The goal of the Long-Term Care Partnership model is to use Medicaid’s safety net feature as an incentive for middle income people to buy private long-term care insurance and, by doing so, encourage them to prepare for the risk of needing long-term care.
Deep within the Patient Protection and Affordable Care Act of 2010, the Community Living Assistance Services and Supports provision, known as the CLASS Act, establishes a first-ever publicly sponsored, voluntary long-term care insurance option for all working adults.
State Long-Term Care Partnership programs, as the original public-private long-term care insurance strategy, and the CLASS insurance option share the common goal of helping consumers prepare for the risk of catastrophic long-term care costs.
Long-term care insurance is one of the least-known benefits supported in the new health reform legislation. The CLASS (Community Living Assistance Services and Supports) provisions included in the Patient Protection and Affordable Care Act (ACA) establish a publicly sponsored, voluntary long-term care insurance option for all working adults. While key details of CLASS are yet to be resolved, it is important to prepare for this new insurance offering.
Its inclusion in health reform guarantees an increased focus on the need for long-term care insurance. State Long-Term Care Partnership programs, the original public-private long-term care insurance strategy, and the new CLASS insurance program share the public policy goal of helping consumers prepare for the risk of catastrophic long-term care costs. States with Partnership programs promote the purchase of private long-term care insurance by offering consumers access to Medicaid under special eligibility rules if additional long-term care coverage (beyond what the policies provide) is needed.
Medicaid benefits from this approach by having people take responsibility for at least the initial phase of their long-term care through the use of private insurance. This policy brief is designed to help Partnership states inform consumers and other stakeholders in considering these two different approaches to insure against long-term care risk.
CLASS insurance will pay cash benefits averaging $50 per day, indexed by the Consumer Price Index (CPI), while allowing flexible use of the money. Daily cash payments could range as high as $100 per day and vary by the level of disability. Payments would be adjusted upward for inflation.
Initial eligibility will require at least two or three (final choice pending) activities of daily living (ADLs) limitations, substantial cognitive impairments, or an impairment equivalent to these two disability standards. The exact eligibility criteria and payment scale will be determined through regulation, but the amounts are not intended to cover the full cost of care, especially at the nursing home level of dependency. In 2010, the national median costs for a semi-private room in a nursing home was $185 per day; for assisted living it was $106 per day; and for licensed home health aide services it was $19 an hour.
Though limited, a $50-per-day benefit would more than double the average monthly payment received by social security retirees (i.e., $1,172). On an annual basis, this is similar to the amounts paid in the Florida and New Jersey Cash and Counseling Programs, and about twice what Medicaid spends on home- and community-based services (HCBS) waiver program beneficiaries. Both cash and counseling and Medicaid HCBS waivers have been shown to help keep people out of nursing homes.