How do we ensure long-term solvency for the CLASS program?
We blogged last week about a Congressional committee’s hearing on the CLASS Act. In his testimony, Al Schmitz put forward several ideas for ensuring the solvency of the new federal long-term care (LTC) program:
On behalf of the Academy, I offer the following recommendations for modifying the CLASS program:
- An actively-at-work definition with a minimum requirement of 20 to 30 hours of scheduled work or a comparable requirement;
- Restrictions on the ability to opt out and subsequently opt in with the use of either a long second waiting period for benefits or an alternative underwriting mechanism(s);
- The use of a benefit elimination period or duration limits;
- Benefits that are paid on a reimbursement rather than cash basis;
- An initial premium structure that provides for scheduled premium increases for active enrollees at either a consumer price index or alternative rate.
These modifications, along with an effective marketing effort, will improve the sustainability of this voluntary long-term care program. Without these modifications, the program is likely to be unsustainable.