August 12, 2010
FEDERAL HEALTH CARE REFORM: THE COMMUNITY LIVING ASSISTANCE SERVICES AND SUPPORTS (CLASS) ACT
By: Nicole Dube, Associate Analyst
The federal Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (HCERA, P.L. 111-152) established the Community Living Assistance Services and Supports (CLASS) Act. Administered by the federal Department of Health and Human Services (HHS), the CLASS program is a voluntary, consumer-funded, long-term care insurance program that provides working adults who develop a functional or cognitive impairment with a daily cash benefit to purchase non-medical long-term care services and supports. Benefits must be at least $50 per day but will vary depending on the severity of the individual's impairment. To receive benefits, enrollees must (1) pay premiums for five years, (2) work for at least three of those five years, and (3) have a functional or cognitive impairment (as defined by the HHS secretary) that lasts for at least 90 consecutive days and is certified by a licensed healthcare practitioner.
The program is funded entirely by monthly premiums paid through voluntary payroll deductions or direct payments. Premium levels will be determined by the HHS secretary and are expected to range from $140 to $240 per month, depending on an enrollee's age. Working, full-time students and individuals with income below the federal poverty level will pay a nominal monthly premium of $5.
The program also provides voluntary advocacy services, advice, and assistance counseling to help beneficiaries access and coordinate long-term care supports and services.
The program takes effect January 1, 2011. The HHS secretary must adopt regulations to define, implement, and administer the program by October 1, 2012. Although the law does not specify an implementation date, enrollment will likely start sometime after these regulations are adopted.
CLASS benefits cannot be counted as income in determining an individual's eligibility for any other federal, state, or local assistance program. Benefits are intended to supplement rather than replace traditional long-term care insurance or Medicaid coverage.
Enrollment in the program by employers and employees is voluntary. To qualify, individuals must (1) be at least 18 years old, (2) be actively employed, (3) receive taxable wages or self-employment income, and (4) not live in a nursing home or other institution. An individual cannot be excluded from enrollment due to a pre-existing condition.
Participating employers will automatically enroll employees in the program and deduct premiums from employee wages unless an employee “opts out” of the program. The law requires the HHS and Treasury secretaries to establish enrollment procedures for individuals who are self-employed, have more than one employer, or whose employer chooses not to participate in the program.
To receive benefits, enrollees must pay premiums for five years and be actively working for three of these years. The law requires the HHS secretary to establish age-adjusted premiums and no underwriting factor, other than age, may be used to determine premium amounts. Premiums are lower for younger, student, and low-income enrollees. Working, full-time students up to age 21 and enrollees with income below the federal poverty level will pay a minimal monthly premium of approximately $5 (adjusted annually for inflation). Initial monthly premiums for other enrollees are estimated to be $140 to $240.
An individual's premium levels cannot increase as long as he or she remains an active enrollee unless the HHS secretary determines premiums are insufficient to cover an upcoming 20-year period. If such a determination is made, active enrollees age 65 and older who have paid premiums for at least 20 years and are not actively employed are exempt from any increase.
The law also allows premiums to be recalculated for individuals who drop out and re-enroll in the program. If an individual opts out of the program, he or she may re-enroll every two years but must pay a 1% penalty in addition to the monthly premium. Those dropping out may re-enroll within 90 days at the same premium level and keep their vesting credit for prior coverage months. But, after five years, an individual loses any credit for prior coverage months and his or her premium will be re-calculated based on current age and include a penalty for each month of non-coverage. Premiums may also be recalculated for student enrollees once their status changes.
Once the five-year vesting requirement is met, an enrollee is eligible to receive cash benefits if he or she has a “qualifying level of disability” as determined by HHS regulations. At a minimum, the law requires an enrollee to (1) be unable to perform at least two or three (the HHS secretary must choose) activities of daily living (e.g. bathing, dressing, eating, toileting, etc.) or (2) need substantial supervision due to a cognitive impairment that threatens the individual's health and safety. The level of disability must be certified by a licensed health care practitioner and expected to last for a continuous period of at least 90 days.
The law requires the HHS secretary to establish eligibility assessment, redetermination, benefit administration, and appeal procedures. Benefits must be based on a functional ability scale with between two and six benefit levels. Those with greater need will receive higher benefits. The average daily benefit must be at least $50, adjusted annually for inflation. There is no lifetime benefit limit; benefits continue until the enrollee no longer has a qualifying disability. Beneficiaries must annually recertify their eligibility status through a process to be determined by the HHS secretary.
Benefits can be used to pay for home and community based long-term care services and supports to help the enrollee live in a residential or institutional setting of their choice. Services and supports may include accessible transportation, homemaker services, home care aides, personal assistant services, home modifications, respite care, nursing supports, and assistive technology.
Cash benefits will be paid either daily or weekly into a “Lifetime Independence Account” which each beneficiary may access through a debit card. Unused benefits may be rolled over from month to month but cannot be rolled over from one benefit year to the next.
Each beneficiary will be assigned an advocacy counselor who will provide (1) information on the program's appeal process, (2) assistance with the program's eligibility notification and recertification processes, and (3) any other assistance the HHS secretary requires. The secretary must enter into agreements with each state's Protection and Advocacy System by January 1, 2012 to provide these services. (In Connecticut, this is the Office of Protection and Advocacy for Persons with Disabilities.)
Advice and Counseling Services
The law requires the HHS secretary to enter into agreements with public and private entities by January 1, 2012 to provide advice and counseling services. Beneficiaries will be assigned a counselor to assist with (1) service access and coordination, (2) eligibility for other benefits and services, (3) creation of a service and support plan, (4) medical decisions, and (5) any other services the secretary requires.
IMPACT ON MEDICAID COVERAGE
The law prohibits an individual's CLASS benefit from being counted as income when determining eligibility for any other federal, state, or local assistance program. Benefits are intended to supplement rather than replace traditional long-term care insurance or Medicaid coverage.
Beneficiaries receiving Medicaid institutional care, home and community based waiver services (HCBS), or Program of All-Inclusive Care for the Elderly (PACE) services (an optional Medicaid and Medicare benefit) will be allowed to keep part of their CLASS cash benefit. Medicaid recipients living in nursing homes, including PACE enrollees, can keep 5% of their cash benefit whereas HCBS waiver beneficiaries, including PACE enrollees, can keep 50% of their cash benefit. Medicaid will provide secondary coverage.
PROGRAM FUNDING AND OVERSIGHT
Program benefits will be paid out of the CLASS Independence Fund within the U.S. Treasury. The fund will hold enrollee premiums, recouped benefits, and any investment income. The law prohibits the use of taxpayer funds to pay benefits.
The law creates a Board of Trustees and an Independence Advisory Council to advise the HHS secretary on the program's funding and administration. The Board of Trustees must annually report to Congress on the fund's short- and long-term solvency, including its: (1) operation and status during the prior fiscal year, (2) expected status for the next two fiscal years, and (3) projected status over the next 20 and 75 years. It also reviews and recommends changes to fund policies and management. The board consists of the secretaries of HHS, Treasury, and Labor and two public members of different political parties appointed by the president.
The Independence Advisory Council must advise the HHS secretary on the program's administration and regulations, including benefits, premiums, and financial solvency. The council consists of up to 15 members appointed by the president, the majority of whom must be consumer representatives and technical experts.
The HHS secretary must adopt regulations to administer the program and annually report to Congress on the program starting January 1, 2014. The secretary must designate a benefit plan as the CLASS Independence Benefit Plan and publish the designation in a final rule by October 1, 2012. The law does not specify a program implementation or enrollment date though people will likely enroll after these regulations are adopted.
American Association of Homes and Services for the Aging, “CLASS Act Summary,” http://www.aahsa.org/classact.aspx, website last visited on August 10, 2010.
Congressional Research Services Report, “Community Living Assistance Services and Supports (CLASS) Provisions in the Patient Protection and Affordable Care Act (PPACA), May 3, 2010, http://www.ncsl.org/documents/health/CLASS.pdf, website last visited on August 10, 2010.
Kaiser Family Foundation, “Health Care Reform and the Class Act,” April 28, 2010, http://www.kff.org/healthreform/8069.cfm, website last visited on August 10, 2010.
National Health Policy Forum, “The Community Living Assistance Services and Supports Act: Major Legislative Provisions,” June 9, 2010, http://www.nhpf.org/library/the-basics/Basics_CLASSAct_06-09-10.pdf, website last visited on August 10, 2010.