Long Term Care Letter from Brigitte Bromberg
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CLASS is Dismissed!
November 7, 2011
Parsipanny, NJ
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***November is Long Term Care Awareness Month***

On Friday afternoon, October 14, 2011, Health and Human Services Secretary Sebelius dropped a bombshell. She announced that the Obama administration won't implement CLASS, a new federal long term care insurance-like program.

Traditionally, the government's role in financing long term care consisted of Medicaid, the means-tested program that pays the nursing home bills of the impoverished. All that changed when health reform passed, and included a provision called CLASS, standing for Community Living Assistance Services and Supports. CLASS was to be implemented in late 2012, or 2013. CLASS, which is still the law of the land, would allow workers and students to pay a monthly premium for an eventual $50/day average benefit were they to eventually need long term care. By eventual benefit I mean that, for the first five years of premium paying, no claims would be paid; coverage springs into action year 6 (subject to income requirements). The benefit would be payable with no limit on duration.

Eligibility for benefits under CLASS would have been partly determined by minimum required employment during those first five premium-paying years. This would have made eligibility problematic for those planning on retiring soon or for those who may become unemployed shortly after enrolling.

Premiums had yet to be determined. The law demanded that CLASS not only be fiscally self-sustaining, but that it be demonstrated to be actuarially sound for a 75 year time horizon. Since no medical questions were asked as a condition of enrolling, estimates of premiums needed to be actuarially sound ranged as high as $3,000/month!

It is no surprise to many in the insurance business that it is impossible to price a plan that is:
- actuarially sound;
- asks no medial questions; and
- has a premium that would also entice healthy people to participate.

Apparently Health and Human Services came to the same conclusion.

On September 22, 2011, three weeks before the official announcement, CLASS' chief actuary resigned and said the office was being disbanded.

The demise of CLASS is just one more reason for individuals to do their own long term care planning and consider the purchase of private long term care insurance.


Brigitte Bromberg, MS, CFP(R), CSA(R) is a long term care insurance specialist and president of Winning Strategies Group LLC, an independent insurance and risk management firm located in Parsippany, NJ. She is one of the first agents nationwide to become involved in the Association of Jewish Family and Children's Agencies affinity long term care insurance program.



Contact Information
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phone: 973-244-9499
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