The CLASS (Community Living Assistance Services and Support) Act, a major component of President Obama’s healthcare plan was scrapped on Friday, October 14, 2011 by Kathleen Sebelius, Health and Human Services Secretary.
This voluntary program was meant to provide a base long term care insurance benefit and was to be open to all working Americans regardless of health. The program was supposed to be financed entirely with premiums collected from participants.
Sebelius told Congress that her department had tried for 19 months to make the numbers work but couldn’t. “… despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time.”
Remember back to when Hillary Clinton tried to pass a similar program early in Bill Clinton’s stint in the White House. She had called it Medicare Part C. Her long term care insurance program was going to be financed through an increase in income tax rates.
But when it was penciled out, the amount that taxes would have to been raised would have been political suicide for President Clinton.
Also note that in the insurance industry private sector, long term care insurance has not had a great track record. Many companies have either gone out of business or stopped selling long term care insurance entirely.
The latest example is Met Life. Met Life and John Hancock by the way were the two companies that sold long term care insurance to federal employees.
So if private insurance companies have a difficult time with long term care insurance, what makes the government think that they could do better? (Are we just being too cynical?)
Once again, we are back to you having to plan for yourself.
Don’t count on the government or anyone else to do it for you.
The one thing that we can learn from the CLASS Act is that long term care costs is a major problem for many, many people. The government realizes this.
Karl Kim is a Certified Financial Planner™, Certified in Long-Term Care, and the President of Retirement Planning Advisors, Inc. in La Mirada, CA. He is a Medi-Cal Specialist and has submitted over 1000 applications with a 99.9% success rate over the past 20 years. He can be reached at 714-994-0599.
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