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CLASS Act

The Obama administration announced Friday, October 14, 2011, that it would be discontinuing the CLASS Act as part of the healthcare reform law.

Christine J. Jensen, Ph.D, Director of Community and Health Services Research at the Center for Excellence in Aging and Geriatric Health (CEAGH) and Research Assistant Professor in Public Policy at William & Mary, answers questions from Schroeder Center staff member Elizabeth Vestal about the discontinuation of the CLASS Act.

What is the CLASS Act?

CLASS stands for Community Living Assistance Services and Supports. The goal of this legislation, which was passed in March 2010 as part of the Affordable Care Act, was to offer a national voluntary insurance program that would allow individuals to purchase community-based care services through payroll deductions. The focus, specifically, was to provide workers and future retirees with financing to support community living, thereby reducing the likelihood that they may become impoverished.  It would also lower the chances that they would turn to Medicaid to access these services or that they would burden family members with the large expenses associated with long-term care. Ideally, this new program would empower consumers and offer actively-working individuals between the ages of 18 and 65 the opportunity to plan ahead and contribute financially to their own long-term care needs. Once individuals had contributed monthly premiums for five years and were identified as having significant care needs (e.g., have difficulty performing two or more activities of daily living, such as eating or bathing), their benefit, of about $50-75/day would begin to supplement the costs of support services and care.

What were the estimated budgetary advantages of the CLASS Act?

The Congressional Budget Office initially estimated that the CLASS Act would reduce the deficit by $74 billion between 2010 and 2019. It was also anticipated that this measure would reduce costs to the Medicaid system.  Medicaid often becomes a measure of last resort for ongoing long-term care for persons who cannot afford the cost of care.

Why was the CLASS Act cut?

The concern about adverse selection, meaning those individuals most in need of the coverage, would buy into the program and cost the program more than the funds contributed could cover, had been looming large. A key question was, would the program be financially solvent or would it soon require federal subsidies once the five-year pay-in period ends? Secretary of Health and Human Services, Kathleen Sebelius received numerous formal requests from Congressional officials and professional organizations, including the American Academy of Actuaries, to examine the risk involved in the CLASS Program more carefully before it was to be implemented in 2012. She was required by law to determine if the CLASS Act would be solvent and sustainable. On October 14th, the White House reported it officially removed the CLASS Program from the healthcare reform plan. Kathy Greenlee, Assistant Secretary for Aging at HHS, simply stated, “At this point, we do not have a viable path forward to implement the CLASS Act.”

What does this mean for future seniors and family caregivers?

For working adults who planned to participate in the CLASS Program, its discontinuation means that they may not have access to financing for their care needs other than through Medicaid or more expensive long-term care insurance plans on the private market.

Family caregivers are truly the backbone of our long-term care system because they provide a great majority of the time and expense associated with personal care and ongoing support for older or chronically ill relatives. In my opinion, discontinuation of the CLASS Act means they will continue to perform the lion’s share of care, while missing more days of work, missing their own medical appointments, and putting their own mental and physical health in jeopardy.

As the Director of Community and Health Services Research at the Center for Excellence in Aging, what have you heard from people in the local community about the recent cancellation of the CLASS Act?

I cannot say that here, in Williamsburg, I have heard family caregivers or working adults comment about their plans to participate in the CLASS Program. But I suspect that is because many adults are simply confused about what elements of the Affordable Care Act will be implemented, in what time frame, and how it will personally impact them. Plus, can you miss something you never had? For me personally, I’ll continue to educate the older adults that CEAGH serves about community resources and care planning and how important it is to state what they want and then prepare care plans accordingly.

Education is an important start. Consumers are concerned about their healthcare options in general and education can make a difference. For example, I’m answering questions right now about which type of Medicare Part D (prescription drug coverage) plan older consumers should participate in as we are in the midst of open enrollment. These questions are encouraging because they show that retirees want choices and want to be educated about their choices. But even I have had a hard time figuring out which of more than 70 plans might be the most appropriate!

What does the future hold for long-term care plans?

There is simply a long road ahead for the U.S. in finding creative and financially solvent means for supporting the long-term care needs of our most vulnerable adults and their family caregivers. I personally think they deserve better. Many age-friendly organizations, such as the AARP, the Family Caregiver Alliance, the National Family Caregivers Association, and the Gerontological Society of America, will continue to advocate for future CLASS-like programs.  So stay tuned!

For more information on the CLASS Act please visit:

Kaiser Family Foundation Issue Brief: Health Care Reform and the CLASS Act

American Academy of Actuaries: Critical Issues in Health Reform

Robert Wood Johnson Health Policy Brief: The CLASS Act