The CLASS Act – More Taxes on The Way

Part of Obama’s 2000 page health reform includes another big taxpayer bailout called the Community Living Assistance Services and Supports Act (CLASS) program.  It is designed to try and meet the rising costs of healthcare by providing some long-term care benefits to people who pay into the system, and will begin in 2012.  The problem however is that its numbers just don’t add up.

People paying taxes into the program will have premiums/taxes as high as $240 per month in the first year.  And you would have to pay into the program for at least 5 years to get any benefits from it.  The benefits would be at least $50/day, which isn’t going to go very far when it comes to long-term care.  So that’s the first problem. 

The second, and bigger problem is that the program is going to be unsustainable in short order.  Independent actuaries and budget analysts reviewed CLASS Act and reached the same conclusion – it is fundamentally flawed and financially unsustainable. The Congressional Budget Office concludes that after an initial 5 year period of collecting premiums and not paying benefits, the program begins to lose money.

In fact, CBO found the program “would add to budget deficits in the third decade – and in succeeding decades—by amounts on the order of tens of billions of dollars for each 10-year period.”

Likewise, Rick Foster, the government’s own actuary, declared the program flawed and stated “there is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.”

The President sent out a mailer to to 40 million seniors to “educate” them about the CLASS program, but failed to mention these concerns in that mailer.  Americans deserve to know CLASS premiums won’t be set aside solely to fund promised benefits.

Instead, Congress spent the money on other parts of the health-care law but still argues it will be available to pay benefits when the time comes. Only in Washington can you collect a dollar once but spend it twice!

It really is amazing how a program this bad could get passed into law.  I guess because it was buried deep inside the 2000 page reform which no one could have possibly read completely, let alone understand prior to its passing.

In my professional opinion, if you can afford to pay out $240/month in extra taxes/premiums, you’d be much better off to buy your own private long-term care insurance policy from a company with a proven track record of success rather than from someone who is on track for financial disaster (our government).
The best time to buy long-term care insurance is when you are healthy and young.  The longer you wait, the more expensive it gets and the greater risk you have of not qualifying due to health conditions.  It’s really just another form of health insurance.  Most people who buy health insurance wouldn’t think of not having it.  But when it comes to long-term care, many of us think that we’ll never be in a position to need it.  But for people age 50 and older, you have a 1 in 2 chance of needing some type of care like this.
Call us today if you would like to learn more about protecting yourself and your family from the rising costs of health care, rather than enrolling in the failing CLASS Act program.

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