A Look Ahead: CLASS versus Long-Term Care Insurance

By December 9, 2010Uncategorized

The media has been giving more attention to CLASS lately, and it is causing many seniors to question whether it will provide a suitable alternative to long-term healthcare insurance.  Like most legal questions, the answer to this one is that it depends on the circumstances.  But before delving into the details, the first thing to clarify is that CLASS is not yet taking enrollees, and it will not begin paying benefits until 2017 at the very earliest.

Let’s begin with a brief overview of the pros and cons of long-term healthcare insurance.  A good long-term care insurance policy will almost certainly provide better benefits than CLASS.  Most private insurance policies pay enough benefits to cover the spectrum of long-term healthcare, from in-home care to care in a skilled nursing facility.  Also, those with private insurance can typically begin collecting benefits only shortly after purchasing the policy – somewhere between 30 and 90 days after enrolling.  Lastly, those who are healthy enough, and can afford the premiums, can purchase long-term care insurance regardless of whether they are employed.

The downside of private insurance is that it can be expensive and difficult to qualify for.  Seniors with a pre-existing condition may find it next to impossible to obtain a suitable policy.  Also, most long-term care policies only pay benefits for a few years; once the coverage period is over, the policyholder must turn to other sources for coverage.  And lastly, it is not uncommon for private insurance to deny coverage for certain types of care.

As to CLASS, seniors must be employed to enroll in the program, but there is no exclusion for pre-existing conditions.  And while its benefits are relatively low when compared to private insurance, CLASS has an unlimited payout period so enrollees can collect benefits for the duration of their lives.  Also, CLASS premiums will be significantly lower than those for private insurance, making it affordable to a broader pool of people.

So as to the question that opened this discussion, the future will likely hold a place for both long-term healthcare insurance and CLASS.  The insurance industry is already coming up with new types of policies that will increase CLASS benefits for enrollees.  And even without these policies, it could be wise for those with the means and good health to both enroll in CLASS and purchase long-term care insurance.  The two could supplement one another and better allow seniors to maintain a quality and comfort of life they are accustomed to.

No discussion on long-term healthcare options would be complete without mentioning ALTCS, or Arizona Medicaid.  The fact remains that private insurance is difficult to obtain, and that CLASS – even when it becomes available – will not be sufficient to cover skilled nursing or assisted living care.  There will always be a large group of people without any type of long-term healthcare insurance for whom ALTCS/Medicaid is the most suitable option.  And waiting to engage in ALTCS planning until the need arises for long-term care could be a costly mistake to the people in this group.  Whether through private insurance, the CLASS program or ALTCS/Medicaid, people should prepare for long-term healthcare well in advance.