Reform Alert - News from the Blues' Office of National Health Reform

Announcement Correction: Health care reform CLASS Act program will not be implemented

UPDATED: Nov. 9, 2011

Original: Nov. 4, 2011

On Nov. 4, 2011, Blue Cross Blue Shield of Michigan distributed an alert regarding the defunding of the federal long-term care insurance program. The previous health care reform alert was referencing the CLASS Act program; not LifeSecure Insurance Company's long-term care product. Please read the remainder of the alert for additional information regarding this change.

The Obama administration has announced that it will not implement the CLASS Act, a long-term care insurance program created by the Affordable Care Act, because it is financially unsustainable.

The program, which was intended for people with chronic illnesses or severe disabilities, was known as Community Living Assistance Services and Supports. The program was intended for people with severe disabilities who wanted to live in the community, though benefits could also have been used to help pay for nursing home care or assisted living.

By statute, it would have been entirely self-financed, with premiums paid by workers through voluntary payroll deductions and no federal subsidy. Premiums were supposed to have ensured the solvency of the program over 75 years. It would have provided a basic lifetime benefit on average of $50 a day in the event of illness or disability, to be used to pay for even nonmedical needs, such as making a house wheelchair-accessible or hiring a home caregiver to assist with basic tasks.

Since the program was designed to receive no federal funding, and participants were required to pay premiums for five years before receiving benefits, the Congressional Budget Office had previously scored the CLASS Act as saving 86 billion over the 10-year budget window. However, the statutory requirement that the program had to be solvent over a 75 year window proved unworkable. In order to set premiums high enough to ensure sustainability, the program would have priced out younger, healthier individuals, likely resulting in a risk spiral requiring ever higher premiums.

The Department of Health and Human Services advised it will not be working further to implement the CLASS Act. The administration and Congress should "continue to explore all of the options to address the critical long-term care needs of Americans," wrote Kathy Greenlee, assistant secretary for HHS.

Despite this change, long term care remains an important issue. While some 70 percent of people over age 65 will require some type of long-term care during their lifetime, most people have little to no knowledge of the significant impact the demands of long-term care can have on their physical, emotional and financial health. Long-Term Care Awareness Month provides families with a great opportunity to learn about the resources and products available to plan for their future long-term care needs and protect their financial security.

LifeSecure Insurance Company, in partnership with the Michigan Governor's Office, designates November as LTCAM in Michigan in order to raise awareness of proper long-term care planning and the importance of finding solutions that work best for families. For more information, please visit LifeSecure is an independent company that provides long-term care coverage.

For more information on CLASS, please visit

View the report sent to Congress (PDF).


The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.