A new model from the SCAN Foundation and the consulting firm Avalere Health concludes that premiums for a national voluntary long-term care insurance program similar to the newly-enacted CLASS Act would average about $115-a-month. The study concludes that a mandatory long-term care insurance program could provide identical benefits for one-third the cost, or about $40. Premiums would vary by the buyer’s age and increase by inflation over time.
The CLASS Act, which was included in the just-passed health law, will allow all workers to enroll in government long-term care insurance. If their employers participate in the program, these workers would be automatically enrolled in the coverage, but could choose to opt-out. Benefits, which must still be set by the Adminstration, are likely to average roughly $50 to $75 per day for life and will be paid in cash.
The model does not price the CLASS Act itself, but includes a policy option that incorporates many elements of that new program. The new premium projection of CLASS insurance is similar to an estimate by the Congressional Budget Office but significantly less costly than projections by the Society of Actuaries or the Medicare actuary.
Voluntary CLASS-type policies would eventually provide benefits to about one-quarter of disabled people, while mandatory insurance would cover three times as many.
As a result, the study projects a big difference in the amount each option would reduce Medicaid costs. The voluntary program would trim Medicaid expenses by about $40 billion over 25 years, while the mandatory version would slash costs by $300 billion.
The new model is the basis for an interactive tool that allows users to compare CLASS with other policy options. Users can make multiple adjustments in coverage, benefit design, and government subsidy levels and learn how those changes effect premiums, participation rates, and government costs.