I haven’t been a huge fan of the health care bill, and I’ve disliked the process throughout. Still, I’m not terribly engaged–politically speaking. What’s done is done, and there are aspects to this bill that I like.

It seems to me that most people will appreciate being able to buy–and have subsidized–their health insurance if they loose a job, change jobs, or their employer drops or radically reduces health insurance coverage. I think those opposed to the bill will appreciate that if they ever need to take advantage of it, even if they’d prefer it was never enacted.

For those who have parents dealing with the expenses of long-term care, there is another piece of the bill to appreciate: The CLASS Act. It’s tough to get a handle on what was left in this bill after all its various incarnations. However, this earlier piece from Time magazine seems to explain well the long-term care section still in the bill.

Average premiums could be as high as $180 per month and could be automatically deducted from the paychecks of some American workers. …
The new program — called the Community Living Assistance Services and Supports (CLASS) Act — would be funded by premiums and would pay enrollees $50 or more per day if they became too disabled to perform normal daily activities like eating and bathing. Employers who chose to participate would sign up their employees, who would then have the ability to opt out. The cash benefits could be applied to nursing-home care, but in an effort to encourage enrollees to stay in their own homes, payouts could cover such things as wheelchair ramps and wages for home health care aides.

Home care is much cheaper than nursing-home care, which averages about $200 per day. Yet millions of Americans who need long-term care but can’t afford to pay for it have to “spend down” all their assets, become poor enough to qualify for Medicaid and then move to nursing homes, which the program covers.

This is good news for a couple of reasons. Long-term care is not “health” care. It’s assistance-with-living care. It covers help with cooking, cleaning, eating, bathing, dressing, medicine taking, and a range of other activities that Medicare doesn’t cover. This quickly gets expensive. See Genworth Financial’s estimates for long term care. The federal government estimates,

One year of care in a nursing home, based on the 2008 national average, costs over $68,000 for a semi-private room. One year of care at home, assuming you need periodic personal care help from a home health aide (the average is about three times a week), would cost almost $18,000 a year.

For people to have this kind of care is financially ruinous. So this plan seems to offer a useful and inexpensive way to set aside some money for a likely scenario. Since 60 percent of people who reach age 65 will need such care, it’s smart to plan for.

The premiums with this new government program compare well to typical long-term care insurance. In 2007, people in private plans between the ages of 60 and 65 paid an average of $2,249 in monthly premiums and an average payout of $160 per day for 4.8 years, according to federal numbers. The government program costs $2,160 a year and pays out just $50 per day. However, you only need to be enrolled for 5 years to collect. Private insurance plans force those enrolled to keep paying until they need to start collecting. If a 60-year-old woman paid private premiums for 20 years before collecting, she would have paid a total of $45,000 and collected a total of $280,320. The same woman in the government program would pay $10,800 over five years and could collect $50 per day indefinitely, but over the same 4.8 years would collect $87,600.

The big difference here is the length of time private plan members have to pay. Since the average age of entrance into a nursing home is 79 the private plan member will need to pay premiums for 15 years into retirement plus at least 5 years beforehand. The government plan member need only pay for 5 years while still working.

This is of course why fiscal conservatives don’t like the new insurance plan. But, if you’re in need of it, a belief in federal austerity is no reason not to use a cheap long term care plan.


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