Health and Human Services Has Deemed the CLASS Act Unworkable, But the Law Remains on the Books

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NAIFA Urges Congress to Repeal the Law and Supports Alternative Approaches to Providing Long Term Care Insurance

The CLASS Act, which charged the federal Department of Health and Human Services with establishing a voluntary, employer-funded long term care insurance program, was doomed to failure from the start. The program, had it been implemented, was financially unsustainable and inevitably would have collapsed or forced a government bailout. Alternatively, Congress may have tried to rescue the program by making employee participation mandatory, causing extreme hardship for many small businesses.

HHS admitted that the program was unworkable in October, with Secretary Kathleen Sebelius writing to Congress, “I do not see a viable path forward for CLASS implementation at this time.”

Yet, while HHS has said that it cannot implement the program and satisfy all of the conditions in the act, the law remains on the books. An administration official said President Obama opposes repealing the CLASS Act and may veto any repeal legislation. It's not clear why the administration would want to keep the law after HHS has said the department cannot implement it.

The National Association of Insurance and Financial Advisors believes it’s time to wipe the slate clean.

“NAIFA would like to see the law taken off the books,” said Diane Boyle, NAIFA vice president of federal government relations. “There’s no good reason to leave flawed legislation in place.”

Sen. John Thume (R-S.D.) has introduced a bill to repeal the CLASS Act, and Rep. Charles Boustany (R-La.) has introduced a similar measure in the House. The bills have dozens of cosponsors.

The Importance of Long Term Care

While supporting the goal of providing consumers financial security to cover long-term care services, NAIFA has long argued that the CLASS Act was not the answer and there are better ways to help people plan for their long-term care needs. These include quality insurance products offered to workers at their places of employment.

NAIFA believes the following efforts are better suited to address the long-term care financing needs:

  •     Increase awareness of long-term care planning needs, including increased funding for the Long-Term Care Clearinghouse run by HHS.
  •     Expand State Partnership Program that allows participants to keep some or all of their assets if they apply for Medicaid after they use their long-term care insurance benefits.
  •     Allow long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending arrangements so premiums could be paid for using pre-tax dollars, making long-term care insurance more accessible for all Americans.

NAIFA is also a proud supporter of the 3 in 4 Need More long-term care awareness campaign. The 3 in 4 campaign focuses on four objectives:

  •     Spread the word among the public that "3 in 4 Need More".
  •     Support congressional moves to provide additional tax deductions or rebates to help people better afford long term care insurance.
  •     Stimulate others in industry, education, government to join the "3 in 4 Need More" campaign, making use of the logo and other visuals to spread the word.
  •     Educate the public that long term care insurance or federal entitlement plans may not be a solution for everyone, but everyone needs a long term care plan.

NAIFA looks forward to working with Congress and the administration to enact sustainable solutions to the long term care financing challenge.


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