Long-Term Care Plan Gets Thrown Off the Fiscal Cliff

Obamacare seemed to have all the solutions to all of our healthcare problems … It’s solution for the growing cost of long-term care was a program called the CLASS Act which meant to provide a government-backed universal long-term care insurance plan.  The reason most people have to rely on Medicaid planning is because they either cannot afford long-term care insurance or they do not qualify for it because of pre-existing health conditions.  The CLASS Act sought to fix that by widening the pool and automatically enrolling anyone who chose to participate.

If there was any question about whether the CLASS Act was a goner, when the new bill got passed on January 2nd Congress made it official. As part of the budget compromise to avoid the Fiscal Cliff, the CLASS Act was formally repealed and replaced with a Long-Term Care Commission.

The CLASS Act was Obamacare’s  attempt to create a national insurance pool for long-term care.  Part of the plan included a cost review by the Department of Health and Human Services.  After the review was done, Secretary Kathleen Sebelius came to the conclusion that the CLASS Act was untenable financially.  To support  the system, the premiums would need to be beyond what she thought most people would be willing to voluntarily pay.  Congress officially agreed and wrote the program’s obituary last week.

For those who can get and afford long-term care insurance, it helps give them the peace of mind of not having to worry about how they’re going to protect their assets if they suffer from a debilitating health condition.  But for the rest of the folks, the standard problems are pervasive: the insurance is either too expensive or they don’t qualify for it because of pre-existing health conditions.

Without the benefit of a guaranteed-issue government insurance, seniors face their own Fiscal Cliff.  The only way for the uninsured to protect themselves is to seek refuge under Medicaid, but many don’t know how to minimize the sting of the Medicaid spend down. Most don’t realize they can take advantage of government incentives that allow them to protect a limited number of assets and preserve precious resources in case their health later improves or for the benefit of a healthy spouse.  With the absence of the CLASS Act, Medicaid Planning becomes all the more essential.

Long-term care Medicaid is not a free ride.  Through a complex system of rules, there is a cost-sharing element that factors in the applicant’s income and family needs.  Sure, they let applicants shift assets like IRAs into income-only annuities without a penalty, but primarily to help support a healthy spouse.  In many cases, the shift of assets to income excludes an asset but increases the monthly cost-sharing.

With that said, there are still ample opportunities to deal with the problem.  Medicaid Planning is the last hope of many before total impoverishment from the costs of nursing homes.  Through creative planning, you can stay at home or in low-cost assisted living facilities with Medicaid’s assistance through the expansion of the Home and Community Based Services (HCBS) program.

If you can’t get or afford long-term care insurance and are worried about how you are going to keep from going over your own personal Fiscal Cliff when a loved one’s health deteriorates, you should learn and understand how to protect your family’s financial future through Medicaid Planning.

If you need help with a strategy to protect your assets or perhaps you may have a family member in need, please contact our Medicaid Planning support center to assist you in providing the best advice for you, your family, or a your friends. Go to www.medicaidanswers.net to learn more.


For advisors, our Certified Medicaid Planner (CMP™) course can give you whole new perspective on ways to help your clients and tools to expand your practice.