CLASS Act Scrapped - What this Means for You

On October 14, 2011, the Department of Health and Human Services announced that it would not implement the portion of the Health Care Reform Act that was intended to provide voluntary long term care benefits for working Americans. The program known as the Community Living Assistance Services and Supports Act (CLASS Act) was designed to create a voluntary government program under which employees would pay a monthly premium and would be eligible for modest benefits for their long term care needs after five years of paying premiums. The program was open to anyone who met certain work requirements - regardless of their health.

Under the terms of the CLASS Act, the program would go into effect only if it were economically viable. Secretary of Health and Human Services Kathleen Sebelius stated that she “did not see a viable path forward for CLASS implementation at this time." The report cited actuarial and solvency impediments as the reason why they had not found a way to make the program work. Premiums were projected to be too high and few healthy people were projected to enroll.

The problem that the CLASS Act was intended to address – aging population and paying for the high cost of long term care assistance - remains a pressing issue. The current cost for a nursing home in New York is $140,000 a year. The cost for home health care is $250 per day for 24/7 care and the cost of assisted living is $3,000-$6,000 per month. These costs are expected to continue to rise.

Enrollment in private long term care insurance, subject to underwriting, can secure a policy for an individual that will provide the benefits needed for the future - be it staying at home with an aid or moving to a nursing home or an assisted living residence. As one grows older, the cost of long term care insurance rises substantially and it may simply be unavailable should one become ill. As a New York resident, one may be eligible for a program called the New York State Partnership for Long Term Care Insurance (NYSPLTC). This allows residents to protect their assets while applying for Medicaid Extended Coverage if their long term care needs exceed the period covered by their qualified NYSPLTC insurance policy.

Long term care insurance is a benefit offered by employers to their employees and/or key people. Employers, self-employed, LLC members, Sub C owners and partners in a partnership are eligible to receive income tax advantages as it relates to long term care insurance premiums. In addition, New York State offers a 20% tax credit. Because long term care insurance is not considered an ERISA benefit, employers can offer it to employees on a select basis. Insurers often offer simplified underwriting and/or discounts to a block of people from a company or an association buying long term care insurance.

Attached is a link to an article from The New York Times that details the ending of the CLASS program: http://www.nytimes.com/2011/10/15/health/policy/15health.html.

If you have any questions regarding CLASS or your long term care needs, please do not hesitate to contact me at 516-682-8400 or Risrael@optonline.net. Additionally, I am available to answer any of your questions regarding health insurance, annuities, life and disability insurance. I look forward to speaking with you soon.

HSA: IRS Releases New Limits

The 2012 limits for HSAs have been released by the IRS in Revenue Procedure 2011-32.

MINIMUM ANNUAL DEDUCTIBLES

There is no change in the minimum annual deductibles required for a plan to be considered a "high deductible health plan", or "HDHP". They remain at $1,200 for single coverage and $2,400 for family coverage.

OUT OF POCKET MAXIMUMS

The maximum out of pocket maximums for HDHPs for 2012 will increase to $6,050 for single coverage and $12,100 for family coverage (2011 levels are $5,950 single/$11,900 family).

ANNUAL INDIVIDUAL CONTRIBUTION LIMIT

The maximum permitted contribution to the HSA on behalf of an individual increases to $3,100 for an individual with single coverage and $6,250 for an individual with family coverage (2011 levers are $3,050 single/$6,150 family).

If you have any questions about how this impacts your health insurance or would like help planning for 2012, please call me at 516-682-8400.

Bob

Delay for Nondiscrimination Provisions Applicable to Insured Group Health Plans

On December 22, 2010, the IRS issued Notice 2011-1, which essentially delays compliance with the provisions of the Patient Protection and Affordable Care Act (PPACA) prohibiting fully insured group health plans from discriminating in favor of highly compensated individuals. The nondiscrimination provisions under the PPACA require non-grandfathered fully insured plans to comply with rules "similar" to the rules applicable to self-insured plans. The effective date of the nondiscrimination provisions was scheduled for your plan's anniversary beginning on or after September 23, 2010.

This provision has raised concerns about the ability of plan sponsors to comply with these provisions without regulatory guidance. In response to comments from the benefit community, the IRS, Treasury Department and Departments of Labor and Health and Human Services have determined that compliance with the nondiscrimination provision should not be required (and any sanctions for failure to comply do not apply) until after regulations or other administrative guidance has been issued. Such guidance will not apply until plan years beginning a specified period after issuance.

The Departments have requested further comments on a variety of issues by March 11, 2011; thus, we can not expect guidance in the near future. We will keep you apprised of any further developments, but for the time being, it appears that no changes will be required for the coming year.

As always, Long Island Planning Group, Ltd.'s goal is to keep you informed of the facts and the effects on you and your business.

*Information received from Emerson Reid