Retirement Blog

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The Community Living Assistance Services and Supports Act, or CLASS Act, has been dismissed, but that doesn't diminish the need to consider long-term care as a part of retirement planning.

CLASS was part of the health care reform law. It would have created a national voluntary long-term care insurance program, providing working adults with a cash benefit. In October, Health and Human Services Secretary Kathleen Sebelius shelved it, saying, "Despite our best analytical efforts, I do not see a viable path forward (for CLASS)." The biggest reason was money -- actuaries held out little hope that program would even come close to paying for itself.

What's next? Sebelius, in a letter to Congress urging that CLASS be left inactive but not repealed, wrote that the CLASS option may appear more attractive one day because, "The current market does not offer viable options for those unable to access private long-term care insurance."

Long-term care costs totaled $240 billion in the United States in 2009, according to last year's study by the Kaiser Commission on Medicaid and the Uninsured. Taxpayers cover most of these costs, with Medicaid paying 43 percent and Medicare 24 percent. But Medicare only covers skilled home health visits and temporary stays in skilled nursing facilities following hospitalizations.

Nursing home and nonmedical home care is delivered by Medicaid to those whose incomes are very low. Here in Florida where I'm spending the winter, there are billboards on every street corner from lawyers offering assistance circumventing the Medicaid rules that require recipients to impoverish themselves before collecting.

Obviously, having long-term care insurance is more attractive than that option, but relatively few people buy it. A recent study by the Urban Institute found that among people 65 and older, only 12.4 percent had coverage, although among people with incomes greater than $100,000, coverage increased to 19.3 percent.

In today's Wall Street Journal, there's a story about the rising number of older people moving in with their children because they can't afford to live on their own. I don't know about you, but I'd have to be truly desperate to consider that retirement option. Besides, I'm not even sure it would be an option. My children love me, but probably not enough to change my diapers.

The bottom line, so to speak, is the need to buy long-term care insurance. It's pricey and maybe I'll never need it, but that's a risk I don't mind taking.