Recently-signed by President Obama is the Community Living Assistance Services and Support Act (CLASS Act). This new provision will serve as a consumer insurance pool funded by federal trust. And, its main objective is to lessen the role of Medicaid when it comes to dealing with resident’s long term care expenses.

According to statistics, Medicaid spends one-third of its while budget specifically spent on LTC alone and the percentage is expected to increase in the coming years.

The CLASS Act is designed to encourage more people to acquire long term care insurance for them, particularly to working adults. In the past, traditional LTCi sets good health requirements but this is no longer the case with the CLASS Act. This latest modification no longer set any health requirements and whatsoever.

The CLASS Act is said to be effective January, 2011. It will be the duty of the Department of Health and Human Services to set the terms of the program while the Secretary needs to delegate a benefit plan accordingly until 2012.

Under the CLASS Act bill, the participants will pay premiums on a monthly basis and after five years of paying premiums, they will be eligible for better long term care coverage. The bill is different from previous developments because the benefits will be paid by premiums collected from voluntary participants and not by the taxpayers.

The system will be through payroll deduction. Employers will collect premiums through pay check and put them into the trust. The employer can freely decide to pay for a portion of the premium, which is voluntary. Also, they can generously decide not to participate in the payroll deduction feature.

For those individuals who are self-employed, they can pay directly. However, premiums are still undetermined and there are still various aspects of the CLASS Act that remains unclear. The good side of the bill is that no one is denied of coverage and there is availability of lower premiums.