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CLASS Act (part of health care bill) means new $100-200 payroll tax each month?

dammitgibs

Senior member
Jan 31, 2009
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So I heard about this on a local California talk radio show, listen here at about 12 minutes in:

http://www.kste.com/cc-common/mediaplayer/player.html?redir=yes&mps=armandgettypodcast.php&mid=http://media.ccomrcdn.com/media/station_content/691/ang_032610_H3_1269620180_6655.mp3?CPROG=PCAST?CCOMRRMID&CPROG=RICHMEDIA&MARKET=SACRAMENTO-CA&NG_FORMAT=talk&NG_ID=kste650am&OR_NEWSFORMAT=&OWNER=&SERVER_NAME=www.talk650kste.com&SITE_ID=691&STATION_ID=KSTE-AM&TRACK=

Basically it's a new fund to cover assisted living that medicare wouldn't cover, but nobody knows anything about it. No liberal or conservative, republican or democrat news agency has been reporting about this and I can't find any other info about this. Anyone more informed about this?

Edit: Ok payroll deduction, not tax, I don't care what you call it
 
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Balt

Lifer
Mar 12, 2000
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dammitgibs

Senior member
Jan 31, 2009
477
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Don't know if this is what you're talking about, but:

Starting January 2013, if you make over $200,000 (individual) or $250,000 (family), your Medicare tax rate will increase from 1.45% to 2.35%. A bigger potential tax bite may hit small business owners who receive capital gains, dividend, or interest income with an additional 3.8% tax on that income.

http://www.usatoday.com/money/smallbusiness/columnist/abrams/2010-03-26-what-health-care-reform-means_N.htm
Nope, it's separate from that. As far as I can tell everyone will have this deducted from their paycheck, just like medicare and FICA.
 

Amused

Elite Member
Apr 14, 2001
54,078
7,439
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No, Balt. This is what he's talking about:

http://www.foxnews.com/politics/2010/03/26/little-known-long-termhealth-care-provision-budget-buster-say-critics/

Little-Known Health Care Law Provision Is a Budget Buster, Critics Say
By William La Jeunesse
- FOXNews.com

(AP Photo)
While Congress spent the last year debating how to provide health insurance for the uninsured, a little-known provision slipped into the heath care law that could cost some Americans upwards of $2,000 a year.

The Class Act, otherwise known as the Community Living Assistance Services and Support Act, is the federal government's first long-term care insurance program.

Under-reported and the under the radar of most lawmakers, the program will allow workers to have an average of roughly $150 or $240 a month, based on age and salary, automatically deducted from their paycheck to save for long-term care.

The Congressional Budget Office expects the government will collect $109 billion in premiums by 2019.

Supporters say the program will relieve pressure on Medicaid and should help keep us out of nursing homes by enabling Americans to save for something most will eventually need -- assistance in eating, bathing or dressing in their old age.

Opponents say the provision is little more than a short-term revenue fix that will eventually add to the federal deficit.

"This is a scary proposition where the government passed a huge new entitlement program with gimmicks and tricks and the American people don't know they will be automatically enrolled in it by their employer if they don’t watch out," said Rep. Devin Nunes (R-CA).

Nunes says Republicans were blindsided by the provision because they were unable to see the final bill until the very end. But Democratic supporters say the provision, which was championed by the late Sen. Ted Kennedy, should not be controversial.

"It promotes independence and choice for people who need long-term care, and over time it will help millions stay where they want to, which is at home," says Jim Firman, director of the National Council on Aging.

Scheduled to go into effect in January, actual deductions could take place in 2012.

Here's how the program will work:

-- The federal government will approach employers next year about alerting workers to the proposed deduction.

-- The deduction will work on a sliding scale based on age. Younger workers will be charged less, older workers more. The Congressional Budget Office pegged the average monthly deduction at $146. The Centers for Medicare and Medicaid Services put it higher, at $240.

-- After a five-year vesting period, enrollees who need help bathing, eating or dressing will be eligible to take out benefits, estimated to be around $75 a day for in-home care.

"Seventy-five dollars a day in flex cash will be enough for most people who are at home to stay at home, which is where they want to be," Firman said. "We are convinced a cash benefit is the best way for consumer to get what they want."

While the plan's opponents don't question the need for long-term care, they say the federal government should not be managing it, and they believe the program will eventually add to the deficit.

"This creates a whole new bureaucracy that is going to break this country," Nunes said. "In the early years there will be money in it, but at the end of the day there won't be enough money to cover the problems because there will be too many people in the program."

The statute says the program is designed to be self-sustaining, with an advisory board to assure the fund remains solvent. But opponents say the fine print already tells another story. Unless modifications are made, according to a CBO analysis of the bill, "the program will add to future federal budget deficits in a large and growing fashion."

Supporters and detractors admit much needs to be worked out, and eventually premiums will be based on how many Americans actually sign up for the insurance.
 
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werepossum

Elite Member
Jul 10, 2006
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Sounds like this is an optional program that won't hurt businesses. Eventually it will break the budget as the money paid in will be spent immediately and replaced with IOUs so that future claims must be paid out of general funds, but there are so many things that will bust the budget that I can't really get too excited about another one.
 

HumblePie

Lifer
Oct 30, 2000
14,621
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Yes, this is an optional provision. You can opt to have that amount reduced and put into a CLASS plan like medicare. If you do, you can use it to pay for assistance in living in your own home. Else, you make do without it or live in a nursing home.

It's under the radar because it's a moot point. You either accept it, or you don't.
 

dammitgibs

Senior member
Jan 31, 2009
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Is this something that can be opted out of?
Sounds like you will be automatically enrolled and have to opt out, not sure how much they can take from you before you get out of if you'll get back anything you put in. Sounds like a straight-up scam to me.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,872
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It isn't a "tax" if the deductions are voluntary.

- wolf
I haven't seen the wording of this, but I can just about guarantee that when mandatory insurance is brought before the courts, it will be sold as being completely optional. No one is forced to buy insurance. You are just punished if you don't.

Are there such "incentives" here as well?
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
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This is news to me.

Some of the professional organizations for CPA's should be publishing info on the bill soon. But otherwise given the size of this bill we'll probably have little surprises like this dribbling out for a while.

Fern
 

jpeyton

Moderator in SFF, Notebooks, Pre-Built/Barebones
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Aug 23, 2003
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New payroll tax?

Umm...no.
 

dammitgibs

Senior member
Jan 31, 2009
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Yes, this is an optional provision. You can opt to have that amount reduced and put into a CLASS plan like medicare. If you do, you can use it to pay for assistance in living in your own home. Else, you make do without it or live in a nursing home.

It's under the radar because it's a moot point. You either accept it, or you don't.
I don't think it will be a moot point when it becomes another unfunded entitlement program, when theres a ton of people on the system and not enough people paying into it.
 

woolfe9999

Diamond Member
Mar 28, 2005
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I haven't seen the wording of this, but I can just about guarantee that when mandatory insurance is brought before the courts, it will be sold as being completely optional. No one is forced to buy insurance. You are just punished if you don't.

Are there such "incentives" here as well?
No, there aren't. It is optional, period. That's why it isn't controversial like the mandate is.

- wolf
 

woolfe9999

Diamond Member
Mar 28, 2005
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This is news to me.

Some of the professional organizations for CPA's should be publishing info on the bill soon. But otherwise given the size of this bill we'll probably have little surprises like this dribbling out for a while.

Fern
Shouldn't be a surprise. There's been some discussion of it on the floor of the House and Senate. Repubs are saying it's a deficit buster, presumably because they think the pay-in is the less than the pay-out. Seems to me if that turns out to be the case it should be fixable. It isn't exactly controversial to increase the pay-in when the program is voluntary.

Edit: did some looking around and the CBO projection is that CLASS will save on the deficit in the first 2 decades but add to it starting in the third decade. The republican criticism is that since CBO only did a 2 decade analysis, this is a hidden deficit in the bill that doesn't show up on CBO.

- wolf
 
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werepossum

Elite Member
Jul 10, 2006
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I don't think it will be a moot point when it becomes another unfunded entitlement program, when theres a ton of people on the system and not enough people paying into it.
Shouldn't be a surprise. There's been some discussion of it on the floor of the House and Senate. Repubs are saying it's a deficit buster, presumably because they think the pay-in is the less than the pay-out. Seems to me if that turns out to be the case it should be fixable. It isn't exactly controversial to increase the pay-in when the program is voluntary.

- wolf
It doesn't really matter if it's an unfunded entitlement program or not. Any money collected will be long spent by that time, so the difference (between new contributions and spending) will have to come out of general funds whether that's to cover those who paid in or those who did not. And arguably it's still cheaper than a government-funded nursing home.
 

woolfe9999

Diamond Member
Mar 28, 2005
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It doesn't really matter if it's an unfunded entitlement program or not. Any money collected will be long spent by that time, so the difference (between new contributions and spending) will have to come out of general funds whether that's to cover those who paid in or those who did not. And arguably it's still cheaper than a government-funded nursing home.
That's correct, IF there is a difference between contributions and spending. The trouble is that republicans have criticized democrats for relying on second decade CBO projections of 1.2 trillion deficit savings for the entire bill, pointing out that CBO has qualified its projections by saying it is very difficult for them to project that far and hence there is a lot of potential error in the projection. At the same time, however, republicans are touting a separate CBO report which says that CLASS will expand the deficit in its *third* decade. The logic of these two positions is inconsistent.

- wolf
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
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Well, obviously I don't much about this, I assume more info will be forthcoming. But this concerns me:

-- After a five-year vesting period, enrollees who need help bathing, eating or dressing will be eligible to take out benefits, estimated to be around $75 a day for in-home care.
So after 5 years of a monthly payroll deduction of $150-240 retirees could draw monthly benefits of $2200-2300 (31 days x $75)?

That can't be right.

Fern
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
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This makes no sense to me (at this point).

Firstly, a lot of private insurance already pays for this stuff. I've seen Medicaid/Medicare also pay for this stuff. Now what I have seen those two pay for is care in an assisted living facility. If the problem is perceived to be that Medicare/Medicaid won't pay for you to stay at your home, well jeebus, just fix that. Why start a whole program?

Why isn't one of the bazillion LT care policies on th emarket sufficient?

Either something's up, or this is a case of government behaving like my sig says.

Fern
 

woolfe9999

Diamond Member
Mar 28, 2005
7,164
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Well, obviously I don't much about this, I assume more info will be forthcoming. But this concerns me:



So after 5 years of a monthly payroll deduction of $150-240 retirees could draw monthly benefits of $2200-2300 (31 days x $75)?

That can't be right.

Fern
Presumably not everyone who pays into is going to need it. It's basically an insurance policy. Ten people buy auto-insurance. One gets into a catastrophic accident, and the others never need it.

- wolf
 

woolfe9999

Diamond Member
Mar 28, 2005
7,164
0
0
This makes no sense to me (at this point).

Firstly, a lot of private insurance already pays for this stuff. I've seen Medicaid/Medicare also pay for this stuff. Now what I have seen those two pay for is care in an assisted living facility. If the problem is perceived to be that Medicare/Medicaid won't pay for you to stay at your home, well jeebus, just fix that. Why start a whole program?

Fern
I can think of a very good reason why not to add it it Medicare: because the Medicare pay-in is mandatory and this pay-in is voluntary. What if not everyone wants to pay for insurance for home assisted living?

- wolf
 

dullard

Elite Member
May 21, 2001
22,968
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Sounds like you will be automatically enrolled and have to opt out, not sure how much they can take from you before you get out of if you'll get back anything you put in. Sounds like a straight-up scam to me.
From Section 3204 of HR3590: "the Secretary, in coordination with the Secretary of the Treasury, shall establish procedures under which each individual described in subsection (c) may be automatically enrolled in the CLASS program by an employer of such individual in the same manner as an employer may elect to automatically enroll employees in a plan under section 401(k), 403(b), or 457 of the Internal Revenue Code of 1986."

Basically, an employer can choose to automatically enroll people, and if so, you can opt out. Of course, the employer may just skip that and have everyone opt in, just like most employers have their employees opt in to a 401(k).
 

dullard

Elite Member
May 21, 2001
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So after 5 years of a monthly payroll deduction of $150-240 retirees could draw monthly benefits of $2200-2300 (31 days x $75)?
Those numbers are someone's estimate. Here is the actual text (from Section 3203 of HR3590):
"Beginning with the first year of the CLASS program, and for each year thereafter, subject to clauses (ii) and (iii), the Secretary shall establish all premiums to be paid by enrollees for the year based on an actuarial analysis of the 75-year costs of the program that ensures solvency throughout such 75-year period.
...
CLASS INDEPENDENCE FUND RESERVES.—At such time as the CLASS program has been in operation for 10 years, the Secretary shall establish all premiums to be paid by enrollees for the year based on an actuarial analysis that accumulated reserves in the CLASS Independence Fund would not decrease in that year."

Meaning that the monthly payroll deduction hasn't been set yet. In fact, there are three different CLASS ACT plans. So there will be three different monthly amounts (subject to income limits as well so the poor get this insurance subsidized to as low as $5/month inflation adjusted).

As for the payment, the text says: "The benefit amount provides an eligible beneficiary with not less than an average of $50 per day (as determined based on the reasonably expected distribution of beneficiaries receiving benefits at various benefit levels).

AMOUNT SCALED TO FUNCTIONAL ABILITY.—The benefit amount is varied based on a scale of functional ability, with not less than 2, and not more than 6, benefit level amounts."

That $75 number benefit was just pulled out of thin air as it will depend on the functional ability of the patient.
 

dammitgibs

Senior member
Jan 31, 2009
477
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Key point in the CBO's own words:
Unless modifications are made, according to a CBO analysis of the bill, "the program will add to future federal budget deficits in a large and growing fashion."
 

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