A Misleading Email FactChecked
Q: Did Congress slip a $150 to $250 monthly tax into the new health care law to pay for home care for the elderly?
A: No. The new CLASS Act program is voluntary. Premiums are estimated to be $123 per month for workers who choose to participate. It covers home care for those who become disabled at any age, not just those over age 65.
FULL QUESTION
Dear FactCheck Editor,
Is the email below legitmate? If so, it’s insane. My wife and I may not be able to retire.
There’s a surprise in the Reconciliation Bill.
We will all be taxed $150-$250 PER MONTH beginning in 2011 for the NEW Community Living Assistance Services and Support Act (CLASS Act) that was added to the Reconciliation Bill on Friday night, Mar 19, 2010, before Congress voted on Sunday, Mar. 21, 2010. It will help pay for long-term home-care for the elderly. Isn’t that nice?
FULL ANSWER
This widely circulating e-mail message contains several false claims. Here are the facts:
- The new CLASS Act insurance program is voluntary. It is not a "tax." Employers are required to deduct premiums automatically, but anyone who wishes to opt out can do so.
- Premiums have not yet been determined, but are expected to be much lower than the amounts claimed in this message. Students and those below the poverty level will pay only $5 per month. For others, the Congressional Budget Office estimated last year that monthly premiums would be about $123.
- The program covers anyone who becomes disabled, not just those "over 65" as claimed. It will provide in-home care, such as a home health aide, adult day care or assisted living, as an alternative to nursing home care. It will pay an average of at least $50 per day, $18,250 a year, with no lifetime limit.
- The program was not suddenly inserted in the health care reconciliation bill as claimed. Both House and Senate had passed slightly different versions of the measure much earlier, as part of their broad health care overhaul legislation. Congress eventually adopted the Senate version.
The CLASS Act is Title VIII of the new health care law. It is spelled out starting on page 710 of the measure as it was passed by both Senate and House. (CLASS stands for "Community Living Assistance Services and Supports.) The law specifies that it is "a national voluntary insurance program," the key word being "voluntary." Section 3204(a) requires employers to enroll workers automatically, but Section 3204(b) then says workers may choose to waive coverage "at any time." Far from being a last-minute "surprise," the Senate passed the bill Dec. 24, 2009, and the House approved it March 21, 2010. President Obama signed it into law March 23. Contrary to the claim in the chain e-mail, the reconciliation bill that was passed later and became law on March 30 did not mention the CLASS Act program or make any changes to it.
The law sets premiums at $5 per month for those below the official poverty line and for students. That will be adjusted each year in line with inflation. For others, the Secretary of Health and Human Services is required to calculate a level of premiums that will keep the system solvent for 75 years, without any subsidy from the government. The Congressional Budget Office estimated last year that the Senate version of the CLASS Act (the one which later became law) would be $123 per month to start, and that even by the year 2019, fewer than 10 million persons would choose to enroll — about 3.5 percent of the adult population.
The program starts to take effect in 2011. The Secretary of Health and Human Services is expected to set benefits by October 2012, and then to begin enrolling workers. Benefits will depend on a person’s degree of impairment, but can’t average less than $50 per day. Democratic sponsors of the legislation say benefits are expected to average roughly $75 per day.
One smidgen of truth in the message is that persons must pay premiums for at least five years before they qualify for benefits. As a result, the government will be bringing in extra revenue for years before it must start making any payments. According to CBO’s most recent estimate (Table 5, page 32) the program would act to reduce the deficit by a total of $70.2 billion during the nine years ending in 2019 — including savings to the Medicaid program brought about by fewer persons entering nursing homes.
CBO said earlier, in its estimate given last year, that the program probably would reduce the deficit during the decade starting in 2020 as well, though not by as much as during the first nine years. After that, CBO said, "the sum of benefit payments and administrative costs would probably exceed premium income and savings to the Medicaid program. Therefore, the programs would add to budget deficits in the third decade—and in succeeding decades—by amounts on the order of tens of billions of dollars for each 10-year period."
– Brooks Jackson
Go to FactCheck.org for the entire item.
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