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The CLASS Act: Retirement In-Security

WASHINGTON, July 28 /PRNewswire-USNewswire/ -- Well-intentioned legislation aimed at addressing the financial burdens faced by Americans who need long-term care services could leave elderly people exposed to substantial and unexpected costs, said Frank Keating, president of the American Council of Life Insurers (ACLI).

Under debate as part of health care reform, the Community Living Assistance Services and Supports (CLASS) Act would provide those who participate in a government-sponsored program $50 per day for long-term care services. Participants would have to pay a monthly premium that would be adjusted annually to maintain the program's solvency.

In a video and other materials available at, Keating explains the problems with the CLASS Act.

"The benefits received by program participants are a fraction of the real cost of long-term care services. Nursing home care now averages $203 per day and will rise to $740 per day in 30 years. Round-the-clock home health care services now cost $1,100 per day and will likely rise to $2,000 within five years. The $50-a-day benefit under the CLASS Act leaves a substantial cost gap," ACLI President and CEO Frank Keating said.

"It is very likely that many people will believe their long-term care needs are addressed by their participation in the program. In fact, studies show that many Americans already mistakenly believe Medicare covers their potential long-term care needs. The CLASS Act will serve to add to the confusion, and people will not take the appropriate steps on their own to address this crucial financial planning issue," Keating said.

Moreover, a recent independent study raises serious questions about the viability of the program, with a projected insolvency by 2022 ( It would take significant increases in premiums or infusion of billions of federal dollars to keep afloat such an entitlement program, Keating said.

"The fact is, no long-term care policy based on such a weak financial footing would be allowed on the market today," he said.

"Simply put, the federal government should not get into the business of providing long-term care insurance. It sets the stage for doing more harm than good to consumers," he said.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 340 member companies account for 93 percent of the life insurance industry's total assets in the United States, 94 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at

SOURCE American Council of Life Insurers
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