A Report on the Actuarial, Marketing, and Legal Analyses of the CLASS Program. Part 1: Benefit Triggers in the Class Program and Other Long-Term Care Insurance Programs

10/14/2011

As noted above, the CLASS Program legislation includes two specified benefit triggers and one unspecified benefit trigger to be determined by the Secretary. Box 1 shows the language from the CLASS Program legislation that describes the benefit triggers. Four concepts (underlined in the box) are particularly important in considering the implications of the benefit triggers for people with cognitive impairment:

  1. substantial assistance (as defined by the Secretary) from another individual;
  2. substantial supervision;
  3. threats to health and safety; and
  4. substantial cognitive impairment.

The required benefit triggers for tax qualified long term care insurance policies under HIPAA (1996)1 are similar but not exactly the same as the mandated benefit triggers for the CLASS Program. In specific, the HIPAA benefit trigger based on need for supervision to protect the individual from threats to health and safety states that the threats are due to severe cognitive impairment,” as opposed to “substantial cognitive impairment” in the CLASS Program benefit trigger. In addition, in the HIPAA requirements, the 90-day period applies only to the benefit trigger based on inability to perform ADLs. Also, the words, “due to a loss of functional capacity” are added to the benefit trigger based on ADLs, so that the individual must be “unable to perform (without substantial assistance from another individual) at least 2 activities of daily living, due to a loss of functional capacity.”

The required benefit triggers for the Federal Long-Term Care Insurance Program are similar but not exactly the same as either the mandated benefit triggers for the CLASS Program or the HIPAA benefit triggers. Like the HIPAA benefit trigger based on need for supervision to protect the individual from threats to health and safety, the Federal Long-Term Care Insurance Program benefit trigger based on need for supervision requires that the threats are due to severe cognitive impairment,” as opposed to “substantial cognitive impairment” in the CLASS Program benefit trigger. Also like the HIPAA benefit triggers, the Federal Long-Term Care Insurance Program applies the 90-day period only to the benefit trigger based on inability to perform ADLs, and adds the words, “due to a loss of functional capacity,” to that benefit trigger. Unlike the CLASS Program and HIPAA benefit triggers based on need for supervision, the Federal Long-Term Care Insurance Program benefit trigger on need for supervision does not include the phrase, “to protect the individual from threats to health and safety.”

All three sets of benefit triggers list exactly the same ADLs: eating, toileting, transferring, bathing, dressing and continence. They differ only in that the HIPAA and Federal Long-Term Care Insurance Program benefit triggers specify that the person must need assistance with 2 of the 6 ADLs, while the CLASS Program triggers allow the Secretary to decide whether the person must need assistance with 2 or 3 ADLs.

This contractor has not found any published information about the number of individuals with cognitive impairment that has received long-term services and supports through the Federal Long-Term Care Insurance Program or the proportion of all individuals who have received such services that are individuals with cognitive impairment. One study funded by ASPE found, however, that 41 percent of a random sample of 1,474 individuals who had long-term care insurance and had just begun or were about to begin using paid long-term services and supports were individuals with cognitive impairment (Miller et al., 2008). The proportions of individuals that had cognitive impairment differed across care settings. Among those who had begun receiving paid care at home, 28 percent had cognitive impairment, compared with 63 percent of those who were receiving paid care in an assisted living facility and 64 percent of those who were receiving paid services in a nursing home (Cohen et al., 2006). Among those who had not yet begun receiving paid care, 29% had cognitive impairment.

The ASPE-funded study found that the great majority of individuals in the sample would have been eligible based on the HIPAA benefit triggers (Miller et al., 2008), but the study finding about the proportion of individuals that had cognitive impairment was based on the results of a brief mental status test, the Short Portable Mental Status Questionnaire (SPMSQ) (Pfeiffer et al., 1975), which was administered by research nurses for the study. Thus, it is not clear from the reported findings whether these individuals met the HIPAA benefit trigger based on need for supervision to protect the individual from threats to health and safety, the HIPAA benefit trigger based on ADLs, or both.

Another study funded by the MetLife Mature Market Institute found that 42 percent of a sample of 423 individuals who had long-term care insurance and were receiving paid care in the community were individuals with Alzheimer’s disease or another dementia (MetLife, 2006). Again, it is not clear from the study finding whether these individuals met the HIPAA benefit trigger based on need for supervision, the HIPAA benefit trigger based on ADLs, both triggers, or another benefit trigger used by their long-term care insurance company. Nevertheless, both studies show that substantial proportions of people who are found to be eligible for long-term services and supports through their long-term care insurance policy are people with cognitive impairment.

As of Oct. 5, 2010, Marc A. Cohen, PhD, was completing a report for SCAN Foundation on questions about how the HIPAA benefit trigger based on need for supervision to protect the individual from threats to health and safety is implemented in existing long-term care insurance plans.2 This report should provide valuable ideas about how the CLASS Program benefit trigger based on need for supervision could be operationalized and implemented.

Recommendation. Because of the similarities among the CLASS Program, HIPAA and Federal Long-Term Care Insurance Program benefit triggers and because the CLASS Program benefit triggers are intended for use in long-term care insurance plans, any available information about how the HIPAA and Federal Long-Term Care Insurance Program benefit triggers have been implemented will be useful to the Secretary in operationalizing the CLASS Program benefit triggers. Such information, which could include research findings and/or clinical and practice-based experience in determining eligibility for long-term services and supports, should be obtained in a timely manner.

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