Tucked into the health reform legislation that passed in March is a national voluntary insurance program for purchasing long-term-care services.

Called the Community Living Assistance Services and Supports program, or CLASS, the program s benefits will be financed by voluntary contributions paid by working adults (age 18 or older) through payroll deductions.

The program could go to supplement the private long-term-care insurance that consumers purchase to cover the costs of long-term-care services, most of which are not covered by traditional health insurance or Medicare. LTC insurance policies pay for several types of care, including nursing home care, assisted living care, and home health care services.

The idea behind it is: How can we keep people at home for as long as possible, and reduce the number of people going into an institutional setting? says Janet Forlini, policy director for long-term services and supports at the National Council on Aging.

Over 10 million Americans need long-term care services and supports to help them with daily activities a number that s expected to grow with an aging population, according to Kaiser Family Foundation, a health policy nonprofit.

Given the new program, how should workers plan for their long-term care? One thing they shouldn t do is rely solely on CLASS and assume it will take care of all their needs.

Here s what you need to know.

Guaranteed issue

One huge advantage of the CLASS provision is that it is guaranteed issue you can enroll no matter what your pre-existing conditions are, which is not the case with all long-term-care insurance.

So a worker with a major disability, which would typically disqualify them for a policy on their own, will be able to get one under CLASS. It doesn t have any underwriting; it s meant to be for working people, even if they already have existing needs, says Forlini.

Insufficient benefits

While many details of the program have yet to be determined the Department of Health and Human Services has until October 2012 to fully define the program the Congressional Budget Office expects the benefit amount to average $75 a day, and no less than $50 a day (it comes as a cash benefit). That s the amount of money that can be used to pay for home health care services, nursing home care, assisted living care or adult day care.

Is that enough? CLASS isn t meant to cover all costs associated with long-term care. But it is intended to help offset the steep costs: The average national rate for a semi-private room in a nursing home was $198 a day (or $72,270 annually) in 2009, according to a MetLife s survey, while the 2009 average hourly rate for a home health aide was $21.

It s definitely not enough to cover a day in a nursing home perhaps you could get three hours of a personal care aide, says Anne Glass, assistant director of the Institute of Gerontology at the University of Georgia.

Check the private LTC market

Based on conservative assumptions, the CBO estimates workers will pay average monthly premiums of $123 in 2011, with premiums for new enrollees increasing with inflation in later years. (Premiums would also vary by a worker s age at the time of enrollment.)

There s no doubt in my mind you can get a better, more efficient policy on your own, says Sharon Luker, a certified financial planner who specializes in elder-care issues and sells long-term-care insurance products. For instance, Luker says a typical 50-year-old could buy a lifetime benefit policy and for a bit less than the $123 a month (or $1,476 a year) in estimated premiums, an individual could get $95 in daily benefits more than the estimated $75 CLASS will provide.

No bells and whistles

The insurance offered through CLASS doesn t come with some of the unique features of plans offered by private carriers, says Luker. For one, it doesn t have marital discount (you can get a 10% to 20% discount if both you and your spouse buy insurance privately). Nor is there a survivorship benefit, where one partner s premium is waived with full benefits if the other dies and they ve held their policy for at least 10 years.

Lifetime benefits -- and premiums

With a regular, standalone policy, once the policy holder starts claiming benefits, they no longer pay a premium. But under CLASS, you continue to pay the premium as long as you re receiving benefits there s no end to the payment, says Anthony Stratidis, a long-term-care insurance consultant for Marsh, an insurance broker.

However, an advantage of CLASS is unlimited benefits: Once you qualify to start receiving benefits, they continue for as long as you need them. That isn t the case with traditional policies. There are few traditional policies that have lifetime benefits most have a designated benefit period, Stratidis says.

Another consideration: There are consumer protection provisions in standalone LTC plans. But the government can at any time increase premiums and change requirements for getting benefits under the CLASS program, says Stratidis.

CLASS Basics

Who can enroll in CLASS?
Working adults will be able to have premiums deducted from their paychecks to purchase public long-term care insurance through CLASS. No one will be required to participate. Employers may elect to enroll their workers automatically; if they do, workers can opt out.

Who s eligible for benefits?
If they become disabled, enrollees who have contributed for at least five years will automatically qualify for help to purchase home-based services, assisted living, or nursing home care. To receive benefits, workers must have paid premiums to the program for at least five years and have worked during the last three of the five years. People receive benefits when they need help with two or more activities of daily living or ADLs (eating, bathing, using the toilet, etc.).

When can workers enroll in CLASS?
The program takes effect Jan. 1, 2011. The HHS secretary is expected to define the benefits by October 2012 with enrolment likely to begin subsequently. The first payouts will start in 2017.