NAIFA Blog

NAIFA Comments on House Vote to Repeal CLASS Act

NAIFA President Robert Miller released the following statement on the House of Representatives’ vote last night to repeal the CLASS Act:

“The House of Representatives vote to repeal the CLASS Act is a good first step towards getting a bad law off the books and developing sustainable solutions to address Americans’ long-term care insurance needs. A program that would inevitably require a government or industry bailout or else would leave the people it was designed to help in the lurch is not a good program. Now, NAIFA urges the Senate and President to do their parts to complete the CLASS repeal.

“While the Class Act is not the right law, the long-term care problem is not going to go away. NAIFA encourages Congress and the executive branch to promote long-term care awareness. Also, NAIFA supports measures to encourage the offer of quality insurance products at people’s places of employment, such as allowing long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending arrangements.”

Rep. Boustany: MLR ‘inhibits’ marketplace

The Medical Loss Ratio “is overly restrictive, inhibits the market and has a direct impact on what (NAIFA members) do,” Rep. Charles Boustany, Jr., MD (R-LA) told NAIFA members today during the National IFAPAC and APIC Training Meeting in Washington.

Boustany, who holds a seat on the House Ways and Means Committee, supports legislation to exclude agent commissions from the MLR calculation, a major priority NAIFA members are taking to Capitol Hill during the winter “Day on the Hill event.” A heart surgeon of 20 years, Boustany addressed 150 NAIFA members before their meetings with legislators and staff today. Among the issues he addressed:

Tax reform: “We want to do a fundamental rewrite of the tax code, and when we do that, I will take my own (favorable) experience with life insurance and bring some reality to the Halls of Congress. … As we look at tax reform we have to get rid of uncertainty that’s afflicting our economy. A business cannot plan with uncertainty.”

Repeal of the CLASS Act: “CLASS is a program that is unsustainable. But most people don’t know they need long term care. Using tax-free savings to take care of health needs is a very important component.” (Boustany supports the idea of long-term care insurance being included in employer-sponsored cafeteria plans and flexible spending arrangements so premiums could be paid for using pre-tax dollars).

On the role of the agent: "You can help us educate the American public on these (healthcare issues.) We’ll need your help as we craft legislation to fix them."

NAIFA's Robert Miller Comments on Congressional Committee Vote to Repeal the CLASS Act

NAIFA President Robert Miller issued the following statement on the House Ways and Means Committee vote in favor of HR 1173 to repeal the CLASS Act:

“NAIFA applauds Congressman Boustany’s leadership and the Ways and Means Committee’s decision to repeal the unsustainable long-term care insurance program called the CLASS Act.  NAIFA supports the goal of achieving financial security to cover long-term care services. However, we believe there are better ways to help people plan for their long-term care needs, such as offering quality insurance products at people’s places of employment. We look forward to working with Congress in a bipartisan manner to enact sustainable long-term care reform.”

For more information, see:

• Congress Moves One Step Closer to Repealing the CLASS Act
• The CLASS Act Is Down. Let’s Get It Out!

 

Congress Moves One Step Closer to Repealing the CLASS Act

The House Energy and Commerce Committee yesterday voted 33-17 in favor of H.R. 1173, a measure to kill the CLASS Act and the federally run long-term care insurance program it would create.

NAIFA and other critics have provided many reasons why the CLASS Act is unsustainable and potentially dangerous. In October, the Department of Health and Human Services came to the same conclusion, with Secretary Kathleen Sebelius announcing that the agency could not successfully implement the law.

So if HHS has no intention to act, why does it matter if CLASS remains on the books? For one thing, officials at HHS could change their mind (or new appointees could reexamine the matter) and decide to move forward with a program likely to hurt the people it is supposed to help, impose harsh regulations on the insurance industry, require a government bailout, or all of the above. Secondly, the Congressional Research Service has concluded that if the law is not repealed, a federal court could force HHS to create a CLASS plan, even if the department remains convinced that the plan would fail.

There is no reason to let this bad legislation linger. NAIFA commends the members of the Energy and Commerce Committee for acting to address the matter and encourages the full Congress to pass a repeal measure quickly.    

While the CLASS Act is not the answer, Americans' lack of long-term care insurance remains an issue. For some better ideas, visit the 3 in 4 Need More campaign.

"3in4 Need More" Raises Long Term Care Insurance Awareness

Guest Blogger: Margie Barrie, Vice President, 3in4 Need More Association

“It makes it easier to open the door to the subject of LTC insurance.”

“Conveyed the concepts easier.”

“Helps the family who is thinking of buying LTCI to explain it to others or family members who sometimes don’t want to spend the money.”

These are actual comments voiced a few weeks ago by agents at a financial services conference. They were referring to the materials provided as part of their FREE membership to the LTCi’s industry’s new consumer awareness campaign.

Called “3in4 Need More,” the campaign is focused on educating Americans about the need to form a long term care plan and what products and options could be part of their plan. We’re using the phrase “Health Insurance Isn’t Enough, 3in4 Need More.”  And who better to raise that awareness than producers, financial advisors and planners.

The 3in4 campaign is the LTC industry’s version of the “Got Milk” campaign, where the dairy industry rallied behind a slogan and used creative marketing and celebrities to successfully raise awareness of the importance of drinking milk. What’s especially exciting is that the campaign provides a proven approach to help producers successfully explain to their clients and prospects the need for planning. 

Here are the key facts on which the 3in4 concept is based: 

• 77% of Americans age 30 to 65 think they should know more about LTCI than they currently do.  That’s more than 3in4 of your prospects. (2010 Prudential Long-Term Care Consumer Awareness & Attitudes Study)
• 74% of consumers age 55 to 65 said they are concerned about needing some kind of long term care. Again that’s nearly 3 in 4 of us. (2010 Prudential Long-Term Care Consumer Awareness & Attitudes Study) 

How can you use the campaign to increase your marketing opportunities and to differentiate yourself from the competition?  Specific benefits include:

• Be listed as a LTC resource
• Obtain educational materials that can be co-branded or private labeled,
• Receive training on how to use the 3in4 brand for marketing
• Gain access to lead campaigns
• Use 3in4 materials such as videos and a new electronic producers kit to increase  local awareness

It’s FREE to join the campaign. To learn more, visit the website www.3in4needmore.com and to join, go to the “Stay Informed and Join” area. The basic level is FREE; other levels provide marketing support such as training and personalized branding materials and are available for a small annual cost. All proceeds go to fund 3in4 media activities and create educational materials. For questions, email us at contact@3in4needmore.com.

The CLASS Act Is Down. Let’s Get It Out!

The CLASS Act, which charged the federal Department of Health and Human Services with establishing a voluntary, employer-funded long term care/disability insurance program, was doomed to failure from the start. The program, had it been implemented, was financially unsustainable and inevitably would have collapsed or forced a government bailout. Alternatively, Congress may have tried to rescue the program by making employee participation mandatory, causing extreme hardship for many small businesses.

HHS admitted that the program was unworkable last week, with Secretary Kathleen Sebelius writing to Congress, “I do not see a viable path forward for CLASS implementation at this time.”

Yet, while HHS has said that it cannot implement the program and satisfy all of the conditions in the act, the law remains on the books. Some analysts argued that repeal could be problematic, because the Congressional Budget Office (CBO) had scored the CLASS Act as saving the federal budget some $86 billion over ten years as a result of the premiums the program was to have brought in. That figure, they said, would have to be offset elsewhere in the budget. 

However, the CBO said today that repealing the act would not have budgetary implications, seemingly removing that roadblock. Unfortunately, an administration official said President Obama nonetheless opposes repealing the CLASS Act and may veto any repeal legislation, according to The Hill’s Healthwatch blog. It's not clear why the administration would want to keep the law after HHS has said the department cannot implement it.

We believe it’s time to wipe the slate clean.

“NAIFA would like to see the law taken off the books,” said Diane Boyle, NAIFA vice president of federal government relations. “There’s no good reason to leave flawed legislation in place.”

Sen. John Thume (R-S.D.) has introduced a bill to repeal the CLASS Act, and Rep. Charles Boustany (R-La.) has introduced a similar measure in the House. The bills have dozens of cosponsors. 

The Importance of Long Term Care

While supporting the goal of achieving financial security to cover long-term care services, NAIFA has long argued that the CLASS Act was not the answer and there are better ways to help people plan for their long-term care needs. These include quality insurance products offered to workers at their places of employment. 

NAIFA believes the following efforts are better suited to address the long-term care financing needs:

• Increase awareness of long-term care planning needs, including increased funding for the Long-Term Care Clearinghouse run by HHS.
• Expand State Partnership Program that allows participants to keep some or all of their assets if they apply for Medicaid after they use their long-term care insurance benefits.
• Allow long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending arrangements so premiums could be paid for using pre-tax dollars, making long-term care insurance more accessible for all Americans.

NAIFA is also a proud supporter of the 3 in 4 Need More long-term care awareness campaign. The 3 in 4 campaign focuses on four objectives:

• Spread the word among the public that "3 in 4 Need More".
• Support congressional moves to provide additional tax deductions or rebates to help people better afford long term care insurance.
• Stimulate others in industry, education, government to join the "3 in 4 Need More" campaign, making use of the logo and other visuals to spread the word.
• Educate the public that long term care insurance or federal entitlement plans may not be a solution for everyone, but everyone needs a long term care plan.

NAIFA looks forward to working with Congress and the administration to enact sustainable solutions to the long term care financing challenge.

NAIFA Responds to HHS Decision to Abandon the CLASS Act

NAIFA today issued the following statement in response to Health and Human Services Secretary Kathleen Sebelius's letter to Congress stating that HHS has suspended implementation of the CLASS Act:

"NAIFA applauds the Obama administration’s decision to abandon the unsustainable long-term care insurance program called the CLASS Act," said NAIFA President Robert Miller. "NAIFA supports the goal of achieving financial security to cover long-term care services. However, we believe there are better ways to help people plan for their long-term care needs, including the offer of quality insurance products at their place of employment."

NAIFA believes the following efforts are better suited to address the long-term care financing needs:

• Increase awareness of long-term care planning needs including increased funding for the Long-Term Care Clearing House run by HHS.
• Expand State Partnership Program that allows participants to keep some or all of their assets if they apply for Medicaid after they use their long-term care insurance benefits.
• Allow long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending arrangements so premiums could be paid for using pre-tax dollars, making long-term care insurance more accessible for all Americans.

NAIFA Sends 1,000 Insurance and Financial Advisors to Its Day on the Hill Event

More than 1,000 NAIFA members gathered in Washington for the Association's 122nd Annual Meeting and Career Conference took their grassroots message to Capitol Hill today. Members from all 50 states scheduled meetings with more than 366 congressional offices.

NAIFA members delivered three primary messages in their visits with elected officials and staffers:

• Efforts to solve Washington's budgetary problems, including potential tax code changes affecting life insurance, annuities, and disability and long-term-care insurance, should not discourage Americans from using these products to protect their financial futures.
• Health care reform's Medical Loss Ration provision must be changed to protect the role of the agent.
• Federal fiduciary standard of care proposals from the Department of Labor and SEC must not hinder the ability of broker-dealers and registered reps to serve middle-market investors.

"NAIFA is in a unique position to educate and inform our legislators, because we have a member in every single congressional district who is a taxpayer, a voter, and an employer," said NAIFA President Robert Miller. "Our members talk to clients every day and see first hand how federal laws and regulations affect people on Main Street."

NAIFA's Day on the Hill began with a Legislative Briefing at the Washington Hilton. Rep. Tom Price (R-Ga.) told NAIFA's grassroots activists that they provide real-world prospectives that legislators use when deciding important and difficult matters.

"There's not a whole lot of good news here in Washington," Rep. Price said. "This is a remarkably challenging time, as you well know." However, he cautioned NAIFA members to "nip your cynicism in the bud" and take a positive message of conciliation to Capitol Hill.

"We'll find the solutions to our country's problems in fundamental American ideals," Rep. Price said.

Rep. Richard Neal (D-Mass.) told NAIFA members that their experience and their personal stories are their greatest assets when meeting with legislators and congressional staffers. He added that in a previous career he was a Massachusetts Mutual agent, and he still holds to many of the principles he learned working in the industry.

"I've always fiercely guarded the tax preferences for life insurance, which is so essential to help families in need," Rep. Neal told the NAIFA members.

Gov. Dirk Kempthorne, president and CEO of the American Council of Life Insurers, delivered the program's final address. He told those gathered that he is proud to be associated with NAIFA members and all of the good work they do to secure the financial futures of American families. 

"You are responsible for the fact that many sleep well at night because they are financially secure," Gov. Kempthorne said. "You made sure they had an annuity to supplement their Social Security."

About NAIFA's message during their Day on the Hill, Gov. Kempthorne said, "Congress needs to get the nation's finances straightened out. We support that. But tax code changes that would discourage people from financially protecting their families or helping them save for the future would be terribly misguided...."

"Tell the story of life insurance, annuities, long-term care, and disability income insurance," he said. "You’ve lived the story. You are real people, doing real things, so others can have a real future."

 

NCOIL Joins NAIFA in Voicing LTC Concern

On Aug. 4, key leaders of the National Conference of Insurance Legislators (NCOIL) wrote to the U.S. Department of Health & Human Services (HHS) Secretary Kathleen Sebelius expressing concerns similar to NAIFA’s with the newly created government-run Community Living Assistance Services and Supports (CLASS) plan.

While supporting the goal of achieving financial security to cover long-term care services, NAIFA has long argued that there are better ways to help people plan for their long-term care needs including the offer of quality insurance products at their place of employment.  The NCOIL letter notes the new federal long-term care insurance program “fails to apply the principles of risk management that are essential to any financially sound insurance program.”

NAIFA believes that none of the inevitable outcomes of the CLASS Act—collapse, mandatory participation, or taxpayer bailout—are good policy. We therefore support immediate repeal of the program. You can support the repeal of the unsustainable CLASS Act by encouraging your Members of Congress to cosponsor H.R. 1173 and S. 720.

NAIFA believes the following efforts are better suited to address the long-term care financing needs:

• Increase awareness of long-term care planning needs including increased funding for the Long-Term Care Clearing House run by HHS.
• Expand State Partnership Program that allows participants to keep some or all of their assets if they apply for Medicaid after they use their long-term care insurance benefits.
• Allow long-term care insurance to be included in employer-sponsored cafeteria plans and flexible spending arrangements so premiums could be paid for using pre-tax dollars, making long-term care insurance more accessible for all Americans.

NAIFA is also a proud supporter of the 3 in 4 Need More long-term care awareness campaign. The 3 in 4 campaign focuses on four objectives.

1. Spread the word among the public that "3 in 4 Need More".
2. Support Congressional moves to provide additional tax deductions or rebates to help people better afford long term care insurance.
3. Stimulate others in industry, education, government to join the "3 in 4 Need More" campaign, making use of the logo and other visuals to spread the word.
4. Educate the public that long term care insurance or federal entitlement plans may not be a solution for everyone, but everyone needs a long term care plan.

Agreement to Avert Default, Potential Credit Rating Downgrade Emerges

On July 31, after two days of white-knuckle negotiations between President Obama, Vice President Biden, and GOP and Democratic leadership in both the House and Senate, an agreement to raise the debt ceiling and reduce the deficit has emerged.

Details remain a bit sketchy as legislative language is not yet available, but below is a summary based on reports by negotiators as well as summaries prepared by the administration and the speaker’s office.

The plan has significant implications for tax reform, and thus for issues of critical importance to NAIFA members and their clients.

Based on what is currently known, the agreement contains several parts, including:

• A combined increase in the debt limit that will total at least $2.1 trillion, enough to allow government borrowing until 2013. This provision delinks the debt ceiling from deficit reduction, thus removing the threat of default from deficit reduction initiatives

• Spending cuts of approximately $1 trillion over a 10-year period that take effect immediately. The spending cuts do not affect Social Security, Medicare or Medicaid

• A process for identifying and enacting an additional $1.5 trillion in deficit reduction measures, including tax and entitlement reform.

It is this process that contains the issues of concern to us. The process involves creation of a special joint congressional committee that will identify and recommend (by November 23) additional deficit reduction measures—including tax reform. Then, Congress will vote on the joint committee recommendations under a fast-track, procedurally protected process. Congress would have to vote on the joint committee report by December 23, 2011.

Joint Committee of Congress—Implications for Tax Reform:
Reportedly, congressional leadership will appoint 12 sitting lawmakers to the special joint congressional committee, three Republicans and three Democrats from both the House and the Senate. The committee will craft a deficit reduction plan that is not limited in what it can consider—i.e., taxes, entitlement reforms, defense spending and discretionary spending are all fair game.
 
Many lawmakers expect the joint committee to recommend a tax reform plan that will reduce rates and broaden the base by repealing or reforming tax expenditures. Restrictions on Medigap insurance (prohibition against first dollar coverage and limits on benefits covering the first several thousand dollars of expenses, likely) are also expected to be among the issues the joint committee will consider. Another issue likely to be addressed by the joint committee is the potential for repeal of the CLASS Act. The plan will require the votes of seven of the committee’s 12 members, and a simple majority vote by both the House and Senate will be enough to pass (or defeat) the committee-recommended plan.

Should the committee fail to craft a plan, or should Congress defeat the plan recommended by the committee, the debt/deficit agreement contains “enforcement triggers.” They include:

• Automatic across-the-board spending cuts that would take effect in 2013. The cuts would be split evenly between domestic and defense spending , including entitlements (although Medicare cuts would apply to providers only, not beneficiaries), OR

 

• A process for considering/enacting a Constitutional amendment requiring a balanced budget, AND/OR

 

• The potential for expiration of the “Bush tax cuts”—especially the top two rate brackets—that expire at the end of 2012 (income, capital gains, and dividends tax rates).

Next Steps: Once Congress enacts this agreement, leadership will appoint the 12 members of the joint committee quickly. That committee will have just three and a half months to put together their $1.2 trillion+ deficit reduction plan. Among their first decisions will be whether to include new tax revenues (whether or not in the context of tax reform). If they do decide to use tax revenue, they will need to decide how much, and whether to include their own tax reform plan or whether instead to instruct the tax-writing committees to fashion the plan—probably with a deadline. All of these decisions will have a profound impact on NAIFA’s mission to prevent adverse tax changes to life insurance, annuities, health and long-term care insurance, pensions and employer-provided benefits.