The Patient Protection and Affordable Care Act gave the Secretary of Health and Human Services, Kathleen Sebelius, a hefty to-do list. One of those tasks was to develop at least three actuarially sound long-term care benefit plans that met specified criteria and would remain solvent for 75 years. This was to pave the way for the Community Living Assistance Services and Support (“CLASS”) program. CLASS was a key aspect of health care reform, intended to help elderly and disabled individuals maintain independence, and according to the Congressional Budget Office, to help pay for health care reform by reducing the federal deficit by billions of dollars. This week, after extensive efforts, the Secretary reported that developing these plans was not possible due to actuarial and solvency problems, and scratched this item off her to-do list.

We will avoid the speculation about what happens next and what this means in the bigger picture of health care reform, and just focus on some cost estimates that were contained in the report. Secretary Sebelius estimates the cost of nursing home care at $6,500 per month, and long-term at home care at $1,800 per month. The Secretary states that expected long-term care spending for a 65-year old is $47,000, that 16% will spend $100,000 for long-term care, and 5% will spend $250,000. Only 2.8% of American have long-term care policies.

Some of your employees may not realize that Medicare does not cover long-term care services, and Medicaid only pays for the services after all other resources are exhausted. While the need for care could arise at any time, this is a particularly important component of retirement planning. If you are offering retirement planning tools to your employees, do the calculators help employees estimate health care, long-term care, and other expenses that they may not currently incur but can anticipate in retirement?