CAHI Issues: Long-Term Care
Long-term care (LTC) refers to the medical and/or personal assistanc that people require when they are unable to manage common activities of daily living on their own because of frailty, chronic illness or mental incapacity. It is estimated that six out of every ten Americans who reach 65 will need long-term care services - and the longer they live, the higher their odds. However, many Americans are not only unsure about what long-term care is, but they also underestimate its cost and do not know how to plan for it financially.
With more than 77 million baby boomers approaching retirement, long-term care will likely be the most significant health care funding expense Americans will face. Public programs such as Medicaid are already in a financial crisis which will only worsen as the population ages and and health care costs increase. Immediate action needs to be taken to educate consumers about the cost of LTC and LTC financing options, such as private long-term care insurance (LTCI).
Over 9 million Americans have purchased private long-term care insurance and the number continues to grow. To help ensure that many more Americans have access to LTCI, the Council for Affordable Health Insurance (CAHI) supports legislative and regulatory initiatives at both the state and federal levels which encourage consumers to purchase these policies.
Tax incentives for the purchase of LTC insurance, such as tax credits or deductions, would make policies more affordable by lowering their effective cost, and help protect millions of Americans from the potentially devastating effect of LTC expenses. By encouraging Americans to take personal responsibility for their future health care needs, incentives for purchasing private coverage would also help lessen reliance on scarce public dollars intended for those truly in need.
CAHI Solutions
CAHI advocates for allowing consumers to withdraw funds, tax-free and without penalty, from IRAs, 401(k) and 403(b) plans to pay for LTCI premiums, just as they are able to do with health savings account (HSA) funds. In February, 2005, Rep. Lee Terry (R-NE) introduced "The Long-Term Care Act of 2005" (H.R.976) which would do just that. Orginally introduced in June, 2004 (H.R. 4502), the legislation has garnered strong support. Sen. George Allen (R-VA) introduced the Senate companion bill in September, 2005 (S.1706. Senator Allen's bill allows consumers to withdraw funds, tax-free and without penalty, from 401(k) and 403(b) plans to pay for LTCI premiums
Additionally, CAHI promotes state and federal tax credits (or deductions) for the purchase of LTCI and supports further research on the public-private LTC partnership program.
Legislative Resources
Testimony for the United States House of Representatives Committee on Ways and Means Subcommittee on Health Hearing on Long-Term Care
The Long-Term Care Act of 2005 - H.R.976 / S. 1706.
The Long-Term Care Act of 2005- Cosponsors
CAHI letter of support - Representative Terry
CAHI letter of support - Senator Allen
H.R. 4502 Cost Estimate, Joint Tax Committee, September 2004 (HR 4502 is the previous version of HR 976; the estimate is the same)
CAHI sign-on letter
CAHI's Letter of Support
Long-Term Care Act of 2005 summary
On May 19, Rep. Lee Terry (R-NE) joined CAHI's Monthly Member Forum teleconference to discuss the Long Term Care Act. To hear the audio recording of the teleconference, click here.
CAHI Testimony on H.R. 4502, September 2004
Summaries of Additional Long-Term Care Legislation
Long-Term Care and Retirement Security Act of 2005 S. 1244/H.R. 2682 -- Introduced by Sen. Chuck Grassley (R-IA) on June 14, 2005.
To provide a credit to individuals for certain Long-Term Care Expenses (H.R. 1150) -- Introduced by Rep. Ginny Brown-Waite (R-FL) on March 8, 2005.
Ronald Reagan Alzheimer’s Breakthrough Act of 2005 (S. 602/H.R. 1262) -- Introduced by Sen. Barbara Mikulski (D-MD)and Rep. Chris Smith (R-NJ) on March 10, 2005.
Senior Elder Care Relief and Empowerment (SECURE) Act of 2005 (S. 835) -- Introduced by Sen. Larry Craig (R-ID) on April 18, 2005.
For More Information
"The Long-Term Care Dilemma: What States are Doing Right and Wrong"
"Senior Century: A Legislators' Guide to Seniors' Health Care Issues"
The Center for Long-Term Care Financing
"Financing Long-Term Care for the Elderly," A CBO Paper, April, 2004
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