Long-Term Care Legislation will provide additional tax incentives to purchase insurance

A new House bill would provide additional tax incentives to encourage the purchase of private long-term care insurance. A nationally known long-term care specialist says this is a great first step to help government out of a looming crisis.

A new bipartisan piece of legislation to make long-term care (LTC) insurance more affordable and provide tax breaks for families and caregivers who pay directly for long-term care expenses was recently introduced in Congress. The bill would provide above-the-line tax deductions for individuals who purchase long-term care insurance. This type of insurance provides cash to pay for things like nursing homes, assisted living facilities, adult day-care and care in one's own home.

"The bill will be effective in helping the government transfer the future liability of long-term care costs to the private insurance industry," said Matt McCann a nationally known long-term care insurance expert. "This will not change the government's responsibility for those who can't afford it, but will encourage those who can to transfer the risk."

U.S. Rep. Nancy Johnson (R-CT) and U.S. Rep. Earl Pomeroy (D-ND) announced the introduction of bipartisan legislation and a companion bill is being introduced in the US Senate as well. President Bush has included the above-the line tax deduction as part of his budget.

AARP CEO William Novelli is very pleased, "AARP applauds Reps. Johnson and Pomeroy for introducing 'The Long-Term Care and Retirement Security Act of 2003. This measure will begin to provide needed relief for family caregivers and will assist families when purchasing quality long-term care insurance products."

McCann hopes for a groundswell of support.

"I call on the Illinois delegation to co-sponsor and support this common sense legislation. I would hope that Rep. Judy Biggert (R-IL) would take the lead here as she has done in the past," said McCann a Darien, IL resident whose office is in Lombard. "The government must take pro-active action to help people plan before their health changes. With the cost of care being so high, far too many people spend down their assets and then qualify for public aid. Medicaid was originally intended to provide health care for the truly poor ... today we have a new category, the new poor. This is a large group of people who have spent down their assets due to the need for long-term care."

McCann says that the further reliance on publicly funded programs like Medicaid for long-term and nursing home care will result in an unsustainable tax burden for the next generation. He says with 50% of people who reach the age of 50 requiring some form of long-term care in their lifetime ignoring this risk is far too dangerous for both government and individuals.

According to statistics from the U.S. House of Representatives, more than $140 billion was spent in 2000 on long-term care costs and more than $85 billion of this came from Medicare and Medicaid. Americans paid $31.3 billion for long-term care services out of their own pocket that same year.

In 2001, Medicaid paid $75.3 billion for nursing homes and home-based care - an increase of 155 percent since 1990.

McCann told a group of state lawmakers in Hawaii last week that federal and state tax incentives for long-term care insurance would help save money in ever tightening budgets.

"Medical science gets better and better all the time. Things that used to kill us no longer do. This has resulted in increased lifespan. While living longer is great the reality is that many of us will need some help at some point. The average cost of care in he Chicago suburbs is about $150.00 per day. Long-term care insurance protects the assets of American families. By providing additional tax incentives for long-term care insurance the government would be saving money down the road since they would have a much smaller number of people exhausting assets and draining Medicaid funds, McCann explained.

McCann called on Rep. Biggert to come out strongly for this legislation and support President Bush preserve the Medicaid system and help protect the budgets of Americans who, as a group, are getting older and older.

McCann notes the average age of his client is 54.

"This has become a retirement planning tool. Premiums are much less when a person is younger and a person's health is usually better. Since a person has to be in relatively good health when they apply for long-term care insurance getting the insurance before retirement is key. Additional tax incentives would help make something that is now affordable even more so and increase the total amount of people who would start planning now. This would help save the Medicaid program. I would hope Congresswoman Biggert would support this common sense plan," McCann said.

Additional information on long-term care insurance can be found on McCann's web site: www.McCannLTC.com. The National Long-Term Care Information Center has a web site as well: www.ltcinformationcenter.org.

-30-