Source: United States Senator for Pennsylvania Pat Toomey
Washington, D.C. – U.S. Senator Pat Toomey (R-Pa.) is re-introducing a bill to increase the affordability of long-term care insurance. Senator Toomey’s Long-Term Care Affordability Act would allow individuals to pay up to $2,500 each year for long-term care insurance with their 401(k), 403(b), and IRAs without a tax penalty.
“The onset of a chronic illness requiring nursing home or in-home care too often has the potential to financially devastate older Americans,” said Senator Toomey. “This legislation allows Americans to use existing retirement accounts to pay for long-term insurance – a commonsense change to enhance financial security in retirement. I hope my colleagues will join me in supporting this measure.”
Retirement accounts give a tax benefit to workers who set aside money now for use during retirement. Early withdrawals from these accounts are generally treated as income and taxed accordingly. However, there are exceptions. For example, 401(k) holders may be able to use their retirement account to own life insurance without a tax penalty. Senator Toomey’s measure would treat insurance for long-term care similarly.
According to the U.S. Census Bureau, 50 percent of individuals living past the age of 65 will need some long-term care, and more than half of American households contribute to retirement accounts. All of them would be eligible to pay for long-term care with retirement savings under this legislation.
Organizations that have endorsed this legislation include:
· Alzheimer’s Association
· Alzheimer’s Impact Movement
· America’s Health Insurance Plans (AHIP)
· American Seniors Housing Association
· Argentum
· Edward Jones
· Long-term Care Insurance Partners
· National Association of Health Underwriters (NAHU)
· National Association of Insurance and Financial Advisors (NAIFA)
· National Association of Insurance Commissioners
“Alzheimer’s is a devastating and fatal disease impacting millions of Americans,” said Robert Egge, Alzheimer’s Association Chief Public Policy Officer and Alzheimer’s Impact Movement (AIM) Executive Director. “One of the most expensive diseases in the nation, for too many American families paying for the costs associated with caring for a loved one is a challenge. We are grateful to Senator Toomey for his leadership re-introducing the Long Term Care Affordability Act. This bill could make a meaningful impact for families struggling to pay for care, by making long-term care insurance more accessible by creating the ability to use retirement plan funds to obtain the insurance.”
“Argentum is pleased to offer support of The Long Term Care Affordability Act to help more Americans plan for and meet their long-term care needs,” said James Balda, Argentum President and CEO. “Unfortunately, one in three Americans have less than $5,000 saved for retirement, and less than 8% have purchased long term care insurance. By the end of this decade, each of the 74 million Baby Boomers will have reached 65, and they will have a roughly 50% chance of needing long-term care at some point in life. As the need for long-term care increases, this legislation provides a critically important means to help ensure more Americans have the financial ability to meet their care needs.”
“The need for long-term care insurance is a major issue for aging Americans and their families,” said Janet Trautwein, NAHU CEO. “As this population continues to expand, insurers, policymakers, and consumers need to seriously consider how to plan for and manage the costs associated with long-term care needs. NAHU fully supports Senator Pat Toomey’s efforts to make long-term care insurance more accessible and affordable.”
You can read a one-pager on the legislation here, and the text of the bill is available here.
Background:
In November 2019, Senator Toomey convened the Senate Finance Committee Subcommittee on Health Care to address barriers to diagnosis, treatment, and care for Alzheimer’s patients. During that hearing, Senator Toomey outlined the need for this new legislation. You can watch here.
Following that hearing, Senator Toomey and Senator Debbie Stabenow, chairman and ranking member of the subcommittee, sought input from health care providers, researchers, patients, advocacy groups, states, and others to inform the development of this legislation.
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