Smith and Lincoln Encourage Long-Term Care Planning

Smith and Lincoln Encourage Long-Term Care Planning

Senators introduce legislation to assist Americans in saving for their long-term care needs

Senators Gordon H. Smith (R-OR) and Blanche Lincoln (D-AR) have introduced legislation to encourage Americans to invest in their future long-term care needs. The bill would create a new type of savings mechanism for the purpose of preparing for the costs associated with long-term care services and purchasing long-term care insurance.

"We are an aging nation," said Senator Smith. "With the baby boomers rapidly retiring, the need for long-term care planning is becoming even more critical. But all too often, insurance is not being purchased, funds are not being saved, and persons with disabilities are forced to rely on Medicaid for their daily care. We need to do better. Senator Lincoln and I believe that our bill will encourage Americans to invest in their future and in their care. This legislation is an important first step to ensuring that Americans are prepared for their long-term needs."

"Long-term care expenses can be quite costly and even devastating without proper planning," Senator Lincoln said. "This is especially problematic because in 25 years more than 70 million Americans will be 65 years of age or older, the largest proportion of seniors in our nation's history. As Americans, we must commit ourselves to planning for our own future. That's why it is critical that we create incentives for Americans to invest in their long-term care security."

The Centers for Medicare and Medicaid Services (CMS) estimates that national spending for long-term care was more than $190 billion in 2004, representing about 12.5% of all personal health care expenditures. Almost two-thirds of people receiving long-term care are over the age of 65, with this number expected to double by 2030. The over the age of 85 population, those most likely to need long-term services and support, is expected to increase more than 250 percent by 2040 from 4.3 million to 15.4 million.

To help prepare Americans for their long-term health care needs, the Smith-Lincoln legislation would allow an individual who establishes a long-term care trust account to contribute up to $5,000 per year to their account and receive a refundable 10 percent tax credit on that contribution. Interest accrued on these accounts would be tax free, and funds could be withdrawn for the purchase of long-term care insurance or to pay for long-term care services. The bill would also allow an individual to make contributions to another person's Long-Term Care Trust Account, allowing relatives to help their parents or a loved one prepare for their health care needs.

http://gsmith.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=275&Month=2&Year=2007