U.S. Senators Blanche Lincoln of Arkansas, Chuck Grassley of Iowa, Olympia Snowe of Maine, Debbie Stabenow of Michigan, and Gordon Smith of Oregon today offered legislation that for the first time will allow employees to pay their qualified long-term care insurance premiums using pre-tax dollars.
The Long-Term Care Affordability and Security Act of 2007 will allow employers to offer qualified long-term care insurance under cafeteria plans and flexible spending agreements (FSAs) amending current law which explicitly states employees are prohibited from paying for the cost of long-term care tax-free.
The legislation also updates consumer protections developed by the National Association of Insurance Commissioners and includes new protections to help ensure the quality of long-term care insurance policies that receive favorable tax treatment.
"Americans of all ages are often unprepared to finance long-term care expenditures, and with the Baby Boom generation beginning to retire, access to long-term care is becoming an emerging crisis. Our legislation makes purchasing long-term care insurance more affordablea necessity for families and for the financial health of our country," Lincoln said.
"As we deal with the realities of an aging America and rising costs of health care, it's vital that we give workers a new option in planning for retirement security by making long-term care insurance policies more affordable for people of all ages." Grassley said. "The added consumer security provisions to these policies will help make sure we weed out the bad apple agents."
"Statistics show that nearly half of all seniors age 65 or older will need some form of long-term care at some point in their life, but just 10 percent of seniors have taken out a long-term care insurance policy and only 7 percent of all private-industry employees are offered long-term care insurance as a voluntary benefit," said Senator Snowe. With the cost of a private room in a nursing home averaging approximately $75,000 annually, it is vital that Congress do everything it can to ensure that individuals will have access to affordable care during their golden years. I strongly believe that the legislation we are introducing today, which would allow cafeteria plans and flexible spending arrangements (FSAs) to offer long-term care insurance as a qualified benefit, will make long-term care much more affordable and widespread by allowing it to be purchased with tax-free dollars."
"Too many middle-class families currently struggle with the unexpected financial and emotional costs of long-term care in this country," said Stabenow. "This bill will help reduce some of the costs associated with long-term care while giving more workers of all ages greater access to quality, affordable long-term care insurance options."
"We are an aging nation," said Senator Smith. "Yet, the majority of Americans are woefully unprepared to meet the challenges of their long-term care needs. I am a strong supporter of incentives for long-term care planning as a way to encourage people to invest in their future health care needs."