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.”
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