Legislation introduced last week in the House of Representatives would reform the tax code in an effort to make long-term care insurance more affordable and accessible for older adults. It has the backing of Argentum and the American Seniors Housing Association.
The Long Term Care Affordability Act was introduced last week by Rep. Ann Wagner (R-MO), chair of the House Suburban Caucus. The bill is the House companion to tax code legislation introduced in the Senate by Sen. Pat Toomey (R-PA).
“Retirement can be expensive enough for seniors, and we should be using every tool we have to make their lives easier and more affordable,” Wagner said. “This legislation would do just that by providing for favorable treatment of long-term care through retirement accounts, allowing greater access to the necessary care they deserve.”
The act would permit people to withdraw funds from their 401(k) accounts, 403(b) accounts and individual retirement accounts to pay for long-term care insurance. Up to $2,500 of a withdrawal used to pay for long-term care insurance would be excluded from income tax annually. Additionally, such withdrawals would be excluded from the 10% early withdrawal penalty tax.
“Argentum is proud to support the Long Term Care Affordability Act, legislation to help more Americans better financially prepare for their long-term care needs,” Argentum President & CEO James Balda told McKnight’s Senior Living.
Approximately 10,000 people now are turning every day in the United States, and estimates are that up to 70% will need some form of care in their lifetimes, he added. According to Wagner, individuals from across the income spectrum would be able to take advantage of the tax benefit.
“Unfortunately, far too few Americans have adequate savings for retirement, let alone for their health and personal care,” Balda said. “We applaud Sen. Toomey and Congresswoman Wagner for their leadership in helping more Americans better access the tools to meet their future care needs.”
Other groups supporting the legislation include the Alzheimer’s Association, the Alzheimer’s Impact Movement, America’s Health Insurance Plans, Edward Jones, Long-Term Care Insurance Partners, the National Association of Insurance and Financial Advisors, the National Association of Insurance Commissioners and the National Association of Health Underwriters.