A proposal allowing people to pay their long-term care insurance premiums from their retirement plans is among the amendments to legislation aimed at helping Americans save for retirement.
The amendment, called the Long-Term Care Affordability Act and introduced by Sen. Pat Toomey (R-PA), would permit retirement plans to distribute up to $2,500 annually to pay premiums for “high-quality” long-term care insurance contracts that provide “meaningful financial assistance” for long-term care costs. Those payments would be exempt from the additional 10% tax on early distributions.
A companion bill was introduced in the house by Rep. Ann Wagner (R-MO), chair of the House Suburban Caucus.
Toomey called the amendment a “commonsense change to enhance financial security in retirement.” The Long-Term Care Affordability Act was endorsed by the American Seniors Housing Association, Argentum and the Alzheimer’s Association, among other organizations.
“More Americans are now reporting that they expect they won’t have enough set aside to retire anytime soon, and the number of retirees who are going back to work is climbing,” Committee Chairman Ron Wyden (D-OR) said during the hearing, adding that the long-term care insurance amendment will make long-term care insurance coverage more available to more people.
According to senators, one of the obstacles facing long-term care insurance providers is cost — typically, policies cost $100 to $250 per month. Policy specialists have been asking that workers be able to invest their retirement plan assets in long-term care insurance coverage to cover those claims.
Several other amendments to the EARN Act also are being proposed.