New Bills Take Small Step Toward Affordable Long-Term Care
By: Source: AARP Bulletin Today Date Posted: 2003-06-23 16:12:02
When Congress returns from summer recess this month, legislation that would make long-term care insurance more affordable may gain further bipartisan support in the House and Senate.
The proposals, introduced earlier this year in the House and Senate, would provide tax credits to individuals receiving long-term care and to their caregivers. The measures also offer a tax break to buyers of long-term care insurance policies that meet consumer standards.
The bipartisan bills, H.R. 831 and S.627, were introduced by Reps. Nancy Johnson, R-Conn., Karen Thurman, D-Fla., Jim McCrery, R-La., and Earl Pomeroy, D-N.D., in the House and by Sens. Charles Grassley, R-Iowa, and Bob Graham, D-Fla., in the Senate.
Under the proposals, taxpayers can claim a credit of up to $3,000 if they need long-term care or if they provide long-term care for a spouse or dependent.
The amount of the tax credit would be phased in, starting at $1,000 in 2001 and going up to $3,000 by 2005.
Supporters view the tax incentives as an important step toward improving federal long-term care policy. Critics, however, say they don't go far enough in providing financial help to caregivers or individuals with long-term care needs.
Joshua M. Wiener, principal research associate at the Urban Institute, a public policy and research group in Washington, says the amount the tax incentives would cost the government—possibly $50 billion over 10 years—might be better spent on direct services and programs to caregivers and individuals in need.
He argues the bill flops in its attempt to make long-term care insurance more affordable by providing a small tax deduction.
"Long-term care insurance is expensive and not affordable by most people," Wiener says. "The vast majority of (older Americans) are in the 15 percent tax bracket, so if you've got a policy that costs $2,200 a year at age 65 and you deduct the full amount, you've taken off $300. That's still unaffordable to most people."
Stephen McConnell, vice president of public policy at the Alzheimer's Association in Washington, which supports the legislation, concedes it is only "a small step forward."
"It needs to happen, and it's an important statement on the role of caregivers," he says. "It has value."
"It doesn't address the larger issue of how we finance long-term care for people who can't afford it, for those who are already disabled from Alzheimer's or stroke or illness that will disqualify them from private insurance," he says.
"This is a small tax credit, and it will be most beneficial to people with ample income who will benefit from a tax break."
McConnell urges lawmakers to create a "social insurance" similar to Social Security or Medicare—a program to which every taxpayer contributes and has access—that provides basic protections and makes private insurance more affordable.
"A $3,000 tax credit won't pay for all the long-term care services a severely disabled person needs, but it would certainly make a difference," says AARP Director for Federal Health Issues Tricia Smith.
The National Council on the Aging and the Health Insurance Association of America are also supporting the legislation.
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