Long-Term Care Bill Would Help Individuals Save for Insurance
Save for LTC Insurance
Sen. Rick Santorum (R-Pa.) recently introduced a bill (S. 2281) that would establish tax incentives to help U.S. residents save funds for long-term care insurance.
The legislation would establish tax-free "long-term care accounts" similar to health savings accounts for individuals who might have problems with access to long-term care insurance because of pre-existing medical conditions or cost issues.
Individuals could place as much $5,000 in the accounts annually and use the funds without penalty for health care expenses such as nursing home care or home health care for themselves or family members.
In the event that individuals with the accounts die, they could place any funds that remain in a similar account for whomever they designate.
The bill also would:
- Allow employers to establish programs similar to 401(k) plans under which employees could save pretax funds for long-term care insurance.
- Revise the rules for flexible spending accounts to allow individuals to use funds from the accounts to cover the cost of home health care, adult day care or respite care for family members.
- Allow the establishment of programs that combine annuities and long-term care insurance.
The legislation would provide "an alternative to spending down (assets) and getting on Medicaid. We give people options to prepare for better options than Medicaid," Santorum said, adding, "It just gives people a lot more flexibility."