ACLI Praises Rep. Shays, 30 Cosponsors For Resolution Promoting Long-Term Care Insurance Coverage
Potential Crisis for Families, Government Programs Looms As Baby Boomers Approach Retirement
Washington, D.C.
(February 14, 2001) - The American Council of Life Insurers (ACLI) today praised Rep.
Christopher Shays (R-CT) and 30 cosponsors for introducing a Sense of Congress
Resolution that promotes private long-term care insurance coverage as a way to
protect families from catastrophic costs and ease the burden on Medicaid as the
baby boom generation ages into retirement.
"One of the
biggest challenges facing America in the 21st century will be the
aging of the baby boomers," said ACLI President & CEO Carroll
Campbell, Jr. "Over the next 30 years, they will double the 65-and-over
population to 70 million. Time is running out for finding private as well as
public sector solutions to the looming long-term care crisis. If we fail to act
soon, we will be severely jeopardizing the financial security of tomorrow's
retirees and their families."
Rep. Shays'
resolution notes that in the coming decade, people over 65 will represent 20
percent or more of the population. And the proportion of the population made up
of people over 85 - who are most likely to need long-term care services - could
double or triple.
The resolution also
notes that as the baby boom generation starts to retire, funding entitlement
programs will put a strain on the financial resources of younger Americans. It
points out that the rising costs of long-term care services, such as nursing
homes, can have a catastrophic effect on families and can wipe out a lifetime
of savings before a spouse, parent, or grandparent becomes eligible for
Medicaid - the primary government program that pays for long-term care in a
nursing home.
The Shays
resolution says the federal government should take "all appropriate
steps" to inform the public about the financial risks posed by rapidly
increasing long-term care costs and that individuals must exhaust their assets
to qualify for Medicaid. It calls on the federal government to encourage
employers to offer private long-term care insurance as an employee benefit, and
to encourage both working-aged Americans and older citizens to obtain private
long-term care insurance.
Finally, the
resolution calls on congressional tax-writing committees and the Treasury
Department to determine whether the tax rules for long-term care insurance need
to be modified to make private long-term care insurance more affordable.
ACLI - which
represents 87 percent of the private long-term care insurance industry - is
actively supporting legislation to establish an "above the line"
federal tax deduction for long-term care insurance premiums. That means all
taxpayers could deduct the cost of annual premiums, regardless of whether they
itemize on their tax returns. Currently, more than 20 states offer income tax
incentives for purchasing long-term care insurance. ACLI also is supporting the
inclusion of long-term care policies in employer-sponsored cafeteria plans and
flexible spending accounts. The Joint Committee on Taxation has scored the cost
of those proposals at $8.8 billion over 10 years.
Pointing to the
recent ACLI studies Who Will Pay for the Baby Boomers' Long-Term Care Needs?
and Can Aging Baby Boomers Avoid the Nursing Home?, Campbell noted that
when the last Boomers retire 30 years from now, no less than 32 states will
have the same demographics that Florida does today. Total nursing home
expenditures could reach $330 billion - equal to today's entire Social Security
budget.
ACLI research
indicates that the cost of virtually all long-term care services - including
home care, adult day care, assisted living and nursing home care - will
quadruple over the next three decades. At the same time, Medicaid expenditures
for nursing home care are expected to jump from about $30 billion a year to
about $134 billion.
"Over the long
run," Campbell said, "encouraging the purchase of private insurance
will be crucial for meeting the nation's long-term care needs without
financially crippling Americans and already strained government programs."
"Baby boomers
must be encouraged to plan," Campbell said. "ACLI research shows that
a person who is 45 today would have to save and invest more than $3,500 a year
for 40 years to afford nursing home care at age 85. But the same person can
meet those same needs by buying private long-term care insurance for a few
hundred dollars a year. That's a far more affordable strategy for the great
majority of individuals and families - and it will become even more affordable
with a federal tax deduction for the cost of policy premiums."
Copies of the
ACLI studies
Who Will Pay for the Baby Boomers' Long-Term Care Needs? and Can Aging
Baby Boomers Avoid the Nursing Home? are available on ACLI's Web site, www.acli.com.
Media representatives can obtain hard copies of the studies by calling ACLI
Media Relations at 202-624-2459 or sending an email to Media@acli.com.
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The American Council of Life
Insurers is a Washington, D.C.-based trade association. Its more than 400
member companies offer life insurance, annuities, pensions, long-term care
insurance, disability income insurance and other retirement and financial
protection products. ACLI member companies have 87 percent of the long-term
care insurance in force in the United States. |