News Release

Long-Term Care Insurance "Crucial" for Federal Workers, Says ACLI

Washington, D.C. (March 18, 1999) - The American Council of Life Insurance told Congress today it is crucial that the federal government offer private long-term care insurance to its workers and their families as an employee benefit.

"This benefit is an integral part of employees' retirement security because without this protection, retirement savings can be wiped out with just one long-term care episode," David Martin, Chairman of the ACLI's Accelerated Death Benefits/Long-Term Care Committee, testified at a House Civil Service Subcommittee hearing.

Congress is considering several proposals to provide private long-term care insurance as a self-funded benefit. Three bills have been introduced in the House - H.R. 602, by Civil Service Subcommittee Chairman Joe Scarborough (R-FL); H.R. 110, by Rep. Elijah Cummings (D-MD), and H.R. 1111, by Rep. Constance Morella (R-MD). There are also two Senate bills - S. 36, by Aging Committee Chairman Charles Grassley (R-IA) and Sen. Bob Graham (D-FL), and S. 59, by Sen. Barbara Mikulski (D-MD).

The Cummings/Mikulski bills represent the Clinton Administration's approach to turning the federal government into a "model employer" - thus encouraging private businesses to offer private long-term care insurance as an employee benefit. The legislation is one part of the Administration's $6.2 billion long-term care initiative announced in January. That initiative also includes a $1,000 tax credit for long-term care needs, a support program for family caregivers, and a national campaign to educate Medicare beneficiaries about that program's limited nursing home coverage.

The ACLI's Martin praised the White House initiative for focusing "much-needed public attention on a problem that already plagues one in four American families, and that will reach crisis proportions as the baby boomer generation reaches retirement."

But Martin said the ACLI -- whose member companies represent more than 88 percent of America's long-term care insurance marketplace -- would ask the Administration to broaden its proposal to provide tax relief for those who take personal responsibility for their families' long-term care needs by purchasing private insurance.

"A tax credit for families grappling with long-term care needs today is vital for easing their immediate burden," Martin said. "But over the long run, encouraging the purchase of private insurance will be crucial for meeting the nation's long-term care needs without crippling taxpayers and already strained government programs."

Pointing to the ACLI's recent study, Who Will Pay for the Baby Boomers' Long-Term Care Needs?, Martin noted that within 30 years, no less than 32 states will have the same demographics that Florida does today. "Medicaid and individual out-of-pocket long-term care expenditures could rise by over 360 percent by the year 2030," Martin said.

Martin said the ACLI believes that a competitive bidding process in which both group and individual insurance carriers are given an opportunity to compete on a level playing field will result in the most successful long-term care program for federal employees.

"Clearly, individuals have different long-term care needs," Martin said. "Based on our experience dealing with large employers, it is appropriate to offer employees a variety of options" such as nursing home care, home care, medical equipment coverage, care coordination services, payment for family caregivers, or coverage for home modifications.

"These options can enable people who are chronically ill to live in the community and to retain their independence," Martin said.

In addition to proposals to offer private long-term care insurance to federal employees, there is a bill in the Senate (S. 35) that would provide an "above the line" tax deduction for long-term care insurance premiums - the same kind of deduction already allowed for IRA and 401(k) contributions. The Senate measure was introduced by Sens. Grassley and Graham. A companion measure is expected to be introduced soon in the House.

In addition, a resolution has been introduced in the House (H. Con. Res. 8) urging coverage of individuals under private long-term care insurance - and endorsing an educational outreach to make the public aware that Medicare does not cover long-term care, and that individuals must "spend down" their assets in order to receive long-term care coverage from Medicaid. An identical resolution is expected to be introduced in the Senate later this month.