ACLI Applauds H.R. 831; New Long-Term Care Bill Is Vital To Americans' Retirement Security
Washington, D.C.
(March 2, 2001) - The American Council of Life Insurers (ACLI) praised Reps. Nancy
Johnson (R-CT) and Karen Thurman (D-FL) for introducing legislation yesterday
to establish an "above the line" federal tax deduction for long-term
care insurance premiums. The measure would also permit the inclusion of
long-term care policies in employer-sponsored cafeteria plans and flexible spending
accounts.
The need for the
legislation - H.R. 831- is clear. ACLI research shows that over the next 30
years, the 65-and-over population will double to 70 million. Millions more
Americans will need long-term care services, whose costs are projected to
increase dramatically. For instance, the average cost of one year of nursing
home care, which is about $50,000 today, will escalate to about $190,000
annually by 2030 ($97,000 annually in today's dollars). With private long-term
care insurance coverage, people will be able to guarantee they get the
assistance they want and need in retirement, while protecting their retirement
savings.
"As long-term
care costs for individuals rise, so too will Medicaid expenditures for nursing
home care if changes are not made. ACLI research shows they'll increase from
about $30 billion a year to about $134 billion -- an unsustainable level for
tomorrow's taxpayers," said Carroll A. Campbell, Jr., ACLI President &
CEO. "If current trends continue, millions of retirees will not get the
help they need and want. We believe that encouraging people to take personal
responsibility for their future now, through the purchase of this vital form of
financial protection, is the best way to address this emerging crisis,"
Campbell said.
The Johnson-Thurmond
"above-the-line" legislation would allow long-term care insurance
policyholders to deduct from their taxable income, whether or not they itemize
their tax returns, the amount they pay in premiums for long-term care
insurance. In effect, the tax code would treat long-term care insurance
premiums the same way as contributions to tax-qualified retirement savings
plans.
"Baby boomers
in particular 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. |