March
12, 2001 Edition
By
Steven Brostoff
Washington
Insurance
agents and companies are lining up in support of legislation introduced by Rep.
Nancy Johnson, R-Conn., establishing a tax deduction for the purchase of
long-term care insurance.
"This
is a top priority for NAIFA and AHIA," says David Winston, vice president
of government affairs for the National Association of Insurance and Financial
Advisors, Falls Church, Va.
AHIA
is the Association of Health Insurance Agents, a NAIFA affiliate.
"We
are hopeful we can get this done this year," Winston says.
Chip
Kahn, president of the Health Insurance Association of America, says that
long-term care remains the largest unfunded liability facing the baby boom
generation. "Rep. Johnson’s legislation offers Americans real protection
against the often-catastrophic cost of long-term care," he says.-
Carroll
Campbell, president of the American Council of Life Insurers, adds that the
average one-year cost of nursing home care will increase from $50,000 today to
$190,000 annually in 2030, which translates to $97,000 in 2001 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," Campbell says.
The
legislation, H.R. 831, would allow individuals to take a 100% above-the-line
deduction for long-term care insurance premiums.
An
above-the-line deduction means it is available to all taxpayers, whether or not
they itemize their deductions.
In
addition, H.R. 831 permits long-term care insurance to be offered under cafeteria
plans and flexible spending arrangements.
For a
policy to qualify for the deduction, it would have to meet a variety of
consumer protection standards outlined in the long-term care model regulation
developed by the National Association of Insurance Commissioners.
The
standards include guaranteed renewability and noncancelability, a requirement
to offer inflation protection and a prohibition against pre-existing condition
exclusions and probationary periods in replacement policies.
H.R.
831 has drawn bipartisan support. In addition to Johnson, original co-sponsors
are Reps. Karen Thurman, D-Fla.; Jim McCrery, R-La.; and Earl Pomeroy, D-N.D.
Reproduced
from National Underwriter Life & Health/Financial Services Edition, March
12, 2001. Copyright © 2001 by The National Underwriter Company in the serial
publication. All rights reserved.Copyright in this article as an independent
work may be held by the author.