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Issue Background

Long Term Care

Long term care insurance is a means of privately financing care needs not covered by Medicare As the generation of baby boomers ages, an increasingly large number of people will require long term care. Unfortunately, Medicare does not cover extended nursing home care, assisted living facilities or home care.  With the need for long term care consistently increasing, NAHU anticipates that the demand for insurance plans to cover the costs of care will increase as well. 

Currently, Medicaid is the primary payer of American long-term care costs. If more individuals were able to privately finance their long-term care needs, the cost savings to both the federal government and the states in reduced Medicaid expenditures would be enormous. Recognizing the potential savings to these entities, NAHU supports simple changes to federal law to incent the private purchase of long-term care insurance. 

One of NAHU’s suggestions is to incorporate long-term care insurance premiums in Section 125. In doing so, the plans would encourage employers to offer long term care coverage to their workers as either a voluntary or subsidized benefit. Additionally, NAHU suggests the federal government implements a tax deduction for long-term care insurance premiums to individuals whose income is above the federal poverty line. This would allow taxpayers to claim a tax deduction regardless whether they choose to itemize their deductions or if they have other medical expenses.

Employers influence their employees and signal what they consider important to their employees by what benefits they offer, including insurance. Long term care insurance should be considered as important as health, disability, dental and vision benefits.

Offering group long term care insurance can lower the after-tax premiums by 25-30% for employees, and these products are fully portable under current law. Sales made in the employer market typically have fewer underwriting restrictions. This creates a private coverage option that gives consumers the greatest possible degree of choice when it comes to their long term care needs.

Tax deductibility of long term care premiums will encourage the purchase of long term care insurance by everyone, including younger Americans, who will benefit by making their initial purchase when premiums are most affordable. Over the lifetime of those individuals purchasing coverage, it is also anticipated that such a change would save the Medicaid system more than it would cost the tax system in lost revenue.

Join NAHU in asking our representatives on Capitol Hill to improve seniors’ choices in long term care coverage.