Legislation allowing tax-advantaged long term care products to be used for other retirement purposes has been introduced in the House of Representatives.
Frank Keating, president and CEO of the American Council of Life Insurers, speaking at the trade group’s annual conference here, voiced optimism in a speech to attendees that the legislation, quietly introduced by Rep. Nancy Johnson, R-Conn., has a good chance of passage. He noted that “interest in it has been expressed” by Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee.
The provision was originally supposed to be included as a sweetener. However, the prospects for any legislation this year are fluid, given President Bush’s weakening support, the prospect for lengthy hearings in the Senate on the nomination to the Supreme Court of Harriet Miers and the uncertainty of her ability to win confirmation, the ethics and legal problems of former House Majority Leader Tom DeLay, R-Texas, and growing concern about the rising federal deficit.
The retirement legislation, H.R. 3912, was introduced by Johnson on Sept. 27. Titled “The Flexible Retirement Security for Life” Act, its co-sponsors are Reps. Phil English, R-Pa., and Stephanie Tubbs Jones, D-Ohio.
It contains provisions providing a limited tax benefit for payments to retirees made from fixed annuities as well as greater flexibility to those buying LTC contracts.
Under the LTC provision, an annuity with a qualified LTC rider would have the same tax advantages as current stand-alone LTC benefits.
In addition, the contract would have the same tax-free inside buildup characteristics as life insurance, endowment and annuity contracts now contain.