Legislation allowing tax-advantaged long term care insurance products to be used for other retirement purposes has been quietly introduced in the House of Representatives.[@@]
Frank Keating, president of the American Council of Life Insurers, Washington, talked about the bill, which was introduced by Rep. Nancy Johnson, R-Conn., here at the trade group’s annual conference.
Keating said the legislation has a good chance of passage, noting that Rep. Bill Thomas, R-Calif., the powerful chairman of the House Ways and Means Committee, has expressed interest in it.
However, the prospects for any legislation this year are fluid, given President Bush’s weakening support, the prospect for lengthy hearings on the nomination to the Supreme Court of Harriet Miers, the ethics and legal problems of House Majority Leader Tom DeLay, R-Texas, and growing concern about the rising federal deficit.
Further muddying the waters is that a deal in the Senate on legislation reforming the pension system hit a major roadblock Friday in the form of bipartisan opposition. The life insurance industry had hoped to use the bill to push major retirement product enhancements through the Congress.
The Senate bill already contains language codifying industry “best practices” on corporate owned life insurance, and the House version would ease the way for insurance agents to provide investment advice to pension clients.
The retirement legislation, H.R. 3912, was introduced Sept. 27. It is titled, “The Flexible Retirement Security for Life” Act. Its cosponsors are Reps. Phil English, R-Pa., and Stephanie Tubbs Jones, D-Ohio.
It contains provisions for limited tax benefit for payments to retirees made from fixed annuities as well as greater flexibility to those purchasing long-term care contracts.
Under the LTC insurance provision, an annuity with a qualified long-term care rider would have the same tax advantages as current stand-alone LTC insurance benefits.
In addition, the contract would have the same tax-free inside buildup characteristics as life insurance, endowment and annuity contracts now contain.