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Bill Pushes Flexible LTC Financing

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Insurance industry trade groups are voicing strong support for legislation introduced in the Senate that will provide employees with greater flexibility in paying for long term care insurance.

The bill, S. S.2281, the Aging with Respect and Dignity Act, was introduced by Sen. Rick Santorum, R-Pa.

It will allow employers to offer long term care insurance under a cafeteria plan, and it will provide employees with another option in using their health care flexible spending account (FSA).

It will also allow employees to create long term care accounts through so-called “life care annuities” that combine life annuities and long term care insurance.

“This bill is the right thing to do to ensure that Americans have a secure retirement,” said Steve Bartlett, president and CEO of The Financial Services Roundtable. “As our Blue Ribbon Commission report on retirement security showed, people are simply not saving enough to cover the costs of long-term health care. Sen. Santorum’s bill provides comprehensive and affordable alternatives to those preparing for retirement.”

In a letter last fall, the American Council of Life Insurers urged Santorum to introduce the bill, saying it will improve the availability of LTC insurance by allowing its purchase through a greater range of options.

In a letter signed by Frank Keating, president of the ACLI, the trade group said that the purchase of combination long term care insurance-annuities, which the bill would allow, “would encourage individuals to use one product to save for retirement, prepare for long term care expenses and manage retirement income.”

Keating added, “This is a concept ACLI strongly endorses.”

Keating also voiced support for the provision in the Santorum legislation that expands current rules to permit employers to offer LTC insurance to employees under a cafeteria employee benefit plan, among numerous other employee benefits.


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