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Life Health > Life Insurance

NAIFA Looks Into The Crystal Ball

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An above-the-line tax deduction for long term care insurance premiums–a top federal legislative priority for life insurance agents–is unlikely to be approved by the incoming Democratic-controlled Congress, says the top lobbyist for the National Association of Insurance and Financial Advisors.

However, healthcare issues are likely to be a high priority for the new Congress, with some long-term Democrats seeking a return to the long-dormant discussion of the controversial single-payer program, says Michael Kerley, NAIFA senior vice president of federal relations.

Kerley says the cost of healthcare is quickly rising to the top of the federal legislative agenda because NAIFA agents, for example, are finding that for both employees and employers of small businesses, costs are rising so high they are crowding out funding for other needs, such as pensions and other benefits.

At the end of the day, however, and for a variety of reasons, the new Congress is likely to delay action until after the 2008 presidential season on the most politically sensitive healthcare issues, Kerley says.

On other key life insurance agent legislative issues:

–Action on “meaningful” estate tax repeal is unlikely in the lame-duck Congressional session that started Nov. 14.

“It is hard to believe the Democrats will allow the proposal for almost full repeal that was before the Senate in early August to pass,” Kerley says. “Something less, however, could pass, something that loses perhaps 50% of the current revenues raised by the estate tax.”

–There is virtually no likelihood the Bush Administration’s tax reform and Lifetime Savings Account proposals will be considered by the new Congress.

“I would color those ‘gone’,” Kerley says. “It seems almost impossible that a Democratically-controlled Congress would allow LSAs to be created.”

–Proposals for regulatory reform are bipartisan in nature and won’t be affected by the change in control.

“It is true that Sen. Chris Dodd, D-Conn., will lead the Senate Banking Committee, but the overall support in the key committees, both House and Senate, remains about the same,” Kerley says. “As a result, I suspect that the issue will simply continue to percolate and it will be a while, because we will able to discern where it will go.”

But he notes that Rep. John Dingell, D-Mich., will return as chairman of the House Energy and Commerce Committee and is “making noises” about having jurisdiction over insurance and securities returned to him. “If Dingell is successful, then that changes everything,” Kerley says. “He has strongly supported a federal regulatory system for insurance in the past.”

Regarding the above-the-line deduction for LTC premiums, Kerley says it will be a casualty if the Democrats reinstall “pay-as-you-go” policies on tax cuts. That means that no tax cut can be approved by Congress until the funds to pay for those cuts are identified.

“If the rule is reestablished, it will make it very difficult in the near-term to expand tax incentives to purchase LTC care insurance,” Kerley says.

For this reason, he adds, NAIFA is very pleased Congress included in the pension reform bill enacted in August a provision allowing the combination of annuities, life insurance and LTC policies, a law which takes effect Jan. 1, 2010. This proposal will have the effect of expanding needed LTC insurance coverage, Kerley says. “While insurers can’t offer it until 2010, this gives companies a couple of years to design attractive products.”


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