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Paying for LTC with Pre-tax Dollars

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A bill was introduced just before Congress’s summer recess that would amend the Internal Revenue Code to allow long-term care insurance to be paid for with pre-tax dollars. Under “The Long-Term Care Affordability and Security Act” (H.R. 3363), which was introduced by Reps. Earl Pomeroy (D-ND), Jim Ramstad (R-MN), Allyson Schwartz (D-PA), and Kenny Hulshof (R-MO), LTC insurance would be offered in employer-sponsored cafeteria plans and flexible spending, so the premiums could be paid with the same pre-tax dollars. It is a way for consumers to be able to afford the rising cost of LTC insurance, which can go a lot further in helping many people cover medical expenses as they live longer than savings alone and also have the coverage readily available to them.

The cost of a nursing home in 2030 is expected to rise to nearly $207,000, according to the American Council of Life Insurers (ACLI). Consumer protections that follow the National Association of (state) Insurance Commissioners’ model act are also included in the bill, which was introduced in the House Ways and Means Committee and signed by 24 co-sponsors from both sides of the aisle. Similar measures have been sponsored by Pomeroy and others in previous sessions in the past few years, and despite a fair amount of support, have not passed. More information is available here.