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5 Facts About the Senate Finance Long-Term Care Hearing

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A Republican on the Senate Finance Committee says he’s trying to do what he can to revive the market for long-term care insurance (LTCI).

Sen. Pat Toomey, R-Pa., announced Wednesday, at a hearing on Alzheimer’s awareness organized by the committee’s health subcommittee, that he’s circulating a discussion draft of a plan for letting people use money from their retirement plans to pay for LTCI coverage.

(Related: 7 Reasons Low, Low Interest Rates Could Make Us Sick)

The proposal could let a retirement plan participant spend up to about $2,000 per year in retirement plan cash on LTCI coverage without paying withdrawal penalties, or income taxes on the cash used to pay LTCI premiums, Toomey said.

The National Association of Insurance and Financial Advisors and the American Council of Life Insurers sent the Senate Finance Committee a joint statement supporting the Toomey proposal.

Here are four other facts about what happened during the hearing:

2. Toomey said he thinks using a tax credit to spur sales of private LTCI to younger, healthier people could help ease LTCI issuers’ price stability problems.

If issuers could sell LTCI coverage to a large number of younger, healthier people, that could greatly improve the quality of the risk pool, and let insurers spread fixed costs over a larger number of people, he said.

3. Marc Cohen was one of the witnesses.

Cohen, a gerontologist who has been involved in the LTCI market for many years, was one of the hearing witnesses. He said a new federal tax break for LTCI coverage could help increase sales, and reduce LTCI prices, by cutting the net cost of coverage, and also by signaling to younger, healthier people that long-term care risk is something they should think about.

4. Cohen talked about ways to reduce LTCI selling costs.

Cohen suggested that it might be possible to increase LTCI coverage costs, and increase sales, by building it into products that people do buy, such as Medicare Advantage plans, or by selling LTCI policies through the Affordable Care Act (ACA) public exchange system.

5. A Democratic senator asked about the relationship between long-term care and the Affordable Care Act.

Family members’ willingness to provide informal care helps reduce the financial impact of long-term care needs on the Medicaid nursing home benefits program.

Sen. Bob Casey, R-Pa., asked Dr. Jason Karlawish, a neurologist who appeared as a witness, about the relationship between the ACA and dementia care.

Karlawish said one relationship has to do with the impact of caregiving.

Many family caregivers give up their jobs to provide care, Karlawish said.

The ACA system gives those caregivers a way to buy health insurance and maintain their own health, Karlawish said.

Karlawish also talked at the hearing about the need to do more to increase the number of people who can provide the kinds of medical services that people with dementia need. There’s now a shortage of neurologists, many refuse to take new Medicaid patients, and many would prefer to focus on more profitable specialities, such as caring for people with epilepsy, he said.

The number of geriatricians, geriatric psychiatrists, and primary care physicians who know how to help people with dementia is also too low, he said.


Links to resources related to the hearing, including a video recording of the hearing, are available here.

A link to the Toomey draft bill is available here.

— Read Can We Tolerate Millions of Elderly People Living in Cars?, on ThinkAdvisor.

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