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Lawmaker Proposes Federal Catastrophic Long-Term Care Insurance Program

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What You Need to Know

  • Employees would pay a 0.3% payroll tax and employers would pay 0.3%.
  • The monthly benefit would start at $3,600 and rise with inflation.
  • The goal is for the benefit to pay for six hours of care per day.

Rep. Tom Suozzi is trying to overhaul how the country pays for long-term care (LTC) services.

The New York state Democrat has introduced H.R. 4289, the “Well-Being Insurance for Seniors to be at Home (WISH) Act” bill.

The WISH act would impose a 0.3% payroll tax on workers and a 0.3% payroll tax on employers.

In exchange, workers would get protection against catastrophic long-term care costs. The goal is for the program to pay for six hours of care per day, according to a bill summary.

For low-income workers, benefits would kick in a year after the workers began to need LTC services.

For the highest income workers, public long-term care insurance (LTCI) would begin to pay benefits after five years.

Suozzi said he tried to design H.R. 4289 to make the LTCI market more attractive to private insurers, not to crowd private LTCI coverage out.

“We have a storm coming, with the number of disabled elders expected to double in the coming years,” Suozzi said in a comment included in the bill introduction announcement. “Fewer family caregivers are available for these aging Americans, and the market for long-term care insurance is not currently sufficient to address these demographic challenges.”

The WISH Act program would reduce the risk that people will run out of assets and end up using Medicaid — a program for the poor — to pay for LTC services, Suozzi said.

The program would help private insurers offer affordable coverage that would pay for the  initial years of use of LTC services, he said.

Alice Rivlin, a former Federal Reserve Board member, promoted a similar public catastrophic LTCI program proposal in 2016, at a hearing organized by the House Energy and Commerce Committee.

Rivlin, who worked on the proposal with the Bipartisan Policy Center, also promoted a proposal for letting workers use 401(k) plan cash to pay LTCI premiums.

Suozzi talked about his version of the public catastrophic LTCI program proposal in April, at a web conference organized by the Insured Retirement Institute.

He told IRI event attendees that he learned about the topic when his parents used LTCI coverage to pay for their own long-term care.

(Photo: Shutterstock)