Earlier this year, Rep. Thomas Suozzi, D-N.Y., joined Rep. John Moolenaar, R-Mich., to revive the Well-Being Insurance for Seniors to be at Home (WISH) Act. The legislation, first introduced in 2021, seeks to significantly overhaul how the country pays for long-term care services.
The WISH Act would establish a Social Security-administered federal insurance program that would provide benefits to retirees with continual long-term care needs, subject to qualifications and a waiting period. The waiting period would depend on income level, with shorter waits for lower-income individuals.
As drafted, the legislation’s waiting period could range from 12 months for someone with average monthly earnings at the 40th percentile up to five years for someone with average monthly earnings in the top 1%.
This week, Morningstar published an in-depth analysis of the potential implications of the WISH Act on different generations of retirement savers. The analysis found that, if enacted, the legislation could bring about "one of the most significant [positive] shifts in retirement risk management in decades."
According to the report, the WISH Act could reduce the share of households running short of money in retirement from 42% to 19% overall.
Among the groups that would see the most dramatic improvements in retirement outcomes would be single women (with projected shortfall dropping from 58% to 28%) and single men (from 48% to 19%). Couples would likewise benefit, with anticipated retirement income shortfalls dropping from 34% to 16%.
The overall projected shortfall rate drop would represent a 23-percentage-point delta or a 54% relative decrease. Few other single policy proposals have the opportunity to have such a dramatic effect, the report suggests.
Key Legislative Details
The WISH Act does not specify a fixed benefit amount, the Morningstar report recounts. Instead, it directs the Secretary of Health and Human Services, in consultation with the Department of Labor, to determine the monthly benefit based on the median U.S. cost of six hours per day of paid personal assistance, indexed to wages in the long-term-care sector.
Staff working on the bill estimate that the benefit payment would be about $4,000 per month in today's dollars, according to the report. Eligibility for benefits requires at least six quarters of payroll tax contributions during the applicable base period, which refers to the period that begins with the first quarter of 2026.
Moreover, until an individual accrues 40 quarters of coverage during the applicable base period, they would receive a proportionally reduced benefit. For example, someone with 20 quarters of coverage would receive half the full benefit amount.
To fund the benefit payments, the bill would establish a federal long-term-care insurance trust fund, modeled after the Federal Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund.
While the bill specifies an initial funding of $12 million per year for fiscal 2026, 2027 and 2028 for infrastructure development and setup, the long-term financing would likely come from a payroll tax of about 0.3% on workers and an additional 0.3% on employers.
Anticipated Affects
The Morningstar report finds the WISH Act could sharply improve retirement security for younger generations, given that it would take time for people to fulfill their eligibility requirements. Among households qualifying for WISH benefits, the analysis found the shortfall rate dropped from 49% to 24% for Gen Z, and 45% to 19% for millennials.
While smaller, the impact is still significant for the Gen X cohort, with the shortfall rate falling from 37% to 20%.
Middle-income households would see the largest improvements in retirement-income adequacy, Morningstar finds. For example, for middle-income Gen Z households qualifying for WISH benefits in the second income quartile, the shortfall rate dropped from 61% to 25%.
Hispanic and Black Americans saw the largest improvements in retirement security. The WISH Act could cut the shortfall rate from 53% to 26% for Hispanic households and 55% to 27% for Black households. The impact was still substantial for white households, with the rate dropping from 38% to 17%.
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