S. 504-110

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Senate Bill 504 (110th Congress)
A bill to amend the Internal Revenue Code of 1986 to establish long-term care trust accounts and allow a refundable tax credit for contributions to such accounts, and for other purposes.
Sponsor: Gordon Smith
Committees: Senate Finance

Senate bill S. 504, or Long-Term Care Trust Account Act of 2007, is proposed legislation introduced by Gordon Smith, the Republican Senator from Oregon on February 6, 2007, with cosponsor Blanche Lincoln, the Democratic Senator from Arkansas. It is a bill to amend the Internal Revenue Code of 1986 to establish long-term care trust accounts and allow a refundable tax credit for contributions to such accounts, and for other purposes.

Contents

Introductory Statement, February 6, 2007

Mr. Smith-R, Oregon - Mr. President, I rise today to introduce the Long-Term Care Trust Account Act of 2007. I am pleased to be joined by my colleague Senator Blanche Lincoln who has been a tireless leader on issues of importance to the health of our Nation. I look forward to continuing to work with Senator Lincoln on this legislation as well as other opportunities to improve health care in America.

We are an aging Nation. With babyboomers rapidly retiring, the need for long-term care planning is becoming even more critical. However, we know all too well that planning for the likelihood of disability in young or old age is not done as actively as we would like it to be. Currently, only about 7 percent of all money spent on long-term care comes from private insurance. Too often, insurance is not being purchased, funds are not being saved and persons with disabilities are forced to rely on Medicaid for their daily care.

As a Nation, we need to do better. Senator Lincoln and I believe that our bill will encourage Americans to invest in their futures and in their care, which is an important first step.

Specifically, our legislation will create a new type of savings mechanism for the purpose of preparing for the costs associated with long-term care services and purchasing long-term care insurance. An individual who establishes a long-term care trust account can contribute up to $5,000 per year to their account and receive a refundable 10 percent tax credit on that contribution. Interest accrued on these accounts will be tax free, and funds could be withdrawn for the purchase of long-term care insurance or to pay for long-term care services. Our bill also will allow an individual to make contributions to another person's Long-Term Care Trust Account. This will allow relatives to help their parents or a loved one prepare for their future health care needs.

The Centers for Medicare and Medicaid Services estimates that national spending for long-term care was more than $190 billion in 2004, representing about 12.5 percent of all personal health care expenditures. While those numbers already are staggering, we also know that the need for long-term care is expected to grow significantly in coming decades. Almost two-thirds of people receiving long-term care are over age 65, with this number expected to double by 2030. We also know that the population over age 85, those most likely to need long-term services and supports, is expected to increase more than 250 percent by 2040 from 4.3 million to 15.4 million.

Today, millions of Americans are receiving or are in need of long-term care services and supports. Surprisingly, more than 40 percent of persons receiving long-term care are between the ages of 18 and 64. Some were born with disabilities; others came to be disabled through accident or illness. No one can predict their long-term health care needs. Therefore, everyone needs to be prepared.

Currently, long-term care insurance is the main way to prepare for possible future care and support needs. Long-term care insurance helps protect assets and income from the devastating financial consequences of long-term health care costs. Today's comprehensive long-term care insurance policies allow consumers to choose from a variety of benefits and offer a wide range of coverage choices. They allow individuals to receive care in a variety of settings including nursing homes, home care, assisted living facilities and adult day care. Some of the most recent policies also provide a cash-benefit that a consumer can spend in the manner he or she chooses. When we buy long-term care insurance, we are also working to ensure that we can make more independent long-term care decisions and reduce the strain on state Medicaid budgets.

Unfortunately, for too many, the struggle to pay the immediate costs of long-term care insurance sometimes outweighs the security these products would provide. As Americans are spending more and saving less, I fear the American middle class is woefully unprepared to meet the coming challenges of their long-term care needs. Moving forward in our effort to help individuals prepare for life in their later years, we must encourage them to purchase long-term care insurance and save for long-term care services. The Long-Term Care Trust Account Act of 2007 is designed to achieve both goals.

It is my hope that this legislation will help all Americans save for their future and their independence during times of vulnerability. I urge my colleagues on both sides of the aisle to support this important bill.

I ask unanimous consent that the text of the bill be printed in the RECORD.

There being no objection, the text of the bill was ordered to be printed in the RECORD... (See link below for text of the bill as introduced)

Bill Text

Text of S. 504-110

Update Status

S. 504-110A bill to amend the Internal Revenue Code of 1986 to establish long-term care trust accounts and allow a refundable tax credit for contributions to such accounts, and for other purposes.
February 6, 2007: Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

External Links

External links for S. 504
(110th Congress)
S. 504 at DailyKos
S. 504 at Thomas
S. 504 at Billhop
S. 504 at GovTrack
S. 504 at OpenCongress

Source: thomas.gov search

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