New York (May 23, 2003) -- Members of the financial planning community are giving thumbs up to proposed legislation that would provide tax breaks and credits for long-term care insurance, making it more affordable for families and caregivers who pay directly for long-term care expenses.
"The Long-Term Care and Retirement Security Act of 2003," introduced by Rep. Nancy Johnson (R-Conn.) and Rep. Earl Pomeroy (D-N.D.) last week, would provide an initial 25 percent above-the-line deduction for a long-term care insurance premium, phased-in to a 100 percent deduction by 2008 and a phased-in annual tax credit of $3,000 for taxpayers who pay LTC expenses and family members who provide care. It would also permit LTC policies to be offered under employer-sponsored cafeteria plans and flexible spending accounts.
“We like the legislation. We like the aspect of helping people save for long term care insurance needs by giving a tax break on premiums, and also helping those with needs right now through tax credits for family caregivers,” said Suzanne Morgan, assistant director of government relations for the Atlanta-based Financial Planning Association. “To have a vehicle in place to start the process of building that coverage up so people will have it when they need it would be beneficial to our members’ clients.”
“I think it’s an excellent bill,” said Arthur Stein, a Certified Financial Planner and LTC insurance specialist with Cassaday & Co. Inc. in McLean, Va. “It would offer a straight deduction of long term care insurance premiums from income. That would be a real incentive for people to buy these policies.” Stein said enabling people to pay for premiums with pre-tax dollars through flexible spending accounts would be a “huge incentive.” He added, “It would be a real step forward for the long term care insurance industry.”
-- Melissa Klein
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