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Policymakers are Looking at LTC Incentives Long-Term Care is one of our most worrisome policy issues. Estimates have suggested that more money is spent on Long-Term Care (both public and private dollars) than on prescription drugs and medical devices combined.

There are numerous insurance products available that address Long-Term Care. Presently the federal tax codes limit the amount that can be deducted from individual taxes in two ways: by amount, and by the fact that the deduction is part of your medical expense line.

While the bipartisan focus on Medicaid’s increasing Long-Term Care expenses have policymakers warming to incentives for people to purchase Long-Term Care insurance, the federal deficit is still a major challenge. General Accountability Office Comptroller General David Walker called the deficit, which now makes up 3.6 percent of the gross domestic product, “unacceptable, outrageous and irresponsible” and attributed it to the increasing number of retirees and rapidly rising healthcare costs. Approximately two thirds of Medicaid expenditures can be attributed to increasing Long-Term Care expenses. Whether the 109th Congress accepts the notion that it needs to spend money (loss revenue) in order to save money remains to be seen.

Centers for Medicare and Medicaid Services Administrator Mark McClellen indicated in his recent remarks before the Policy Committee of the White House Conference on Aging that the Administration would be looking more actively at incentives to encourage individuals to purchase Long-Term Care insurance. As President Bush puts together his FY 2006 budget to submit to Congress and the public in early 2005, we can be hopeful that he will once again include the provision of allowing for full tax deductibility of Long-Term Care insurance premiums. The President’s inclusion of an above-the-line deduction in his budget would certainly be a catalyst for action by the Congress.