July 06, 2007 - The high cost of healthcare, including long-term care, is consistently one of the most important concerns I hear about from individuals, families and businesses. In South Dakota, the average annual cost of a one-year nursing home stay is over $50,000 and growing ($70,000 nationally).
As we begin to tackle the larger issue of healthcare reform, we must also address the looming challenge of an aging population-which will create an even greater demand for affordable long-term care services. In rural areas such as South Dakota, this presents an even greater challenge. The soaring cost of long-term care also continues to put a considerable strain on our federal healthcare programs, Medicare and Medicaid.
But there is a solution: long-term care insurance. I am working on legislation to encourage the use of long-term care insurance by allowing individuals to purchase qualified plans with pre-tax dollars, penalty-free from their 401(k) plans, IRAs and other tax-advantaged retirement accounts. Through the purchase of long-term care insurance, individuals will be empowered to plan for their future and their long-term care needs.
Right now, ordinary health insurance and Medicare do not typically pay for long-term care expenses. To qualify for Medicaid, individuals are forced to spend down their life savings-and they are subject to limitations on long-term care settings and services.
One of the benefits of long-term care insurance is that it allows individuals to actually plan for their healthcare needs without being forced to spend all of their assets. Owning long-term care insurance also allows individuals to choose the type of care they may need, including nursing home stays, home healthcare, or even respite care.
Many in South Dakota and around the country already take advantage of private long-term care insurance. At the state level, states such as South Dakota have also launched large-scale efforts to educate their citizens on the advantages of long-term care insurance. However, long-term care plans are still quite costly. Many individuals wait until they are much older to look into purchasing long-term care insurance, at which point premiums are high. Others are unaware of the risks of needing care, the cost, and what services private insurance, or Medicare and Medicaid will pay.
Allowing individuals to pay long-term care premiums tax-free, without penalty, from their 401(k)s, IRAs or other savings accounts creates a viable incentive for people to purchase long-term care insurance earlier.
The later years of a person's life should be spent enjoying the company of grandchildren, family and friends. Long-term care insurance can help relieve the burden of long-term care planning and give people the flexibility and freedom they need to make the best decisions for their own healthcare future.
I will continue to support healthcare reform solutions that allow individuals to take ownership of their healthcare, create more competition in the market place and help provide affordable, high-quality care for all South Dakotans.
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