Burlison bill would create tax deduction for long-term care insurance

Jul. 5—A recent study showed that more than 70% of Americans age 65 and older face the need for long-term care, making it a top financial concern.

Rep. Eric Burlison, representing the 7th Congressional District in Southwest Missouri, recently introduced a bill in the U.S. House to try to address that concern by allowing taxpayers who buy insurance that pays for long-term nursing care to deduct some of that cost from their income taxes.

"What's frustrating about the whole thing is you've got a lot of people who spend their entire lives never being on the government dole who suddenly are trying to figure out how to get the government to pay for their health care," Burlison said. "And it's the most expensive part. The vast majority of someone's entire lifetime of medical expenses will be incurred in just the last few months of their lives while in a nursing home facility."

Burlison said long-term care insurance is available but has become difficult to get or unaffordable.

He said in his days as a state senator he saw the insurance industry starting to offer hybrid policies — a kind of life insurance policy that pays out like a life insurance policy, but if someone is still alive but needs long-term nursing care, it will pay those expenses.

Burlison's bill would try to make those kinds of policies more affordable by offering a federal tax deduction of up to a quarter of those costs if someone takes out that kind of policy.

"My bill will encourage individuals to purchase long-term care insurance by providing a tax deduction for the costs of insurance premiums for individuals who take responsibility for purchasing long-term care insurance instead of relying on the state and federal government for their care," Burlison said. "The federal government should always be looking for ways to encourage individuals to be self-reliant instead of relying on government programs."

Burlison said he helped create a state tax deduction for those costs while he served in the Missouri Senate.

"So I'm trying to do that at the federal level," he said. "I don't think most people care about the state tax deduction because it's such a small amount, 5% off your income tax, but on the federal level, it could be enough to hopefully motivate some people to not rely on the government for their long-term care."

Burlison said the states and federal government can't continue to pay for long-term care without raising taxes.

"The problem is the Medicaid reimbursement rates are being cut," he said. "From my experience, they don't grow year after year after year, and nursing homes in the private sector are really in a desperate situation. The response to that, if you're going to fix it, is to raise taxes in order to increase the reimbursement rate to these long-term care facilities, and I think it's a false choice. Instead, what the industry needs is to have people privately pay, and the only way to do that is to figure out a way to encourage people to buy the insurance by giving them a deduction."

Burlison introduced his bill June 25, and he was not sure how many representatives had signed up to cosponsor the bill as of Wednesday.

"A lot of people are happy to buy health insurance through their employer just so they can get the tax deduction," Burlison said. "People donate more to a not-for-profit knowing they can get a tax deduction. I think the income tax rate, being as high as it is, is enough to motivate behaviors. At the end of the day, I think people would be a lot more safe and comfortable knowing that they don't have to rely on the state or federal government to pay for their long-term care."

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