To help make long-term care insurance (LTCI) more affordable for Americans, Sen. Patrick Toomey, R-Pa. is putting together a bill to be introduced soon with an amendment to the federal tax code. The proposed bill would permit individuals to withdraw up to $2,000 of retirement assets annually to pay LTCI premiums and other policy charges. The 401k and IRA withdrawals would not incur income tax, and policy holders younger than 59 ½ would not sustain the typical 10% penalty for early withdrawals.

As life expectancy grows, so does the number of Americans who will require long-term care, whether in a nursing home, assisted living facility, or at home. According to Health and Human Services, an estimated 52% of Americans turning 65 today will require a nursing home stay or at-home care during their lifetime. Additionally, the Genworth Cost of Care Survey found the median cost for a private nursing home room in the U.S. is $8,517 per month. To pay for long-term care costs, Health and Human Services estimates 52% pay out of pocket, 34% use government funding through Medicaid, and only 2.7% pay with private insurance.

The proposed bill may encourage change as it promotes long-term care insurance for healthy Americans aged 50 to 59. In addition to traditional LTCI policies, individuals may also opt for hybrid policy options to ensure they have an LTCI plan that suits their specific situation.

Read the full article from Investment News below.