[Congressional Record Volume 152, Number 30 (Thursday, March 9, 2006)]
[Senate]
[Pages S1967-S1968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH (for himself and Mrs. Lincoln):
  S. 2397. A bill to amend the Internal Revenue Code of 1986 to 
establish long-term care trust accounts and allow a refundable tax 
credit for contributions to such accounts, and for other purposes; to 
the Committee on Finance.
  Mr. SMITH. Mr. President, I rise today to introduce the Long-Term 
Care Trust Account Act of 2006. I am pleased to be joined by my 
colleague Senator Blanche Lincoln.
  In the past few years the notion of estate planning has taken on a 
negative connotation. I am here to introduce a bill that will focus on 
the positive side of planning for one's future.

[[Page S1968]]

  As the Chairman of the Senate Special Committee on Aging, I am 
committed to improving the financing and delivery of long-term care. 
The Centers for Medicare and Medicaid Services estimate that national 
spending for long-term care was almost $160 billion in 2002, 
representing about 12 percent of all personal health care expenditures. 
While those numbers are already staggering we also know that the need 
for long-term care is expected to grow significantly in coming decades. 
Almost two-thirds of people receiving long-term care are over age 65, 
with this number expected to double by 2030.
  For many individuals it will be necessary to find a way to either 
save for the care needed or purchase long-term care insurance. Long-
term care insurance protects assets and income from the devastating 
financial consequences of long-term health care costs. Today's 
comprehensive long-term care insurance policies allow consumers to 
choose from a variety of benefits and offer a wide range of coverage 
choices. They allow individuals to receive care in a variety of 
settings including nursing homes, home care, assisted living facilities 
and adult day care. Some of the most recent policies also provide a 
cash benefit that a consumer can spend in the manner he or she chooses. 
Lastly, long-term care insurance allows individuals to take personal 
responsibility for their long-term health care needs and reduces the 
strain on state Medicaid budgets. Unfortunately, for many the struggle 
to pay the immediate costs of long-term care insurance sometimes 
outweighs the security these products provide.
  With our national savings rate in steady decline I fear the American 
middle class is woefully unprepared to meet the coming challenges of 
their long-term care needs. As we move forward in our effort to help 
individuals stay financially stable in their later years, we must 
encourage them to purchase long-term care insurance and save for long-
term care services. The Long-Term Care Trust Account Act of 2006 
achieves both goals. My legislation will create a new type of savings 
vehicle for the purpose of preparing for the costs associated with 
long-term care services and purchasing long-term care insurance. An 
individual who establishes a long-term care trust account can 
contribute up to $5,000 per year to their account and receive a 
refundable ten percent tax credit on that contribution. Interest 
accrued on these accounts will be tax free, and funds can be withdrawn 
for the purchase of long-term care insurance or to pay for long-term 
care services. The bill will also allow an individual to make 
contributions to another person's Long-Term Care Trust Account. This 
will help many relatives in our country that want to help their parents 
or a loved one prepare for their health care needs.
  It is my hope that this legislation will help all Americans save for 
their long-term care needs. I urge my colleagues on both sides of the 
aisle to support this important bill.
  Thank you, Mr. President.
                                 ______