LTC Bullet: How Two Wrongs Can Make a Right: An Open Letter on Tax Deductibility to Congresswoman Nancy Johnson
Thursday October 1, 1998
Rep. Nancy Johnson's (R-CT) Long-Term Care and Retirement Security
Act of 1998 (HR 4472;
The original estimate of $200 million was revised to $1.8 billion by Congress' Joint Committee on Taxation earlier this month.
The bill would amend the Internal Revenue Code to allow a 100 percent deduction for the LTC insurance premiums of all individuals who are not eligible to participate in employer-subsidized long-term care health plans. The above-the-line deduction would apply also to an employee's spouse and dependents.
Rep. Johnson's office reaffirmed the Congresswoman's commitment
to LTC legislation in a letter
This disappointing news gave Center for LTC Financing President Stephen Moses an idea. Why not use the revenue to be saved by fixing the criminalization debacle and permanently controlling Medicaid planning to pay for the cost of full tax deductibility for long-term care insurance?
Moses' letter to Representative Johnson proposing this solution
follows. With the letter, he also sent copies of "The Magic
Bullet: How to Pay for Universal Long-Term Care" and "LTC
Choice: A Simple, Cost-Free Solution to the Long-Term Care Financing
Puzzle." (These reports are available for purchase from the
Center by calling 206-447-1340 or consul-
The Honorable Nancy Johnson
Dear Representative Johnson,
Thank you for notifying me and the Center for Long-Term Care Financing about the disappointing news concerning HR 4472. I know that your hopes were dashed, along with all of us who worry about long-term care financing, by the discovery that true deductibility for LTC insurance would cost $1.6 billion more than originally anticipated.
Ironically, however, this bad news gave me a good idea. What if we could find a new non-tax revenue source that would more than make up for this unfortunate shortfall and solve another important social problem in the bargain? What if we could take two wrongs and make a right! Here's what I mean:
As you know, Attorney General Janet Reno recently advised Speaker Gingrich that Justice will not enforce the criminalization of Medicaid estate planning (i.e., the practice of artificially impoverishing frail or infirm elderly people to qualify them for Medicaid nursing home benefits.) A New York court has enjoined enforcement of the law as well. Consequently, a green light is flashing nationwide in favor of Medicaid estate planning and a red light is flashing against private long-term care insurance. Why buy insurance when you can ignore the risk, wait to see if the insurable event occurs, and shift the cost to taxpayers and nursing home owners if necessary?
The well-known problems of too much Medicaid planning and too
little private long-term care insurance are inextricably intertwined.
We can and must kill both birds with one stone. By
Congresswoman Johnson, I have taken the liberty to send you
herewith "The Magic Bullet" study that documents these
claims and additional corroborative evidence. The Magic Bullet
is only the financing portion of a broader plan we have published
called "LTC Choice" which will solve the long-term care
financing problem once and for all. A copy of that paper is also
enclosed. If you find merit in this approach, we at the Center
for Long-Term Care Financing would be pleased to help you explore
and develop it further.
Stephen A. Moses
CC 1600 subscribers to "LTC Bullets," the Center
for Long-Term Care Financing's on-line