Long-Term Care: The President''s FY2001 Budget Proposals and Related Legislation

Publication Date: August 2000

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

In his FY2001 budget, President Clinton proposed a multi-faceted long-term care initiative. Its principal components include a new tax credit (up to $3,000 when fully phased-in) for persons with substantial disabilities and their families, grants to states for caregiver services through the Older Americans Act (OAA), long-term care insurance for federal workers, and conversion of some federally assisted housing to assisted living units. Similar proposals were included in the FY2000 budget.

The President's initiative raises questions that some say need attention by policymakers. One is whether family caregiving can be sustained by targeting tax benefits and making support, respite, and counseling services more widely available. While federal assistance for long-term care is primarily for nursing homes, most longterm care is provided by families in the home. About 37 million caregivers provide unpaid care - usually without public assistance - to family members of all ages with functional or cognitive impairments. The need for caregivers and the demands they face are expected to grow substantially in the future.

A second question is what role private long-term care insurance can play. Some believe it can supplement public programs and support options for family caregiving, at least for some people. One objective of the President's initiative is to promote employment-based long-term care insurance by establishing a model program for federal employees.

The President's proposals continue an incremental approach to long-term care when some believe that a more comprehensive strategy is needed. The $3,000 tax credit, the most costly element of the package, in particular has been criticized. While it would compensate families for their caregiving efforts and out-of-pocket expenses, some analysts say it is not well targeted. Most lower income families without tax liability would not be eligible for the credit; for those that are, it would cover only a small portion of their often significant expenses.

Different approaches are found in the patient protection legislation passed by the House (H.R. 2990) and Senate (S. 1344), in conference. These bills would authorize a new tax deduction (not limited to itemizers) for individuals who purchase long-term care insurance, and allow employment-based long-term care insurance to be included in cafeteria plans and flexible spending accounts. H.R. 2990 would also authorize an additional dependency exemption for taxpayers who provide care to elderly family members. These tax benefits have also been included in the Senate amendment to the FY2001 Labor-HHS-Education Appropriations legislation (H.R. 4577).

The House and Senate have passed legislation (H.R. 4040) that would establish a group long-term care insurance program for federal employees, retirees, members of the uniformed services, and certain family members. Similar proposals for an OAA caregiver grant program have been approved by the House Education and the Workforce Committee (H.R. 782) and the Senate Health, Education, Labor and Pensions (HELP) Committee (S. 1536).