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Modern Long-Term Care

Just as in other areas of health care, tremendous progress in the treatment options available for persons with long-term care needs has left government programs struggling to keep up. Too little attention has been paid to the increasing need for flexible, innovative forms of long term care - in particular, health care assistance that allows individuals with disabilities the opportunity to continue to live and participate in their community, and assistance that supports innovative forms of long-term care institutions.

Through a range of legislative and administrative initiatives, the Administration is taking steps to give seniors and persons with disabilities more control over their care, including better opportunities to choose the medical professionals they want and to choose the services they need. Many of these improvements are occurring in the Medicaid program, and were described in the previous section. In addition, the President has proposed new tax incentives to help Americans get innovative long-term care when they need it, and to provide more support for the caregivers who help so many Americans who need long-term assistance stay in their homes.

Provide and above-the-line deduction for long-term care insurance premiums. Current law provides a tax preference for employer-paid long-term care insurance. However, the vast majority of the long-term care insurance market consists of individually purchased policies, for which no tax preference is provided except when the taxpayer itemizes and has very high medical expenses. The Administration proposes to make individually purchased long-term care insurance -- the vast majority of the long-term care insurance market - more affordable by providing an above-the-line deduction for qualified long-term care insurance premiums.

This means that people who do not itemize deductions would still qualify for this deduction. The deduction would be available to taxpayers who individually purchase qualified long-term care insurance and those who pay at least 50 percent of the cost of employer-provided coverage.

Provide an additional personal exemption to home caretakers of family members. A parent's long illness or disability can impose significant burdens on their adult children who choose to care for them at home. Similar burdens are incurred by taxpayers who are the primary caregivers for their ill or disabled spouses or grandparents. Taxpayers who provide long-term care in their own home for close family members incur significant costs. Under the President's proposal, taxpayers would be eligible to claim an additional personal exemption for certain family members residing with the taxpayer in the household the taxpayer maintains.