Lawmakers Propose Well-Being Insurance for Older Adults

Takeaways

• The WISH Act proposes a federal long-term care insurance trust fund to provide monthly funds for long-term care expenses after a waiting period, aiming to support aging in place and reduce reliance on Medicaid.
• Potential benefits include increased access to home-based care, relief for family members serving as caregivers, long-term Medicaid savings, and a more equitable system, but there are potential costs and challenges.
• The WISH Act seeks to address the growing need for affordable long-term care solutions for the aging U.S. population by creating a universal insurance program funded by payroll taxes.

As the United States population ages, the need for affordable and sustainable long-term care solutions has become increasingly urgent. Many older adults prefer to age in place – that is, live independently in their homes and communities as they grow older. However, the high cost of long-term services and supports, such as home health aides or assisted living, remains a barrier.

In response to this growing issue, policymakers and advocates have been exploring innovative approaches to help seniors remain at home with dignity and independence. One such proposal is the bipartisan Well-Being Insurance for Seniors to be at Home (WISH) Act, introduced in Congress by Representatives Tom Suozzi (D-NY) and John Moolenaar (R-MI).

“Right now, our country is facing a looming long-term care crisis,” said Rep. Suozzi in a press release.

“Ten thousand Americans turn 65 every day; in five years, 6,500 seniors will turn 80 every day. Medicaid and nursing homes are already overburdened, and seniors have no other affordable options to pay for the care that they will need. We need to handle this problem before it becomes a crisis, and I believe a federal catastrophic long-term care insurance program coupled with a robust private sector insurance market is the way to do that.”

What Is the WISH Act?

The WISH Act aims to establish a federal long-term care insurance trust fund. The core idea behind the WISH Act is to provide a basic, federally administered long-term care benefit that kicks in after a waiting period, which could be one to five years. During this initial period, individuals would rely on personal savings, private insurance, family care, or Medicaid, if eligible. Once the federal benefit begins, it would provide monthly funds to help pay for long-term care expenses.

If enacted, this new federal benefit would be funded from a newly created Long-Term Care Insurance Trust Fund, similar to the Federal Old-Age Survivors Insurance Trust Fund and the Disability Insurance Trust Fund.

Potential Benefits of the WISH Act

The proposed WISH Act would offer a number of benefits to people as they age, including:

• Increased Access to Home-Based Care. Many seniors prefer to age in place, but the high cost of home care often forces them into nursing homes or into poverty before they can qualify for Medicaid. The WISH Act would provide a dedicated source of funding to support in-home services, helping people maintain independence and a decent quality of life.
• Relief for Families and Family Caregivers. Informal caregiving can be financially and emotionally taxing. The WISH Act could help qualified older people cover the costs of their long-term care needs, thus reducing the burden on family caregivers.
• Long-Term Medicaid Savings. Medicaid is the largest payer of long-term care services in the U.S., but it only covers people who have extremely little income and assets. By helping middle-income seniors afford care before they become impoverished, the WISH Act could reduce pressure on state Medicaid budgets.
• A More Equitable System. Currently, long-term care insurance is expensive and underutilized, with only 3 percent to 4 percent of Americans over 50 having coverage, according to LIMRA, as reported by KFF. The WISH Act would create a universal system that does not depend on an individual’s wealth or ability to qualify for private insurance.

Potential Costs and Challenges

Though the WISH Act would benefit scores of seniors across the country, it would come with costs.

• Initial Transition Costs. Though the program would eventually be self-sustaining through payroll taxes, it may require upfront funding to cover startup costs and ensure solvency early on.
• Political Feasibility. Implementing a new payroll tax, even a small one, could face resistance from employers, workers, and policymakers, especially during times of economic uncertainty.
• Long-Term Solvency Risks. As with any social insurance program, careful actuarial modeling would be necessary to ensure that payroll taxes are sufficient to meet future obligations.
• Administrative Complexity. Establishing eligibility, managing benefit payments, and coordinating with existing state Medicaid programs and private insurers could require significant administrative infrastructure.
• Adequacy of Benefits. Critics may argue that the proposed benefit of about $3,600 per month might be insufficient to cover the full cost of care in high-cost areas or for individuals with severe disabilities.

Planning for Long-Term Care

The WISH Act presents a promising and pragmatic approach to one of the most pressing issues facing the aging U.S. population. By establishing a public insurance program for long-term care, it seeks to promote aging in place, reduce Medicaid dependency, and ease the burden on families. However, its success would depend on careful policy design, sustainable financing, and strong bipartisan support. Contact an elder law attorney in your area to learn more about planning for the costs of long-term care.

For additional reading about different aspects of long-term care planning as adults age, check out the following articles:

• What a Good Long-Term Care Insurance Policy Should Include
• 2024 Survey Shows Long-Term Care Costs Continue to Rise
• Home Safety for Aging in Place: A Guide for Older Adults
• Is an Independent Living Facility Right for Me?
• When Should You Purchase Long-Term Care Insurance?
• Questions to Ask Before Buying Long-Term Care Insurance
• Activities of Daily Living and the Need for Long-Term Care