America is aging. By 2030, 1 in every 5 Americans will be a senior. And by 2040, more than 14 million Americans will be 85 or older.

This creates unique challenges for how we think about health care and senior living. Our seniors have higher expectations for being able to stay healthy, and for being able to age in place in the homes and communities they love.

Long-term care (LTC) coverage can help ensure that we successfully care for this generation. LTC coverage helps to pay for services that many seniors will need as they age, including board and care in a residential home; the support of a caregiver who would help with daily activities such as bathing, dressing and eating; and care for long-lasting or recurring illnesses.

Approximately 7.4 million people have invested in LTC coverage for their security and peace of mind. And it’s not just for seniors. Each year, approximately 20 million Americans under the age of 65 need LTC to help support them through a serious illness or health condition.

Unfortunately, too few Americans are investing now for future LTC needs. But Congress can make a few simple policy changes that would encourage more people to think ahead about their long-term health and financial security:

• Let employees use cafeteria plans and flexible spending arrangements to buy LTC coverage. Allowing LTC coverage to be provided under a cafeteria plan would make it more affordable. Most employees would simply shift their cafeteria plan/FSA dollars from other pre-tax benefits to LTC coverage. That means it would have limited impact on the tax dollars received from employees.*
• Allow retirement plans to invest directly in LTC coverage. This improvement will allow Americans to treat their LTC coverage like any other retirement plan investment. The impact on seniors’ tax revenue would be minimal, because they would be using existing retirement plan savings to protect themselves from LTC expenses.*
• Allow employees to make additional contributions to their Health Savings Accounts (HSA) to pay for LTC plans. This approach provides more flexibility and choice, allowing employees to save more pre-tax dollars to buy LTC coverage for themselves or their spouse.* Encouraging people to invest now to cover future health care expenses will likely save more taxpayer dollars long-term.

America’s seniors want to stay healthy and age in place in the homes and communities they love. By enacting these solutions, Congress can ensure that seniors are provided with an important pathway to health, independence, and financial security.

*Conceptual Analysis of potential Revenue Effects of Three Proposals to Encourage the Purchase of Long-Term Care Insurance; Mary M. Schmitt, Optimal Benefit Strategies, LLC; August 2018