WASHINGTON — U.S. Sen. Pat Toomey, R-Pa., is pushing a new measure to increase the affordability of long-term care insurance.

Toomey’s Long-Term Care Affordability Act would allow individuals to pay up to $2,500 each year for long-term care insurance with their 401k, 403b, and IRAs without a tax penalty.

“For too many Americans approaching retirement, the onset of a chronic illness that requires nursing home or in-home care could cause financial ruin,” said Toomey. “Paying for long-term care insurance with retirement savings can enhance financial security in retirement. The Senate should pass this bill.”

Retirement accounts give a tax benefit to workers who set aside money now for use during retirement. Early withdrawals from these accounts are generally treated as income and taxed accordingly. However, there are exceptions. For example, 401k holders may be able to use their retirement account to own life insurance without a tax penalty. Toomey’s measure would treat insurance for long-term care similarly.

According to the U.S. Census Bureau, 50 percent of individuals living past the age of 65 will need some long-term care, and more than half of American households contribute to retirement accounts. All of them would be eligible to pay for long-term care with retirement savings under this legislation.

In November 2019, Toomey convened the Senate Finance Committee Subcommittee on Health Care to address barriers to diagnosis, treatment, and care for Alzheimer’s patients. During that hearing, Toomey outlined the need for this new legislation.

Following that hearing, Toomey and Sen. Debbie Stabenow, chairman and ranking member of the subcommittee, sought input from health care providers, researchers, patients, advocacy groups, states, and others to inform the development of this legislation.