Clinton to Urge Tax Credit for Long-Term Care

President Clinton will ask Congress to create a $1,000-a-year tax credit to help families cover the cost of home-based care for elderly parents, disabled spouses or children, White House officials said Sunday.

If enacted, it would represent the first significant effort by the federal government to help offset the costs of long-term care for the disabled. Clinton administration officials said it would help 2 million families, the majority of whom are caring for elderly relatives.

The plan will be included in the fiscal year 2000 budget being drafted by the White House. It would cost an estimated $6.2 billion over five years, making it the biggest new health initiative in the president’s budget. White House officials said Clinton will ask Congress to offset the expense by closing unspecified tax loopholes.

Vice President Al Gore will officially unveil the proposed tax credit today in Sacramento at the Del Oro Caregiver Resource Center, which assists those who care for adults with brain impairment from stroke, cancer or disease, such as Alzheimer’s and Parkinson’s.

Although a $1,000-a-year tax credit is likely to cover only a fraction of the cost of caring for a disabled parent, child or spouse, the measure won immediate praise from advocacy groups. They noted that it would reward family members who care for their relatives at home rather than institutionalizing them. In many cases, caregivers have left paying jobs to keep a family member out of a nursing home.

“It’s not a complete answer, but it does begin to address the problem of caregiving for very seriously disabled folks,” said John Rother, legislative director for the American Assn. of Retired Persons in Washington. “We have unprecedented prosperity and wealth, yet to date we haven’t done much to help people who are facing these enormous burdens just to support their own family.”

The cost of nursing home care averages $45,000 to $50,000 a year. The only federal program that pays for nursing home care is Medicaid, which serves the poor and disabled. In many cases, elderly people must spend all their savings and impoverish themselves to qualify for assistance.

Medicare, the primary government health insurance program for the elderly, does not cover long-term care. Members of the national commission set up to overhaul Medicare have signaled that they will not attempt to change the program to address the long-term care needs of the elderly.

“This recognizes that you shouldn’t have to impoverish yourself in order to get some public support,” said Judy Feder, dean of policy studies at Georgetown University.

Advocates lauded the administration for encouraging families to keep the elderly and disabled at home.

“People would rather stay home,” said Feder. “To provide enough resources to enable somebody to stay home--that’s hard; it’s a lot of money. But a little assistance can make life easier for families who are struggling to take care of people at home.”

Still, experts and advocates acknowledged that the costs of caring for a disabled child, spouse or parent dwarf Clinton’s proposed $1,000 credit.

“We’re very positive on it,” Rother said. “But we don’t want people to think this is the answer to the problems they face, because the problems are likely to be so much larger in magnitude.”

The cost of hiring an unskilled home health aide for a few hours a day can hit $5,000 a year. The proposed tax credit offsets only 20% of that. Social Security, on average, provides only about $10,000 a year to a retiree, according to the Treasury Department.

Still, the credit could make a difference, said Stephen McConnell, vice president of the Chicago-based Alzheimer’s Assn.

More than two-thirds of the estimated 4 million people with some degree of Alzheimer’s disease are cared for by their families, McConnell said. New Alzheimer’s medication, which is not covered by most health insurance plans, can cost as much as $100 a month. The tax credit, he noted, would cover almost all of that expense.

In addition, the credit could help pay for the one thing that a caregiving family probably needs most: a little time off.

“Caring for someone with Alzheimer’s is a 24-hour experience,” McConnell said. “They don’t sleep well, they wander, you have to have someone come in to give you a break. That’s where the tax credit would be helpful because you’re paying out-of-pocket for someone to come in.”

Despite its cost, the proposal is likely to receive serious consideration on Capitol Hill. Republicans generally favor social initiatives that rely on tax credits rather than new government programs.

GOP lawmakers already have proposed a tax break to help Americans purchase long-term-care insurance. But it would primarily affect upper-income families, since middle- and lower-income taxpayers often cannot afford the premiums. Moreover, the GOP proposal does little to help families already caring for a relative.

Another Republican proposal, advanced by Rep. William M. Thomas (R-Bakersfield), co-chairman of the Medicare Commission, entails providing new incentives for families to save money for their long-term care needs.

White House officials said the tax credit is one of several key budgetary proposals aimed at helping at-home caregivers. The package contains four basic elements:

* The $1,000 tax credit, which would be available to the disabled or their caregivers with incomes of $75,000 or less if they are single and $110,000 or less for a couple.

* A $125-million matching grant program to help states set up respite care networks for caregivers and “one-stop” offices to dispense information about caring for disabled family members. California is one of four states whose model programs are being highlighted by the White House.

* A program to educate the elderly about the limitations of Medicare coverage, since many do not realize it will not help them if they fall ill with a disease that leaves them disabled.

* A model program to help employers assess long-term health care insurance plans. The program would be run by the Federal Employee Health Benefit Program.