State Senator Offers Long-Term Savings Account

January 12, 2009
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State Sen. Bill Hardiman, R-Kentwood, has introduced a pair of bills that would give Michigan residents an opportunity to open a long-term health care savings account.

The account would earn interest and be tax deductible, and could be established with a state-chartered bank, a savings and loan, a credit union or a trust company.

The funds could pay for skilled nursing home care, home health care, personal care, or supportive services that are necessary due to the loss of some capacity from a chronic illness that makes self-care very difficult.

“We want to try to make it easier for people to provide for their long-term health care costs. The population is aging and health care costs are continuing to rise faster than inflation and government programs. We simply can’t handle the higher demand,” said Hardiman, a former mayor of Kentwood.

“The Medicaid rolls are swelling. In fact, if you look at the state budget, the increase there is just eating up so much that it causes us to cut other programs,” he added.

The governor’s 2009 budget included $8.5 billion for the medical services and long-term care portions of Medicaid, a figure up by 4.3 percent from the previous year. One of every seven Michigan residents is served by Medicaid.

The latest bills from Hardiman continue his effort to help residents with what sometimes are staggering medical costs. A few years ago, he supported legislation that added flexibility to insurance co-payments and gave businesses some options to continue to provide coverage for employees.

The long-term savings account would let residents set aside tax-deductible dollars for their future care — up to $5,000 a year for a single taxpayer and $10,000 on a joint return. The idea behind the account is similar to a health savings account such as the one Hardiman said he currently participates in.

“It’s almost similar to the health savings account we have at the state where it covers normal expenses. My wife and I put away some money in it every year and, for our expenses that are not covered by insurance, we pay for those from our account, which is not taxed,” he said.

“An ordinary savings account would not have that (tax) deduction. The account can also accrue interest. The accounts are not government funded.”

Hardiman voluntarily acknowledged that the long-term health care savings accounts will cost state government a yet-to-be-determined amount of money each year. But he strongly feels that price tag will be lower for the state than if residents are forced to enroll in Medicaid.

“If they have to go on Medicaid, that will be a lot more money. This empowers people to deal with their own long-term health care needs, and I think it just makes great sense to do that,” he said.

There isn’t an age restriction to open an account. Hardiman hopes everyone will flock to the idea — including young and healthy residents — even if they can only deposit a handful of dollars into the account each month.

“I think even young people starting out putting aside whatever they can — a small amount of money — would make a lot of sense,” he said. “Obviously, as we get older, we realize the need for this a little bit more. So I think at any age this is important.” HQ

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