Osborn's goal on encouraging savings a worthy one

Tuesday, Sep 09, 2008 - 12:30:41 am CDT
Nebraska State Treasurer Shane Osborn was in Minnesota last month trying to persuade another state to create its own version of the Nebraska Long-Term Care Savings Plan.

Osborn is investing his energy in a worthwhile cause.

Nebraska legislators in 2006 created the nation’s first state-sponsored plan to encourage people to save for long-term care following the model of the so-called “529” tax-advantaged college savings plans.

The long-term plan gives participants a deduction on their state income taxes. The incentive, however, is relatively small – protecting only about $2,000 of income for a couple.

Osborn’s goal, however, is to build momentum and support for creating a deduction for federal income taxes by popularizing the concept at the state level.

There’s little doubt that there’s a need. Federal officials say that 70 percent of people will need long-term care at some point in their lives.

The average annual cost for private assisted living in Nebraska is $54,000 a year. The national average is $60,000.

Osborn said promoting the new savings plan also helps raise awareness that people need to start saving. Seventeen banks in the state now offer the savings plan.

An individual can save up to $170,000 in the plan. The money can be used for a variety of uses related to long-term care. For example, the money can be used for modifications to a home such as a ramp for a wheel chair, or for home health care. At age 50 people can use the money to pay for long-term care insurance. If the money is not used, it can be passed along to heirs.

Osborn’s visit to Minnesota, sponsored by the Minnesota Chamber of Commerce, Ecumen, a senior services and housing nonprofit and other organizations, produced a positive response. “I’m sold. I would go so far as saying I would be prepared to carry this legislation next year in the senate,” Minnesota State Senator Geoff Michel told the Minneapolis Star Tribune., Osborn said he received other promises of support last week at the Republican National Convention.

Other states that have expressed interest include Indiana, Illinois, Maryland, Connecticut and Idaho.

Although the long-term care saving plan may lower tax revenue, Osborn said, it will save the state money in the long run. The state spends more than $120 million a year to cover nursing home care.

Nebraskans should wish Osborn success in his quest to eventually win a federal tax deduction for long-term savings plans. The option is one that would be popular with baby boomers who are beginning to come to grips with their own mortality.