updated March 2021
What is HR 5958?
Earlier this year, a piece of new legislation was introduced that allows the use of tax-free health planning accounts funded by the proceeds from the sale of their unneeded life insurance policies.
Known as the Senior Health Planning Account Act (H.R. 5958), the bill has the potential to help millions of American seniors fund their health care needs, especially that of long-term care, which can be prohibitively expensive. Essentially, if the legislation passes, Senior Health Planning Accounts would allow seniors to access the same type of tax-advantaged savings accounts that millions of younger adults already enjoy in the form of Health Savings Accounts.
According to HealthView Services, a provider of health care cost projection software, a 65-year-old couple in good health will need $387,644 to pay for health care costs for the remainder of their lives — and that’s without long-term care. The average cost for long-term care is $7,698 per month for a private room in a nursing home and $3,628 per month for a room in an assisted living facility, according to the U.S. Department of Health and Human Services.
For millions of Americans who own a life insurance policy, letting it “lapse,” or missing a premium payment, means voiding the protection and security gained when they held the policy. The Senior Health Planning Account Act would help make life insurance a more powerful and valuable asset for millions of Americans.
Here is the updated new legislation 2020 H.R. 5958 summary.
Senior Health Planning Account Act
This bill allows tax-exempt senior health planning accounts that are funded using a taxpayer’s gains from the sale or assignment of a life insurance contract. The bill excludes from gross income (1) the gains that are contributed to the accounts, and (2) distributions from the accounts that are used exclusively for the health care expenses of the account beneficiary or the account beneficiary’s spouse.
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