Observation Deck

Incentivising Aging in Place for Middle-Income Americans

Public policy and the private sector can work together to meet the future long-term care and housing needs of seniors.

• By Louis Tenenbaum
• Apr 01, 2022

A 2019 report from Health Affairs showed that by 2029 there would be 14.4 million middle-income seniors, 60 percent of whom will have mobility limitations and 20 percent of whom will have high health care and functional needs. While many of these seniors will likely need the level of care provided in senior housing, Health Affairs projects that 54 percent of seniors will not have sufficient financial resources to pay for it.

There is currently no government policy in place for middle-income Americans. This is why the HomesRenewed Coalition is working to pass legislation that will create tax incentives for older homeowners to make modifications to their homes so they can safely age at home.

The HomesRenewed Coalition was founded to engage the support of stakeholders across industries like home modifications, homecare, and technology to pass legislation and build an aging-in-place industry. Support is widespread and comes from entities such as VGM Live at Home, Lowes, Lifewise CHM, Lifeways Mobility, NSM, Age Safe America, Collins Medical, Handyman Solutions, Seniors Home Services, Access to independence, Accessible Systems, TrueBlue, Right at Home, and Axxess, as well as aging issues advocates and consumers.

How This Effort Started

A few years back, solar collectors and hybrid cars were taking off, thanks to tax incentives. This showed similar funding could become available for aging in place. That’s important because modifying homes was an issue that would continue to grow in importance as the number of Americans over the age of 65 continued to grow.

Living in the DC area, I started working with Tom Sheridan, a top lobbyist and founder of The Sheridan Group, on a strategy to propel this issue forward. They wrote a position paper that outlined the problem and a solution to implement legislation.

With the position paper in hand, we could start working on a bill. In the past year, we spoke to 28 congressional offices, Senators and Representatives, Republicans and Democrats alike. While there has been strong support for the idea, the chaotic political scene and COVID-19 meant most offices had limited bandwidth to pick up another bill.

Legislative Progress

However, our efforts have been working. Two champions have been identified: Reps. Charlie Crist (D-Fla.) and Tom Suozzi (D-N.Y.) have both agreed to introduce the bill.

An important part of that process is the Congressional Budget Office (CBO) score. The score indicates what Congressional economists think it will cost to implement a bill over a 10-year window. The idea with the home modifications tax incentive bill is that if it can be scored close to “revenue neutral,” meaning the cost to the federal budget is equal or close to equal to the benefits that will occur. If that is the case, a bill can easily pass the House and Senate since there wouldn’t be any budget concerns. Once a revenue-neutral bill is introduced, it can tag-along on another bill that is already going forward.

Seeing the importance of this factor, the Coalition has published an economics white paper that shows that the cost of lost tax revenues will be balanced by people falling less, fewer injuries, and fewer trips to the hospital, all of which cost the government money.

The proposed bill has made favorable progress and is expected to be scored and introduced in February or March 2022. The bill language is ready, and negotiations preparing for the CBO score continue. Once the bill is introduced in the House and Senate, other members of Congress will be approached and to sign on to the bill as well.

How The Incentives Work

The bill would incentivize homeowners to make home safety modifications by making their 401k or IRA funds available without tax or penalty. The bill recognizes two categories: For people above 59-and-a-half, the bill will eliminate the tax on funds used to update your home for aging in place. This is of particular interest for people who are over 70 or 71 and have a required minimum distribution of their 401Ks. If they don’t really need to take money out of their 401Ks because of other resources (pension, current income, etc.), this legislation will let them spend money on modifications without paying taxes on it. For people under 59-and-a-half who have untaxed savings, the bill would eliminate the penalties for early withdrawal as well as the tax savings.

Those expected to be early adopters of the new incentives are people who are already remodeling their homes. Homeowners over 50 years old annually spend more than $130 billion on their homes. Once more contractors become familiar with aging in place and help homeowners save money, incentive use is expected to expand.

The bill would include basic items to help an aging population get in and around their home, including better lighting, curbless showers, ramps and doorhandles, as well as technology installations. An extensive list of typical home modifications for aging-in-place items has been recommended for eligibility.

The next three months are critical as the Coalition would like to reach Congress before the mid-term elections. The bill’s two champions realize the importance of the bill in getting the attention of the aging voting population. You can help by joining the HomesRenewed Coalition. There are different levels of support and opportunities to become a sponsor. Funds are used for lobbying, administration, public relations, and campaigns costs.

This article originally appeared in the Mar/Apr 2022 issue of HME Business.