Senior Health Planning Accounts (SHPAs) will help seniors and their families plan and pay for rising health and long-term care costs. By allowing seniors to make more effective use of their current resources, rather than depending on government programs like Medicaid, SHPAs will help provide seniors the ability to choose the level and type of health care that best suits their needs.

Americans with a terminal or chronic illness already have the right to sell their life insurance policies without incurring federal income taxes on the proceeds. SHPAs would extend that right to all seniors so they can better plan for rising long-term health care needs, maintain a more comfortable standard of living, and give them and their families more choice over their health care decisions.


SHPAs would benefit taxpayers by making more effective use of existing private resources to pay for health care costs otherwise borne by taxpayer-funded programs. In particular, the increased use of private dollars for long-term care services will help seniors defer the need to enroll in Medicaid, potentially saving billions of taxpayer dollars.  

What’s more, extending current law to provide for the tax-free use of life settlements to all seniors, provided that those proceeds are used for qualified medical expenses, would likely increase life settlement volumes. In turn, life settlements produce greater taxable income than alternative outcomes for life insurance policies, including lapse, surrender, or payment of a death benefit to original beneficiaries. Life settlement proceeds, on average, far exceed policies’ cash value; policyowners receive nothing for lapsed policies. Also, though death benefits on most insurance policies are not taxed, death benefits on policies purchased in life settlement transactions are fully taxable.