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There are big changes coming to retirement plans.

By: Clay Cotton

In August 2006, President Bush signed into law the Pension Protection Act of 2006 (PPA). This law affects both employee funded plans such as 401(k)s and traditional defined benefit pension plans.

Congress was partially motivated by the looming crisis of the Pension Benefit Guaranty Corporation. So several of the provisions in the act serve to shore up private defined benefit pension plans that provide a pension.

Sadly, it's likely the stricter rules will encourage the recent trend of companies terminating or freezing their defined benefit plans.

Most of the changes regarding defined benefit pension plans are fairly arcane, but one thing is clear: These plans do nothing to address long term care needs. For long term care, Uncle Sam makes it clear that they want you to buy your own long term care insurance, and it's in your interest to get it early, long before you may need it.

Long term care has become an increasingly urgent policy issue. The number of elderly Americans and their proportion of the nation's population are growing, and Americans who reach age 65 are living longer. Debate over long term care by policymakers and members of the public has ebbed and flowed during the past three decades. More and more Americans and their leaders face the dilemma of how to meet the needs of elders with chronic disabilities in the United States.

The mass media have highlighted the cost of long term care and the need to plan for it well in advance; the burden of long term care on individuals, families, and society; and concerns about the quality of care.

Policymakers are struggling to define the roles of the federal and state governments and the private sector in financing and delivering care to elderly people with disabilities.

Policymakers now face three significant questions: (1) Who should pay for long term care, and how? (2) How should services to elders with disabilities and their families be designed, and who should deliver them? (3) How can the labor force delivering that care be recruited, trained, and maintained? For long term care policymakers in the United States, this is the triple knot. Each of these three strands demands equal attention if sound, appropriate policy is to be developed.

The question of financing has received periodic attention from federal policymakers since the early 1970s. The potentially high cost and the lack of political will, however, have impeded serious debate about access to long term care and about the "right" balance between the roles of the public and private sectors. Except for some federal demonstration initiatives, policy development related to the delivery of services has occurred primarily at the state and local levels. At every level, the availability and quality of the current and future long term care labor force""""both professional and paraprofessional""""have received the least attention of all.

We believe that the burden of long term care will likely continue to be borne by individuals and their loved ones. Long term care insurance is the primary financial planning tool used to prepare in advance for these all-too-likely care expenses.