House Passes Bill that Would Allow Tax Deductions for Long-Term Care Insurance Premiums
The House yesterday passed a bill (HR 4946) that would allow middle-income people to take a tax deduction for the cost of their long-term care insurance premiums, the AP/Worcester Telegram & Gazette reports. Current law permits taxpayers to deduct the cost of long-term care insurance premiums, but the amount that can be deducted must equal more than 7.5% of their incomes when combined with all medical expenses, and individuals must itemize the deduction. Under the bill, which passed 362-61, taxpayers could take the deduction without itemizing. Individuals earning $20,000 to $40,000 in adjusted gross income and couples earning $40,000 to $80,000 and filing tax returns jointly would be eligible for the deduction. Further, individuals would have to pay at least half of the plan premium to be eligible for the deduction. The measure also would permit a personal tax exemption of $3,000 in 2002 for people who act as long-term caregivers for a family member.
Rep. J.D. Hayworth (R-Ariz.), the bill's main sponsor, said the measure would encourage more people to purchase private long-term care insurance rather than relying on Medicare or Medicaid. He added, "If we don't put incentives in for individuals, our public funds will be depleted" (AP/Worcester Telegram & Gazette, 7/26). Donald Young, president of the Health Insurance Association of America, said, "Because this bill only provides limited tax incentives, it is only the first step in creating an effective tax policy to expand private long-term care insurance coverage. We hope that Congress can do more to make this benefit more fully and broadly available to Americans" (HIAA release, 7/25). Rep. Pete Stark (D-Calif.) called the bill "worthless," adding that it would help only a few people at a large cost to the federal government. The tax deduction would decrease federal revenue by approximately $5.3 billion over 10 years (Los Angeles Times, 7/26).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.