California Insurance Industry Cool To LTC Savings Accounts
California lawmakers almost created a task force that would have studied long-term care savings accounts.
Gov. Gray Davis, a Democrat, vetoed the bill, A.B. 1451, arguing the state could save $133,000 by letting an existing Long-Term Care Council conduct the study.
But the council is still looking at the LTC savings account idea, and the concept has come up repeatedly in other states. Michigan lawmakers began considering LTC savings account proposals in 1999, and an Illinois lawmaker introduced an LTC savings account bill in her state in February.
Calif. Assembly Member Carol Liu, D-La Canada Flintridge, Calif., says an LTC savings program seemed to be an obvious option to include in her LTC task force bill.
“That idea came from brainstorming among the staff,” Liu says.
The government now allows taxpayers to deduct LTC premiums from taxable income only if they itemize deductions and spend at least 7.5% of gross income on medical expenses. In practice, few taxpayers can take the LTC deduction, according to the Health Insurance Association of America, Washington.
The government has offered tax breaks for years on contributions to Individual Retirement Accounts and 401(k) retirement plans.