NU Online News Service, June 19, 4:14 p.m. — Washington
The House Ways and Means Committee has approved legislation providing a limited above-the-line tax deduction for long-term care insurance.
In a 29-6 vote, the committee approved H.R. 4946, which would provide a graduated deduction with a maximum of 50% for LTC premiums.
An above-the-line deduction is one that is available to all taxpayers, whether or not they itemize.
A deduction would only be available to individuals with less than $40,000 in adjusted gross income and to married couples filing jointly with less than $80,000 in adjusted gross income.
There would be no deduction for individuals whose employers pay 50% or more of the total premiums.
In addition, H.R. 4946 contains no language for including LTC insurance in cafeteria plans or flexible spending accounts.
Lynn Boyd, a long-term care specialist with the American Council of Life Insurers, Washington, says ACLI is always pleased when Congress looks at providing a deduction for LTC premiums.
This is a step in the right direction, she says.
However, Boyd says, ACLI is concerned about the income limitations. The maximum 50% deduction is available only to individuals with adjusted gross incomes of $20,000, she notes.
The deduction phases out completely for individuals who earn $40,000, Boyd says.
Generally, she says, the taxpayers who could take the deduction would be low-income individuals who probably are not in the market for LTC insurance.
That is ACLI’s biggest concern, Boyd says, but life insurers are also concerned that H.R. 4946 has no provisions for cafeteria plans or flexible spending accounts.
Although ACLI is pleased that the Ways and Means Committee is looking at the issue, other pending bills have stronger provisions, Boyd says.