NU Online News Service, July 26, 3:50 p.m. – The U.S. House of Representatives voted 362-61 Thursday to pass H.R. 4946, a bill that would create a limited “above-the-line” federal income tax deduction for individual taxpayers who buy long-term care insurance.
More than two-thirds of the 204 Democrats who voted supported the bill, and all of the 217 Republicans who voted supported it.
The bill, brought before the House by Reps. William Thomas, R-Calif., and J.D. Hayworth, R-Ariz., would phase in a long-term care insurance premium deduction over 10 years.
The maximum deduction would eventually amount to 50% of the taxpayer’s long-term care insurance premiums.
Only individuals with an adjusted gross income of $20,000 or less, and couples with adjusted gross incomes of $40,000 or less, could take the full deduction.
Individuals with adjusted gross incomes between $20,000 and $40,000, and couples with adjusted gross incomes between $40,000 and $80,000, could deduct smaller percentages of their annual premiums.
The Health Insurance Association of America, Washington, has issued a statement emphasizing the need for further action on tax treatment of long-term care insurance premiums.
“Because this bill only provides limited tax incentives, it is only a first step in creating an effective tax policy to expand private long-term care insurance coverage,” Dr. Donald Young, HIAA’s president, said in a statement. “HIAA has joined with key members of Congress in working for the enactment of legislation that will create effective tax incentives to expand this important coverage.”
The American Council of Life Insurers, Washington, also emphasizes the need for more action.
Two ACLI executives, Philmore Anderson, the council’s senior vice president for government relations, and Kimberly Olson Dorgan, the vice president for federal relations, wrote a letter to Hayworth and House Ways and Means Chairman William Thomas urging them to support the private long-term care insurance industry.
“One of the greatest risks to asset loss in retirement is unanticipated long-term care expenses,” the ACLI officials write in the letter. “Unless people are encouraged to plan for their future needs, soaring costs and rising demand for long-term care services could deplete personal savings and exhaust government entitlement programs.”