Lawmakers in Maryland have been looking at a pair of bills that could replace a one-time long-term care insurance (LTCI) state income tax break with an ongoing tax break.
Maryland now provides a one-time $500 tax credit for residents who buy eligible LTCI policies.
The bills under consideration would provide an annual $200 credit and apply the credit to all taxable years beginning after Dec. 31, 2012.
The House version is in the House Ways and Means Committee, and the Senate companion bill is in the Senate Budget and Taxation Committee.
The lead sponsor of H.B. 347 is Delegate James Hubbard, D-Bowie, Md.
The lead sponsor of S.B. 35 is Sen. Katherine Klausmeier, D-Baltimore.
The existing credit has shown up on about 71,000 Maryland tax returns filed from 2000 through 2010, and the filers of those returns asked for about 100,000 LTCI credits with a total value of $43 million, Robert Rehrmann, a state House analyst, writes in an H.B. 347 impact analysis.
“The bill provides a substantial incentive for individuals to buy long-term care insurance by subsidizing a portion of the annual premium,” Rehrmann says.
Use of private LTCI could help reduce state long-term care spending, but, at this point, it appears that the extra LTCI coverage sold as a result of the existence of the $500 one-time LTCI tax credit has probably not led to much savings, Rehrmann says.