S2559-2011 Actions

• Jan 4, 2012: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS
• Jan 25, 2011: REFERRED TO INVESTIGATIONS AND GOVERNMENT OPERATIONS

S2559-2011 Memo

BILL NUMBER:S2559

TITLE OF BILL:

An act
to amend the tax law, in relation to long-term care insurance tax
credits

PURPOSE OR GENERAL IDEA OF BILL:

This legislation would enhance the tax incentives for the purchase of
long-term care insurance policies.

SUMMARY OF PROVISIONS:

This legislation amends subdivision 1 of section 190 of the tax law,
paragraph 1 of subsection aa of section 606 of the tax law,
subdivision 1 of subdivision k of section 1456 of the tax law,
paragraph 1 of subsection m of section 1511 of the tax law, and
paragraph a of subdivision 25-a of section 210 of the tax law, to
provide a tax credit equal to 75% of the premium paid during the
first taxable year in which the long-term care insurance was
purchased, 50% of the premium paid in the following year, and 25% of
the premium in the third year. In order to qualify for a credit, the
premium payment must be for the purchase of or for continuing
coverage under a long-term care insurance policy that qualifies for
such credit pursuant to section 1117 of the insurance law.

JUSTIFICATION:

Long-term care insurance policies are purchased with the intent of
covering basic activities of daily living and are typically
associated with individuals over the age of 65 years. However,
studies have shown that fewer individuals are purchasing policies
each year and even fewer at an earlier age. As a result, individuals
are relying more on Medicaid for their long-term care needs.
In 2006, New York State spent approximately $19 billion on long-term
care while California spent an estimated $12 billion, according to
a study conducted by the Rockefeller Institute of Government. The
enhanced tax credit proposed by this legislation would encourage more
individuals to purchase policies at a younger age and minimize the
burden on the State's Medicaid system.

Currently, a credit of 20% of the premium paid is given for every year
the policy is maintained.
While this current credit certainly provides a valuable benefit to the
consumer, studies conducted by the New York State Insurance
Department indicate fewer policies have been purchased over the past
several years. (on average, 20,000 long-term care insurance policies
sold annually from 2001-2004 to nearly 12,500 annually from
2005-2008.) This legislation offers a tax credit of 75% of the

premium paid during the first year of purchase, 50% of the premium
during the
following year, and 25% of the premium during the third year with the
intent to encourage individuals to purchase long-term care policies
and lessen the burden on the Medicaid system.

Historically, individuals who purchase long-term care insurance and
keep it for three years, are less likely to lapse in payments or
cancel the policy, signifying less of a need for the current 20% tax
credit schedule; in fact, with the proposed credit schedule, the
state could save millions of dollars.

LEGISLATIVE HISTORY:

S.3201-A of 2009-10

FISCAL IMPLICATIONS:

To be determined.

EFFECTIVE DATE:

This act shall take effect immediately and shall apply to long-term
insurance contracts purchased or entered into on and after
January 1st, 2012.

S2559-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 
                                         2559
 2011-2012 Regular Sessions
 I N  SENATE
 January 25, 2011
 
 Introduced  by  Sen.  SEWARD -- read twice and ordered printed, and when
 printed to be committed to the Committee on Investigations and Govern
 ment Operations
 

AN ACT to amend the tax law, in relation to long-term care insurance tax
 credits
 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section  1. Subdivision 1 of section 190 of the tax law, as amended by
 section 17 of part B of chapter 58 of the laws of 2004,  is  amended  to
 read as follows:

 1.  General.  A  taxpayer  shall  be  allowed a credit against the tax
 imposed by this article, other  than  the  taxes  and  fees  imposed  by
 sections  one hundred eighty and one hundred eighty-one of this article,
 equal to [twenty] SEVENTY-FIVE percent of the premium  paid  during  the
 taxable  year [for] IN WHICH THE long-term care insurance WAS PURCHASED,
 FIFTY PERCENT OF THE PREMIUM PAID IN THE FOLLOWING YEAR AND  TWENTY-FIVE
 PERCENT  OF  THE PREMIUM PAID IN THE THIRD YEAR. In order to qualify for
 such credit, the taxpayer's premium payment must be for the purchase  of
 or  for continuing coverage under a long-term care insurance policy that
 qualifies for such credit pursuant to section one thousand  one  hundred
 seventeen of the insurance law.
 

S  2. Paragraph 1 of subsection (aa) of section 606 of the tax law, as
 amended by section 1 of part P of chapter 61 of the  laws  of  2005,  is
 amended to read as follows:

 (1)  Residents.  A  taxpayer shall be allowed a credit against the tax
 imposed by this article equal to [twenty] SEVENTY-FIVE  percent  of  the
 premium  paid  during the taxable year [for] IN WHICH THE long-term care
 insurance WAS PURCHASED, FIFTY  PERCENT  OF  THE  PREMIUM  PAID  IN  THE
 FOLLOWING  YEAR AND TWENTY-FIVE PERCENT OF THE PREMIUM PAID IN THE THIRD
 YEAR.   In order to qualify for  such  credit,  the  taxpayer's  premium
 payment  must  be for the purchase of or for continuing coverage under a
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD05408-01-1
 
       S. 2559                             2
 long-term care insurance policy that qualifies for such credit  pursuant
 to  section  one thousand one hundred seventeen of the insurance law. If
 the amount of the credit allowable under this subsection for any taxable
 year  shall  exceed  the taxpayer's tax for such year, the excess may be
 carried over to the following year or years and may be deducted from the
 taxpayer's tax for such year or years.
 

S 3. Paragraph 1 of subsection (k) of section 1456 of the tax law,  as
 amended  by  section  20 of part B of chapter 58 of the laws of 2004, is
 amended to read as follows:

 (1) A taxpayer shall be allowed a credit against the  tax  imposed  by
 this  article equal to [twenty] SEVENTY-FIVE percent of the premium paid
 during the taxable year [for] IN WHICH THE long-term care insurance  WAS
 PURCHASED,  FIFTY  PERCENT OF THE PREMIUM PAID IN THE FOLLOWING YEAR AND
 TWENTY-FIVE PERCENT OF THE PREMIUM PAID IN THE THIRD YEAR.  In order  to
 qualify  for such credit, the taxpayer's premium payment must be for the
 purchase of or for continuing coverage under a long-term care  insurance
 policy  that  qualifies for such credit pursuant to section one thousand
 one hundred seventeen of the insurance law.
 

S 4. Paragraph 1 of subdivision (m) of section 1511 of the tax law, as
 amended by section 21 of part B of chapter 58 of the laws  of  2004,  is
 amended to read as follows:

 (1)  A  taxpayer  shall be allowed a credit against the tax imposed by
 this article equal to [twenty] SEVENTY-FIVE percent of the premium  paid
 during  the taxable year [for] IN WHICH THE long-term care insurance WAS
 PURCHASED, FIFTY PERCENT OF THE PREMIUM PAID IN THE FOLLOWING  YEAR  AND
 TWENTY-FIVE  PERCENT OF THE PREMIUM PAID IN THE THIRD YEAR.  In order to
 qualify for such credit, the taxpayer's premium payment must be for  the
 purchase  of or for continuing coverage under a long-term care insurance
 policy that qualifies for such credit pursuant to section  one  thousand
 one hundred seventeen of the insurance law.
 

S  5. Paragraph (a) of subdivision 25-a of section 210 of the tax law,
 as amended by section 18 of part B of chapter 58 of the laws of 2004, is
 amended to read as follows:

 (a) A taxpayer shall be allowed a credit against the  tax  imposed  by
 this  article equal to [twenty] SEVENTY-FIVE percent of the premium paid
 during the taxable year [for] IN WHICH THE long-term care insurance  WAS
 PURCHASED,  FIFTY  PERCENT OF THE PREMIUM PAID IN THE FOLLOWING YEAR AND
 TWENTY-FIVE PERCENT OF THE PREMIUM PAID IN THE THIRD YEAR.  In order  to
 qualify  for such credit, the taxpayer's premium payment must be for the
 purchase of or for continuing coverage under a long-term care  insurance
 policy  that  qualifies for such credit pursuant to section one thousand
 one hundred seventeen of the insurance law.
 

S 6. This act shall take effect immediately and shall apply  to  long
 term  care  insurance  contracts  purchased or entered into on and after
 January 1, 2012.

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