House Adopts Long-Term Care Tax Bill, Expected to Pass Treasury-
Postal Spending Plan
The House on July 23 approved a GOP long-term care bill granting taxpayers
who cover at least half the costs of their long-term insurance premiums an
above-the-line deduction and providing a $3,000 credit for caregivers assisting
those with long-term care needs.
Document Type: News Stories
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=============== SUMMARY ===============
House lawmakers on July 23 approved a Republican long-term care bill (H.R.
4946) granting taxpayers who cover at least half the costs of their long-term
insurance premiums an above-the-line deduction and providing a new $3,000
credit for caregivers who assist family members with long-term care needs.
At press time, the House was debating the fiscal 2003 Treasury- Postal
appropriations bill and was expected to approve the measure.
The
The Joint Committee on Taxation has estimated the bill would cost $98
million in 2003 and $5.6 billion through 2012.
While Weller touted the bill as a "pro-family, pro-senior"
initiative, bill author Hayworth said the coming retirement rush by the
baby-boom generation and the growing number of seniors mandated action on the
long-term insurance front. "Our nation is in dire need of long-term care
reform," Hayworth said on the House floor.
Ways and Means Committee member Fortney Pete Stark, D-Calif., however,
charged that the real motivation behind the legislation was to offset corporate
losses resulting from skimpy long-term care plan sales. "This is some
insurance salesman running amok and writing a bill," he asserted, labeling
the Hayworth proposal "at best unnecessary and at worst a wasteful
expenditure of $5.5 billion."
=============== FULL TEXT ===============
House lawmakers on July 23 approved a Republican long-term care bill (H.R.
4946) granting taxpayers who cover at least half the costs of their long-term
insurance premiums an above-the-line deduction and providing a new $3,000
credit for caregivers who assist family members with long-term care needs.
At press time, the House was debating the fiscal 2003 Treasury- Postal
appropriations bill and was expected to approve the measure. (For prior
coverage, see Doc 2002-16870 (2 original pages) [PDF]
or 2002 TNT 139-4 
.)
The
The Joint Committee on Taxation has estimated the bill would cost $98
million in 2003 and $5.6 billion through 2012.
While Weller touted the bill as a "pro-family, pro-senior"
initiative, bill author Hayworth said the coming retirement rush by the
baby-boom generation and the growing number of seniors mandated action on the
long-term insurance front. "Our nation is in dire need of long-term care
reform," Hayworth said on the House floor.
Ways and Means Committee member Fortney Pete Stark, D-Calif., however,
charged that the real motivation behind the legislation was to offset corporate
losses resulting from skimpy long-term care plan sales. "This is some
insurance salesman running amok and writing a bill," he asserted, labeling
the Hayworth proposal "at best unnecessary and at worst a wasteful
expenditure of $5.5 billion."
Taxpayers earning between $20,000 and $40,000 (between $40,000 and $80,000
for joint filers) could claim the above-the-line deduction (adjusted annually
for inflation and rounded to the nearest $1,000) for eligible long-term care
insurance covering individuals, their spouses, or any eligible dependents.
According to the JCT, the deduction provision would cost $648 million over five
years and $2.4 billion through the next decade.
Individuals would also be eligible for an additional personal exemption --
beyond the existing $3,000 exemption -- for each qualified family member with
long-term care needs. The exemption would phase in over the next decade, rising
to $500 for 2003 and 2004, $1,000 in 2005 and 2006, $1,500 in 2007 and 2008,
$2,000 in 2009 and 2010, $2,500 in 2011, and the full $3,000 (adjusted for
inflation thereafter) from 2012 forward. The home caregiver credit is estimated
to cost $787 million over five years and $2.9 billion over 10 years.
The bill also includes a handful of other tax changes that would (1) expand
the eligibility for Archer medical savings accounts to Medicare+Choice account
holders and allow employers to make contributions to an Archer MSA for
employees already on Medicare; (2) expand human clinical trials qualifying for
the orphan drug credit ($105 million over 5 years, $268 million over 10 years);
(3) add any vaccine designed to combat Hepatitis A to the list of taxable
children's vaccines ($26 million over five years, $58 million over 10); and,
(4) update the National Association of Insurance Commissioners' consumer
protection rules governing qualified long- term care insurance to reflect the
new tax deduction.
Stark said the bill is just another attempt by GOP leaders to
"subsidize corporations to the detriment of the poor while accomplishing
very little."
According to Stark, JCT estimates suggest that 100,000 new customers will
sign up for long-term care plans by 2012 because of the proposed tax changes --
a boost he insists adds up to a per capita "$5,600 bribe" for
long-term care purchasers. "Why are we trying to get people to purchase
something they don't need?" he asked.
Code Section: Miscellaneous
Geographic Identifier:
Subject Area: Budgets
Credits
Health care tax issues
Individual income taxation
Legislative tax issues
Cross Reference:
Author: Rojas, Warren
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