Makes various provisions to encourage the purchase of long term health care insurance coverage

Summary of specific provisions

Section 1: Adds Insurance Law section 342 to establish a coordinated Public awareness program to encourage individuals to purchase long term care (LTC) insurance. Such awareness program shall be a collaborative effort between the Departments of Health, Insurance, and Taxation & Finance, and the Office of the Aging.

Section 2: Amends Insurance Law section 1113(al to expand the types of long term care (LTC) and end of life care that can be financed by an accelerated death benefit payable from an individual's life insurance. This accelerated death benefit would need to be purchased as an additional rider attached to a life insurance contract. This authorization for a new rider was done by expanding the definition of life insurance.

Section 3: Amends Insurance Law section 3201(11) to add life insurance policies that have a trigger for payment of benefit upon the recipient receiving end of life care or palliative care via long term health care, hospice or adult day care services, or other services as one of the types of policies that the Insurance Department must approve the policy form for before and insurer can begin to sell such policy riders to the general public.

Section 4: Amends Insurance Law section 3230(f) to add the payment of an accelerated payment of a death benefit or special surrender value upon the insured requiring end of life care as provided for in Insurance Law section 1113.

Section 5: Amends Tax Law section 190 to increase the tax credit for purchasing long term care insurance. The tax credit increase from 20% to 4096 if the insured is less than 40 years old. The bill provides

further a gradual increase in the tax credit based on age. For persons less than 50 years old, the tax credit is 30%, for those less than 55 years old, the tax credit is 25%, and for those 55 years old or older, the tax credit remains the same as it is now at 20%. The reason for the increased tax credit for those under the age of 40, 50, and 55 years of age is to encourage younger persons to purchase long term care insurance when the premium rate is cheaper. Over 80% of the New York Partnership for Long Term Care Insurance policies are purchased by persons over the age of 55. For persons over the age of 60 years, the average cost of a Partnership for Long Term Care insurance policy is between $3,000 and $6,000, for those under the age of 55, it is approximately $2,300. Hence, even with the higher percentage tax credit for the purchase of LTC Insurance, for younger persons the tax subsidy will be less than it is for the average person over the age of 60. The goal of this bill is to encourage younger individuals to purchase this kind of coverage.

Section 5: Amends Tax Law section 210 to add the new tax credit incentives for the computation of the corporate franchise tax.

Section 7: Amends Tax Law section 606 to add the LTC tax credit for personnel income tax calculations.

Section 8: Amends Tax Law section 1456 to add the LTC tax credit for bank corporation taxes.

Section 9: Amends Tax Law section 1511 to add the LTC tax credit for insurance corporation taxes.

Section 10: Amends the public Health Law section 3602(4) to broaden the definition of "home health aide services" to include "homemaker services" which can be engaged through a private home aide. Further, that such services are reimbursable through the partnership for long term care program for end of life expenses.

Section 11: Amends Insurance Law section 3216 that relates to the provisions of individual health care contracts and expands coverage under such individual health care policies to cover homemaker services that are provided and reimbursed under the LTC Partnership program.

Section 12: Amends Insurance Law section 3221(k) that relates to the provisions of small group health insurance policies to expand the definition of home care to include the provision of such services through a private home aide service as long as such service is provided and reimbursed under the LTC partnership program.

Section 13: Amends Insurance Law section 4303(a) to expand the defi- nition of home care to include the provision of such services through a private home aide service as long as such service is provided and reimbursed under the LTC Partnership program.

Section 14; Amends social Services Law section 367-f to expand the definition of long term care services to include homemaker services provided through private home aides that is reimbursed pursuant to the LTC partnership

Section 15: Mandates that the Insurance Department analyze and compare expenditures, utilization rates, and utilization patterns for claims for home care services covered under individual and group accident policies for the period commencing 2 years preceding the effective date of this act.

Justification

As the general population becomes older, more and more individuals are looking for affordable ways to pay for the financing of their nursing home and long term care needs. While there are available policies that provide payment for long term care, more products should be authorized under New York law so that consumers will have more types of insurance coverage available to meet their specific needs or the needs of their family.

In addition, encouraging more individuals to finance their own long term care, will help to curtail future expenditures from the State's Medicaid program, which currently finances the lion's share of the provision of long term care in this State. This bill is a further extension of new laws such as Chapter 563 of the Laws of 2010 which are geared towards encouraging individuals to finance their own long term care and nursing home care as we all get older.

Prior legislative history

2011-2012 - S. 5037 - Referred to Insurance

Fiscal implications

It is the intent of this bill encourage the increased use of Long Term Care insurance for the use as a financing mechanism to finance end of life care. This, in the end, should help to decrease State Medicaid expenditures.

Effective date

This act shall take effect on January 1st of the year next succeeding its date of enactment.