Establishes tax credits for premiums paid for life insurance which is used for long term health care

3 Co-sponsors

• Tony Avella
• David Carlucci
• David J. Valesky

Title of bill

An act to amend the tax law and the insurance law, in relation to credits for premiums paid for long-term care insurance policies

Purpose or general idea of bill

The purpose of this bill is to expand upon the provisions of Chapter 563 of the Laws of 2010 and Chapter 465 of the Laws of 2014, which expanded the types of end of life care that can be financed by an accelerated death benefit rider attached to a life insurance policy. Under these new laws, persons who have resided in a nursing home for three months or more or require end of life or palliative care for three months or more at a residential, health care facility, receive home care services or hospice care and such services are expected to be needed until death can now be financed by a life insurance policy rider. The bill provides additional tax credit inducements to encourage individuals to purchase long term care insurance or these new life insurance policy riders when they are younger. This enhanced tax credit is available for the first four years of the policy's effectiveness.

Summary of specific provisions

Section 1: Amends Tax Law section 190 to increase the tax credit for purchasing long term care insurance or a policy rider to a life insurance policy that provides for long term care-like coverages. The tax credit increases from 20% to 40% if the insured is less than 40 years old (for the first four policy years). The bill provides further a gradual decrease in the tax credit based on age (but which is still higher than the current law that establishes the tax credit at 20 percent). For persons less than 50 years old, the tax credit is 30%, for those older than 50, but 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 enhanced tax credit shall be applicable for the first four policy years, and thereafter, the rate of the tax credit will remain the same as is the current rate of 20%.

The reason for the increase in the 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 or policy riders to life insurance policies 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.

Effective date

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