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

Summary of specific provisions

Section 1: Amends Tax Law section 190 to extend the tax credit for purchasing long term care insurance (20% of the premium paid) to include a policy rider to a life insurance policy that provides for long term care-like coverages. The reason for this expansion is because, under new laws recently adopted in New York, the life insurance rider can now pay for accelerated benefits for end of life care that covers the same types of end of life care covered under long term care insurance.

Section 2: Amends Tax Law section 210-B to expand the tax credit incen- tives currently used to encourage the purchase long term care insurance (20% of the premium paid)to include premiums paid to purchase life insurance riders that cover similar end of life expenses as it relates to the corporate franchise rate.

Section 3: Amends Tax Law section 606 to add the LTC (long term care) life insurance policy rider premiums paid that is eligible for a tax credit, in addition the tax credit that is currently available for long term care insurance for personnel income tax calculations.

Section 4: Amends Tax Law section 1511 to add the LTC tax credit for the purchase of life insurance policy riders for insurance corporation taxes.

Section 5: Amends Insurance Law section 1117 (g) to make a technical amendment to cross reference and ensure that the Superintendent of Financial Services approves all life insurance policy riders that are eligible to obtain an income tax credit, as is currently the case for free standing long term care insurance policies.

Justification

As the general population becomes older, more and more individuals are looking for affordable ways to finance 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. This can be done by encouraging more younger persons to obtain such coverage and incentivize more life insurers to offer such coverages. By both encouraging persons to purchase such policies and incentivizing carriers to offer such policy riders, this should greatly expand the number of covered lives protected.

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 and Chapter 465 of the Laws of 2014 which are geared towards encouraging individuals to finance their own long term care and nursing home care as we all get older via life insurance policy riders.

Prior legislative history

New bill, that has been introduced to include technical changes to S. 5230-A / A. 7607-A, that was vetoed, for certain technical cross references in the law that may have been needed.

Fiscal implications

It is the intent of this bill encourage the increased use: of Long Term Care insurance and policy riders to life insurance policies 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 April, 1st of the year next succeeding its date of enactment.