Relates to the tax credit for the purchase of long-term care insurance

Title of bill

An act to amend the tax law and the insurance law, in relation to the tax credit for the purchase of long-term care insurance

Purpose

To provide relief from the increased premium costs of long-term care insurance.

Summary of provisions

Section one of this bill amends Tax Law section 190(1) by providing that for taxable years beginning on and after January 1, 2016, the credit for long-term care insurance premiums that are paid during the taxable year shall be 20% of the premium paid unless the premium increased during the taxable year and then the credit will be 25% of the premium paid during that taxable year.

Section two of this bill amends Tax Law section 210-B by providing that for taxable years beginning on and after January 1, 2016, the credit for long-term care insurance premiums that are paid during the taxable year shall be 20% of the premium paid unless the premium increased during the taxable year and then the credit will be 25% of the premium paid during that taxable year.

Section three of this bill amends Tax Law section 606(aa)(1) to provide that for taxable years beginning on and after January 1, 2016, taxpayers will be allowed a credit for long-term care insurance premiums paid during the taxable year equaling the applicable percentage of the premiums paid. The applicable percentage, which ranges from 50% to 20%, is based upon the insured's age at the time the policy was written.

Section four of this bill amends Tax Law section 1511 by providing that for taxable years beginning on and after January 1, 2016, the credit for long-term care insurance premiums that are paid during the taxable year shall be 20% of the premium paid unless the premium increased during the taxable year and then the credit will be 25% of the premium paid during that taxable year.

Section five of this bill adds a new section 4306-h to the Insurance Law. This new section prescribes information that must be provided to long-term care insurance policy holders on an annual basis.

Section six of this bill adds a new section 3216-a to the Insurance Law. This new section prescribes information that must be provided to long-term care insurance policy holders on an annual basis.

Section seven of this bill provides that this act shall take effect immediately.

Justification

In the past year, the Department of Financial Services approved significant increases in premiums for many long-term care insurance policies. The increase for one insurance company was 60% of the current premiums, while another was allowed to increase the premiums by 50%. Upon receiving notification of the premium increase, many New Yorkers, faced a difficult decision; find extra funds to pay the increased premium or reduce the policy's benefits. That is a difficult decision that this bill would help alleviate.

By using the age of the insured as the basis for the credit, those who purchased policies when they were in their younger years would receive a larger credit. These individuals acted responsibly and purchased policies when they were young and healthy. Instead of forcing these individuals to make a difficult decision after paying premiums for a number of years, this bill will help them in this time of increasing premiums.

Legislative history

New bill

Fiscal implications

To be determined

Effective date

This act shall take effect immediately.