Crisco, colleagues seek tax deduction on long-term care insurance

State Sen. Joseph J. Crisco, D-Woodbridge, and advocates call on Congress to offer an “above-the-line” federal tax deduction for those who invest in long-term care insurance. / Contributed photo

 

HARTFORD - Leaders of the Connecticut General Assembly’s Insurance and Real Estate Committee announced Friday they are seeking support from fellow legislators to establish an income tax deduction for individuals who invest in long-term care insurance. 
The leaders are asking for federal support in the form of a nationwide tax deduction on long-term care insurance premiums.

State senators Joseph J. Crisco, Jr., D-Woodbridge, and Kevin Kelly, R-Stratford, and state Representatives Robert Megna, D-New Haven, and Rob Sampson R-Wolcott, are sending a letter  to the Connecticut Congressional Delegation asking them to work towards passage of a federal tax deduction for long-term care insurance premiums.

These efforts are focused on encouraging individuals to invest in long-term care insurance, which would provide relief for the state’s growing burden of Medicaid-funded nursing home care.

“This is a commonsense approach to relieving one of the heaviest burdens on our state budget,” said  Crisco.
“Just as we in state government need to focus on long-term investments that will pay dividends for Connecticut for years to come, our constituents need to make similar investments so they can live healthy, independent lives as they age. 
"The benefits of independent living are indisputable. People are happier when they are able to age in their own communities, and stay connected to their friends, neighbors and surroundings. This would be a good step toward promoting investment in long-term care insurance, and I encourage Congress to take action.”

The single largest expenditure in the Connecticut state budget is funding for long-term Medicaid services. In 2012, the state spent $2.8 billion, or 10 percent of the annual state budget, on long-term care for seniors. As Connecticut’s senior population grows, the costs of providing this care will increase beyond the state’s capabilities, further straining the state budget.

Currently, 14 percent of the population is over 65 years old. 
By 2032, the senior population is expected to increase by nearly 69 percent, making nearly one quarter of the population over 65 years old.

“With huge growth in the senior population, it will be impossible to support people with the same amount of Medicaid services offered today,” Kelly said. “We need to encourage people to invest in long-term care insurance now, so they can independently support themselves as they age. We hope that the federal government will support our efforts with nationwide legislation.”

Long-term care is not always direct medical care, but rather is a range of services and supports that help individuals care for themselves on a daily basis. This can include help bathing, dressing, eating, using the toilet, shopping for groceries, caring for pets, housework, managing money, taking medication etc.

“The costs of providing long-term care are rising and spending is unsustainable,” said Sampson. “People need more incentives to encourage a personal investment in long-term care insurance. People deserve peace of mind when it comes to health care in their later years, and long-term care insurance can provide that. It’s time to make this insurance more affordable and more accessible while saving taxpayer money and helping people stay in their homes longer.”

The Insurance Committee leaders encourage the Connecticut Congressional Delegation to work towards passage of a federal “above-the-line” tax deduction for private long-term care insurance premiums. Currently, individuals can claim a deduction on their federal income taxes for the costs of long term care, but only if they itemize their deduction. The Insurance Committee is seeking support for a deduction that would come off the gross income, before the adjusted gross income is determined.

The majority of people do not itemize deductions when filing their taxes, with recent data from Urban Institute showing that only 30 percent of individuals did so in 2010. 
By requesting an “above-the-line” deduction, the Insurance Committee leaders hope to make it easier for all eligible individuals to receive the deductions they qualify for.

This is a press release from Crisco's office.