From Families USA
February 22, 2000
New Patients' Bill of Rights Fact Sheets: Proposed Tax Deductions for Long Term Care Insurance
What is proposed?
Individuals can deduct 100 percent of the premium for a "qualified" long term care policy.
What's wrong with a deduction for people who purchase long term care insurance?
- Long term care insurance is of benefit only to those with higher incomes. Consumer groups advise people not to buy long term care policies unless they have assets of at least $75,000 (excluding their home and automobile) and retirement income of at least $35,000. More than 70 percent of Medicare beneficiaries over the age of 65 have income of $25,000 or less.
- This deduction will be worth more to people in higher tax brackets and will do least for those who can barely afford the premiums. The tax break isn't sufficient to help people with lower incomes buy insurance.
- This deduction will do nothing to help people who currently have long term care needs.
How many people who lack long term care insurance would this provision help?
The Joint Tax Committee estimates that this proposal will cost taxpayers $2 billion a year when fully phased in, but they do not indicate how many people would newly purchase such coverage.
