SENIOR SENATE PROPOSAL NO. 2
INTRODUCED BY SENATOR GALLIMORE
LEGISLATIVE COUNSEL'S DIGEST
SP 2: LONG-TERM
CARE INSURANCE PREMIUMS.
UNDER EXISTING LAW, LONG-TERM CARE INSURANCE PREMIUMS ARE
DEDUCTIBLE FOR PURPOSES OF THE PERSONAL INCOME TAX LAW.
THE AMOUNT OF PREMIUMS THAT MAY BE DEDUCTED IS LIMITED ACCORDING TO THE
AGE OF THE TAXPAYER, AND IS DEDUCTIBLE ONLY TO THE EXTENT THAT THE AMOUNT PAID,
WHEN GROUPED TOGETHER WITH ALL OTHER QUALIFYING MEDICAL AND DENTAL EXPENSES,
EXCEEDS 7.5% OF THE TAXPAYER'S ADJUSTED GROSS INCOME.
THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE
GOVERNOR TO ENACT LEGISLATION THAT WOULD PERMIT PREMIUMS FOR LONG-TERM CARE
INSURANCE TO BE FULLY DEDUCTED UNDER THE STATE PERSONAL INCOME TAX LAW.
VOTE: MAJORITY.
SP 2:
RELATING TO LONG-TERM CARE INSURANCE PREMIUMS
WHEREAS, FORTY-THREE PERCENT OF ALL SENIORS OVER THE AGE
OF 65 WILL REQUIRE LONG-TERM CARE IN A REGISTERED AND LICENSED SKILLED NURSING
FACILITY; AND
WHEREAS, THE AVERAGE DURATION OF THIS CARE, ON AVERAGE,
IS FOUR YEARS; AND
WHEREAS, THE CURRENT COST OF LONG-TERM CARE IN A SKILLED
NURSING FACILITY IS FROM $40,000 TO $100,000 PER YEAR; AND
WHEREAS, IF THE SENIOR REQUIRING THESE SERVICES IS NOT
ABLE TO PAY FOR THIS CARE, EITHER DIRECTLY OR THROUGH A LONG-TERM CARE INSURANCE
POLICY, THE STATE IS OBLIGATED TO PAY FOR THESE COSTS; AND
WHEREAS, THE COST OF NURSING HOME CARE IS INCREASING
FASTER THAN THE RATE OF INFLATION; AND
WHEREAS, THE PRESENT TAX LAW ONLY PERMITS A FRACTION OF
THE COST OF LONG-TERM INSURANCE TO BE DEDUCTIBLE; AND
WHEREAS, AS A RESULT, THERE IS LESS INCENTIVE FOR SENIORS
TO PURCHASE LONG-TERM CARE INSURANCE; AND
WHEREAS, THE AMOUNT OF REVENUE LOST TO THE STATE BY
PERMITTING FULL DEDUCTIBILITY OF THIS INSURANCE, AS COMPARED TO THE EXPOSURE TO
THE STATE FOR FULL EXPENSE OF LONG-TERM CARE, IS MINIMAL; AND
WHEREAS, SUCH DEDUCTIBILITY WOULD, THEREFORE, BE COST
EFFECTIVE TO THE STATE AS A RESULT OF COST AVOIDANCE; NOW, THEREFORE, BE IT
RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY,
JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2002
REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT
THE STATE PERSONAL INCOME TAX LAW BE AMENDED TO PERMIT FULL DEDUCTIBILITY OF
LONG-TERM CARE INSURANCE PREMIUMS; AND BE IT FURTHER
RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF
RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO
THE PRESIDENT PRO TEMPORE OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE
GOVERNOR OF THE STATE OF CALIFORNIA.
PU
RN0214989
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