LTC Bullet: Wednesday July 7, 1999 Seattle-- Chairman of the U.S. House Ways and Means Committee, Bill Archer (R-TX), has called for new tax provisions to encourage the purchase of long-term care insurance. Archer announced yesterday (July 6, 1999) that the Republican tax package--to be considered by the House Ways and Means Committee next week--contains two important features to help people purchase long-term care insurance: 1. Above-the-line tax deductibility for LTC insurance premiums: Taxpayers would no longer be subject to the threshold for deducting medical expenses (only those exceeding 7.5% of adjusted gross income) that now applies to deductibility of federally qualified LTC insurance premiums. Full deductibility would be phased in over a ten year period. In cases where an employer assists with premiums, taxpayers could deduct their personal out-of-pocket premium costs if their employer's contribution is less than 50%. 2. LTC Insurance in Cafeteria Plans: Companies would be permitted to include LTC insurance as a benefit of a cafeteria plan, which generally allow employees to purchase benefits with pre-tax wages. The bill also provides a tax break for caregivers. In response to President Clinton's proposed $1,000 annual tax break for LTC patients or their caregivers (see LTC Bullet: "Dr. Feelgood's LTC Prescription (1/8/99) at www.centerltc.com ), qualifying taxpayers could take a personal exemption currently worth $2,750. The benefit would be available only to persons caring for a spouse, or someone from whom the taxpayer or spouse descended (e.g., parent or grandparent)--and not to patients themselves. Moreover, the patient would have to reside with the taxpayer for the full year to which the exemption applied and be unable to perform at least three activities of daily living (ADL's), such as bathing, dressing or transferring. *Sources: Amy Goldstein, "Archer Wants Tax Breaks for Long-Term Health Care," Washington Post, July 7, 1999, p. A04. http://search.washingtonpost.com/wp-srv/WPlate/1999-07/07/079l-070799-idx.html Fowler W. Martin, "U.S. House Tax Bill to Contain Long-Term
Care Initiative," Dow Jones Newswires, July 6, 1999. http://interactive.wsj.com/archive/retrieve.cgi?id=BT-CO-19990706-002971.djml
(subscription required) |