FACT SHEET
H.B. 1616, HD1, SD1
LONG-TERM CARE TAX
Establishes a long-term care income tax of $120 per year, collected through withholding and estimated tax filings beginning after December 31, 2004. Provides for scheduled increases beginning after December 31, 2005, up to December 31, 2011 (thereafter, board of trustees to recommend increases to legislature). Exempts persons receiving defined benefits if the person is vested.
- Provides for portability of benefits for persons who leave the State.
- Provides for vesting after ten years to receive defined benefits. Vesting is progressive, with one year of contribution equaling one-tenth of defined benefits.
- Defines benefits of $70 per day up to a cumulative period of 365 days, to be paid primary to private insurance and Medicaid benefits. No benefits paid to Medicare beneficiaries unless Medicare is exhausted for qualifying individuals. Benefits gradually increase from 2008 to 2013, with increases thereafter at the discretion of the board of trustees.
- Requires the Department of Taxation to transfer tax receipts to the board of trustees for deposit into the long-term care benefits fund (to pay for benefits and administration), which current law prohibits any "raid" for other purposes.
- Excludes defined benefits from taxation.
- Provides for ten years of income tax credits of $10 per month up to $120 per year for the first five years of the tax credit, to be increased to $15 per month up to $180 per year for the remaining five years of the tax credit, for persons who have purchased long-term care insurance and paid the long-term care income tax.
- Exempts long-term care benefits fund from transfers to general fund for administrative and central services expenses.
- Requires board of trustees to prepare annual actuarial report.
- Requires board of trustees to establish procedures to allow individuals who do not file income tax returns because they only receive pension income, to participate by voluntarily paying the tax.
- Requires board of trustees to ensure against fraud and abuse in claims and payment of defined benefits.
- Makes appropriations for start-up costs.
- Applies to taxable years beginning after December 31, 2003.