STAND. COM. REP. NO. 1277

Honolulu, Hawaii

, 2005

RE: H.B. No. 97

H.D. 2

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Human Services and Health and Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 97, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO LONG-TERM CARE,"

beg leave to report as follows:

The purpose of this measure is to provide individual and employer long-term care tax credits for long-term care premium costs.

Your Committees received testimony in support of this measure from the Governor, Department of Taxation, Department of Health, Department of Commerce and Consumer Affairs, HealthCare Association of Hawaii, Chamber of Commerce of Hawaii, Hawaii State Teachers Association, Hawaii Association of Health Underwriters, Hawaii Long Term Care Association, National Association of Insurance and Financial Advisors, and American Council of Life Insurers. Testimony in opposition was received from the Kokua Council. Comments were received from the Attorney General and Tax Foundation of Hawaii.

Your Committees find that the rapid growth of the elderly and disabled populations will result in extraordinary demands on the delivery of services. Persons sixty years of age and older will increase from one fifth to more that one-fourth of the adult population by 2020. While the majority of persons receiving long-term care are older adults, their entire families are affected by the psychological, financial, and social costs of long-term care provided to those who are limited in the activities of daily living. A tax credit may encourage the community to buy long-term care insurance, because in the long term, the State could save hundreds of thousands of dollars in Medicaid coverage as their limited resources disappeared paying for nursing homes. The tax credit under this measure targets the lower and middle income bracket and these groups will most likely qualify for Medicaid coverage because of their limited resources.

Your Committees further find that the individual tax credit is structured to accomplish two specifics goals: to help residents with lower incomes afford the cost of long-term care insurance, and to provide a financial incentive for residents with moderate incomes to purchase their own private long-term care insurance. Another goal of tax credits is to encourage employers to purchase qualified long-term care insurance contracts for their employees, and to ensure that such qualified long-term care insurance contracts cover both home and community-based care in addition to coverage for long-term care in intermediate care facilities and skilled nursing facilities.

Your Committees further find that the dependency on ever shrinking Medicaid dollars seriously limits the choice of venue for long-term care services, and only by taking a proactive position to purchase long-term care insurance or other similar approach will our elderly be able to receive necessary care in a manner of their own choosing.

Your Committees have amended this measure by changing the term "resident taxpayers" to "taxpayers" to address a potential constitutional challenge based on the Equal Protection Clause of the United States Constitution.

As affirmed by the records of votes of the members of your Committees on Human Services and Health and Commerce, Consumer Protection, and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 97, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 97, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Human Services and Health and Commerce, Consumer Protection, and Housing,

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ROSALYN H. BAKER, Chair

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SUZANNE CHUN OAKLAND, Chair

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RON MENOR, Chair