House of Representatives

SB 1520

tax credit; long-term care insurance

Sponsor: Senator Allen

 

DP

Committee on Human Services
x

Committee on Ways and Means

 

Caucus and COW

 

As Engrossed and As Passed the House

 

 

SB 1520 establishes a new income tax credit for long-term care insurance premiums.

 

History

Long-Term Care ranges from medical to social services designed to help people who have disabilities or chronic illnesses. Services may be short or long-term and may be provided in a person's home, in the community, or in residential facilities such as nursing homes or assisted living facilities. Long-Term Care Insurance policies pay for long-term care services that Medicare and Medicaid do not cover. Consumers pay premiums that vary depending on their age and health status and on the level of coverage, benefits and options selected.  Benefits are claimed when long-term care services are needed. 

 

The purpose of the Joint Legislative Income Tax Credit Review Committee (Committee) is to determine the original purpose of existing tax credits; establish a standard for evaluating and measuring the success or failure of the tax credits, rationale and estimated revenue impact of the credit, whether the credit has provided a benefit to this State, and whether the credit is unnecessarily complex in the application, administration and approval process. After the Committee completes the review process it determines whether the credit should be amended, repealed or retained. Each new income tax credit is required to be placed on the schedule for review after five full calendar years following the date the credit was first enacted.

 

Provisions

·          Beginning in 2007, provides a new nonrefundable income tax credit for long-term care premium costs paid by an Arizona resident during the taxable year for long-term care insurance coverage for:

§         the taxpayer.

§         the taxpayer’s spouse, parent or parent-in-law.

§         any other dependent of the taxpayer, subject to specified restrictions.

·          Limits the amount of the credit to the lesser of ten percent of the premium costs paid or five hundred dollars per each person covered by the policy.

·          Stipulates that the credit shall not exceed the amount of tax otherwise due by the taxpayer, after all other applicable credits and prohibits the credit from being refunded or carried forward to subsequent years.

·          Requires a long-term care policy to meet the requirements of the current statutes that regulate long-term care insurance.

·          Prohibits taxpayers from claiming both an itemized deduction or subtraction and a tax credit for the same expense in the calculation of taxpayer’s Arizona adjusted gross income.

·          Allows a husband and wife that file separate tax returns to each claim part of the credit, but limits the sum of the credits claimed by the husband and wife to the amount that would have been allowed if they filed a joint return.

·          Adds the credit to the Income Tax Credit Review Schedule in 2011.

·          Contains a purpose section.

·          Makes technical and conforming changes.

 

 

 

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Forty-seventh Legislature

Second Regular Session          2          March 22, 2006

 

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