Lawmakers push to double tax deduction for long-term care insurance premiums

~ Several suggested that boosting participation in long-term care plans would reduce the state's spiraling Medicaid costs.

JEFFERSON CITY, Mo. -- Hoping to increase enrollment in long-term care plans and perhaps reduce the state's Medicaid burden, a bipartisan group of lawmakers is pushing for a 100 percent state income tax deduction for long-term care insurance premiums.

Federal and state laws already allow taxpayers to deduct 50 percent of nonreimbursed long-term care insurance payments for nursing homes, assisted living and other such expenses from their tax returns.

But doubling that deduction could provide added financial motivation to those who might otherwise forego the costly insurance, said Rep. Edward Wildberger, D-St. Joseph, who is sponsoring one of three similar bills on the topic.

"It's being thrown out there as an incentive for people to purchase long-term care insurance while they're young," Wildberger testified Thursday at hearing of the House Senior Citizen Advocacy Committee.

The committee took no action on the proposed legislation.

Enacting such a law is projected to cost the state more than $2.7 million annually in lost tax revenue.

Wildberger and several committee members suggested that boosting participation in long-term care plans would reduce the state's spiraling Medicaid costs. They cited examples of otherwise ineligible Medicaid recipients attempting to qualify for the health-care program for the poor to avoid paying for long-term care or private insurance policies.

'No conclusive' evidence

A fiscal analysis by legislative researchers suggested otherwise, noting that the state Department of Social Services "does not believe there would be any substantial savings to the Medicaid program."

"There are no conclusive studies linking tax deductions to Medicaid savings," the Jan. 23 analysis concludes.

Reps. Charles Portwood, R-Ballwin, and Mike Dethrow, R-Alton, are sponsoring similar bills promoting the added tax incentive. Twenty-eight representatives from both parties signed on as co-sponsors of the three bills.

The proposal also has the support of House Speaker Rod Jetton, R-Marble Hill.

"The baby boom generation is approaching that age now," he said in an interview Thursday. "Anybody we can encourage to buy long-term care probably has a huge budget impact on the state and federal [governments] in the future."

The senior citizen committee approved a similar bill the previous two years before it died on the House floor, Portwood said.

Among those testifying in support of the proposal was a representative of the AARP, which provided committee members a breakfast of eggs, biscuits and potatoes.

Long-term care bills are HB1121, HB1145 and HB1359.