HB 6674 — AN ACT ESTABLISHING AN INCOME TAX CREDIT FOR LONG-TERM CARE INSURANCE PREMIUM PAYMENTS.

House of Representatives General Assembly RaisedFile Bill No.

6674657 January Session, 2021 LCOHouse Bill No.

60776674 ReferredHouse toof Representatives, May 10, 2021 The Committee on FINANCE,Finance, REVENUERevenue ANDand BONDINGBonding Introducedreported by:through REP.

(FIN)SCANLON ANof ACTthe ESTABLISHING98th ANDist., INCOMEChairperson TAXof CREDITthe FORCommittee LONG-TERMon CAREthe INSURANCEpart PREMIUMof PAYMENTS.the House, that the bill ought to pass.

AN ACT ESTABLISHING AN INCOME TAX CREDIT FOR LONG-TERM CARE INSURANCE PREMIUM PAYMENTS.

LCOHB6674 6077/ \\PRDFS1\HCOUSERS\BARRYJN\WS\2021HB-06674-R011File of 2 HB.docx Raised Bill No.

6674657 This1 actHB6674 shallFile takeNo. effect as follows and shall amend the following sections:

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Section 1 January 1, 2022, and New section applicable to taxable years commencing on or after January 1, 2022 FIN Joint Favorable HB6674 / File No.

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657 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 22 $ FY 23 $ Department of Revenue Services GF - Revenue None 59.3 million Loss Department of Revenue Services GF - Cost None 10,000 - 20,000 Note:

GF=General Fund Municipal Impact:

None Explanation The bill, which establishes a personal income tax credit for certain taxpayers equal to 20% of long-term care insurance premiums paid, results in:

1) a General Fund revenue loss of $59.3 million annually beginning in FY 23, and 2) a one-time cost of between $10,000 and $20,000 to the Department of Revenue Services to implement tax form changes in FY 23 only.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

Sources:

American Association of Retired People 5 Things You Should Know About Long- Term Care Insurance Hartford Business Journal "Long-term Care Insurers Request Big Rate Hikes, But COVID-19 Not To Blame" 6/27/2020 InvestmentNews "States Try To Beat Back Rate Increases On Long-term Care Policies" 9/13/2018 HB6674 / File No.

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657 OLR Bill Analysis HB 6674 AN ACT ESTABLISHING AN INCOME TAX CREDIT FOR LONG- TERM CARE INSURANCE PREMIUM PAYMENTS.

SUMMARY This bill establishes a personal income tax credit for certain taxpayers who make premium payments on individual long-term care insurance policies (see BACKGROUND).

The credit does not apply to the withholding tax.

Under the bill, the credit equals 20% of premiums paid in the tax year by an eligible taxpayer who is the insured under the policy.

To qualify for thecredit, a taxpayer must beaConnecticut resident for state income tax purposes with a federal adjusted gross income (AGI) below $200,0000.

(It is unclear how these limits apply to married individuals filing jointly.) EFFECTIVE DATE:

January 1, 2022, and applicable to tax years starting on or after that date.

BACKGROUND Long-Term Care Policy As used in the bill, a long-term care policy is an individual health insurance policy issued to state residents that provides benefits for the care or treatment of an injury, illness, or loss of functional capacity in a setting other than an acute care hospital, including a nursing home and an insured's own home, for at least one year after an elimination period.

It excludes policies that primarily provide Medicare supplement, basic medical-surgical expense, hospital confinement indemnity, major medical expense, disability income protection, accident only, specified accident, and limited benefit health coverage (CGS § 38a-501).

HB6674 / File No.

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657 COMMITTEE ACTION Finance, Revenue and Bonding Committee Joint Favorable Yea 47 Nay 0 (04/22/2021) HB6674 / File No.

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