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10% LTC Tax Credit Given to Louisiana

July 11, 2002

Louisiana residents who purchase long term care insurance have been given a state income tax credit. The bill, signed by Louisiana Governor Murphy Foster, Jr, allows for residents to subtract up to 10% of the annual LTC premium costs from their total state income taxes. In order to receive the credit, the policy must include a minimum 3 year benefit period and be tax-qualified. However, the credit can not exceed a taxpayer's total state tax liability in any given year.

"There may be some future Medicaid cost savings to the state" Albrecht, an analyst with the Louisiana Fiscal Office, concedes. "It seems possible that a relatively large population of citizens would be generating annual credit costs to the state's treasury, while a relatively small population would be generating Medicaid cost savings."

However, we know that Medicaid pays for 2/3 of nursing home patients nationally, but is substantially lower for states with higher market penetration of LTC insurance. Medicaid patients in IA, KS, NE and ND are 50%, 53%, 53% and 55% respectively. In all four states, over 15% of 65+ residents own LTC insurance. (Source: "2000 Nursing Home Statistical Yearbook", c. 2001, 800-508-9442 and HIAA "LTC Insurance in 1998-1999," 2/02)

More information about the bill, including the text, is on the Web at: http://www.legis.state.la.us/bills/byinst.asp?sessionid=02RS&billid=HB55

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