With less than three weeks left in the regular session of the Connecticut legislature, two bills that are pending and awaiting further action by the legislature, if signed into law, would represent tax relief for Connecticut taxpayers who are paying for the care of their relatives in need of long-term/home health care, or who have decided to purchase long-term care insurance for themselves.
- House Bill 7071 would establish a new state income tax deduction from Connecticut Adjusted Gross Income for an individual’s cost of ordinary and necessary expenses of full-time home health care costs (including medical supplies) incurred for caring for either (a) relatives age 70 or older of the taxpayer who are related by blood, adoption or marriage, or (b) a qualifying spouse or dependent of any age who is incapable of caring for him or herself due to physical or mental conditions and who meets additional requirements of the bill. The bill would limit the deduction to a maximum of $60,000 for full-time home health care costs. The bill would also create a separate deduction of up to $3,000 for the care of a qualifying child younger than age 13 who is the taxpayer’s dependent for federal income tax purposes. The bill would become effective upon passage and would be applicable to tax years beginning on or after January 1, 2019. The bill received a favorable vote on February 26, 2019, by the Connecticut General Assembly’s Aging Committee, and has now been referred by the House to the Committee on Finance, Revenue and Bonding.
- Senate Bill 563 would create a new state income tax deduction for a Connecticut taxpayer by adding a new subpart (xxvi) under Connecticut General Statutes § 12-701(a)(20)(B). This new subpart (xxvi) would subtract from Connecticut Adjusted Gross Income an amount equal to 100% of the long-term care (LTC) insurance premiums paid by the taxpayer in the taxable year for his or her own LTC coverage. (Federal law already contains an income tax deduction under IRC 213(d) that is limited to a dollar amount based on the total LTC premiums paid, depending on the taxpayer’s age — e.g., $1580 for someone who is age 55 in 2019; this deduction may be available at the federal level to taxpayers depending on their personal circumstances, such as whether they are an employee or self-employed.) If Senate Bill 563 becomes law in Connecticut, then to calculate the taxpayer’s Connecticut Adjusted Gross Income, 100% of his or her LTC premiums paid would further reduce the taxpayer’s federal Adjusted Gross Income. Eligible LTC premiums include premiums for individual policies or group policies. Eligible LTC policies provide benefits for treating injuries, illnesses or loss of functional capacity in settings such as nursing homes or the insured’s home; in-patient services in an acute-care hospital would not be eligible nor would policies that provide Medicare Supplement coverage, long-term disability coverage or major medical coverage. The bill would be effective upon passage, and would apply to taxable years beginning on or after January 1, 2019. The bill received a unanimous favorable vote on February 20, 2019, by all 13 members of the Connecticut General Assembly’s Aging Committee, and has now been referred by the Senate to the Committee on Finance, Revenue and Bonding.
Obviously, these two bills still are a long way away from becoming law in Connecticut, but, if they do become law, they signify some very meaningful tax relief for Connecticut residents who may be facing substantial expenses for the home health care of their loved ones, and/or may be purchasing long-term care insurance to address their own needs.