NY State Senate Bill 2017-S3566

Senate Bill S3566

2017-2018 Legislative Session

Establishes tax credits for premiums paid for life insurance which is used for long term health care

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Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to investigations and government operations
Jan 24, 2017	referred to investigations and government operations

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2017-S3566 (ACTIVE) - Details

Current Committee:: Senate Investigations And Government Operations
Law Section:: Tax Law
Laws Affected:: Amd §§190, 210-B, 606 & 1511, Tax L; amd §1117, Ins L
Versions Introduced in 2015-2016 Legislative Session:: S5229

2017-S3566 (ACTIVE) - Summary

Establishes tax credits for premiums paid for life insurance which is used for long term health care; enhances tax credits for long term health care insurance premiums.

2017-S3566 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S3566

 TITLE OF BILL :  An act to amend the tax law and the insurance law,
in relation to credits for premiums paid for long-term care insurance
policies

 PURPOSE OR GENERAL IDEA OF BILL :

The purpose of this bill is to expand upon the provisions of Chapter
563 of the Laws of 2010 and Chapter 465 of the Laws of 2014, which
expanded the types of end of life care that can be financed by an
accelerated death benefit rider attached to a life insurance policy.
Under these new laws, persons who have resided in a nursing home for
three months or more; require end of life or palliative care for three
months or more at a residential health care facility; or receive home
care services and/or hospice care for 3 months or more -- and such
services are expected to be needed until the death of the insured --
can now finance such LTC care by a life insurance policy rider. The
life insurance rider needs to have similar coverages as a stand alone
Long-term care insurance policy (LTC).

The bill provides additional tax credit inducements to encourage
individuals to purchase long-term care insurance or these new life
insurance policy LTC riders when they are younger. This enhanced tax
credit is available for the first four years of the policy's
effectiveness, after which, the premium tax credit enhancements return

to the currently existing 20% of the LTC insurance premiums paid by
the taxpayer.

 SUMMARY OF SPECIFIC PROVISIONS :

Sections 1-4: Amends Tax Law sections 190, 210-B, 606, 1511 to
increase the tax credit for purchasing insurance or a policy rider to
a life insurance policy that provides for long term care-like (LTC)
coverages.

This bill increases the LTC premium rate tax credit from 20% to 40% of
the premium paid if the insured that is purchasing LTC insurance or a
life insurance LTC rider is less than 40 years old (for the first four
policy years). The bill provides further a gradual decrease in the tax
credit based on age (but which is still higher than the current law
that establishes the tax credit at 20 percent). For person is between
40 and 50 years old, the tax credit is 30%, for those older than 50,
but less than 55 years old, the tax credit is 25%, and for those 55
years old or older, the tax credit remains the same as it is now under
current law at 20%. The enhanced tax credit shall be applicable for
the first four policy years, and thereafter, the rate of the tax
credit will remain the same as is the current rate of 20%.

The reason for the increase in the tax credit for those under the age
of 40, 50, and 55 years of age is to encourage younger persons to
purchase Long-term care (LTC) insurance or LTC policy riders to life
insurance policies when the premium rate is cheaper. Over 80% of the
New York Partnership for Long Term Care Insurance policies are
purchased by persons over the age of 55. For persons over the age of
60 years, the average annual cost of a Partnership for Long Term Care
insurance policy starts at at least $5,000 and can go up to $ 9,000
per year. However, for those under the age of 55, the cost of LTC
insurance or life policy LTC rider is much less.

Under this bill, the reason why this enhanced premium tax credit is
effective for only four years after the policy is purchased, is
because studies indicate that after securing coverage for 4 years of a
policy, those that retain such coverages will retain such LTC policies
over the long run.  Hence, there is no need to provide the enhanced
premium tax credit after the fourth year.
The other very important reason that this bill needs to be enacted
into law is to help stem the hemorrhaging loss of covered individuals
in the LTC insurance market. Presently, each year, the premium rates
for LTC insurance have been increasing by at least 50% for the
three-year policy term. This is forcing many covered individuals out
of the LTC insurance market. Those that remain covered by LTC
insurance in this market are those who are most likely to need this
very expensive care, hence the experience rate (the cost of providing
services under such LTC policies) is rising rapidly. This, in turn,
then necessitates that LTC premium rates need to increase that much
more rapidly to cover such rising expenses. This phenomenon in the
insurance industry is called a "death spiral", where the premium rates
increase so high that the LTC coverages are not affordable by covered
individuals, and hence, they drop out of the market. Further, as the
LTC rates become ever more astronomical, LTC insurers pull out of the
market because the number of covered persons becomes too low to
sustain this as a viable insurance market.

 LEGISLATIVE HISTORY :

This bill was introduced in 2015 as S. 5229 / A. 7603.

 EFFECTIVE DATE :
This act shall take effect on April, 1st of the year next succeeding
its date of enactment.

2017-S3566 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3566
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 24, 2017
                                ___________
 
 Introduced  by Sens. KLEIN, ALCANTARA, AVELLA, CARLUCCI, HAMILTON, SAVI-
   NO, VALESKY -- read twice and ordered printed, and when printed to  be
   committed to the Committee on Investigations and Government Operations
 
 AN  ACT to amend the tax law and the insurance law, in relation to cred-
   its for premiums paid for long-term care insurance policies

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1.  Subdivision 1 of section 190 of the tax law, as amended by
 section  102  of part A of chapter 59 of the laws of 2014, is amended to
 read as follows:
   1. General. A taxpayer shall be  allowed  a  credit  against  the  tax
 imposed by this article equal to [twenty percent] THE FOLLOWING PERCENT-
 AGES  of  the  premium  paid  during the taxable year for long-term care
 insurance OR FOR A POLICY RIDER TO A LIFE INSURANCE POLICY ISSUED PURSU-
 ANT TO SUBPARAGRAPH (C), (D), (E) OR (F) OF PARAGRAPH ONE OF  SUBSECTION
 (A) OF SECTION ONE THOUSAND ONE HUNDRED THIRTEEN OF THE INSURANCE LAW:
   (A)  FORTY  PERCENT  IF THE INSURED IS LESS THAN FORTY YEARS OF AGE AT
 THE END OF THE TAX YEAR FOR THE FIRST FOUR POLICY YEARS;
   (B) THIRTY PERCENT IF THE INSURED IS LESS THAN FIFTY YEARS OF AGE, BUT
 FORTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR  THE  FIRST
 FOUR POLICY YEARS;
   (C)  TWENTY-FIVE  PERCENT IF THE INSURED IS LESS THAN FIFTY-FIVE YEARS
 OF AGE, BUT FIFTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR
 THE FIRST FOUR POLICY YEARS; OR
   (D)  TWENTY  PERCENT IF THE INSURED IS FIFTY-FIVE OR MORE YEARS OF AGE
 AT THE END OF THE TAX YEAR, AND FOR ALL OTHER INSUREDS WHO  HAVE  HAD  A
 POLICY FOR FIVE YEARS OR MORE.
   In  order  to  qualify for such credit, the taxpayer's premium payment
 must be for the purchase of or for continuing coverage under a long-term
 care insurance policy that qualifies for such credit pursuant to section
 one thousand one hundred seventeen of the insurance law.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD09046-01-7

 S. 3566                             2
 
   § 2. Paragraph (a) of subdivision 14 of section 210-B of the tax  law,
 as  added  by section 17 of part A of chapter 59 of the laws of 2014, is
 amended to read as follows:
   (a)  General.  A  taxpayer  shall  be allowed a credit against the tax
 imposed by this article equal to [twenty percent] THE FOLLOWING PERCENT-
 AGES of the premium paid during the  taxable  year  for  long-term  care
 insurance OR FOR A POLICY RIDER TO A LIFE INSURANCE POLICY ISSUED PURSU-
 ANT  TO SUBPARAGRAPH (C), (D), (E) OR (F) OF PARAGRAPH ONE OF SUBSECTION
 (A) OF SECTION ONE THOUSAND ONE HUNDRED THIRTEEN OF THE INSURANCE LAW:
   (I) FORTY PERCENT IF THE INSURED IS LESS THAN FORTY YEARS  OF  AGE  AT
 THE END OF THE TAX YEAR FOR THE FIRST FOUR POLICY YEARS;
   (II)  THIRTY  PERCENT  IF THE INSURED IS LESS THAN FIFTY YEARS OF AGE,
 BUT FORTY OR MORE YEARS OF AGE, AT THE END OF THE TAX YEAR FOR THE FIRST
 FOUR POLICY YEARS;
   (III) TWENTY-FIVE PERCENT IF THE INSURED IS LESS THAN FIFTY-FIVE YEARS
 OF AGE, BUT FIFTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR
 THE FIRST FOUR POLICY YEARS; OR
   (IV)  TWENTY PERCENT IF THE INSURED IS FIFTY-FIVE OR MORE YEARS OF AGE
 AT THE END OF THE TAX YEAR, AND FOR ALL OTHER INSUREDS WHO  HAVE  HAD  A
 POLICY FOR FIVE YEARS OR MORE.
   In  order  to  qualify for such credit, the taxpayer's premium payment
 must be for the purchase of or for continuing coverage under a long-term
 care insurance policy that qualifies for such credit pursuant to section
 one thousand one hundred seventeen of the insurance law.
   § 3. Paragraph 1 of subsection (aa) of section 606 of the tax law,  as
 amended  by  section  1  of part P of chapter 61 of the laws of 2005, is
 amended to read as follows:
   (1) Residents. A taxpayer shall be allowed a credit  against  the  tax
 imposed by this article equal to [twenty percent] THE FOLLOWING PERCENT-
 AGES  of  the  premium  paid  during the taxable year for long-term care
 insurance OR FOR A POLICY RIDER TO A LIFE INSURANCE POLICY ISSUED PURSU-
 ANT TO SUBPARAGRAPH (C), (D), (E) OR (F) OF PARAGRAPH ONE OF  SUBSECTION
 (A) OF SECTION ONE THOUSAND ONE HUNDRED THIRTEEN OF THE INSURANCE LAW:
   (A)  FORTY  PERCENT  IF THE INSURED IS LESS THAN FORTY YEARS OF AGE AT
 THE END OF THE TAX YEAR FOR THE FIRST FOUR POLICY YEARS;
   (B) THIRTY PERCENT IF THE INSURED IS LESS THAN FIFTY YEARS OF AGE, BUT
 FORTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR  THE  FIRST
 FOUR POLICY YEARS;
   (C)  TWENTY-FIVE  PERCENT IF THE INSURED IS LESS THAN FIFTY-FIVE YEARS
 OF AGE, BUT FIFTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR
 THE FIRST FOUR POLICY YEARS; OR
   (D)  TWENTY  PERCENT IF THE INSURED IS FIFTY-FIVE OR MORE YEARS OF AGE
 AT THE END OF THE TAX YEAR, AND FOR ALL OTHER INSUREDS WHO  HAVE  HAD  A
 POLICY FOR FIVE YEARS OR MORE.
   In  order  to  qualify for such credit, the taxpayer's premium payment
 must be for the purchase of or for continuing coverage under a long-term
 care insurance policy that qualifies for such credit pursuant to section
 one thousand one hundred seventeen of the insurance law. If  the  amount
 of the credit allowable under this subsection for any taxable year shall
 exceed  the taxpayer's tax for such year, the excess may be carried over
 to the following year or years and may be deducted from  the  taxpayer's
 tax for such year or years.
   § 4. Paragraph 1 of subdivision (m) of section 1511 of the tax law, as
 amended  by  section  21 of part B of chapter 58 of the laws of 2004, is
 amended to read as follows:

 S. 3566                             3
 
   (1) A taxpayer shall be allowed a credit against the  tax  imposed  by
 this  article equal to [twenty percent] THE FOLLOWING PERCENTAGES of the
 premium paid during the taxable year for long-term care insurance OR FOR
 A POLICY RIDER TO A LIFE INSURANCE POLICY ISSUED  PURSUANT  TO  SUBPARA-
 GRAPH (C), (D), (E) OR (F) OF PARAGRAPH ONE OF SUBSECTION (A) OF SECTION
 ONE THOUSAND ONE HUNDRED THIRTEEN OF THE INSURANCE LAW:
   (A)  FORTY  PERCENT  IF THE INSURED IS LESS THAN FIFTY YEARS OF AGE AT
 THE END OF THE TAX YEAR FOR THE FIRST FOUR POLICY YEARS;
   (B) THIRTY PERCENT IF THE INSURED IS LESS THAN FIFTY YEARS OF AGE, BUT
 FORTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR  THE  FIRST
 FOUR POLICY YEARS;
   (C)  TWENTY-FIVE  PERCENT IF THE INSURED IS LESS THAN FIFTY-FIVE YEARS
 OF AGE, BUT FIFTY OR MORE YEARS OF AGE, AT THE END OF THE TAX  YEAR  FOR
 THE FIRST FOUR POLICY YEARS; OR
   (D)  TWENTY  PERCENT IF THE INSURED IS FIFTY-FIVE OR MORE YEARS OF AGE
 AT THE END OF THE TAX YEAR, AND FOR ALL OTHER INSUREDS WHO  HAVE  HAD  A
 POLICY FOR FIVE YEARS OR MORE.
   In  order  to  qualify for such credit, the taxpayer's premium payment
 must be for the purchase of or for continuing coverage under a long-term
 care insurance policy that qualifies for such credit pursuant to section
 one thousand one hundred seventeen of the insurance law.
   § 5. Paragraphs 1 and 2 of subsection  (g)  of  section  1117  of  the
 insurance  law,  paragraph  1  as  amended by chapter 417 of the laws of
 2001, paragraph 2 as amended by section 12 of part E of  chapter  63  of
 the laws of 2000 and subparagraphs (A) and (B) of paragraph 2 as amended
 by chapter 311 of the laws of 2002, are amended to read as follows:
   (1)  Except for certain group contracts described in paragraph four of
 this subsection, in order for premium payments for long-term care insur-
 ance, OR FOR A POLICY RIDER TO A LIFE INSURANCE POLICY  ISSUED  PURSUANT
 TO  SUBPARAGRAPH (C), (D), (E) OR (F) OF PARAGRAPH ONE OF SUBSECTION (A)
 OF SECTION ONE THOUSAND ONE HUNDRED THIRTEEN OF THIS ARTICLE, to qualify
 for purposes of section one hundred ninety, subdivision  [twenty-five-a]
 FOURTEEN  of section two hundred [ten] TEN-B, subsection (aa) of section
 six hundred six[, subsection (k) of section one  thousand  four  hundred
 fifty-six] and subsection (m) of section one thousand five hundred elev-
 en  of  the  tax  law, the long-term care insurance OR SUCH POLICY RIDER
 must be approved by the  superintendent  pursuant  to  this  subsection.
 Prior  to  approving any such insurance OR POLICY RIDER, the superinten-
 dent shall conclude that it meets minimum standards,  including  minimum
 loss  ratio  standards  under this section or section three thousand two
 hundred twenty-nine of this chapter and is a  qualified  long-term  care
 insurance  contract  as defined in section 7702B of the internal revenue
 code.
   (2) (A) No insurer, agent, broker,  person,  business  or  corporation
 doing  business  in or into this state shall in any manner state, adver-
 tise or claim that a long-term care insurance policy, OR A POLICY  RIDER
 TO  A  LIFE  INSURANCE  POLICY ISSUED PURSUANT TO SUBPARAGRAPH (C), (D),
 (E), OR (F) OF PARAGRAPH ONE OF SUBSECTION (A) OF SECTION  ONE  THOUSAND
 ONE  HUNDRED  THIRTEEN  OF  THIS  ARTICLE, qualifies for purposes of the
 above-referenced provisions of the tax law unless either: (i) the super-
 intendent has issued a letter or other written instrument to the insurer
 stating that the policy OR POLICY RIDER has been determined  to  qualify
 under  this  subsection,  or  (ii)  the policy OR POLICY RIDER qualifies
 under paragraph four of this subsection without the need for approval by
 the superintendent.

 S. 3566                             4
 
   (B) Any policy OR POLICY RIDER which is held out or purported to be  a
 long-term  care  insurance policy by any insurer, agent, broker, person,
 business or corporation doing business in or into this state  which  has
 not  been determined by the superintendent to qualify and which does not
 qualify  under  paragraph  four  of  this subsection for purposes of the
 above referenced provisions of the tax law shall so state clearly, legi-
 bly and in close physical proximity to any description of the policy  OR
 POLICY  RIDER  as  a long-term care insurance policy that it does not so
 qualify. This subsection shall also be deemed to  cover  any  statement,
 advertisement  or  claim  concerning  such policy by any insurer, agent,
 broker, person, business or corporation doing business in or  into  this
 state.
   (C)  Violation  of  this  paragraph shall be considered a misrepresen-
 tation under section [twenty-one] TWO THOUSAND ONE hundred  twenty-three
 of this chapter.
   §  6. This act shall take effect on the first of April next succeeding
 the date on which it shall have become a law.

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Senate Bill S3566

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Sponsored By

Jeffrey D. Klein

Archive: Last Bill Status - In Senate Committee Investigations And Government Operations Committee

co-Sponsors

Marisol Alcantara

Tony Avella

David Carlucci

Jesse Hamilton

2017-S3566 (ACTIVE) - Details

2017-S3566 (ACTIVE) - Summary

2017-S3566 (ACTIVE) - Sponsor Memo

2017-S3566 (ACTIVE) - Bill Text download pdf

Comments