Tax credit aims
to foster care planning

The plan offers credit for buying
long-term care insurance policies

People who plan for their future by buying long-term care insurance policies would be rewarded with a tax credit under a proposal poised for passage by the Legislature.

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Lawmakers first want to make sure the law would have the intended effect of spurring people to buy such policies.

To ensure that, House and Senate lawmakers meeting in conference committee yesterday agreed to have the Legislature revisit the issue after five years to determine whether the tax credits should continue. During that time the state Tax and Commerce and Consumer Affairs departments would be required to study whether more people are buying policies and report back to the Legislature.

"If we don't see a significant increase, then we probably would not renew it," said Senate Health Vice Chairwoman Suzanne Chun Oakland (D, Kalihi-Liliha).

Under the proposal in House Bill 97, Senate Draft 2, individuals who purchase long-term care insurance would be able to claim up to a $250 credit when filing taxes, starting next year. The credit doubles in 2007 and following years.

The Tax Department estimated the credits would cost the state about $3.4 million in the first year the credits can be claimed and $6.9 million in subsequent years.

Gov. Linda Lingle had proposed similar tax credits to address the looming problem of long-term care but has not stated a position on the current proposal.

House Health Chairman Dennis Arakaki (D, Alewa Heights-Kalihi) called the tax credits "a small part of a total strategy to provide long-term care, which is one of our greatest needs right now for the state of Hawaii."

According to a recent report by the U.S. Census, the number of Hawaii residents age 65 or older is expected to top 327,000 by 2030. The increased numbers, up from today's estimate of about 161,000, would equal about 22.3 percent of the state's population.