$500 Tax Credit for First-Time Buyers of Long Term Care Insurance in Maryland Available Through Senior Insurance Services.

Business Editors

GAITHERSBURG, Md.--(BUSINESS WIRE)--June 26, 2000

On July 1, 2000, a new law takes effect in Maryland that gives first-time buyers of long term care insurance a one-time credit against their Maryland

state income tax. For new buyers over age 50, the credit is limited to the lesser of $500 or 100% of their annual premium. For those ages 41 to 50, the maximum credit is $410, and for those under 41, the credit is limited to $220. An individual who purchases a policy for parents or children is also entitled to the credit.

"Maryland has finally recognized the importance of creating an incentive to purchase long term care insurance," says Ed Neveleff, long term care insurance specialist with Senior Insurance Services, which represents many of the major long term care insurance companies in Maryland.. "The middle class has been caught in a dilemma. On one hand, they've often perceived this insurance as too costly in the past. But on the other hand, they understand the terrible financial consequences of being caught uninsured and needing long term care. We hope this will encourage them to acquire this important insurance protection."

The new tax credit comes at a time when long term care insurance is moving to the forefront on both the state and federal level.

For most individuals, the federal tax deduction is limited to those whose itemized, non-reimbursed medical expenses (including a specified portion of their long term care insurance premium) exceed 7.5% of their adjusted gross income - a threshold that relatively few taxpayers meet.

However, there are several proposals in Congress that would allow 100% deductibility of long term care insurance premiums, a position recently endorsed by Republican presidential candidate George W. Bush. These measures reflect growing recognition of the limits on the government's ability to care for our increasingly aging population.

"Many people have assumed that Medicare or Medicaid will pay for their long term care," says Neveleff. "However, Medicare pays for very little long term care and a person must first spend most of his or her assets before Medicaid will pay. Even then, Medicaid offers far fewer care options than people would have with private insurance. And these government programs are financially strapped as it is. What's going to happen when millions of baby boomers start needing care?"

"The new tax credit has two eligibility requirements," says Neveleff. "First, it is available only for new policyholders after July 1, 2000. If you were covered by this insurance at any time prior to July 1st, you can't take the credit. Also, like most that are sold today, your policy must be tax-qualified. Of course, you should contact your tax advisor and insurance agent to determine your specific entitlement to this credit."