Virginia Long Term Care Insurance Tax Credit Remains… For Now
The tax credit offered to residents of Virginia remains in place for 2013, narrowly escaping the ax after a bill failed in committee to kill it. As part of a general transportation bill to reduce tax rates and add other consumption taxes such as gasoline tax, the bill sought to destroy this incentive to buy Long Term Care Insurance offered to Virginia residents.
Del. David Albo (R-Fairfax Station) introduced House Bill 2253, which along with repealing the long-term insurance tax credit that became law in 2006, sought to decrease individual income tax rates, repeal the land preservation tax credit, impose a 5% state gasoline tax, double the registration fee of electric vehicles to $102, and exempt food from state and local taxes.
The average premium for an LTC policy in Virginia is $2,996, according to a study by LTC Tree.
Virginia’s Long Term Care Tax Credit: 15%
It’s important to note that this is a tax credit, not a tax deduction. The amount can be equal to 15% of the premium, or about $450 the first year, according to Drew Nichols of LTC Tree. With state budgets at some of the tightest levels yet, it’s no surprise the state is trying to reduce exposure. What is overlooked is the fact that Medicaid, a state program, is responsible for the majority of Long Term Care costs in Virginia. By allowing private citizens to take matters into their own hands, a subsidy in the form of a tax credit may actually reduce the burden on Virginia in the long term.
Long Term Care Insurance is a product often overlooked by many consumers, but popularity among ’baby boomers’ from age 50-60 is increasing as the reality of funding sets in. With states cutting back on Medicaid programs almost weekly, it’s clear that private citizens are going to need to self-fund or insure the risk of Long Term Care.
A common catalyst to researching LTC is seeing one’s own family members face the devastating costs of Long Term Care. Many Americans falsely believe that Long Term Care is covered by Medicare when in reality, only 100 days is covered by Medicare in almost all situations. It’s not uncommon for LTC costs to exceed $50,000/year in Virginia, so insuring even part of the risk can help take the “bite” out of Long Term Care costs at affordable premiums.
To those considering Long Term Care Insurance, shop around with at least 5-6 companies. Virginia’s Long Term Care costs average close to $200/day, and according to the LTC Tree study, consumers buy an average of $148/day in benefits. Taking nearly 75% of the average cost out of the equation makes sense for Virginians in the $100k – $2M Net Worth range. Everyone from Dave Ramsey to Clark Howard will advise smart consumers shopping for Insurance to compare your Long Term Care options and shop the market of major insurance providers in Virginia.