Plan to provide tax incentives for insurance

JEFFERSON CITY — Three representatives want Missourians to buy their own long-term care insurance.

Reps. Charles Portwood, R-St. Louis; Mike Dethrow, R-Alton, and Charles Denison, R-Springfield, proposed a package of bills, which passed out of committee Wednesday, that would provide tax incentives for Missourians to do just that.

Under the bills, Missourians who purchase long-term care insurance would receive two benefits. First, they would be eligible for a tax deduction in direct proportion to the policy premium. Second, the state Medicaid plan would be amended to allow the insured to keep 100 percent of the value of their policy in personal assets. Currently, those who pay long-term care insurance premiums are eligible for a tax deduction of 50 percent of their premiums and all income and assets are considered for Medicaid eligibility.

Long-term care providers help patients with disabilities or prolonged illnesses with daily activities such as getting dressed and preparing meals.

Margaret Sanders is the long-term care insurance representative for MetLife. She said that rates vary depending on the plan, the area of residence, age and coverage. But she added that a couple in Missouri could expect to pay somewhere in the range of $3,000 to $4,000 per year for the insurance.

A fiscal note in the package estimates that the cost of the program to the state would be $2.8 million. Portwood said that the state would make that up in Medicaid savings.

“If someone purchases a long-term care insurance policy, and they utilize that long-term care insurance policy instead of using our Medicaid system, for each person that does that, we save between $35 (thousand) and $40,000,” he said.

Bruce Ward spoke in support of the plan, representing the St. Louis Chapter of the State Association of Insurance and Financial Advisors. He estimated that long-term care and facilities in St. Louis cost between $35,000 and $50,000 a year. He said the proposal would both save the state money and ease family burdens.

“This will protect an awful lot of assets for the families, and it will save the state an awful lot of money long-term,” he said. “The baby boom is going to come through, and they’re going to start tapping into Medicaid like they’ve affected everything else in society, and I think it would be wise for the state to get ahead of it.”

Larry Rohrback, a paid lobbyist for the Missouri Association of Homes for the Aging, also spoke in support of the bills. He said the plan would decrease Medicaid fraud.

“Now people are very much encouraged to hide assets however they can to get on Medicaid,” he said. “And this provides citizens of Missouri, particularly with the partnership and the tax deduction together, it encourages them to use a responsible way, responsible to society and to their families to protect some assets. And it gives them a responsible, disciplined, legitimate way to do it, and we think it’s a good incentive to get on the books.”

Others that testified in favor of the plan were: AARP, a retired member of the Missouri State Highway Patrol, the Department of Health and Senior Services’ Silver Haired Legislature, the Missouri Health Care Association, the Alliance for Senior Care, Roy W. Kern and Associates Insurance Agency, Golden Security Senior Advisors, America’s Health Insurance Plans and the American Council of Life Insurers. Nobody testified in opposition.

The bills will head to the House Rules Committee that reviews bills before sending them to the full House.