A bill has passed in the Arizona Senate that aims to make long term healthcare more affordable for those middle-income families who need it by offering a pre-tax long-term care savings option.
The bill, introduced earlier this year and sponsored by Rep. Steve Farley (D-Tucson), allows for a subtraction of long-term care insurance premiums and amounts deposited into a long-term care savings account from Arizona gross income.
“Right now, our middle-class families are struggling to make ends meet, and seniors’ long-term care expenses, now averaging more than $72,000 a year out of pocket, are pushing many to the edge of poverty,” Farley said. “The number of Americans needing long-term care is expected to triple by 2040. If we do not find ways to provide for that care right now, we will be facing a huge crisis for our seniors, our national budget, and our economy. This bill gives families an important tool to alleviate that crisis.”
Under the terms of the bill, a taxpayer may receive the tax benefit if he or she establishes a long-term care account with an account administrator, and uses the account for long-term care costs only. If the taxpayer makes any non-long-term care withdrawals, there is a 10% penalty associated with the withdrawal.
The savings can be used for non-hospital expenses such as in-home healthcare, assisted living, nursing care and others.
“It’s a good option to help Arizona families plan for future health-care expenses,” Farley said. “It’s also a step in the direction of a tax code that’s fair for Arizona seniors and the families that care for them. Now we should push Congress to act as well.”
Written by Elizabeth Ecker