Long-term care insurance bill would give buyers tax deduction

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A new bill in the Senate would offer an above-the-line tax deduction and a phased-in tax credit of up to $3,000 for those who purchase a "qualified" long-term care insurance policy. Long-term care advocates are in favor of measures that promote the purchase of more long-term care insurance because they should infuse the funding stream with more private funding.

The Improving Long-Term Care Choices Act of 2005 would phase in the tax credit over four years: $1,000 in 2005, $1,500 in 2006, $2,000 in 2007, $2,500 in 2008 and $3,000 in 2009. Sens. Evan Bayh (D-IN) and Hillary Rodham Clinton (D-NY) sponsored the legislation.

The bill also would establish further requirements for long-term care insurance policies that agree with recommendations by the National Association of Insurance Commissioners, said Senate Finance Committee Chair Charles Grassley (R-IA) who brought the bill forward. The requirements aim to provide additional protections for purchasers of long-term care insurance policies.

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