Speaking at the Summit of Brighton, an independent living facility operated by Jewish Senior Life, I highlighted two bills that will help rein in one of the major cost drivers in the New York State budget.
The first of these (
A.6893) would substantially alter and increase the refundable tax credit now available for residents who purchase long-term care insurance. Currently, a credit equal to 20% of the premium is available each year the policy is in place; under the new legislation, the credit increases to 75% of the premium the first year, 50% in the second, and 25% in the third. This schedule makes long-term care insurance purchases substantially more affordable during the first three years, the period in which policies are most likely to lapse.
For many, premiums associated with long-term care insurance are prohibitive, and fewer and fewer people are buying these policies. When the time comes they turn to Medicaid to pay for nursing homes and other assisted living programs and that represents a substantial burden for taxpayers. The answer is clear: We must make private insurance more accessible. I believe this goes a long way toward doing just that.
Medicaid is the largest element in the New York State budget, representing nearly 40% of Albany's total annual expenditures. Its long-term care component is the largest in the nation, with New Yorkers paying nearly $19 billion to provide those services. That compares to $12 billion spent by California, a state with nearly twice New York's population.
Unless we deal directly with issues such as the projected growth in Medicaid, we will never truly address the root causes of our state's fiscal crisis. The purchase of just 5,000 private policies could provide a Medicaid savings of $195 million for long-term care services.
Also announced today was a bill (
A.4761) making it possible for policyholders of New York's Partnership for Long-Term Care to seek asset protection while living in one of the more than 30 states that have reciprocity agreements with New York.
Under current law,
New York State Partnership for Long-Term Care policyholders do not receive any asset-protection benefit if they move to another state. It is reasonable to believe that if we increase the portability of the Partnership product, it would be more attractive to consumers in today's mobile society and we would see an increase in sales.
Ultimately, there is greater value for a Partnership policyholder in New York if the state were to enter into agreements in those states that currently offer the Long-Term Care policyholder reciprocity.
Recent studies show that rising premiums and economic factors have depressed the long-term care insurance market, where only about 21,000 long-term care policies are sold annually throughout all of New York State.
This is an unfortunate trend because the annual cost of nursing home residency in New York is nearly $100,000. For individuals this can mean the loss of the bulk of a life's savings; for the state and its taxpayers it means an unsustainable commitment of limited financial resources.
Only through expanded use of private insurance will we provide the quality care our senior citizens need and the fiscally responsible state government all our citizens deserve.
