Sunday, December 21st, 2014

Bob-O-Meter

Increase tax credit for long-term health insurance

"As governor, Bob McDonnell will provide for an increase in the refundable tax credit for purchase of long term health insurance."


Updates

Legislature thwarts promise

Gov. Bob McDonnell promised to encourage Virginians to buy long-term health care insurance when he ran for office.

Long-term care policies cover the cost of care for assistance in daily activities -- such as dressing, bathing, walking and eating -- that a person can no longer perform because of chronic conditions, age or disability. The plans have become increasingly popular as Americans live longer and the cost of health care rises.

The McDonnell campaign, in a health policy paper released in September 2009, made this promise: "As Governor, Bob McDonnell will provide for an increase in the refundable tax credit for purchase of long-term care insurance."

The General Assembly passed legislation in 2006 that allows Virginians to claim a 15 percent state income tax credit for the premium costs of long-term care policies. McDonnell, in his position paper, said the credit should be increased to 30 percent.

As governor, McDonnell backed legislation in 2010 and 2011 that would have expanded the tax credit to 30 percent. The General Assembly passed the measure in 2011 but did not provide funding for it. The final version of the bill, which McDonnell signed, required lawmakers to approve the measure again and pay for it.

As we found last year, that proposal had not yet been approved by the General Assembly. But now, after the governor's final General Assembly session, PolitiFact will reconsider the promises previously rated In the Works.

In December 2011, McDonnell submitted a budget that included $1.2 million per year to cover the cost of the tax credit. But the General Assembly did not approve the appropriation.

We noted these actions in a Bob-O-Meter item published in August 2012. Because McDonnell was still hoping to expand the tax credit, we rated the promise In the Works. Here's an update that changes that rating:

During the 2013 session, the General Assembly voted to repeal the long-term health insurance tax credit. Lawmakers acted on a Joint Legislative Audit and Review Committee report that the credit hadn't spurred Virginians to buy long-term insurance. McDonnell offered an amendment to sustain the credit for three more years to give it time to show its worth, spokesman Paul Shanks said. But that recommendation was handily defeated in the House.

"Recognizing the will of the General Assembly to repeal the tax credit after the JLARC findings, the governor approved the legislation," Paul Shanks, a McDonnell spokesman, wrote in an email. "This is a clear example of changed circumstances between the campaign and action this year."

Del. Chris Jones, who sponsored the legislation to repeal, said in an email the action rolled back the credit, which reduced a Virginian's tax liability dollar-for-dollar up to 15 percent of the premiums he or she paid during the first year of the policy. But the law left intact a deduction that reduces a policy holder's state taxable income by the amount of the insurance premium.

If the resident claims a federal deduction for long-term health care insurance, the resident cannot claim the state deduction, Jones said.

McDonnell couldn't rally legislators to expand the tax credit, let alone keep it, so we rate this a Promise Broken.

Sources:

PolitiFact Virginia, "Legislators haven't funded larger tax credit," Aug. 6, 2012.

Email from McDonnell spokesman Paul Shanks, July 15, 2013.

Legislative Information System, 2013 H.B. 2047, accessed July 10, 2013.

The Virginian-Pilot, "Bill to repeal land tax credit is tabled," Jan. 19, 2013.

Email from Del. Chris Jones, July 23, 2013.

Joint Legislative Audit and Review Commission, "Review of the Effectiveness of Virginia Tax Preferences," January 2012, pages 84-87,

Legislators haven't funded larger tax credit

When he was running for governor, Bob McDonnell made a pledge to encourage Virginians to buy long-term care insurance.

The policies cover the cost of care for assistance in daily activities -- such as dressing, bathing, walking and eating -- that a person can no longer perform because of chronic conditions, age or disability. The plans have become increasingly popular as Americans live longer and the cost of health care rises.

The McDonnell campaign, in a health policy paper released in September 2009, made this promise: "As Governor, Bob McDonnell will provide for an increase in the refundable tax credit for purchase of long-term care insurance.”

The General Assembly passed legislation in 2006 that allows Virginians to claim a 15 percent state income tax credit for the premium costs of long-term care policies. McDonnell, in his position paper, said the credit should be increased to 30 percent.

As governor, McDonnell backed legislation in 2010 and 2011 that would have expanded the tax credit to 30 percent. The General Assembly passed the measure in 2011 but did not provide funding for it. The final version of the bill, which McDonnell signed, required lawmakers to approve the measure again and pay for it.

Last December, McDonnell submitted a budget that included $1.2 million per year to cover the cost of the tax credit. But the General Assembly did not approve the appropropriation. Lawmakers said they will take up the bill again next year.
Del. T. Scott Garrett, R-Lynchburg, has been the patron of the bill for the last few years. He said he understands the pressures on the budget committees to balance a variety of immediate needs.

"It"s not a huge big-ticket item, unlike the state"s funding impact of Obamacare, but it"s a  balancing decision with public education, public safety, infrastructure and transportation,” he said.

McDonnell has pushed forward on his pledge to expand tax credits for those who purchase long-term care policies and has suffered near-misses in the General Assembly. The legislation is expected to come up again next year, so we rate this promise In the Works.

Sources:

McDonnell for Governor, health care plan, Sept. 10, 2009.

Legislative Information System, 2006 H.B. 786, accessed July 30, 2012.

Legislative Information System, 2011 H.B. 1840, accessed July 30, 2012.

Legislative Information System, 2012 H.B. 505, accessed July 30, 2012.

Senate Finance Committee, Resources subcommittee reporton SB 29 and SB 30 from 2012 session, accessed July 30, 2012.

Email from Taylor Thornley, July 30, 2012.

Interview with Del. T. Scott Garrett, July 31, 2012.