ASSEMBLY INSURANCE COMMITTEE

STATEMENT TO

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 516

STATE OF NEW JERSEY

DATED: MARCH 4, 1996

      The Assembly Insurance Committee reports favorably Assembly Committee Substitute for Assembly Bill No. 516.

      This bill, an Assembly Committee Substitute for Assembly Bill No. 516, provides a credit against the New Jersey gross income tax or the corporation business tax equal to 25% of the cost of providing long-term care insurance coverage to a business taxpayer's employees. In addition, the bill provides a credit against the New Jersey gross income tax equal to 25% of the cost incurred by an individual taxpayer in purchasing long-term care insurance coverage for the taxpayer's benefit or dependents.

      "Long-term care insurance coverage" is defined in the bill as a group or individual insurance policy which provides benefits for a period of not less than 12 months for each person covered under the policy, on an expense incurred, indemnity, or annuity basis, or combination thereof, for necessary diagnostic, preventive, therapeutic or custodial services in a setting other than an acute care unit of a hospital. Long-term care services are not limited to traditional nursing home care, and may also include home health care, assisted living residence care, alternative family living care or other similar types of community-based care for which long-term care insurance coverage is available. The bill defines "dependent" as the taxpayer's spouse or parents, the parents of the taxpayer's spouse, or the children of the taxpayer.

      The purpose of this bill is to contain the cost of long-term health care by providing an incentive to businesses and individuals to purchase insurance that will pay for future long-term health care needs. Currently, most of the cost of long-term health care in New Jersey and nationally is paid through private individual funds or the Medicaid program. Despite the fact that the annual cost of long-term care insurance is, on average, less than the cost of one month's stay in a nursing facility, such insurance pays for only a small portion of long-term care today. The current system of payment impoverishes our senior citizens and imposes a significant cost on taxpayers through public assistance programs which pay for the care of over two-thirds of the nursing home population in the State.