Nebraska’s Long-Term Care Savings Plan would be eliminated under a bill given first-round approval April 4.
Syracuse Sen. Dan Watermeier, who introduced LB756 on behalf of the Legislative Performance Audit Committee, said the plan was created in 2006 to encourage Nebraskans to plan for the future by providing a tax credit on contributions to an account used to pay for long-term care needs or long-term care insurance plan premiums.
However, he said, a recent audit determined that the plan had been ineffective in incentivizing individuals to plan for long-term care needs or reducing Medicaid costs to the state.
“The Long-Term Care Savings Plan was a well-intended program that just wasn’t able to do what its creators had hoped for,” Watermeier said. “Too few people are saving too little money to have a meaningful impact on long-term care costs to the taxpayers. It is time for the program to be eliminated.”
A Revenue Committee amendment, adopted 26-0, would terminate the plan on Jan. 1, 2018. Any participant would be entitled to receive the full balance of his or her account on that date.
Under the amendment, investment earnings from the plan would be deducted from an individual’s adjusted gross income (AGI) for tax years beginning Jan. 1, 2018, and AGI would increase for unapproved withdrawals for tax years before Jan. 1, 2018.
Grand Island Sen. Mike Gloor, chairperson of the committee, said the change would allow plan participants sufficient time to transition to another option.
Sen. Mark Kolterman of Seward supported the bill and the amendment, but said the state needs to examine ways to better incentivize Nebraskans to save for their long-term care needs.
A major reason that the current program failed, he said, is because investments had to be placed in federally insured accounts—essentially limiting participants to CDs, which offer only a 1 or 1.5 percent return.
“If this program had some good incentives it would have been utilized,” Kolterman said. “We need to look at ways to [encourage] people to plan for the future so the state doesn’t continue to take on the liability of those entering nursing homes.”
The bill advanced to select file on a 29-0 vote.