TAX TYPE Income
YEAR ENACTED 1999
REPEAL/EXPIRATION DATE None
REVENUE IMPACT $2.6 million
(T
AX YEAR 2018)
NUMBER OF TAXPAYERS 12,500
WHAT DOES THE TAX EXPENDITURE
DO?
The Long-Term Care Insurance Credit [Section 39-
22-122 (1) and (3), C.R.S.] allows certain taxpayers
to claim a credit against their state income taxes for
25 percent of the premiums they paid during the
year for long-term care insurance, up to $150 per
policy. Statute allows the credit only for taxpayers
who:
Have federal taxable income below $50,000, are
filing a single or joint federal return, and are
claiming the credit for one policy; or
Have federal taxable income below $100,000,
are filing a joint return, and are claiming the
credit for separate policies that cover both
individuals on the return.
WHAT IS THE PURPOSE OF THE TAX
EXPENDITURE?
Statute and the enacting legislation for the credit do
not state its purpose; therefore, we could not
definitively determine the General Assembly’s
original intent. Based on our review of the credit’s
legislative history and operation; similar credits in
other states; and discussions with Division of
Insurance staff, we considered two potential
purposes:
1. To encourage taxpayers with lower and middle
incomes to purchase long-term care insurance
by making it more affordable, and
2. To reduce the State’s costs for long-term care
services and supports.
WHAT POLICY CONSIDERATIONS DID
THE EVALUATION IDENTIFY?
The General Assembly may want to:
Consider amending statute to establish a
statutory purpose and performance measures
for the credit.
Review the effectiveness of the credit and could
consider changes to the credit cap and income
limits.
LONG-TERM CARE
INSURANCE CREDIT
EVALUATION SUMMARY | APRIL 2022 | 2022-TE17
KEY CONCLUSION: The Long-Term Care Insurance Credit does not appear large enough to encourage
most individuals who qualify to purchase long-term care insurance and its relative benefit has declined since
it was established because premium costs have increased.