46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TAXATION; PROVIDING A TAX CREDIT FOR A PORTION OF LONG-TERM CARE INSURANCE PREMIUM EXPENSES PAID BY AN INDIVIDUAL; ENACTING A SECTION OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] CREDIT--EMPLOYEE HEALTH INSURANCE PREMIUMS PAID BY EMPLOYER.--

A. As used in this section, "long-term care insurance" means insurance coverage advertised, marketed, offered or designed to provide coverage for not less than twelve consecutive months for a covered person on an expense incurred, indemnity, prepaid or other basis for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care services provided in a setting other than an acute care unit of a hospital, including group and individual annuities and life insurance policies or riders that provide directly or that supplement long-term care insurance, and policies or riders that provide for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long-term care insurance may be issued by insurers, fraternal benefit societies, nonprofit health insurers, prepaid health plans, health maintenance organizations and similar organizations to the extent that they are otherwise authorized to issue life or health insurance. "Long-term care insurance" does not include an insurance policy that is offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, specified disease or specified accident coverage or limited benefit health coverage. With regard to life insurance, "long-term care insurance" does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention or permanent institutional confinement, and that provide the option of a lump-sum payment for those benefits and in which neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care. Notwithstanding any other provision contained herein, any product advertised, marketed or offered as long-term care insurance shall be subject to the provisions of the Long-Term Care Insurance Law.

B. A taxpayer who files an individual New Mexico income tax return who is not a dependent of another individual may claim a credit in an amount equal to twenty-five percent of the cost of long-term care insurance premiums paid by the taxpayer in a taxable year.

C. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed on a joint return.

D. The credit provided in this section may be deducted from the taxpayer's liability only for the taxable year for which the credit is claimed.

Section 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2004.