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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Beffort

 

DATE TYPED:

 

 

HB

 

 

SHORT TITLE:

Health Insurance Income Tax Credit

 

SB

14

 

 

ANALYST:

Chabot

 

 

 

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY04

FY05

 

 

 

TBD

TBD

TBD

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

 

LFC files

 

Responses Not Received From

 

Taxation and Revenue Department

Public Regulation Commission

Human Services Department

Department of Health

Health Policy Commission

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 14 enacts an individual tax credit of up to $2,500 based upon income level for a portion of the health insurance premium paid during the taxable year. 

 

     Significant Issues

 

The bill would create an individual tax credit of up to $2,500 based upon the following scale.

 

 

 

            Modified gross income                       Tax credit as a percent of

            as a percent of the                               health insurance premium

            federal poverty guidelines                  expenditure

 

Less than 50                                        90

51 to 75                                               85

76 to 100                                             80

101 to 125                                           75

126 to 150                                           70

151 to 175                                           65

176 to 200                                           60

201 to 250                                           50

251 to 300                                           25

 

Federal poverty guidelines vary depending on family size as shown below for a family of four.

 

Family Size                 50%                 75%                 100%               125%               150%

 

4                                  $9,050             $13,575           $18,100           $22,625           $27,150

 

                                    175%               200%               250%               300%

 

4                                  $31,675           $36,200           $45,250           $54,300                      

 

The intent of the bill is to encourage individuals to purchase health insurance and decrease the rising number of uninsured currently estimated by the New Mexico Health Policy Commission in 2001 as 20.7 percent of the population.  The credit will partially offset the cost of the insurance.

 

FISCAL IMPLICATIONS

 

It is difficult to estimate the fiscal impact of the legislation because of the health cost variable.  The fiscal impact will be provided when the Tax and Revenue department provides an estimate.

 

POSSIBLE QUESTIONS

1.      Why not provide a tax credit on cost and not income?

2.      What proof of insurance will be required?

3.      How could the complexity of administration be minimized?

 

GAC/dm