HOUSE TAXATION AND REVENUE COMMITTEE SUBSTITUTE FOR

HOUSE BILL 1102

47th legislature - STATE OF NEW MEXICO - first session, 2005

AN ACT

RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE; PROVIDING A MEDICAL CARE TAX CREDIT; PROVIDING FOR A LONG-TERM MEDICAL CARE PLAN PURSUANT TO THE MEDICAL INSURANCE POOL ACT.

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--UNREIMBURSED OR UNCOMPENSATED MEDICAL CARE EXPENSES OF INDIVIDUALS SIXTY-FIVE YEARS OF AGE OR OLDER.--

          A. A taxpayer who files an individual New Mexico income tax return, who is sixty-five years of age or older and who is not a dependent of another taxpayer may claim a credit for medical care expenses that are not reimbursed or compensated for by insurance or otherwise and that are paid by the taxpayer for that taxpayer or for the taxpayer's spouse or dependent in an amount not to exceed two thousand eight hundred dollars ($2,800) of an amount equal to ten percent of the expenses paid by the taxpayer that exceed twenty-eight thousand dollars ($28,000).

          B. 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.

          C. The credit provided in this section may be deducted from the taxpayer's income tax liability. If the credit exceeds the income tax liability for the taxable year, the excess shall be refunded to the taxpayer.

          D. As used in this section:

                (1) "dependent" means "dependent" as defined in Section 152 of the Internal Revenue Code;

                (2) "health care facility" means a hospital, outpatient facility, diagnostic and treatment center, rehabilitation center, freestanding hospice or other similar facility at which medical care is provided;

                (3) "medical care" means the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body;

                (4) "medical care expenses" means the amounts paid for:

                           (a) the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body, if provided by a physician or in a health care facility;

                           (b) prescribed drugs or insulin;

                           (c) qualified long-term care services as defined in Section 7702B(c) of the Internal Revenue Code;

                           (d) insurance covering medical care, including amounts paid as premiums under Part B of Title 18 of the Social Security Act or for a qualified long-term care insurance contract defined in Section 7702B(b) of the Internal Revenue Code, if the insurance or other amount is paid from income included in the taxpayer's adjusted gross income for the taxable year;

                           (e) specialized treatment or the use of special therapeutic devices if the treatment or device is prescribed by a physician and the patient can show that the expense was incurred primarily for the prevention or alleviation of a physical or mental defect or illness; and

                           (f) care in an institution other than a hospital, such as a sanitarium or rest home, if the principal reason for the presence of the person in the institution is to receive the medical care available; provided that if the meals and lodging are furnished as a necessary part of such care, the cost of meals and lodging are "medical care expenses";

                (5) "physician" means a medical doctor, osteopathic physician, dentist, podiatrist, chiropractic physician or psychologist licensed or certified to practice in New Mexico; and

                (6) "prescribed drug" means a drug or biological that requires a prescription of a physician for its use by an individual."

     Section 2. A new section of the Medical Insurance Pool Act is enacted to read:

     "[NEW MATERIAL] LONG-TERM CARE INSURANCE PLAN.--The board may establish a long-term care insurance plan for persons sixty-five years of age or older. A policy for a long-term care insurance plan, if adopted by the board, shall be developed in accordance with the Medical Insurance Pool Act. The plan shall not provide coverage for services covered under medicare or medicaid; provided, however, that services excluded from coverage by medicare or medicaid may be covered under the plan."

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