CLHIA-ACCAP

CLHIA Proposal for a Tax Credit on Long-term Care Insurance

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• Individuals purchasing qualifying long-term care insurance for a spouse, parent or dependent would be eligible for the tax credit. • The tax credit would be in relation to the premiums paid in each tax year for the qualifying long- term care insurance. o The tax credit would only apply to the amount of any premium that can be clearly earmarked towards long-term care coverage. o In order to qualify for the tax credit, the long-term care insurance product would not be permitted to have a cash surrender value. o The tax credit would apply to both individual and group products. • The benefit payout of any eligible long-term care insurance would be non-taxable. • Qualifying long-term care insurance could be defined as: o "insurance that provides coverage for nursing-home care, home-health care, personal or adult day care for individuals above the age of 65 or with a chronic or disabling condition that needs ongoing supervision." • Long-term care could be defined as: o "ongoing care required for an individual unable to perform at least two activities of daily living without suitable assistance from another individual or suffering from a cognitive impairment that is endangering his/her health or safety." Conclusion: Canadians and governments are facing a $590 billion funding gap for long-term care costs over the next 35 years. Governments are not in a fiscal position to take on the full burden of providing long-term care to Canadians and, as a result, individuals will have to take greater responsibility for their own potential long-term care expenses. Providing a tax credit for qualified long-term care insurance premiums will provide important incentives and financial support to help individual Canadians take financial responsibility for their own future potential long-term care expenses. This will not only help address the existing funding gap, it will also reduce the fiscal pressures on governments going forward.

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