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Montana's Elder Care Tax Credit

Extent: HTML page
Date: December 2, 2003
Subject(s): Social services; Public administration
Creator(s): McLaren, Jay

State efforts to encourage individuals to prepare for their long-term care needs have mainly revolved around tax deductions or credits for long-term care insurance. According to national studies, 22 states offer tax incentives for individuals to purchase long-term care insurance for themselves or a blood relative. Of these 22 states, only one provides a tax incentive for expenses beyond long-term care insurance premiums.

In Montana, taxpayers can claim an “Elderly Care Credit” for long-term care expenses. Moderate and low-income tax filers qualify for this credit if they have paid for care provided to a low-income elderly or disabled family member. Qualified eldercare expenses include homemaker services, adult day care, respite care, health care equipment and supplies, nursing home services, and premiums paid for long-term care insurance coverage. The credit is limited to $5000 per year for care provided to one family member, and $10,000 per year for two or more relatives.

As demand for long-term care increases over the next 30 years, state government should provide further incentives for the elderly and their children to prepare for these needs. The informal care provided by children, spouses, and neighbors will be vitally important for ensuring the stability of the health care system. State tax incentives that strengthen the informal care network will provide relief for families that bear the responsibility of caring for frail relatives, instead of shifting the responsibility to the state and federal governments.

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