STAND. COM. REP. NO. 717

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 194
                                        S.D. 2




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B.
No. 194, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO INCOME TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish a State income
tax credit equal to fifty per cent of a taxpayer's long-term care
insurance costs.

     The Department of Commerce and Consumer Affairs, the Hawaii
State Association of Life Underwriters, the American Council of
Life Insurance, the Hawaii Medical Services Association, the
Hawaii Long Term Care Association, the National Association of
Retired Federal Employees Hawaii State Federation of Chapters,
and an individual submitted testimony in support of the measure.
The Department of Taxation and the Tax Foundation submitted
comments on the measure.

     Your Committee finds that Hawaii residents age seventy and
older comprise the fastest growing segment of the State's
population.  As Hawaii's population ages and more residents
require long-term care, the problem of how to finance such care
becomes more urgent.

     Long-term care services can cost an average of $65,000 to
$75,000 for skilled nursing or intermediate care facilities, and
nursing home costs often exceed a family's ability to pay.
Additionally, seventy per cent of Medicaid payments in the State

 
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                                   STAND. COM. REP. NO. 717
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go towards nursing home care and the cost of paying for long-term
care for indigent individuals creates a drain on the State's
resources.  Those individuals buying long-term insurance will not
require Medicaid, thus saving the State much more than this
credit will cost.

     Your Committee has amended this measure by:

     (1)  Inserting a $1,000 per taxable year maximum credit
          allowable; and

     (2)  Making technical, nonsubstantive amendments to the
          measure for the purpose of clarity.

     Your Committee believes that by providing taxpayers with a
State income tax credit for long-term care insurance costs, the
measure provides an incentive for individuals to purchase long-
term care insurance during their younger years when premiums are
more affordable.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of S.B.
No. 194, S.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as S.B. No. 194,
S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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