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Sponsor says tax credit for older long‑term care policyholders could save Medicaid dollars
Summary
Delegate Vaughn Stewart told the committee House Bill 327 would offer a focused tax credit to older Marylanders who bought long‑term care policies priced on faulty actuarial assumptions in the 1990s and 2000s; he presented an argument that modest retention of private policies could yield Medicaid savings.
"There's a population of Maryland seniors who were wronged by the insurance industry," Delegate Vaughn Stewart told the Ways and Means Committee while presenting House Bill 327 on Jan. 30.
Stewart, the bill sponsor, said the proposal would provide a tax credit averaging about $400 annually to older, relatively low‑income Marylanders (he described the pool as those 85 and older and making under $100,000) who purchased long‑term care insurance before 2004. He said insurers underpriced policies in the 1990s and early 2000s, creating later premium increases he described as unaffordable for policyholders on fixed incomes.
Stewart outlined a fiscal rationale for the credit: he estimated the program would cost about $3 million annually if roughly 7,500 people claimed the credit, while an existing but underused long‑term care insurance credit costs roughly $2 million a year. Stewart argued that even modest retention of private coverage could reduce Medicaid enrollments and yield net savings because a small number of avoided Medicaid entrants (he repeatedly cited a calculation that five people remaining on private policies could tip the program to net savings) would avoid much larger Medicaid costs.
Stewart said he had modeled the proposal with the Maryland Insurance Administration and the insurance industry and offered to provide supporting calculations to committee members. Committee members asked clarifying questions but did not move to a vote; the sponsor told the panel he would share detailed numbers by follow‑up email.
Why it matters: The sponsor framed HB 327 as narrowly targeted relief for a small, aging population whose long‑term care policies faced repeated premium hikes. The fiscal argument rests on estimates of the program's take‑up rate and the Medicaid cost of institutional long‑term care; those inputs were discussed in the hearing and flagged by the sponsor as available for committee review, but they were not adopted as committee findings during the session.
The hearing concluded with no formal committee vote recorded on Jan. 30.
