Sandwich Generation News Volume XI Number 4

For people sandwiched between aging parents and growing children

Provided by Lidke & Associates, Inc., 10 Inverness Dr E, Ste 110, Englewood, CO 80112-5611

Tax Tip: Colorado Tax Credit for Long Term Care Insurance Premiums

The Law: For tax years beginning on or after January 2000 an income tax credit is available for Colorado residents who purchase or pay premiums for a long term care insurance policy. The credit is equal to 25% of the amount paid for the insurance during the year (d39-22-122 C.R.S.). The amount of the credit claimed cannot exceed $150 per policy.

The credit can only be claimed by:

· An individual filing a single return with federal taxable income of less than $50,000 for the year,

· Two individuals filing a joint return with federal taxable income of less than $50,000 for the year and claiming a credit for one insurance policy, and

· Two individuals filing a joint return with federal taxable income of less than $100,000 for the year, and claiming a credit for two insurance policies or for a joint policy that covers each individual separately.

The credit used cannot exceed the amount of the net tax liability. Any unused credit may not be carried forward to future years.

The Significance: When the legislature passes a tax credit it is encouraging its citizens to take a certain course of action. Our legislatures are looking ahead and recognizing that Medicaid will not be able to handle the anticipated future long term care crisis in Colorado. In fact, Medicaid was designed to pay for care only for the indigent population and there is already a shortage of Medicaid beds in many parts of the state. To be eligible for Medicaid nursing home benefits a person must spend down his or her assets and have a limited income. It is a sad state of affairs.

Remember, the bumper stickers on motor homes - I’m spending my children’s inheritance ? Well, we may soon see these same bumper stickers appearing over the beds of people in nursing homes!

There is a better solution. Take advantage of your company-sponsored long-term care insurance plan. Get the facts and then make a decision. The discounted policy premiums are available to you, your spouse, your extended family and their spouses. As long as you’re healthy, this option is available to you.

It is your health not your money that buys long term care insurance.

To Request information or a consultation on this important aspect of pre-retirement planning contact us:

Long Term Care Quote Request: http://www.lidke.com/forms/Surveyform.htm

Phone: 303-649-1922 OR 800-888-9084