Bill
AB 699
The bill would establish a separate long-term care assessment funded by insurers and offer a 20% tax credit to partially offset that cost.
Status: Passed legislature; presented to Governor Sept. 24, 2025; vetoed by Governor Oct. 1, 2025 (per provided actions).
Purpose
- To create a dedicated long‑term care (LTC) account within the state’s Insurance Security Fund, require assessments on insurers to fund that account, and provide a tax credit to partially offset those assessments.
Key provisions
- Insurance Security Fund: Adds a new segregated account for long‑term care insurance within the Insurance Security Fund (the fund that supports policyholder protections when insurers are liquidated).
- Assessment methodology:
- The Fund’s board must calculate the assessment for the LTC account and allocate liability between two insurer classes: “life insurers” and “disability insurers.”
- Each insurer’s classification is determined by the mix of premiums written in the prior year: if life/annuity premiums >50% of that insurer’s total relevant premiums, it is a life insurer; if disability premiums >50%, it is a disability insurer.
- The board allocates 50% of the total LTC‑account assessment to life insurers and 50% to disability insurers; individual insurer assessments are proportional to their share of premiums written within their class.
- Tax credit for insurers:
- Creates a Long‑Term Care Insurance Assessment Credit against state income/franchise taxes (and insurer license fees) equal to 20% of the LTC assessment paid by the insurer.
- Timing: credit may be claimed beginning in the taxable year following the year the assessment was paid and for the four subsequent taxable years (total availability over five years).
- Refundability: credit is refundable for disability insurers; for other taxpayers/insurers the credit is nonrefundable.
- The bill establishes statutory payment authority (budget appropriation schedule entries) to cover refundable credit payments but contains no separate appropriation for making those payments.
- Administrative/tax code changes: creates and amends multiple statutory sections to implement the credit mechanics, filing/claim rules, and fund accounting.
Who would be affected
- Insurers writing life, annuity, and disability/health (including LTC‑related) business in the state — they would pay assessments funding the LTC account and be eligible for a partial (20%) tax credit spread over five years.
- Policyholders and beneficiaries: the LTC account increases the Insurance Security Fund’s capacity to respond to insurer insolvencies affecting LTC policies.
- State finances: revenue impacts from issuance of refundable and nonrefundable credits and administrative costs associated with implementing the new account and tax credit.
Fiscal and procedural notes
- The credit reduces state tax revenue to the extent credits are claimed; refundable credits (for disability insurers) create direct state outlays. The bill’s analysis references a state fiscal estimate (not included here).
- Effective/timing details: credit available for taxable years beginning after Dec. 31, 2026 (per bill language).
- Legislative action: bill advanced through committees and both houses; enrolled and presented to the Governor; vetoed Oct. 1, 2025.
Potential impacts and considerations
- Insurers: assessment increases short‑term operating costs; the 20% tax credit partially offsets that cost, but timing and refundability differ by insurer type.
- Consumers: strengthening the Insurance Security Fund’s LTC account could improve protection for LTC policyholders in insurer liquidations, but insurers may seek to pass assessment costs to consumers through premium increases.
- State budget: the refundable portion of the credit may require state appropriations and reduce net General Fund revenues.
Compiled from official sources — confirm details with the bill’s official record.
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