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Volume 11 - Opinions of Counsel SBRPS No. 73

Opinions of Counsel index

Senior citizens exemption (income requirement) (long-term care insurance premiums) - Real Property Tax Law, § 467:

Where a municipality has opted to allow applicants for the senior citizens exemption to offset their unreimbursed medical and prescription drug expenses, premiums paid for long-term care insurance may also be deducted. Where a municipality has not opted to allow that offset, however, such payments are not deductible.

We have been asked whether “pre-paid expenses for an owner’s care in a residential health care facility” may be deducted in computing income eligibility for the senior citizens exemption (Real Property Tax Law, §467). The corollary question is whether a municipality’s decision to adopt the income offset for unreimbursed medical and prescription drug expenses affects the answer. In our opinion, that decision is determinative.

Income is defined for purposes of the senior citizens exemption in section 467(3)(a)). In a 1972 opinion, based upon the definition of income then applicable, we concluded that: “Expenditures for personal medical expenses are not deductible [from income] ...” (2 Op.Counsel SBEA No. 65).

However, chapter 313 of the Laws of 1996 amended the income definition to provide that “any such income shall be offset by all medical and prescription drug expenses actually paid which were not reimbursed or paid for by insurance, if the governing board of a municipality, after a public hearing, adopts a local law, ordinance, or resolution providing therefor.” As a result, in 10 Op.Counsel SBRPS No. 28, we concluded that, where a municipality adopts such option, “premiums paid for medical insurance (including Medicare Part B) may be deducted.” In that opinion, we relied on provisions of the Internal Revenue Code and commentaries thereon in reaching our conclusion.

We are assuming that the reference to “pre-paid expenses” is to payments for “‘qualified long-term care services’ (as defined in section 7702B(c))” that are now included in the definition of “medical care” for purposes of section 213 of the IRS Code (26 USCS §213(d)(1)(C)), which is the Code section prescribing the itemized deduction allowed for medical, dental, and related expenses. “Amounts paid for insurance that covers qualified long-term care services are deductible medical care expenses” (34 Am Jur2d, Federal Taxation (2005) 18811). “Specifically, the term ‘medical care’ includes amounts paid for insurance ... for any qualified long-term care insurance contract” (47A CJS §203).

Accordingly, consistent with our conclusion in 10 Op.Counsel SBRPS No. 28, in our opinion, where a municipality has opted to allow applicants for the senior citizens exemption to offset their unreimbursed medical and prescription drug expenses, premiums paid for long-term care insurance may also be deducted. Where a municipality has not opted to allow that offset, however, such payments are not deductible (see, 2 Op.Counsel SBEA No. 65).

Finally, we note that the statute generally requires that all of the owners reside on the property for which exemption is sought, “except where ... an owner is absent from the residence while receiving health-related care as in inpatient of a residential health care facility, as defined in [Public Health Law, §2801], provided that any income accruing to that person shall only be income only to the extent that it exceeds the amount paid by such owner, spouse, or co-owner for care in the facility...” (RPTL, §467(3)(d); 10 Op.Counsel SBRPS No. 99).

February 22, 2005

Updated: