Nebraska's first-of-its kind, long-term care savings plan, which was created by the Legislature in 2006, will come to an end Jan. 1 because of a low level of participation.
Participants have been notified that they may withdraw funds from their accounts on or after Jan. 1 without any tax penalty or choose to leave the funds deposited as a standard savings account.
An account owner who wishes to withdraw funds before Jan. 1 is subject to a 10 percent penalty on the amount withdrawn unless that amount is used to pay for long-term care insurance premiums or for long-term care expenses.
The 2016 Legislature decided to eliminate the program on a 49-0 vote after a decade of experience. The repeal legislation was introduced by the Legislative Performance Audit Committee.
The program was created by the Legislature to give Nebraskans another option in considering their future health care needs and hopefully encourage more Nebraskans to plan ahead.
Participants could deduct up to $1,000 from their federally adjusted gross income for Nebraska state income tax purposes by depositing an equal amount in a designated account. The program had 519 participants at the end of last year.
The low level of participation "does not justify the expense of administering the plan," State Treasurer Don Stenberg said.
Community banks have managed the accounts on behalf of the state.
"The worthy goal was to reduce older Nebraskans' dependency on Medicaid and promote personal responsibility," Stenberg said in a letter notifying participants of the program's approaching end.
"The Legislative Performance Audit Committee determined in 2015 that the plan was ineffective both in encouraging Nebraskans to save for long-term care needs and in reducing the long-term burden on Nebraska taxpayers," he said.