Long-Term Care Insurance Act of 1999

Summary: Provides that such deduction shall: (1) not be part of the medical deduction; (2) not be available if used as part of the self-employed health insurance deduction; and (3) be available to nonitemizers and itemizers.
Reduces the earned income percentage for taxpayers without children.
Amends the Social Security Act, with respect to long-term care policy benefits, to exempt 75 percent of certain disregarded assets from State Medicaid recovery.
Directs the: (1) Commissioner of the Social Security Administration to inform the public about the financial risks and costs of long-term care costs, and the limited coverage provided under Medicaid and Medicare; and (2) Secretary of Labor to encourage employer-sponsored long-term coverage.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Long-Term Care Insurance Act of 
1999''.

SEC. 2. DEDUCTION FOR LONG-TERM CARE PREMIUMS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 222 as 
section 223 and by inserting after section 221 the following new 
section:

``SEC. 222. ELIGIBLE PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE 
              CONTRACTS.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction an amount equal to the applicable 
percentage of the eligible long-term care premiums (as defined in 
section 213(d)(10)) paid during the taxable year for coverage under a 
qualified long-term care insurance contract for the taxpayer, his 
spouse, and dependents.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
term `applicable percentage' means the percentage determined under the 
following table:

``For taxable years beginning in    The applicable percentage is--
        calendar year--
    2001..........................................                  20 
    2002..........................................                  40 
    2003..........................................                  60 
    2004..........................................                  80 
    2005 and thereafter...........................                 100.

    ``(c) Special Rules.--
            ``(1) Coordination with medical deduction.--Any amount paid 
        by a taxpayer for insurance to which subsection (a) applies 
        shall not be taken into account in computing the amount 
        allowable to the taxpayer as a deduction under section 213(a).
            ``(2) Coordination with deduction for health insurance 
        costs of self-employed individuals.--No deduction shall be 
        allowed under this section for any amount for which a deduction 
        is allowable under section 162(l).
            ``(3) Denial of deduction to dependents.--No deduction 
        shall be allowed under this section to any individual with 
        respect to whom a deduction under section 151 is allowable to 
        another taxpayer for a taxable year beginning in the calendar 
        year in which such individual's taxable year begins.''
    (b) Deduction Allowed Whether or Not Taxpayer Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code is amended by 
inserting after paragraph (17) the following new paragraph:
            ``(18) Eligible long-term care premiums.--The deduction 
        allowed by section 222.''
    (c) Reduction in Earned Income Credit to Taxpayers Without Children 
as Offset for Reduction in Revenues.--Subparagraph (A) of section 
32(b)(1) of such Code is amended by striking ``7.65'' and inserting 
``3.825''.
    (d) Conforming Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the last 
item and inserting the following new items:

                              ``Sec. 222. Eligible premiums on 
                                        qualified long-term care 
                                        insurance contracts.
                              ``Sec. 223. Cross reference.''
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 3. REVISION OF MEDICAID LIMITATION.

    (a) In General.--Section 1917(b)(1)(C) of the Social Security Act 
(42 U.S.C. 1396p(b)(1)(C)) is amended--
            (1) in clause (i), by inserting ``or clause (iii)'' after 
        ``such clause''; and
            (2) by adding at the end the following new clause:
            ``(iii) In the case of an individual who receives medical 
        assistance under a State plan not described in clause (ii) of a 
        State which has a State plan amendment approved which provides 
        for the disregard of any assets or resources in the manner 
        described in such clause, clause (i) shall not apply to 75 
        percent of the amounts of the assets or resources so 
        disregarded.''.
    (b) Effective Date.--The amendments made by subsection (a) take 
effect on the date of the enactment of this Act.

SEC. 4. DISSEMINATING INFORMATION ABOUT LONG-TERM CARE POLICIES AND 
              MEDICARE COVERAGE.

    (a) Findings.--The Congress finds the following:
            (1) As the baby boom generation begins to retire, funding 
        Social Security and Medicare will put a strain on the financial 
        resources of younger Americans.
            (2) Medicaid was designed as a program for the poor, but in 
        many States Medicaid is being used for middle income elderly 
        people to fund long-term care expenses.
            (3) In the coming decade, people over age 65 will represent 
        up to 20 percent or more of the population, and the proportion 
        of the population composed of individuals who are over age 85, 
        who are most likely to be in need of long-term care, may double 
        or triple.
            (4) With nursing home care now costing $40,000 to $50,000 
        on average per year, long-term care expenses can have a 
        catastrophic effect on families, wiping out a lifetime of 
        savings before a spouse, parent, or grandparent becomes 
        eligible for Medicaid.
            (5) Many people are unaware that most long-term care costs 
        are not covered by Medicare and that Medicaid covers long-term 
        care only after the person's assets have been exhausted.
            (6) Widespread use of private long-term care insurance has 
        the potential to protect families from the catastrophic costs 
        of long-term care services while, at the same time, easing the 
        burden on Medicaid as the baby boom generation ages.
            (7) The Federal Government has endorsed the concept of 
        private long-term care insurance by establishing Federal tax 
        rules for tax-qualified policies in the Health Insurance 
        Portability and Accountability Act of 1996.
            (8) The Federal Government has ensured the availability of 
        quality long-term care insurance products and sales practices 
        by adopting strict consumer protections in the Health Insurance 
        Portability and Accountability Act of 1996.
    (b) Dissemination of Information.--
            (1) In general.--The Administrator of the Social Security 
        Administration, in cooperation with the Administrator of the 
        Health Care Financing Administration, shall take all 
        appropriate steps to inform the public--
                    (A) about the financial risks posed by rapidly 
                increasing long-term care costs and about the need for 
                families to plan for their long-term care needs; and
                    (B) that Medicare does not cover most long-term 
                care costs and that Medicaid covers long-term care 
                costs only when the beneficiary has exhausted his or 
                her assets.
            (2) Encouragement of employer-sponsored coverage.--The 
        Secretary of Labor, in cooperation with the Administrator of 
        the Health Care Financing Administration, shall take all 
        appropriate steps not only to encourage employers to offer 
        private long-term care insurance coverage to employees, but 
        also to encourage both working-aged people and older citizens 
        to obtain long-term care insurance either through their 
        employers or on their own.