I 

109TH CONGRESS 

1ST SESSION H. R. 3254 

To provide funding and incentives for caregiver support and long-term care 

assistance. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 12, 2005 

Mr. MENENDEZ (for himself, Ms. ROS-LEHTINEN, Mr. BRADY of Pennsylvania, Ms. DELAURO, Mr. MCNULTY, Mr. BOUSTANY, Mr. RANGEL, Ms. 

WASSERMAN SCHULTZ, Mr. WEXLER, and Mr. OWENS) introduced the 

following bill; which was referred to the Committee on Ways and Means, 

and in addition to the Committee on Education and the Workforce, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide funding and incentives for caregiver support and 

long-term care assistance. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Caregiver Assistance 

5 and Relief Effort Act of 2005’’ or as the ‘‘CARE Act of 

6 2005’’. 
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1 SEC. 2. INCREASED FUNDING FOR NATIONAL FAMILY 

2 CAREGIVER SUPPORT PROGRAM. 

3 (a) IN GENERAL.—Section 303(e)(1) of the Older 

4 Americans Act of 1965 (42 U.S.C. 3023(e)(1)) is amend5 ed by striking ‘‘$125,000,000 for fiscal year 2001’’ and 

6 inserting ‘‘$250,000,000 for fiscal year 2006’’. 

7 (b) NATIVE AMERICANS.—Section 643(2) of the 

8 Older Americans Act of 1965 (42 U.S.C. 3057n(2)) is 

9 amended by striking ‘‘$5,000,000 for fiscal year 2001’’ 

10 and inserting ‘‘$10,000,000 for fiscal year 2006’’. 

11 SEC. 3. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE 

12 NEEDS. 

13 (a) IN GENERAL.—Subpart C of part IV of sub14 chapter A of chapter 1 of the Internal Revenue Code of 

15 1986 (relating to refundable credits) is amended by redes16 ignating section 36 as section 37 and by inserting after 

17 section 35 the following new section: 

18 ‘‘SEC. 36. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE 

19 NEEDS. 

20 ‘‘(a) ALLOWANCE OF CREDIT.— 

21 ‘‘(1) IN GENERAL.—There shall be allowed as a 

22 credit against the tax imposed by this chapter for 

23 the taxable year an amount equal to the applicable 

24 amount multiplied by the number of applicable indi25 viduals with respect to whom the taxpayer is an eli26 gible caregiver for the taxable year. 
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1 ‘‘(2) APPLICABLE AMOUNT.—For purposes of 

2 paragraph (1), the applicable amount shall be deter3 mined in accordance with the following table: 

‘‘In the case of taxable years beginning in: 

The applicable 

amount 

is: 

2005 ................................................................................................ $2,500

2006 ................................................................................................ $2,750

2007 or thereafter .......................................................................... $3,000. 

4 ‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN5 COME.— 

6 ‘‘(1) IN GENERAL.—The amount of the credit 

7 allowable under subsection (a) shall be reduced (but 

8 not below zero) by $100 for each $1,000 (or fraction 

9 thereof) by which the taxpayer’s modified adjusted 

10 gross income exceeds the threshold amount. For 

11 purposes of the preceding sentence, the term ‘modi12 fied adjusted gross income’ means adjusted gross in13 come increased by any amount excluded from gross 

14 income under section 911, 931, or 933. 

15 ‘‘(2) THRESHOLD AMOUNT.—For purposes of 

16 paragraph (1), the term ‘threshold amount’ means 

17 $75,000 (twice such amount in the case of joint re18 turn). 

19 ‘‘(3) INDEXING.—In the case of any taxable 

20 year beginning in a calendar year after 2005, the 
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1 $75,000 amount contained in paragraph (2) shall be 

2 increased by an amount equal to the product of— 

3 ‘‘(A) such dollar amount, and 

4 ‘‘(B) the medical care cost adjustment de5 termined under section 213(d)(10)(B)(ii) for 

6 the calendar year in which the taxable year be7 gins, determined by substituting ‘2004’ for 

8 ‘1996’ in subclause (II) thereof. 

9 If any increase determined under the preceding sen10 tence is not a multiple of $50, such increase shall 

11 be rounded to the next lowest multiple of $50. 

12 ‘‘(c) DEFINITIONS.—For purposes of this section— 

13 ‘‘(1) APPLICABLE INDIVIDUAL.— 

14 ‘‘(A) IN GENERAL.—The term ‘applicable 

15 individual’ means, with respect to any taxable 

16 year, any individual who has been certified, be17 fore the due date for filing the return of tax for 

18 the taxable year (without extensions), by a phy19 sician (as defined in section 1861(r)(1) of the 

20 Social Security Act) as being an individual with 

21 long-term care needs described in subparagraph 

22 (B) for a period— 

23 ‘‘(i) which is at least 180 consecutive 

24 days, and 
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1 ‘‘(ii) a portion of which occurs within 

2 the taxable year. 

3 Such term shall not include any individual oth4 erwise meeting the requirements of the preceding sentence unless within the 391 5 ⁄2 month 

6 period ending on such due date (or such other 

7 period as the Secretary prescribes) a physician 

8 (as so defined) has certified that such indi9 vidual meets such requirements. 

10 ‘‘(B) INDIVIDUALS WITH LONG-TERM CARE

11 NEEDS.—An individual is described in this sub12 paragraph if the individual meets any of the fol13 lowing requirements: 

14 ‘‘(i) The individual is at least 18 years 

15 of age and— 

16 ‘‘(I) is unable to perform (with17 out substantial assistance from an18 other individual) at least 3 activities 

19 of daily living (as defined in section 

20 7702B(c)(2)(B)) due to a loss of 

21 functional capacity, or 

22 ‘‘(II) requires substantial super23 vision to protect such individual from 

24 threats to health and safety due to se25 vere cognitive impairment and is un-
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1 able to perform at least 1 activity of 

2 daily living (as so defined) or to the 

3 extent provided in regulations pre4 scribed by the Secretary (in consulta5 tion with the Secretary of Health and 

6 Human Services), is unable to engage 

7 in age appropriate activities. 

8 ‘‘(ii) The individual is at least 6 but 

9 not 18 years of age and— 

10 ‘‘(I) is unable to perform (with11 out substantial assistance from an12 other individual) at least 3 activities 

13 of daily living (as defined in section 

14 7702B(c)(2)(B)) due to a loss of 

15 functional capacity, 

16 ‘‘(II) requires substantial super17 vision to protect such individual from 

18 threats to health and safety due to se19 vere cognitive impairment and is un20 able to perform at least 1 activity of 

21 daily living (as so defined) or to the 

22 extent provided in regulations pre23 scribed by the Secretary (in consulta24 tion with the Secretary of Health and 
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1 Human Services), is unable to engage 

2 in age appropriate activities, 

3 ‘‘(III) has a level of disability 

4 similar to the level of disability de5 scribed in subclause (I) (as deter6 mined under regulations promulgated 

7 by the Secretary), or 

8 ‘‘(IV) has a complex medical con9 dition (as defined by the Secretary) 

10 that requires medical management 

11 and coordination of care. 

12 ‘‘(iii) The individual is at least 2 but 

13 not 6 years of age and— 

14 ‘‘(I) is unable due to a loss of 

15 functional capacity to perform (with16 out substantial assistance from an17 other individual) at least 2 of the fol18 lowing activities: eating, transferring, 

19 or mobility, 

20 ‘‘(II) has a level of disability 

21 similar to the level of disability de22 scribed in subclause (I) (as deter23 mined under regulations promulgated 

24 by the Secretary), or 
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1 ‘‘(III) has a complex medical con2 dition (as defined by the Secretary) 

3 that requires medical management 

4 and coordination of care. 

5 ‘‘(iv) The individual is under 2 years 

6 of age and— 

7 ‘‘(I) requires specific durable 

8 medical equipment by reason of a se9 vere health condition or requires a 

10 skilled practitioner trained to address 

11 the individual’s condition to be avail12 able if the individual’s parents or 

13 guardians are absent, 

14 ‘‘(II) has a level of disability 

15 similar to the level of disability de16 scribed in subclause (I) (as deter17 mined under regulations promulgated 

18 by the Secretary), or 

19 ‘‘(III) has a complex medical con20 dition (as defined by the Secretary) 

21 that requires medical management 

22 and coordination of care. 

23 ‘‘(v) The individual has 5 or more 

24 chronic conditions (as defined in subpara25 graph (C)) and is unable to perform (with-
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1 out substantial assistance from another in2 dividual) at least 1 activity of daily living 

3 (as so defined) due to a loss of functional 

4 capacity. 

5 ‘‘(C) CHRONIC CONDITION.—For purposes 

6 of this paragraph, the term ‘chronic condition’ 

7 means a condition that lasts for at least 6 con8 secutive months and requires ongoing medical 

9 care. 

10 ‘‘(2) ELIGIBLE CAREGIVER.—A taxpayer shall 

11 be treated as an eligible caregiver for any taxable 

12 year with respect to the taxpayer and the taxpayer’s 

13 spouse and dependents. A taxpayer shall not be 

14 treated as an eligible caregiver with respect to him15 self for any taxable year beginning in any calendar 

16 year if any other person is an eligible caregiver with 

17 respect to the taxpayer for a taxable year which be18 gins in such calendar year. 

19 ‘‘(d) IDENTIFICATION REQUIREMENT.—No credit 

20 shall be allowed under this section to a taxpayer with re21 spect to any applicable individual unless the taxpayer in22 cludes the name and taxpayer identification number of 

23 such individual, and the identification number of the phy24 sician certifying such individual, on the return of tax for 

25 the taxable year. 
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1 ‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE

2 YEAR.—Except in the case of a taxable year closed by rea3 son of the death of the taxpayer, no credit shall be allow4 able under this section in the case of a taxable year cov5 ering a period of less than 12 months.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Section 6213(g)(2) of the Internal Revenue 

8 Code of 1986 is amended by striking ‘‘and’’ at the 

9 end of subparagraph (L), by striking the period at 

10 the end of subparagraph (M) and inserting ‘‘, and’’, 

11 and by inserting after subparagraph (M) the fol12 lowing new subparagraph: 

13 ‘‘(N) an omission of a correct TIN or phy14 sician identification required under section 

15 36(d) (relating to credit for taxpayers with 

16 long-term care needs) to be included on a re17 turn.’’. 

18 (2) The table of sections for subpart C of part 

19 IV of subchapter A of chapter 1 of such Code is 

20 amended by redesignating the item relating to sec21 tion 36 as an item relating to section 37 and by in22 serting before such item the following new item: 

‘‘Sec. 36. Credit for taxpayers with long-term care needs.’’. 

23 (3) Section 1324(b)(2) of title 31, United 

24 States Code, is amended by inserting ‘‘or 36’’ after 

25 ‘‘section 35’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2004. 

4 SEC. 4. TREATMENT OF PREMIUMS ON QUALIFIED LONG5 TERM CARE INSURANCE CONTRACTS. 

6 (a) IN GENERAL.—Part VII of subchapter B of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to 

8 additional itemized deductions) is amended by redesig9 nating section 224 as section 225 and by inserting after 

10 section 223 the following new section: 

11 ‘‘SEC. 224. PREMIUMS ON QUALIFIED LONG-TERM CARE IN12 SURANCE CONTRACTS. 

13 ‘‘(a) IN GENERAL.—In the case of an individual, 

14 there shall be allowed as a deduction an amount equal to 

15 the applicable percentage of the amount of eligible long16 term care premiums (as defined in section 213(d)(10)) 

17 paid during the taxable year for coverage for the taxpayer 

18 and the taxpayer’s spouse and dependents under a quali19 fied long-term care insurance contract (as defined in sec20 tion 7702B(b)). 

21 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

22 subsection (a)— 

23 ‘‘(1) IN GENERAL.—Except as otherwise pro24 vided in this subsection, the applicable percentage 

25 shall be determined in accordance with the following 
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1 table based on the number of years of continuous 

2 coverage (as of the close of the taxable year) of the 

3 individual under any qualified long-term care insur4 ance contracts (as defined in section 7702B(b)): 

‘‘If the number of years of The applicable 

continuous coverage is— percentage is—

Less than 1 .................................................................. 60

At least 1 but less than 2 ............................................. 70

At least 2 but less than 3 ............................................. 80

At least 3 but less than 4 ............................................. 90

At least 4 ...................................................................... 100.

5 ‘‘(2) SPECIAL RULES FOR INDIVIDUALS WHO

6 HAVE ATTAINED AGE 55.—In the case of an indi7 vidual who has attained age 55 as of the close of the 

8 taxable year, the following table shall be substituted 

9 for the table in paragraph (1): 

‘‘If the number of years of The applicable 

continuous coverage is— percentage is—

Less than 1 .................................................................. 70

At least 1 but less than 2 ............................................. 85

At least 2 ...................................................................... 100.

10 ‘‘(3) ONLY COVERAGE AFTER 2004 TAKEN INTO

11 ACCOUNT.—Only coverage for periods after Decem12 ber 31, 2004, shall be taken into account under this 

13 subsection. 

14 ‘‘(4) CONTINUOUS COVERAGE.—An individual 

15 shall not fail to be treated as having continuous cov16 erage if the aggregate breaks in coverage during any 

17 1-year period are less than 60 days. 

18 ‘‘(c) COORDINATION WITH OTHER DEDUCTIONS.— 

19 Any amount paid by a taxpayer for any qualified long- 
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1 term care insurance contract to which subsection (a) ap2 plies shall not be taken into account in computing the 

3 amount allowable to the taxpayer as a deduction under 

4 section 162(l) or 213(a).’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) Section 62(a) of the Internal Revenue Code 

7 of 1986 is amended by inserting before the last sen8 tence the following new paragraph: 

9 ‘‘(21) PREMIUMS ON QUALIFIED LONG-TERM

10 CARE INSURANCE CONTRACTS.—The deduction al11 lowed by section 224.’’. 

12 (2) The table of sections for part VII of sub13 chapter B of chapter 1 of such Code is amended by 

14 redesignating the item relating to section 224 as an 

15 item relating to section 225 and by inserting before 

16 such item the following new item: 

‘‘Sec. 224. Premiums on qualified long-term care insurance contracts.’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to taxable years beginning after 

19 December 31, 2004. 

20 SEC. 5. ADDITIONAL CONSUMER PROTECTIONS FOR LONG21 TERM CARE INSURANCE. 

22 (a) ADDITIONAL PROTECTIONS APPLICABLE TO

23 LONG-TERM CARE INSURANCE.—Subparagraphs (A) and 

24 (B) of section 7702B(g)(2) of the Internal Revenue Code 
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1 of 1986 (relating to requirements of model regulation and 

2 Act) are amended to read as follows: 

3 ‘‘(A) IN GENERAL.—The requirements of 

4 this paragraph are met with respect to any con5 tract if such contract meets— 

6 ‘‘(i) MODEL REGULATION.—The fol7 lowing requirements of the model regula8 tion: 

9 ‘‘(I) Section 6A (relating to guar10 anteed renewal or noncancellability), 

11 other than paragraph (5) thereof, and 

12 the requirements of section 6B of the 

13 model Act relating to such section 6A. 

14 ‘‘(II) Section 6B (relating to pro15 hibitions on limitations and exclu16 sions) other than paragraph (7) there17 of. 

18 ‘‘(III) Section 6C (relating to ex19 tension of benefits). 

20 ‘‘(IV) Section 6D (relating to 

21 continuation or conversion of cov22 erage). 

23 ‘‘(V) Section 6E (relating to dis24 continuance and replacement of poli25 cies). 
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1 ‘‘(VI) Section 7 (relating to unin2 tentional lapse). 

3 ‘‘(VII) Section 8 (relating to dis4 closure), other than sections 8F, 8G, 

5 8H, and 8I thereof. 

6 ‘‘(VIII) Section 11 (relating to 

7 prohibitions against post-claims un8 derwriting). 

9 ‘‘(IX) Section 12 (relating to 

10 minimum standards). 

11 ‘‘(X) Section 13 (relating to re12 quirement to offer inflation protec13 tion). 

14 ‘‘(XI) Section 25 (relating to pro15 hibition against preexisting conditions 

16 and probationary periods in replace17 ment policies or certificates). 

18 ‘‘(XII) The provisions of section 

19 26 relating to contingent nonforfeiture 

20 benefits, if the policyholder declines 

21 the offer of a nonforfeiture provision 

22 described in paragraph (4). 

23 ‘‘(ii) MODEL ACT.—The following re24 quirements of the model Act: 
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1 ‘‘(I) Section 6C (relating to pre2 existing conditions). 

3 ‘‘(II) Section 6D (relating to 

4 prior hospitalization). 

5 ‘‘(III) The provisions of section 8 

6 relating to contingent nonforfeiture 

7 benefits, if the policyholder declines 

8 the offer of a nonforfeiture provision 

9 described in paragraph (4). 

10 ‘‘(B) DEFINITIONS.—For purposes of this 

11 paragraph— 

12 ‘‘(i) MODEL PROVISIONS.—The terms 

13 ‘model regulation’ and ‘model Act’ mean 

14 the long-term care insurance model regula15 tion, and the long-term care insurance 

16 model Act, respectively, promulgated by 

17 the National Association of Insurance 

18 Commissioners (as adopted as of October 

19 2000). 

20 ‘‘(ii) COORDINATION.—Any provision 

21 of the model regulation or model Act listed 

22 under clause (i) or (ii) of subparagraph 

23 (A) shall be treated as including any other 

24 provision of such regulation or Act nec25 essary to implement the provision. 
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1 ‘‘(iii) DETERMINATION.—For pur2 poses of this section and section 4980C, 

3 the determination of whether any require4 ment of a model regulation or the model 

5 Act has been met shall be made by the 

6 Secretary.’’. 

7 (b) EXCISE TAX.—Paragraph (1) of section 

8 4980C(c) of the Internal Revenue Code of 1986 (relating 

9 to requirements of model provisions) is amended to read 

10 as follows: 

11 ‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.— 

12 ‘‘(A) MODEL REGULATION.—The following 

13 requirements of the model regulation must be 

14 met: 

15 ‘‘(i) Section 9 (relating to required 

16 disclosure of rating practices to consumer). 

17 ‘‘(ii) Section 14 (relating to applica18 tion forms and replacement coverage). 

19 ‘‘(iii) Section 15 (relating to reporting 

20 requirements). 

21 ‘‘(iv) Section 22 (relating to filing re22 quirements for marketing). 

23 ‘‘(v) Section 23 (relating to standards 

24 for marketing), including inaccurate com25 pletion of medical histories, other than 
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1 paragraphs (1), (6), and (9) of section 

2 23C. 

3 ‘‘(vi) Section 24 (relating to suit4 ability). 

5 ‘‘(vii) Section 29 (relating to standard 

6 format outline of coverage). 

7 ‘‘(viii) Section 30 (relating to require8 ment to deliver shopper’s guide). 

9 The requirements referred to in clause (vi) shall 

10 not include those portions of the personal work11 sheet described in Appendix B relating to con12 sumer protection requirements not imposed by 

13 section 4980C or 7702B. 

14 ‘‘(B) MODEL ACT.—The following require15 ments of the model Act must be met: 

16 ‘‘(i) Section 6F (relating to right to 

17 return). 

18 ‘‘(ii) Section 6G (relating to outline of 

19 coverage). 

20 ‘‘(iii) Section 6H (relating to require21 ments for certificates under group plans). 

22 ‘‘(iv) Section 6J (relating to policy 

23 summary). 

24 ‘‘(v) Section 6K (relating to monthly 

25 reports on accelerated death benefits). 
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1 ‘‘(vi) Section 7 (relating to incontest2 ability period). 

3 ‘‘(C) DEFINITIONS.—For purposes of this 

4 paragraph, the terms ‘model regulation’ and 

5 ‘model Act’ have the meanings given such terms 

6 by section 7702B(g)(2)(B).’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to policies issued more than 1 year 

9 after the date of the enactment of this Act. 

Æ