II 

116TH CONGRESS 

2D SESSION S. 4820 

To amend the Internal Revenue Code of 1986 to expand the use of retirement 

plan funds to obtain long-term care insurance, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 20 (legislative day, OCTOBER 19), 2020 

Mr. TOOMEY introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

the use of retirement plan funds to obtain long-term 

care insurance, and for other purposes. 

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 ‘‘Long-Term Care Af5 fordability Act’’. 

6 SEC. 2. LONG-TERM CARE CONTRACTS PURCHASED WITH 

7 RETIREMENT PLAN DISTRIBUTIONS. 

8 (a) IN GENERAL.—Section 402 of the Internal Rev9 enue Code of 1986 is amended by adding at the end the 

10 following new subsection: 


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1 ‘‘(m) DISTRIBUTIONS WITH RESPECT TO LONG2 TERM CARE INSURANCE.— 

3 ‘‘(1) EXCLUSION.— 

4 ‘‘(A) IN GENERAL.—Gross income of an 

5 individual for the taxable year does not include 

6 any distribution from an eligible retirement 

7 plan to the extent that the aggregate amount of 

8 such distributions does not exceed the amount 

9 paid by or assessed to such individual during 

10 the taxable year for or with respect to coverage 

11 described in subparagraph (B) for the indi12 vidual, the individual’s spouse, or a dependent 

13 (as defined in section 152, determined without 

14 regard to subsections (b)(1), (b)(2), and 

15 (d)(1)(B) thereof) of the individual. 

16 ‘‘(B) COVERAGE DESCRIBED.—Coverage 

17 described in this subparagraph is— 

18 ‘‘(i) a qualified long-term care insur19 ance contract (as defined in section 

20 7702B(b)) covering qualified long-term 

21 care services (as defined in section 

22 7702B(c)), and 

23 ‘‘(ii) coverage of the risk that an in24 sured individual would become a chron25 ically ill individual (within the meaning of 


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1 section 101(g)(4)(B)) under a rider or 

2 other provision of a life insurance contract 

3 which satisfies the requirements of section 

4 101(g)(3) (determined without regard to 

5 subparagraph (D) thereof). 

6 ‘‘(2) LIMITATION.— 

7 ‘‘(A) IN GENERAL.—The amount excluded 

8 from gross income under paragraph (1) for any 

9 taxable year shall not exceed $2,500 with re10 spect to payments for coverage for any insured 

11 individual. 

12 ‘‘(B) EXCLUSION AVAILABLE ONLY TO 1

13 TAXPAYER.—The exclusion under paragraph 

14 (1) shall be allowed to only 1 taxpayer for any 

15 taxable year with respect to any 1 insured indi16 vidual. 

17 ‘‘(C) ADJUSTMENT FOR INFLATION.— 

18 ‘‘(i) IN GENERAL.—In the case of any 

19 taxable year beginning after December 31, 

20 2020, the $2,500 amount in subparagraph 

21 (A) shall be increased by an amount equal 

22 to— 

23 ‘‘(I) such dollar amount, multi24 plied by 


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1 ‘‘(II) the cost-of-living adjust2 ment determined under section 1(f)(3) 

3 for the calendar year in which the tax4 able year begins, determined by sub5 stituting ‘calendar year 2019’ for ‘cal6 endar year 2016’ in subparagraph 

7 (A)(ii) thereof. 

8 ‘‘(ii) ROUNDING.—If any increase de9 termined under clause (i) is not a multiple 

10 of $10, such increase shall be rounded to 

11 the nearest multiple of $10. 

12 ‘‘(3) ELIGIBLE RETIREMENT PLAN.—For pur13 poses of this subsection, the term ‘eligible retirement 

14 plan’ means any plan which— 

15 ‘‘(A) is described in clause (i),(ii), (iv), (v), 

16 or (vi) of subsection (c)(8)(B), or 

17 ‘‘(B) is a defined contribution plan de18 scribed in clause (iii) of subsection (c)(8)(B). 

19 ‘‘(4) DISTRIBUTIONS MUST OTHERWISE BE IN20 CLUDIBLE.—Rules similar to the rules of subsection 

21 (l)(3) shall apply for purposes of this subsection. 

22 ‘‘(5) SEPARATELY STATED PORTIONS OF A CON23 TRACT.—For purposes of this subsection, the 

24 amount taken into account as paid during the tax25 able year for coverage described in paragraph 


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1 (1)(B)(i) includes premiums paid and charges as2 sessed during such taxable year for any such cov3 erage which is treated as a separate contract under 

4 section 7702B(e)(1), if such separate contract is a 

5 qualified long-term care insurance contract (as de6 fined in section 7702B(b)). 

7 ‘‘(6) COORDINATION WITH OTHER DEDUC8 TIONS.—The amounts excluded from gross income 

9 under paragraph (1) shall not be taken into account 

10 under section 162(l) or 213.’’. 

11 (b) AMOUNTS TREATED AS REQUIRED MINIMUM

12 DISTRIBUTION.—Section 401(a)(9) of the Internal Rev13 enue Code of 1986 is amended by adding at the end the 

14 following new subparagraph: 

15 ‘‘(I) TREATMENT OF DISTRIBUTIONS FOR

16 LONG-TERM CARE INSURANCE.—For purposes 

17 of this title, if a distribution is required under 

18 this paragraph for a taxable year, any distribu19 tion which is excluded from gross income under 

20 section 402(m) for the taxable year shall be 

21 treated as a distribution required under this 

22 paragraph.’’. 

23 (c) CONFORMING AMENDMENTS.— 

24 (1) Section 401(k)(2)(B)(i) of the Internal Rev25 enue Code of 1986 is amended by striking ‘‘or’’ at 


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1 the end of subclause (IV), by striking ‘‘and’’ at the 

2 end of subclause (V) and inserting ‘‘or’’, and by add3 ing at the end the following new subclause: 

4 ‘‘(VI) as provided in section 

5 402(m), and’’. 

6 (2) Section 403(b)(11) of such Code is amend7 ed by striking ‘‘or’’ at the end of subparagraph (B), 

8 by striking the period at the end of subparagraph 

9 (C) and inserting ‘‘, or’’, and by inserting after sub10 paragraph (C) the following new subparagraph: 

11 ‘‘(D) for distributions to which section 

12 402(m) applies.’’. 

13 (3) Section 457(d)(1)(A) of such Code is 

14 amended by striking ‘‘or’’ at the end of clause (ii), 

15 by striking the comma at the end of clause (iii) and 

16 inserting ‘‘, or’’, and by adding at the end the fol17 lowing new clause: 

18 ‘‘(iv) as provided in section 402(m),’’. 

19 (d) REPORTING.— 

20 (1) IN GENERAL.—Subpart B of part III of 

21 subchapter A of chapter 61 of the Internal Revenue 

22 Code of 1986 is amended by adding at the end the 

23 following new section: 


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1 ‘‘SEC. 6050Z. CERTAIN WITHDRAWALS FROM QUALIFIED AR2 RANGEMENTS FOR LONG-TERM CARE INSUR3 ANCE. 

4 ‘‘(a) REQUIREMENT OF REPORTING.—Any issuer of 

5 a qualified long-term care insurance contract (as defined 

6 in section 7702B(b)), including a rider or other provision 

7 that is treated as a qualified long-term care insurance con8 tract under section 7702B(e)(1), or of coverage described 

9 in section 402(m)(1)(B)(ii), shall make a return, accord10 ing to forms or regulations prescribed by the Secretary, 

11 setting forth for each insured individual— 

12 ‘‘(1) the aggregate amount of premiums and 

13 charges paid for the contract or coverage covering 

14 such individual during the calendar year, 

15 ‘‘(2) the name, address, and TIN of the owner 

16 of the contract, if applicable, and 

17 ‘‘(3) the name, address, and TIN of the insured 

18 under the contract. 

19 ‘‘(b) STATEMENT TO BE FURNISHED TO PERSONS

20 WITH RESPECT TO WHOM INFORMATION IS REQUIRED.— 

21 Every person required to make a return under subsection 

22 (a) shall furnish to each individual whose name is required 

23 to be set forth in such return a written statement show24 ing— 

25 ‘‘(1) the name, address, and phone number of 

26 the information contact of the issuer of the qualified 


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1 long-term care insurance contract or coverage de2 scribed in section 402(m)(1)(B)(ii), and 

3 ‘‘(2) the aggregate amount of premiums and 

4 charges paid under the contract or coverage covering 

5 the insured individual during the calendar year. 

6 The written statement required under the preceding sen7 tence shall be furnished to the individual or individuals 

8 on or before January 31 of the year following the calendar 

9 year for which the return required under subsection (a) 

10 was required to be made. 

11 ‘‘(c) CONTRACTS OR COVERAGE COVERING MORE

12 THAN ONE INSURED.—In the case of contracts or cov13 erage covering more than one insured, the return and 

14 statement required by subsections (a) and (b) shall iden15 tify only the portion of the premium that is properly allo16 cable to the insured in respect of whom the return or 

17 statement is made.’’. 

18 (2) CLERICAL AMENDMENT.—The table of sec19 tions for subpart B of part III of subchapter A of 

20 chapter 61 of such Code is amended by adding after 

21 the item relating to section 6050Y the following new 

22 item: 

‘‘Sec. 6050Z. Certain withdrawals from qualified arrangements for long-term 

care insurance.’’. 


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1 (e) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to distributions received after the 

3 date of the enactment of this Act. 

4 SEC. 3. INFORMATION ABOUT LONG-TERM CARE INSUR5 ANCE. 

6 Section 516 of the Employee Retirement Income Se7 curity Act of 1974 (29 U.S.C. 1146) is amended— 

8 (1) in the section heading, by inserting ‘‘AND

9 PARTICIPATION IN LONG-TERM CARE INSUR10 ANCE’’ after ‘‘SAVINGS’’; 

11 (2) in subsection (a), by inserting ‘‘and long12 term care insurance’’ after ‘‘income savings’’; 

13 (3) in subsection (c)— 

14 (A) in paragraph (1), by striking ‘‘; and’’ 

15 and inserting a semicolon; 

16 (B) in paragraph (2), by striking the pe17 riod and inserting ‘‘; and’’; and 

18 (C) by adding at the end the following: 

19 ‘‘(3) a description of long-term care insurance 

20 arrangements, and information regarding matters 

21 relevant to enrolling in such insurance, including— 

22 ‘‘(A) a fact sheet for employers, in an eas23 ily accessible format; and 

24 ‘‘(B) a fact sheet for workers, in an easily 

25 accessible format.’’; and 


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1 (4) in subsection (d)— 

2 (A) in the matter preceding paragraph (1), 

3 by inserting ‘‘and long-term care insurance’’ be4 fore the period at the end of the first sentence; 

5 (B) in paragraph (3), by adding ‘‘and’’ 

6 after the semicolon; 

7 (C) in paragraph (4), by striking ‘‘; and’’ 

8 and inserting a period; 

9 (D) by redesignating paragraphs (1) 

10 through (4) as subparagraphs (A) through (D), 

11 respectively, and adjusting the margins accord12 ingly; 

13 (E) by redesignating paragraph (5) as 

14 paragraph (3); 

15 (F) by inserting before subparagraph (A), 

16 as so redesignated, the following: 

17 ‘‘(1) With respect to retirement income sav18 ings—’’; 

19 (G) by inserting before paragraph (3), as 

20 so redesignated by subparagraph (E), the fol21 lowing: 

22 ‘‘(2) With respect to long-term care insur23 ance— 

24 ‘‘(A) a description in simple terms of the 

25 common types of long-term care insurance 


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1 available to both individuals and employers 

2 (specifically including small employers), includ3 ing information on the tax benefits of such in4 surance under the Internal Revenue Code of 

5 1986; and 

6 ‘‘(B) materials explaining to employers in 

7 simple terms, the characteristics and operation 

8 of the different long-term care insurance for 

9 their workers and what the basic legal require10 ments are under this Act and the Internal Rev11 enue Code of 1986, including the steps to enroll 

12 in such insurance and including links to the 

13 fact sheets described in subsection (c)(3).’’; and 

14 (H) in paragraph (3), as so redesignated 

15 by subparagraph (E)— 

16 (i) by striking ‘‘links to other’’ and in17 serting ‘‘Links to other’’; and 

18 (ii) by inserting ‘‘and long-term care 

19 insurance’’ after ‘‘retirement income sav20 ings arrangements’’. 

Æ 


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