I

103D CONGRESS

1ST SESSION H. R. 862

To require the Secretary of Health and Human Services to submit to the

Congress a proposal for the regulation of long-term care insurance policies, including an analysis and evaluation of such policies as are available

to individuals, and to amend the Internal Revenue Code of 1986 to

allow tax-free distributions from individual retirement accounts for the

purchase of long-term care insurance coverage by individuals who have

attained age 591⁄2.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 4, 1993

Mr. ROWLAND introduced the following bill; which was referred jointly to the

Committees on Ways and Means and Energy and Commerce

A BILL

To require the Secretary of Health and Human Services

to submit to the Congress a proposal for the regulation

of long-term care insurance policies, including an analysis

and evaluation of such policies as are available to individuals, and to amend the Internal Revenue Code of 1986

to allow tax-free distributions from individual retirement

accounts for the purchase of long-term care insurance

coverage by individuals who have attained age 591⁄2.

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

2 This Act may be cited as the ‘‘Long-Term Care In3 surance for the Elderly Act of 1993’’.

4 SEC. 2. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE5 TIREMENT ACCOUNTS FOR THE PURCHASE

6 OF LONG-TERM CARE INSURANCE COVERAGE

7 BY INDIVIDUALS WHO HAVE ATTAINED AGE

591 8 ⁄2.

9 Subsection (d) of section 408 of the Internal Revenue

10 Code of 1986 (relating to tax treatment of distributions

11 from individual retirement accounts) is amended by add12 ing at the end the following new paragraph:

13 ‘‘(8) DISTRIBUTIONS TO PURCHASE LONG-TERM

14 CARE INSURANCE.—

15 ‘‘(A) IN GENERAL.—Paragraph (1) shall

16 not apply to the applicable percentage of any

17 amount paid or distributed out of an individual

18 retirement account or individual retirement an19 nuity to the individual for whose benefit the ac20 count or annuity is maintained if—

21 ‘‘(i) the individual has attained age

591 22 ⁄2 by the date of the payment or dis23 tribution, and

24 ‘‘(ii) the entire amount received (in25 cluding money and any other property) is

26 used within 90 days to purchase long-term
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1 care insurance for the benefit of the indi2 vidual or the spouse of the individual (if

the spouse has attained age 591 3 ⁄2 by the

4 date of the payment or distribution).

5 ‘‘(B) APPLICABLE PERCENTAGE.—For

6 purposes of subparagraph (A), the term ‘appli7 cable percentage’ means in the case of a tax8 payer whose adjusted gross income for the tax9 able year is—

10 ‘‘(i) not greater than the minimum

11 amount, 100 percent,

12 ‘‘(ii) greater than the minimum

13 amount but not greater than the maximum

14 amount, a percentage equal to—

15 ‘‘(I) the difference between the

16 maximum amount and such adjusted

17 gross income, divided by

18 ‘‘(II) the difference between the

19 maximum amount and the minimum

20 amount, or

21 ‘‘(iii) greater than the maximum

22 amount, zero percent.

23 ‘‘(C) DEFINITIONS.—For purposes of sub24 paragraph (A)—
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1 ‘‘(i) LONG-TERM CARE INSURANCE.—

2 The term ‘long-term care insurance’ means

3 an insurance policy which at a minimum,

4 provides reimbursement for expenses in5 curred by, and services provided to, the

6 beneficiary for catastrophic and long-term

7 care at a nursing facility within the mean8 ing of section 1919(a) of the Social Secu9 rity Act (42 U.S.C. 1396r(a)) and at the

10 home of the beneficiary in the case of serv11 ices of a homemaker/home health aide, per12 sonal care services, and nursing care pro13 vided by a licensed professional nurse.

14 ‘‘(ii) MINIMUM AMOUNT.—The term

15 ‘minimum amount’ means, with respect to

16 any taxable year, $45,000 increased by an

17 amount which is equal to $45,000 multi18 plied by the cost-of-living adjustment (as

19 defined in section 1(f)(3)) for the calendar

20 year in which the taxable year begins.

21 ‘‘(iii) MAXIMUM AMOUNT.—The term

22 ‘maximum amount’ means, with respect to

23 any taxable year, $100,000 increased by

24 an amount which is equal to $100,000

25 multiplied by the cost-of-living adjustment
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1 (as defined in section 1(f)(3)) for the cal2 endar year in which the taxable year be3 gins.

4 ‘‘(iv) ROUNDING.—If any amount de5 termined under clause (ii) or (iii) is not a

6 multiple of $10, the amount shall be

7 rounded to the nearest multiple of $10 (or

8 if the amount is a multiple of $5 and not

9 a multiple of $10, the amount shall be in10 creased to the next multiple of $10).’’

11 SEC. 3. REPORT TO CONGRESS ON MINIMUM STANDARDS

12 FOR LONG-TERM CARE INSURANCE POLI13 CIES.

14 (a) IN GENERAL.—Within 1 year after the date of

15 the enactment of this Act, the Secretary of Health and

16 Human Services shall issue a report to the Congress after

17 consultation with representatives of the following:

18 (1) Consumer groups.

19 (2) Insurance companies.

20 (3) Long-term care facilities.

21 (4) Hospitals.

22 (5) Home health care agencies.

23 (6) State commissioners of insurance.

24 (b) CONTENTS OF REPORT.—The report required in

25 subsection (a)—
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1 (1) shall propose a regulatory program which

2 provides for the application of minimum standards

3 and requirements with respect to long-term care in4 surance policies, and

5 (2) should analyze and evaluate—

6 (A) the various catastrophic and long-term

7 care insurance policies available to individuals,

8 and

9 (B) any other areas of examination deter10 mined to be appropriate by the Secretary of

11 Health and Human Services.

12 SEC. 4. EFFECTIVE DATE.

13 The amendment made by section 2 shall apply to

14 amounts paid or distributed after the 1st day of the 1st

15 calendar year which begins after the date of the enactment

16 of this Act.

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