I

106TH CONGRESS

1ST SESSION H. R. 1261

To amend the Internal Revenue Code of 1986 and title XIX of the Social

Security Act to promote the purchase of private long-term care insurance

by providing tax deductibility, State Medicaid flexibility, and information

dissemination.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 1999

Mr. HOBSON (for himself, Mr. KASICH, Mr. GREENWOOD, Mrs. JOHNSON of

Connecticut, Ms. PRYCE of Ohio, and Mr. SAWYER) introduced the following bill; which was referred to the Committee on Ways and Means,

and in addition to the Committee on Commerce, 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 amend the Internal Revenue Code of 1986 and title

XIX of the Social Security Act to promote the purchase

of private long-term care insurance by providing tax deductibility, State Medicaid flexibility, and information

dissemination.

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 In5 surance Act of 1999’’.
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1 SEC. 2. DEDUCTION FOR LONG-TERM CARE PREMIUMS.

2 (a) IN GENERAL.—Part VII of subchapter B of chap3 ter 1 of the Internal Revenue Code of 1986 (relating to

4 additional itemized deductions for individuals) is amended

5 by redesignating section 222 as section 223 and by insert6 ing after section 221 the following new section:

7 ‘‘SEC. 222. ELIGIBLE PREMIUMS ON QUALIFIED LONG-TERM

8 CARE INSURANCE CONTRACTS.

9 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an

10 individual, there shall be allowed as a deduction an

11 amount equal to the applicable percentage of the eligible

12 long-term care premiums (as defined in section

13 213(d)(10)) paid during the taxable year for coverage

14 under a qualified long-term care insurance contract for the

15 taxpayer, his spouse, and dependents.

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

17 subsection (a), the term ‘applicable percentage’ means the

18 percentage determined under the following table:

‘‘For taxable years beginning

in calendar year—

The applicable percentage is—

2001 ......................................................................................... 20

2002 ......................................................................................... 40

2003 ......................................................................................... 60

2004 ......................................................................................... 80

2005 and thereafter ................................................................. 100.

19 ‘‘(c) SPECIAL RULES.—

20 ‘‘(1) COORDINATION WITH MEDICAL DEDUC21 TION.—Any amount paid by a taxpayer for insur22 ance to which subsection (a) applies shall not be
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1 taken into account in computing the amount allow2 able to the taxpayer as a deduction under section

3 213(a).

4 ‘‘(2) COORDINATION WITH DEDUCTION FOR

5 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN6 DIVIDUALS.—No deduction shall be allowed under

7 this section for any amount for which a deduction is

8 allowable under section 162(l).

9 ‘‘(3) DENIAL OF DEDUCTION TO DEPEND10 ENTS.—No deduction shall be allowed under this

11 section to any individual with respect to whom a de12 duction under section 151 is allowable to another

13 taxpayer for a taxable year beginning in the cal14 endar year in which such individual’s taxable year

15 begins.’’

16 (b) DEDUCTION ALLOWED WHETHER OR NOT TAX17 PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)

18 of section 62 of such Code is amended by inserting after

19 paragraph (17) the following new paragraph:

20 ‘‘(18) ELIGIBLE LONG-TERM CARE PRE21 MIUMS.—The deduction allowed by section 222.’’

22 (c) REDUCTION IN EARNED INCOME CREDIT TO

23 TAXPAYERS WITHOUT CHILDREN AS OFFSET FOR RE24 DUCTION IN REVENUES.—Subparagraph (A) of section
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1 32(b)(1) of such Code is amended by striking ‘‘7.65’’ and

2 inserting ‘‘3.825’’.

3 (d) CONFORMING AMENDMENT.—The table of sec4 tions for part VII of subchapter B of chapter 1 of such

5 Code is amended by striking the last item and inserting

6 the following new items:

‘‘Sec. 222. Eligible premiums on qualified long-term care insurance contracts.

‘‘Sec. 223. Cross reference.’’

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

8 this section shall apply to taxable years beginning after

9 December 31, 2000.

10 SEC. 3. REVISION OF MEDICAID LIMITATION.

11 (a) IN GENERAL.—Section 1917(b)(1)(C) of the So12 cial Security Act (42 U.S.C. 1396p(b)(1)(C)) is

13 amended—

14 (1) in clause (i), by inserting ‘‘or clause (iii)’’

15 after ‘‘such clause’’; and

16 (2) by adding at the end the following new

17 clause:

18 ‘‘(iii) In the case of an individual who receives

19 medical assistance under a State plan not described

20 in clause (ii) of a State which has a State plan

21 amendment approved which provides for the dis22 regard of any assets or resources in the manner de23 scribed in such clause, clause (i) shall not apply to
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1 75 percent of the amounts of the assets or resources

2 so disregarded.’’.

3 (b) EFFECTIVE DATE.—The amendments made by

4 subsection (a) take effect on the date of the enactment

5 of this Act.

6 SEC. 4. DISSEMINATING INFORMATION ABOUT LONG-TERM

7 CARE POLICIES AND MEDICARE COVERAGE.

8 (a) FINDINGS.—The Congress finds the following:

9 (1) As the baby boom generation begins to re10 tire, funding Social Security and Medicare will put

11 a strain on the financial resources of younger Ameri12 cans.

13 (2) Medicaid was designed as a program for the

14 poor, but in many States Medicaid is being used for

15 middle income elderly people to fund long-term care

16 expenses.

17 (3) In the coming decade, people over age 65

18 will represent up to 20 percent or more of the popu19 lation, and the proportion of the population com20 posed of individuals who are over age 85, who are

21 most likely to be in need of long-term care, may dou22 ble or triple.

23 (4) With nursing home care now costing

24 $40,000 to $50,000 on average per year, long-term

25 care expenses can have a catastrophic effect on fami-
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1 lies, wiping out a lifetime of savings before a spouse,

2 parent, or grandparent becomes eligible for Med3 icaid.

4 (5) Many people are unaware that most long5 term care costs are not covered by Medicare and

6 that Medicaid covers long-term care only after the

7 person’s assets have been exhausted.

8 (6) Widespread use of private long-term care

9 insurance has the potential to protect families from

10 the catastrophic costs of long-term care services

11 while, at the same time, easing the burden on Med12 icaid as the baby boom generation ages.

13 (7) The Federal Government has endorsed the

14 concept of private long-term care insurance by estab15 lishing Federal tax rules for tax-qualified policies in

16 the Health Insurance Portability and Accountability

17 Act of 1996.

18 (8) The Federal Government has ensured the

19 availability of quality long-term care insurance prod20 ucts and sales practices by adopting strict consumer

21 protections in the Health Insurance Portability and

22 Accountability Act of 1996.

23 (b) DISSEMINATION OF INFORMATION.—

24 (1) IN GENERAL.—The Administrator of the

25 Social Security Administration, in cooperation with
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1 the Administrator of the Health Care Financing Ad2 ministration, shall take all appropriate steps to in3 form the public—

4 (A) about the financial risks posed by rap5 idly increasing long-term care costs and about

6 the need for families to plan for their long-term

7 care needs; and

8 (B) that Medicare does not cover most

9 long-term care costs and that Medicaid covers

10 long-term care costs only when the beneficiary

11 has exhausted his or her assets.

12 (2) ENCOURAGEMENT OF EMPLOYER-SPON13 SORED COVERAGE.—The Secretary of Labor, in co14 operation with the Administrator of the Health Care

15 Financing Administration, shall take all appropriate

16 steps not only to encourage employers to offer pri17 vate long-term care insurance coverage to employees,

18 but also to encourage both working-aged people and

19 older citizens to obtain long-term care insurance ei20 ther through their employers or on their own.

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