I

106TH CONGRESS

1ST SESSION H. R. 2102

To amend the Internal Revenue Code of 1986 to allow individuals a deduction

for qualified long-term care insurance premiums and a credit for individuals with long-term care needs, to provide for an individual and employer

educational campaign concerning long-term care insurance, and to amend

title XIX of the Social Security Act to expand State long-term care

partnerships by exempting 75 percent of partnership assets from Medicaid estate recovery.

IN THE HOUSE OF REPRESENTATIVES

JUNE 9, 1999

Mrs. JOHNSON of Connecticut (for herself, Mrs. THURMAN, Mrs. KELLY, Mrs.

MORELLA, and Mr. BAKER) 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 to allow individuals a deduction for qualified long-term care insurance

premiums and a credit for individuals with long-term

care needs, to provide for an individual and employer

educational campaign concerning long-term care insurance, and to amend title XIX of the Social Security

Act to expand State long-term care partnerships by exempting 75 percent of partnership assets from Medicaid

estate recovery.
2

•HR 2102 IH

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 and

5 Retirement Security Act of 1999’’.

6 SEC. 2. DEDUCTION FOR PREMIUMS ON QUALIFIED LONG7 TERM CARE INSURANCE CONTRACTS.

8 (a) IN GENERAL.—Part VII of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 (relating to

10 additional itemized deductions) is amended by redesig11 nating section 222 as section 223 and by inserting after

12 section 221 the following new section:

13 ‘‘SEC. 222. PREMIUMS ON QUALIFIED LONG-TERM CARE IN14 SURANCE CONTRACTS.

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

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

17 the applicable percentage of the amount of eligible long18 term care premiums (as defined in section 213(d)(10))

19 paid during the taxable year for coverage for the taxpayer,

20 his spouse, and dependents under a qualified long-term

21 care insurance contract (as defined in section 7702B(b)).

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

23 subsection (a)—

24 ‘‘(1) IN GENERAL.—Except as otherwise pro25 vided in this subsection, the applicable percentage
3

•HR 2102 IH

1 shall be determined in accordance with the following

2 table based on the number of years of continuous

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

4 individual under a qualified long-term care insurance

5 contract (as defined in section 7702B(b)):

‘‘If the number of years of The applicable long-term

continuous coverage is— care percentage is—

Less than 1 .................................................................. 50

At least 1 but less than 2 ............................................. 60

At least 2 but less than 3 ............................................. 70

At least 3 but less than 4 ............................................. 80

At least 4 but less than 5 ............................................. 90

At least 5 ...................................................................... 100.

6 ‘‘(2) SPECIAL RULES FOR INDIVIDUALS WHO

7 HAVE ATTAINED AGE 60.—In the case of an indi8 vidual who has attained age 60 as of the close of the

9 taxable year, the following table shall be substituted

10 for the table in paragraph (1).

‘‘If the number of years of The applicable long-term

continuous coverage is— care percentage is—

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

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

At least 2 but less than 3 ............................................. 85

At least 3 ...................................................................... 100.

11 ‘‘(3) ONLY COVERAGE AFTER 1999 TAKEN INTO

12 ACCOUNT.—Only coverage for periods after Decem13 ber 31, 1999, shall be taken into account under this

14 subsection.

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

16 shall not fail to be treated as having continuous cov17 erage if the aggregate breaks in coverage during any

18 1-year period are less than 60 days.
4

•HR 2102 IH

1 ‘‘(c) EXCLUSION OF SUBSIDIZED COVERAGE.—Sub2 section (a) shall not apply to any taxpayer for any cal3 endar month for which the taxpayer participates in any

4 group health plan of an employer or any other entity if

5 less than 50 percent of the cost of the taxpayer’s coverage

6 under such plan is borne by the taxpayer.

7 ‘‘(d) SPECIAL RULES.—

8 ‘‘(1) COORDINATION WITH MEDICAL DEDUC9 TION, ETC.—Any amount paid by a taxpayer for any

10 qualified long-term care insurance contract shall not

11 be taken into account in computing the amount al12 lowable to the taxpayer as a deduction under section

13 213(a).

14 ‘‘(2) COORDINATION WITH DEDUCTION FOR

15 HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN16 DIVIDUALS.—Any amount paid by a taxpayer for

17 any qualified long-term care insurance contract

18 which taken into account in computing the amount

19 allowable to the taxpayer as a deduction under sec20 tion 162(l) shall not be taken into account under

21 this section.’’

22 (b) CONFORMING AMENDMENTS.—

23 (1) Subsection (a) of section 62 of such Code

24 is amended by inserting after paragraph (17) the

25 following new item:
5

•HR 2102 IH

1 ‘‘(18) PREMIUMS ON QUALIFIED LONG-TERM

2 CARE INSURANCE CONTRACTS.—The deduction al3 lowed by section 222.’’

4 (2) The table of sections for part VII of sub5 chapter B of chapter 1 of such Code is amended by

6 striking the last item and inserting the following

7 new items:

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

‘‘Sec. 223. Cross reference.’’

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

9 this section shall apply to taxable years beginning after

10 December 31, 1999.

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

12 NEEDS.

13 (a) ALLOWANCE OF CREDIT.—

14 (1) IN GENERAL.—Section 24(a) of the Internal

15 Revenue Code of 1986 (relating to allowance of child

16 tax credit) is amended to read as follows:

17 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al18 lowed as a credit against the tax imposed by this chapter

19 for the taxable year an amount equal to the sum of—

20 ‘‘(1) $500 multiplied by the number of quali21 fying children of the taxpayer, plus

22 ‘‘(2) $1,000 multiplied by the number of appli23 cable individuals with respect to whom the taxpayer

24 is an eligible caregiver for the taxable year.’’
6

•HR 2102 IH

1 (2) ADDITIONAL CREDIT FOR TAXPAYER WITH

2 3 OR MORE SEPARATE CREDIT AMOUNTS.—So much

3 of section 24(d) of such Code as precedes paragraph

4 (1)(A) thereof is amended to read as follows:

5 ‘‘(d) ADDITIONAL CREDIT FOR TAXPAYERS WITH 3

6 OR MORE SEPARATE CREDIT AMOUNTS.—

7 ‘‘(1) IN GENERAL.—If the sum of the number

8 of qualifying children of the taxpayer and the num9 ber of applicable individuals with respect to which

10 the taxpayer is an eligible caregiver is 3 or more for

11 any taxable year, the aggregate credits allowed

12 under subpart C shall be increased by the lesser

13 of—’’.

14 (3) CONFORMING AMENDMENTS.—

15 (A) The heading for section 32(n) of such

16 Code is amended by striking ‘‘CHILD’’ and in17 serting ‘‘FAMILY CARE’’.

18 (B) The heading for section 24 is amended

19 to read as follows:

20 ‘‘SEC. 24. FAMILY CARE CREDIT.’’

21 (C) The table of sections for subpart A of

22 part IV of subchapter A of chapter 1 of such

23 Code is amended by striking the item relating

24 to section 24 and inserting the following new

25 item:

‘‘Sec. 24. Family care credit.’’.
7

•HR 2102 IH

1 (b) DEFINITIONS.—Section 24(c) of such Code (de2 fining qualifying child) is amended to read as follows:

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

4 ‘‘(1) QUALIFYING CHILD.—

5 ‘‘(A) IN GENERAL.—The term ‘qualifying

6 child’ means any individual if—

7 ‘‘(i) the taxpayer is allowed a deduc8 tion under section 151 with respect to such

9 individual for the taxable year,

10 ‘‘(ii) such individual has not attained

11 the age of 17 as of the close of the cal12 endar year in which the taxable year of the

13 taxpayer begins, and

14 ‘‘(iii) such individual bears a relation15 ship to the taxpayer described in section

16 32(c)(3)(B).

17 ‘‘(B) EXCEPTION FOR CERTAIN NONCITI18 ZENS.—The term ‘qualifying child’ shall not in19 clude any individual who would not be a de20 pendent if the first sentence of section

21 152(b)(3) were applied without regard to all

22 that follows ‘resident of the United States’.

23 ‘‘(2) APPLICABLE INDIVIDUAL.—

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

25 individual’ means, with respect to any taxable
8

•HR 2102 IH

1 year, any individual who has been certified, be2 fore the due date for filing the return of tax for

3 the taxable year (without extensions), by a phy4 sician (as defined in section 1861(r)(1) of the

5 Social Security Act) as being an individual with

6 long-term care needs described in subparagraph

7 (B) for a period—

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

9 days, and

10 ‘‘(ii) a portion of which occurs within

11 the taxable year.

12 Such term shall not include any individual oth13 erwise meeting the requirements of the preceding sentence unless within the 391 14 ⁄2 month

15 period ending on such due date (or such other

16 period as the Secretary prescribes) a physician

17 (as so defined) has certified that such indi18 vidual meets such requirements.

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

20 NEEDS.—An individual is described in this sub21 paragraph if the individual meets any of the fol22 lowing requirements:

23 ‘‘(i) The individual is at least 6 years

24 of age and—
9

•HR 2102 IH

1 ‘‘(I) is unable to perform (with2 out substantial assistance from an3 other individual) at least 3 activities

4 of daily living (as defined in section

5 7702B(c)(2)(B)) due to a loss of

6 functional capacity, or

7 ‘‘(II) requires substantial super8 vision to protect such individual from

9 threats to health and safety due to se10 vere cognitive impairment and is un11 able to preform, without reminding or

12 cuing assistance, at least 1 activity of

13 at least 1 activity of daily living (as so

14 defined) or to the extent provided in

15 regulations prescribed by the Sec16 retary (in consultation with the Sec17 retary of Health and Human Serv18 ices), is unable to engage in age ap19 propriate activities.

20 ‘‘(ii) The individual is at least 2 but

21 not 6 years of age and is unable due to a

22 loss of functional capacity to perform

23 (without substantial assistance from an24 other individual) at least 2 of the following

25 activities: eating, transferring, or mobility.
10

•HR 2102 IH

1 ‘‘(iii) The individual is under 2 years

2 of age and requires specific durable med3 ical equipment by reason of a severe health

4 condition or requires a skilled practitioner

5 trained to address the individual’s condi6 tion to be available if the individual’s par7 ents or guardians are absent.

8 ‘‘(3) ELIGIBLE CAREGIVER.—

9 ‘‘(A) IN GENERAL.—A taxpayer shall be

10 treated as an eligible caregiver for any taxable

11 year with respect to the following individuals:

12 ‘‘(i) The taxpayer.

13 ‘‘(ii) The taxpayer’s spouse.

14 ‘‘(iii) An individual with respect to

15 whom the taxpayer is allowed a deduction

16 under section 151 for the taxable year.

17 ‘‘(iv) An individual who would be de18 scribed in clause (iii) for the taxable year

19 if section 151(c)(1)(A) were applied by

20 substituting for the exemption amount an

21 amount equal to the sum of the exemption

22 amount, the standard deduction under sec23 tion 63(c)(2)(C), and any additional stand24 ard deduction under section 63(c)(3) which
11

•HR 2102 IH

1 would be applicable to the individual if

2 clause (iii) applied.

3 ‘‘(v) An individual who would be de4 scribed in clause (iii) for the taxable year

5 if—

6 ‘‘(I) the requirements of clause

7 (iv) are met with respect to the indi8 vidual, and

9 ‘‘(II) the requirements of sub10 paragraph (B) are met with respect to

11 the individual in lieu of the support

12 test of section 152(a).

13 ‘‘(B) RESIDENCY TEST.—The require14 ments of this subparagraph are met if an indi15 vidual has as his principal place of abode the

16 home of the taxpayer and—

17 ‘‘(i) in the case of an individual who

18 is an ancestor or descendant of the tax19 payer or the taxpayer’s spouse, is a mem20 ber of the taxpayer’s household for over

21 half the taxable year, or

22 ‘‘(ii) in the case of any other indi23 vidual, is a member of the taxpayer’s

24 household for the entire taxable year.
12

•HR 2102 IH

1 ‘‘(C) SPECIAL RULES WHERE MORE THAN

2 1 ELIGIBLE CAREGIVER.—

3 ‘‘(i) IN GENERAL.—If more than 1 in4 dividual is an eligible caregiver with re5 spect to the same applicable individual for

6 taxable years ending with or within the

7 same calendar year, a taxpayer shall be

8 treated as the eligible caregiver if each

9 such individual (other than the taxpayer)

10 files a written declaration (in such form

11 and manner as the Secretary may pre12 scribe) that such individual will not claim

13 such applicable individual for the credit

14 under this section.

15 ‘‘(ii) NO AGREEMENT.—If each indi16 vidual required under clause (i) to file a

17 written declaration under clause (i) does

18 not do so, the individual with the highest

19 modified adjusted gross income (as defined

20 in section 32(c)(5)) shall be treated as the

21 eligible caregiver.

22 ‘‘(iii) MARRIED INDIVIDUALS FILING

23 SEPARATELY.—In the case of married indi24 viduals filing separately, the determination

25 under this subparagraph as to whether the
13

•HR 2102 IH

1 husband or wife is the eligible caregiver

2 shall be made under the rules of clause (ii)

3 (whether or not one of them has filed a

4 written declaration under clause (i)).’’.

5 (c) IDENTIFICATION REQUIREMENTS.—

6 (1) IN GENERAL.—Section 24(e) of such Code

7 is amended by adding at the end the following new

8 sentence: ‘‘No credit shall be allowed under this sec9 tion to a taxpayer with respect to any applicable in10 dividual unless the taxpayer includes the name and

11 taxpayer identification number of such individual,

12 and the identification number of the physician certi13 fying such individual, on the return of tax for the

14 taxable year.’’.

15 (2) ASSESSMENT.—Section 6213(g)(2)(I) of

16 such Code is amended—

17 (A) by inserting ‘‘or physician identifica18 tion’’ after ‘‘correct TIN’’, and

19 (B) by striking ‘‘child’’ and inserting

20 ‘‘family care’’.

21 (d) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 1999.
14

•HR 2102 IH

1 SEC. 4. LONG-TERM CARE EDUCATION CAMPAIGN.

2 (a) INCLUDING INFORMATION WITH ANNUAL SOCIAL

3 SECURITY STATEMENTS.—Section 1143(c) of the Social

4 Security Act (42 U.S.C. 1320b–13(c)) is amended by add5 ing at the end the following:

6 ‘‘(3)(A) The Secretary shall include with the annual

7 statements under paragraph (2) for individuals who have

8 attained age 50 information about—

9 ‘‘(i) the limitation on long-term care benefits

10 provided through the medicare and medicaid pro11 grams under titles XVIII and XIX;

12 ‘‘(ii) what such individuals should look for in

13 purchasing private long-term care coverage; and

14 ‘‘(iii) the tax benefits that are available to those

15 who purchase qualified long-term care plans.

16 ‘‘(B) The information described in subparagraph (A)

17 shall be developed in cooperation with the Health Care Fi18 nancing Administration and representatives of providers

19 of long-term care services, of medicare and medicaid bene20 ficiaries, and of entities offering long-term care insurance

21 policies.

22 ‘‘(C) There are authorized to be appropriated from

23 the Federal Old-Age and Survivors Insurance Trust Fund

24 such sums as may be necessary to carry out this para25 graph and subsection (d).’’.
15

•HR 2102 IH

1 (b) TRANSMITTAL OF INFORMATION TO EMPLOY2 ERS.—Section 1143 of such Act (42 U.S.C. 1320b–13)

3 is further amended by adding at the end the following:

4 ‘‘Dissemination of Information to Employers

5 ‘‘(d) The Commissioner of Social Security shall pro6 vide for the transmittal to employers of information—

7 ‘‘(1) concerning the tax benefits available to

8 employers for the provision of qualified long-term

9 care insurance coverage; and

10 ‘‘(2) encouraging employers to offer coverage

11 under qualified long-term care insurance contracts

12 to their employees and to inform employees about

13 the information described in subsection (c)(3)(A).’’.

14 (c) EFFECTIVE DATES.—(1) The amendment made

15 by subsection (a) applies to annual statements transmitted

16 more than 1 year after the date of the enactment of this

17 Act.

18 (2) The amendment made by subsection (b) takes ef19 fect upon enactment.

20 SEC. 5. EXPANSION OF STATE LONG-TERM CARE PARTNER21 SHIPS BY EXEMPTING A PORTION OF PART22 NERSHIP ASSETS FROM ESTATE RECOVERY.

23 (a) IN GENERAL.—Section 1917(b)(1)(C) of the So24 cial Security Act (42 U.S.C. 1396p(b)(1)(C)) is

25 amended—
16

•HR 2102 IH

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

2 after ‘‘such clause’’; and

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

4 clause:

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

6 medical assistance under a State plan not described

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

8 amendment approved which provides for the dis9 regard of any assets or resources in the manner de10 scribed in such clause, clause (i) shall not apply to

11 75 percent of the amounts of the assets or resources

12 so disregarded.’’.

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

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

15 of this Act.

Æ