I 

108TH CONGRESS 

2D SESSION H. R. 5110 

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

for qualified long-term care insurance premiums, a credit for individuals 

who care for those with long-term care needs, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 21, 2004 

Ms. HERSETH 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 amend the Internal Revenue Code of 1986 to allow individuals a deduction for qualified long-term care insurance 

premiums, a credit for individuals who care for those 

with long-term care needs, 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 ‘‘Comprehensive Long5 Term Care Support Act of 2004’’. 

6 SEC. 2. FINDINGS. 

7 The Congress hereby finds: 
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1 (1) As our Nation’s seniors live longer lives, the 

2 United States faces a major challenge in long-term 

3 health care needs. 

4 (2) The United States does not have a com5 prehensive system to support long-term care needs. 

6 (3) Since the late 1980s the proportion of 

7 households in the United States involved in unpaid 

8 caregiving activities jumped to over 25 percent. 

9 (4) Eighty-three percent of people over age 85 

10 have a functional limitation or chronic health care 

11 condition requiring care. 

12 (5) Medicare spending on home health care has 

13 decreased significantly during the last 10 years and 

14 long-term care is expected to place a huge burden on 

15 State Medicaid programs, which are the primary 

16 source of funding for nursing homes. 

17 SEC. 3. DEDUCTION FOR QUALIFIED LONG-TERM CARE IN18 SURANCE PREMIUMS. 

19 (a) IN GENERAL.—Part VII of subchapter B of chap20 ter 1 of the Internal Revenue Code of 1986 (relating to 

21 additional itemized deductions) is amended by redesig22 nating section 224 as section 225 and by inserting after 

23 section 223 the following new section: 
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1 ‘‘SEC. 224. PREMIUMS ON QUALIFIED LONG-TERM CARE IN2 SURANCE CONTRACTS. 

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

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

5 the applicable percentage of the amount of eligible long6 term care premiums (as defined in section 213(d)(10)) 

7 paid during the taxable year for coverage for the taxpayer 

8 or any member of the family of the taxpayer under a quali9 fied long-term care insurance contract (as defined in sec10 tion 7702B(b)). 

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

12 subsection (a), the applicable percentage shall be deter13 mined in accordance with the following table: 

‘‘For taxable years beginning 

in calendar year— 

The applicable percentage is— 

2005 ................................................................................. 50

2006 ................................................................................. 75

2007 or thereafter ............................................................ 100. 

14 ‘‘(c) MEMBER OF THE FAMILY.—For purposes of 

15 this section, the term ‘member of the family’ means, with 

16 respect to any individual— 

17 ‘‘(1) the spouse of the individual, 

18 ‘‘(2) an ancestor or lineal descendant of the in19 dividual or the individual’s spouse, 

20 ‘‘(3) a brother or sister of the individual or any 

21 individual described in paragraph (1) or (2), and 

22 ‘‘(4) the spouse of any individual described in 

23 paragraph (2) or (3). 
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1 ‘‘(d) COORDINATION WITH OTHER DEDUCTIONS.— 

2 Any amount paid by a taxpayer for any qualified long3 term care insurance contract to which subsection (a) ap4 plies shall not be taken into account in computing the 

5 amount allowable to the taxpayer as a deduction under 

6 section 162(l) or 213(a).’’. 

7 (b) LONG-TERM CARE INSURANCE PERMITTED TO

8 BE OFFERED UNDER CAFETERIA PLANS AND FLEXIBLE

9 SPENDING ARRANGEMENTS.— 

10 (1) CAFETERIA PLANS.—Section 125(f) of the 

11 Internal Revenue Code of 1986 (defining qualified 

12 benefits) is amended by inserting before the period 

13 at the end ‘‘; except that such term shall include the 

14 payment of premiums for any qualified long-term 

15 care insurance contract (as defined in section 

16 7702B) to the extent the amount of such payment 

17 does not exceed the eligible long-term care premiums 

18 (as defined in section 213(d)(10)) for such con19 tract’’. 

20 (2) FLEXIBLE SPENDING ARRANGEMENTS.— 

21 Section 106 of such Code (relating to contributions 

22 by an employer to accident and health plans) is 

23 amended by striking subsection (c). 

24 (c) CONFORMING AMENDMENTS.— 
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1 (1) Section 62(a) of the Internal Revenue Code 

2 of 1986 is amended by inserting after paragraph 

3 (19) the following new item: 

4 ‘‘(20) PREMIUMS ON QUALIFIED LONG-TERM

5 CARE INSURANCE CONTRACTS.—The deduction al6 lowed by section 224.’’. 

7 (2) The table of sections for part VII of sub8 chapter B of chapter 1 of such Code is amended by 

9 striking the last item and inserting the following 

10 new items: 

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

‘‘Sec. 225. Cross reference.’’. 

11 (d) EFFECTIVE DATES.— 

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section 

14 shall apply to taxable years beginning after Decem15 ber 31, 2004. 

16 (2) CAFETERIA PLANS AND FLEXIBLE SPEND17 ING ARRANGEMENTS.—The amendments made by 

18 subsection (b) shall apply to taxable years beginning 

19 after December 31, 2006. 

20 SEC. 4. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE 

21 NEEDS. 

22 (a) IN GENERAL.—Subpart A of part IV of sub23 chapter A of chapter 1 of the Internal Revenue Code of 

24 1986 (relating to nonrefundable personal credits) is 
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1 amended by inserting after section 25B the following new 

2 section: 

3 ‘‘SEC. 25C. CREDIT FOR TAXPAYERS WITH LONG-TERM 

4 CARE NEEDS. 

5 ‘‘(a) ALLOWANCE OF CREDIT.— 

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

7 credit against the tax imposed by this chapter for 

8 the taxable year an amount equal to the applicable 

9 credit amount multiplied by the number of applica10 ble individuals with respect to whom the taxpayer is 

11 an eligible caregiver for the taxable year. 

12 ‘‘(2) APPLICABLE CREDIT AMOUNT.—For pur13 poses of paragraph (1), the applicable credit amount 

14 shall be determined in accordance with the following 

15 table: 

‘‘For taxable years beginning 

in calendar year—

The applicable credit amount 

is—

2005 ......................................................................................... $1,000

2006 ......................................................................................... 1,500

2007 ......................................................................................... 2,000

2008 ......................................................................................... 2,500

2009 or thereafter .................................................................... 3,000. 

16 ‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN17 COME.— 

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

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

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

21 thereof) by which the taxpayer’s modified adjusted 

22 gross income exceeds the threshold amount. For 
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1 purposes of the preceding sentence, the term ‘modi2 fied adjusted gross income’ means adjusted gross in3 come increased by any amount excluded from gross 

4 income under section 911, 931, or 933. 

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

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

7 ‘‘(A) $150,000 in the case of a joint re8 turn, and 

9 ‘‘(B) $75,000 in any other case. 

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

11 year beginning in a calendar year after 2005, each 

12 dollar amount contained in paragraph (2) shall be 

13 increased by an amount equal to the product of— 

14 ‘‘(A) such dollar amount, and 

15 ‘‘(B) the medical care cost adjustment de16 termined under section 213(d)(10)(B)(ii) for 

17 the calendar year in which the taxable year be18 gins, determined by substituting ‘August 2004’ 

19 for ‘August 1996’ in subclause (II) thereof. 

20 If any increase determined under the preceding sen21 tence is not a multiple of $50, such increase shall 

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

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

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

2 individual’ means, with respect to any taxable 

3 year, any individual who has been certified, be4 fore the due date for filing the return of tax for 

5 the taxable year (without extensions), by a phy6 sician (as defined in section 1861(r)(1) of the 

7 Social Security Act) as being an individual with 

8 long-term care needs described in subparagraph 

9 (B) for a period— 

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

11 days, and 

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

13 the taxable year. 

14 Such term shall not include any individual oth15 erwise meeting the requirements of the preceding sentence unless within the 391 16 ⁄2 month 

17 period ending on such due date (or such other 

18 period as the Secretary prescribes) a physician 

19 (as so defined) has certified that such indi20 vidual meets such requirements. 

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

22 NEEDS.—An individual is described in this sub23 paragraph if the individual meets any of the fol24 lowing requirements: 
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1 ‘‘(i) The individual is at least 6 years 

2 of age and— 

3 ‘‘(I) is unable to perform (with4 out substantial assistance from an5 other individual) at least 3 activities 

6 of daily living (as defined in section 

7 7702B(c)(2)(B)) due to a loss of 

8 functional capacity, or 

9 ‘‘(II) requires substantial super10 vision to protect such individual from 

11 threats to health and safety due to se12 vere cognitive impairment and is un13 able to preform, without reminding or 

14 cuing assistance, at least 1 activity of 

15 daily living (as so defined) or to the 

16 extent provided in regulations pre17 scribed by the Secretary (in consulta18 tion with the Secretary of Health and 

19 Human Services), is unable to engage 

20 in age appropriate activities. 

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

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

23 loss of functional capacity to perform 

24 (without substantial assistance from an-
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1 other individual) at least 2 of the following 

2 activities: eating, transferring, or mobility. 

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

4 of age and requires specific durable med5 ical equipment by reason of a severe health 

6 condition or requires a skilled practitioner 

7 trained to address the individual’s condi8 tion to be available if the individual’s par9 ents or guardians are absent. 

10 ‘‘(2) ELIGIBLE CAREGIVER.— 

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

12 treated as an eligible caregiver for any taxable 

13 year with respect to the following individuals: 

14 ‘‘(i) The taxpayer. 

15 ‘‘(ii) The taxpayer’s spouse. 

16 ‘‘(iii) An individual with respect to 

17 whom the taxpayer is allowed a deduction 

18 under section 151 for the taxable year. 

19 ‘‘(iv) An individual who would be de20 scribed in clause (iii) for the taxable year 

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

22 substituting for the exemption amount an 

23 amount equal to the sum of the exemption 

24 amount, the standard deduction under sec25 tion 63(c)(2)(C), and any additional stand-
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1 ard deduction under section 63(c)(3) which 

2 would be applicable to the individual if 

3 clause (iii) applied. 

4 ‘‘(v) An individual who would be de5 scribed in clause (iii) for the taxable year 

6 if— 

7 ‘‘(I) the requirements of clause 

8 (iv) are met with respect to the indi9 vidual, and 

10 ‘‘(II) the requirements of sub11 paragraph (B) are met with respect to 

12 the individual in lieu of the support 

13 test of section 152(a). 

14 ‘‘(B) RESIDENCY TEST.—The require15 ments of this subparagraph are met if an indi16 vidual has as his principal place of abode the 

17 home of the taxpayer and— 

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

19 is an ancestor or descendant of the tax20 payer or the taxpayer’s spouse, is a mem21 ber of the taxpayer’s household for over 

22 half the taxable year, or 

23 ‘‘(ii) in the case of any other indi24 vidual, is a member of the taxpayer’s 

25 household for the entire taxable year. 
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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 
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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 ‘‘(d) IDENTIFICATION REQUIREMENT.—No credit 

6 shall be allowed under this section to a taxpayer with re7 spect to any applicable individual unless the taxpayer in8 cludes the name and taxpayer identification number of 

9 such individual, and the identification number of the phy10 sician certifying such individual, on the return of tax for 

11 the taxable year. 

12 ‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE

13 YEAR.—Except in the case of a taxable year closed by rea14 son of the death of the taxpayer, no credit shall be allow15 able under this section in the case of a taxable year cov16 ering a period of less than 12 months.’’. 

17 (b) CONFORMING AMENDMENTS.— 

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

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

20 end of subparagraph (K), by striking the period at 

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

22 and by inserting after subparagraph (M) the fol23 lowing new subparagraph: 

24 ‘‘(N) an omission of a correct TIN or phy25 sician identification required under section 
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1 25C(d) (relating to credit for taxpayers with 

2 long-term care needs) to be included on a re3 turn.’’. 

4 (2) The table of sections for subpart A of part 

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

6 amended by inserting after the item relating to sec7 tion 25B the following new item: 

‘‘Sec. 25C. Credit for taxpayers with long-term care needs.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2004. 

11 SEC. 5. INCREASED FUNDING FOR NATIONAL FAMILY 

12 CAREGIVER SUPPORT PROGRAM. 

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

14 Americans Act of 1965 (42 U.S.C. 3023(e)(1)) is amend15 ed by striking ‘‘$125,000,000 for fiscal year 2001’’ and 

16 inserting ‘‘$250,000,000 for fiscal year 2005’’. 

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

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

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

20 and inserting ‘‘$10,000,000 for fiscal year 2005’’. 

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