709
‘‘(i) such individual is not an eligible
individual for all months of the taxable
year,
‘‘(ii) the deductible under the cata-
strophic health plan covering such individ-
ual is not the same throughout such tax-
able year, or
‘‘(iii) such limitation is determined
using the next to the last sentence of para-
graph (1) for some but not all months dur-
ing such taxable year.
‘‘(B) MONTHLY LIMITATION.—The month-
ly limitation for any month shall be an amount
equal to 1⁄12 of the limitation which would (but
for this paragraph and paragraph (3)) be deter-
mined under paragraph (1) if the facts and cir-
cumstances as of the first day of such month
that such individual is covered under a cata-
strophic health plan were true for the entire
taxable year.
‘‘(5) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No deduction shall be allowed under this
section to any individual with respect to whom a de-
duction under section 151 is allowable to another
taxpayer for a taxable year beginning in the cal-
710
endar year in which such individual’s taxable year
begins.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE INDIVIDUAL.—
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means, with respect to any month, any
individual—
‘‘(i) who is covered under a cata-
strophic health plan at any time during
such month, and
‘‘(ii) who is not, while covered under
a catastrophic health plan, covered under
any health plan—
‘‘(I) which is not a catastrophic
health plan, and
‘‘(II) which provides coverage for
any benefit which is covered under the
catastrophic health plan.
‘‘(B) 
CERTAIN
COVERAGE
DIS-
REGARDED.—Subparagraph (A)(ii) shall be ap-
plied without regard to—
‘‘(i) coverage for any benefit provided
by permitted insurance, and
711
‘‘(ii) coverage (whether through insur-
ance or otherwise) for accidents, dental
care, vision care, or long-term care.
‘‘(2) CATASTROPHIC HEALTH PLAN.—The term
‘catastrophic health plan’ means any health plan
which provides no compensation for an individual’s
expenses covered by the plan for any calendar year
to the extent such expenses for such calendar year
do not exceed $1,500 ($3,000 if the catastrophic
health plan covering the taxpayer provides coverage
for more than 1 individual) or such higher amounts
as may be specified by the plan.
‘‘(3) PERMITTED INSURANCE.—The term ‘per-
mitted insurance’ means—
‘‘(A) Medicare supplemental insurance,
‘‘(B) insurance if substantially all of the
coverage provided under such insurance relates
to—
‘‘(i) liabilities incurred under workers’
compensation laws,
‘‘(ii) tort liabilities,
‘‘(iii) liabilities relating to ownership
or use of property,
‘‘(iv) credit insurance, or
712
‘‘(v) such other similar liabilities as
the Secretary may specify by regulations,
‘‘(C) insurance for a specified disease or
illness, and
‘‘(D) insurance paying a fixed amount per
day (or other period) of hospitalization.
‘‘(d) MEDICAL SAVINGS ACCOUNT.—For purposes of
this section—
‘‘(1) MEDICAL SAVINGS ACCOUNT.—The term
‘medical savings account’ means a trust created or
organized in the United States exclusively for the
purpose of paying the qualified medical expenses of
the account holder, but only if the written governing
instrument creating the trust meets the following re-
quirements:
‘‘(A) Except in the case of a rollover con-
tribution described in subsection (f)(4), no con-
tribution will be accepted unless it is in cash.
‘‘(B) The trustee is a bank (as defined in
section 408(n)), an insurance company (as de-
fined in section 816), or another person who
demonstrates to the satisfaction of the Sec-
retary that the manner in which such person
will administer the trust will be consistent with
the requirements of this section.
713
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts.
‘‘(D) The assets of the trust will not be
commingled with other property except in a
common trust fund or common investment
fund.
‘‘(E) The interest of an individual in the
balance in his account is nonforfeitable.
‘‘(2) QUALIFIED MEDICAL EXPENSES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
medical expenses’ means, with respect to an ac-
count holder, amounts paid by such holder—
‘‘(i) for medical care (as defined in
section 213(d)) for such individual, the
spouse of such individual, and any depend-
ent (as defined in section 152) of such in-
dividual, but only to the extent such
amounts are not compensated for by insur-
ance or otherwise, or
‘‘(ii) for long-term care insurance for
such individual, spouse, or dependent.
‘‘(B) HEALTH
INSURANCE
MAY
NOT
BE
PURCHASED
FROM
ACCOUNT.—Subparagraph
(A)(i) shall not apply to any payment for insur-
ance.
728
rectly to the Deputy Commissioner of the Internal
Revenue Service.
‘‘(2) FUNCTIONS OF OFFICE.—
‘‘(A) IN GENERAL.—It shall be the func-
tion of the Office of Taxpayer Advocate to—
‘‘(i) assist taxpayers in resolving prob-
lems with the Internal Revenue Service,
‘‘(ii) identify areas in which taxpayers
have problems in dealings with the Internal
Revenue Service,
‘‘(iii) to the extent possible, propose
changes in the administrative practices of
the Internal Revenue Service to mitigate
problems identified under clause (ii), and
‘‘(iv) 
identify 
potential 
legislative
changes which may be appropriate to miti-
gate such problems.
‘‘(B) ANNUAL REPORTS.—
‘‘(i) OBJECTIVES.—Not later than
June 30 of each calendar year after 1995,
the Taxpayer Advocate shall report to the
Committee on Ways and Means of the
House of Representatives and the Commit-
tee on Finance of the Senate on the objec-
tives of the Taxpayer Advocate for the fis-