I
107TH CONGRESS
2D SESSION
H. R. 4946
To amend the Internal Revenue Code to provide health care incentives related
to long-term care.
IN THE HOUSE OF REPRESENTATIVES
JUNE 17, 2002
Mr. HAYWORTH (for himself, Mr. WELLER, Mr. RAMSTAD, Mr. WATKINS of
Oklahoma, Mr. ENGLISH, and Mr. LEWIS of Kentucky) introduced the
following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code to provide health care
incentives related to long-term care.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Improving Access to Long-Term Care Act of 2002’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
SEC. 2. DEDUCTION FOR PREMIUMS ON QUALIFIED LONG-
TERM CARE INSURANCE CONTRACTS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 (relating to additional itemized deductions) is
amended by redesignating section 223 as section 224 and
by inserting after section 222 the following new sub-
section:
‘‘SEC. 223. PREMIUMS ON QUALIFIED LONG-TERM CARE IN-
SURANCE CONTRACTS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a deduction an amount equal to
the applicable percentage of eligible long-term care pre-
miums (as defined in section 213(d)(10)) paid during the
taxable year by the taxpayer for coverage for the taxpayer
and the spouse and dependents of the taxpayer.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the applicable percentage shall be deter-
mined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
percentage is—
2003, 2004, and 2005 .............................................................
2006 and 2007 .........................................................................
2008 and 2009 .........................................................................
2010 and 2011 .........................................................................
2012 and thereafter .................................................................
50.
‘‘(c) LIMITATION BASED ON MODIFIED ADJUSTED
GROSS INCOME.—
‘‘(1) IN
GENERAL.—If the modified adjusted
gross income of the taxpayer for the taxable year ex-
ceeds $20,000 (twice the preceding dollar amount,
as adjusted under paragraph (2), in the case of a
joint return) the amount which would (but for this
subsection) be allowed as a deduction under sub-
section (a) shall be reduced (but not below zero) by
the amount which bears the same ratio to the
amount which would be so allowed as such excess
bears to $20,000 ($40,000 in the case of a joint re-
turn).
‘‘(2) ADJUSTMENTS
FOR
INFLATION.—In the
case of a taxable year beginning after December 31,
2003, the first $20,000 amount contained in para-
graph (1) shall be increased by an amount equal
to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar
year in which the taxable year begins, deter-
mined by substituting ‘calendar year 2002’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(3) MODIFIED
ADJUSTED
GROSS
INCOME.—
For purposes of paragraph (1), the term ‘modified
adjusted gross income’ means adjusted gross income
determined—
‘‘(A) without regard to this section and
sections 911, 931, and 933, and
‘‘(B) after application of sections 86, 135,
137, 219, 221, 222, and 469.
‘‘(d) LIMITATION
BASED
ON
SUBSIDIZED
COV-
ERAGE.—
‘‘(1) IN
GENERAL.—Subsection (a) shall not
apply to premiums paid for coverage of any indi-
vidual for any calendar month if—
‘‘(A) for such month such individual is cov-
ered by any insurance which is advertised, mar-
keted, or offered as long-term care insurance
under any health plan maintained by any em-
ployer of the taxpayer or of the taxpayer’s
spouse, and
‘‘(B) 50 percent or more of the cost of any
such 
coverage 
(determined 
under 
section
4980B) for such month is paid or incurred by
the employer.
‘‘(2) PLANS MAINTAINED BY CERTAIN EMPLOY-
ERS.—A health plan which is not otherwise de-
scribed in paragraph (1)(A) shall be treated as de-
scribed in such paragraph if such plan would be so
described if all health plans of persons treated as a
single employer under subsection (b), (c), (m), or (o)
of section 414 were treated as one health plan.
‘‘(e) COORDINATION WITH OTHER DEDUCTIONS.—
Any amount taken into account under subsection (a) shall
not be taken into account in computing the amount allow-
able as a deduction under section 162(l) or 213(a).
‘‘(f) MARRIED COUPLES MUST FILE JOINT RE-
TURN.—
‘‘(1) IN GENERAL.—If the taxpayer is married
at the close of the taxable year, the deduction shall
be allowed under subsection (a) only if the taxpayer
and the taxpayer’s spouse file a joint return for the
taxable year.
‘‘(2) MARITAL STATUS.—For purposes of para-
graph (1), marital status shall be determined in ac-
cordance with section 7703.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out this
section, including regulations requiring employers to re-
port to their employees and the Secretary such informa-
tion as the Secretary determines to be appropriate.’’.
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES.—Subsection (a) of section 62 is amend-
ed by inserting after paragraph (18) the following new
item:
‘‘(19) PREMIUMS
ON
QUALIFIED
LONG-TERM
CARE
INSURANCE
CONTRACTS.—The deduction al-
lowed by section 223.’’.
(c) CONFORMING AMENDMENTS.—
(1) 
Sections 
86(b)(2)(A), 
135(c)(4)(A),
137(b)(3)(A), 219(g)(3)(A)(ii), and 221(b)(2)(C)(i)
are each amended by inserting ‘‘223,’’ after ‘‘222,’’.
(2) Section 222(b)(2)(C)(i) is amended by in-
serting ‘‘223,’’ before ‘‘911’’.
(3) Section 469(i)(3)(F)(iii) is amended by
striking ‘‘and 222’’ and inserting ‘‘222, and 223’’.
(d) CLERICAL AMENDMENT.—The table of sections
for part VII of subchapter B of chapter 1 is amended by
striking the last item and inserting the following new
items:
‘‘Sec. 223. Premiums on qualified long-term care insurance con-
tracts.
‘‘Sec. 224. Cross reference.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2002.
SEC. 3. ADDITIONAL PERSONAL EXEMPTION FOR DEPEND-
ENTS WITH LONG-TERM CARE NEEDS IN TAX-
PAYER’S HOME.
(a) IN GENERAL.—Section 151 (relating to allowance
of deductions for personal exemptions) is amended by re-
designating subsections (d) and (e) as subsections (e) and
(f), respectively, and by inserting after subsection (c) the
following new subsection:
‘‘(d) ADDITIONAL EXEMPTION
FOR DEPENDENTS
WITH
LONG-TERM
CARE
NEEDS
IN
TAXPAYER’S
HOME.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), an exemption of the exemption amount
for each qualified family member of the taxpayer.
‘‘(2) PHASE-IN.—In the case of taxable years
beginning in calendar years before 2012, the amount
of the exemption provided under paragraph (1) shall
not exceed the applicable limitation amount deter-
mined in accordance with the following table:
‘‘For taxable years beginning
The applicable
in calendar year—
limitation amount is—
2003 and 2004 .........................................................................
$500
2005 and 2006 .........................................................................
1,000
2007 and 2008 .........................................................................
1,500
2009 and 2010 .........................................................................
2,000
2011 .........................................................................................
2,500.
‘‘(3) QUALIFIED FAMILY MEMBER.—For pur-
poses of this subsection, the term ‘qualified family
member’ means, with respect to any taxable year,
any individual—
‘‘(A) who is—
‘‘(i) the spouse of the taxpayer, or
‘‘(ii) a dependent of the taxpayer with
respect to whom the taxpayer is entitled to
an exemption under subsection (c),
‘‘(B) who is an individual with long-term
care needs during any portion of the taxable
year, and
‘‘(C) other than an individual described in
section 152(a)(9), who, for more than half of
such year, has as such individual’s principal
place of abode the home of the taxpayer and is
a member of the taxpayer’s household.
‘‘(4) INDIVIDUALS
WITH
LONG-TERM
CARE
NEEDS.—For purposes of this subsection, the term
‘individual with long-term care needs’ means, with
respect to any taxable year, an individual who has
been certified, during the 391⁄2-month period ending
on the due date (without extensions) for filing the
return of tax for the taxable year (or such other pe-
riod as the Secretary prescribes), by a physician (as
defined in section 1861(r)(1) of the Social Security
Act) as being, for a period which is at least 180 con-
secutive days—
‘‘(A) an individual who is unable to per-
form (without substantial assistance from an-
other individual) at least 2 activities of daily liv-
ing (as defined in section 7702B(c)(2)(B)) due
to a loss of functional capacity, or
‘‘(B) an individual who requires substan-
tial supervision to protect such individual from
threats to health and safety due to severe cog-
nitive impairment and is unable to perform,
without reminding or cuing assistance, at least
1 activity of daily living (as so defined) or to
the extent provided in regulations prescribed by
the Secretary (in consultation with the Sec-
retary of Health and Human Services), is un-
able to engage in age appropriate activities.
‘‘(5) IDENTIFICATION REQUIREMENT.—No ex-
emption shall be allowed under this subsection to a
taxpayer with respect to any qualified family mem-
ber unless the taxpayer includes, on the return of
tax for the taxable year, the name and taxpayer
identification of the physician certifying such mem-
ber. In the case of a failure to provide the informa-
tion required under the preceding sentence, the pre-
ceding sentence shall not apply if it is shown that
the taxpayer exercised due diligence in attempting to
provide the information so required.
‘‘(6) SPECIAL
RULES.—Rules similar to the
rules of paragraphs (2), (3), and (4) of section 21(e)
shall apply for purposes of this subsection.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1(f)(6)(A) is amended by striking
‘‘151(d)(4)’’ and inserting ‘‘151(e)(4)’’.
(2) Section 1(f)(6)(B), as amended by the Eco-
nomic Growth and Tax Relief Reconciliation Act of
2001, is amended by striking ‘‘151(d)(3)(A)’’ and
inserting ‘‘151(e)(3)(A)’’.
(3) Section 1(f)(6)(B), as in effect on the day
before the date of the enactment of the Economic
Growth and Tax Relief Reconciliation Act of 2001,
is amended by striking ‘‘151(d)(4)(A)’’ and inserting
‘‘151(e)(4)(A)’’.
(4) Section 3402(f)(1)(A) is amended by strik-
ing ‘‘151(d)(2)’’ and inserting ‘‘151(e)(2)’’.
(5) Section 3402(r)(2)(B) is amended by strik-
ing ‘‘151(d)’’ and inserting ‘‘151(e)’’.
(6) Section 6012(a)(1)(D)(ii) is amended—
(A) by striking ‘‘151(d)’’ and inserting
‘‘151(e)’’, and
(B) by striking ‘‘151(d)(2)’’ and inserting
‘‘151(e)(2)’’.
(7) Section 6013(b)(3)(A) is amended by strik-
ing ‘‘151(d)’’ and inserting ‘‘151(e)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2002.
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