SEC. 2. TREATMENT OF PREMIUMS ON QUALIFIED LONG- 
TERM CARE INSURANCE CONTRACTS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions) is amended by redesig-
nating section 224 as section 225 and by inserting after 
section 223 the following new section: 
‘‘SEC. 224. 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 for coverage for the taxpayer and the tax-
payer’s spouse and dependents under a qualified long-term 
care insurance contract (as defined in section 7702B(b)). 
‘‘(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— 
2009 or 2010 ...............................................................................
2011 .............................................................................................
2012 .............................................................................................
2013 or thereafter .......................................................................
100. 
‘‘(c) COORDINATION WITH OTHER DEDUCTIONS.— 
Any amount paid by a taxpayer for any qualified long- 
term care insurance contract to which subsection (a) ap-
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plies shall not be taken into account in computing the 
amount allowable to the taxpayer as a deduction under 
section 162(l) or 213(a).’’. 
(b) LONG-TERM CARE INSURANCE PERMITTED TO 
BE OFFERED UNDER CAFETERIA PLANS AND FLEXIBLE 
SPENDING ARRANGEMENTS.— 
(1) CAFETERIA PLANS.—The last sentence of 
section 125(f) of such Code (defining qualified bene-
fits) is amended by inserting before the period at the 
end ‘‘; except that such term shall include the pay-
ment of premiums for any qualified long-term care 
insurance contract (as defined in section 7702B) to 
the extent the amount of such payment does not ex-
ceed the eligible long-term care premiums (as de-
fined in section 213(d)(10)) for such contract’’. 
(2) FLEXIBLE
SPENDING
ARRANGEMENTS.— 
Section 106 of such Code (relating to contributions 
by an employer to accident and health plans) is 
amended by striking subsection (c) and redesig-
nating subsections (d) and (e) as subsections (c) and 
(d), respectively. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 62(a) of such Code is amended by 
inserting before the last sentence at the end the fol-
lowing new paragraph: 
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‘‘(22) PREMIUMS
ON
QUALIFIED
LONG-TERM 
CARE
INSURANCE
CONTRACTS.—The deduction al-
lowed by section 224.’’. 
(2) 
Sections 
223(b)(4)(B), 
223(d)(4)(C), 
223(f)(3)(B), 
3231(e)(11), 
3306(b)(18), 
3401(a)(22), 4973(g)(1), and 4973(g)(2)(B)(i) of 
such Code are each amended by striking ‘‘section 
106(d)’’ and inserting ‘‘section 106(c)’’. 
(3) Section 223(c)(1)(B)(iii)(II) of such Code is 
amended 
by 
striking 
‘‘106(e)’’ 
and 
inserting 
‘‘106(d)’’. 
(4) Section 6041 of such Code is amended— 
(A) in subsection (f)(1) by striking ‘‘(as 
defined in section 106(c)(2))’’, and 
(B) by adding at the end the following new 
subsection: 
‘‘(h) FLEXIBLE
SPENDING
ARRANGEMENT
DE-
FINED.—For purposes of this section, a flexible spending 
arrangement is a benefit program which provides employ-
ees with coverage under which— 
‘‘(1) specified incurred expenses may be reim-
bursed (subject to reimbursement maximums and 
other reasonable conditions), and 
‘‘(2) the maximum amount of reimbursement 
which is reasonably available to a participant for 
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such coverage is less than 500 percent of the value 
of such coverage. 
In the case of an insured plan, the maximum amount rea-
sonably available shall be determined on the basis of the 
underlying coverage.’’. 
(5) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by 
striking the last item and inserting the following 
new items: 
‘‘Sec. 224. Premiums on qualified long-term care insurance contracts. 
‘‘Sec. 225. Cross reference.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 3. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE 
NEEDS. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable personal credits) is 
amended by inserting after section 25D the following new 
section: 
‘‘SEC. 25E. CREDIT FOR TAXPAYERS WITH LONG-TERM 
CARE NEEDS. 
‘‘(a) ALLOWANCE OF CREDIT.— 
‘‘(1) IN GENERAL.—There shall be allowed as a 
credit against the tax imposed by this chapter for 
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the taxable year an amount equal to the applicable 
credit amount multiplied by the number of applica-
ble individuals with respect to whom the taxpayer is 
an eligible caregiver for the taxable year. 
‘‘(2) APPLICABLE CREDIT AMOUNT.—For pur-
poses of paragraph (1), the applicable credit amount 
shall be determined in accordance with the following 
table: 
‘‘For taxable years beginning 
The applicable 
in calendar year— 
credit amount is— 
2009 .............................................................................................
1,500
2010 .............................................................................................
2,000
2011 .............................................................................................
2,500
2012 or thereafter .......................................................................
3,000. 
‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.— 
‘‘(1) IN GENERAL.—The amount of the credit 
allowable under subsection (a) shall be reduced (but 
not below zero) by $100 for each $1,000 (or fraction 
thereof) by which the taxpayer’s modified adjusted 
gross income exceeds the threshold amount. For 
purposes of the preceding sentence, the term ‘modi-
fied adjusted gross income’ means adjusted gross in-
come increased by any amount excluded from gross 
income under section 911, 931, or 933. 
‘‘(2) THRESHOLD AMOUNT.—For purposes of 
paragraph (1), the term ‘threshold amount’ means— 
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‘‘(A) $150,000 in the case of a joint re-
turn, and 
‘‘(B) $75,000 in any other case. 
‘‘(3) INDEXING.—In the case of any taxable 
year beginning in a calendar year after 2009, each 
dollar amount contained in paragraph (2) shall be 
increased by an amount equal to the product of— 
‘‘(A) such dollar amount, and 
‘‘(B) the medical care cost adjustment de-
termined under section 213(d)(10)(B)(ii) for 
the calendar year in which the taxable year be-
gins, determined by substituting ‘August 2008’ 
for ‘August 1996’ in subclause (II) thereof. 
If any increase determined under the preceding sen-
tence is not a multiple of $50, such increase shall 
be rounded to the next lowest multiple of $50. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) APPLICABLE INDIVIDUAL.— 
‘‘(A) IN GENERAL.—The term ‘applicable 
individual’ means, with respect to any taxable 
year, any individual who has been certified, be-
fore the due date for filing the return of tax for 
the taxable year (without extensions), by a phy-
sician (as defined in section 1861(r)(1) of the 
Social Security Act) as being an individual with 
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long-term care needs described in subparagraph 
(B) for a period— 
‘‘(i) which is at least 180 consecutive 
days, and 
‘‘(ii) a portion of which occurs within 
the taxable year. 
Notwithstanding the preceding sentence, a cer-
tification shall not be treated as valid unless it 
is made within the 391⁄2 month period ending 
on such due date (or such other period as the 
Secretary prescribes). 
‘‘(B) INDIVIDUALS WITH LONG-TERM CARE 
NEEDS.—An individual is described in this sub-
paragraph if the individual meets any of the fol-
lowing requirements: 
‘‘(i) The individual is at least 6 years 
of age and— 
‘‘(I) is unable to perform (with-
out substantial assistance from an-
other individual) at least 3 activities 
of daily living (as defined in section 
7702B(c)(2)(B)) due to a loss of 
functional capacity, or 
‘‘(II) requires substantial super-
vision to protect such individual from 
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threats to health and safety due to se-
vere cognitive impairment and is un-
able to perform, without reminding or 
cuing assistance, at least 1 activity of 
daily living (as so defined) or to the 
extent provided in regulations pre-
scribed by the Secretary (in consulta-
tion with the Secretary of Health and 
Human Services), is unable to engage 
in age appropriate activities. 
‘‘(ii) The individual is at least 2 but 
not 6 years of age and is unable due to a 
loss of functional capacity to perform 
(without substantial assistance from an-
other individual) at least 2 of the following 
activities: eating, transferring, or mobility. 
‘‘(iii) The individual is under 2 years 
of age and requires specific durable med-
ical equipment by reason of a severe health 
condition or requires a skilled practitioner 
trained to address the individual’s condi-
tion to be available if the individual’s par-
ents or guardians are absent. 
‘‘(2) ELIGIBLE CAREGIVER.— 
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‘‘(A) IN GENERAL.—A taxpayer shall be 
treated as an eligible caregiver for any taxable 
year with respect to the following individuals: 
‘‘(i) The taxpayer. 
‘‘(ii) The taxpayer’s spouse. 
‘‘(iii) An individual with respect to 
whom the taxpayer is allowed a deduction 
under section 151(c) for the taxable year. 
‘‘(iv) An individual who would be de-
scribed in clause (iii) for the taxable year 
if section 151(c) were applied by sub-
stituting for the exemption amount an 
amount equal to the sum of the exemption 
amount, the standard deduction under sec-
tion 63(c)(2)(C), and any additional stand-
ard deduction under section 63(c)(3) which 
would be applicable to the individual if 
clause (iii) applied. 
‘‘(v) An individual who would be de-
scribed in clause (iii) for the taxable year 
if— 
‘‘(I) the requirements of clause 
(iv) are met with respect to the indi-
vidual, and 
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‘‘(II) the requirements of sub-
paragraph (B) are met with respect to 
the individual in lieu of the support 
test under subsection (c)(1)(D) or 
(d)(1)(C) of section 152. 
‘‘(B) RESIDENCY
TEST.—The require-
ments of this subparagraph are met if an indi-
vidual has as his principal place of abode the 
home of the taxpayer and— 
‘‘(i) in the case of an individual who 
is an ancestor or descendant of the tax-
payer or the taxpayer’s spouse, is a mem-
ber of the taxpayer’s household for over 
half the taxable year, or 
‘‘(ii) in the case of any other indi-
vidual, is a member of the taxpayer’s 
household for the entire taxable year. 
‘‘(C) SPECIAL RULES WHERE MORE THAN 
1 ELIGIBLE CAREGIVER.— 
‘‘(i) IN GENERAL.—If more than 1 in-
dividual is an eligible caregiver with re-
spect to the same applicable individual for 
taxable years ending with or within the 
same calendar year, a taxpayer shall be 
treated as the eligible caregiver if each 
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such individual (other than the taxpayer) 
files a written declaration (in such form 
and manner as the Secretary may pre-
scribe) that such individual will not claim 
such applicable individual for the credit 
under this section. 
‘‘(ii) NO AGREEMENT.—If each indi-
vidual required under clause (i) to file a 
written declaration under clause (i) does 
not do so, the individual with the highest 
adjusted gross income shall be treated as 
the eligible caregiver. 
‘‘(iii) MARRIED
INDIVIDUALS
FILING 
SEPARATELY.—In the case of married indi-
viduals filing separately, the determination 
under this subparagraph as to whether the 
husband or wife is the eligible caregiver 
shall be made under the rules of clause (ii) 
(whether or not one of them has filed a 
written declaration under clause (i)). 
‘‘(d) IDENTIFICATION
REQUIREMENT.—No credit 
shall be allowed under this section to a taxpayer with re-
spect to any applicable individual unless the taxpayer in-
cludes the name and taxpayer identification number of 
such individual, and the identification number of the phy-
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sician certifying such individual, on the return of tax for 
the taxable year. 
‘‘(e) TAXABLE YEAR MUST BE FULL TAXABLE 
YEAR.—Except in the case of a taxable year closed by rea-
son of the death of the taxpayer, no credit shall be allow-
able under this section in the case of a taxable year cov-
ering a period of less than 12 months.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6213(g)(2) of such Code is amend-
ed by striking ‘‘and’’ at the end of subparagraph 
(L), by striking the period at the end of subpara-
graph (M) and inserting ‘‘, and’’, and by inserting 
after subparagraph (M) the following new subpara-
graph: 
‘‘(N) an omission of a correct TIN or phy-
sician identification required under section 
25E(d) (relating to credit for taxpayers with 
long-term care needs) to be included on a re-
turn.’’. 
(2) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 25D the following new item: 
‘‘Sec. 25E. Credit for taxpayers with long-term care needs.’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 4. ADDITIONAL CONSUMER PROTECTIONS FOR LONG- 
TERM CARE INSURANCE. 
(a) ADDITIONAL
PROTECTIONS
APPLICABLE
TO 
LONG-TERM CARE INSURANCE.—Subparagraphs (A) and 
(B) of section 7702B(g)(2) of the Internal Revenue Code 
of 1986 (relating to requirements of model regulation and 
Act) are amended to read as follows: 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to any con-
tract if such contract meets— 
‘‘(i) MODEL
REGULATION.—The fol-
lowing requirements of the model regula-
tion: 
‘‘(I) Section 6A (relating to guar-
anteed renewal or noncancellability), 
other than paragraph (5) thereof, and 
the requirements of section 6B of the 
model Act relating to such section 6A. 
‘‘(II) Section 6B (relating to pro-
hibitions on limitations and exclu-
sions) other than paragraph (7) there-
of. 
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Commissioners (as adopted as of December 
31, 2008). 
‘‘(ii) COORDINATION.—Any provision 
of the model regulation or model Act listed 
under clause (i) or (ii) of subparagraph 
(A) shall be treated as including any other 
provision of such regulation or Act nec-
essary to implement the provision. 
‘‘(iii) 
DETERMINATION.—For 
pur-
poses of this section and section 4980C, 
the determination of whether any require-
ment of a model regulation or the model 
Act has been met shall be made by the 
Secretary.’’. 
(b) 
EXCISE
TAX.—Paragraph 
(1) 
of 
section 
4980C(c) of the Internal Revenue Code of 1986 (relating 
to requirements of model provisions) is amended to read 
as follows: 
‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.— 
‘‘(A) MODEL REGULATION.—The following 
requirements of the model regulation must be 
met: 
‘‘(i) Section 9 (relating to required 
disclosure of rating practices to consumer). 
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‘‘(ii) Section 14 (relating to applica-
tion forms and replacement coverage). 
‘‘(iii) Section 15 (relating to reporting 
requirements). 
‘‘(iv) Section 22 (relating to filing re-
quirements for marketing). 
‘‘(v) Section 23 (relating to standards 
for marketing), including inaccurate com-
pletion of medical histories, other than 
paragraphs (1), (6), and (9) of section 
23C. 
‘‘(vi) Section 24 (relating to suit-
ability). 
‘‘(vii) Section 29 (relating to standard 
format outline of coverage). 
‘‘(viii) Section 30 (relating to require-
ment to deliver shopper’s guide). 
The requirements referred to in clause (vi) shall 
not include those portions of the personal work-
sheet described in Appendix B relating to con-
sumer protection requirements not imposed by 
section 4980C or 7702B. 
‘‘(B) MODEL ACT.—The following require-
ments of the model Act must be met: 
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‘‘(i) Section 6F (relating to right to 
return). 
‘‘(ii) Section 6G (relating to outline of 
coverage). 
‘‘(iii) Section 6H (relating to require-
ments for certificates under group plans). 
‘‘(iv) Section 6J (relating to policy 
summary). 
‘‘(v) Section 6K (relating to monthly 
reports on accelerated death benefits). 
‘‘(vi) Section 7 (relating to incontest-
ability period). 
‘‘(C) DEFINITIONS.—For purposes of this 
paragraph, the terms ‘model regulation’ and 
‘model Act’ have the meanings given such terms 
by section 7702B(g)(2)(B).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to policies issued after December 
31, 2008. 
Æ 
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