I
106TH CONGRESS
1ST SESSION
H. R. 1261
To amend the Internal Revenue Code of 1986 and title XIX of the Social
Security Act to promote the purchase of private long-term care insurance
by providing tax deductibility, State Medicaid flexibility, and information
dissemination.
IN THE HOUSE OF REPRESENTATIVES
MARCH 24, 1999
Mr. HOBSON (for himself, Mr. KASICH, Mr. GREENWOOD, Mrs. JOHNSON of
Connecticut, Ms. PRYCE of Ohio, and Mr. SAWYER) introduced the fol-
lowing bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Commerce, for a period to be subse-
quently 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 and title
XIX of the Social Security Act to promote the purchase
of private long-term care insurance by providing tax de-
ductibility, State Medicaid flexibility, and information
dissemination.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Long-Term Care In-
surance Act of 1999’’.
SEC. 2. DEDUCTION FOR LONG-TERM CARE PREMIUMS.
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
additional itemized deductions for individuals) is amended
by redesignating section 222 as section 223 and by insert-
ing after section 221 the following new section:
‘‘SEC. 222. ELIGIBLE PREMIUMS ON QUALIFIED LONG-TERM
CARE INSURANCE CONTRACTS.
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an
individual, there shall be allowed as a deduction an
amount equal to the applicable percentage of the eligible
long-term 
care 
premiums 
(as 
defined 
in 
section
213(d)(10)) paid during the taxable year for coverage
under a qualified long-term care insurance contract for the
taxpayer, his spouse, and dependents.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of
subsection (a), the term ‘applicable percentage’ means the
percentage determined under the following table:
‘‘For taxable years beginning
in calendar year—
The applicable percentage is—
2001 .........................................................................................
2002 .........................................................................................
2003 .........................................................................................
2004 .........................................................................................
2005 and thereafter .................................................................
100.
‘‘(c) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
MEDICAL
DEDUC-
TION.—Any amount paid by a taxpayer for insur-
ance to which subsection (a) applies shall not be
taken into account in computing the amount allow-
able to the taxpayer as a deduction under section
213(a).
‘‘(2) COORDINATION
WITH
DEDUCTION
FOR
HEALTH INSURANCE COSTS OF SELF-EMPLOYED IN-
DIVIDUALS.—No deduction shall be allowed under
this section for any amount for which a deduction is
allowable under section 162(l).
‘‘(3) 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-
endar year in which such individual’s taxable year
begins.’’
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 of such Code is amended by inserting after
paragraph (17) the following new paragraph:
‘‘(18) 
ELIGIBLE
LONG-TERM
CARE
PRE-
MIUMS.—The deduction allowed by section 222.’’
(c) REDUCTION
IN EARNED INCOME CREDIT
TO
TAXPAYERS WITHOUT CHILDREN AS OFFSET FOR RE-
DUCTION IN REVENUES.—Subparagraph (A) of section
32(b)(1) of such Code is amended by striking ‘‘7.65’’ and
inserting ‘‘3.825’’.
(d) CONFORMING AMENDMENT.—The table of sec-
tions for part VII of subchapter B of chapter 1 of such
Code is amended by striking the last item and inserting
the following new items:
‘‘Sec. 222. Eligible premiums on qualified long-term care insur-
ance contracts.
‘‘Sec. 223. Cross reference.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 3. REVISION OF MEDICAID LIMITATION.
(a) IN GENERAL.—Section 1917(b)(1)(C) of the So-
cial Security Act (42 U.S.C. 1396p(b)(1)(C)) is
amended—
(1) in clause (i), by inserting ‘‘or clause (iii)’’
after ‘‘such clause’’; and
(2) by adding at the end the following new
clause:
‘‘(iii) In the case of an individual who receives
medical assistance under a State plan not described
in clause (ii) of a State which has a State plan
amendment approved which provides for the dis-
regard of any assets or resources in the manner de-
scribed in such clause, clause (i) shall not apply to
75 percent of the amounts of the assets or resources
so disregarded.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) take effect on the date of the enactment
of this Act.
SEC. 4. DISSEMINATING INFORMATION ABOUT LONG-TERM
CARE POLICIES AND MEDICARE COVERAGE.
(a) FINDINGS.—The Congress finds the following:
(1) As the baby boom generation begins to re-
tire, funding Social Security and Medicare will put
a strain on the financial resources of younger Ameri-
cans.
(2) Medicaid was designed as a program for the
poor, but in many States Medicaid is being used for
middle income elderly people to fund long-term care
expenses.
(3) In the coming decade, people over age 65
will represent up to 20 percent or more of the popu-
lation, and the proportion of the population com-
posed of individuals who are over age 85, who are
most likely to be in need of long-term care, may dou-
ble or triple.
(4) With nursing home care now costing
$40,000 to $50,000 on average per year, long-term
care expenses can have a catastrophic effect on fami-
lies, wiping out a lifetime of savings before a spouse,
parent, or grandparent becomes eligible for Med-
icaid.
(5) Many people are unaware that most long-
term care costs are not covered by Medicare and
that Medicaid covers long-term care only after the
person’s assets have been exhausted.
(6) Widespread use of private long-term care
insurance has the potential to protect families from
the catastrophic costs of long-term care services
while, at the same time, easing the burden on Med-
icaid as the baby boom generation ages.
(7) The Federal Government has endorsed the
concept of private long-term care insurance by estab-
lishing Federal tax rules for tax-qualified policies in
the Health Insurance Portability and Accountability
Act of 1996.
(8) The Federal Government has ensured the
availability of quality long-term care insurance prod-
ucts and sales practices by adopting strict consumer
protections in the Health Insurance Portability and
Accountability Act of 1996.
(b) DISSEMINATION OF INFORMATION.—
(1) IN
GENERAL.—The Administrator of the
Social Security Administration, in cooperation with