H. R. 2488—39 
plan (determined under section 4980B and without regard 
to payments made with respect to any coverage described 
in subsection (e)) is paid or incurred by the employer. 
‘‘(B) EMPLOYER CONTRIBUTIONS TO CAFETERIA PLANS, 
FLEXIBLE SPENDING ARRANGEMENTS, AND MEDICAL SAVINGS 
ACCOUNTS.—Employer contributions to a cafeteria plan, a 
flexible spending or similar arrangement, or a medical 
savings account which are excluded from gross income 
under section 106 shall be treated for purposes of subpara-
graph (A) as paid by the employer. 
‘‘(C) AGGREGATION OF PLANS OF EMPLOYER.—A health 
plan which is not otherwise described in subparagraph 
(A) shall be treated as described in such subparagraph 
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. 
‘‘(D) SEPARATE APPLICATION TO HEALTH INSURANCE AND 
LONG-TERM CARE INSURANCE.—Subparagraphs (A) and (C) 
shall be applied separately with respect to— 
‘‘(i) plans which include primarily coverage for 
qualified long-term care services or are qualified long- 
term care insurance contracts, and 
‘‘(ii) plans which do not include such coverage and 
are not such contracts. 
‘‘(2) COVERAGE UNDER CERTAIN FEDERAL PROGRAMS.— 
‘‘(A) IN GENERAL.—Subsection (a) shall not apply to 
any amount paid for any coverage for an individual for 
any calendar month if, as of the first day of such month, 
the individual is covered under any medical care program 
described in— 
‘‘(i) title XVIII, XIX, or XXI of the Social Security 
Act, 
‘‘(ii) chapter 55 of title 10, United States Code, 
‘‘(iii) chapter 17 of title 38, United States Code, 
‘‘(iv) chapter 89 of title 5, United States Code, 
or 
‘‘(v) the Indian Health Care Improvement Act. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) QUALIFIED
LONG-TERM
CARE.—Subparagraph 
(A) shall not apply to amounts paid for coverage under 
a qualified long-term care insurance contract. 
‘‘(ii) 
CONTINUATION
COVERAGE
OF
FEHBP.— 
Subparagraph (A)(iv) shall not apply to coverage which 
is comparable to continuation coverage under section 
4980B. 
‘‘(d) LONG-TERM CARE DEDUCTION LIMITED TO QUALIFIED LONG- 
TERM CARE INSURANCE CONTRACTS.—In the case of a qualified 
long-term care insurance contract, only eligible long-term care pre-
miums (as defined in section 213(d)(10)) may be taken into account 
under subsection (a). 
‘‘(e) DEDUCTION NOT AVAILABLE FOR PAYMENT OF ANCILLARY 
COVERAGE PREMIUMS.—Any amount paid as a premium for insur-
ance which provides for— 
‘‘(1) coverage for accidents, disability, dental care, vision 
care, or a specified illness, or 
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H. R. 2488—40 
‘‘(2) making payments of a fixed amount per day (or other 
period) by reason of being hospitalized. 
shall not be taken into account under subsection (a). 
‘‘(f ) SPECIAL RULES.— 
‘‘(1) COORDINATION WITH DEDUCTION FOR HEALTH INSUR-
ANCE
COSTS
OF
SELF-EMPLOYED
INDIVIDUALS.—The amount 
taken into account by the taxpayer in computing the deduction 
under section 162(l) shall not be taken into account under 
this section. 
‘‘(2) COORDINATION WITH MEDICAL EXPENSE DEDUCTION.— 
The amount taken into account by the taxpayer in computing 
the deduction under this section shall not be taken into account 
under section 213. 
‘‘(g) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be appropriate to carry out this section, including 
regulations requiring employers to report to their employees and 
the Secretary such information as the Secretary determines to 
be appropriate.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT TAXPAYER ITEMIZES 
OTHER DEDUCTIONS.—Subsection (a) of section 62 is amended by 
inserting after paragraph (17) the following new item: 
‘‘(18) HEALTH AND LONG-TERM CARE INSURANCE COSTS.— 
The deduction allowed by section 222.’’. 
(c) 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. 222. Health and long-term care insurance costs. 
‘‘Sec. 223. Cross reference.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2000. 
SEC. 502. LONG-TERM CARE INSURANCE PERMITTED TO BE OFFERED 
UNDER CAFETERIA PLANS AND FLEXIBLE SPENDING 
ARRANGEMENTS. 
(a) CAFETERIA PLANS.— 
(1) IN GENERAL.—Subsection (f ) of section 125 (defining 
qualified benefits) is amended by inserting before the period 
at the end ‘‘; except that such term shall include the payment 
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 exceed the eligible long-term care pre-
miums (as defined in section 213(d)(10)) for such contract’’. 
(b) FLEXIBLE SPENDING ARRANGEMENTS.—Section 106 (relating 
to contributions by employer to accident and health plans) is 
amended by striking subsection (c). 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2001. 
SEC. 503. ADDITIONAL PERSONAL EXEMPTION FOR TAXPAYER CARING 
FOR ELDERLY FAMILY MEMBER IN TAXPAYER’S HOME. 
(a) IN GENERAL.—Section 151 (relating to allowance of deduc-
tions for personal exemptions) is amended by redesignating sub-
section (e) as subsection (f ) and by inserting after subsection (d) 
the following new subsection: 
‘‘(e) ADDITIONAL EXEMPTION
FOR CERTAIN ELDERLY FAMILY 
MEMBERS RESIDING WITH TAXPAYER.— 
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H. R. 2488—41 
‘‘(1) IN GENERAL.—An exemption of the exemption amount 
for each qualified family member of the taxpayer. 
‘‘(2) QUALIFIED FAMILY MEMBER.—For purposes of this sub-
section, the term ‘qualified family member’ means, with respect 
to any taxable year, any individual— 
‘‘(A) who is an ancestor of the taxpayer or of the 
taxpayer’s spouse or who is the spouse of any such ancestor, 
‘‘(B) who is a member for the entire taxable year of 
a household maintained by the taxpayer, and 
‘‘(C) who has been certified, before the due date for 
filing the return of tax for the taxable year (without exten-
sions), by a physician (as defined in section 1861(r)(1) of 
the Social Security Act) as being an individual with long- 
term care needs described in paragraph (3) for a period— 
‘‘(i) which is at least 180 consecutive days, and 
‘‘(ii) a portion of which occurs within the taxable 
year. 
Such term shall not include any individual otherwise meeting 
the requirements of the preceding sentence unless within the 
391⁄2 month period ending on such due date (or such other 
period as the Secretary prescribes) a physician (as so defined) 
has certified that such individual meets such requirements. 
‘‘(3) INDIVIDUALS WITH LONG-TERM CARE NEEDS.—An indi-
vidual is described in this paragraph if the individual— 
‘‘(A) is unable to perform (without substantial assist-
ance from another individual) at least two activities of 
daily living (as defined in section 7702B(c)(2)(B)) due to 
a loss of functional capacity, or 
‘‘(B) requires substantial supervision to protect such 
individual from threats to health and safety due to severe 
cognitive impairment and is unable to perform, without 
reminding or cuing assistance, at least one activity of daily 
living (as so defined) or to the extent provided in regula-
tions prescribed by the Secretary (in consultation with 
the Secretary of Health and Human Services), is unable 
to engage in age appropriate activities. 
‘‘(4) SPECIAL RULES.—Rules similar to the rules of para-
graphs (1), (2), (3), (4), and (5) of section 21(e) shall apply 
for purposes of this subsection.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 504. EXPANDED HUMAN CLINICAL TRIALS QUALIFYING FOR 
ORPHAN DRUG CREDIT. 
(a) IN GENERAL.—Subclause (I) of section 45C(b)(2)(A)(ii) is 
amended to read as follows: 
‘‘(I) after the date that the application is filed 
for designation under such section 526, and’’. 
(b) 
CONFORMING
AMENDMENT.—Clause 
(i) 
of 
section 
45C(b)(2)(A) is amended by inserting ‘‘which is’’ before ‘‘being’’ and 
by inserting before the comma at the end ‘‘and which is designated 
under section 526 of such Act’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to amounts paid or incurred after December 31, 1999. 
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H. R. 2488—42 
SEC. 505. INCLUSION OF CERTAIN VACCINES AGAINST STREPTO-
COCCUS PNEUMONIAE TO LIST OF TAXABLE VACCINES; 
REDUCTION IN PER DOSE TAX RATE. 
(a) INCLUSION OF VACCINES.— 
(1) IN GENERAL.—Section 4132(a)(1) (defining taxable vac-
cine) is amended by adding at the end the following new 
subparagraph: 
‘‘(L) Any conjugate vaccine against streptococcus 
pneumoniae.’’. 
(2) EFFECTIVE DATE.— 
(A) SALES.—The amendment made by this subsection 
shall apply to vaccine sales beginning on the day after 
the date on which the Centers for Disease Control makes 
a final recommendation for routine administration to chil-
dren of any conjugate vaccine against streptococcus 
pneumoniae, but shall not take effect if subsection (c) does 
not take effect. 
(B) DELIVERIES.—For purposes of subparagraph (A), 
in the case of sales on or before the date described in 
such subparagraph for which delivery is made after such 
date, the delivery date shall be considered the sale date. 
(b) REDUCTION IN PER DOSE TAX RATE.— 
(1) IN GENERAL.—Section 4131(b)(1) (relating to amount 
of tax) is amended by striking ‘‘75 cents’’ and inserting ‘‘50 
cents’’. 
(2) EFFECTIVE DATE.— 
(A) SALES.—The amendment made by this subsection 
shall apply to vaccine sales after December 31, 2004, but 
shall not take effect if subsection (c) does not take effect. 
(B) DELIVERIES.—For purposes of subparagraph (A), 
in the case of sales on or before the date described in 
such subparagraph for which delivery is made after such 
date, the delivery date shall be considered the sale date. 
(3) LIMITATION ON CERTAIN CREDITS OR REFUNDS.—For pur-
poses of applying section 4132(b) of the Internal Revenue Code 
of 1986 with respect to any claim for credit or refund filed 
after August 31, 2004, the amount of tax taken into account 
shall not exceed the tax computed under the rate in effect 
on January 1, 2005. 
(c) VACCINE TAX AND TRUST FUND AMENDMENTS.— 
(1) Sections 1503 and 1504 of the Vaccine Injury Compensa-
tion Program Modification Act (and the amendments made 
by such sections) are hereby repealed. 
(2) Subparagraph (A) of section 9510(c)(1) is amended by 
striking ‘‘August 5, 1997’’ and inserting ‘‘October 21, 1998’’. 
(3) The amendments made by this subsection shall take 
effect as if included in the provisions of the Tax and Trade 
Relief Extension Act of 1998 to which they relate. 
SEC. 506. DRUG BENEFITS FOR MEDICARE BENEFICIARIES. 
(a) IN GENERAL.—Section 213 (relating to medical, dental, etc., 
expenses) is amended by redesignating subsection (e) as subsection 
(f ) and by inserting after subsection (d) the following new sub-
section: 
‘‘(e) DRUG BENEFITS FOR MEDICARE BENEFICIARIES.— 
‘‘(1) DEDUCTION
FOR
CERTAIN
FORMER
PRESCRIPTION 
DRUGS.— 
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