I 
108TH CONGRESS 
2D SESSION 
H. R. 4432
To amend the Internal Revenue Code of 1986 to allow individuals a deduction 
for qualified long-term care insurance premiums, use of such insurance 
under cafeteria plans and flexible spending arrangements, and a credit 
for individuals with long-term care needs. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 20, 2004
Mrs. DAVIS of California (for herself and Mr. PAUL) introduced the following 
bill; which was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow indi-
viduals a deduction for qualified long-term care insurance 
premiums, use of such insurance under cafeteria plans 
and flexible spending arrangements, and a credit for 
individuals with long-term care needs.
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 Sup-
port and Incentive Act of 2004’’.
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 the amount of eligible long-
term care premiums (as defined in section 213(d)(10)) 
paid during the taxable year for coverage for the taxpayer 
and the spouse and dependents of the taxpayer under a 
qualified long-term care insurance contract (as defined in 
section 7702B(b)). 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a)—
‘‘(1) AGE 65 OR OLDER.—In the case of an in-
dividual who has attained age 65 as of the close of 
the taxable year, the applicable percentage shall be 
75 percent. 
‘‘(2) UNDER AGE 65.—In the case of an indi-
vidual who has not attained age 65 as of the close
of the taxable year, the applicable percentage shall 
be 50 percent. 
‘‘(c) COORDINATION WITH OTHER PROVISIONS.—
Any amount paid by a taxpayer for any qualified long-
term care insurance contract to which subsection (a) ap-
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). Premiums paid by the taxpayer 
shall not be taken into account under subsection (a) to 
the extent that an amount is not includible in gross income 
under section 220(f) or 223(f) with respect to such pay-
ment.’’. 
(b) LONG-TERM CARE INSURANCE PERMITTED TO 
BE OFFERED UNDER CAFETERIA PLANS AND FLEXIBLE 
SPENDING ARRANGEMENTS.—
(1) CAFETERIA PLANS.—Section 125(f) of the 
Internal Revenue Code of 1986 (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 premiums 
(as defined in section 213(d)(10)) for such con-
tract’’.
(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). 
(c) CONFORMING AMENDMENTS.—
(1) Section 62(a) of the Internal Revenue Code 
of 1986 is amended by inserting after paragraph 
(19) the following new item: 
‘‘(20) PREMIUMS
ON
QUALIFIED
LONG-TERM 
CARE
INSURANCE
CONTRACTS.—The deduction al-
lowed by section 224.’’. 
(2) 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:
‘‘224. Premiums on qualified long-term care insurance contracts. 
‘‘225. Cross reference.’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
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 25B the following new 
section: 
‘‘SEC. 25C. CREDIT FOR TAXPAYERS WITH LONG-TERM 
CARE NEEDS. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to $4,000 multiplied 
by the number of applicable individuals with respect to 
whom the taxpayer is an eligible caregiver for the taxable 
year. 
‘‘(b) LIMITATIONS AND ADJUSTMENTS.—
‘‘(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—
‘‘(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 2004, 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 of 
2003’ for ‘August of 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. 
‘‘(4) APPLICATION
WITH
OTHER
CREDITS.—
The credit allowed by subsection (a) for any taxable 
year shall not exceed the excess of—
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this subpart (other than this section) and 
section 27 for the taxable year. 
‘‘(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—
‘‘(i) who has attained age 65, and 
‘‘(ii) who has been certified, before the 
due date for filing the return of tax for the 
taxable year (without extensions), by a 
physician (as defined in section 1861(r)(1) 
of the Social Security Act) as being an in-
dividual with long-term care needs de-
scribed in subparagraph (B) for a period—
‘‘(I) which is at least 180 con-
secutive days, and 
‘‘(II) a portion of which occurs 
within the taxable year. 
Such term shall not include any individual oth-
erwise meeting the requirements of the pre-
ceding 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 indi-
vidual meets such requirements. 
‘‘(B) INDIVIDUALS WITH LONG-TERM CARE 
NEEDS.—An individual is described in this sub-
paragraph if the individual is unable to perform
(without substantial assistance from another in-
dividual) at least 2 activities of daily living (as 
defined in section 7702B(c)(2)(B)) due to a 
loss of functional capacity. 
‘‘(2) ELIGIBLE CAREGIVER.—
‘‘(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 for the taxable year. 
‘‘(iv) An individual who would be de-
scribed in clause (iii) for the taxable year 
if section 151(c)(1)(A) were applied by 
substituting 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.