Long-Term Care Affordability Act
Bill: S.2415 | Sponsor: Sen. Toomey, Patrick (R-PA)
Policy area: Taxation

Summary:
Long-Term Care Affordability Act
This bill allows the use of tax-exempt retirement plan distributions to pay for long-term health care insurance. Specifically, it excludes such distributions from the gross income of an insured individual up to $2,500 for per individual in a taxable year.

To amend the Internal Revenue Code of 1986 to expand the use of 
retirement plan funds to obtain long-term care insurance, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Long-Term Care Affordability Act''.

SEC. 2. LONG-TERM CARE CONTRACTS PURCHASED WITH RETIREMENT PLAN 
              DISTRIBUTIONS.

    (a) In General.--Section 402 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(m) Distributions With Respect to Long-Term Care Insurance.--
            ``(1) Exclusion.--
                    ``(A) In general.--Gross income of an individual 
                for the taxable year does not include any distribution 
                from an eligible retirement plan to the extent that the 
                aggregate amount of such distributions does not exceed 
                the amount paid by or assessed to such individual 
                during the taxable year for or with respect to coverage 
                described in subparagraph (B) for the individual, the 
                individual's spouse, or a dependent (as defined in 
                section 152, determined without regard to subsections 
                (b)(1), (b)(2), and (d)(1)(B) thereof) of the 
                individual.
                    ``(B) Coverage described.--Coverage described in 
                this subparagraph is--
                            ``(i) a qualified long-term care insurance 
                        contract (as defined in section 7702B(b)) 
                        covering qualified long-term care services (as 
                        defined in section 7702B(c)), and
                            ``(ii) coverage of the risk that an insured 
                        individual would become a chronically ill 
                        individual (within the meaning of section 
                        101(g)(4)(B)) under a rider or other provision 
                        of a life insurance contract which satisfies 
                        the requirements of section 101(g)(3) 
                        (determined without regard to subparagraph (D) 
                        thereof).
            ``(2) Limitation.--
                    ``(A) In general.--The amount excluded from gross 
                income under paragraph (1) for any taxable year shall 
                not exceed $2,500 with respect to payments for coverage 
                for any insured individual.
                    ``(B) Exclusion available only to 1 taxpayer.--The 
                exclusion under paragraph (1) shall be allowed to only 
                1 taxpayer for any taxable year with respect to any 1 
                insured individual.
                    ``(C) Adjustment for inflation.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning after December 31, 2021, 
                        the $2,500 amount in subparagraph (A) shall be 
                        increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2020' for 
                                `calendar year 2016' in subparagraph 
                                (A)(ii) thereof.
                            ``(ii) Rounding.--If any increase 
                        determined under clause (i) is not a multiple 
                        of $10, such increase shall be rounded to the 
                        nearest multiple of $10.
            ``(3) Eligible retirement plan.--For purposes of this 
        subsection, the term `eligible retirement plan' means any plan 
        which--
                    ``(A) is described in clause (i),(ii), (iv), (v), 
                or (vi) of subsection (c)(8)(B), or
                    ``(B) is a defined contribution plan described in 
                clause (iii) of subsection (c)(8)(B).
            ``(4) Distributions must otherwise be includible.--Rules 
        similar to the rules of subsection (l)(3) shall apply for 
        purposes of this subsection.
            ``(5) Separately stated portions of a contract.--For 
        purposes of this subsection, the amount taken into account as 
        paid during the taxable year for coverage described in 
        paragraph (1)(B)(i) includes premiums paid and charges assessed 
        during such taxable year for any such coverage which is treated 
        as a separate contract under section 7702B(e)(1), if such 
        separate contract is a qualified long-term care insurance 
        contract (as defined in section 7702B(b)).
            ``(6) Coordination with other deductions.--The amounts 
        excluded from gross income under paragraph (1) shall not be 
        taken into account under section 162(l) or 213.''.
    (b) Amounts Treated as Required Minimum Distribution.--Section 
401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new subparagraph:
                    ``(J) Treatment of distributions for long-term care 
                insurance.--For purposes of this title, if a 
                distribution is required under this paragraph for a 
                taxable year, any distribution which is excluded from 
                gross income under section 402(m) for the taxable year 
                shall be treated as a distribution required under this 
                paragraph.''.
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of the Internal Revenue Code of 
        1986 is amended by striking ``or'' at the end of subclause (V), 
        by adding ``or'' at the end of subclause (VI), and by adding at 
        the end the following new subclause:
                                    ``(VII) as provided in section 
                                402(m),''.
            (2) Section 403(b)(11) of such Code is amended by striking 
        ``or'' at the end of subparagraph (C), by striking the period 
        at the end of subparagraph (D) and inserting ``, or'', and by 
        inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) for distributions to which section 402(m) 
                applies.''.
            (3) Section 457(d)(1)(A) of such Code is amended by 
        striking ``or'' at the end of clause (iii), by striking the 
        comma at the end of clause (iv) and inserting ``, or'', and by 
        adding at the end the following new clause:
                            ``(v) as provided in section 402(m),''.
    (d) Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of the Internal Revenue Code of 1986 is amended by 
        adding at the end the following new section:

``SEC. 6050Z. CERTAIN WITHDRAWALS FROM QUALIFIED ARRANGEMENTS FOR LONG-
              TERM CARE INSURANCE.

    ``(a) Requirement of Reporting.--Any issuer of a qualified long-
term care insurance contract (as defined in section 7702B(b)), 
including a rider or other provision that is treated as a qualified 
long-term care insurance contract under section 7702B(e)(1), or of 
coverage described in section 402(m)(1)(B)(ii), shall make a return, 
according to forms or regulations prescribed by the Secretary, setting 
forth for each insured individual--
            ``(1) the aggregate amount of premiums and charges paid for 
        the contract or coverage covering such individual during the 
        calendar year,
            ``(2) the name, address, and TIN of the owner of the 
        contract, if applicable, and
            ``(3) the name, address, and TIN of the insured under the 
        contract.
    ``(b) Statement To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth in such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the issuer of the qualified long-term 
        care insurance contract or coverage described in section 
        402(m)(1)(B)(ii), and
            ``(2) the aggregate amount of premiums and charges paid 
        under the contract or coverage covering the insured individual 
        during the calendar year.
The written statement required under the preceding sentence shall be 
furnished to the individual or individuals on or before January 31 of 
the year following the calendar year for which the return required 
under subsection (a) was required to be made.
    ``(c) Contracts or Coverage Covering More Than One Insured.--In the 
case of contracts or coverage covering more than one insured, the 
return and statement required by subsections (a) and (b) shall identify 
only the portion of the premium that is properly allocable to the 
insured in respect of whom the return or statement is made.''.
            (2) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 of such Code is 
        amended by adding after the item relating to section 6050Y the 
        following new item:

``Sec. 6050Z. Certain withdrawals from qualified arrangements for long-
                            term care insurance.''.
    (e) Effective Date.--The amendment made by this section shall apply 
to distributions received after the date of the enactment of this Act.

SEC. 3. INFORMATION ABOUT LONG-TERM CARE INSURANCE.

    Section 516 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1146) is amended--
            (1) in the section heading, by inserting ``and 
        participation in long-term care insurance'' after ``savings'';
            (2) in subsection (a), by inserting ``and long-term care 
        insurance'' after ``income savings'';
            (3) in subsection (c)--
                    (A) in paragraph (1), by striking ``; and'' and 
                inserting a semicolon;
                    (B) in paragraph (2), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) a description of long-term care insurance 
        arrangements, and information regarding matters relevant to 
        enrolling in such insurance, including--
                    ``(A) a fact sheet for employers, in an easily 
                accessible format; and
                    ``(B) a fact sheet for workers, in an easily 
                accessible format.''; and
            (4) in subsection (d)--
                    (A) in the matter preceding paragraph (1), by 
                inserting ``and long-term care insurance'' before the 
                period at the end of the first sentence;
                    (B) in paragraph (3), by adding ``and'' after the 
                semicolon;
                    (C) in paragraph (4), by striking ``; and'' and 
                inserting a period;
                    (D) by redesignating paragraphs (1) through (4) as 
                subparagraphs (A) through (D), respectively, and 
                adjusting the margins accordingly;
                    (E) by redesignating paragraph (5) as paragraph 
                (3);
                    (F) by inserting before subparagraph (A), as so 
                redesignated, the following:
            ``(1) With respect to retirement income savings--'';
                    (G) by inserting before paragraph (3), as so 
                redesignated by subparagraph (E), the following:
            ``(2) With respect to long-term care insurance--
                    ``(A) a description in simple terms of the common 
                types of long-term care insurance available to both 
                individuals and employers (specifically including small 
                employers), including information on the tax benefits 
                of such insurance under the Internal Revenue Code of 
                1986; and
                    ``(B) materials explaining to employers in simple 
                terms, the characteristics and operation of the 
                different long-term care insurance for their workers 
                and what the basic legal requirements are under this 
                Act and the Internal Revenue Code of 1986, including 
                the steps to enroll in such insurance and including 
                links to the fact sheets described in subsection 
                (c)(3).''; and
                    (H) in paragraph (3), as so redesignated by 
                subparagraph (E)--
                            (i) by striking ``links to other'' and 
                        inserting ``Links to other''; and
                            (ii) by inserting ``and long-term care 
                        insurance'' after ``retirement income savings 
                        arrangements''.
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