[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4946 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 4946

 To amend the Internal Revenue Code to provide health care incentives 
                       related to long-term care.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 17, 2002

  Mr. Hayworth (for himself, Mr. Weller, Mr. Ramstad, Mr. Watkins of 
   Oklahoma, Mr. English, and Mr. Lewis of Kentucky) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code to provide health care incentives 
                       related to long-term care.

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Improving Access 
to Long-Term Care Act of 2002''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. DEDUCTION FOR PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE 
              CONTRACTS.

    (a) In General.--Part VII of subchapter B of chapter 1 (relating to 
additional itemized deductions) is amended by redesignating section 223 
as section 224 and by inserting after section 222 the following new 
subsection:

``SEC. 223. PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE 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 premiums (as defined in section 213(d)(10)) 
paid during the taxable year by the taxpayer for coverage for the 
taxpayer and the spouse and dependents of the taxpayer.
    ``(b) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage shall be determined in accordance with the 
following table:

``For taxable years beginning                       The applicable
    in calendar year--                              percentage is--
    2003, 2004, and 2005..........................                  25 
    2006 and 2007.................................                  30 
    2008 and 2009.................................                  35 
    2010 and 2011.................................                  40 
    2012 and thereafter...........................                  50.
    ``(c) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--If the modified adjusted gross income of 
        the taxpayer for the taxable year exceeds $20,000 (twice the 
        preceding dollar amount, as adjusted under paragraph (2), in 
        the case of a joint return) the amount which would (but for 
        this subsection) be allowed as a deduction under subsection (a) 
        shall be reduced (but not below zero) by the amount which bears 
        the same ratio to the amount which would be so allowed as such 
        excess bears to $20,000 ($40,000 in the case of a joint 
        return).
            ``(2) Adjustments for inflation.--In the case of a taxable 
        year beginning after December 31, 2003, the first $20,000 
        amount contained in paragraph (1) shall be increased by an 
        amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) 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 2002' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(3) Modified adjusted gross income.--For purposes of 
        paragraph (1), the term `modified adjusted gross income' means 
        adjusted gross income determined--
                    ``(A) without regard to this section and sections 
                911, 931, and 933, and
                    ``(B) after application of sections 86, 135, 137, 
                219, 221, 222, and 469.
    ``(d) Limitation Based on Subsidized Coverage.--
            ``(1) In general.--Subsection (a) shall not apply to 
        premiums paid for coverage of any individual for any calendar 
        month if--
                    ``(A) for such month such individual is covered by 
                any insurance which is advertised, marketed, or offered 
                as long-term care insurance under any health plan 
                maintained by any employer of the taxpayer or of the 
                taxpayer's spouse, and
                    ``(B) 50 percent or more of the cost of any such 
                coverage (determined under section 4980B) for such 
                month is paid or incurred by the employer.
            ``(2) Plans maintained by certain employers.--A health plan 
        which is not otherwise described in paragraph (1)(A) shall be 
        treated as described in such paragraph 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.
    ``(e) Coordination With Other Deductions.--Any amount taken into 
account under subsection (a) shall not be taken into account in 
computing the amount allowable as a deduction under section 162(l) or 
213(a).
    ``(f) Married Couples Must File Joint Return.--
            ``(1) In general.--If the taxpayer is married at the close 
        of the taxable year, the deduction shall be allowed under 
        subsection (a) only if the taxpayer and the taxpayer's spouse 
        file a joint return for the taxable year.
            ``(2) Marital status.--For purposes of paragraph (1), 
        marital status shall be determined in accordance with section 
        7703.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
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.--Subsection 
(a) of section 62 is amended by inserting after paragraph (18) the 
following new item:
            ``(19) Premiums on qualified long-term care insurance 
        contracts.--The deduction allowed by section 223.''.
    (c) Conforming Amendments.--
            (1) Sections 86(b)(2)(A), 135(c)(4)(A), 137(b)(3)(A), 
        219(g)(3)(A)(ii), and 221(b)(2)(C)(i) are each amended by 
        inserting ``223,'' after ``222,''.
            (2) Section 222(b)(2)(C)(i) is amended by inserting 
        ``223,'' before ``911''.
            (3) Section 469(i)(3)(F)(iii) is amended by striking ``and 
        222'' and inserting ``222, and 223''.
    (d) 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. 223. Premiums on qualified long-
                                        term care insurance contracts.
                              ``Sec. 224. Cross reference.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 3. ADDITIONAL PERSONAL EXEMPTION FOR DEPENDENTS WITH LONG-TERM 
              CARE NEEDS IN TAXPAYER'S HOME.

    (a) In General.--Section 151 (relating to allowance of deductions 
for personal exemptions) is amended by redesignating subsections (d) 
and (e) as subsections (e) and (f), respectively, and by inserting 
after subsection (c) the following new subsection:
    ``(d) Additional Exemption for Dependents With Long-Term Care Needs 
in Taxpayer's Home.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        exemption of the exemption amount for each qualified family 
        member of the taxpayer.
            ``(2) Phase-in.--In the case of taxable years beginning in 
        calendar years before 2012, the amount of the exemption 
        provided under paragraph (1) shall not exceed the applicable 
        limitation amount determined in accordance with the following 
        table:

``For taxable years beginning                       The applicable
    in calendar year--                      limitation amount is--
    2003 and 2004.................................                $500 
    2005 and 2006.................................               1,000 
    2007 and 2008.................................               1,500 
    2009 and 2010.................................               2,000 
    2011..........................................               2,500.
            ``(3) Qualified family member.--For purposes of this 
        subsection, the term `qualified family member' means, with 
        respect to any taxable year, any individual--
                    ``(A) who is--
                            ``(i) the spouse of the taxpayer, or
                            ``(ii) a dependent of the taxpayer with 
                        respect to whom the taxpayer is entitled to an 
                        exemption under subsection (c),
                    ``(B) who is an individual with long-term care 
                needs during any portion of the taxable year, and
                    ``(C) other than an individual described in section 
                152(a)(9), who, for more than half of such year, has as 
                such individual's principal place of abode the home of 
                the taxpayer and is a member of the taxpayer's 
                household.
            ``(4) Individuals with long-term care needs.--For purposes 
        of this subsection, the term `individual with long-term care 
        needs' means, with respect to any taxable year, an individual 
        who has been certified, during the 39\1/2\-month period ending 
        on the due date (without extensions) for filing the return of 
        tax for the taxable year (or such other period as the Secretary 
        prescribes), by a physician (as defined in section 1861(r)(1) 
        of the Social Security Act) as being, for a period which is at 
        least 180 consecutive days--
                    ``(A) an individual who is unable to perform 
                (without substantial assistance from another 
                individual) at least 2 activities of daily living (as 
                defined in section 7702B(c)(2)(B)) due to a loss of 
                functional capacity, or
                    ``(B) an individual who 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 1 activity of daily living (as so 
                defined) or to the extent provided in regulations 
                prescribed by the Secretary (in consultation with the 
                Secretary of Health and Human Services), is unable to 
                engage in age appropriate activities.
            ``(5) Identification requirement.--No exemption shall be 
        allowed under this subsection to a taxpayer with respect to any 
        qualified family member unless the taxpayer includes, on the 
        return of tax for the taxable year, the name and taxpayer 
        identification of the physician certifying such member. In the 
        case of a failure to provide the information required under the 
        preceding sentence, the preceding sentence shall not apply if 
        it is shown that the taxpayer exercised due diligence in 
        attempting to provide the information so required.
            ``(6) Special rules.--Rules similar to the rules of 
        paragraphs (2), (3), and (4) of section 21(e) shall apply for 
        purposes of this subsection.''.
    (b) Conforming Amendments.--
            (1) Section 1(f)(6)(A) is amended by striking ``151(d)(4)'' 
        and inserting ``151(e)(4)''.
            (2) Section 1(f)(6)(B), as amended by the Economic Growth 
        and Tax Relief Reconciliation Act of 2001, is amended by 
        striking ``151(d)(3)(A)'' and inserting ``151(e)(3)(A)''.
            (3) Section 1(f)(6)(B), as in effect on the day before the 
        date of the enactment of the Economic Growth and Tax Relief 
        Reconciliation Act of 2001, is amended by striking 
        ``151(d)(4)(A)'' and inserting ``151(e)(4)(A)''.
            (4) Section 3402(f)(1)(A) is amended by striking 
        ``151(d)(2)'' and inserting ``151(e)(2)''.
            (5) Section 3402(r)(2)(B) is amended by striking ``151(d)'' 
        and inserting ``151(e)''.
            (6) Section 6012(a)(1)(D)(ii) is amended--
                    (A) by striking ``151(d)'' and inserting 
                ``151(e)'', and
                    (B) by striking ``151(d)(2)'' and inserting 
                ``151(e)(2)''.
            (7) Section 6013(b)(3)(A) is amended by striking ``151(d)'' 
        and inserting ``151(e)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.
                                 <all>