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

                                                 Union Calendar No. 342
107th CONGRESS
  2d Session
                                H. R. 4946

                          [Report No. 107-572]

 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

                             July 15, 2002

 Additional sponsors: Mr. McInnis, Mr. Brady of Texas, and Mr. Portman

                             July 15, 2002

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on June 
                               17, 2002]

_______________________________________________________________________

                                 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.--
                    ``(A) In general.--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--
                            ``(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 2002' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $1,000, such 
                amount shall be rounded to the nearest multiple of 
                $1,000 (or if such amount is a multiple of $500, such 
                amount shall be rounded to the next highest multiple of 
                $500).
            ``(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) is amended by striking 
        ``151(d)(4)(A)'' and inserting ``151(e)(4)(A)''.
            (3) Section 3402(f)(1)(A) is amended by striking 
        ``151(d)(2)'' and inserting ``151(e)(2)''.
            (4) Section 3402(r)(2)(B) is amended by striking ``151(d)'' 
        and inserting ``151(e)''.
            (5) 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)''.
            (6) 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.

SEC. 4. EXPANSION OF HUMAN CLINICAL TRIALS QUALIFYING FOR ORPHAN DRUG 
              CREDIT.

    (a) In General.--Paragraph (2) of section 45C(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(C) Treatment of certain expenses incurred before 
                designation.--For purposes of subparagraph (A)(ii)(I), 
                if a drug is designated under section 526 of the 
                Federal Food, Drug, and Cosmetic Act not later than the 
                due date (including extensions) for filing the return 
                of tax under this subtitle for the taxable year in 
                which the application for such designation of such drug 
                was filed, such drug shall be treated as having been 
                designated on the date that such application was 
                filed.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to expenses incurred after the date of the enactment of this Act.

SEC. 5. VACCINE TAX TO APPLY TO HEPATITIS A VACCINE.

    (a) In General.--Paragraph (1) of section 4132(a) (defining taxable 
vaccine) is amended by redesignating subparagraphs (I), (J), (K), and 
(L) as subparagraphs (J), (K), (L), and (M), respectively, and by 
inserting after subparagraph (H) the following new subparagraph:
                    ``(I) Any vaccine against hepatitis A.''
    (b) Effective Date.--
            (1) Sales, etc.--The amendments made by subsection (a) 
        shall apply to sales and uses on or after the first day of the 
        first month which begins more than 4 weeks after the date of 
        the enactment of this Act.
            (2) Deliveries.--For purposes of paragraph (1) and section 
        4131 of the Internal Revenue Code of 1986, in the case of sales 
        on or before the effective date described in such paragraph for 
        which delivery is made after such date, the delivery date shall 
        be considered the sale date.

SEC. 6. ADJUSTMENT OF EMPLOYER CONTRIBUTIONS TO COMBINED BENEFIT FUND 
              TO REFLECT MEDICARE PRESCRIPTION DRUG SUBSIDY PAYMENTS.

    (a) In General.--Section 9704(b) of the Internal Revenue Code of 
1986 (relating to health benefit premium) is amended by adding at the 
end the following new paragraph:
            ``(4) Adjustments for medicare prescription drug 
        subsidies.--The trustees of the Combined Fund shall decrease 
        the per beneficiary premium for each plan year in which a 
        subsidy payment is provided to it under section 1860H of the 
        Social Security Act by the amount which would place the 
        Combined Fund in the same financial position as if such subsidy 
        payment had not been received.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to plan years beginning after the date of the enactment of the 
Medicare Modernization and Prescription Drug Act of 2002.

SEC. 7. ELIGIBILITY FOR ARCHER MSA'S EXTENDED TO ACCOUNT HOLDERS OF 
              MEDICARE+CHOICE MSA'S.

    (a) In General.--Subparagraph (B) of section 220(c)(2) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new clause:
                            ``(iii) Medicare+choice msa's.--In the case 
                        of an individual who is covered under an MSA 
                        plan (as defined in section 1859(b)(3) of the 
                        Social Security Act) which such individual 
                        elected under section 1851(a)(2)(B) of such 
                        Act--
                                    ``(I) such plan shall be treated as 
                                a high deductible health plan for 
                                purposes of this section,
                                    ``(II) subsection (b)(2)(A) shall 
                                be applied by substituting `100 
                                percent' for `65 percent' with respect 
                                to such individual,
                                    ``(III) with respect to such 
                                individual, the limitation under 
                                subsection (d)(1)(A)(ii) shall be 100 
                                percent of the highest annual 
                                deductible limitation under section 
                                1859(b)(3)(B) of the Social Security 
                                Act,
                                    ``(IV) paragraphs (4), (5), and (7) 
                                of subsection (b) and paragraph 
                                (1)(A)(iii) of this subsection shall 
                                not apply with respect to such 
                                individual, and
                                    ``(V) the limitation which would 
                                (but for this subclause) apply under 
                                subsection (b)(1) with respect to such 
                                individual for any taxable year shall 
                                be reduced (but not below zero) by the 
                                amount which would (but for subsection 
                                106(b)) be includible in such 
                                individual's gross income for the 
                                taxable year.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2002.




                                                 Union Calendar No. 342

107th CONGRESS

  2d Session

                               H. R. 4946

                          [Report No. 107-572]

_______________________________________________________________________

                                 A BILL

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

_______________________________________________________________________

                             July 15, 2002

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed