Home > 106th Congressional Bills > H.R. 4433 (ih) To amend the Internal Revenue Code of 1986 to waive the income inclusion on a distribution from an individual retirement account or a section 401(k) plan to the extent that the distribution is contributed to a charity. [Introduced in House]...H.R. 4433 (ih) To amend the Internal Revenue Code of 1986 to waive the income inclusion on a distribution from an individual retirement account or a section 401(k) plan to the extent that the distribution is contributed to a charity. [Introduced in House]...
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 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.
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 Support 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 chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions) is amended by redesignating section 224 as section 225 and
by inserting after section 223 the following new section:
``SEC. 224. 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
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 individual 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 individual 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) applies 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
payment.''.
(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 contract''.
(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 allowed by section 224.''.
(2) The table of sections for part VII of subchapter 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 subchapter 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 allowed 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 `modified
adjusted gross income' means adjusted gross income 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 return, 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 determined
under section 213(d)(10)(B)(ii) for the calendar year
in which the taxable year begins, determined by
substituting `August of 2003' for `August of 1996' in
subclause (II) thereof.
If any increase determined under the preceding sentence 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 imposed 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 individual
with long-term care needs described in
subparagraph (B) 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 39\1/2\ 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.
``(B) Individuals with long-term care needs.--An
individual is described in this subparagraph if the
individual 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.
``(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 described
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 section 63(c)(2)(C), and any additional
standard deduction under section 63(c)(3) which
would be applicable to the individual if clause
(iii) applied.
``(v) An individual who would be described
in clause (iii) for the taxable year if--
``(I) the requirements of clause
(iv) are met with respect to the
individual, and
``(II) the requirements of
subparagraph (B) are met with respect
to the individual in lieu of the
support test of section 152(a).
``(B) Residency test.--The requirements of this
subparagraph are met if an individual has as his
principal place of abode the home of the taxpayer and--
``(i) in the case of an individual who is
an ancestor or descendant of the taxpayer or
the taxpayer's spouse, is a member of the
taxpayer's household for over half the taxable
year, or
``(ii) in the case of any other individual,
is a member of the taxpayer's household for the
entire taxable year.
``(C) Special rules where more than 1 eligible
caregiver.--
``(i) In general.--If more than 1
individual is an eligible caregiver with
respect to the same applicable individual for
taxable years ending with or within the same
calendar year, a taxpayer shall be treated as
the eligible caregiver if each such individual
(other than the taxpayer) files a written
declaration (in such form and manner as the
Secretary may prescribe) that such individual
will not claim such applicable individual for
the credit under this section.
``(ii) No agreement.--If each individual
required under clause (i) to file a written
declaration under clause (i) does not do so,
the individual with the highest modified
adjusted gross income (as defined in section
32(c)(5)) shall be treated as the eligible
caregiver.
``(iii) Married individuals filing
separately.--In the case of married individuals
filing separately, the determination under this
subparagraph as to whether the husband or wife
is the eligible caregiver shall be made under
the rules of clause (ii) (whether or not one of
them has filed a written declaration under
clause (i)).
``(d) Identification Requirement.--No credit shall be allowed under
this section to a taxpayer with respect to any applicable individual
unless the taxpayer includes the name and taxpayer identification
number of such individual, and the identification number of the
physician certifying such individual, on the return of tax for the
taxable year.
``(e) Taxable Year Must Be Full Taxable Year.--Except in the case
of a taxable year closed by reason of the death of the taxpayer, no
credit shall be allowable under this section in the case of a taxable
year covering a period of less than 12 months.
``(f) Carryforward of Unused Credit.--If the credit allowable under
subsection (a) exceeds the limitation imposed by subsection (b)(4) for
the taxable year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection (a) for
such taxable year.''.
(b) Conforming Amendments.--
(1) Section 6213(g)(2) of the Internal Revenue Code of 1986
is amended by striking ``and'' at the end of subparagraph (L),
by striking the period at the end of subparagraph (M) and
inserting ``, and'', and by inserting after subparagraph (M)
the following new subparagraph:
``(N) an omission of a correct TIN or physician
identification required under section 25C(d) (relating
to credit for taxpayers with long-term care needs) to
be included on a return.''.
(2) Section 23(b)(4) is amended by striking ``this
section'' and inserting ``this section and section 25C''.
(3) Section 24(b)(3)(B) is amended by striking ``23 and
25B'' and inserting ``23, 25B, and 25C''.
(4) Section 25(e)(1)(C) is amended by inserting ``25C,''
after ``25B,''.
(5) Section 26(a)(1) is amended by striking ``and 25B'' and
inserting ``, 25B, and 25C''.
(6) Section 904(h) is amended by striking ``and 25B'' and
inserting ``, 25B, and 25C''.
(7) Section 1400C(d) is amended by striking ``and 25B'' and
inserting ``, 25B, and 25C''.
(8) The table of sections for subpart A of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 25B the following new item:
``25C. Credit for taxpayers with long-term care needs.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 4. ADDITIONAL CONSUMER PROTECTIONS FOR LONG-TERM CARE INSURANCE.
(a) Additional Protections Applicable to Long-Term Care
Insurance.--Subparagraphs (A) and (B) of section 7702B(g)(2) of the
Internal Revenue Code of 1986 (relating to requirements of model
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