I
104TH CONGRESS 1ST SESSION
H. R. 8
To amend the Social Security Act to increase the earnings limit, to amend the Internal Revenue Code of 1986 to repeal the increase in the tax on social security benefits and to provide incentives for the purchase of long-term care insurance, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 4, 1995 Mr. BUNNING, Mr. HASTERT, Mrs. KELLY, and Mrs. THURMAN (for themselves, Mr. WICKER, Mr. HOKE, Mr. FRISA, Mr. MCINTOSH, Mr. SHADEGG, Mrs. JOHNSON of Connecticut, Mr. CHRYSLER, Mr. CUNNINGHAM, Mr. CANADY, Mr. MCCOLLUM, Mr. SHAYS, Mr. BARTON of Texas, Mr. GILLMOR, Mr. BARR, Mr. ARMEY, Mr. FORBES, Mr. HORN, Mrs. WALDHOLTZ, Mr. TATE, Ms. DUNN of Washington, Mr. MICA, Mr. MCHUGH, Mr. CRANE, Mr. DORNAN, Mr. BACHUS, Mr. SMITH of Texas, Mr. WELDON of Pennsylvania, Mr. OXLEY, Mr. ROHRABACHER, Ms. DANNER, Mr. SAXTON, Mr. KIM, Mr. BALLENGER, Mr. CALLAHAN, Mr. TALENT, Mr. BAKER of Louisiana, Mr. SCHAEFER, Mr. FILNER, Mr. CRAPO, Mr. KOLBE, Mr. HALL of Texas, Mr. PAXON, Mr. THOMAS, Mr. COMBEST, Mr. COBLE, Mr. EHRLICH, Mrs. MEYERS of Kansas, Mr. YOUNG of Florida, Mr. GOSS, Mr. STOCKMAN, Mr. SMITH of Michigan, Mr. COX, Mr. STEARNS, Mr. BAKER of California, Mr. SHAW, Mr. HERGER, Mr. HEINEMAN, Mr. HANCOCK, Mr. SENSENBRENNER, Mrs. FOWLER, Mr. GREENWOOD, Mr. ZIMMER, Mr. LINDER, Mr. HUTCHINSON, Mr. EMERSON, Mr. ENGLISH of Pennsylvania, Mr. HOSTETTLER, Mr. JONES, Mr. ENSIGN, Mr. SMITH of New Jersey, Mr. TIAHRT, Mrs. MYRICK, Mr. FRELINGHUYSEN, Mr. HOUGHTON, Mrs. CUBIN, Mr. KINGSTON, Mr. EWING, Mr. HASTINGS of Washington, Mr. GANSKE, Mr. WELDON of Florida, Mr. COBURN, Mr. LARGENT, Mr. WELLER, Mr. LEWIS of Kentucky, Mr. FOLEY, Mr. INGLIS of South Carolina, Mr. LIGHTFOOT, Mr. ISTOOK, Mr. CALVERT, Mr. HOBSON, Mr. CREMEANS, Mr. KNOLLENBERG, Mr. BILIRAKIS, Mr. HAYWORTH, Mr. FOX, Mr. GOODLING, Mr. RADANOVICH, Mr. ROTH, Mr. WAMP, Mr. GILCHREST, Mr. BLUTE, Mr. SOLOMON, Mr. DOOLITTLE, Mr. CAMP, Mr. UPTON, Mr. PACKARD, Mr. STUMP, Mr. EVERETT, Mr. GILMAN, Mr. MILLER of Florida, Mr. LATOURETTE, Mr. ROYCE, Mr. FLANAGAN, Mr. BURR, Mr. LATHAM, Mr. DAVIS, Ms. MOLINARI, Mr. GUNDERSON, Mr. THORNBERRY, Mr. RIGGS, Mr. PORTER, Mr. ALLARD, Mr.
2
CHRISTENSEN, Mr. GOODLATTE, Mr. HILLEARY, Mr. COOLEY, and Mr. BONO) introduced the following bill; which was referred as follows: Titles I–III; referred to the Committee on Ways and Means Title IV, referred to the Committee on the Judiciary APRIL 3, 1995 Additional sponsors: Mr. TAYLOR of North Carolina, Mr. BARTLETT of Maryland, Mr. NUSSLE, Mr. CHABOT, Mr. BURTON of Indiana, Mr. NEY, Mr. NORWOOD, Mrs. VUCANOVICH, Mr. HUNTER, Mr. MANZULLO, Mr. LIVINGSTON, Mr. COLLINS of Georgia, Mr. SAM JOHNSON of Texas, Mr. WALKER, Mr. MOORHEAD, Mrs. SEASTRAND, Mr. MCKEON, Mr. DREIER, Mr. ROBERTS, Mr. POMBO, Mr. SALMON, Mr. FIELDS of Texas, Mr. SOUDER, Mr. SPENCE, and Mr. GUTKNECHT
A BILL
To amend the Social Security Act to increase the earnings limit, to amend the Internal Revenue Code of 1986 to repeal the increase in the tax on social security benefits and to provide incentives for the purchase of long-term care insurance, and for other purposes. 1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled, 3 4
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Senior Citizens’ Equity
5 Act’’.
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3 1 2 3 4 5 6
TITLE I—SOCIAL SECURITY EARNINGS TEST
SEC. 101. ADJUSTMENTS IN MONTHLY EXEMPT AMOUNT FOR PURPOSES OF THE SOCIAL SECURITY EARNINGS TEST.
(a) INCREASE
IN
MONTHLY EXEMPT AMOUNT HAVE ATTAINED
FOR
7 INDIVIDUALS
WHO
RETIREMENT
8 AGE.—Section 203(f)(8)(D) of the Social Security Act (42 9 U.S.C. 403(f)(8)(D)) is amended to read as follows: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ‘‘(D)(i) Notwithstanding any other provision of this subsection, the exempt amount which is applicable to an individual who has attained retirement age (as defined in section 216(1)) before the close of the taxable year involved shall be— ‘‘(I) for the taxable year beginning after 1995 and before 1997, $1,250.00, ‘‘(II) for the taxable year beginning after 1996 and before 1998, $1,583.331⁄3, ‘‘(III) for the taxable year beginning after 1997 and before 1999, $1,916.662⁄3, ‘‘(IV) for the taxable year beginning after 1998 and before 2000, $2,250.00, and ‘‘(V) for the taxable year beginning after 1999 and before 2001, $2,500.00.
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4 1 2 3 4 5 6 ‘‘(ii) For purposes of subparagraph (B)(ii)(II), the increase in the exempt amount provided under clause (i)(V) shall be deemed to have resulted from a determination which shall be deemed to have been made under subparagraph (A) in 1999.’’. (b) CONFORMING AMENDMENT.—The second sen-
7 tence of section 223(d)(4) of such Act (42 U.S.C. 8 423(d)(4)) is amended by striking ‘‘the exempt amount 9 under section 203(f)(8) which is applicable to individuals 10 described in subparagraph (D) thereof’’ and inserting the 11 following: ‘‘an amount equal to the exempt amount which 12 would have been applicable under section 203(f)(8), to in13 dividuals described in subparagraph (D) thereof, if section 14 101 of the Senior Citizens’ Equity Act had not been en15 acted’’. 16 17
SEC. 102. EFFECTIVE DATE.
The amendments made by section 101 shall apply
18 with respect to taxable years beginning after 1995. 19 20 21 22 23 24
TITLE II—REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY BENEFITS
SEC. 201. REPEAL OF INCREASE IN TAX ON SOCIAL SECURITY BENEFITS.
(a) IN GENERAL.—Subsection (a) of section 86 of the
25 Internal Revenue Code of 1986 (relating to social security
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5 1 and tier 1 railroad retirement benefits) is amended by 2 adding at the end the following new paragraph: 3 4 5 6 7 8 ‘‘(3) PHASEOUT
OF ADDITIONAL AMOUNT.—In
the case of any taxable year beginning in a calendar year after 1995 and before 2000, paragraph (2) shall be applied by substituting the percentage determined under the following table for ‘85 percent’ each place it appears:
‘‘In the case of a taxable year beginning in calendar year: 1996 ....................................... 1997 ....................................... 1998 ....................................... 1999 ....................................... The percentage is: 75 65 60 55 percent percent percent percent.’’
9
(b) TERMINATION
OF
ADDITIONAL AMOUNT.—Para-
10 graph (2) of section 86(a) of such Code is amended by 11 adding at the end the following new flush sentence: 12 13 14 ‘‘This paragraph shall not apply to any taxable year beginning after December 31, 1999.’’ (c) CONFORMING AMENDMENT.—Subparagraph (A)
15 of section 871(a)(3) of such Code is amended— 16 17 18 19 20 21 22 (1) by striking ‘‘85 percent’’ and inserting ‘‘50 percent’’, and (2) by inserting before the last sentence the following new flush sentence: ‘‘In the case of any taxable year beginning in a calendar year after 1995 and before 2000, subparagraph (A) shall be applied by substituting the per•HR 8 SC
6 1 2 3 centage determined for such calendar year under section 86(a)(3) for ‘50 percent’.’’ (d) EFFECTIVE DATE.—The amendments made by
4 this section shall apply to taxable years beginning after 5 December 31, 1995. 6 7 8 9 10
TITLE III—TREATMENT OF LONG-TERM CARE
SEC. 301. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.
(a) GENERAL RULE.—Subpart E of part I of sub-
11 chapter L of chapter 1 of the Internal Revenue Code of 12 1986 is amended by inserting after section 818 the follow13 ing new section: 14 15 16
‘‘SEC. 818A. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.
‘‘(a) GENERAL RULE.—For purposes of this part, a
17 long-term care insurance contract shall be treated as an 18 accident or health insurance contract. 19 20 21 22 23 24 ‘‘(b) LONG-TERM CARE INSURANCE CONTRACT.— ‘‘(1) IN
GENERAL.—For
purposes of this part,
the term ‘long-term care insurance contract’ means any insurance contract issued if— ‘‘(A) the only insurance protection provided under such contract is coverage of quali-
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7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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fied long-term care services and benefits incidental to such coverage, ‘‘(B) such contract does not cover expenses incurred for services or items to the extent that such expenses are reimbursable under title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount, ‘‘(C) such contract is guaranteed renewable, ‘‘(D) such contract does not have any cash surrender value, and ‘‘(E) all refunds of premiums, and all policyholder dividends or similar amounts, under such contract are to be applied as a reduction in future premiums or to increase future benefits. ‘‘(2) SPECIAL
RULES.— DIEM, ETC. PAYMENTS PER-
‘‘(A) PER
MITTED.—A
contract shall not fail to be treated
as described in paragraph (1)(A) by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
8 1 2 3 4 5 6 7 8 9 10 11 ‘‘(B) CONTRACT
MAY COVER MEDICARE
REIMBURSABLE EXPENSES WHERE MEDICARE IS SECONDARY PAYOR.—Paragraph
(1)(B) shall
not apply to expenses which are reimbursable under title XVIII of the Social Security Act only as a secondary payor. ‘‘(C) REFUNDS
OF PREMIUMS.—Paragraph
(1)(E) shall not apply to any refund of premiums on surrender or cancellation of the contract. ‘‘(c) QUALIFIED LONG-TERM CARE SERVICES.—For
12 purposes of this section— 13 14 15 16 17 18 19 20 21 22 23 24 ‘‘(1) IN
GENERAL.—The
term ‘qualified long-
term care services’ means necessary diagnostic, preventive, therapeutic, and rehabilitative services, and maintenance or personal care services, which— ‘‘(A) are required by a chronically ill individual in a qualified facility, and ‘‘(B) are provided pursuant to a plan of care prescribed by a licensed health care practitioner. ‘‘(2) CHRONICALLY ‘‘(A) IN
ILL INDIVIDUAL.—
GENERAL.—The
term ‘chronically
ill individual’ means any individual who has
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9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 been certified by a licensed health care practitioner as— ‘‘(i)(I) being unable to perform (without substantial assistance from another individual) at least 2 activities of daily living (as defined in subparagraph (B)) for a period of at least 90 days due to a loss of functional capacity, or ‘‘(II) having a level of disability similar (as determined by the Secretary in consultation with the Secretary of Health and Human Services) to the level of disability described in subclause (I), or ‘‘(ii) having a similar level of disability due to cognitive impairment. ‘‘(B) ACTIVITIES
OF DAILY LIVING.—For
purposes of subparagraph (A), each of the following is an activity of daily living: ‘‘(i) MOBILITY.—The process of walking or wheeling on a level surface which may include the use of an assistive device such as a cane, walker, wheelchair, or brace.
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10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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‘‘(ii) DRESSING.—The overall complex behavior of getting clothes from closets and drawers and then getting dressed. ‘‘(iii) TOILETING
AND BATHING.—
Each of the following shall be treated as 1 activity: ‘‘(I) The act of going to the toilet room for bowel and bladder function, transferring on and off the toilet, cleaning after elimination, and arranging clothes or the ability to voluntarily control bowel and bladder function, or in the event of incontinence, the ability to maintain a reasonable level of personal hygiene. ‘‘(II) The overall complex behavior of getting water and cleansing the whole body, including turning on the water for a bath, shower, or sponge bath, getting to, in, and out of a tub or shower, and washing and drying oneself. ‘‘(iv) TRANSFER.—The process of getting in and out of bed or in and out of a chair or wheelchair.
11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 or ‘‘(ii) which is a certified facility for purposes of title XVIII or XIX of the Social Security Act, or ‘‘(B) an individual’s home if a licensed health care practitioner certifies that without home care the individual would have to be cared for in a facility described in subparagraph (A). ‘‘(4) MAINTENANCE
ICES.—The OR PERSONAL CARE SERV-
‘‘(v) EATING.—The process of getting food from a plate or its equivalent into the mouth. ‘‘(3) QUALIFIED fied facility’ means— ‘‘(A) a nursing, rehabilitative, hospice, or adult day care facility (including a hospital, retirement home, nursing home, skilled nursing facility, intermediate care facility, or similar institution)— ‘‘(i) which is licensed under State law,
FACILITY.—The
term ‘quali-
term ‘maintenance or personal care serv-
ices’ means any care the primary purpose of which is to provide needed assistance with any of the activities of daily living described in paragraph (2)(B).
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12 1 2 3 4 5 6 7 8 9
OF A
‘‘(5)
LICENSED
HEALTH
CARE
PRACTI-
TIONER.—The
term ‘licensed health care practi-
tioner’ means any physician (as defined in section 1861(r) of the Social Security Act) and any registered professional nurse, licensed social worker, or other individual who meets such requirements as may be prescribed by the Secretary. ‘‘(d) TREATMENT
OF
COVERAGE PROVIDED
AS
PART
LIFE INSURANCE CONTRACT.—Except as otherwise
10 provided in regulations prescribed by the Secretary, in the 11 case of any long-term care insurance coverage (whether 12 or not qualified) provided by rider on a life insurance con13 tract, this part shall be applied as if the portion of the 14 contract providing such coverage were a separate contract. 15 16 17 18 19 20 21 22 23 24 25
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‘‘(e) BENEFITS
CLUDIBLE IN
IN
EXCESS
OF $200
PER DAY IN-
GROSS INCOME.—
GENERAL.—Notwithstanding
‘‘(1) IN
any other
provision of this title, gross income includes the aggregate amount of excess benefits received during the taxable year under any long-term care insurance contract. ‘‘(2) EXCESS ‘‘(A) IN
BENEFIT.— GENERAL.—For
purposes of para-
graph (1), the term ‘excess benefit’ means, with respect to any day, the amount by which the
13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 benefits received under a long-term care insurance contract for such day exceed $200. ‘‘(B) CONTRACTS
NOT AGGREGATED IN AP-
PLYING LIMIT.—Subparagraph
(A) shall be ap-
plied separately with respect to each long-term care insurance contract. ‘‘(3) INFLATION
FIT LIMIT.— ADJUSTMENT OF
$200
BENE-
‘‘(A) IN
GENERAL.—In
the case of a cal-
endar year after 1995, the $200 amount contained in paragraph (1) shall be increased for such calendar year by the medical care cost adjustment for such calendar year. If any increase determined under the preceding sentence is not a multiple of $10, such increase shall be rounded to the nearest multiple of $10. ‘‘(B) MEDICAL
CARE COST ADJUST-
MENT.—For
purposes of subparagraph (A), the
medical care cost adjustment for any calendar year is the percentage (if any) by which— ‘‘(i) the medical care component of the Consumer Price Index (as defined in section 1(f)(5)) for August of the preceding calendar year, exceeds
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14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ‘‘(ii) such component for August of 1994.’’ (b) RESERVE METHOD.— (1) Subparagraph (A) of section 807(d)(3) of such Code is amended by redesignating clause (iv) as clause (v) and by inserting after clause (iii) the following new clause: ‘‘(iv) LONG-TERM
CONTRACTS.—In CARE INSURANCE
the case of any long-term
care insurance contract, a 1-year full preliminary term method.’’ (2) Clause (v) of section 807(d)(3)(A) of such Code, as redesignated by paragraph (1), is amended by striking ‘‘or (iii)’’ each place it appears and inserting ‘‘(iii), or (iv)’’. (3) Clause (iii) of section 807(d)(3)(A) of such Code is amended by inserting ‘‘(other than a longterm care insurance contract)’’ after ‘‘insurance contract’’. (c) CONTINUATION COVERAGE EXCISE TAX NOT TO
21 APPLY.—Subsection (f) of section 4980B of such Code is 22 amended by adding at the end the following new para23 graph: 24 25 ‘‘(9) CONTINUATION
OF LONG-TERM CARE COV-
ERAGE NOT REQUIRED.—A
group health plan shall
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15 1 2 3 4 5 not be treated as failing to meet the requirements of this subsection solely by reason of failing to provide coverage under any long-term care insurance contract (as defined in section 818A).’’ (d) CLERICAL AMENDMENT.—The table of sections
6 for subpart E of part I of subchapter L of chapter 1 of 7 such Code is amended by inserting after the item relating 8 to section 818 the following new item:
‘‘Sec. 818A. Treatment of long-term care insurance or plans.’’
9 10 11 12
SEC. 302. EXCLUSION FOR BENEFITS PROVIDED UNDER LONG-TERM CARE INSURANCE; EXCLUSION FOR EMPLOYER-PROVIDED COVERAGE.
(a) IN GENERAL.—Subsection (a) of section 104 of
13 the Internal Revenue Code of 1986 (relating to compensa14 tion for injuries or sickness) is amended by striking ‘‘and’’ 15 at the end of paragraph (4), by striking the period at the 16 end of paragraph (5) and inserting ‘‘, and’’, and by insert17 ing after paragraph (4) the following new paragraph: 18 19 20 21 ‘‘(6) benefits under a long-term care insurance contract (as defined in section 818A(b)).’’ (b) EXCLUSION
ERAGE.—Section FOR
EMPLOYER-PROVIDED COV-
106 of such Code (relating to contribu-
22 tions by employer to accident and health plans) is amend23 ed by adding at the end thereof the following sentence: 24 ‘‘For purposes of the preceding sentence, the term ‘acci25 dent or health plan’ includes a long-term care insurance
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16 1 contract (as defined in section 818A(b)) but only to the 2 extent that the aggregate of the benefits under such con3 tracts provided by the employer with respect to coverage 4 of an individual does not exceed the limitation applicable 5 under section 818A(e)(2) (determined without regard to 6 subparagraph (B) thereof).’’ 7 8 9
SEC. 303. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE.
(a) GENERAL RULE.—Paragraph (1) of section
10 213(d) of the Internal Revenue Code of 1986 (defining 11 medical care) is amended by striking ‘‘or’’ at the end of 12 subparagraph (B), by redesignating subparagraph (C) as 13 subparagraph (D), and by inserting after subparagraph 14 (B) the following new subparagraph: 15 16 17 18 19 20 21 22 23 24 ‘‘(C) for qualified long-term care services (as defined in section 818A(c)), or’’. (b) TECHNICAL AMENDMENTS.— (1) Subparagraph (D) of section 213(d)(1) of such Code (as redesignated by subsection (a)) is amended by striking ‘‘subparagraphs (A) and (B)’’ and inserting ‘‘subparagraphs (A), (B), and (C)’’. (2)(A) Paragraph (1) of section 213(d) of such Code is amended by adding at the end thereof the following new flush sentence:
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17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 ‘‘In the case of a long-term care insurance contract (as defined in section 818A), only eligible long-term care premiums (as defined in paragraph (10)) shall be taken into account under subparagraph (D).’’ (B) Subsection (d) of section 213 of such Code is amended by adding at the end the following new paragraph: ‘‘(10)
MIUMS.—
ELIGIBLE
LONG-TERM
CARE
PRE-
‘‘(A) IN
GENERAL.—For
purposes of this
section, the term ‘eligible long-term care premiums’ means the amount paid during a taxable year for any long-term care insurance contract (as defined in section 818A) covering an individual, to the extent such amount does not exceed the limitation determined under the following table:
‘‘In the case of an individual with an attained age before the The limitation close of the taxable year of: is: 40 or less ................................................................... $ 200 More than 40 but not more than 50 ......................... 375 More than 50 but not more than 60 ......................... 750 More than 60 but not more than 70 ......................... 2,000 More than 70 ............................................................. 2,500.
18 19 20 21 22
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‘‘(B) INDEXING.— ‘‘(i) IN
GENERAL.—In
the case of any
taxable year beginning in a calendar year after 1995, each dollar amount contained in paragraph (1) shall be increased by the
18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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medical care cost adjustment of such amount for such calendar year. If any increase determined under the preceding sentence is not a multiple of $10, such increase shall be rounded to the nearest multiple of $10. ‘‘(ii) MEDICAL
MENT.—For CARE COST ADJUST-
purposes of clause (i), the
medical care cost adjustment for any calendar year is the percentage (if any) by which— ‘‘(I) the medical care component of the Consumer Price Index (as defined in section 1(f)(5)) for August of the preceding calendar year, exceeds ‘‘(II) such component for August of 1994.’’ (3) Paragraph (6) of section 213(d) of such Code is amended— (A) by striking ‘‘subparagraphs (A) and (B)’’ and inserting ‘‘subparagraphs (A), (B), and (C)’’, and (B) by striking ‘‘paragraph (1)(C)’’ in subparagraph (1)(D)’’. (A) and inserting ‘‘paragraph
19 1 2 3 4 5 6 7 8 (4) Paragraph (7) of section 213(d) of such Code is amended by striking ‘‘subparagraphs (A) and (B)’’ and inserting ‘‘subparagraphs (A), (B), and (C)’’.
SEC. 304. CERTAIN EXCHANGES OF LIFE INSURANCE CONTRACTS FOR LONG-TERM CARE INSURANCE CONTRACTS NOT TAXABLE.
Subsection (a) of section 1035 of the Internal Reve-
9 nue Code of 1986 (relating to certain exchanges of insur10 ance contracts) is amended by striking the period at the 11 end of paragraph (3) and inserting ‘‘; or’’, and by adding 12 at the end thereof the following new paragraph: 13 14 15 16 17 18 19 20 ‘‘(4) a contract of life insurance or an endowment or annuity contract for a long-term care insurance contract (as defined in section 818A).’’
SEC. 305. EXCLUSION FROM GROSS INCOME FOR AMOUNTS WITHDRAWN FROM INDIVIDUAL RETIRE-
MENT PLANS OR 401(k) PLANS FOR LONGTERM CARE INSURANCE.
(a) IN GENERAL.—Part III of subchapter B of chap-
21 ter 1 of the Internal Revenue Code of 1986 (relating to 22 items specifically excluded from gross income) is amended 23 by redesignating section 137 as section 138 and by insert24 ing after section 136 the following new section:
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20 1 2 3 4
‘‘SEC. 137. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS AND SECTION 401(k) PLANS FOR LONG-TERM CARE INSURANCE.
‘‘(a) GENERAL RULE.—The amount which would
5 (but for this section) be includible in the gross income of 6 an individual for the taxable year by reason of distribu7 tions from any individual retirement account or section 8 401(k) plan shall be reduced (but not below zero) by the 9 aggregate premiums paid by such individual during such 10 taxable year for any long-term care insurance contract (as 11 defined in section 818A) for the benefit of such individual 12 or the spouse of such individual. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ‘‘(b) DEFINITIONS.—For purposes of this section— ‘‘(1) INDIVIDUAL
RETIREMENT ACCOUNT.—The
term ‘individual retirement account’ has the meaning given such term by section 408(a). ‘‘(2) SECTION
401(k) PLAN.—The
term ‘section
401(k) plan’ means any employer plan which meets the requirements of section 401(a) and which includes a qualified cash or deferred arrangement (as defined in section 401(k)). ‘‘(c) SPECIAL RULES
FOR
SECTION 401(k) PLANS.—
CANNOT EXCEED ELEC-
‘‘(1) WITHDRAWALS
TIVE CONTRIBUTIONS UNDER QUALIFIED CASH OR DEFERRED ARRANGEMENT.—This
section shall not
apply to any distribution from a section 401(k) plan
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21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 to the extent the aggregate amount of such distributions for the use described in subsection (a) exceeds the aggregate employer contributions made pursuant to the employee’s election under section 401(k)(2). ‘‘(2) WITHDRAWALS
FICATION.—A NOT TO CAUSE DISQUALI-
plan shall not be treated as failing to
satisfy the requirements of section 401, and an arrangement shall not be treated as failing to be a qualified cash or deferred arrangement (as defined in section 401(k)(2)), merely because under the plan or arrangement distributions are permitted which are excludable from gross income by reason of this section.’’ (b) CONFORMING AMENDMENTS.— (1) Section 401(k) of such Code is amended by adding at the end the following new paragraph: ‘‘(11) CROSS
REFERENCE.—
‘‘For provision permitting tax-free withdrawals for payment of long-term care premiums, see section 137.’’
18 19
(2) Section 408(d) of such Code is amended by adding at the end the following new paragraph:
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22 1 ‘‘(8) CROSS
REFERENCE.—
‘‘For provision permitting tax-free withdrawals from individual retirement accounts for payment of long-term care premiums, see section 137.’’
2 3 4
(3) The table of sections for such part III is amended by striking the last item and inserting the following new items:
‘‘Sec. 137. Distributions from individual retirement accounts and section 401(k) plans for long-term care insurance. ‘‘Sec. 138. Cross references to other Acts.’’
5 6 7
SEC. 306. TAX TREATMENT OF ACCELERATED DEATH BENEFITS UNDER LIFE INSURANCE CONTRACTS.
Section 101 of the Internal Revenue Code of 1986
8 (relating to certain death benefits) is amended by adding 9 at the end thereof the following new subsection: 10 ‘‘(g) TREATMENT
OF
CERTAIN
ACCELERATED
11 DEATH BENEFITS.— 12 13 14 15 16 17 18 19 20 21 22 ‘‘(1) IN
GENERAL.—For
purposes of this sec-
tion, any amount paid or advanced to an individual under a life insurance contract on the life of an insured— ‘‘(A) who is a terminally ill individual, or ‘‘(B) who is a chronically ill individual (as defined in section 818A(c)(2)) who is confined to a qualified facility (as defined in section 818A(c)(3)), shall be treated as an amount paid by reason of the death of such insured.
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23 1 2 3 4 5 6 7 8 9 10 11 ‘‘(2) TERMINALLY
ILL INDIVIDUAL.—For
pur-
poses of this subsection, the term ‘terminally ill individual’ means an individual who has been certified by a physician as having an illness or physical condition which can reasonably be expected to result in death in 12 months or less. ‘‘(3) PHYSICIAN.—For purposes of this subsection, the term ‘physician’ has the meaning given to such term by section 213(d)(4).’’
SEC. 307. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by this
12 title shall apply to taxable years beginning after December 13 31, 1995. 14 (b) CONTINUATION
OF
EXISTING POLICIES.—In the
15 case of any policy issued before January 1, 1996, which 16 met the long-term care insurance requirements of the 17 State in which the policy was sitused at the time the policy 18 was issued— 19 20 21 22 23 24 (1) such policy shall be treated for purposes of the Internal Revenue Code of 1986 as a long-term care insurance contract (as defined in section 818A(b) of such Code), and (2) services provided under such policy shall be treated for such purposes as qualified long-term care
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24 1 2 3 services (as defined in section 818A(c) of such Code). (c) EXCHANGES
OF
EXISTING POLICIES.—If, after
4 the date of enactment of this Act and before January 1, 5 1996, a policy providing for long-term care insurance cov6 erage is exchanged solely for a long-term care insurance 7 contract (as defined in section 818A(b) of the Internal 8 Revenue Code of 1986), no gain or loss shall be recognized 9 on the exchange. If, in addition to a long-term care insur10 ance contract, money or other property is received in the 11 exchange, then any gain shall be recognized to the extent 12 of the sum of the money and the fair market value of the 13 other property received. For purposes of this paragraph, 14 the cancellation of a policy providing for long-term care 15 insurance coverage and reinvestment of the cancellation 16 proceeds in a qualified long-term care insurance policy 17 within 60 days thereafter shall be treated as an exchange. 18 (d) ISSUANCE
OF
CERTAIN RIDERS PERMITTED.—
19 For purposes of determining whether section 7702 or 20 7702A of the Internal Revenue Code of 1986 applies to 21 any contract, the issuance, whether before, on, or after 22 December 31, 1995, of a rider on a life insurance contract 23 providing long-term care insurance coverage shall not be 24 treated as a modification or material change of such con25 tract.
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25 1 (e) TREASURY TO SPECIFY TAX TREATMENT
OF
2 LONG-TERM CARE CONTRACTS WHICH DO NOT MEET 3 STANDARDS.—Not later than October 1, 1995, the Sec4 retary of the Treasury shall submit to the Congress a re5 port detailing the Department of the Treasury’s interpre6 tation of the treatment under the Internal Revenue Code 7 of 1986 of contracts which provide long-term care services 8 but which are not long-term care insurance contracts (as 9 defined by section 818A(b) of such Code). 10 11 12 13
TITLE IV—SENIOR CITIZEN COMMUNITIES
SEC. 401. DEFINITION OF HOUSING FOR OLDER PERSONS.
Subparagraph (C) of section 807(b)(2) of the Fair
14 Housing Act (42 U.S.C. 3607(b)(2)) is amended to read 15 as follows: 16 17 18 19 20 21 22 23 24 ‘‘(C) that meets the following requirements: ‘‘(i) The housing is in a facility or community intended and operated for the occupancy of at least 80 percent of the occupied units by at least one person 55 years of age or older. ‘‘(ii) The housing facility or community publishes and adheres to policies and procedures that demonstrate the intent required under clause (i), whether or not such policies
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26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 and procedures are set forth in the governing documents of such facility or community. ‘‘(iii) The housing facility or community complies with rules made by the Secretary for the verification of occupancy. Such rules shall allow for that verification by reliable surveys and affidavits and shall include examples of the types of policies and procedures relevant to a determination of compliance with the requirement of clause (ii). Such surveys and affidavits shall be admissible in administrative and judicial proceedings for the purposes of such verification.’’.
SEC. 402. GOOD FAITH ATTEMPT AT COMPLIANCE DEFENSE AGAINST CIVIL MONEY DAMAGES.
Section 807(b) of the Fair Housing Act (42 U.S.C.
17 3607(b)) is amended by adding at the end the following: 18 ‘‘(5) An individual who engages in conduct with a
19 reasonable good faith reliance on the existence of the ex20 emption of this subsection relating to housing for older 21 persons is not personally liable for money damages for a 22 violation of this Act that such an exemption would have 23 vitiated. For the purposes of this paragraph, a person en24 gaged in the business of residential real estate trans25 actions is presumed to have such a good faith reliance if
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27 1 that person has no actual knowledge that the facility or 2 community is not or will not be eligible for such exemption 3 and the facility or community gives such person a written 4 certification stating the compliance of the facility or com5 munity with the requirements for such exemption.’’.
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