H.R. 3088 – Long-Term Care Act of 2007

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Referred to the House Committee on Ways and Means.

Ways and Means Committee

July 18, 2007

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HouseIntro Referral

Introduced in House

July 18, 2007

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

July 18, 2007

Floor Debate

1 member

What members said about H.R. 3088 on the floor

1 Republican

Rep. Lee TerryR-NE-2 · Nov 8, 2007

Madam Speaker, I rise to recognize November 4-10 as ``Long-Term Care Awareness Week.'' As the baby boomer generation begins to reach retirement age, understanding the realities and benefits of…

Madam Speaker, I rise to recognize November 4-10 as ``Long-Term Care Awareness Week.'' As the baby boomer generation begins to reach retirement age, understanding the realities and benefits of long-term care has never been more important.

Preparing for future costs of health care is something that every American should be doing. Long-term care insurance is one way for Americans to plan for periods of extended disability without burdening their families, going bankrupt, or relying on government assistance.

At least 60 percent of people over age 65 will require some long-term care services at some point in their lives--the personal assistance that enables impaired people to perform daily routines such as eating, bathing, and dressing. This care is expensive, averaging almost $200 per day for nursing home care, nearly $80 per day for assisted living and about $20 per day for home care.

While these costs are astronomical, it is even more stunning how few people realize the true financial impact of requiring long-term care. A 2006 AARP study found that 59 percent of adults who are over 45 overestimate Medicare coverage for long-term care. It is important for people to understand that Medicare does not generally pay for most long-term care services. Therefore, it is important for individuals to start early and plan ahead for long-term care costs as a critical component of their retirement plans.

Various pieces of legislation have been introduced in Congress to encourage the purchase of long-term care insurance, including my own legislation, The Long-Term Care Act (H.R. 3088), which allows individuals to use funds from their IRAs or 401(k) plans tax-free and without penalty to purchase long-term care insurance. The government does have an important role to play in encouraging higher utilization of long-term care insurance.

During Long-Term Care Awareness Week, I would encourage all citizens interested in retirement planning to visit www.longtermcare.gov, where the government hosts a national clearinghouse for long-term care information.

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Introduced in HouseIssued July 18, 2007

I

110th CONGRESS

1st Session

H. R. 3088

IN THE HOUSE OF REPRESENTATIVES

July 18, 2007

Mr. Terry (for himself, Mr. Feeney, Mr. Paul, Mr. Souder, and Mr. Saxton) 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 provide that distributions from an individual retirement plan, a section 401(k) plan, a section 403(b) contract, or a section 457 plan shall not be includible in gross income to the extent used to pay long-term care insurance premiums.

1.

Short title

This Act may be cited as the Long-Term Care Act of 2007.

2.

Exclusion from gross income for distributions from individual retirement plans, section 401(k) plans, section 403(b) contracts, and 457 plans which are used to pay long-term care insurance premiums

(a)

In general

Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to items specifically excluded from gross income) is amended by inserting after section 139A the following new item:

139B.

Distributions from individual retirement plans, section 401(k) plans, section 403(b) contracts, and section 457 plans which are used to pay long-term care insurance premiums

(a)

In general

Gross income shall not include any distribution to an individual from—

(1)

an individual retirement plan, or

(2)

from amounts attributable to—

(A)

any elective deferrals described in subparagraph (A) or (C) of section 402(g)(3), or

(B)

any elective deferral under an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A),

to the extent that such distributions do not exceed the eligible long-term care premiums (as defined in section 213(d)(10)) paid during the taxable year for insurance covering the individual or the individual's spouse.

(b)

Denial of double benefit

The limitation in section 213(d)(10) shall be reduced by the amount which would (but for subsection (a)) be includible in the taxpayer's gross income for the taxable year.

(c)

No effect on qualification

An arrangement shall not fail to be treated as a qualified cash or deferred arrangement (as defined in section 401(k)), a contract described in section 403(b), or an eligible deferred compensation plan (as defined in section 457(b)) by reason of permitting distributions for the payment of eligible long-term care premiums.

.

(b)

Clerical amendment

The table of sections for such part III is amended by inserting after the item relating to section 139A the following new item:

Sec. 139B. Distributions from individual retirement plans, section 401(k) plans, and section 403(b) contracts which are used to pay long-term care insurance premiums..

(c)

Effective date

The amendments made by this section shall apply to distributions after the date of the enactment of this Act.