[House Report 107-572]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 107-572
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IMPROVING ACCESS TO LONG-TERM CARE ACT OF 2002
_______
July 15, 2002.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Thomas, from the Committee on Ways and Means, submitted the
following
R E P O R T
[To accompany H.R. 4946]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 4946) to amend the Internal Revenue Code to provide
health care incentives related to long-term care, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
I. Summary and Background............................................5
A. Purpose and Summary................................... 5
B. Background and Need for Legislation................... 6
C. Legislative History................................... 6
II. Explanation of the Bill...........................................6
A. Above-the-Line Deduction for Long-Term Care Insurance
Premiums (sec. 2 of the bill and new sec. 223 of the
Code)................................................ 6
B. Provide an Additional Personal Exemption to Home
Caregivers of Family Members (sec. 3 of the bill and
sec. 151 of the Code)................................ 8
C. Expand Human Clinical Trials Expenses Qualifying for
the Orphan Drug Tax Credit (sec. 4 of the bill and
sec. 45C of the Code)................................ 10
D. Add Vaccines Against Hepatitis A to the List of
Taxable Vaccines (sec. 5 of the bill and sec. 4131 of
the Code)............................................ 11
E. Adjustment of Employer Contributions to Combined
Benefit Fund to Reflect Medicare Prescription Drug
Benefit (sec. 6 of the bill and sec. 9704 of the
Code)................................................ 12
F. Modifications to Medicare+Choice MSAs (sec. 7 of the
bill and sec. 220 of the Code)....................... 13
III.Votes of the Committee...........................................15
IV. Budget Effects of the Bill.......................................16
A. Committee Estimate of Budgetary Effects............... 16
B. Statement Regarding New Budget Authority and Tax
Expenditures Budget Authority........................ 18
C. Cost Estimate Prepared by the Congressional Budget
Office............................................... 18
V. Other Matters to be Discussed Under the Rules of the House.......20
A. Committee Oversight Findings and Recommendations...... 20
B. Statement of General Performance Goals and Objectives. 21
C. Constitutional Authority Statement.................... 21
D. Information Relating to Unfunded Mandates............. 21
E. Applicability of House Rule XXI 5(b).................. 21
F. Tax Complexity Analysis............................... 21
VI. Changes in Existing Law Made by the Bill, as Reported............22
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
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.
I. SUMMARY AND BACKGROUND
A. Purpose and Summary
The bill, H.R. 4946, as amended (the ``Improving Access to
Long-Term Care Act of 2002'') provides tax relief to assist
individuals in meeting the long-term care needs of themselves,
their spouse, and their dependents.
The bill provides an above-the-line deduction for
individuals with certain income levels for the purchase of
long-term care insurance. In addition, the bill provides a
phased-in additional personal exemption for taxpayers who care
for dependents with long-term care needs in their home.
The bill also expands human clinical trials that qualify
for the orphan drug credit, adds hepatitis A vaccine to the
list of taxable vaccines, makes a conforming change to the coal
industry health provisions to reflect the Committee's actions
relating to prescription drug benefits under Medicare, and
allows individuals enrolled in Medicare+Choice MSA plans to
contribute to Archer MSAs.
B. Background and Need for Legislation
The provisions approved by the Committee reflect the need
for tax relief to assist individuals in meeting their long-term
care needs. The provisions also address other health care
matters.
C. Legislative History
COMMITTEE ACTION
The Committee on Ways and Means marked up the provisions of
the bill on June 19, 2002, and approved the provisions, as
amended, on June 19, 2002, by a rollcall vote of 29 yeas to 6
nays (with a quorum being present).
II. EXPLANATION OF THE BILL
A. Above-the-Line Deduction for Long-Term Care Insurance Premiums (sec.
2 of the bill and new sec. 223 of the Code)
PRESENT LAW
Under present law, the Federal income tax treatment of
qualified long-term care insurance expenses is similar to the
treatment of health insurance expenses.\1\ As is the case with
health insurance expenses, the Federal income tax treatment of
qualified long-term care insurance expenses depends on the
individual's circumstances.
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\1\ The main difference between the tax treatment of qualified
long-term care insurance and medical insurance is that long-term care
insurance canot be offered under a cafeteria plan.
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Individuals who purchase their own qualified long-term care
insurance may claim an itemized deduction for the premiums, but
only to the extent that eligible qualified long-term care
insurance premiums, together with the individual's medical
expenses exceed 7.5 percent of adjusted gross income.\2\ The
amount of qualified long-term care insurance premiums that may
be taken into account in determining the amount allowed as an
itemized deduction is limited as follows (for 2002) based on
the case of the covered individual: $240 in the case of an
individual 40 years old or less; $450 in the case of an
individual who is more than 40 but not more than 50; $900 in
the case of an individual who is more than 50 but not more than
60; $2,390 in the case of an individual who is more than 60 but
not more than 70; and $2,990 in the case of an individual who
is more than 70. These dollar limits are indexed for inflation.
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\2\ Sec. 213(d).
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Self-employed individuals may deduct a portion of qualified
long-term care insurance premiums for the individual and his or
her spouse and dependents. The deductible percentage of such
premiums is 70 percent in 2002 and 100 percent in 2003 and
thereafter.\3\ The deduction applies to qualified long-term
care insurance premiums, subject to the same dollar limits that
apply for purposes of the itemized deduction, described above.
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\3\ The deduction for long-term care insurance expenses of self-
employed individuals is not available for any month in which the
taxpayer is eligible to participate in a subsidized health plan
maintained by the employer of the taxpayer or the taxpayer's spouse.
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Employees can exclude from income 100 percent of qualified
long-term care insurance paid for by the employee's employer.
There is no dollar limit on this exclusion.\4\ Payments made
under a qualified long-term care insurance contract are
excludable from gross income, subject to a dollar limitation in
the case of contracts that provide for payment on a per diem or
similar basis.
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\4\ Unlike health insurance, long-term care insurance cannot be
provided under a cafeteria plan.
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In order for a long-term care insurance contract to be a
qualified long-term care insurance contract: (1) the contract
must be guaranteed renewable; (2) the contract generally cannot
provide for a cash surrender value or other money that can be
paid, assigned, or pledged as a loan or borrowed; (3) all
refunds of premiums, and all policyholder dividends or similar
amounts, under the contract are to be applied as a reduction in
future premiums or to increase future benefits; and (4) the
contract must meet certain consumer protection standards.\5\
Contracts that provide for per diem or similar payments are
subject to additional requirements.
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\5\ Sec. 7702B.
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The consumer protection provisions applicable to qualified
long-term care insurance contracts require that (1) such
contracts meet certain provisions under the model long-term
care insurance act and regulations promulgated by the National
Association of Insurance Commissioners, (2) the issuer of the
contract discloses that the contract is intended to be a
qualified policy, and (3) the issuer offer the policyholder a
nonforfeiture provision meeting certain requirements.
REASONS FOR CHANGE
Present law provides favorable tax treatment for the
purchase of qualified long-term care insurance. The present-law
provisions were enacted to provide incentives for individuals
to take financial responsibility for the long-term care needs
of themselves and their dependents. The Committee believes that
further incentives and tax relief are appropriate to encourage
individuals to purchase qualified long-term care insurance.
EXPLANATION OF PROVISION
The provision provides an above-the-line deduction for a
percentage of qualified long-term care insurance premiums up to
the present-law dollar limitations that apply under the
itemized deduction.\6\ The deduction is not available to an
individual for any month in which the individual is covered
under a long-term care insurance contract 50 percent or more of
the cost of which is paid or incurred by the individual's
employer (or the employer of the individual's spouse). In
determining whether the 50-percent threshold is met, all plans
of related employers providing long-term care insurance in
which the individual participates are treated as a single plan.
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\6\ The deduction only applies to premiums on qualified long-term
care insurance contracts; it does not apply to long-term care expenses.
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The otherwise allowable deduction is phased out for
taxpayers with modified adjusted gross income between $20,000
and $40,000 ($40,000 and $80,000 in the case of married
taxpayers filing a joint return).\7\ The $20,000 and $40,000
starting points for the phase-out range are indexed for
inflation, rounded to the nearest $1,000.
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\7\ Modified adjusted gross income means adjusted gross income
determined without regard to the deduction provided by the provision
and the exclusion for certain foreign earned income (sec. 911), income
from Guam, American Samoa, or the Northern Mariana Islands (sec. 931),
and income from Puerto Rico (sec. 933). Modified adjusted gross income
is calculated after the determination of the amount of Social Security
benefits includible in gross income (sec. 86), the exclusion for
certain interest on education savings bonds (sec. 135), the exclusion
for adoption assistance (sec. 137), the deduction for contributions to
individual retirement arrangements (sec. 219), the deduction for
student loan interest (sec. 221), the deduction for certain education
expenses (sec. 222), and the deduction for passive activity losses
(sec. 469).
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The deductible percentage of qualified long-term care
insurance premiums is 25 percent in 2003, 2004, and 2005, 30
percent in 2006 and 2007, 35 percent in 2008 and 2009, 40
percent in 2010 and 2011, and 50 percent in 2012 and
thereafter.
No amount taken into account in computing the deduction may
be taken into account in determining the deduction for health
insurance expenses of self-employed individuals or the itemized
deduction for medical expenses. Married taxpayers are required
to file a joint return in order to claim the deduction.\8\ The
Secretary is authorized to prescribe such regulations as may be
appropriate to carry out the provision, including appropriate
reporting requirements for employers.
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\8\ The rules of sec. 7703 would apply in determining married
status for this purpose.
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EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2002.
B. Provide an Additional Personal Exemption to Home Caregivers of
Family Members (sec. 3 of the bill and sec. 151 of the Code)
PRESENT LAW
In determining taxable income, taxpayers are entitled to a
personal exemption deduction for the taxpayer, his or her
spouse, and each dependent. To qualify as a dependent under
present law, an individual must: (1) be (a) a specified
relative or (b) have as his or her principal place of abode for
the taxable year the home of the taxpayer and be a member of
the taxpayer's household; \9\ (2) be a citizen or resident of
the U.S. or resident of Canada or Mexico; (3) not be required
to file a joint tax return with his or her spouse; (4) have
gross income below the personal exemption amount if not the
taxpayer's child; and (5) receive over half of his or her
support from the taxpayer.\10\
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\9\ For purposes of this rule, the taxpayer must maintain the
household in which the taxpayer and the individual reside. The taxpayer
is considered to maintain the household if over one-half of the support
of the household is provided by the taxpayer (or, if married, the
taxpayer and his or her spouse).
\10\ If no one person contributes over half the support of an
individual, the taxpayer is treated as meeting the support requirement
if: (a) over half the support is received from persons each of whom,
but for the fact that he or she did not provide over half such support,
could claim the individual as a dependent; (b) the taxpayer contributes
over 10 percent of such support; and (c) the other caregivers who
provide over 10 percent of the support file written declarations
stating that they will not claim the individual as a dependent.
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The personal exemption amount for 2002 is $3,000. Personal
exemptions are phased-out by two percentage points for each
$2,500 ($1,250 if married filed separately) or fraction thereof
by which adjusted gross income exceeds certain thresholds based
on filing status. For 2002, the thresholds are $137,300 for
single filers, $206,000 for joint filers, $171,650 for heads of
household, and $103,000 for married taxpayers filing separate
returns.\11\ The exemption amount and the dollar thresholds for
the phase-out are indexed for inflation.
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\11\ For taxable years beginning in 2006 and 2007, the otherwise
applicable personal exemption phase-out is reduced by one-third and for
taxable years beginning in 2008 and 2009, the otherwise applicable
phase-out is reduced by two-thirds. The personal exemption phaseout is
repealed for taxable years beginning after December 31, 2009, and
reinstated for taxable years beginning after December 31, 2010.
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Present law provides favorable tax treatment for the
purchase of qualified long-term care insurance and for
individuals with qualified long-term care expenses.
REASONS FOR CHANGE
Present law provides favorable tax treatment for long-term
care insurance and expenditures on long-term care services, but
does not provide similar tax relief for in-home care, i.e., for
individuals who care for family members or other dependents in
their home. The Committee understands that in-home care may be
preferable in some cases, and that individuals who care for
family members or other dependents with special needs often
incur additional household expenses. The Committee believes it
appropriate to provide additional tax relief in such cases.
EXPLANATION OF PROVISION
The provision allows a phased-in additional personal
exemption for each qualified family member with long-term care
needs. The exemption amount is limited to $500 for 2003 and
2004, $1,000 for 2005 and 2006, $1,500 for 2007 and 2008, and
$2,000 for 2009 and 2010, $2,500 for 2011, and is equal to the
regularly applicable exemption amount for 2012 and thereafter.
A qualified family member means an individual with long-
term care needs who (1) is the spouse of the taxpayer or a
dependent of the taxpayer or the taxpayer's spouse with respect
to whom the taxpayer is allowed to claim a personal exemption,
and (2) satisfies a residency requirement. In the case of an
individual who is a dependent by reason of living in the
taxpayer's household for the entire taxable year, the residency
requirement is the same as that under the dependency exemption.
In the case of other dependents, the residency requirement is
satisfied if, for more than one half of the taxable year, the
individual has as his or her principal place of abode the home
of the taxpayer and is a member of the taxpayer's household. As
under present law, a taxpayer would be treated as maintaining a
household for a period only if the taxpayer (or, if married,
the taxpayer and his or her spouse) furnishes more than one-
half the cost of maintaining the household for the entire year.
An individual is considered to have long-term care needs if
he or she has been certified by a licensed physician as being
unable, for a period of at least 180 consecutive days, \12\ to
perform at least two activities of daily living (``ADLs'') \13\
without substantial assistance from another individual due to a
loss of functional capacity. Substantial assistance includes
both hands-on assistance (that is, the physical assistance of
another person without which the individual would be unable to
perform the ADL) and stand-by assistance (that is, the presence
of another person within arm's reach of the individual that is
necessary to prevent, by physical intervention, injury to the
individual when performing the ADL).
---------------------------------------------------------------------------
\12\ Some portion of the period must be within the taxable year.
\13\ As under the present-law rules relating to long-term care,
ADLs are defined as eating, toileting, transferring, bathing, dressing,
and continence.
---------------------------------------------------------------------------
As an alternative to the two-ADL test described above, an
individual is considered to have long-term care needs if he or
she has been certified by a licensed physician as, for at least
180 consecutive days: (1) requiring substantial supervision to
be protected from threats to health and safety due to severe
cognitive impairment and (2) being unable to perform at least
one ADL or to engage in age appropriate activities as
determined under regulations prescribed by the Secretary of the
Treasury in consultation with the Secretary of Health and Human
Services.
In all cases, the required certification must be made
during the 39\1/2\ month period ending on the due date (without
extensions) for filing the return for the taxable year (or such
other period as the Secretary of the Treasury may prescribe).
Married couples may not claim the additional personal
exemption unless they file a joint return. An individual who is
legally separated from his or her spouse is not considered
married. In addition, married individuals who live apart during
the last six months of the year are not considered married if
certain requirements are satisfied.
The taxpayer is required to provide a correct physician
identification number (e.g., the Unique Physician
Identification Number that is currently required for Medicare
billing) for the certifying physician. Failure to provide
correct physician identification numbers is subject to the
mathematical error rule. Under that rule, the IRS may summarily
assess additional tax due without sending the individual a
notice of deficiency and giving the taxpayer an opportunity to
petition the Tax Court.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2002.
C. Expand Human Clinical Trials Expenses Qualifying for the Orphan Drug
Tax Credit (sec. 4 of the bill and sec. 45C of the Code)
PRESENT LAW
Taxpayers may claim a 50-percent credit for expenses
related to human clinical testing of drugs for the treatment of
certain rare diseases and conditions, generally those that
afflict less than 200,000 persons in the United States.
Qualifying expenses are those paid or incurred by the taxpayer
after the date on which the drug is designated as a potential
treatment for a rare disease or disorder by the Food and Drug
Administration (``FDA'') in accordance with section 526 of the
Federal Food, Drug, and Cosmetic Act.
REASONS FOR CHANGE
The Committee understands that approval for human clinical
testing and designation as a potential treatment for a rare
disease or disorder require separate reviews within the FDA. As
a result, in some cases, a taxpayer may be permitted to begin
human clinical testing prior to a drug being designated as a
potential treatment for a rare disease or disorder. If the
taxpayer delays human clinical testing in order to obtain the
benefits of the orphan drug tax credit, which currently may be
claimed only for expenses incurred after the drug is designated
as a potential treatment for a rare disease or disorder,
valuable time will have been lost and Congress's original
intent in enacting the orphan drug tax credit will have been
partially thwarted. Because taxpayers generally seek
designation of a potential drug as a treatment for a rare
disease or disorder at the time they seek approval to
clinically test such drugs, the Committee believes it is
appropriate to make such expenses related to human clinical
testing that the taxpayer incurs prior to FDA designation
eligible for the orphan drug tax credit to help speed cures to
such insidious diseases.
EXPLANATION OF PROVISION
The bill expands qualifying expenses to include those
expenses related to human clinical testing incurred after the
date on which the taxpayer files an application with the FDA
for designation of the drug under section 526 of the Federal
Food, Drug, and Cosmetic Act as a potential treatment for a
rare disease or disorder. As under present law, the credit may
only be claimed for such expenses related to drugs designated
as a potential treatment for a rare disease or disorder by the
FDA in accordance with section 526 of such Act.
EFFECTIVE DATE
The provision is effective for expenditures paid or
incurred after the date of enactment.
D. Add Vaccines Against Hepatitis A to the List of Taxable Vaccines
(sec. 5 of the bill and sec. 4131 of the Code)
PRESENT LAW
A manufacturer's excise tax is imposed at the rate of 75
cents per dose (sec. 4131) on the following vaccines routinely
recommended for administration to children: diphtheria,
pertussis, tetanus, measles, mumps, rubella, polio, HIB
(haemophilus influenza type B), hepatitis B, varicella (chicken
pox), rotavirus gastroenteritis, and streptococcus pneumoniae.
The tax applied to any vaccine that is a combination of vaccine
components equals 75 cents times the number of components in
the combined vaccine.
Amounts equal to net revenues from this excise tax are
deposited in the Vaccine Injury Compensation Trust Fund to
finance compensation awards under the Federal Vaccine Injury
Compensation Program for individuals who suffer certain
injuries following administration of the taxable vaccines. This
program provides a substitute Federal, ``no fault'' insurance
system for the State-law tort and private liability insurance
systems otherwise applicable to vaccine manufacturers. All
persons immunized after September 30, 1988, with covered
vaccines must pursue compensation under this Federal program
before bringing civil tort actions under State law.
REASONS FOR CHANGE
The Committee is aware that the Centers for Disease Control
and Prevention have recommended that children in 17 highly
endemic States be inoculated with a hepatitis A vaccine. The
population of children in the affected States exceeds 20
million. Several of the affected States mandate childhood
vaccination against hepatitis A. The Committee is aware that
the Advisory Commission on Childhood Vaccines has recommended
that the vaccine excise tax be extended to cover vaccines
against hepatitis A. For these reasons, the Committee believes
it is appropriate to include vaccines against hepatitis A as
part of the Vaccine Injury Compensation Program. Making the
hepatitis A vaccine taxable is a first step.\14\ In the
unfortunate event of an injury related to this vaccine,
families of injured children would be eligible for the no-fault
arbitration system established under the Vaccine Injury
Compensation Program rather than going to Federal Court to seek
compensatory redress.
---------------------------------------------------------------------------
\14\ The Committee recognizes that, to become covered under the
Vaccine Injury Compensation Program, the Secretary of Health and Human
Services also must list the hepatitis A vaccine on the Vaccine Injury
Table.
---------------------------------------------------------------------------
EXPLANATION OF PROVISION
The committee bill adds any vaccine against hepatitis A to
the list of taxable vaccines.
EFFECTIVE DATE
The provision is effective for vaccines sold beginning on
the first day of the first month beginning more than four weeks
after the date of enactment.
E. Adjustment of Employer Contributions to Combined Benefit Fund to
Reflect Medicare Prescription Drug Benefit (sec. 6 of the bill and sec.
9704 of the Code)
PRESENT LAW
Under present law, certain persons are required to pay
premiums to the United Mine Workers of America Combined Benefit
Fund (the ``Combined Fund'') established to provide health
benefits for certain coal industry workers.
REASONS FOR CHANGE
The Committee believes it appropriate to modify the premium
requirements under the Combined Fund to reflect the Medicare
prescription drug benefits adopted by the Committee in H.R.
4954, the ``Medicare Modernization and Prescription Drug Act of
2002'' on June 18, 2002.
EXPLANATION OF PROVISION
The provision provides that the trustees of the Combined
Fund are to decrease otherwise provided premiums for each year
in which a subsidy payment is provided in the Medicare
Modernization and Prescription Drug Act of 2002 in order to
place the Fund in the same financial position as if the subsidy
payment had not been received.
EFFECTIVE DATE
The provision applies to plan years beginning after the
date of enactment of the Medicare Modernization and
Prescription Drug Act of 2002.
F. Modifications to Medicare+Choice MSAs (sec. 7 of the bill and sec.
220 of the Code)
PRESENT LAW
In general
Present law provides for favorable tax treatment for Archer
medical savings accounts (``MSAs'') and Medicare+Choice
MSAs.\15\
---------------------------------------------------------------------------
\15\ In general, an MSA is a trust or custodial account created
exclusively for the benefit of the account holder and that meets
certain other requirements. The trustee of an MSA can be a bank,
insurance company, or other person as specified by the Secretary of the
Treasury.
---------------------------------------------------------------------------
Archer MSAs
Within limits, contributions to an Archer MSA are
deductible in determining adjusted gross income if made by an
eligible individual and are excludable from gross income and
wages for employment tax purposes if made by the employer of an
eligible individual. In general, eligible individuals are self-
employed individuals covered by a high deductible health plan
\16\ and employees covered under a high deductible health plan
of a small employer.\17\ The maximum contribution that can be
made to an Archer MSA for a year is 65 percent of the
deductible under the high deductible plan in the case of
individual coverage, and 75 percent of the deductible in the
case of family coverage. An eligible individual or the employer
of an eligible individual may contribute to an Archer MSA, but
not both.
---------------------------------------------------------------------------
\16\ A high deductible health plan is a plan that meets certain
requirements with respect to the amount of the annual deductible and
out-of-pocket limitations.
\17\ In order to be eligible for an MSA, the individual generally
cannot be covered under a health plan other than the high deductible
health plan.
---------------------------------------------------------------------------
Earnings on amounts in an Archer MSA are not currently
includible in income. Distributions from an Archer MSA for
medical expenses of the MSA account holder and his or her
spouse or dependents are not includible in income. For this
purpose, medical expenses are defined as under the itemized
deduction for medical expenses, except that medical expenses do
not include any insurance premiums other than premiums for
long-term care insurance, continuation coverage (``COBRA
coverage''), or premiums for coverage while an individual is
receiving unemployment compensation. Distributions not used for
medical expenses are subject to an additional 15-percent tax
unless the distribution is made after age 65, death, or
disability.
Individuals who are covered by Medicare are not eligible
for an Archer MSA, but may be eligible for a Medicare+Choice
MSA as described below.
The number of Archer MSAs that may be established is
limited. In general, no new Archer MSAs can be established
after 2003.
Medicare+Choice MSAs
Under present law, the Medicare program includes a variety
of health plan options called Medicare+Choice. One of the
Medicare+Choice options is a test program called the
Medicare+Choice medical savings account (``MSA'') plan. The
Medicare+Choice MSA plan consists of two parts, a
Medicare+Choice health policy and a Medicare+Choice MSA.
Individuals who elect the Medicare+Choice MSA plan select a
policy from a commercial insurer. The policy must be designed
to work as part of the Medicare+Choice MSA plan and must be
approved by Medicare. The premium for the policy is paid for by
Medicare.
In addition, individuals who elect the Medicare+Choice MSA
plan establish a Medicare+Choice MSA with a bank or other
institution that is registered with Medicare to set up
Medicare+Choice MSAs. The Secretary of Health and Human
Services makes a specified contribution directly into a
Medicare+Choice MSA designated by such individual based on the
policy the individual is covered by and certain other factors.
Only contributions by the Secretary of Health and Human
Services can be made to a Medicare+Choice MSA. Such
contributions are not included in the taxable income of
Medicare+Choice MSA holder.
Income earned on amounts held in a Medicare+Choice MSA is
not currently includible in taxable income. Withdrawals from a
Medicare+Choice MSA are excludable from taxable income if used
for the qualified medical expenses of the account holder.
Withdrawals that are not used for the qualified medical
expenses of the account holder are includible in income and may
be subject to an additional tax (described below).
Distributions from a Medicare+Choice MSA that are used to
pay the qualified medical expenses of the account holder are
excludable from taxable income regardless of whether the
account holder is enrolled in the Medicare+Choice MSA plan at
the time of the distribution. Qualified medical expenses of the
account holder are generally defined as under the rules
relating to the itemized deductions for medical expenses.
However, for this purpose, qualified medical expenses do not
include any insurance premiums other than premiums for long-
term care insurance, COBRA coverage, or premium for coverage
while an individual is receiving unemployment compensation. In
addition, expenses of the taxpayer's spouse and dependents are
not qualified medical expenses.
Distributions for purposes other than qualified medical
expenses are includible in taxable income. An additional tax of
50 percent applies to the extent the total distributions for
purposes other than qualified medical expenses in a taxable
year exceed the amount by which the value of Medicare+Choice
MSA as of December 31 of the preceding taxable year exceeds 60
percent of the deductible of the plan under which the
individual is covered. The additional tax does not apply to
distributions on account of the disability or death of the
account holder.
REASONS FOR CHANGE
The Committee believes it appropriate to increase the
attractiveness of the Medicare+Choice MSA program by allowing
individuals in such program to be eligible for Archer MSAs.
EXPLANATION OF PROVISION
The provision treats policies selected as part of the
Medicare+Choice MSA plan as high deductible plans for purposes
of Archer MSAs. Thus, individuals who have a Medicare+Choice
MSA plan also are eligible individuals for Archer MSA purposes
(such individuals are referred to as ``Medicare-eligible
individuals''). The maximum deductible contribution that may be
made to an Archer MSA with respect to a Medicare-eligible
individual is 100 percent of the deductible under the
Medicare+Choice MSA policy.
The proposal also allows employers or former employers of
Medicare-eligible individuals to make contributions to an
Archer MSA on behalf of such individuals. Total contributions
can not exceed the deductible amount.
The cap on Archer MSAs does not apply to MSAs established
by persons in Medicare+Choice. As under present law, the Archer
MSA program, including the program as applied to Medicare-
eligible individuals, expires at the end of 2003.
EFFECTIVE DATE
The provision is effective for taxable years beginning
after December 31, 2002.
III. VOTES OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statements are made
concerning the votes of the Committee on Ways and Means in its
consideration of the bill, H.R. 4946.
Motion To Report the Bill
The bill, H.R. 4946, as amended, was ordered favorably
reported by a rollcall vote of 29 yeas to 6 nays (with a quorum
being present). The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas..................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Crane...................... ........ ........ ......... Mr. Stark........ ........ X .........
Mr. Shaw....................... X ........ ......... Mr. Matsui....... ........ X .........
Mrs. Johnson................... X ........ ......... Mr. Coyne........ ........ ........ .........
Mr. Houghton................... X ........ ......... Mr. Levin........ X ........ .........
Mr. Herger..................... X ........ ......... Mr. Cardin....... X ........ .........
Mr. McCrery.................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Camp....................... X ........ ......... Mr. Kleczka...... X ........ .........
Mr. Ramstad.................... X ........ ......... Mr. Lewis (GA)... ........ X .........
Mr. Nussle..................... X ........ ......... Mr. Neal......... ........ ........ .........
Mr. Johnson.................... X ........ ......... Mr. McNulty...... ........ ........ .........
Ms. Dunn....................... X ........ ......... Mr. Jefferson.... ........ ........ .........
Mr. Collins.................... X ........ ......... Mr. Tanner....... X ........ .........
Mr. Portman.................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. English.................... X ........ ......... Mrs. Thurman..... X ........ .........
Mr. Watkins.................... X ........ ......... Mr. Doggett...... ........ ........ .........
Mr. Hayworth................... X ........ ......... Mr. Pomeroy...... X ........ .........
Mr. Weller..................... X ........ .........
Mr. Hulshof.................... X ........ .........
Mr. McInnis.................... X ........ .........
Mr. Lewis (KY)................. X ........ .........
Mr. Foley...................... X ........ .........
Mr. Brady...................... X ........ .........
Mr. Ryan....................... X ........ .........
----------------------------------------------------------------------------------------------------------------
Votes on Amendments
A rollcall vote was conducted on the following amendment to
the Chairman's amendment in the nature of a substitute.
An amendment by Mr. McCrery, which would provide retirees
with additional flexibility in obtaining health care for
retirees and their families by allowing employers or former
employers to make contributions to an Archer MSA on behalf of a
Medicare eligible individual, was agreed to by a roll call vote
of 23 yeas to 12 nays. The vote was as follows:
----------------------------------------------------------------------------------------------------------------
Representative Yea Nay Present Representative Yea Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Thomas..................... X ........ ......... Mr. Rangel....... ........ X .........
Mr. Crane...................... ........ ........ ......... Mr. Stark........ ........ X .........
Mr. Shaw....................... X ........ ......... Mr. Matsui....... ........ X .........
Mrs. Johnson................... X ........ ......... Mr. Coyne........ ........ ........ .........
Mr. Houghton................... X ........ ......... Mr. Levin........ ........ X .........
Mr. Herger..................... X ........ ......... Mr. Cardin....... ........ X .........
Mr. McCrery.................... X ........ ......... Mr. McDermott.... ........ X .........
Mr. Camp....................... X ........ ......... Mr. Kleczka...... ........ X .........
Mr. Ramstad.................... X ........ ......... Mr. Lewis (GA)... ........ X .........
Mr. Nussle..................... X ........ ......... Mr. Neal......... ........ ........ .........
Mr. Johnson.................... X ........ ......... Mr. McNulty...... ........ ........ .........
Ms. Dunn....................... X ........ ......... Mr. Jefferson.... ........ ........ .........
Mr. Collins.................... X ........ ......... Mr. Tanner....... ........ X .........
Mr. Portman.................... X ........ ......... Mr. Becerra...... ........ X .........
Mr. English.................... X ........ ......... Mrs. Thurman..... ........ X .........
Mr. Watkins.................... X ........ ......... Mr. Doggett...... ........ ........ .........
Mr. Hayworth................... X ........ ......... Mr. Pomeroy...... ........ X .........
Mr. Weller..................... X ........ .........
Mr. Hulshof.................... X ........ .........
Mr. McInnis.................... X ........ .........
Mr. Lewis (KY)................. X ........ .........
Mr. Foley...................... X ........ .........
Mr. Brady...................... X ........ .........
Mr. Ryan....................... X ........ .........
----------------------------------------------------------------------------------------------------------------
IV. BUDGET EFFECTS OF THE BILL
A. Committee Estimate of Budgetary Effects
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made concerning the effects on the budget of the revenue
provisions of the bill, H.R. 4946 as reported.
The bill is estimated to have the following effects on
budget receipts for fiscal years 2003-2007:
B. Statement Regarding New Budget Authority and Tax Expenditures Budget
Authority
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee states that the
bill involves no new or increased budget authority (as detailed
in the statement by the Congressional Budget Office (``CBO'');
see Part IV.C., below). The Committee further states that the
revenue reducing income tax provisions involve increased tax
expenditures. (See amounts in table in Part IV.A., above.)
C. Cost Estimate Prepared by the Congressional Budget Office
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the CBO, the following statement by CBO is
provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 25, 2002.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4946, the
Improving Access to Long-Term Care Act of 2002.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Andrew Shaw
(for federal revenues), and Alexis Ahlstrom (for federal
spending).
Sincerely,
Steven M. Lieberman
(For Dan L. Crippen, Director).
Enclosure.
CONGRESSIONAL BUDGET OFFICE COST ESTIMATE
H.R. 4946--Improving Access to Long-Term Care Act of 2002
Summary: H.R. 4946 would provide an above-the-line
deduction for a percentage of premiums for eligible long-term
care insurance contracts. The deduction would be available for
eligible long-term care insurance that covers the taxpayer, the
taxpayer's spouse or the taxpayer's dependents and for which
the taxpayer pays at least 50 percent of the cost of coverage.
The deduction would phase out for single taxpayers with
adjusted gross income (AGI) between $20,000 and $40,000 a year
and for married taxpayers filing jointly with AGI between
$40,000 and $80,000.
H.R. 4946 would also allow an additional personal exemption
for taxpayers who provide home care to dependents with long-
term care needs. This additional exemption would be phased in
starting at $500 in 2003 and 2004, increasing in $500
increments every other year thereafter until it reaches $2,500
in 2011. Starting in 2012, a full personal exemption would
apply.
In addition, the bill would add vaccines against Hepatitis
A to the list of taxable vaccines, expand human clinical trial
expenses qualifying for the orphan drug tax credit, and adjust
employer contributions to the Combined Benefit Fund to reflect
Medicare payments for prescription drug subsidies.
The Joint Committee on Taxation (JCT) and CBO estimate that
enacting H.R. 4946 would reduce revenues by $106 million in
2003, $1.5 billion over the 2003-2007 period, and $5.5 billion
over the 2003-2012 period. CBO estimates that the bill would
increase direct spending by $5 million in 2003, $34 million
over the 2003-2007 period, and $70 million over the 2003-2012
period. Because the bill would affect revenues and direct
spending, pay-as-you-go procedures would apply. JCT and CBO
have determined that the bill contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act (UMRA), and would not affect the budgets of state,
local, or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 4946 is shown in the following table.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Estimated Revenues.......................................... 0 -106 -250 -329 -359 -455
CHANGES IN DIRECT SPENDING
Estimated Budget Authority.................................. 0 5 7 7 7 7
Estimated Outlays........................................... 0 5 7 7 7 7
----------------------------------------------------------------------------------------------------------------
Basis of estimate
Revenues
All revenue estimates for H.R. 4946 were provided by JCT
except for the provision adjusting employer contributions to
the Combined Benefit Fund to reflect Medicare prescription drug
subsidy payments. CBO estimates the revenue effect of that
provision, by itself, would be zero because Medicare does not
have an outpatient prescription drug benefit under current law.
However, H.R. 4946, if enacted concurrently with or after the
establishment of a Medicare prescription drug benefit, would
decrease revenues in the form of health care premiums paid to
the Combined Benefit Fund by certain coal companies.
The Combined Benefit Fund was created in 1992 to provide
health benefits to retired coal industry workers. Under current
law, the premiums coal companies pay to the fund on behalf of
retired workers can be increased in the event that Medicare
reduces its benefits to ensure that the same level of benefits
is maintained. In contrast, there is not mechanism to decrease
premiums if Medicare adds benefits. This provision would
require the fund to reduce the premiums that coal companies pay
to the fund by the amount the fund would receive from Medicare
for the prescription drug benefit. The estimate assumes that
the fund would make arrangements with Medicare to enroll all
Medicare-eligible fund participants in the drug benefit and
that the fund would pay the premiums and cost-sharing
associated with participation in that plan.
CBO estimates the cost of implementing this provision in
conjunction with the prescription drug benefit specified in
H.R. 4954 (as ordered reported by the Committee on Ways and
Means on June 19) would be $35 million over the 2003-2007
period and $92 million over the 2003-2012 period. (Those
estimates are not included in the above table, which provides
estimated changes in revenues relative to current law only.)
Direct Spending
The Hepatitis A vaccine tax provision would require vaccine
buyers to pay an excise tax on each dose purchased. Medicaid is
a major purchaser of vaccines through the Vaccines for Children
program, administered through the Centers for Disease Control
and Prevention (CDC). CBO assumes that Medicaid purchases
approximately half of the Hepatitis A vaccines sold annually.
Based on estimates provided by JCT, CBO expects that
implementing H.R. 4946 would cost the Medicaid program about $3
million in 2003 and $48 million over the 2003-2012 period.
Receipts from the tax would go to the Vaccine Injury
Compensation Fund (VICF), which is administered by the Health
Resources and Services Administration (HRSA). The fund uses tax
revenues to pay compensation to claimants injured by vaccines.
Once a vaccine becomes taxable, injuries attributed to its use
become compensable through this fund. Based on information
provided by HRSA and CDC, we assume there will be few
compensable claims related to the Hepatitis A vaccine. CBO
estimates the provision would increase outlays from the VICF by
$2 million in 2003 and $22 million over the 2003-2012 period.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go procedures are shown in the following table.
For the purposes of enforcing pay-as-you-go procedures, only
the effects through 2006 are counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts.................................. 0 -106 -250 -329 -359 -455 -498 -607 -662 -923 -1,297
Changes in outlays................................... 0 5 7 7 7 7 7 7 7 7 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: JCT and CBO
have determined that the bill contains no intergovernmental or
private-sector mandates as defined in UMRA and would not affect
the budgets of state, local, or tribal governments.
Estimate prepared by: Federal revenues: Andrew Shaw;
Federal outlays: Alexis Ahlstrom; impact on state, local, and
tribal governments: Susan Sieg Tompkins; impact on the private
sector: Stuart Hagan.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis.
Peter H. Fontaine, Deputy Assistant Director for Budget
Analysis.
V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. Committee Oversight Findings and Recommendations
With respect to clause 3(c)(1) of rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee advises that it was a result of the Committee's
oversight review concerning the tax burden on individual
taxpayers and tax-related health issues that the Committee
concluded that it is appropriate and timely to enact the
revenue provisions included in the bill as reported.
B. Statement of General Performance Goals and Objectives
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
bill contains no measure that authorizes funding, so no
statement of general performance goals and objectives for which
any measure authorizes funding is required.
C. Constitutional Authority Statement
With respect to clause 3(d)(1) of the rule XIII of the
Rules of the House of Representatives (relating to
Constitutional Authority), the Committee states that the
Committee's action in reporting this bill is derived from
Article I of the Constitution, Section 8 (``The Congress shall
have Power to lay and collect Taxes, Duties, Imposts and
Excises . . . ''), and from the 16th Amendment to the
Constitution.
D. Information Relating to Unfunded Mandates
This information is provided in accordance with section 423
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, and tribal
governments.
E. Applicability of House Rule XXI 5(b)
Rule XXI 5(b) of the Rules of the House of Representatives
provides, in part, that ``A bill or joint resolution,
amendment, or conference report carrying a Federal income tax
rate increase may not be considered as passed or agreed to
unless so determined by a vote of not less than three-fifths of
the Members voting, a quorum being present.'' The Committee has
carefully reviewed the provisions of the bill, and states that
the provisions of the bill do not involve any Federal income
tax rate increases within the meaning of the rule.
F. Tax Complexity Analysis
Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 (the ``IRS Reform Act'') requires the
Joint Committee on Taxation (in consultation with the Internal
Revenue Service and the Department of Treasury) to provide a
tax complexity analysis. The complexity analysis is required
for all legislation reported by the House Committee on Ways and
Means, the Senate Committee on Finance, or any committee of
conference if the legislation includes a provision that
directly or indirectly amends the Internal Revenue Code and has
widespread applicability to individuals or small businesses.
The staff of the Joint Committee on Taxation has determined
that a complexity analysis is not required under section
4022(b) of the IRS Reform Act because the bill contains no
provisions that amend the Internal Revenue Code and that have
``widespread applicability'' to individuals or small
businesses.
VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
INTERNAL REVENUE CODE OF 1986
Subtitle A--Income Taxes
* * * * * * *
CHAPTER 1--NORMAL TAXES AND SURTAXES
* * * * * * *
Subchapter A--Determination of Tax Liability
* * * * * * *
PART I--TAX ON INDIVIDUALS
* * * * * * *
SEC. 1. TAX IMPOSED.
(a) * * *
* * * * * * *
(f) Adjustments in Tax Tables so that Inflation Will Not
Result in Tax Increases.--
(1) * * *
* * * * * * *
(6) Rounding.--
(A) In general.--If any increase determined
under paragraph (2)(A), section 63(c)(4),
section 68(b)(2) or section [151(d)(4)]
151(e)(4) is not a multiple of $50, such
increase shall be rounded to the next lowest
multiple of $50.
(B) Table for married individuals filing
separately.--In the case of a married
individual filing a separate return,
subparagraph (A) (other than with respect to
sections 63(c)(4) and [151(d)(4)(A)]
151(e)(4)(A)) shall be applied by substituting
``$25'' for ``$50'' each place it appears.
* * * * * * *
PART IV--CREDITS AGAINST TAX
* * * * * * *
Subpart D--Business Related Credits
* * * * * * *
SEC. 45C. CLINICAL TESTING EXPENSES FOR CERTAIN DRUGS FOR RARE DISEASES
OR CONDITIONS.
(a) * * *
(b) Qualified Clinical Testing Expenses.--For purposes of
this section--
(1) * * *
(2) Clinical testing.--
(A) * * *
* * * * * * *
(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.
* * * * * * *
Subchapter B--Computation of Taxable Income
* * * * * * *
PART I--DEFINITION OF GROSS INCOME, ADJUSTED GROSS INCOME, TAXABLE
INCOME, ETC.
* * * * * * *
SEC. 62. ADJUSTED GROSS INCOME DEFINED.
(a) General Rule.--For purposes of this subtitle, the term
``adjusted gross income'' means, in the case of an individual,
gross income minus the following deductions:
(1) * * *
* * * * * * *
(19) Premiums on qualified long-term care insurance
contracts.--The deduction allowed by section 223.
* * * * * * *
PART II--ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
* * * * * * *
SEC. 86. SOCIAL SECURITY AND TIER 1 RAILROAD RETIREMENT BENEFITS.
(a) * * *
(b) Taxpayers to Whom Subsection (a) Applies.--
(1) * * *
(2) Modified adjusted gross income.--For purposes of
this subsection, the term ``modified adjusted gross
income'' means adjusted gross income--
(A) determined without regard to this section
and sections 135, 137, 221, 222, 223, 911, 931,
and 933, and
* * * * * * *
PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
* * * * * * *
SEC. 135. INCOME FROM UNITED STATES SAVINGS BONDS USED TO PAY HIGHER
EDUCATION TUITION AND FEES.
(a) * * *
* * * * * * *
(c) Definitions.--For purposes of this section--
(1) * * *
* * * * * * *
(4) Modified adjusted gross income.--The term
``modified adjusted gross income'' means the adjusted
gross income of the taxpayer for the taxable year
determined--
(A) without regard to this section and
sections 137, 221, 222, 223, 911, 931, and 933,
and
* * * * * * *
SEC. 137. ADOPTION ASSISTANCE PROGRAMS.
(a) * * *
(b) Limitations.--
(1) * * *
* * * * * * *
(3) Determination of adjusted gross income.--For
purposes of paragraph (2), adjusted gross income shall
be determined--
(A) without regard to this section and
sections 221, 222, 223, 911, 931, and 933, and
* * * * * * *
PART V--DEDUCTIONS FOR PERSONAL EXEMPTIONS
* * * * * * *
SEC. 151. ALLOWANCE OF DEDUCTIONS FOR PERSONAL EXEMPTIONS.
(a) * * *
* * * * * * *
(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 be 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.
[(d)] (e) Exception Amount.--For purposes of this section--
(1) * * *
* * * * * * *
[(e)] (f) Identifying Information Required.--No exemption
shall be allowed under this section with respect to any
individual unless the TIN of such individual is included on the
return claiming the exemption.
* * * * * * *
PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS
Sec. 211. Allowance of deductions.
* * * * * * *
[Sec. 223. Cross reference.]
Sec. 223. Premiums on qualified long-term care insurance
contracts.
Sec. 224. Cross reference.
* * * * * * *
SEC. 219. RETIREMENT SAVINGS.
(a) * * *
* * * * * * *
(g) Limitation on Deduction for Active Participants in
Certain Pension Plans.--
(1) * * *
* * * * * * *
(3) Adjusted gross income; applicable dollar
amount.--For purposes of this subsection--
(A) Adjusted gross income.--Adjusted gross
income of any taxpayer shall be determined--
(i) * * *
(ii) without regard to sections 135,
137, 221, 222, 223, and 911 or the
deduction allowable under this section.
* * * * * * *
SEC. 220. ARCHER MSAS.
(a) * * *
* * * * * * *
(c) Definitions.--For purposes of this section--
(1) * * *
(2) High deductible health plan.--
(A) * * *
(B) Special rules.--
(i) * * *
* * * * * * *
(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.
* * * * * * *
SEC. 221. INTEREST ON EDUCATION LOANS.
(a) * * *
(b) Maximum Deduction.--
(1) * * *
(2) Limitation based on modified adjusted gross
income.--
(A) * * *
* * * * * * *
(C) Modified adjusted gross income.--The term
``modified adjusted gross income'' means
adjusted gross income determined--
(i) without regard to this section
and sections 222, 223, 911, 931, and
933, and
* * * * * * *
SEC. 222. QUALIFIED TUITION AND RELATED EXPENSES.
(a) * * *
(b) Dollar Limitations.--
(1) * * *
(2) Applicable dollar limit.--
(A) * * *
* * * * * * *
(C) Adjusted gross income.--For purposes of
this paragraph, adjusted gross income shall be
determined--
(i) without regard to this section
and sections 223, 911, 931, and 933,
and
* * * * * * *
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 be 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.
SEC. [223.] 224. CROSS REFERENCE.
For deductions in respect of a decedent, see section 691.
* * * * * * *
Subchapter E--Accounting periods and Methods of Accounting
* * * * * * *
PART II--METHODS OF ACCOUNTING
* * * * * * *
Subpart C--Taxable Year for Which Deductions Taken
* * * * * * *
SEC. 469. PASSIVE ACTIVITY LOSSES AND CREDITS LIMITED.
(a) * * *
* * * * * * *
(i) $25,000 Offset for Rental Real Estate Activities.--
(1) * * *
* * * * * * *
(3) Phase-out of exemption.--
(A) * * *
* * * * * * *
(F) Adjusted gross income.--For purposes of
this paragraph, adjusted gross income shall be
determined without regard to--
(i) * * *
* * * * * * *
(iii) the amounts allowable as a
deduction under sections 219, 221, [and
222] 222, and 223, and
* * * * * * *
Subtitle C--Employment Taxes
* * * * * * *
CHAPTER 24--COLLECTION OF INCOME TAX AT SOURCE ON WAGES
Subchapter A--Withholding from Wages
* * * * * * *
SEC. 3402. INCOME TAX COLLECTED AT SOURCE.
(a) * * *
* * * * * * *
(f) Withholding Exemptions.--
(1) In general.--An employee receiving wages shall on
any day be entitled to the following withholding
exemptions:
(A) an exemption for himself unless he is an
individual described in section [151(d)(2)]
151(e)(2);
* * * * * * *
(r) Extension of Withholding to Certain Taxable Payments of
Indian Casino Profits.--
(1) * * *
(2) Exception.--The tax imposed by paragraph (1)
shall not apply to any payment to the extent that the
payment, when annualized, does not exceed an amount
equal to the sum of--
(A) the basic standard deduction (as defined
in section 63(c)) for an individual to whom
section 63(c)(2)(C) applies, and
(B) the exemption amount (as defined in
section [151(d)] 151(e)).
* * * * * * *
Subtitle D--Miscellaneous Excise Taxes
* * * * * * *
CHAPTER 32--MANUFACTURERS EXCISE TAXES
* * * * * * *
Subchapter C--Certain Vaccines
* * * * * * *
SEC. 4132. DEFINITIONS AND SPECIAL RULES.
(a) Definitions Relating to Taxable Vaccines.--For purposes
of this subchapter--
(1) Taxable vaccine.--The term ``taxable vaccine''
means any of the following vaccines which are
manufactured or produced in the United States or
entered into the United States for consumption, use, or
warehousing:
(A) * * *
* * * * * * *
(I) Any vaccine against hepatitis A.
[(I)] (J) Any vaccine against hepatitis B.
[(J)] (K) Any vaccine against chicken pox.
[(K)] (L) Any vaccine against rotavirus
gastroenteritis.
[(L)] (M) Any conjugate vaccine against
streptococcus pneumoniae.
* * * * * * *
Subtitle F--Procedure and Aministration
* * * * * * *
CHAPTER 61--INFORMATION AND RETURNS
* * * * * * *
Subchapter A--Returns and Records
* * * * * * *
PART II--TAX RETURNS OR STATEMENTS
* * * * * * *
Subpart B--Income Tax Returns
* * * * * * *
SEC. 6012. PERSONS REQUIRED TO MAKE RETURNS OF INCOME.
(a) General Rule.--Returns with respect to income taxes under
subtitle A shall be made by the following:
(1)(A) * * *
* * * * * * *
(D) For purposes of this subsection--
(i) * * *
(ii) The term ``exemption amount'' has the
meaning given such term by section [151(d)]
151(e). In the case of an individual described
in section [151(d)(2)] 151(e)(2), the exemption
amount shall be zero.
* * * * * * *
SEC. 6013. JOINT RETURNS OF INCOME TAX BY HUSBAND AND WIFE.
(a) * * *
(b) Joint Return After Filing Separate Return.--
(1) * * *
* * * * * * *
(3) When return deemed filed.--
(A) Assessment and collection.--For purposes
of section 6501 (relating to periods of
limitations on assessment and collection), and
for purposes of section 6651 (relating to
delinquent returns), a joint return made under
this subsection shall be deemed to have been
filed--
(i) * * *
* * * * * * *
For purposes of this subparagraph, the term ``exemption
amount'' has the meaning given to such term by section [151(d)]
151(e). For purposes of clauses (ii) and (iii), if the spouse
whose gross income is being compared to the exemption amount is
65 or over, such clauses shall be applied by substituting ``the
sum of the exemption amount and the additional standard
deduction under section 63(c)(2) by reason of section
63(f)(1)(A)'' for ``the exemption amount''.
* * * * * * *
Subtitle J--Coal Industry Health Benefits
* * * * * * *
CHAPTER 99--COAL INDUSTRY HEALTH BENEFITS
* * * * * * *
Subchapter B--Combined Benefit Fund
* * * * * * *
PART II--FINANCING
* * * * * * *
SEC. 9704. LIABILITY OF ASSIGNED OPERATORS.
(a) * * *
(b) Health Benefit premium.--For purposes of this chapter--
(1) * * *
* * * * * * *
(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.
* * * * * * *