For purposes of this title-
For purposes of this title-
The term "qualified long-term care insurance contract" means any insurance contract if-
other than as provided in subparagraph (E) or paragraph (2)(C),
A contract shall not fail to be described in subparagraph (A) or (B) of paragraph (1) by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
Paragraph (1)(E) shall not apply to any refund on the death of the insured, or on a complete surrender or cancellation of the contract, which cannot exceed the aggregate premiums paid under the contract. Any refund on a complete surrender or cancellation of the contract shall be includible in gross income to the extent that any deduction or exclusion was allowable with respect to the premiums.
For purposes of this section-
The term "qualified long-term care services" means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services, which-
The term "chronically ill individual" means any individual who has been certified by a licensed health care practitioner as-
Such term shall not include any individual otherwise meeting the requirements of the preceding sentence unless within the preceding 12-month period a licensed health care practitioner has certified that such individual meets such requirements.
For purposes of subparagraph (A), each of the following is an activity of daily living:
A contract shall not be treated as a qualified long-term care insurance contract unless the determination of whether an individual is a chronically ill individual described in subparagraph (A)(i) takes into account at least 5 of such activities.
The term "maintenance or personal care services" means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment).
The term "licensed health care practitioner" means any physician (as defined in section 1861(r)(1) of the Social Security Act) and any registered professional nurse, licensed social worker, or other individual who meets such requirements as may be prescribed by the Secretary.
If the aggregate of-
exceeds the per diem limitation for such period, such excess shall be includible in gross income without regard to section 72. A payment shall not be taken into account under subparagraph (B) if the insured is a terminally ill individual (as defined in section 101(g)) at the time the payment is received.
For purposes of paragraph (1), the per diem limitation for any period is an amount equal to the excess (if any) of-
For purposes of this subsection-
The dollar amount in effect under this subsection shall be $175 per day (or the equivalent amount in the case of payments on another periodic basis).
In the case of a calendar year after 1997, the dollar amount contained in paragraph (4) shall be increased at the same time and in the same manner as amounts are increased pursuant to section 213(d)(10).
For purposes of this subsection, the term "periodic payment" means any payment (whether on a periodic basis or otherwise) made without regard to the extent of the costs incurred by the payee for qualified long-term care services.
Except as otherwise provided in regulations prescribed by the Secretary, in the case of any long-term care insurance coverage (whether or not qualified) provided by a rider on or as part of a life insurance contract or an annuity contract-
This title shall apply as if the portion of the contract providing such coverage is a separate contract.
No deduction shall be allowed under section 213(a) for any payment made for coverage under a qualified long-term care insurance contract if such payment is made as a charge against the cash surrender value of a life insurance contract or the cash value of an annuity contract.
For purposes of this subsection, the term "portion" means only the terms and benefits under a life insurance contract or annuity contract that are in addition to the terms and benefits under the contract without regard to long-term care insurance coverage.
For purposes of this subsection, none of the following shall be treated as an annuity contract:
Any dividend described in section 404(k) which is received by a participant or beneficiary shall, for purposes of this paragraph, be treated as paid under a separate contract to which subparagraph (B)(i) applies.
If-
such plan shall be treated as a qualified long-term care insurance contract for purposes of this title.
For purposes of paragraph (1), the term "State long-term care plan" means any plan-
The requirements of this subsection are met with respect to any contract if the contract meets-
The requirements of this paragraph are met with respect to any contract if such contract meets-
The following requirements of the model regulation:
The following requirements of the model Act:
For purposes of this paragraph-
The terms "model regulation" and "model Act" mean the long-term care insurance model regulation, and the long-term care insurance model Act, respectively, promulgated by the National Association of Insurance Commissioners (as adopted as of January 1993).
Any provision of the model regulation or model Act listed under clause (i) or (ii) of subparagraph (A) shall be treated as including any other provision of such regulation or Act necessary to implement the provision.
For purposes of this section and section 4980C, the determination of whether any requirement of a model regulation or the model Act has been met shall be made by the Secretary.
The requirement of this paragraph is met with respect to any contract if such contract meets the requirements of section 4980C(d).
The requirements of this paragraph are met with respect to any level premium contract, if the issuer of such contract offers to the policyholder, including any group policyholder, a nonforfeiture provision meeting the requirements of subparagraph (B).
The nonforfeiture provision required under subparagraph (A) shall meet the following requirements:
For coordination of the requirements of this subsection with State requirements, see section 4980C(f).
26 U.S.C. § 7702B
Inflation Adjusted Items for Certain Years For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.
EDITORIAL NOTES
REFERENCES IN TEXTThe Social Security Act, referred to in subsec. (b)(1)(B), (2)(B)(i), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title XVIII of the Act is classified generally to subchapter XVIII (§1395 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. Section 1861(r)(1) of the Act is classified to section 1395x(r)(1) of Title 42. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.
AMENDMENTS2006-Subsec. (e). Pub. L. 109-280, §844(c), amended subsec. (e) generally. Prior to amendment, subsec. (e) related to treatment of coverage provided as part of a life insurance contract.Subsec. (e)(1). Pub. L. 109-280, §844(f), substituted "title" for "section". 2004-Subsec. (f)(2)(C)(iii). Pub. L. 108-311 substituted "subparagraphs (A) through (G) of section 152(d)(2)" for "paragraphs (1) through (8) of section 152(a)".1998-Subsec. (e)(2). Pub. L. 105-206 inserted "section" after "Application of" in heading.1997-Subsec. (c)(2)(B). Pub. L. 105-34, §1602(b), inserted "described in subparagraph (A)(i)" after "chronically ill individual" in concluding provisions.Subsec. (g)(4)(B)(ii), (iii)(IV). Pub. L. 105-34, §1602(e), substituted "appropriate State regulatory agency" for "Secretary". 1996-Subsec. (g). Pub. L. 104-191, §325, added subsec. (g).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109-280 applicable to contracts issued after Dec. 31, 1996, but only with respect to taxable years beginning after Dec. 31, 2009, except as otherwise provided, see section 844(g)(1) of Pub. L. 109-280, set out as a note under section 72 of this title.Amendment by section 844(f) of Pub. L. 109-280 effective as if included in section 321(a) of Pub. L. 104-191, see section 844(g)(5) of Pub. L. 109-280, set out as a note under section 72 of this title.
EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108-311 applicable to taxable years beginning after Dec. 31, 2004, see section 208 of Pub. L. 108-311, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105-34 effective as if included in the provisions of the Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191, to which such amendment relates, see section 1602(i) of Pub. L. 105-34, set out as a note under section 26 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT Amendment by section 325 of Pub. L. 104-191 applicable to contracts issued after Dec. 31, 1996, with provisions of section 321(f) of Pub. L. 104-191, set out as an Effective Date note below, applicable to such contracts, see section 327 of Pub. L. 104-191, set out as an Effective Date note under section 4980C of this title.
EFFECTIVE DATE Pub. L. 104-191, §321(f), Aug. 21, 1996, 110 Stat. 2059, provided that: "(1) GENERAL EFFECTIVE DATE.-"(A) IN GENERAL.-Except as provided in subparagraph (B), the amendments made by this section [enacting this section and amending sections 106, 125, 807, and 4980B of this title, section 1167 of Title 29, Labor, and section 300bb-8 of Title 42, The Public Health and Welfare] shall apply to contracts issued after December 31, 1996."(B) RESERVE METHOD.-The amendment made by subsection (b) [amending section 807 of this title] shall apply to contracts issued after December 31, 1997."(2) CONTINUATION OF EXISTING POLICIES.-In the case of any contract issued before January 1, 1997, which met the long-term care insurance requirements of the State in which the contract was sitused [sic] at the time the contract was issued-"(A) such contract shall be treated for purposes of the Internal Revenue Code of 1986 as a qualified long-term care insurance contract (as defined in section 7702B(b) of such Code), and"(B) services provided under, or reimbursed by, such contract shall be treated for such purposes as qualified long-term care services (as defined in section 7702B(c) of such Code).In the case of an individual who is covered on December 31, 1996, under a State long-term care plan (as defined in section 7702B(f)(2) of such Code), the terms of such plan on such date shall be treated for purposes of the preceding sentence as a contract issued on such date which met the long-term care insurance requirements of such State. "(3) EXCHANGES OF EXISTING POLICIES.-If, after the date of enactment of this Act [Aug. 21, 1996] and before January 1, 1998, a contract providing for long-term care insurance coverage is exchanged solely for a qualified long-term care insurance contract (as defined in section 7702B(b) of such Code), no gain or loss shall be recognized on the exchange. If, in addition to a qualified long-term care insurance contract, money or other property is received in the exchange, then any gain shall be recognized to the extent of the sum of the money and the fair market value of the other property received. For purposes of this paragraph, the cancellation of a contract providing for long-term care insurance coverage and reinvestment of the cancellation proceeds in a qualified long-term care insurance contract within 60 days thereafter shall be treated as an exchange."(4) ISSUANCE OF CERTAIN RIDERS PERMITTED.-For purposes of applying sections 101(f), 7702, and 7702A of the Internal Revenue Code of 1986 to any contract-"(A) the issuance of a rider which is treated as a qualified long-term care insurance contract under section 7702B, and"(B) the addition of any provision required to conform any other long-term care rider to be so treated,shall not be treated as a modification or material change of such contract."(5) APPLICATION OF PER DIEM LIMITATION TO EXISTING CONTRACTS.-The amount of per diem payments made under a contract issued on or before July 31, 1996, with respect to an insured which are excludable from gross income by reason of section 7702B of the Internal Revenue Code of 1986 (as added by this section) shall not be reduced under subsection (d)(2)(B) thereof by reason of reimbursements received under a contract issued on or before such date. The preceding sentence shall cease to apply as of the date (after July 31, 1996) such contract is exchanged or there is any contract modification which results in an increase in the amount of such per diem payments or the amount of such reimbursements."
LONG-TERM CARE STUDY REQUEST Pub. L. 104-191, §321(g), Aug. 21, 1996, 110 Stat. 2060, related to a study of the marketing and other effects of per diem limits on certain types of long-term care policies, and provided that if the National Association of Insurance Commissioners agreed to the study request by Congress, the Association would report the results of the study not later than 2 years after accepting the request.
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.