Committee on Ways and Means
Summary of H.R. 4946
Improving Access to Long-Term Care Act of 2002

H.R. 4946 provides immediate tax relief to assist individuals in acquiring and maintaining long-term health care for themselves, their spouse and their dependents. 

• Under current law, individuals may claim an itemized deduction for the cost of eligible qualified long-term care insurance premiums, but only to the extent that such eligible long-term care premiums, combined with the taxpayer’s additional medical expenses, exceeds 7.5 percent of adjusted gross income.

• This bill provides an above-the-line deduction for a percentage of eligible long-term care premiums for which the taxpayer pays at least 50 percent of the cost of coverage.  The deduction is available for eligible long-term care insurance that covers the taxpayer, the taxpayer’s spouse or the taxpayer’s dependents.
• The deduction is available to individuals with adjusted gross income between $20,000 and $40,000 (twice the amount for married filing jointly).  This amount will be adjusted annually for inflation.  This bill provides substantial targeted relief for those taxpayers who really need it.
• The Chairman’s amendment provides that when the preceding income limitation is adjusted for inflation, the adjusted amount will be rounded to the nearest $1,000.
• The Joint Committee on Taxation estimates the cost of this provision to be $648 million over 5 years and 2.4 billion over 10 years.

• Under current law, individuals are entitled to a personal exemption deduction ($3,000 in 2002) for the taxpayer, the taxpayer’s spouse and each dependent.  The personal exemption amount is phased-out for taxpayer’s with adjusted gross income above certain thresholds ($137,300 for single filers, $206,000 for joint filers and $171,650 for heads of household). 

• This bill provides the taxpayer with an additional personal exemption for each qualified family member with long-term care needs.
• The exemption is phased-in as follows: $500 in 2003 and 2004, $1,000 for 2005 and 2006, $1,500 for 2007 and 2008, $2,000 for 2009 and 2010, $2,500 for 2011 and a full personal exemption ($3,000 adjusted for inflation) will be allowed in 2012 and thereafter.
• This bill provides immediate tax relief to those taxpayers who assume the responsibility of providing for the care and support of individuals with long-term care needs.
• The Joint Committee on Taxation estimates the cost of this provision to be $787 million over 5 years and $2.9 billion over 10 years.