,i #aafth ,,congress #b;d ,session ,h4 ,r4 #eieh ,,in ,,the ,,house ,,of ,,representatives ,february #be1 #bjbj,mr4 ,higgins of ,new ,york 7for himself and ,mr4 ,steube7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to create senior health planning accounts funded by the proceeds of the sale or assignment of life insurance contracts4 #a4 ,short title ,this ,act may be cited as the ,senior ,health ,planning ,account ,act4 #b4 ,senior health planning account 7a7 ,in general ,part ,,iii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #aci;,g the following new section3 #aci;,h4 ,senior health planning account 7a7 ,exclusion of contributions of gain from sales of life insurance contracts ,the amount of gain from the sale or assignment of a life insurance contract of a taxpayer shall be reduced 7but not below zero7 by the amount of contributions to a senior health planning account made by such taxpayer during the #cj-;day period beginning on the date of such sale or assignment4 7b7 ,tax ,treatment of ,senior ,health ,planning ,account 7#a7 ,in general ,a senior health planning account is exempt from taxation under this subtitle unless such account has ceased to be a senior health planning account4 ,notwithstanding the preceding sentence1 any such account is subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,account terminations ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to senior health planning accounts1 and any amount treated as distributed under such rules shall be treated as not used to pay qualified health care expenses4 7#c7 ,tax treatment of distributions 7,a7 ,amounts used for qualified health care expenses ,any amount paid or distributed out of a senior health planning account which is used exclusively to pay qualified health care expenses of the account beneficiary or the account beneficiary's spouse shall not be includible in gross income4 7,b7 ,inclusion of amounts not used for qualified health care expenses ,any amount paid or distributed out of a senior health planning account which is not used to pay the qualified health care expenses of the account beneficiary or the account beneficiary's spouse shall be included in the gross income of such beneficiary4 7,c7 ,additional tax on distributions not used for qualified health care expenses ,the tax imposed by this chapter on the account beneficiary for any taxable year in which there is a payment or distribution from a senior health planning account of such beneficiary which is includible in gross income under subparagraph 7,b7 shall be increased by #bj percent of the amount which is so includible4 ,this subparagraph shall not apply if the payment or distribution is made after the account beneficiary-- 7i7 dies1 7ii7 becomes a terminally ill individual 7as such term is defined in section #aja7;g77#d77;,a771 or 7iii7 becomes a chronically ill individual 7as such term is defined in section #aja7;g77#d77;,b774 7#d7 ,coordination with medical expense deduction ,for purposes of determining the amount of the deduction under section #bac1 any payment or distribution out of a senior health planning account for qualified health care expenses shall not be treated as an expense paid for medical care4 7#e7 ,transfer of account incident to divorce ,the transfer of an individual's interest in a senior health planning account to an individual's spouse or former spouse under a divorce or separation instrument described in subparagraph 7,a7 of section #ga7;b77#b7 shall not be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle1 and such interest shall1 after such transfer1 be treated as a senior health planning account with respect to which such spouse is the account beneficiary4 7#f7 ,treatment after death of account beneficiary 7,a7 ,treatment if designated beneficiary is spouse ,if the account beneficiary's surviving spouse acquires such beneficiary's interest in a senior health planning account by reason of being the designated beneficiary of such account at the death of the account beneficiary1 such senior health planning account shall be treated as if the spouse were the account beneficiary4 7,b7 ,other cases 7i7 ,in general ,if1 by reason of the death of the account beneficiary1 any person acquires the account beneficiary's interest in a senior health planning account in a case to which subparagraph 7,a7 does not apply-- 7,i7 such account shall cease to be a senior health planning account as of the date of death1 and 7,,ii7 an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the estate of such beneficiary1 in such person's gross income for the taxable year which includes such date1 or if such person is the estate of such beneficiary1 in such beneficiary's gross income for the last taxable year of such beneficiary4 7ii7 ,special rules 7,i7 ,reduction of inclusion for predeath expenses ,the amount includible in gross income under clause 7i7 by any person 7other than the estate7 shall be reduced by the amount of qualified health care expenses which were incurred by the decedent before the date of the decedent's death and paid by such person within #a year after such date4 7,,ii7 ,deduction for estate taxes ,an appropriate deduction shall be allowed under section #fia7;c7 to any person 7other than the decedent or the decedent's spouse7 with respect to amounts included in gross income under clause 7i7 by such person4 7c7 ,definitions ,for purposes of this subsection-- 7#a7 ,account beneficiary ,the term account beneficiary means1 with respect to a senior health planning account1 the individual on whose behalf such account was established4 7#b7 ,senior health planning account ,the term senior health planning account means a trust created or organized in the ,united ,states as a senior health planning account1 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,no contribution will be accepted unless it is in cash and in consideration of the sale or assignment of any portion of the death benefits under a life insurance contract on the life of the account beneficiary4 7,b7 ,the trustee is a bank 7as defined in section #djh7n771 an insurance company 7as defined in section #haf71 or another person who demonstrates to the satisfaction of the ,secretary that the manner in which such person will administer the trust will be consistent with the requirements of this section4 7,c7 ,no part of the trust assets will be invested in life insurance contracts4 7,d7 ,the assets of the trust will not be commingled with other property except in a common trust fund or common investment fund4 7,e7 ,the interest of an individual in the balance in his account is nonforfeitable4 7#c7 ,qualified health care expenses ,the term qualified health care expenses means1 with respect to an account beneficiary1 amounts paid by such beneficiary for medical care 7as defined in section #bac7;d77 for such individual and the spouse of such individual1 but only to the extent such amounts are not compensated for by insurance or otherwise4 4 7b7 ,clerical amendment ,the table of sections for part ,,iii of subchapter ,b of chapter #a of such ,code is amended by inserting after the item relating to section #aci;,g the following new item3 ,sec4 #aci;,h4 ,senior health planning account4 4 7c7 ,effective date ,the amendments made by this subsection shall apply with respect to sales or assignments of life insurance contracts after the date of enactment of this ,act4 7d7 ,reports ,the ,secretary may require the trustee of a senior health planning account to make such reports regarding such account to the ,secretary and to the account beneficiary with respect to contributions1 distributions1 and such other matters as the ,secretary determines appropriate4