,i  #aaf? ,,congress  #b;d ,session  ,h4
 ,r4 #eieh  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,febru>y #be1         
#bjbj,mr4 ,higg9s ( ,new ,york 7=       
himself & ,mr4 ,/eube7 introduc$ !      
foll[+ bill2 :i* 0 ref]r$ to !          
,committee on ,ways & ,means  ,a ,,bill 
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to create s5ior heal? plann+      
acc\nts fund$ by ! proce$s ( ! sale or  
assignm5t ( life insurance contracts4   
#a4 ,%ort title ,?is ,act may be cit$ z 
! ,s5ior ,heal? ,plann+ ,acc\nt ,act4   
#b4 ,s5ior heal? plann+ acc\nt  7a7 ,9  
g5]al ,"p ,,iii ( sub*apt] ,b ( *apt] #a
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$ by ins]t+ aft] section #aci;,g !  
foll[+ new section3  #aci;,h4 ,s5ior    
heal? plann+ acc\nt  7a7 ,exclusion (   
contributions ( ga9 f sales ( life      
insurance contracts ,! am\nt ( ga9 f !  
sale or assignm5t ( a life insurance    
contract ( a taxpay] %all be r$uc$ 7b n 
bel[ z]o7 by ! am\nt ( contributions to 
a s5ior heal? plann+ acc\nt made by su* 

taxpay] dur+ ! #cj-;day p]iod beg9n+ on 
! date ( su* sale or assignm5t4  7b7    
,tax ,treatm5t ( ,s5ior ,heal? ,plann+  
,acc\nt  7#a7 ,9 g5]al ,a s5ior heal?   
plann+ acc\nt is exempt f taxation "u   
?is subtitle unless su* acc\nt has ceas$
 to be a s5ior heal? plann+ acc\nt4     
,not)/&+ ! prec$+ s5t5ce1 any su* acc\nt
 is subject to ! taxes impos$ by section
 #eaa 7relat+ to imposition ( tax on    
unrelat$ bus9ess income ( *>itable1 etc4
 organizations74  7#b7 ,acc\nt          
t]m9ations ,rules simil> to ! rules (   
p>agraphs 7#b7 & 7#d7 ( section #djh7;e7
 %all apply to s5ior heal? plann+       
acc\nts1 & any am\nt treat$ z di/ribut$ 
"u su* rules %all be treat$ z n us$ to  
pay qualifi$ heal? c>e exp5ses4  7#c7   
,tax treatm5t ( di/ributions  7,a7      
,am\nts us$ = qualifi$ heal? c>e exp5ses
 ,any am\nt paid or di/ribut$ out ( a   
s5ior heal? plann+ acc\nt :i* is us$    
exclusively to pay qualifi$ heal? c>e   
exp5ses ( ! acc\nt b5efici>y or ! acc\nt
 b5efici>y's sp\se %all n be includible 

9 gross income4  7,b7 ,inclusion (      
am\nts n us$ = qualifi$ heal? c>e       
exp5ses ,any am\nt paid or di/ribut$ out
 ( a s5ior heal? plann+ acc\nt :i* is n 
us$ to pay ! qualifi$ heal? c>e exp5ses 
( ! acc\nt b5efici>y or ! acc\nt        
b5efici>y's sp\se %all be includ$ 9 !   
gross income ( su* b5efici>y4  7,c7     
,additional tax on di/ributions n us$ = 
qualifi$ heal? c>e exp5ses ,! tax impos$
 by ?is *apt] on ! acc\nt b5efici>y =   
any taxable ye> 9 :i* !re is a paym5t or
 di/ribution f a s5ior heal? plann+     
acc\nt ( su* b5efici>y :i* is includible
 9 gross income "u subp>agraph 7,b7 %all
 be increas$ by #bj p]c5t ( ! am\nt :i* 
is s includible4 ,?is subp>agraph %all n
 apply if ! paym5t or di/ribution is    
made aft] ! acc\nt b5efici>y-- 7i7 dies1
  7ii7 becomes a t]m9ally ill individual
 7z su* t]m is def9$ 9 section          
#aja7;g77#d77;,a771 or  7iii7 becomes a 
*ronically ill individual 7z su* t]m is 
def9$ 9 section #aja7;g77#d77;,b774     
7#d7 ,coord9ation ) m$ical exp5se       

d$uction ,= purposes ( det]m9+ ! am\nt (
 ! d$uction "u section #bac1 any paym5t 
or di/ribution out ( a s5ior heal?      
plann+ acc\nt = qualifi$ heal? c>e      
exp5ses %all n be treat$ z an exp5se    
paid = m$ical c>e4  7#e7 ,transf] (     
acc\nt incid5t to divorce ,! transf] (  
an individual's int]e/ 9 a s5ior heal?  
plann+ acc\nt to an individual's sp\se  
or =m] sp\se "u a divorce or sep>ation  
in/rum5t describ$ 9 subp>agraph 7,a7 (  
section #ga7;b77#b7 %all n be consid]$ a
 taxable transf] made by su* individual 
not)/&+ any o!r provision ( ?is         
subtitle1 & su* int]e/ %all1 aft] su*   
transf]1 be treat$ z a s5ior heal?      
plann+ acc\nt ) respect to :i* su* sp\se
 is ! acc\nt b5efici>y4  7#f7 ,treatm5t 
aft] dea? ( acc\nt b5efici>y  7,a7      
,treatm5t if designat$ b5efici>y is     
sp\se ,if ! acc\nt b5efici>y's surviv+  
sp\se acquires su* b5efici>y's int]e/ 9 
a s5ior heal? plann+ acc\nt by reason ( 
be+ ! designat$ b5efici>y ( su* acc\nt  
at ! dea? ( ! acc\nt b5efici>y1 su*     

s5ior heal? plann+ acc\nt %all be treat$
 z if ! sp\se 7 ! acc\nt b5efici>y4     
7,b7 ,o!r cases  7i7 ,9 g5]al ,if1 by   
reason ( ! dea? ( ! acc\nt b5efici>y1   
any p]son acquires ! acc\nt b5efici>y's 
int]e/ 9 a s5ior heal? plann+ acc\nt 9 a
 case to :i* subp>agraph 7,a7 does n    
apply-- 7,i7 su* acc\nt %all cease to be
 a s5ior heal? plann+ acc\nt z ( ! date 
( dea?1 &  7,,ii7 an am\nt equal to !   
fair m>ket value ( ! assets 9 su* acc\nt
 on su* date %all be includible if su*  
p]son is n ! e/ate ( su* b5efici>y1 9   
su* p]son's gross income = ! taxable ye>
 :i* includes su* date1 or if su* p]son 
is ! e/ate ( su* b5efici>y1 9 su*       
b5efici>y's gross income = ! la/ taxable
 ye> ( su* b5efici>y4  7ii7 ,special    
rules  7,i7 ,r$uction ( inclusion =     
pr$ea? exp5ses ,! am\nt includible 9    
gross income "u clause 7i7 by any p]son 
7o!r ?an ! e/ate7 %all be r$uc$ by !    
am\nt ( qualifi$ heal? c>e exp5ses :i* 7
 incurr$ by ! dec$5t be=e ! date ( !    
dec$5t's dea? & paid by su* p]son )9 #a 

ye> aft] su* date4  7,,ii7 ,d$uction =  
e/ate taxes ,an appropriate d$uction    
%all be all[$ "u section #fia7;c7 to any
 p]son 7o!r ?an ! dec$5t or ! dec$5t's  
sp\se7 ) respect to am\nts includ$ 9    
gross income "u clause 7i7 by su* p]son4
  7c7 ,def9itions ,= purposes ( ?is     
subsection-- 7#a7 ,acc\nt b5efici>y ,!  
t]m acc\nt b5efici>y means1 ) respect to
 a s5ior heal? plann+ acc\nt1 !         
individual on ^: behalf su* acc\nt 0    
e/abli%$4  7#b7 ,s5ior heal? plann+     
acc\nt ,! t]m s5ior heal? plann+ acc\nt 
means a tru/ creat$ or organiz$ 9 !     
,unit$ ,/ates z a s5ior heal? plann+    
acc\nt1 b only if ! writt5 gov]n+       
in/rum5t creat+ ! tru/ meets ! foll[+   
requirem5ts3 7,a7 ,no contribution w be 
accept$ unless x is 9 ca% & 9           
consid]ation ( ! sale or assignm5t ( any
 portion ( ! dea? b5efits "u a life     
insurance contract on ! life ( ! acc\nt 
b5efici>y4  7,b7 ,! tru/ee is a bank 7z 
def9$ 9 section #djh7n771 an insurance  
company 7z def9$ 9 section #haf71 or    

ano!r p]son :o demon/rates to !         
satisfaction ( ! ,secret>y t ! mann] 9  
:i* su* p]son w adm9i/] ! tru/ w be     
consi/5t ) ! requirem5ts ( ?is section4 
7,c7 ,no "p ( ! tru/ assets w be inve/$ 
9 life insurance contracts4  7,d7 ,!    
assets ( ! tru/ w n be comm+l$ ) o!r    
prop]ty except 9 a common tru/ fund or  
common inve/m5t fund4  7,e7 ,! int]e/ ( 
an individual 9 ! balance 9 8 acc\nt is 
non=feitable4  7#c7 ,qualifi$ heal? c>e 
exp5ses ,! t]m qualifi$ heal? c>e       
exp5ses means1 ) respect to an acc\nt   
b5efici>y1 am\nts paid by su* b5efici>y 
= m$ical c>e 7z def9$ 9 section         
#bac7;d77 = su* individual & ! sp\se (  
su* individual1 b only to ! ext5t su*   
am\nts are n comp5sat$ = by insurance or
 o!rwise4  4  7b7 ,cl]ical am5dm5t ,!   
table ( sections = "p ,,iii ( sub*apt]  
,b ( *apt] #a ( su* ,code is am5d$ by   
ins]t+ aft] ! item relat+ to section    
#aci;,g ! foll[+ new item3  ,sec4       
#aci;,h4 ,s5ior heal? plann+ acc\nt4  4 
7c7 ,effective date ,! am5dm5ts made by 

?is subsection %all apply ) respect to  
sales or assignm5ts ( life insurance    
contracts aft] ! date ( enactm5t ( ?is  
,act4  7d7 ,reports ,! ,secret>y may    
require ! tru/ee ( a s5ior heal? plann+ 
acc\nt to make su* reports reg>d+ su*   
acc\nt to ! ,secret>y & to ! acc\nt     
b5efici>y ) respect to contributions1   
di/ributions1 & su* o!r matt]s z !      
,secret>y det]m9es appropriate4