HOUSE BILL No. 4790

 

May 17, 2005, Introduced by Reps. Green, Vagnozzi, Van Regenmorter, Stahl, Taub, Proos, Hildenbrand, Zelenko and Vander Veen and referred to the Committee on Tax Policy.

 

     A bill to permit the establishment and maintenance of long-

 

term health care savings accounts; to provide for certain tax

 

credits and deductions; to prescribe the requirements of and

 

restrictions on long-term health care savings accounts; and to

 

provide penalties and remedies.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the "long-

 

term health care savings account act".

 

     Sec. 2. As used in this act:

 

     (a) "Account administrator" means any of the following:

 

     (i) A state chartered bank, savings and loan association,

 

credit union, or trust company authorized to act as fiduciary and

 

under the supervision of the financial institutions bureau of the


 

office of financial and insurance services; or a national banking

 

association or federal savings and loan association or credit union

 

authorized to act as fiduciary in this state.

 

     (ii) A broker-dealer, commodity issuer, or investment advisor

 

registered pursuant to the uniform securities act, 1964 PA 265, MCL

 

451.501 to 451.818, or a federal investment company registered

 

under the investment company act of 1940, 15 USC 80a-1 to 80a-3 and

 

80a-4 to 80a-64.

 

     (iii) A certified public accountant licensed to practice in this

 

state pursuant to article 7 of the occupational code, 1980 PA 299,

 

MCL 339.720 to 339.736.

 

     (b) "Account holder" means the resident who is a taxpayer and

 

establishes a long-term health care savings account or for whose

 

benefit a long-term health care savings account is established.

 

     (c) "Domicile" means a place where an individual has his or

 

her true, fixed, and permanent home and principal establishment, to

 

which, whenever absent, he or she intends to return. Domicile

 

continues until another permanent home or principal establishment

 

is established.

 

     (d) "Eligible expense" means an expense paid by the taxpayer

 

for long-term health care costs allowed under this act or premiums

 

for a long-term health care policy, certificate, or rider issued by

 

an insurer pursuant to the insurance code of 1956, 1956 PA 218, MCL

 

500.100 to 500.8302, as determined by the department of treasury of

 

a taxpayer who has established an account under this act.

 

     (e) "Long-term health care costs" means expenses paid by the

 

account holder or on behalf of the account holder for the use of


 

skilled nursing care, home health care, personal care, or

 

supportive services due to the loss of some capacity for self-care

 

based on a chronic illness or condition of the individual on whose

 

behalf the expenses were paid.

 

     (f) "Long-term health care savings account" or "account" means

 

an account established in this state pursuant to this act to be

 

used to pay the eligible expenses of an account holder or his or

 

her spouse, parent, or child.

 

     (g) "Resident" means an individual domiciled in this state.

 

     Sec. 3. (1) For tax years that begin after December 31, 2004,

 

a resident may establish a long-term health care savings account

 

with an account administrator for himself or herself or for his or

 

her spouse, parent, or child if the account holder claims an

 

exemption under section 30(2) of the income tax act of 1967, 1967

 

PA 281, MCL 206.30, for the spouse, parent, or child.

 

     (2) An individual may establish a joint account for the

 

benefit of himself or herself and his or her spouse. If a joint

 

account is established, each individual is considered to be the

 

account holder and the account shall be available to pay the

 

eligible expenses of either account holder.

 

     (3) To establish an account, the taxpayer shall enter into an

 

agreement with an account administrator.

 

     (4) Contributions to an account shall only be made in cash, by

 

check, by money order, by credit card, or by any other similar

 

method, but shall not be property.

 

     Sec. 4. (1) An account administrator shall administer the

 

account from which the payments are made and has a fiduciary duty


 

to the person for whose benefit the account administrator

 

administers an account.

 

     (2) The account administrator shall utilize the funds held in

 

an account solely for the purpose of paying the eligible expenses

 

of the account holder or the person for whose benefit the account

 

has been established.

 

     (3) The account administrator shall pay the eligible expenses

 

of the person on whose behalf the account has been established

 

directly based on bills or other evidence of a debt or account due

 

or shall reimburse the account holder from the account holder's

 

account for eligible expenses paid by the account holder based on

 

documentation submitted to the account administrator.

 

     Sec. 5. (1) Subject to subsection (2), if an account holder

 

withdraws money for any purpose other than a purpose described in

 

section 4(2), the administrator shall withhold from the amount of

 

the withdrawal and on behalf of the account holder shall pay a

 

penalty to the department of treasury equal to 10% of the amount of

 

the withdrawal.

 

     (2) The amount of a disbursement of any assets of an account

 

pursuant to a filing for protection under title 11 of the United

 

States Code, 11 USC 101 to 1330, by an account holder or an account

 

holder's spouse is not considered a withdrawal for purposes of this

 

section.

 

     (3) Upon the death of the account holder, the account

 

administrator shall distribute the principal and accumulated

 

interest of the account to the estate of the account holder.

 

     Sec. 6. This act does not take effect unless Senate Bill No.


 

_______ or House Bill No. 4791(request no. 00852'05 a) of the

 

93rd Legislature is enacted into law.