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.