SB758: Bill Text

LRB-5198/1

TJD&MES:wlj

2017 - 2018 LEGISLATURE

2017 Senate BILL 758

February 1, 2018 - Introduced by Senators Miller, Carpenter and Ringhand, cosponsored by Representatives Murphy, Anderson, Petryk, Milroy, Pope, Hebl, Skowronski, Berceau, Horlacher, Shankland, Vruwink, Meyers, Hesselbein, Spiros, Sargent, Spreitzer, Zepnick and Considine. Referred to Committee on Revenue, Financial Institutions and Rural Issues.

SB758,1,5 An Act to create 20.435 (7) (tf), 20.435 (7) (th), 20.435 (7) (tj), 20.435 (7) (tL), 20.435 (7) (tn), 20.435 (7) (tp), 25.17 (1) (jn), 25.776, 25.777, 25.778, 71.05 (6) (b) 53., 71.05 (6) (b) 54., 71.05 (6) (b) 55., 71.07 (5) (a) 10., 146.92 and 815.18 (3) (q) of the statutes; relating to: long-term care investment accounts and making appropriations.

Analysis by the Legislative Reference Bureau

This bill requires the Department of Health Services to establish a long-term care investment program that is administered and promoted by a manager, for which investments are made by a manager, and that allows an account owner—an individual, a married couple, domestic partners, or a trust—to establish a long-term care investment account to cover long-term care costs. The program's functions of administration, promotion, and investment are performed by one manager or multiple managers performing any combination of the functions. The bill creates a procedure for the selection of a manager and the execution of a contract with that manager and establishes criteria on provisions to be included in the contract with a manager.

Under the bill, an account owner must meet certain criteria, including having attained the age of 18, except for persons designated by a trust, and being listed on the account application. An account owner may contribute to a long-term care investment account or may authorize another person to contribute.

The bill provides that any amount contributed to an account each year, up to $5,500, or $8,500 for those over age 50, is exempt from taxation, as is any interest, dividends, or other gain that accrues in the account if such amounts are redeposited into the account. Amounts withdrawn from the account are also exempt from taxation if the withdrawal is for a qualified use. Beginning in 2018, these dollar amounts are indexed for inflation. Amounts contributed to an account that exceed the maximum amount that is eligible for the tax exemption may be carried forward to the next taxable year. Also under the bill, in calculating the itemized deductions credit, a claimant may not include unreimbursed medical expenses to the extent that such expenses were paid with amounts withdrawn from an account.

The bill also allows the account owner to select or change the beneficiary, and to transfer all or a portion of the account to another account. An account terminates upon the death of the individual account owners, and the proceeds of the account are distributed to a beneficiary, if named by the account owner. A beneficiary may retain the account as a long-term care investment account and becomes the account owner if the beneficiary meets the criteria to be an account owner.

An individual account owner is not eligible for Medical Assistance programs, including certain long-term care programs and Family Care, until the individual spends down the income and assets in the account to a level that would qualify for eligibility for the applicable program. For programs other than Medical Assistance and other programs that provide long-term care services, any person who is determining eligibility for a state or federal program must exclude from the determination any income from or assets accumulated in an account for the account owner, except this exclusion does not apply to eligibility for federal programs unless the federal government approves.

The bill specifies certain uses of account funds that are considered qualified uses. Before a use of account funds is considered a qualified use, a licensed or certified health care professional must submit documentation to the manager that one of the events or conditions specified in the bill has occurred. Payment of a premium for long-term care insurance that meets criteria set by the manager is a qualified use without documentation of one of the specified events or conditions.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB758,1 Section 1 . 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table - See PDF for table

SB758,2 Section 2 . 20.435 (7) (tf) of the statutes is created to read:

SB758,3,5 20.435 (7) (tf) Payment of qualified long-term care expenses and refunds; long-term care investment trust fund. From the long-term care investment trust fund, a sum sufficient for the payment of qualified use expenses and refunds under s. 146.92.

SB758,3 Section 3 . 20.435 (7) (th) of the statutes is created to read:

SB758,3,10 20.435 (7) (th) Administrative expenses; long-term care investment trust fund. From the long-term care investment trust fund, the amounts in the schedule for the administrative expenses of the long-term care investment program under s. 146.92, including the expense of promoting the program.

SB758,4 Section 4 . 20.435 (7) (tj) of the statutes is created to read:

SB758,4,4 20.435 (7) (tj) Payment of qualified long-term care expenses and refunds; long-term care investment bank deposit trust fund. From the long-term care investment bank deposit trust fund, a sum sufficient for the payment of qualified use expenses and refunds under s. 146.92.

SB758,5 Section 5 . 20.435 (7) (tL) of the statutes is created to read:

SB758,4,10 20.435 (7) (tL) Administrative expenses; long-term care investment bank deposit trust fund. From the long-term care investment bank deposit trust fund, the amounts in the schedule for the administrative expenses of the long-term care investment program under s. 146.92, including the expense of promoting the program.

SB758,6 Section 6 . 20.435 (7) (tn) of the statutes is created to read:

SB758,4,15 20.435 (7) (tn) Payment of qualified long-term care expenses and refunds; long-term care investment credit union deposit trust fund. From the long-term care investment credit union deposit trust fund, a sum sufficient for the payment of qualified use expenses and refunds under s. 146.92.

SB758,7 Section 7 . 20.435 (7) (tp) of the statutes is created to read:

SB758,4,21 20.435 (7) (tp) Administrative expenses; long-term care investment credit union deposit trust fund. From the long-term care investment credit union deposit trust fund, the amounts in the schedule for the administrative expenses of the long-term care investment program under s. 146.92, including the expense of promoting the program.

SB758,8 Section 8. 25.17 (1) (jn) of the statutes is created to read:

SB758,4,24 25.17 (1) (jn) Long-term care investment trust fund, bank deposit trust fund, and credit union deposit trust fund (ss. 25.776, 25.777, and 25.778);

SB758,9 Section 9 . 25.776 of the statutes is created to read:

SB758,5,7 25.776 Long-term care investment trust fund. There is established a separate nonlapsible trust fund designated as the long-term care investment trust fund, consisting of all revenue from enrollment fees for and contributions to long-term care investment accounts under s. 146.92 and from distributions and fees paid by the vendor under s. 146.92 other than revenue from those sources that is deposited into the long-term care investment bank deposit trust fund or the long-term care investment credit union deposit trust fund.

SB758,10 Section 10 . 25.777 of the statutes is created to read:

SB758,5,18 25.777 Long-term care investment bank deposit trust fund. There is established a separate nonlapsible trust fund designated as the long-term care investment bank deposit trust fund, consisting of all revenue from enrollment fees for and contributions to long-term care investment accounts under s. 146.92 in which the investment instrument is an account held by a state or national bank, a state or federal savings bank, a state or federal savings and loan association, or a savings and trust company that has its main office or home office or a branch office located in this state and that is insured by the Federal Deposit Insurance Corporation, and all revenue from distributions and fees paid by the vendor of those investment instruments under s. 146.92.

SB758,11 Section 11 . 25.778 of the statutes is created to read:

SB758,6,4 25.778 Long-term care investment credit union deposit trust fund. There is established a separate nonlapsible trust fund designated as the long-term care investment credit union deposit trust fund, consisting of all revenue from enrollment fees for and contributions to long-term care investment accounts under s. 146.92 in which the investment instrument is an account held by a state or federal credit union, including a corporate central credit union organized under s. 186.32, that has its main office or home office or a branch office located in this state and that is insured by the National Credit Union Administration, and all revenue from distributions and fees paid by the vendor of those investment instruments under s. 146.92.

SB758,12 Section 12 . 71.05 (6) (b) 53. of the statutes is created to read:

SB758,6,13 71.05 (6) (b) 53. a. Subject to subd. 53. b. and c., each year, and for each account to which a claimant contributes, an amount of up to $5,500 that is deposited by a claimant into an account described under s. 146.92, and any interest, dividends, or other gain that accrues in the account if the interest, dividends, or other gain is redeposited into the account. Any amount that is paid into an account under this subdivision that exceeds the maximum amount that may be subtracted under this subdivision may be carried forward to the next taxable year, and thereafter, subject to the limitations in this subdivision.

SB758,6,17 b. If a claimant is more than 50 years of age during the calendar year in which the claimant makes a deposit into an account as described in subd. 53. a., the maximum amount that may be subtracted each year and for each account under subd. 53. a. is $8,500.

SB758,7,5 c. For taxable years beginning after December 31, 2017, the dollar amounts in subd. 53. a. and b. shall be increased each year by a percentage equal to the percentage change between the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August of the previous year and the U.S. consumer price index for all urban consumers, U.S. city average, for the month of August 2016, as determined by the federal department of labor, except that the adjustment may occur only if the resulting amount is greater than the corresponding amount that was calculated for the previous year. Each amount that is revised under this subd. 53. c. shall be rounded to the nearest multiple of $10 if the revised amount is not a multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be increased to the next higher multiple of $10. The department of revenue shall annually adjust the changes in dollar amounts required under this subd. 53. c. and incorporate the changes into the income tax forms and instructions.

SB758,13 Section 13 . 71.05 (6) (b) 54. of the statutes is created to read:

SB758,7,8 71.05 (6) (b) 54. Any amount that is withdrawn from an account described under s. 146.92 that is transferred to another account described under s. 146.92.

SB758,14 Section 14 . 71.05 (6) (b) 55. of the statutes is created to read:

SB758,7,11 71.05 (6) (b) 55. Any amount that is withdrawn from an account described under s. 146.92 if the withdrawal is for a qualified use under s. 146.92 (6).

SB758,15 Section 15 . 71.07 (5) (a) 10. of the statutes is created to read:

SB758,7,16 71.07 (5) (a) 10. The amount claimed as a deduction for unreimbursed medical expenses under section 213 (a) of the Internal Revenue Code to the extent that the funds used to pay for the unreimbursed expenses for which the deduction was claimed were withdrawn from an account described under s. 146.92.

SB758,16 Section 16 . 146.92 of the statutes is created to read:

SB758,7,19 146.92 Long-term care investment program. (1) Definitions. In this section:

SB758,7,23 (a) “Account owner" means an individual, a married couple, or domestic partners under ch. 770, who apply for and establish, or a trust other than a special needs trust that applies for and establishes, a long-term care investment account under this section.

SB758,8,3 (b) “Beneficiary" means an individual, a married couple, or domestic partners under ch. 770, to whom any funds remaining in a long-term care investment account pass upon the death of the individual account owners.

SB758,8,7 (c) “Designee of a trust" means the person designated under sub. (5) (g) by a trust instrument or the trustee of a trust that is an account owner. If the person so designated is a married couple or domestic partnership, “designee of a trust" also means either spouse or partner.

SB758,8,8 (d) “Individual account owner" means any of the following:

SB758,8,9 1. In the case of an individual who is an account owner, that individual.

SB758,8,10 2. In the case of a married couple that is an account owner, either spouse.

SB758,8,12 3. In the case of domestic partners under ch. 770 that are an account owner, either domestic partner.

SB758,8,14 4. In the case of a trust that is an account owner, the trust instrument or trustee of the trust.

SB758,8,18 (e) “Manager” means a person that has contracted with the department under sub. (4) to perform the function of investing moneys for, administering, or promoting the long-term care investment program or performing any combination of those functions.

SB758,8,23 (2) Program establishment; rules; information. (a) The department shall establish a long-term care investment program that is administered and promoted by a manager, for which investments are made by a manager, and that allows an account owner to establish a long-term care investment account to cover long-term care costs.

SB758,9,3 (b) The department shall keep personal and financial information it has pertaining to an account owner, a designee of a trust, or a beneficiary closed to the public.

SB758,9,11 (3) Selection of manager. (a) The secretary shall form a committee to recommend a manager and propose a contract to perform investment, administration, and promotion functions for the long-term care investment program. The department shall enter either one contract with one manager for all functions of investment, administration, and promotion for the long-term care investment program or multiple contracts with managers to perform one or more functions. The selection and contracting for each manager shall follow the procedure under this subsection.