LRB-5198/1
TJD&MES:wlj
2017 - 2018 LEGISLATURE
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
1An Act to create 20.435 (7) (tf), 20.435 (7) (th), 20.435 (7) (tj), 20.435 (7) (tL),
220.435 (7) (tn), 20.435 (7) (tp), 25.17 (1) (jn), 25.776, 25.777, 25.778, 71.05 (6)
3(b) 53., 71.05 (6) (b) 54., 71.05 (6) (b) 55., 71.07 (5) (a) 10., 146.92 and 815.18 (3)
4(q) of the statutes;
relating to: long-term care investment accounts and
5making 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 Amounts withdrawn from the account are also exempt from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:
SB758,2
1Section 2
. 20.435 (7) (tf) of the statutes is created to read:
SB758,3,52
20.435
(7) (tf)
Payment of qualified long-term care expenses and refunds;
3long-term care investment trust fund. From the long-term care investment trust
4fund, a sum sufficient for the payment of qualified use expenses and refunds under
5s. 146.92.
SB758,3
6Section 3
. 20.435 (7) (th) of the statutes is created to read:
SB758,3,107
20.435
(7) (th)
Administrative expenses; long-term care investment trust fund. 8From the long-term care investment trust fund, the amounts in the schedule for the
9administrative expenses of the long-term care investment program under s. 146.92,
10including the expense of promoting the program.
SB758,4
11Section 4
. 20.435 (7) (tj) of the statutes is created to read:
SB758,4,4
120.435
(7) (tj)
Payment of qualified long-term care expenses and refunds;
2long-term care investment bank deposit trust fund. From the long-term care
3investment bank deposit trust fund, a sum sufficient for the payment of qualified use
4expenses and refunds under s. 146.92.
SB758,5
5Section 5
. 20.435 (7) (tL) of the statutes is created to read:
SB758,4,106
20.435
(7) (tL)
Administrative expenses; long-term care investment bank
7deposit trust fund. From the long-term care investment bank deposit trust fund, the
8amounts in the schedule for the administrative expenses of the long-term care
9investment program under s. 146.92, including the expense of promoting the
10program.
SB758,6
11Section 6
. 20.435 (7) (tn) of the statutes is created to read:
SB758,4,1512
20.435
(7) (tn)
Payment of qualified long-term care expenses and refunds;
13long-term care investment credit union deposit trust fund. From the long-term care
14investment credit union deposit trust fund, a sum sufficient for the payment of
15qualified use expenses and refunds under s. 146.92.
SB758,7
16Section 7
. 20.435 (7) (tp) of the statutes is created to read:
SB758,4,2117
20.435
(7) (tp)
Administrative expenses; long-term care investment credit union
18deposit trust fund. From the long-term care investment credit union deposit trust
19fund, the amounts in the schedule for the administrative expenses of the long-term
20care investment program under s. 146.92, including the expense of promoting the
21program.
SB758,8
22Section
8. 25.17 (1) (jn) of the statutes is created to read:
SB758,4,2423
25.17
(1) (jn) Long-term care investment trust fund, bank deposit trust fund,
24and credit union deposit trust fund (ss. 25.776, 25.777, and 25.778);
SB758,9
25Section 9
. 25.776 of the statutes is created to read:
SB758,5,7
125.776 Long-term care investment trust fund. There is established a
2separate nonlapsible trust fund designated as the long-term care investment trust
3fund, consisting of all revenue from enrollment fees for and contributions to
4long-term care investment accounts under s. 146.92 and from distributions and fees
5paid by the vendor under s. 146.92 other than revenue from those sources that is
6deposited into the long-term care investment bank deposit trust fund or the
7long-term care investment credit union deposit trust fund.
SB758,10
8Section 10
. 25.777 of the statutes is created to read:
SB758,5,18
925.777 Long-term care investment bank deposit trust fund. There is
10established a separate nonlapsible trust fund designated as the long-term care
11investment bank deposit trust fund, consisting of all revenue from enrollment fees
12for and contributions to long-term care investment accounts under s. 146.92 in
13which the investment instrument is an account held by a state or national bank, a
14state or federal savings bank, a state or federal savings and loan association, or a
15savings and trust company that has its main office or home office or a branch office
16located in this state and that is insured by the Federal Deposit Insurance
17Corporation, and all revenue from distributions and fees paid by the vendor of those
18investment instruments under s. 146.92.
SB758,11
19Section 11
. 25.778 of the statutes is created to read:
SB758,6,4
2025.778 Long-term care investment credit union deposit trust fund. 21There is established a separate nonlapsible trust fund designated as the long-term
22care investment credit union deposit trust fund, consisting of all revenue from
23enrollment fees for and contributions to long-term care investment accounts under
24s. 146.92 in which the investment instrument is an account held by a state or federal
25credit union, including a corporate central credit union organized under s. 186.32,
1that has its main office or home office or a branch office located in this state and that
2is insured by the National Credit Union Administration, and all revenue from
3distributions and fees paid by the vendor of those investment instruments under s.
4146.92.
SB758,12
5Section 12
. 71.05 (6) (b) 53. of the statutes is created to read:
SB758,6,136
71.05
(6) (b) 53. a. Subject to subd. 53. b. and c., each year, and for each account
7to which a claimant contributes, an amount of up to $5,500 that is deposited by a
8claimant into an account described under s. 146.92, and any interest, dividends, or
9other gain that accrues in the account if the interest, dividends, or other gain is
10redeposited into the account. Any amount that is paid into an account under this
11subdivision that exceeds the maximum amount that may be subtracted under this
12subdivision may be carried forward to the next taxable year, and thereafter, subject
13to the limitations in this subdivision.
SB758,6,1714
b. If a claimant is more than 50 years of age during the calendar year in which
15the claimant makes a deposit into an account as described in subd. 53. a., the
16maximum amount that may be subtracted each year and for each account under
17subd. 53. a. is $8,500.
SB758,7,518
c. For taxable years beginning after December 31, 2017, the dollar amounts in
19subd. 53. a. and b. shall be increased each year by a percentage equal to the
20percentage change between the U.S. consumer price index for all urban consumers,
21U.S. city average, for the month of August of the previous year and the U.S. consumer
22price index for all urban consumers, U.S. city average, for the month of August 2016,
23as determined by the federal department of labor, except that the adjustment may
24occur only if the resulting amount is greater than the corresponding amount that was
25calculated for the previous year. Each amount that is revised under this subd. 53.
1c. shall be rounded to the nearest multiple of $10 if the revised amount is not a
2multiple of $10 or, if the revised amount is a multiple of $5, such an amount shall be
3increased to the next higher multiple of $10. The department of revenue shall
4annually adjust the changes in dollar amounts required under this subd. 53. c. and
5incorporate the changes into the income tax forms and instructions.
SB758,13
6Section 13
. 71.05 (6) (b) 54. of the statutes is created to read:
SB758,7,87
71.05
(6) (b) 54. Any amount that is withdrawn from an account described
8under s. 146.92 that is transferred to another account described under s. 146.92.
SB758,14
9Section 14
. 71.05 (6) (b) 55. of the statutes is created to read:
SB758,7,1110
71.05
(6) (b) 55. Any amount that is withdrawn from an account described
11under s. 146.92 if the withdrawal is for a qualified use under s. 146.92 (6).
SB758,15
12Section 15
. 71.07 (5) (a) 10. of the statutes is created to read:
SB758,7,1613
71.07
(5) (a) 10. The amount claimed as a deduction for unreimbursed medical
14expenses under section
213 (a) of the Internal Revenue Code to the extent that the
15funds used to pay for the unreimbursed expenses for which the deduction was
16claimed were withdrawn from an account described under s. 146.92.
SB758,16
17Section 16
. 146.92 of the statutes is created to read:
SB758,7,19
18146.92 Long-term care investment program. (1) Definitions. In this
19section:
SB758,7,2320
(a) “Account owner" means an individual, a married couple, or domestic
21partners under ch. 770, who apply for and establish, or a trust other than a special
22needs trust that applies for and establishes, a long-term care investment account
23under this section.
SB758,8,3
1(b) “Beneficiary" means an individual, a married couple, or domestic partners
2under ch. 770, to whom any funds remaining in a long-term care investment account
3pass upon the death of the individual account owners.
SB758,8,74
(c) “Designee of a trust" means the person designated under sub. (5) (g) by a
5trust instrument or the trustee of a trust that is an account owner. If the person so
6designated is a married couple or domestic partnership, “designee of a trust" also
7means either spouse or partner.
SB758,8,88
(d) “Individual account owner" means any of the following:
SB758,8,99
1. In the case of an individual who is an account owner, that individual.
SB758,8,1010
2. In the case of a married couple that is an account owner, either spouse.
SB758,8,1211
3. In the case of domestic partners under ch. 770 that are an account owner,
12either domestic partner.
SB758,8,1413
4. In the case of a trust that is an account owner, the trust instrument or trustee
14of the trust.
SB758,8,1815
(e) “Manager” means a person that has contracted with the department under
16sub. (4) to perform the function of investing moneys for, administering, or promoting
17the long-term care investment program or performing any combination of those
18functions.
SB758,8,23
19(2) Program establishment; rules; information. (a) The department shall
20establish a long-term care investment program that is administered and promoted
21by a manager, for which investments are made by a manager, and that allows an
22account owner to establish a long-term care investment account to cover long-term
23care costs.
SB758,9,3
1(b) The department shall keep personal and financial information it has
2pertaining to an account owner, a designee of a trust, or a beneficiary closed to the
3public.
SB758,9,11
4(3) Selection of manager. (a)
The secretary shall form a committee to
5recommend a manager and propose a contract to perform investment,
6administration, and promotion functions for the long-term care investment
7program. The department shall enter either one contract with one manager for all
8functions of investment, administration, and promotion for the long-term care
9investment program or multiple contracts with managers to perform one or more
10functions. The selection and contracting for each manager shall follow the procedure
11under this subsection.
SB758,9,2412
(b) The committee formed under par. (a) shall consist of 3 representatives from
13the investment board; one representative from the Wisconsin Aging Advocacy
14Network if the network exists or one representative from an aging advocacy
15organization if the network does not exist; and one representative from a disability
16advocacy organization. The secretary shall select as chairperson of the committee
17one of the representatives from the investment board. The committee shall
18recommend to the secretary a manager and propose a contract to be finalized by the
19manager and the secretary. The committee shall consider as a manager an entity
20that has a contract as a vendor of the college savings program under s. 16.255. The
21secretary shall accept or reject the recommended manager. If the secretary rejects
22the recommended manager, the committee shall recommend another manager until
23the secretary accepts the manager. The secretary shall dissolve the committee once
24a manager for each function described under par. (a) has been accepted.
SB758,10,4
1(4) Contract with manager; disclosure requirement. (a) The department's
2contract with a manager under sub. (3) shall include provisions establishing all of
3the following, as applicable to the function that the manager is performing for the
4long-term care investment program:
SB758,10,55
1. The manager's compensation including any management fee.