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REFERENCE TITLE: Arizona long‑term care trust |
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State of Arizona House of Representatives Fiftieth Legislature Second Regular Session 2012
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HB 2713 |
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Introduced by Representatives Farley: Ash, Gray R, Yee
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AN ACT
Amending title 35, Arizona Revised Statutes, by adding chapter 9; amending section 43-1022, Arizona Revised Statutes; relating to long‑term care trust.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Title 35, Arizona Revised Statutes, is amended by adding chapter 9, to read:
CHAPTER 9
ARIZONA LONG‑TERM CARE TRUST
ARTICLE 1. GENERAL PROVISIONS
35-1201. Definitions
In this chapter, unless the context otherwise requires:
1. "Depositor" means a person making a deposit, payment, contribution, gift or other deposit to the trust pursuant to a participation agreement.
2. "Designated beneficiary" means any individual who enters into a participation agreement or is subsequently designated as the spouse of the designated beneficiary.
3. "Eligible long‑term care provider" means any of the following:
(a) a provider licensed in this STATE to perform home care or long‑term care services.
(b) a homemaker or companion service.
(c) a transportation service.
(d) a personal care assistant.
4. "Instrumental activities of daily living" means activities related to independent living necessary to maintain an individual in the individual's home or other noninstitutional setting, and includes adult day care, chore services, companion services, meal preparation or home-delivered meals, or transportation or homemaker services.
5. "Participation agreement" means the agreement between the trust and depositors for participation in a savings plan for a designated beneficiary.
6. "Qualified long‑term care expenses" means the cost of services performed by an eligible long‑term care provider for the instrumental activities of daily living and the cost of any other service recommended by a physician and provided by an eligible home care provider.
35-1202. Arizona long‑term care trust for the elderly; fund; advisory committee
A. The Arizona long‑term care trust is established to allow individuals to plan for the cost of long‑term care services as they age.
B. The state treasurer shall establish the Arizona long‑term care trust fund, consisting of individual savings accounts for those qualified long‑term care expenses not covered by a long-term care insurance policy and for those qualified long‑term care expenses that supplement the coverage provided by a long‑term care policy or medicare. Withdrawals from the fund may be used for qualified long‑term care expenses, on receipt by the fund of a physician's certification that the designated beneficiary is in need of services for the instrumental activities of daily living. On the death of a designated beneficiary, any available monies in the deceased beneficiary's account becomes an asset of the beneficiary's estate.
C. An advisory committee to the trust is established consisting of:
1. The state comptroller.
2. The director of the governor's office of strategic planning and budgeting.
3. The director of the department of economic security or the director's designee.
4. A member of the advisory council on aging who is appointed by the chairperson of the council.
5. The long-term care ombudsman.
6. The chairpersons and ranking members of the senate and house of representatives committees that are responsible for matters relating to human services and aging.
7. One provider of home care services and one provider of long‑term care services who are appointed by the governor.
8. One physician who is licensed pursuant to title 32, chapter 13 or 17 and who specializes in geriatric care.
D. The advisory committee shall meet at least annually. The state comptroller shall convene the meetings of the committee.
35-1203. Operation of trust
On behalf of the trust, the state treasurer may:
1. Receive and invest monies in the trust in any instruments, obligations, securities or property as provided by section 35-1204.
2. Procure insurance in connection with the trust's property, assets, activities or deposits or contributions to the trust.
3. Establish one or more funds within the trust and maintain separate accounts for each designated beneficiary.
4. Take any other actions necessary to carry out the purposes of this chapter and incidental to the duties imposed on the state treasurer pursuant to this chapter.
35-1204. Investment of trust monies
A. The state treasurer shall invest the amounts on deposit in the trust in a manner reasonable and appropriate to achieve the objectives of the trust, exercising the discretion and care of a prudent person in similar circumstances with similar objectives.
B. The state treasurer shall give due consideration to the rate of return, risk, term or maturity, diversification of the total portfolio within the trust, liquidity, projected disbursements and expenditures and expected payments, deposits, contributions and gifts to be received.
C. The trust is not required to invest directly in obligations of this state or any political subdivision of this state or in any investment or other fund administered by the state treasurer.
D. The assets of the trust shall be continuously invested and reinvested in a manner consistent with the objectives of the trust until disbursed for qualified long‑term care expenses, expended on expenses incurred by the operations of the trust or refunded to the depositor or designated beneficiary on the conditions provided in the participation agreement.
35-1205. Powers of state treasurer as trustee
The state treasurer, on behalf and for the purposes of the trust, may:
1. Establish consistent terms for each participation agreement, bulk deposit, coupon or installment payments, including:
(a) The method of payment into the trust by payroll deduction, by transfer from bank accounts or otherwise.
(b) The termination, withdrawal or transfer of payments under the trust, including transfers to an eligible long‑term care provider.
(c) Penalties for distributions not used or made consistent with this section.
(d) Changing the identity of the designated beneficiary.
(e) Any charges or fees in connection with the administration of the trust.
2. Enter into one or more contractual agreements, including contracts for legal, actuarial, accounting, custodial, advisory, management, administrative, advertising, marketing and consulting services for the trust and pay for those services from the gains and earnings of the trust.
3. Apply for, accept and spend gifts, grants or donations from public or private sources to enable the trust to carry out its objectives.
4. Adopt rules to implement the purposes of this chapter.
5. Sue and be sued.
6. Take any other action necessary to carry out the purposes of this CHAPTER and incidental to the duties imposed on the state treasurer pursuant to this chapter.
35-1206. Exemption from securities law
Participation in the trust and the offering and solicitation of the trust are exempt from title 44, chapter 12. The state treasurer shall obtain written advice from the attorney general or the United States Securities Exchange Commission, or both, that the trust and the offering of participation in the trust are not subject to federal securities laws.
35-1207. Pledge of state
A. This state pledges to depositors, designated beneficiaries and any party that enters into contracts with the trust that this state will not limit or alter the rights under this chapter vested in the trust or contract with the trust until its obligations are fully met and discharged and the contracts are fully performed on the part of the trust. This section does not preclude such limitation or alteration if adequate provision is made by law for the protection of depositors and designated beneficiaries pursuant to the obligations of the trust or parties that entered into the contracts with the trust.
B. The trust, on behalf of this state, may include this pledge and undertaking for the state in participation agreements and other obligations or contracts.
Sec. 2. Section 43-1022, Arizona Revised Statutes, is amended to read:
43-1022. Subtractions from Arizona gross income
In computing Arizona adjusted gross income, the following amounts shall be subtracted from Arizona gross income:
1. The amount of exemptions allowed by section 43‑1023.
2. Benefits, annuities and pensions in an amount totaling not more than two thousand five hundred dollars received from one or more of the following:
(a) The United States government service retirement and disability fund, retired or retainer pay of the uniformed services of the United States, the United States foreign service retirement and disability system and any other retirement system or plan established by federal law.
(b) The Arizona state retirement system, the corrections officer retirement plan, the public safety personnel retirement system, the elected officials' retirement plan, an optional retirement program established by the Arizona board of regents under section 15‑1628, an optional retirement program established by a community college district board under section 15‑1451 or a retirement plan established for employees of a county, city or town in this state.
3. A beneficiary's share of the fiduciary adjustment to the extent that the amount determined by section 43‑1333 decreases the beneficiary's Arizona gross income.
4. The amount of any distributions from an individual retirement account as provided for in section 408 of the internal revenue code or from a qualified retirement plan of a self‑employed individual as provided for in section 401 of the internal revenue code to the extent that total adjustments made pursuant to this paragraph in all tax years do not exceed the total of all contributions made by the taxpayer to such plans prior to December 31, 1975, which were included in computing Arizona taxable income.
5. The amount of income on an installment receivable which is recognized pursuant to the internal revenue code and which has already been recognized on the death of the taxpayer for purposes of this title for tax years ending before January 1, 1990.
6. Interest income received on obligations of the United States, less any interest on indebtedness, or other related expenses, and deducted in arriving at Arizona gross income, which were incurred or continued to purchase or carry such obligations.
7. The amount of any income tax refunds which were received from states other than Arizona and which were included as income in computing federal adjusted gross income.
8. Annuity income included in federal adjusted gross income pursuant to section 72 of the internal revenue code if the first payment with respect to such annuity was received prior to December 31, 1978.
9. The excess of a partner's share of income required to be included under section 702(a)(8) of the internal revenue code over the income required to be included under chapter 14, article 2 of this title.
10. The excess of a partner's share of partnership losses determined pursuant to chapter 14, article 2 of this title over the losses allowable under section 702(a)(8) of the internal revenue code.
11. The amount by which the adjusted basis of property described in this paragraph and computed pursuant to this title and the income tax act of 1954, as amended, exceeds the adjusted basis of such property computed pursuant to the internal revenue code. This paragraph shall apply to all property which is held for the production of income and which is sold or otherwise disposed of during the taxable year other than depreciable property used in a trade or business.
12. The amount allowed by section 43‑1024 for amortization, by a qualified defense contractor certified by the Arizona commerce authority under section 41‑1508, of a capital investment for private commercial activities.
13. The amount of gain included in federal adjusted gross income on the sale or other disposition of a capital investment that a qualified defense contractor has elected to amortize pursuant to section 43‑1024.
14. The amount allowed by section 43‑1025 for contributions during the taxable year of agricultural crops to charitable organizations.
15. The portion of any wages or salaries paid or incurred by the taxpayer for the taxable year that is equal to the amount of the federal work opportunity credit, the empowerment zone employment credit, the credit for employer paid social security taxes on employee cash tips and the Indian employment credit that the taxpayer received under sections 45A, 45B, 51(a) and 1396 of the internal revenue code.
16. The amount of prizes or winnings less than five thousand dollars in a single taxable year from any of the state lotteries established and operated pursuant to title 5, chapter 5, article 1, except that all such winnings before March 22, 1983, including periodic distributions from such winnings made after March 22, 1983, may be subtracted.
17. The amount of exploration expenses that is determined pursuant to section 617 of the internal revenue code, that has been deferred in a taxable year ending before January 1, 1990 and for which a subtraction has not previously been made. The subtraction shall be made on a ratable basis as the units of produced ores or minerals discovered or explored as a result of this exploration are sold.
18. The amount included in federal adjusted gross income pursuant to section 86 of the internal revenue code, relating to taxation of social security and railroad retirement benefits.
19. To the extent not already excluded from Arizona gross income under the internal revenue code, compensation received for active service as a member of the reserves, the national guard or the armed forces of the United States, including compensation for service in a combat zone as determined under section 112 of the internal revenue code.
20. The amount of unreimbursed medical and hospital costs, adoption counseling, legal and agency fees and other nonrecurring costs of adoption not to exceed three thousand dollars. In the case of a husband and wife who file separate returns, the subtraction may be taken by either taxpayer or may be divided between them, but the total subtractions allowed both husband and wife shall not exceed three thousand dollars. The subtraction under this paragraph may be taken for the costs that are described in this paragraph and that are incurred in prior years, but the subtraction may be taken only in the year during which the final adoption order is granted.
21. The amount authorized by section 43‑1027 for the taxable year relating to qualified wood stoves, wood fireplaces or gas fired fireplaces.
22. With respect to a medical savings account established pursuant to section 43‑1028:
(a) An eligible individual may subtract:
(i) The amount of contributions made by the individual's employer during the taxable year to the individual's medical savings account pursuant to section 43‑1028 to the extent that the employer contributions are included in the individual's federal adjusted gross income.
(ii) The amount deposited by the individual in the account during the taxable year to the extent that the individual's contributions are included in the individual's federal adjusted gross income.
(b) The individual's employer may subtract the amount of contributions made by the employer to a medical savings account established on the individual's behalf to the extent that the contributions are not deductible under the internal revenue code.
23. The amount by which a net operating loss carryover or capital loss carryover allowable pursuant to section 43‑1029, subsection F exceeds the net operating loss carryover or capital loss carryover allowable pursuant to section 1341(b)(5) of the internal revenue code.
24. Any amount of qualified educational expenses that is distributed from a qualified state tuition program determined pursuant to section 529 of the internal revenue code and that is included in income in computing federal adjusted gross income.
25. Any item of income resulting from an installment sale that has been properly subjected to income tax in another state in a previous taxable year and that is included in Arizona gross income in the current taxable year.
26. The amount authorized by section 43‑1030 relating to holocaust survivors.
27. The amount authorized by section 43‑1031 for constructing an energy efficient residence.
28. An amount equal to the depreciation allowable pursuant to section 167(a) of the internal revenue code for the taxable year computed as if the election described in section 168(k)(2)(D)(iii) of the internal revenue code had been made for each applicable class of property in the year the property was placed in service.
29. With respect to property that is sold or otherwise disposed of during the taxable year by a taxpayer that complied with section 43‑1021, paragraph 26 with respect to that property, the amount of depreciation that has been allowed pursuant to section 167(a) of the internal revenue code to the extent that the amount has not already reduced Arizona taxable income in the current or prior taxable years.
30. With respect to property for which an adjustment was made under section 43‑1021, paragraph 27, an amount equal to one‑fifth of the amount of the adjustment pursuant to section 43‑1021, paragraph 27 in the year in which the amount was adjusted under section 43‑1021, paragraph 27 and in each of the following four years.
31. For taxable years beginning from and after December 31, 2007 through December 31, 2012, the amount contributed during the taxable year to college savings plans established pursuant to section 529 of the internal revenue code to the extent that the contributions were not deducted in computing federal adjusted gross income. The amount subtracted shall not exceed:
(a) Seven hundred fifty dollars for a single individual or a head of household.
(b) One thousand five hundred dollars for a married couple filing a joint return. In the case of a husband and wife who file separate returns, the subtraction may be taken by either taxpayer or may be divided between them, but the total subtractions allowed both husband and wife shall not exceed one thousand five hundred dollars.
32. To the extent not already excluded from Arizona gross income under the internal revenue code, the amount authorized by section 43‑1032 for displaced pupils choice grants.
33. The amount of any original issue discount that was deferred and not allowed to be deducted in computing federal adjusted gross income or federal taxable income in the current taxable year pursuant to section 108(i) of the internal revenue code as added by section 1231 of the American recovery and reinvestment act of 2009 (P.L. 111‑5).
34. The amount of previously deferred discharge of indebtedness income that is included in the computation of federal adjusted gross income or federal taxable income in the current taxable year pursuant to section 108(i) of the internal revenue code as added by section 1231 of the American recovery and reinvestment act of 2009 (P.L. 111-5), to the extent that the amount was previously added to Arizona gross income pursuant to section 43‑1021, paragraph 33.
35. The portion of the net operating loss carryforward that would have been allowed as a deduction in the current year pursuant to section 172 of the internal revenue code if the election described in section 172(b)(1)(H) of the internal revenue code had not been made in the year of the loss that exceeds the actual net operating loss carryforward that was deducted in arriving at federal adjusted gross income. This subtraction only applies to taxpayers who made an election under section 172(b)(1)(H) of the internal revenue code as amended by section 1211 of the American recovery and reinvestment act of 2009 (P.L. 111-5) or as amended by section 13 of the worker, homeownership, and business assistance act of 2009 (P.L. 111‑92).
36. For taxable years beginning from and after December 31, 2013, the amount of any net capital gain included in federal adjusted gross income for the taxable year derived from investment in a qualified small business as determined by the Arizona commerce authority pursuant to section 41‑1518.
37. To the extent included in Arizona gross income under the internal revenue code, interest earned on contributions to accounts established for a designated beneficiary in the Arizona long‑term care trust under title 35, chapter 9.