Title VII, SEC. 7701. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE. (a) General Rule. Paragraph (1) of section 213(d) (defining medical care) is amended by striking ``or'' at the end of subparagraph (B), by redesignating subparagraph (C) as subparagraph (D), and by inserting after subparagraph (B) the following new subparagraph: ``(C) for qualified long-term care services (as defined in subsection (g)), or''. (b) Qualified Long-Term Care Services Defined. Section 213 (relating to the deduction for medical, dental, etc., expenses) is amended by adding at the end thereof the following new subsection: ``(g) Qualified Long-Term Care Services. For purposes of this section ``(1) In general. The term `qualified long-term care services' means necessary diagnostic, curing, mitigating, treating, preventive, therapeutic, and rehabilitative services, and maintenance and personal care services (whether performed in a residential or nonresidential setting) which ``(A) are required by an individual during any period the individual is an incapacitated individual (as defined in paragraph (2)), ``(B) have as their primary purpose ``(i) the provision of needed assistance with 1 or more activities of daily living (as defined in paragraph (3)), or ``(ii) protection from threats to health and safety due to severe cognitive impairment, and ``(C) are provided pursuant to a continuing plan of care prescribed by a licensed professional (as defined in paragraph (4)). ``(2) Incapacitated individual. The term `incapacitated individual' means any individual who ``(A) is unable to perform, without substantial assistance from another individual (including assistance involving cueing or substantial supervision), at least 2 activities of daily living as defined in paragraph (3), or ``(B) has severe cognitive impairment as defined by the Secretary in consultation with the Secretary of Health and Human Services. Such term shall not include any individual otherwise meeting the requirements of the preceding sentence unless a licensed professional within the preceding 12-month period has certified that such individual meets such requirements. ``(3) Activities of daily living. Each of the following is an activity of daily living: ``(A) Eating. ``(B) Toileting. ``(C) Transferring. ``(D) Bathing. ``(E) Dressing. ``(4) Licensed professional. The term `licensed professional' means ``(A) a physician or registered professional nurse, or ``(B) any other individual who meets such requirements as may be prescribed by the Secretary after consultation with the Secretary of Health and Human Services. ``(5) Certain services not included. The term `qualified long-term care services' shall not include any services provided to an individual ``(A) by a relative (directly or through a partnership, corporation, or other entity) unless the relative is a licensed professional with respect to such services, or ``(B) by a corporation or partnership which is related (within the meaning of section 267(b) or 707(b)) to the individual. ``For purposes of this paragraph, the term `relative' means an individual bearing a relationship to the individual which is described in paragraphs (1) through (8) of section 152(a).'' (c) Technical Amendments. (1) Subparagraph (D) of section 213(d)(1) (as redesignated by subsection (a)) is amended to read as follows: ``(D) for insurance (including amounts paid as premiums under part B of title XVIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in ``(i) subparagraphs (A) and (B), or ``(ii) subparagraph (C), but only if such insurance is provided under a qualified long-term care insurance policy (as defined in section 7702B(b)) and the amount paid for such insurance is not disallowed under section 7702B(d)(4).'' (2) Paragraph (6) of section 213(d) is amended (A) by striking ``subparagraphs (A) and (B)'' and inserting ``subparagraph (A), (B), and (C)'', and (B) by striking ``paragraph (1)(C)'' in subparagraph (A) and inserting ``paragraph (1)(D)''. (d) Effective Date. The amendments made by this section shall apply to taxable years beginning after December 31, 1995.