Introduced Version
HOUSE BILL No. 1588
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 5-28-45; IC 6-3.1; IC 6-8-16.
Synopsis: Long term care savings accounts. Establishes the primary
care access revolving fund (fund) for the purpose of making loans to
primary care medical practices in Indiana. Specifies the purposes for
which money in the fund may be loaned. Provides that the Indiana
finance authority shall administer the fund. Requires the Indiana
economic development corporation (IEDC) to transfer $15,000,000 to
the fund from the amount appropriated to the IEDC by the general
assembly in the 2025-2026 state fiscal year. Increases the employee
threshold for purposes of eligibility for the health reimbursement
arrangement income tax credit. Increases the maximum amount of tax
credits that may be granted in a year. Specifies the procedure for
claiming the credit. Allows an employer to establish a long term care
savings account program that allows an employee to save with
favorable tax treatment for services required when the employee's or
the employee's dependents' functional capacities become chronically
impaired due to advanced age or other circumstances. Expands the
physician practice ownership tax credit (tax credit) against state tax
liability to practicing physicians (instead of only primary care
physicians) who have an ownership interest in a physician practice and
meet other eligibility criteria. Requires a taxpayer claiming the tax
credit to certify that each physician with an ownership interest provides
health care services to patients. Provides that the total amount of tax
credits awarded in a state fiscal year may not exceed $20,000,000.
Effective: January 1, 2025 (retroactive); July 1, 2025.
Barrett
January 21, 2025, read first time and referred to Committee on Ways and Means.
2025 IN 1588—LS 7709/DI 134 Introduced
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2024 Regular Session of the General Assembly.
HOUSE BILL No. 1588
A BILL FOR AN ACT to amend the Indiana Code concerning state
and local administration and to make an appropriation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 5-28-45 IS ADDED TO THE INDIANA CODE AS
2 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
3 1, 2025]:
4 Chapter 45. Primary Care Access Revolving Fund
5 Sec. 1. As used in this chapter, "fund" refers to the primary
6 care access revolving fund established by section 5 of this chapter.
7 Sec. 2. As used in this chapter, "physician" means an individual
8 who is licensed to practice medicine in Indiana under IC 25-22.5.
9 Sec. 3. As used in this chapter, "primary care medical practice"
10 includes:
11 (1) a physician practicing as a primary care physician;
12 (2) a hospital providing primary health care services to
13 patients; and
14 (3) any other corporation, limited liability company,
15 partnership, or other legal entity organized and licensed to
16 provide primary health care services to patients;
17 in Indiana.
2025 IN 1588—LS 7709/DI 134 2
1 Sec. 4. As used in this chapter, "primary care physician" refers
2 to a physician practicing in one (1) or more of the following:
3 (1) Family medicine.
4 (2) General pediatric medicine.
5 (3) General internal medicine.
6 (4) The general practice of medicine.
7 Sec. 5. (a) The primary care access revolving fund is established
8 for the purpose of making loans to primary care medical practices
9 as set forth in this chapter. The fund is a nonlapsing, revolving
10 fund. The Indiana finance authority shall administer the fund. The
11 fund consists of the following:
12 (1) Money appropriated by the general assembly.
13 (2) Money deposited in the fund under subsection (b).
14 (3) The repayment proceeds of loans made to primary care
15 medical practices from the fund.
16 (4) Money received from any other source.
17 (b) Of the money appropriated by the general assembly to the
18 Indiana economic development corporation for the state fiscal year
19 beginning after June 30, 2025, and ending before July 1, 2026,
20 fifteen million dollars ($15,000,000) of that amount shall be
21 deposited by the Indiana economic development corporation in the
22 fund to be used for the purposes of the fund.
23 Sec. 6. (a) The Indiana finance authority may make loans from
24 the fund to primary care medical practices in Indiana. A loan
25 under this section may be made for the following purposes:
26 (1) To finance facility capital improvements and expansion.
27 (2) To purchase equipment used in the primary care medical
28 practice.
29 (3) To meet the primary care medical practice's working
30 capital needs.
31 (4) Any other purpose of a primary care medical practice that
32 serves to increase local access to primary health care services.
33 (b) Priority for a loan from the fund may be given to a primary
34 care medical practice:
35 (1) that has secured funding from other sources for the
36 project or purpose for which the loan from the fund is made;
37 or
38 (2) that is located in a:
39 (A) a medically underserved area;
40 (B) a rural area; or
41 (C) a health professional shortage area.
42 Sec. 7. The recipient of a loan under this chapter must enter into
2025 IN 1588—LS 7709/DI 134 3
1 a loan agreement with the Indiana finance authority. The loan
2 agreement must contain the following terms:
3 (1) A requirement that the loan proceeds be used for specified
4 purposes consistent with this chapter.
5 (2) The term of the loan.
6 (3) The repayment schedule.
7 (4) The interest rate or rates of the loan, which may include
8 variations in the rate but may not be less than the amount
9 necessary to cover all expenses in making the loan.
10 (5) Any other terms and provisions deemed necessary.
11 SECTION 2. IC 6-3.1-38-1.5 IS ADDED TO THE INDIANA
12 CODE AS A NEW SECTION TO READ AS FOLLOWS
13 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 1.5. As
14 used in this chapter, "pass through entity" has the meaning set
15 forth in IC 6-3-1-35.
16 SECTION 3. IC 6-3.1-38-4, AS ADDED BY P.L.203-2023,
17 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
18 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 4. (a) Subject to
19 subsection (c) and section 7 of this chapter, a qualified taxpayer may
20 claim a credit against the qualified taxpayer's state tax liability for a
21 qualified contribution for a qualified taxpayer with less than fifty (50)
22 seventy-five (75) employees, if the amount provided toward the
23 health reimbursement arrangement is equal to or greater than
24 either the level of benefits provided in the previous benefit year, or
25 if the amount the employer contributes toward the health
26 reimbursement arrangement equals the same amount contributed
27 per covered individual toward the employer provided health
28 insurance plan during the previous benefit year. up to four hundred
29 dollars ($400) in the first year per covered employee if the amount
30 provided toward the health reimbursement arrangement is equal to or
31 greater than either the level of benefits provided in the previous benefit
32 year, or if the amount the employer contributes toward the health
33 reimbursement arrangement equals the same amount contributed per
34 covered individual toward the employer provided health insurance plan
35 during the previous benefit year. The credit under this section
36 decreases to two hundred dollars ($200) per covered employee in the
37 second year.
38 (b) The amount of the credit is the lesser of:
39 (1) the amount contributed by the employer toward the health
40 reimbursement arrangement during the taxable year; or
41 (2) the following:
42 (A) For the taxable year in which the employer establishes
2025 IN 1588—LS 7709/DI 134 4
1 the health reimbursement arrangement, four hundred
2 dollars ($400).
3 (B) For the taxable year that immediately follows the
4 taxable year in which the employer establishes the health
5 reimbursement arrangement, two hundred dollars ($200).
6 (C) For a taxable year following a taxable year described
7 in clause (A) or (B), zero dollars ($0).
8 (c) A qualified taxpayer may not claim a credit under this
9 chapter for a health reimbursement arrangement established in a
10 taxable year beginning before January 1, 2024.
11 SECTION 4. IC 6-3.1-38-4.5 IS ADDED TO THE INDIANA
12 CODE AS A NEW SECTION TO READ AS FOLLOWS
13 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 4.5. For
14 a taxable year beginning after December 31, 2024, if a pass through
15 entity is entitled to a credit under section 4 of this chapter but does
16 not have state tax liability against which the tax credit may be
17 applied, a shareholder, partner, or member of the pass through
18 entity is entitled to a tax credit equal to:
19 (1) the tax credit determined for the pass through entity for
20 the taxable year; multiplied by
21 (2) the percentage of the pass through entity's distributive
22 income to which the shareholder, partner, or member is
23 entitled.
24 SECTION 5. IC 6-3.1-38-6, AS ADDED BY P.L.203-2023,
25 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
26 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 6. Subject to section 7
27 of this chapter, to receive the credit provided by this chapter, a
28 qualified taxpayer must claim the credit on the qualified taxpayer's
29 state tax return or returns in the manner prescribed by the department.
30 SECTION 6. IC 6-3.1-38-7, AS ADDED BY P.L.203-2023,
31 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
32 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 7. (a) The amount of tax
33 credits granted under this chapter may not exceed ten million dollars
34 ($10,000,000) fifteen million dollars ($15,000,000) in any taxable
35 state fiscal year.
36 (b) For state fiscal years ending before July 1, 2025, the
37 department shall record the time of filing of each return claiming a
38 credit under section 6 of this chapter and shall approve the claims if
39 they otherwise qualify for a tax credit under this chapter, in the
40 chronological order in which the claims are filed in the state fiscal year.
41 (c) For state fiscal years beginning after June 30, 2025, to claim
42 the credit, a qualified taxpayer must submit a claim for the credit
2025 IN 1588—LS 7709/DI 134 5
1 after the end of the qualified taxpayer's taxable year. The
2 department shall record the claimant and the amount of allowable
3 credit in the order in which the department receives the
4 application from the taxpayer.
5 (c) (d) The department may not approve a claim for a tax credit after
6 the date on which the total credits approved under this section equal the
7 maximum amount allowable in a particular state fiscal year.
8 SECTION 7. IC 6-3.1-40-1.5 IS ADDED TO THE INDIANA
9 CODE AS A NEW SECTION TO READ AS FOLLOWS
10 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 1.5. As
11 used in this chapter, "pass through entity" has the meaning set
12 forth in IC 6-3-1-35.
13 SECTION 8. IC 6-3.1-40-3 IS REPEALED [EFFECTIVE
14 JANUARY 1, 2025 (RETROACTIVE)]. Sec. 3. As used in this
15 chapter, "primary care physician" refers to a physician practicing in one
16 (1) or more of the following:
17 (1) Family medicine.
18 (2) General pediatric medicine.
19 (3) General internal medicine.
20 (4) The general practice of medicine.
21 SECTION 9. IC 6-3.1-40-5, AS ADDED BY P.L.203-2023,
22 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
23 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 5. As used in this
24 chapter, "taxpayer" means an individual who:
25 (1) is a physician practicing as a primary care physician; engaged
26 in the practice of medicine;
27 (2) has an ownership interest in a corporation, limited liability
28 company, partnership, or other legal entity organized to provide
29 primary health care services as a physician owned entity;
30 (3) is not employed by a health system (as defined in
31 IC 16-18-2-168.5); and
32 (4) has any state income tax liability.
33 SECTION 10. IC 6-3.1-40-6, AS ADDED BY P.L.203-2023,
34 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
35 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 6. If a taxpayer:
36 (1) has an ownership interest in a physician owned medical
37 practice described in section 5(2) of this chapter that:
38 (1) (A) is established as a legal entity under Indiana law after
39 December 31, 2023;
40 (2) (B) opens and begins to provide primary health care
41 services to patients in a particular taxable year beginning after
42 December 31, 2023; and
2025 IN 1588—LS 7709/DI 134 6
1 (3) (C) has billed for health care services described in
2 subdivision (2) for at least six (6) months of that a taxable
3 year;
4 (2) has an ownership interest in the income of the physician
5 owned medical practice that is at least:
6 (A) for a physician owned medical practice with not more
7 than ten (10) owners, five percent (5%) of the physician
8 owned medical practice's income; and
9 (B) for a physician owned medical practice with more than
10 ten (10) owners, fifty percent (50%) of the physician owned
11 medical practice's income; and
12 (3) provided health care services in the physician owned
13 medical practice for at least six (6) months of a taxable year;
14 the taxpayer may, subject to section sections 7 and 9.5 of this chapter,
15 claim a credit against the taxpayer's state income tax liability. Subject
16 to section sections 8 and 11 of this chapter, the amount of the credit
17 allowed under this chapter for a taxpayer in the particular taxable year
18 is twenty thousand dollars ($20,000).
19 SECTION 11. IC 6-3.1-40-7, AS ADDED BY P.L.203-2023,
20 SECTION 3, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
21 JANUARY 1, 2025 (RETROACTIVE)]: Sec. 7. A taxpayer may claim
22 a tax credit under this chapter for the a taxable year described in
23 section 6 of this chapter and the two (2) immediately following taxable
24 years.
25 SECTION 12. IC 6-3.1-40-8.5 IS ADDED TO THE INDIANA
26 CODE AS A NEW SECTION TO READ AS FOLLOWS
27 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 8.5. If a
28 pass through entity is entitled to a credit under section 6 of this
29 chapter but does not have state tax liability against which the tax
30 credit may be applied, a shareholder, partner, or member of the
31 pass through entity is entitled to a tax credit equal to:
32 (1) the tax credit determined for the pass through entity for
33 the taxable year; multiplied by
34 (2) the percentage of the pass through entity's distributive
35 income to which the shareholder, partner, or member is
36 entitled.
37 SECTION 13. IC 6-3.1-40-9 IS REPEALED [EFFECTIVE
38 JANUARY 1, 2025 (RETROACTIVE)]. Sec. 9. To obtain a credit
39 under this chapter, a taxpayer must claim the credit on the taxpayer's
40 annual state income tax return in the manner prescribed by the
41 department. The taxpayer shall submit to the department all
42 information that the department determines is necessary to verify the
2025 IN 1588—LS 7709/DI 134 7
1 taxpayer's eligibility for the credit provided by this chapter.
2 SECTION 14. IC 6-3.1-40-9.5 IS ADDED TO THE INDIANA
3 CODE AS A NEW SECTION TO READ AS FOLLOWS
4 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 9.5. (a) To
5 receive a credit under this chapter, a taxpayer must:
6 (1) subject to subsection (d), apply for the department's
7 approval of the tax credit in the manner prescribed by the
8 department after June 30 of a calendar year, but not later
9 than July 1 of the subsequent calendar year;
10 (2) submit with the application a certified list of each of the
11 physicians who has an ownership interest in the legal entity
12 described in section 6 of this chapter and any additional
13 information that the department determines is necessary for
14 the calculation of the credit under this chapter;
15 (3) attach proof of the department's approval of the tax credit
16 to the taxpayer's state tax return or returns; and
17 (4) claim the approved tax credit on the taxpayer's state tax
18 return or returns in the manner prescribed by the
19 department.
20 (b) The department shall record the time of filing of each
21 application for the department's approval of a tax credit and shall,
22 except as provided in subsection (c), approve granting the credit to
23 the taxpayer, if the taxpayer otherwise qualifies for a credit under
24 this chapter, in the chronological order in which the application for
25 the department's approval is filed in the year.
26 (c) If the total credits approved under this section equal the
27 maximum amount allowable in the year, the department may not
28 approve an application for the credit filed later in that year.
29 (d) A taxpayer may not file an application for a credit under this
30 chapter after the due date of the taxpayer's tax return for a taxable
31 year, or another date specified by the department.
32 SECTION 15. IC 6-3.1-40-11 IS ADDED TO THE INDIANA
33 CODE AS A NEW SECTION TO READ AS FOLLOWS
34 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 11. (a)
35 Subject to subsection (b), the total amount of tax credits awarded
36 under this chapter may not exceed twenty million dollars
37 ($20,000,000) in the state fiscal year beginning July 1, 2025, and
38 ending June 30, 2026, and in each state fiscal year thereafter.
39 However, any amounts carried forward under section 8(a) of this
40 chapter shall first be deducted from the total amount of tax credits
41 that may be awarded for the succeeding state fiscal year.
42 (b) For a taxable year beginning after December 31, 2024, and
2025 IN 1588—LS 7709/DI 134 8
1 before January 1, 2026, only that part of a taxpayer's tax credit
2 that is attributable to the period of time beginning after June 30,
3 2025, and before January 1, 2026, is subject to the maximum
4 amount provided in subsection (a).
5 SECTION 16. IC 6-3.1-40-12 IS ADDED TO THE INDIANA
6 CODE AS A NEW SECTION TO READ AS FOLLOWS
7 [EFFECTIVE JANUARY 1, 2025 (RETROACTIVE)]: Sec. 12. The
8 department, on a website used by the department to provide
9 information to the public, shall provide the following information:
10 (1) The application for the credit provided in this chapter.
11 (2) A timeline for receiving the credit provided in this chapter.
12 (3) The total amount of credits awarded under this chapter
13 during the current state fiscal year.
14 SECTION 17. IC 6-8-16 IS ADDED TO THE INDIANA CODE AS
15 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
16 1, 2025]:
17 Chapter 16. Long Term Care Savings Account
18 Sec. 1. As used in this chapter, "deductible" means the total
19 deductible for an employee and all dependents of the employee for
20 a calendar year.
21 Sec. 2. As used in this chapter, "dependent" means any of the
22 following:
23 (1) The spouse of an employee.
24 (2) An employee's child who is one (1) of the following:
25 (A) Less than nineteen (19) years of age.
26 (B) Less than twenty-three (23) years of age and enrolled
27 as a full-time student at an accredited college or university.
28 (C) Legally entitled to the provision by the employee of
29 proper or necessary subsistence, education, medical care,
30 or other care necessary for the child's health, guidance, or
31 well-being, and not otherwise emancipated,
32 self-supporting, married, or a member of the armed forces
33 of the United States.
34 (D) Mentally or physically incapacitated to the extent that
35 the child is not self-sufficient.
36 Sec. 3. As used in this chapter, "eligible long term care expense"
37 means an expense paid for the provision of long term care.
38 Sec. 4. As used in this chapter, "employee" means the
39 individual:
40 (1) for whose benefit; or
41 (2) for the benefit of whose dependents;
42 a long term care savings account is established.
2025 IN 1588—LS 7709/DI 134 9
1 Sec. 5. (a) As used in this chapter, for 2026, "higher deductible"
2 means a deductible of:
3 (1) not less than one thousand dollars ($1,000); and
4 (2) not more than five thousand dollars ($5,000).
5 (b) For years after 2026, the term means a deductible of:
6 (1) not less than the amount set forth in subsection (a)(1),
7 adjusted under subsection (c); and
8 (2) not more than the amount set forth in subsection (a)(2),
9 adjusted under subsection (c).
10 (c) The adjustments referred to in subsection (b)(1) and (b)(2):
11 (1) may reflect increases in the general level of prices since
12 2025; and
13 (2) must be based on:
14 (A) the Consumer Price Index updated monthly by the
15 Bureau of Labor Statistics of the United States Department
16 of Labor; or
17 (B) other figures issued by the United States government
18 to indicate increases in the general level of prices in the
19 United States.
20 Sec. 6. As used in this chapter, "long term care" means the
21 provision of the following services in a setting other than an acute
22 care wing of a hospital to enable individuals whose functional
23 capacities are chronically impaired due to advanced age or other
24 circumstances:
25 (1) Physician's services.
26 (2) Nursing services.
27 (3) Diagnostic services.
28 (4) Therapeutic services, including physical therapy, speech
29 therapy, and occupational therapy.
30 (5) Rehabilitative services.
31 (6) Maintenance services.
32 (7) Personal care services, including companion services and
33 assistance in bathing, dressing, and other skills of daily living.
34 (8) Transportation services.
35 (9) Day care services.
36 (10) Home health care services.
37 (11) Respite care services.
38 (12) Services provided in a facility licensed under IC 16-28.
39 (13) Services provided by chiropractors, podiatrists, and
40 optometrists.
41 Sec. 7. As used in this chapter, "long term care savings account"
42 or "account" means an account established in Indiana under a long
2025 IN 1588—LS 7709/DI 134 10
1 term care savings account program to pay the eligible long term
2 care expenses of an employee and dependents of the employee.
3 Sec. 8. As used in this chapter, "long term care savings account
4 program" means a program established under this chapter to pay
5 the eligible long term care expenses of employees and dependents
6 of employees through long term care savings accounts.
7 Sec. 9. As used in this chapter, "qualified higher deductible long
8 term care plan" means a long term care coverage policy,
9 certificate, or contract that:
10 (1) provides for the payment of eligible long term care
11 expenses that exceed a higher deductible;
12 (2) is purchased by an employer for the benefit of employees
13 and dependents of employees; and
14 (3) is part of a long term care savings account program
15 established under this chapter.
16 Sec. 10. (a) Except as otherwise provided by statute, contract, or
17 a collective bargaining agreement, an employer may establish a
18 long term care savings account program for the employer's
19 employees.
20 (b) An employer that establishes a long term care savings
21 account program under this chapter shall, before making any
22 contributions to long term care savings accounts under the
23 program, inform all employees in writing of the federal tax status
24 of contributions made under this chapter.
25 (c) Except as provided in sections 18 and 24 of this chapter, the:
26 (1) principal contributed by an employer to a long term care
27 savings account;
28 (2) interest earned on money on deposit in a long term care
29 savings account; and
30 (3) money:
31 (A) paid out of a long term care savings account for eligible
32 long term care expenses; or
33 (B) used to reimburse an employee for eligible long term
34 care expenses;
35 are exempt from taxation as income of the employee.
36 Sec. 11. (a) A long term care savings account program
37 established by an employer under this chapter must include all of
38 the following:
39 (1) The purchase by the employer of a qualified higher
40 deductible long term care plan for the benefit of one (1) or
41 more employees and dependents of the employees.
42 (2) The contribution by the employer, and the deposit into the
2025 IN 1588—LS 7709/DI 134 11
1 long term care savings account established on behalf of each
2 employee, of all or part of the difference between:
3 (A) the cost to the employer of purchasing a qualified
4 higher deductible long term care plan for the benefit of the
5 employee; and
6 (B) the cost previously incurred by the employer to pay the
7 eligible long term care expenses of the employee through
8 a long term care coverage policy, certificate, or contract.
9 (3) The designation of an account administrator to administer
10 the long term care savings accounts of employees.
11 (b) Notwithstanding subsection (a)(2), if an employer, before
12 establishing a long term care savings account program under this
13 chapter, did not pay the eligible long term care expenses of the
14 employer's employees through a long term care coverage policy,
15 certificate, or contract, the employer may contribute all or part of
16 the deductible of the qualified higher deductible long term care
17 plan purchased by the employer to establish the long term care
18 savings account program.
19 (c) The contribution under subsection (b) must not exceed the
20 following:
21 (1) For 2026, five thousand dollars ($5,000).
22 (2) For years after 2026, the figure set forth in subdivision (1),
23 adjusted under subsection (d).
24 (d) The adjustments referred to in subsection (c):
25 (1) may reflect increases in the general level of prices since
26 2025; and
27 (2) must be based on:
28 (A) the Consumer Price Index updated monthly by the
29 Bureau of Labor Statistics of the United States Department
30 of Labor; or
31 (B) other figures issued by the United States government
32 to indicate increases in the general level of prices in the
33 United States.
34 Sec. 12. (a) A long term care savings account program
35 established by an employer under this chapter may allow an
36 employee to contribute money to the long term care savings
37 account established for the employee. However, an employee may
38 not contribute an amount larger than necessary to make the
39 balance in the account equal the deductible.
40 (b) Notwithstanding sections 18 and 24 of this chapter, if an
41 employee contributes money to an account under this section:
42 (1) the money may be withdrawn from the account by the
2025 IN 1588—LS 7709/DI 134 12
1 employee at any time and for any purpose without a penalty;
2 (2) the withdrawal of the money by the employee is not
3 income to the employee that is subject to taxation under
4 IC 6-3-1 through IC 6-3-7; and
5 (3) income earned on the money while it is in the account is
6 not income to the employee that is subject to taxation under
7 IC 6-3-1 through IC 6-3-7.
8 Sec. 12.5. If an employer contributes money to an account under
9 this chapter after December 31, 2025, for which no exemption
10 applies under Indiana law and for which no exemption or exclusion
11 applies under the Internal Revenue Code at the time of
12 contribution:
13 (1) the money may be withdrawn from the account by the
14 employee at any time and for any purpose without a penalty;
15 and
16 (2) the withdrawal of the principal amount contributed by the
17 employer is not income to the employee that is subject to
18 taxation under IC 6-3-1 through IC 6-3-7.
19 Sec. 13. The following may be an account administrator under
20 this chapter:
21 (1) A federal or state chartered:
22 (A) bank;
23 (B) savings association;
24 (C) savings bank; or
25 (D) credit union.
26 (2) A trust company authorized to act as a fiduciary.
27 (3) An insurance company or a health maintenance
28 organization authorized to do business in Indiana under
29 IC 27.
30 (4) A broker-dealer, an agent, or an investment adviser
31 registered under IC 23-19.
32 (5) A person that is licensed as an administrator under
33 IC 27-1-25.
34 (6) An employee welfare benefit plan that is governed by the
35 federal Employee Retirement Income Security Act, 29 U.S.C.
36 1001 et seq.
37 Sec. 14. An account administrator shall use the funds held in a
38 long term care savings account exclusively for the purpose of
39 paying the eligible long term care expenses of the employee or the
40 employee's dependents.
41 Sec. 15. (a) Funds held in a long term care savings account shall
42 not be used to cover long term care expenses of the employee or the
2025 IN 1588—LS 7709/DI 134 13
1 employee's dependents that are otherwise covered.
2 (b) Long term care expenses that are "otherwise covered", for
3 purposes of this section, include expenses covered by:
4 (1) an automobile insurance policy;
5 (2) a worker's compensation insurance policy or self-insured
6 plan; or
7 (3) another long term care coverage policy, certificate, or
8 contract.
9 Sec. 16. If an employee submits documentation to the account
10 administrator concerning eligible long term care expenses that the
11 employee has incurred and paid for long term care for the
12 employee or a dependent of the employee, the account
13 administrator shall reimburse the employee from the employee's
14 account for the eligible long term care expenses paid by the
15 employee.
16 Sec. 17. An employer that makes contributions to a long term
17 care savings account program on a periodic installment basis may
18 advance to an employee, interest free, an amount necessary to
19 cover unpaid eligible long term care expenses that exceed the
20 amount in the employee's long term care savings account if the
21 employee agrees to repay the advance:
22 (1) from future installments; or
23 (2) when the employee ceases to be an employee of the
24 employer.
25 Sec. 18. (a) An employee may, under this section, withdraw
26 money from the employee's long term care savings account for a
27 purpose other than the purposes set forth in section 6 of this
28 chapter.
29 (b) Except as provided in sections 12(b) and 12.5 of this chapter,
30 if an employee withdraws money from the employee's long term
31 care savings account on the last business day of the account
32 administrator's business year for a purpose not set forth in section
33 6 of this chapter:
34 (1) the money withdrawn is income to the individual that is
35 subject to taxation; but
36 (2) the withdrawal does not:
37 (A) subject the employee to a penalty; or
38 (B) make the interest earned on the account during the tax
39 year taxable as income of the employee.
40 (c) Except as provided in sections 12(b) and 12.5 of this chapter,
41 if an employee withdraws money for a purpose not set forth in
42 section 6 of this chapter at any time other than the last business
2025 IN 1588—LS 7709/DI 134 14
1 day of the account administrator's business year, all of the
2 following apply:
3 (1) The amount of the withdrawal is income to the individual
4 that is subject to taxation.
5 (2) The administrator shall withhold and, on behalf of the
6 employee, pay a penalty to the department of state revenue
7 equal to ten percent (10%) of the amount of the withdrawal.
8 (3) All interest earned on the balance in the account during
9 the tax year in which a withdrawal under this subsection is
10 made is income to the individual that is subject to taxation.
11 (d) Money paid to the department of state revenue as a penalty
12 under this section shall be deposited in the local public health fund
13 established by IC 16-46-10-1.
14 Sec. 19. (a) For purposes of section 18(b) of this chapter, an
15 account administrator that begins to administer a long term care
16 savings account shall, in writing, notify the employee for whose
17 benefit the account was established of the date of the last business
18 day of the administrator's business year.
19 (b) The notice required by this section must be given not more
20 than thirty (30) days after the account administrator begins to
21 administer the long term care savings account.
22 Sec. 20. Money in a long term care savings account established
23 under this chapter is exempt from execution under IC 34-55-10-2.
24 Sec. 21. (a) This section applies only to an employee who has no
25 dependents who are covered under the long term care savings
26 account established for the benefit of the employee.
27 (b) Upon the death of the employee for whose benefit a long
28 term care savings account was established, the account
29 administrator shall distribute the principal and accumulated
30 interest of the account to the estate of the employee by mailing a
31 check to the personal representative of the employee (as defined in
32 IC 29-1-1-3).
33 (c) The distribution of the balance in a long term care savings
34 account under this section is not income to the individual or to the
35 estate of the individual that is subject to taxation under IC 6-3-1
36 through IC 6-3-7.
37 Sec. 22. If an individual:
38 (1) who was employed by an employer that participated in a
39 long term care savings account program; and
40 (2) whose employment was terminated;
41 becomes employed with a different employer that participates in
42 a long term care savings account program, the individual may
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1 transfer the long term care savings account that was established
2 for the individual's benefit by the former employer to the account
3 administrator of the new employer.
4 Sec. 23. If the employment of an individual by an employer that
5 participates in a long term care savings account program is
6 terminated, the money in the individual's long term care savings
7 account may continue to be used for the benefit of the individual
8 and the individual's dependents and remains exempt from taxation
9 as provided under this chapter if, not more than sixty (60) days
10 after the individual's final day of employment:
11 (1) the individual transfers the individual's long term care
12 savings account to a new account administrator; or
13 (2) the individual requests in writing that the former
14 employer's account administrator remain the administrator
15 of the individual's account, and the account administrator
16 agrees to retain the account.
17 Sec. 24. (a) This section applies when the employment of an
18 individual by an employer that participates in a long term care
19 savings account program is terminated.
20 (b) If the former employer is not informed, within ninety (90)
21 days after the former employee's final day of employment, of the
22 name and address of an account administrator to which the former
23 employee is transferring the former employee's long term care
24 savings account under section 22 of this chapter, the former
25 employer shall pay the money in the former employee's long term
26 care savings account to the former employee under subsection (d).
27 (c) If:
28 (1) the former employee, under section 23(2) of this chapter,
29 requests in writing that the former employer's account
30 administrator remain the administrator of the individual's
31 long term care savings account; and
32 (2) the account administrator does not agree to retain the
33 account;
34 the former employer shall, within ninety (90) days after the former
35 employee's final day of employment, pay the money in the former
36 employee's long term care savings account to the former employee
37 under subsection (d).
38 (d) An employer that is required under this section to pay the
39 money in a former employee's long term care savings account to
40 the former employee shall mail to the former employee, at the
41 former employee's last known address, a check for the balance in
42 the account on the ninety-first day after the employee's final day
2025 IN 1588—LS 7709/DI 134 16
1 of employment.
2 (e) Except as provided in sections 12(b) and 12.5 of this chapter,
3 money that is paid to a former employee under subsection (d):
4 (1) is subject to taxation under IC 6-3-1 through IC 6-3-7 as
5 income of the individual; but
6 (2) is not subject to the penalty referred to in section 18(c)(2)
7 of this chapter.
8 Sec. 25. (a) This section applies if an individual:
9 (1) whose employer participates in a long term care savings
10 account program; and
11 (2) who has one (1) or more dependents who are covered
12 under the account established for the benefit of the individual;
13 dies.
14 (b) After the death of an individual described in subsection (a),
15 the money in the individual's long term care savings account may
16 continue to be used for the benefit of the individual's dependents
17 and remains exempt from taxation as provided under this chapter
18 if, not more than sixty (60) days after the individual's death:
19 (1) the deceased individual's long term care savings account
20 is transferred to a new account administrator; or
21 (2) the dependents of the individual request in writing that the
22 account administrator of the deceased individual's employer
23 remain the administrator of the account, and the account
24 administrator agrees to retain the account.
25 (c) If the former employer of an individual described in
26 subsection (a) is not informed, within ninety (90) days after the
27 individual's death, of the name and address of an account
28 administrator to which the long term care savings account has
29 been transferred under subsection (b)(1), the former employer
30 shall pay the money in the long term care savings account to the
31 estate of the individual under subsection (e).
32 (d) If:
33 (1) the dependents of an individual described in subsection (a),
34 under subsection (b)(2), request in writing that the former
35 employer's account administrator remain the administrator
36 of the individual's long term care savings account; and
37 (2) the account administrator does not agree to retain the
38 account;
39 the former employer shall, within ninety (90) days after the
40 individual's death, pay the money in the individual's long term care
41 savings account to the estate of the individual under subsection (e).
42 (e) Under the circumstances described in subsection (c) or (d),
2025 IN 1588—LS 7709/DI 134 17
1 the account administrator shall distribute the principal and
2 accumulated interest in the account to the estate of the individual
3 by mailing a check to the personal representative of the individual
4 (as defined in IC 29-1-1-3).
5 (f) The distribution of the balance in a long term care savings
6 account under subsection (e) is not income to the individual or to
7 the estate of the individual that is subject to taxation under
8 IC 6-3-1 through IC 6-3-7.
9 Sec. 26. (a) The insurance commissioner appointed under
10 IC 27-1-1-2 and the department of state revenue may adopt rules
11 under IC 4-22-2 necessary to implement this chapter.
12 (b) The rules adopted under this section must include a
13 procedure for the adjustment of amounts required by sections 5
14 and 11 of this chapter.
15 SECTION 18. [EFFECTIVE JULY 1, 2025] (a) IC 6-8-16, as
16 added by this act, applies to taxable years beginning after
17 December 31, 2025.
18 (b) This SECTION expires June 30, 2028.
19 SECTION 19. [EFFECTIVE JANUARY 1, 2025
20 (RETROACTIVE)] (a) IC 6-3.1-40-1.5, IC 6-3.1-40-8.5,
21 IC 6-3.1-40-9.5, IC 6-3.1-40-11, and IC 6-3.1-40-12, all as added by
22 this act, apply to taxable years beginning after December 31, 2024.
23 (b) IC 6-3.1-40-5, IC 6-3.1-40-6, and IC 6-3.1-40-7, all as
24 amended by this act, apply to taxable years beginning after
25 December 31, 2024.
26 (c) The repeal of IC 6-3.1-40-3 and IC 6-3.1-40-9 by this act
27 applies to taxable years beginning after December 31, 2024.
28 (d) This SECTION expires July 1, 2028.
29 SECTION 20. [EFFECTIVE JANUARY 1, 2025
30 (RETROACTIVE)] (a) IC 6-3.1-38-4, IC 6-3.1-38-6, and
31 IC 6-3.1-38-7, all as amended by this act, apply to taxable years
32 beginning after December 31, 2024.
33 (b) IC 6-3.1-38-1.5 and IC 6-3.1-38-4.5, both as added by this
34 act, apply to taxable years beginning after December 31, 2024.
35 (c) This SECTION expires July 1, 2028.
36 SECTION 21. An emergency is declared for this act.
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