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Minnesota Legislature

Office of the Revisor of Statutes

HF 4229

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 05/01/2008

Current Version - as introduced

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A bill for an act
relating to health; setting policy goals for health care reform; providing health
insurance reform; establishing health savings accounts for state employees;
setting spending targets for health and human services programs; establishing
the MinnesotaCare CMF program; modifying procedures for assessing
MinnesotaCare taxes; making changes in the tax treatment of premiums and
medical expenditures; increasing a tax credit for long-term care insurance;
limiting punitive damages and attorney fees for certain medical liability claims;
appropriating money; amending Minnesota Statutes 2006, sections 62J.2930, by
adding a subdivision; 290.0672, subdivision 2; 295.52, by adding a subdivision;
Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, as
amended; proposing coding for new law in Minnesota Statutes, chapters 43A;
62J; 62Q; 256; 256L; 290; 604.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

GOALS OF REFORM

Section 1. new text beginPOLICY GOALS OF HEALTH CARE REFORM.
new text end

new text begin It is the policy and intent of the state of Minnesota to enact and promote
consumer-driven, market-based solutions within the health care sector, to achieve the
greatest access to the highest quality of care. It is not the intent of this act to shift, in part or
in whole, any care provided in the private market to public programs or to a single-payer
government-managed system. Any policies enacted must be patient-centered, and offer
choice and competition through the free market. Any policies enacted must inform and
empower consumer decision-making, prevent health care rationing, provide effective
accountability, and advance and provide access to high-quality, affordable care.
new text end

ARTICLE 2

INSURANCE REFORM

Section 1.

new text begin [43A.221] BENEFIT STRUCTURE; HEALTH SAVINGS ACCOUNTS.
new text end

new text begin (a) The state employee group insurance plan must be structured as a high-deductible
health plan that would allow both the employer and participants to qualify under federal
law to use health savings accounts to:
new text end

new text begin (1) provide open access to health care services and unlimited patient choice;
new text end

new text begin (2) save on health care costs by encouraging price comparison shopping; and
new text end

new text begin (3) create a tax-free, interest-earning fund for future medical expenses.
new text end

new text begin (b) The plan must include an option for the employer to contribute at least 60
percent of the cost of the chosen high-deductible health plan and a maximum of 100
percent of the chosen deductible for both single and family coverage per year. Preventive
care coverage must be 100 percent covered by the insurance portion of the plan with a
waiver of the deductible.
new text end

new text begin (c) The goal of the employer is to expand coverage through the health savings
account for eligible items, including but not limited to:
new text end

new text begin (1) all preventive and medical care services;
new text end

new text begin (2) eyeglasses, contact lenses, and laser eye surgery;
new text end

new text begin (3) preventive and restorative dental procedures, including orthodontics;
new text end

new text begin (4) all over-the-counter medications and supplies;
new text end

new text begin (5) future long-term care policy premiums; and
new text end

new text begin (6) future Medicare Part B premiums.
new text end

new text begin (d) The goal of the employer is to enable a dramatic reduction in potential
out-of-pocket financial liability to the employee with both single and family coverage
as compared to the present plan.
new text end

new text begin (e) The goal of the employer is to eliminate the employee's net out-of-pocket plan
liability through the tax-free accumulation of both employee elective pretax payroll
contributions, and the accumulation of unused health savings account funds from year to
year.
new text end

new text begin (f) It is the employer's goal to allow for the portability of employee-owned pretax
health savings account accumulations into retirement for the purpose of financing health
care needs of the retired employee postretirement on a tax-free basis.
new text end

new text begin (g) Any future premium reductions of the high-deductible health plan shall be
reinvested back into employee health savings accounts as a reward for successful efforts
in achieving the goals of this new plan.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for the insurance plan year beginning
January 1, 2010.
new text end

Sec. 2.

new text begin [62J.261] HEALTH COVERAGE MANDATE COST INFORMATION.
new text end

new text begin The commissioner of commerce shall post, and update at least annually, on the
Department of Commerce Web site information for consumers regarding health coverage
mandates required under Minnesota law. The information must list separately each current
mandate and an estimate of its cost as a percentage of the premium, if available. The
estimated cost must be based on the assumption that the benefit would not be covered in
the absence of a mandate. A health plan company shall, upon request of the commissioner,
provide information it has, if any, regarding the estimated cost of a mandate based upon
the health plan company's experience. Cost estimates posted on the Web site may be
an average or may specify a range of costs, but must not identify particular health plan
companies.
new text end

Sec. 3.

Minnesota Statutes 2006, section 62J.2930, is amended by adding a subdivision
to read:


new text begin Subd. 5. new text end

new text begin Virtual health pretax benefits exchange. new text end

new text begin The commissioner shall create a
Web site to assist employers and employees in obtaining health benefits on a pretax basis.
The Web site must focus on providing a cost-effective means of connecting employers and
employees with providers of pretax health benefit plans. The Web site must also focus on
educating employees and employers on the tax advantage of pretax health benefits.
new text end

Sec. 4.

new text begin [62J.85] PROVIDER PRICE AND QUALITY DISCLOSURE.
new text end

new text begin (a) By January 1, 2009, and annually thereafter, each physician clinic and hospital
shall establish a list of prices for each health care procedure, service, or basket of care
the provider provides and provide this information electronically to the commissioner of
health in the form and manner specified by the commissioner, and the commissioner shall
provide this information at no cost to the public, upon request.
new text end

new text begin (b) The commissioner shall develop a plan to expand the provisions of paragraph (a)
to all health care providers by January 1, 2010. Notwithstanding this provision, health plan
companies shall submit provider price information to the commissioner for the purposes
of paragraph (a), for providers who do not submit prices to the commission for analysis
and provider cost performance purposes.
new text end

new text begin (c) By January 1, 2009, the commissioner shall require physician clinics and
hospitals to submit standardized electronic information on the outcomes and processes
associated with patient care.
new text end

new text begin (d) By January 15, 2009, the commissioner shall make recommendations to the
legislative committees with jurisdiction over health care policy and finance on the
feasibility of collecting standardized electronic information on the outcomes and processes
associated with patient care from health care providers not included under paragraph (c).
new text end

Sec. 5.

new text begin [62Q.022] HEALTH PLAN COMPANIES AUTHORIZED IN OTHER
STATES.
new text end

new text begin (a) Health plan companies authorized to issue health coverage in other states may
issue health coverage in this state under this section.
new text end

new text begin (b) Out-of-state health plan companies authorized under this section are not required
to provide benefits mandated under the laws of this state in coverage sold to residents of
this state.
new text end

new text begin (c) Each written application for participation in an out-of-state health benefit plan
shall contain the following language in boldface type at the beginning of the document:
"This policy is primarily governed by the laws of [insert state where the master policy is
filed]; therefore, all of the rating laws applicable to policies filed in this state do not apply
to this policy, which may result in increases in your premium at renewal that would not be
permissible in a Minnesota-approved policy. Any purchase of individual health insurance
should be considered carefully since future medical conditions may make it impossible to
qualify for another individual health policy. For information concerning individual health
coverage under a Minnesota-approved policy, please consult your insurance agent or the
Minnesota Department of Commerce or Minnesota Department of Health."
new text end

new text begin (d) Each out-of-state health benefit plan shall contain the following language in
boldface type at the beginning of the document: "The benefits of this policy providing
your coverage are governed primarily by the laws of a state other than Minnesota. While
this health benefit plan may provide you a more affordable health insurance policy, it
may also provide fewer health benefits than those included as state mandated health
benefits in policies in Minnesota. Please consult your insurance agent to determine which
state-mandated health benefits are excluded under this policy."
new text end

new text begin (e) The commissioner of commerce or health, as appropriate, shall be authorized to
conduct market conduct and solvency examinations of all out-of-state companies seeking
to offer health benefit plans in this state or who have been given approval to offer health
benefit plans in this state. Such examinations shall be conducted in the same manner and
under the same terms and conditions as for companies located in this state.
new text end

new text begin (f) The commissioners of commerce and health shall adopt rules necessary to
implement this chapter, including, but not limited to, determining which health plan
companies located in other states shall be authorized to offer plans to Minnesota residents
and determining the manner of approving the health benefit plans offered by such
companies.
new text end

Sec. 6.

new text begin [604.111] EMERGENCY HEALTH CARE AND OB/GYN ACTIONS;
LIMITS ON DAMAGES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms in
paragraphs (b) to (d) have the meanings given them.
new text end

new text begin (b) "Economic loss" means all harm for which damages are recoverable, other
than noneconomic losses.
new text end

new text begin (c) "Health care provider" has the meaning given in section 541.076, paragraph
(a), except that health care provider also includes a physician assistant registered under
chapter 147A and ambulance services, medical directors, and personnel regulated under
chapter 144E.
new text end

new text begin (d) "Noneconomic loss" means all nonpecuniary harm for which damages are
recoverable, including, but not limited to, pain, disability, disfigurement, embarrassment,
emotional distress, and loss of consortium.
new text end

new text begin Subd. 2. new text end

new text begin Limitation. new text end

new text begin (a) In an action for injury or death against a health care
provider alleging malpractice, error, mistake, or failure to cure, whether based in contract
or tort, in which the health care services at issue were provided for:
new text end

new text begin (1) pregnancy or labor and delivery, including the immediate postpartum period; or
new text end

new text begin (2) emergency care in the emergency room of a hospital; the amount of damages
awarded for noneconomic losses must not exceed $250,000, regardless of the number of
parties against whom the action is brought or the number of separate claims or actions
brought with respect to the same occurrence.
new text end

new text begin (b) The limitation imposed by this subdivision must not be disclosed to the trier of
fact by any person at trial.
new text end

new text begin Subd. 3. new text end

new text begin Findings. new text end

new text begin (a) A court in an action tried without a jury shall make a finding
as to noneconomic loss without regard to the limit under subdivision 2. If noneconomic
loss in excess of the limit is found, the court shall make any reduction required under
this section and shall award as damages for noneconomic loss the lesser of the reduced
amount or the limit.
new text end

new text begin (b) If an action is before a jury, the jury shall make a finding as to noneconomic loss
without regard to the limit under subdivision 2. If the jury finds that noneconomic loss
exceeds the limit, the court shall make any reduction required under this section and shall
award as damages for noneconomic loss the lesser of the reduced amount or the limit.
new text end

new text begin Subd. 4. new text end

new text begin Punitive damages limited. new text end

new text begin Punitive, exemplary, and similar damages
recoverable against a health care provider in a cause of action described in subdivision 2
must not exceed $250,000. The jury must not be informed of this limitation.
new text end

new text begin Subd. 5. new text end

new text begin Excessive attorney fees prohibited. new text end

new text begin (a) Attorney fees payable by a
plaintiff in any cause of action referred to in subdivision 2 must not exceed the following
percentage of damages:
new text end

new text begin (1) 40 percent of the first $50,000;
new text end

new text begin (2) 33-1/3 percent of the next $50,000;
new text end

new text begin (3) 25 percent of the next $500,000; plus
new text end

new text begin (4) 15 percent of that portion of damages that exceeds $600,000.
new text end

new text begin (b) This subdivision applies to the net damages actually recovered by that plaintiff
under the cause of action, whether through settlement, alternative dispute resolution, court
judgment, or otherwise. "Net damages actually recovered" means the net sum recovered
after deducting any disbursements or costs incurred in connection with prosecution or
settlement of the claim, including all costs paid or advanced by any person. Costs of
health care incurred by the plaintiff and the attorney's office overhead costs or charges for
legal services are not deductible disbursements of costs for such purpose.
new text end

new text begin (c) A fee agreement that violates this subdivision is void and unenforceable to
the extent of the violation.
new text end

new text begin Subd. 6. new text end

new text begin Intentional discriminatory denial of treatment. new text end

new text begin Except for the purposes
of subdivision 5, an action described in subdivision 2 shall not be construed to include any
claim in a civil action that is based solely on intentional denial of medical treatment that a
patient is otherwise qualified to receive, against the wishes of a patient, or, if the patient
is incompetent, against the wishes of the patient's guardian, on the basis of the patient's
present or predicted age, disability, degree of medical dependency, or quality of life.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2008, and applies to
actions arising from incidents occurring on or after that date.
new text end

ARTICLE 3

STATE HEALTH CARE PROGRAMS AND FINANCING

Section 1.

new text begin [256.0122] HEALTH AND HUMAN SERVICES SPENDING
TARGETS.
new text end

new text begin During each fiscal year, beginning July 1, 2009, the commissioners of health and
human services shall manage spending on health and human services programs receiving
general fund appropriations to ensure that the annual aggregate spending growth for
these programs for the next fiscal year does not exceed spending for the previous fiscal
year plus an annual growth rate equal to the change in the Consumer Price Index for all
urban consumers (CPI-U). The annual spending growth for specific programs may differ
from this aggregate spending target. The commissioners shall take all steps necessary to
manage program spending growth to ensure compliance with spending targets, including
but not limited to reducing administrative costs and modifying program eligibility,
covered services, and grant levels, and shall seek any necessary federal approvals. The
commissioners shall annually report to the legislature any actions that have been or will
be taken to comply with this section, beginning June 1, 2009, and each June 1 thereafter.
The commissioners shall also provide the chairs and ranking minority members of the
legislative committees with jurisdiction over health and human services policy and
spending with at least seven days' notice of specific actions the commissioners plan to
take to comply with this section.
new text end

Sec. 2.

new text begin [256L.20] MINNESOTACARE FOR MORE FAMILIES PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The commissioner shall establish the MinnesotaCare
for More Families (CMF) program. The commissioner shall implement the program on
January 1, 2010, or upon federal approval, whichever is later. Upon implementation, the
MinnesotaCare CMF program shall replace MinnesotaCare coverage provided to families
and children under this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Eligibility. new text end

new text begin Families and children with family income equal to or less than
300 percent of the federal poverty guidelines for the applicable family size are eligible for
the MinnesotaCare CMF program. Families and children must meet all other eligibility
criteria of this chapter, unless the legislature modifies the eligibility criteria based upon the
recommendation of the commissioner under subdivision 7.
new text end

new text begin Subd. 3. new text end

new text begin Program design. new text end

new text begin (a) Enrollees covered under the MinnesotaCare CMF
program must purchase a high-deductible health plan, and must manage a medical
benefit account. Money in the account may be used to pay for health care services
subject to a deductible, qualified health care expenses, and other expenses specified by
the commissioner.
new text end

new text begin (b) Covered services under the program consist of all comprehensive health
maintenance services covered under a standard HMO contract, as defined under section
62D.02, subdivision 7, and Minnesota Rules, chapter 4685.
new text end

new text begin Subd. 4. new text end

new text begin Premiums. new text end

new text begin Families and children shall pay a premium based on the
sliding scale specified in section 256L.15, except that the commissioner shall extend the
premium scale to include families and children with income up to 300 percent of the
federal poverty guidelines.
new text end

new text begin Subd. 5. new text end

new text begin Program criteria. new text end

new text begin (a) The MinnesotaCare CMF program must meet
the criteria specified in this subdivision.
new text end

new text begin (b) Payments to health care providers for covered services must be substantially
equivalent to the average payment paid to providers by health plan companies in the
private sector.
new text end

new text begin (c) The high-deductible health plan purchased by an enrollee must be a plan
approved by the commissioner prior to purchase as in compliance with this section and
must meet requirements of the Internal Revenue Code, sections 220 and 223, and related
federal regulations.
new text end

new text begin (d) The high-deductible health plan must be linked to a health savings account that
qualifies under sections 220 and 223 of the Internal Revenue Code. The commissioner
shall recommend to the legislature any special administrative or other provisions necessary
regarding access by enrollees to those accounts.
new text end

new text begin (e) The MinnesotaCare CMF program shall deposit a minimum of 50 percent of the
enrollee deductible into each health savings account for each year, which must comply
with federal limits and other provisions. Funds in the account may be used to cover
deductibles, co-pays, coinsurance, and other enrollee out-of-pocket costs, and amounts not
so spent may accumulate from year to year and accrue earnings from investments.
new text end

new text begin (f) The MinnesotaCare CMF program shall subsidize the premium for the enrollee's
high-deductible health plan based upon the sliding fee scale referenced in subdivision 4.
new text end

new text begin (g) The program must be designed to achieve a balance of affordability, access to
care, choice of providers, and incentives to use health care in a cost-effective manner.
new text end

new text begin new text end

new text begin Subd. 6. new text end

new text begin Waivers and federal approval. new text end

new text begin The commissioner shall seek all necessary
federal approvals to implement the MinnesotaCare CMF program and to use federal
medical assistance and state children's health insurance program dollars to pay for services
covered under the MinnesotaCare CMF program.
new text end

new text begin Subd. 7. new text end

new text begin Legislative changes. new text end

new text begin The commissioner shall present to the legislature, by
December 15, 2008, all legislative changes necessary to implement the MinnesotaCare
CMF program.
new text end

Sec. 3.

Minnesota Statutes 2006, section 295.52, is amended by adding a subdivision
to read:


new text begin Subd. 8. new text end

new text begin Contingent reduction in tax rate. new text end

new text begin On September 1 of each odd-numbered
year, beginning September 1, 2009, the commissioner of finance shall determine the
projected balance of the health care access fund at the end of the current biennium, based
on the most recent February forecast adjusted for any legislative session changes. If the
commissioner of finance projects a surplus in the health care access fund at the end of the
current biennium, the commissioner of finance, in consultation with the commissioners of
health and human services, shall reduce the tax rates specified in subdivisions 1, 1a, 2, 3,
and 4 in one-tenth of one percent increments, making the largest reduction in tax rates
consistent with ensuring that the health care access fund retains a surplus at the end of the
current biennium. The reduced tax rates take effect on the January 1 that immediately
follows the September 1 on which the commissioner of finance determines the projected
balance and shall remain in effect for two tax years. The tax rates specified in subdivisions
1, 1a, 2, 3, and 4 apply for subsequent tax years, unless the commissioner of finance,
based on a determination of the projected balance of the health care access fund made
on September 1 of an odd-numbered year, reduces the tax rates. If the commissioner of
finance does not project a surplus in the health care access fund at the end of the current
biennium, the tax rates specified in subdivisions 1, 1a, 2, 3, and 4 continue to apply.
The commissioner of finance shall publish in the State Register by October 1 of each
odd-numbered year the amount of tax to be imposed for the next two calendar years.
new text end

ARTICLE 4

TAX CHANGES

Section 1.

Minnesota Statutes 2007 Supplement, section 290.01, subdivision 19b, as
amended by Laws 2008, chapter 154, article 3, section 3, and Laws 2008, chapter 154,
article 11, section 11, is amended to read:


Subd. 19b.

Subtractions from federal taxable income.

For individuals, estates,
and trusts, there shall be subtracted from federal taxable income:

(1) net interest income on obligations of any authority, commission, or
instrumentality of the United States to the extent includable in taxable income for federal
income tax purposes but exempt from state income tax under the laws of the United States;

(2) if included in federal taxable income, the amount of any overpayment of income
tax to Minnesota or to any other state, for any previous taxable year, whether the amount
is received as a refund or as a credit to another taxable year's income tax liability;

(3) the amount paid to others, less the amount used to claim the credit allowed under
section 290.0674, not to exceed $1,625 for each qualifying child in grades kindergarten
to 6 and $2,500 for each qualifying child in grades 7 to 12, for tuition, textbooks, and
transportation of each qualifying child in attending an elementary or secondary school
situated in Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin, wherein a
resident of this state may legally fulfill the state's compulsory attendance laws, which
is not operated for profit, and which adheres to the provisions of the Civil Rights Act
of 1964 and chapter 363A. For the purposes of this clause, "tuition" includes fees or
tuition as defined in section 290.0674, subdivision 1, clause (1). As used in this clause,
"textbooks" includes books and other instructional materials and equipment purchased
or leased for use in elementary and secondary schools in teaching only those subjects
legally and commonly taught in public elementary and secondary schools in this state.
Equipment expenses qualifying for deduction includes expenses as defined and limited in
section 290.0674, subdivision 1, clause (3). "Textbooks" does not include instructional
books and materials used in the teaching of religious tenets, doctrines, or worship, the
purpose of which is to instill such tenets, doctrines, or worship, nor does it include books
or materials for, or transportation to, extracurricular activities including sporting events,
musical or dramatic events, speech activities, driver's education, or similar programs. For
purposes of the subtraction provided by this clause, "qualifying child" has the meaning
given in section 32(c)(3) of the Internal Revenue Code;

(4) income as provided under section 290.0802;

(5) to the extent included in federal adjusted gross income, income realized on
disposition of property exempt from tax under section 290.491;

(6) to the extent not deducted or not deductible pursuant to section 408(d)(8)(E)
of the Internal Revenue Code in determining federal taxable income by an individual
who does not itemize deductions for federal income tax purposes for the taxable year, an
amount equal to 50 percent of the excess of charitable contributions over $500 allowable
as a deduction for the taxable year under section 170(a) of the Internal Revenue Code and
under the provisions of Public Law 109-1;

(7) for taxable years beginning before January 1, 2008, the amount of the federal
small ethanol producer credit allowed under section 40(a)(3) of the Internal Revenue Code
which is included in gross income under section 87 of the Internal Revenue Code;

(8) for individuals who are allowed a federal foreign tax credit for taxes that do not
qualify for a credit under section 290.06, subdivision 22, an amount equal to the carryover
of subnational foreign taxes for the taxable year, but not to exceed the total subnational
foreign taxes reported in claiming the foreign tax credit. For purposes of this clause,
"federal foreign tax credit" means the credit allowed under section 27 of the Internal
Revenue Code, and "carryover of subnational foreign taxes" equals the carryover allowed
under section 904(c) of the Internal Revenue Code minus national level foreign taxes to
the extent they exceed the federal foreign tax credit;

(9) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (7), or 19c, clause (14), in the case
of a shareholder of a corporation that is an S corporation, an amount equal to one-fifth
of the delayed depreciation. For purposes of this clause, "delayed depreciation" means
the amount of the addition made by the taxpayer under subdivision 19a, clause (7), or
subdivision 19c, clause (14), in the case of a shareholder of an S corporation, minus the
positive value of any net operating loss under section 172 of the Internal Revenue Code
generated for the tax year of the addition. The resulting delayed depreciation cannot be
less than zero;

(10) job opportunity building zone income as provided under section 469.316;

(11) to the extent included in federal taxable income, the amount of compensation
paid to members of the Minnesota National Guard or other reserve components of the
United States military for active service performed in Minnesota, excluding compensation
for services performed under the Active Guard Reserve (AGR) program. For purposes of
this clause, "active service" means (i) state active service as defined in section 190.05,
subdivision 5a
, clause (1); (ii) federally funded state active service as defined in section
190.05, subdivision 5b; or (iii) federal active service as defined in section 190.05,
subdivision 5c
, but "active service" excludes services performed exclusively for purposes
of basic combat training, advanced individual training, annual training, and periodic
inactive duty training; special training periodically made available to reserve members;
and service performed in accordance with section 190.08, subdivision 3;

(12) to the extent included in federal taxable income, the amount of compensation
paid to Minnesota residents who are members of the armed forces of the United States or
United Nations for active duty performed outside Minnesota under United States Code,
title 10, section 101(d); United States Code, title 32, section 101(12); or the authority of
the United Nations;

(13) an amount, not to exceed $10,000, equal to qualified expenses related to a
qualified donor's donation, while living, of one or more of the qualified donor's organs
to another person for human organ transplantation. For purposes of this clause, "organ"
means all or part of an individual's liver, pancreas, kidney, intestine, lung, or bone marrow;
"human organ transplantation" means the medical procedure by which transfer of a human
organ is made from the body of one person to the body of another person; "qualified
expenses" means unreimbursed expenses for both the individual and the qualified donor
for (i) travel, (ii) lodging, and (iii) lost wages net of sick pay, except that such expenses
may be subtracted under this clause only once; and "qualified donor" means the individual
or the individual's dependent, as defined in section 152 of the Internal Revenue Code. An
individual may claim the subtraction in this clause for each instance of organ donation for
transplantation during the taxable year in which the qualified expenses occur;

(14) in each of the five tax years immediately following the tax year in which an
addition is required under subdivision 19a, clause (8), or 19c, clause (15), in the case of a
shareholder of a corporation that is an S corporation, an amount equal to one-fifth of the
addition made by the taxpayer under subdivision 19a, clause (8), or 19c, clause (15), in the
case of a shareholder of a corporation that is an S corporation, minus the positive value of
any net operating loss under section 172 of the Internal Revenue Code generated for the
tax year of the addition. If the net operating loss exceeds the addition for the tax year, a
subtraction is not allowed under this clause;

(15) to the extent included in federal taxable income, compensation paid to a
nonresident who is a service member as defined in United States Code, title 10, section
101(a)(5), for military service as defined in the Service Member Civil Relief Act, Public
Law 108-189, section 101(2); deleted text beginand
deleted text end

(16) international economic development zone income as provided under section
469.325deleted text begin.deleted text endnew text begin; and
new text end

new text begin (17) to the extent not deducted in computing or otherwise excluded from federal
taxable income or used to compute the credit under section 290.0672 or 290.0678,
amounts paid during the taxable year for insurance as defined in section 213(d)(1)(D) of
the Internal Revenue Code.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 2.

Minnesota Statutes 2006, section 290.0672, subdivision 2, is amended to read:


Subd. 2.

Credit.

A taxpayer is allowed a credit against the tax imposed by this
chapter for long-term care insurance policy premiums paid during the tax year. The
credit for each policy equals 25 percent of premiums paid to the extent not deducted in
determining federal taxable income. A taxpayer may claim a credit for only one policy
for each qualified beneficiary. A maximum of deleted text begin$100deleted text end new text begin$1,000 new text endapplies to each qualified
beneficiary. The maximum total credit allowed per year is deleted text begin$200deleted text end new text begin$2,000 new text endfor married
couples filing joint returns and deleted text begin$100deleted text end new text begin$1,000 new text endfor all other filers. For a nonresident or
part-year resident, the credit determined under this section must be allocated based on the
percentage calculated under section 290.06, subdivision 2c, paragraph (e).

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end

Sec. 3.

new text begin [290.0678] HEALTH CARE AND HEALTH COVERAGE CREDIT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) "Health insurance premiums" means insurance as
defined in section 213(d)(1)(D) of the Internal Revenue Code.
new text end

new text begin (b) "Medical expenses" means expenditures that qualify for a deduction under
section 213 of the Internal Revenue Code, other than health insurance premiums.
new text end

new text begin (c) "Paid" means expenditures by the taxpayer on behalf of the taxpayer, the
taxpayer's spouse, or the taxpayer's tax-qualified dependents, and not reimbursed by any
other person or paid by an employee from income on which income tax was not paid.
new text end

new text begin Subd. 2. new text end

new text begin Credit. new text end

new text begin (a) A taxpayer is allowed a credit against the tax imposed by this
chapter of 50 percent of:
new text end

new text begin (1) medical expenses paid; and
new text end

new text begin (2) health insurance premiums paid.
new text end

new text begin (b) The credit does not apply to amounts deducted in determining federal taxable
income or used as a deduction or as another credit against the tax imposed by this chapter.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after
December 31, 2007.
new text end