A bill to amend the Internal Revenue Code of 1986 to provide for establishment of, and a credit for contributions to, longterm health care savings accounts.

Amends the Internal Revenue Code to allow an individual a nonrefundable income tax credit for contributions made to a long-term health care savings account established to pay the long-term health care expenses of an individual. Sets the amount of the credit at the lesser of ten percent of the contribution or $200. Includes as legitimate long-term health care benefits those covering diagnostic, preventive, therapeutic, rehabilitative, and personal care services that are: (1) required by a chronically ill or disabled individual; and (2) provided by a qualified provider (other than a family member) in a nursing facility, including hospitals and nursing homes, or in a home (if home care is a substitute for care in a nursing facility).

Provides that no account may have more than one beneficiary and that no individual may be a beneficiary of more than one account. Disallows the credit in the case of a beneficiary covered under an employee benefit plan that provides similar benefits.

Identifies the criteria and requirements applicable to a long-term health care savings account.

Excludes from gross income any payments and distributions from a long-term health care savings account as long as the amounts: (1) are used exclusively for the qualified health care expenses of the eligible beneficiary; or (2) are distributions of excess contributions before the due date of the tax return.

Exempts the accounts themselves from taxation unless they cease to be proper long-term health care savings accounts because the beneficiary either engages in prohibited transactions or pledges the account as security.

Establishes penalties in the form of additional tax when account funds or distributions are used for other than health care purposes.

Requires that the trustee of such an account report to the Secretary of the Treasury and to the account's beneficiary on the maintenance of the account.

Establishes: (1) a six percent excise tax on excess contributions to a long-term health care savings account; (2) a five percent excise tax on amounts connected with any prohibited transaction with respect to such an account; and (3) a penalty for failure to file required reports concerning the account.