Page:United States Statutes at Large Volume 79.djvu/376

 PUBLIC LAW 89-97-JULY 30, 1965

336

Post, p. 396. 70 Stat. 845,

Post,

p. 400.

of such section 3111 as amended by the Social Security Amendments of 1956" and inserting in lieu thereof "the rate of the tax imposed with respect to wages by section 3111(a) at such time exceeds 2 % percent (the rate provided by paragraph (2) of section 3111 as amended by the Social Security Amendments of 1956)". (4) The amendments made by this subsection shall be effective with respect to compensation paid for services rendered after December 31, 1965. (c) For amendments preserving relationship between the railroad retirement and old-age, survivors, and disability insurance systems, see section 326 of this Act. MEDICAL EXPENSE

74 Stat. 133. 26 USC 213.

68A Stat. 43. 26 USC 152.

Repeal.

"Medical c a r e. "

Ante, p. 301.

[79 STAT.

DEDUCTION

SEC. 106. (a) Subsection (a) of section 213 of the Internal Revenue Code of 1954 (relating to allowance of deduction) is amended to read as follows: " (a) ALLOWANCE OF DEDUCTION.—There shall be allowed as a deduction the following amounts, ^ot compensated for by insurance or otherwise— "(1) the amount by which the amount of the expenses paid during the taxable year (reduced by any amount deductible under paragraph (2)) for medical care of the taxpayer, his spouse, and dependents (as defined in section 152) exceeds 3 percent of the adjusted gross income, and "(2) an amount (not in excess of $150) equal to one-half of the expenses paid during the taxable year for insurance which constitutes medical care for the taxpayer, his spouse, and dependents." (b) The second sentence of section 213(b) of such Code (relating to limitation with respect to medicine and drugs) is repealed. (c) Section 213(e) of such Code (relating to definitions) is amended by renumbering paragraph (2) as paragraph (4), and by striking out paragraph (1) and inserting in lieu thereof the following: "(1) The term 'medical care' means amounts paid— " (A) for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, " (B) for transportation primarily for and essential to medical care referred to in subparagraph (A), or " (C) for insurance (including amounts paid as premiums under part B of title X VIII of the Social Security Act, relating to supplementary medical insurance for the aged) covering medical care referred to in subparagraphs (A) and (B). " (2) I n the case of an insurance contract under which amounts are payable for other than medical care referred to in subparagraphs (A) and (B) of paragraph (1)— " (A) no amount shall be treated as paid for insurance to which paragraph (1)(C) applies unless the charge for such insurance is either separately stated in the contract, or furnished to the policyholder by the insurance company in a separate statement, " (B) the amount taken into account as the amount paid for such insurance sjiall not exceed such charge, and " (C) no amount shall be treated as paid for such insurance if the amount specified in the contract (or furnished to the

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