TREATMENT OF CERTAIN REIMBURSEMENTS FROM GOVERNMENTAL PLANS FOR MEDICAL CARE.

SEC. 124. TREATMENT OF CERTAIN REIMBURSEMENTS FROM GOVERNMENTAL PLANS FOR MEDICAL CARE.(a) In General.—Section 105 of the 1986 Code (relating to amounts received under accident and health plans) is amended by adding at the end the following new subsection:“(j) Special Rule for Certain Governmental Plans.—“(1) In general.—For purposes of subsection (b), amounts paid (directly or indirectly) to the taxpayer from an accident or health plan described in paragraph (2) shall not fail to be excluded from gross income solely because such plan, on or before January 1, 2008, provides for reimbursements of health care expenses of a deceased plan participant’s beneficiary.“(2) Plan described.—An accident or health plan is described in this paragraph if such plan is funded by a medical trust that is established in connection with a public retirement system and that—“(A) has been authorized by a State legislature, or122 STAT. 5115“(B) has received a favorable ruling from the Internal Revenue Service that the trust’s income is not includible in gross income under section 115.”.(b) Effective Date.—The amendment made by subsection (a) shall apply to payments before, on, or after the date of the enactment of this Act.