(1) The Nebraska long-term care savings plan is created. The State Treasurer shall select the administrator of the plan. If the State Treasurer receives no acceptable responses to a request for proposals for an administrator for the plan by November 1, 2006, the State Treasurer may enter into agreements with state-chartered or federally chartered banks, savings banks, building and loan associations, savings and loan associations, or credit unions, or a subsidiary of any such entity, to receive contributions in the form of account deposits. The State Treasurer may adopt and promulgate rules and regulations to carry out its duties under this subsection.

(2) If an administrator is selected, participants shall enter into participation agreements with the State Treasurer, and if an administrator is not selected, participants may make contributions to an account with a financial institution with which the State Treasurer has an agreement under subsection (1) of this section. A lifetime maximum of one hundred sixty-five thousand dollars may be contributed by a participant. This dollar limitation shall be adjusted for inflation by the method provided in section 151 of the Internal Revenue Code of 1986, as amended.

(3) Each participation agreement shall provide that the agreement may be canceled or transferred to a spouse upon the terms and conditions set by the State Treasurer. If the participation agreement is canceled or the Nebraska long-term care savings plan is terminated, a participant may receive the principal amount of all contributions made by the participant or on behalf of the participant plus the actual investment earnings on the contributions, less any losses incurred on the contributions. A participant shall not receive more than the fair market value of his or her account under the participation agreement on the applicable liquidation date.

(4) A participant retains ownership of all contributions up to the date of utilization.

(5) State income tax treatment of contributions and investment earnings shall be as provided in section 77-2716.