To amend the Internal Revenue Code of 1986 to allow long-term care insurance to be offered under cafeteria plans and flexible spending arrangements and to provide additional consumer protections for long-term care insurance.

Summary: Long-Term Care Affordability and Security Act of 2009 - Amends the Internal Revenue Code to: (1) include long-term care insurance as a benefit under tax-exempt employee benefit cafeteria plans and flexible spending arrangements; and (2) extend certain consumer protections under the long-term care insurance model regulation promulgated by the National Association of Insurance Commissioners to all contracts for long-term care insurance.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Long-Term Care Affordability and 
Security Act of 2009''.

SEC. 2. TREATMENT OF PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE 
              CONTRACTS.

    (a) In General.--
            (1) Cafeteria plans.--The last sentence of section 125(f) 
        of the Internal Revenue Code of 1986 (defining qualified 
        benefits) is amended by inserting before the period at the end 
        ``; except that such term shall include the payment of premiums 
        for any qualified long-term care insurance contract (as defined 
        in section 7702B) to the extent the amount of such payment does 
        not exceed the eligible long-term care premiums (as defined in 
        section 213(d)(10)) for such contract''.
            (2) Flexible spending arrangements.--Section 106 of such 
        Code (relating to contributions by an employer to accident and 
        health plans) is amended by striking subsection (c) and 
        redesignating subsection (d) as subsection (c).
    (b) Conforming Amendments.--
            (1) Section 6041 of such Code is amended by adding at the 
        end the following new subsection:
    ``(h) Flexible Spending Arrangement Defined.--For purposes of this 
section, a flexible spending arrangement is a benefit program which 
provides employees with coverage under which--
            ``(1) specified incurred expenses may be reimbursed 
        (subject to reimbursement maximums and other reasonable 
        conditions), and
            ``(2) the maximum amount of reimbursement which is 
        reasonably available to a participant for such coverage is less 
        than 500 percent of the value of such coverage.
In the case of an insured plan, the maximum amount reasonably available 
shall be determined on the basis of the underlying coverage.''.
            (2) The following sections of such Code are each amended by 
        striking ``section 106(d)'' and inserting ``section 106(c)'': 
        sections 223(b)(4)(B), 223(d)(4)(C), 223(f)(3)(B), 3231(e)(11), 
        3306(b)(18), 3401(a)(22), 4973(g)(1), and 4973(g)(2)(B)(i).
            (3) Section 6041(f)(1) of such Code is amended by striking 
        ``(as defined in section 106(c)(2))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2008.

SEC. 3. ADDITIONAL CONSUMER PROTECTIONS FOR LONG-TERM CARE INSURANCE.

    (a) Additional Protections Applicable to Long-Term Care 
Insurance.--Subparagraphs (A) and (B) of section 7702B(g)(2) of the 
Internal Revenue Code of 1986 (relating to requirements of model 
regulation and Act) are amended to read as follows:
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any contract if such 
                contract meets--
                            ``(i) Model regulation.--The following 
                        requirements of the model regulation:
                                    ``(I) Section 6A (relating to 
                                guaranteed renewal or 
                                noncancellability), other than 
                                paragraph (5) thereof, and the 
                                requirements of section 6B of the model 
                                Act relating to such section 6A.
                                    ``(II) Section 6B (relating to 
                                prohibitions on limitations and 
                                exclusions) other than paragraph (7) 
                                thereof.
                                    ``(III) Section 6C (relating to 
                                extension of benefits).
                                    ``(IV) Section 6D (relating to 
                                continuation or conversion of 
                                coverage).
                                    ``(V) Section 6E (relating to 
                                discontinuance and replacement of 
                                policies).
                                    ``(VI) Section 7 (relating to 
                                unintentional lapse).
                                    ``(VII) Section 8 (relating to 
                                disclosure), other than sections 8F, 
                                8G, 8H, and 8I thereof.
                                    ``(VIII) Section 11 (relating to 
                                prohibitions against post-claims 
                                underwriting).
                                    ``(IX) Section 12 (relating to 
                                minimum standards).
                                    ``(X) Section 13 (relating to 
                                requirement to offer inflation 
                                protection).
                                    ``(XI) Section 25 (relating to 
                                prohibition against preexisting 
                                conditions and probationary periods in 
                                replacement policies or certificates).
                                    ``(XII) The provisions of section 
                                28 relating to contingent nonforfeiture 
                                benefits, if the policyholder declines 
                                the offer of a nonforfeiture provision 
                                described in paragraph (4) of this 
                                subsection.
                            ``(ii) Model act.--The following 
                        requirements of the model Act:
                                    ``(I) Section 6C (relating to 
                                preexisting conditions).
                                    ``(II) Section 6D (relating to 
                                prior hospitalization).
                                    ``(III) The provisions of section 8 
                                relating to contingent nonforfeiture 
                                benefits, if the policyholder declines 
                                the offer of a nonforfeiture provision 
                                described in paragraph (4) of this 
                                subsection.
                    ``(B) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Model regulation.--The term `model 
                        regulation' means the long-term care insurance 
                        model regulation promulgated by the National 
                        Association of Insurance Commissioners (as 
                        adopted as of December 2006).
                            ``(ii) Model act.--The term `model Act' 
                        means the long-term care insurance model Act 
                        promulgated by the National Association of 
                        Insurance Commissioners (as adopted as of 
                        December 2006).
                            ``(iii) Coordination.--Any provision of the 
                        model regulation or model Act listed under 
                        clause (i) or (ii) of subparagraph (A) shall be 
                        treated as including any other provision of 
                        such regulation or Act necessary to implement 
                        the provision.
                            ``(iv) Determination.--For purposes of this 
                        section and section 4980C, the determination of 
                        whether any requirement of a model regulation 
                        or the model Act has been met shall be made by 
                        the Secretary.''.
    (b) Excise Tax.--Paragraph (1) of section 4980C(c) of the Internal 
Revenue Code of 1986 (relating to requirements of model provisions) is 
amended to read as follows:
            ``(1) Requirements of model provisions.--
                    ``(A) Model regulation.--The following requirements 
                of the model regulation must be met:
                            ``(i) Section 9 (relating to required 
                        disclosure of rating practices to consumer).
                            ``(ii) Section 14 (relating to application 
                        forms and replacement coverage).
                            ``(iii) Section 15 (relating to reporting 
                        requirements).
                            ``(iv) Section 22 (relating to filing 
                        requirements for marketing).
                            ``(v) Section 23 (relating to standards for 
                        marketing), including inaccurate completion of 
                        medical histories, other than paragraphs (1), 
                        (6), and (9) of section 23C.
                            ``(vi) Section 24 (relating to 
                        suitability).
                            ``(vii) Section 27 (relating to the right 
                        to reduce coverage and lower premiums).
                            ``(viii) Section 31 (relating to standard 
                        format outline of coverage).
                            ``(ix) Section 32 (relating to requirement 
                        to deliver shopper's guide).
                The requirements referred to in clause (vi) shall not 
                include those portions of the personal worksheet 
                described in Appendix B relating to consumer protection 
                requirements not imposed by section 4980C or 7702B.
                    ``(B) Model act.--The following requirements of the 
                model Act must be met:
                            ``(i) Section 6F (relating to right to 
                        return).
                            ``(ii) Section 6G (relating to outline of 
                        coverage).
                            ``(iii) Section 6H (relating to 
                        requirements for certificates under group 
                        plans).
                            ``(iv) Section 6J (relating to policy 
                        summary).
                            ``(v) Section 6K (relating to monthly 
                        reports on accelerated death benefits).
                            ``(vi) Section 7 (relating to 
                        incontestability period).
                            ``(vii) Section 9 (relating to producer 
                        training requirements).
                    ``(C) Definitions.--For purposes of this paragraph, 
                the terms `model regulation' and `model Act' have the 
                meanings given such terms by section 7702B(g)(2)(B).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to policies issued more than 1 year after the date of the 
enactment of this Act.