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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1658 Introduced in Senate (IS)]

104th CONGRESS
  2d Session
                                S. 1658

 To amend the Internal Revenue Code of 1986 to provide improved access 
 to quality long-term care services and to provide incentives for the 
     purchase of long-term care insurance, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 29, 1996

 Mr. McConnell introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Internal Revenue Code of 1986 to provide improved access 
 to quality long-term care services and to provide incentives for the 
     purchase of long-term care insurance, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Family Choice in 
Long-Term Care Act''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
           TITLE I--TAX TREATMENT OF LONG-TERM CARE INSURANCE

Sec. 101. Treatment of long-term care insurance or plans.
Sec. 102. Qualified long-term services as medical care.
Sec. 103. Qualified long-term care insurance contracts to be offered in 
                            cafeteria plans.
Sec. 104. Inclusion in income of excessive long-term care benefits.
Sec. 105. Tax reserves for qualified long-term care insurance 
                            contracts.
Sec. 106. Certain exchanges of life insurance contracts for long-term 
                            care insurance contracts not taxable.
Sec. 107. Treatment of accelerated death benefits by recipient.
Sec. 108. Tax treatment of companies issuing qualified accelerated 
                            death benefit riders.
Sec. 109. Exclusion from gross income for amounts withdrawn from 
                            individual retirement plans or 401(k) plans 
                            for long-term care insurance.
Sec. 110. Effective date.
              TITLE II--LONG-TERM CARE INSURANCE STANDARDS

Sec. 200. Short title.
Sec. 201. National Long-Term Care Insurance Advisory Council.
Sec. 202. Policy requirements.
Sec. 203. Additional requirements for issuers of long-term care 
                            insurance policies.
Sec. 204. Relation to State Law.
Sec. 205. Uniform language and definitions.
Sec. 206. Consumer access to compliance.
Sec. 207. Effective dates.
            TITLE III--PREVENTIVE HEALTH PRACTICES PROMOTION

Sec. 301. Distribution of information on recommended preventive health 
                            practices.

           TITLE I--TAX TREATMENT OF LONG-TERM CARE INSURANCE

SEC. 101. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.

    (a) In General.--Chapter 79 of the Internal Revenue Code of 1986 
(relating to definitions) is amended by inserting after section 7702A 
the following new section:

``SEC. 7702B. TREATMENT OF LONG-TERM CARE INSURANCE OR PLANS.

    ``(a) General Rule.--For purposes of this title--
            ``(1) a qualified long-term care insurance contract (as 
        defined in subsection (b)) shall be treated as an accident or 
        health insurance contract,
            ``(2) any plan of an employer providing coverage of 
        qualified long-term care services shall be treated as an 
        accident or health plan with respect to such services,
            ``(3) amounts received under such a contract or plan with 
        respect to qualified long-term care services, including 
        payments described in subsection (b)(2)(A), shall be treated--
                    ``(A) as amounts received for personal injuries or 
                sickness, and
                    ``(B) for purposes of section 105(c), as amounts 
                received for the permanent loss of a function of the 
                body, and as amounts computed with reference to the 
                nature of the injury, and
            ``(4) payments described in subsection (b)(2)(A) shall be 
        treated as payments made with respect to qualified long-term 
        care services.
Paragraph (3)(B) shall not apply in the case of amounts attributable to 
(and not in excess of) deductions permitted under section 213 (relating 
to medical and other expenses) for any prior taxable year and also 
shall not apply for purposes of section 105(f).
    ``(b) Qualified Long-Term Care Insurance Contract.--
            ``(1) In general.--For purposes of this title, the term 
        `qualified long-term care insurance contract' means any 
        insurance contract if--
                    ``(A) the only insurance protection provided under 
                such contract is coverage of qualified long-term care 
                services and benefits incidental to such coverage;
                    ``(B) such contract does not cover expenses 
                incurred for services or items to the extent that such 
                expenses are reimbursable under title XVIII of the 
                Social Security Act or would be so reimbursable but for 
                the application of a deductible or coinsurance amount;
                    ``(C) such contract or coverage is guaranteed 
                renewable, or in the case of a group certificate, 
                provides the insured individual with a basis for 
                continuation or conversion of coverage,
                    ``(D) such contract does not have any cash 
                surrender value, and
                    ``(E) all refunds of premiums, and all policyholder 
                dividends or other amounts, under such contract are to 
                be applied as a reduction in future premiums or to 
                increase future benefits.
            ``(2) Special rules.--
                    ``(A) Per diem and other payments permitted.--A 
                contract that meets the requirements of paragraph (1) 
                shall be considered to be a qualified long-term care 
                insurance contract regardless of whether payments under 
                such contract are being made on a per diem or other 
                periodic basis without regard to the expenses incurred 
                during the period to which the payments relate.
                    ``(B) Refunds of premiums.--With respect to a 
                qualified long-term care insurance contract, paragraph 
                (1)(D) shall not apply to any refund of premiums on 
                surrender, cancellation of the contract, or death of 
                the policyholder.
                    ``(C) Contract may cover medicare reimbursable 
                expenses where medicare is secondary payor.--With 
                respect to a long-term care insurance contract, 
                paragraph (1)(B) shall not apply to expenses which are 
                reimbursable under title XVIII of the Social Security 
                Act only as a secondary payor.
                    ``(D) Coordination with other laws.--Nothing in 
                this or any other Act shall be construed or applied so 
                as to prohibit the offering of a qualified long-term 
                care insurance contract on the basis that such contract 
                coordinates benefits under the contract with those 
                provided under title XVIII of the Social Security Act.
            ``(3) Treatment of coverage provided as part of a life 
        insurance contract.--Except as otherwise provided in 
        regulations, in the case of coverage with respect to qualified 
        long-term care services provided as part of a life insurance 
        contract the following rules shall apply:
                    ``(A) Application of general requirements.--The 
                requirements of this section shall apply as if the 
                portion of the contract providing such long-term care 
                services coverage was a separate contract.
                    ``(B) Premiums and charges for qualified long-term 
                care coverage.--Premiums for coverage of qualified 
                long-term care services and charges against the life 
                insurance contract's cash surrender value (within the 
                meaning of section 7702(f)(2)(A)) for such coverage 
                shall be treated as premiums under a qualified long-
                term care insurance contract.
                    ``(C) Application of section 7702.--Subsection 
                (c)(2) of section 7702 (relating to the guideline 
                premium limitation) shall be applied, as of any date, 
                by increasing the guideline premium limitation with 
                respect to the life insurance contract by an amount 
                equal to--
                            ``(i) by the sum of any charges (but not 
                        premiums) described in subparagraph (B) 
                        assessed to that date under the contract, less
                            ``(ii) any such charges the imposition of 
                        which reduces the premiums paid for the 
                        contract (within the meaning of section 
                        7702(f)(1)).
                    ``(D) Application of section 72(e)(4)(b).--
                Subsection (e)(4)(B) of section 72 (relating to certain 
                amounts retained by the insurer) shall be applied as 
                including charges described in subparagraph (B).
                    ``(E) Application of section 213.--No deduction 
                shall be allowed under subsection (a) of section 213 
                for premiums and charges described in subparagraph (B).
        For purposes of subparagraph (A), the term `portion' means only 
        the terms and benefits under a life insurance contract (whether 
        provided by a rider or addendum on, or other provision of, such 
        contract) that are in addition to the terms and benefits under 
        the contract without regard to the coverage of qualified long-
        term care services and benefits incidental to such coverage.
    ``(c) Qualified Long-Term Care Services.--For purposes of this 
section:
            ``(1) In general.--The term `qualified long-term care 
        services' means necessary diagnostic, preventive, therapeutic, 
        and rehabilitative services, and maintenance or personal care 
        services, which--
                    ``(A) are required by an ill individual in a 
                qualified facility,
                    ``(B) are provided pursuant to a plan of care 
                prescribed by a licensed health care practitioner, or
                    ``(C) are required by law or regulation.
            ``(2) Chronically ill individual.--
                    ``(A) In general.--The term `chronically ill 
                individual' means any individual who has been certified 
                by a licensed health care practitioner as--
                            ``(i)(I) being unable to perform (without 
                        substantial assistance from another individual) 
                        at least two activities of daily living (as 
                        defined in subparagraph (B)), due to a loss of 
                        functional capacity, or
                            ``(II) having a level of disability similar 
                        (as determined by the Secretary in consultation 
                        with the Secretary of Health and Human 
                        Services) to the level of disability described 
                        in subclause (I), or
                            ``(ii) having a similar level of disability 
                        due to cognitive impairment.
                    ``(B) Activities of daily living.--For purposes of 
                subparagraph (A), each of the following is an activity 
                of daily living:
                            ``(i) Bathing.--The overall complex 
                        behavior of getting water and cleansing the 
                        whole body, including turning on the water for 
                        a bath, shower, or sponge bath, getting to, in, 
                        and out of a tub or shower, and washing and 
                        drying oneself.
                            ``(ii) Dressing.--The overall complex 
                        behavior of getting clothes from closets and 
                        drawers and then getting dressed.
                            ``(iii) Toileting.--The act of going to the 
                        toilet room for bowel and bladder function, 
                        transferring on and off the toilet, cleaning 
                        after elimination, and arranging clothes.
                            ``(iv) Transfer.--The process of getting in 
                        and out of bed or in and out of a chair or 
                        wheelchair.
                            ``(v) Eating.--The process of getting food 
                        from a plate or its equivalent into the mouth.
                            ``(vi) Continence.--The ability to 
                        voluntarily control bowel and bladder function 
                        and to maintain a reasonable level of personal 
                        hygiene.
                            ``(vii) State required.--Any other activity 
                        of daily living as required by State law or 
                        regulation which is not preempted by Federal 
                        law or regulation.
                    ``(C) Number of activities of daily living.--A 
                qualified long-term care insurance contract may utilize 
                fewer than the number of activities of daily living 
                described in subparagraph (B).
            ``(3) Qualified facility.--The term `qualified facility' 
        means--
                    ``(A) a nursing, rehabilitative, hospice, service, 
                or adult day care facility (including a hospital, 
                retirement home, nursing home, skilled nursing 
                facility, intermediate care facility, or similar 
                institution)--
                            ``(i) which is licensed under State law, or
                            ``(ii) which is a certified facility for 
                        purposes of title XVIII or XIX of the Social 
                        Security Act, or
                    ``(B) an individual's home if a physician, 
                certifies that without home care the individual would 
                have to be cared for in a facility described in 
                subparagraph (A), except that such home shall be 
                treated as a qualified facility only to the extent that 
                the cost of such services is not greater than the cost 
                of similar services provided in a facility described in 
                subparagraph (A).
            ``(4) Maintenance of personal care services.--The term 
        `maintenance of personal care services' means any care the 
        primary purpose of which is to provide needed assistance with 
        any of the activities of daily living described in paragraph 
        (2)(B). Such term may include such services as adult day care, 
        homemaker and chore services, hospice services, respite care, 
        and services required by law or regulation.
            ``(5) Licensed health care practitioner.--The term 
        `licensed health care practitioner' means any physician (as 
        defined in section 1861(r) of the Social Security Act) and any 
        registered professional nurse, licensed social worker, or other 
        individual who meets such requirements as may be prescribed by 
        the Secretary.
    ``(d) Special Rules.--
            ``(1) Continuation rules not to apply.--The health care 
        continuation rules contained in section 4980B (and contained in 
        part 6 of subtitle B of title I of the Employee Retirement 
        Income Security Act of 1974 and in title XXII of the Public 
        Health Insurance Act) shall not apply to--
                    ``(A) qualified long-term care insurance contracts, 
                or
                    ``(B) plans described in subsection (a)(2).
            ``(2) Employer plans not treated as deferred compensation 
        plans.--For purposes of this title, a plan of an employer 
        providing coverage of qualified long-term care services shall 
        not be treated as a plan which provides for deferred 
        compensation by reason of providing such coverage.
            ``(3) Contracts covering parents and grandparents.--For 
        purposes of this title, if a qualified long-term care insurance 
        contract purchased by or provided to an individual provides 
        coverage with respect to one or more of the individual's 
        parents or grandparents (or, in the case of a joint return, of 
        either spouse), such coverage and all payments made pursuant to 
        such coverage shall be treated in the same manner as if the 
        parents or grandparents were dependents (as defined in section 
        152) of the individual. For purposes of this paragraph, the 
        term `parent' includes any stepmother or stepfather, and the 
        term `grandparent' includes any stepgrandfather or 
        stepgrandmother, and any relationship that exists by virtue of 
        a legal adoption shall be recognized to the same extent as 
        relationships by blood.
            ``(4) Welfare benefit rules not to apply.--For purposes of 
        subpart D of part I of subchapter D of chapter 1 (relating to 
        treatment of welfare benefit funds), qualified long-term care 
        services shall not be treated as a welfare benefit or a medical 
        benefit.
            ``(5) Deductibility.--For purposes of this title, no 
        payment of a premium for a long-term care insurance contract 
        shall fail to be deductible in whole or in part merely because 
        the contract provides for level annual payments.
    ``(e) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary to carry out the requirements of this section, 
including regulations to prevent the avoidance of this section by 
providing qualified long-term care services under a life insurance 
contract.''
    (b) Conforming Amendment.--The table of sections for chapter 79 of 
such Code is amended by inserting after the item relating to section 
7702A the following new item:

                              ``Sec. 7702B. Treatment of long-term care 
                                        insurance or plans.''

SEC. 102. QUALIFIED LONG-TERM SERVICES TREATED AS MEDICAL CARE.

    (a) General Rule.--Paragraph (1) of section 213(d) of the Internal 
Revenue Code of 1986 (defining medical care) is amended--
            (1) by striking ``or'' at the end of subparagraph (B);
            (2) by redesignating subparagraph (C) as subparagraph (D); 
        and
            (3) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) for qualified long-term care services (as 
                defined in section 7702B(c)), or''.
    (b) Conforming Amendments.--
            (1) Subparagraph (D) of section 213(d)(1) of such Code (as 
        redesignated by subsection (a)) is amended by striking 
        ``subparagraphs (A) and (B)'' and inserting ``subparagraphs 
        (A), (B), and (C)''.
            (2) Paragraph (6) of section 213(d) of such Code is 
        amended--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``subparagraphs (A) and (B)'' and inserting 
                ``subparagraphs (A), (B), and (C)''; and
                    (B) in subparagraph (A) by striking ``paragraph 
                (1)(C)'' and inserting ``paragraph (1)(D)''.
            (3) Paragraph (7) of section 213(d) of such Code is amended 
        by striking ``subparagraphs (A) and (B)'' and inserting 
        ``subparagraphs (A), (B), and (C)''.

SEC. 103. QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS PERMITTED TO BE 
              OFFERED IN CAFETERIA PLANS.

    Paragraph (2) of section 125(d) of the Internal Revenue Code of 
1986 (relating to the exclusion of deferred compensation) is amended by 
adding at the end thereof the following new subparagraph:
                    ``(D) Exception for long-term care insurance 
                contracts.--For purposes of subparagraph (A), a plan 
                shall not be treated as providing deferred compensation 
                by reason of providing any long-term care insurance 
                contract (as defined in section 7702B(b)) if--
                            ``(i) the employee may elect to continue 
                        the insurance upon cessation of participation 
                        in the plan, and
                            ``(ii) the amount paid or incurred during 
                        any taxable year for such insurance does not 
                        exceed the premium which would have been 
                        payable for such year under a level premium 
                        structure.''

SEC. 104. INCLUSION IN INCOME OF EXCESSIVE LONG-TERM CARE BENEFITS.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically included 
in gross income) is amended by adding at the end thereof the following 
new section:

``SEC. 91. EXCESSIVE LONG-TERM CARE BENEFITS.

    ``(a) General Rule.--Gross income for the taxable year of any 
individual includes excessive long-term care benefits received by or 
for the benefit of such individual during the taxable year.
    ``(b) Excessive Long-Term Care Benefits.--
            ``(1) In general.--For purposes of this section, the term 
        `excessive long-term care benefits' means the excess (if any) 
        of--
                    ``(A) the aggregate amount from all policies which 
                is not includable in the gross income of the individual 
                for the taxable year by reason of the amendments made 
                by the Family Choice in Long-Term Care Act; and
                    ``(B) the aggregate of $200 for each day during the 
                taxable year that such individual--
                            ``(i) was a chronically ill individual (as 
                        defined in section 7702B(c)(2)), and
                            ``(ii) was confined to a qualified facility 
                        (as defined in section 7702B(c)(3)).
            ``(2) Inflation adjustment.--In the case of any taxable 
        year beginning after 1996, the amount described in paragraph 
(1)(B) shall be equal to the sum of--
                    ``(A) the amount in effect under paragraph (1)(B) 
                for the preceding calendar year (after application of 
                this subparagraph), plus
                    ``(B) the product of the amount referred to in 
                subparagraph (A) multiplied by the cost-of-living 
                adjustment for the calendar year under paragraph (3).
            ``(3) Cost-of-living adjustment.--For purposes of paragraph 
        (2), the cost-of-living adjustment for any calendar year is the 
        percentage (if any) by which the cost index under paragraph (4) 
        for the preceding calendar year exceeds such index for the 
        second preceding calendar year.
            ``(4) Cost index.--The Secretary, in consultation with the 
        Secretary of Health and Human Services, shall before January 1, 
        1997, establish a cost index to measure increases in the cost 
        of nursing home and similar facilities. The Secretary may from 
        time to time revise such index to the extent necessary to 
        accurately measure any increase or decreases in such costs.
            ``(5) Rounding.--If any dollar amount determined under this 
        subsection is not a multiple of $10, such dollar amount shall 
        be rounded to the nearest multiple of $10 (or, if such dollar 
        amount is a multiple of $5, such dollar amount shall be 
        increased to the next higher multiple of $10).
            ``(6) Computation of daily amount.--For purposes of this 
        section, the aggregate for each day may be determined by using 
        an average daily amount for the month, computed by dividing the 
        amount of benefits for the month by the number of days in the 
        month.''
    (b) Clerical Amendment.--The table of sections for such part II of 
subchapter B of chapter 1 of such Code is amended by adding at the end 
the following new item:

                              ``Sec. 91. Excessive long-term care 
                                        benefits.

SEC. 105. TAX RESERVES FOR QUALIFIED LONG-TERM CARE INSURANCE 
              CONTRACTS.

    (a) In General.--Subparagraph (A) of section 807(d)(3) of the 
Internal Revenue Code of 1986 (relating to tax reserve methods) is 
amended--
            (1) by redesignating clause (iv) as clause (v); and
            (2) by inserting after clause (iii) the following new 
        clause:
                            ``(iv) Qualified long-term care insurance 
                        contracts.--In the case of any qualified long-
                        term care insurance contract (as defined in 
                        section 7702B(b))--
                                    ``(I) the reserve method prescribed 
                                by the National Association of 
                                Insurance Commissioners which covers 
                                such contract (as of the date of 
                                issuance), or
                                    ``(II) if no reserve method has 
                                been prescribed by the National 
                                Association of Insurance Commissioners 
                                which covers such contract, a 1-year 
                                full preliminary term method.''
    (b) Conforming Amendments.--
            (1) Clause (iii) of section 807(d)(3)(A) of such Code is 
        amended by striking ``noncancellable accident and health 
        insurance contract,'' and inserting ``noncancellable accident 
        and health insurance contract (other than qualified long-term 
        care insurance contracts (as defined in section 7702B(b)),''.
            (2) Clause (v) of section 807(d)(3)(A) of such Code (as 
        redesignated by subsection (a)) is amended by striking ``or 
        (iii)'' each place that such appears and inserting ``(iii), or 
        (iv)''.

SEC. 106. CERTAIN EXCHANGES OF LIFE INSURANCE CONTRACTS FOR LONG-TERM 
              CARE INSURANCE CONTRACTS NOT TAXABLE.

    Subsection (a) of section 1035 of the Internal Revenue Code of 1986 
(relating to certain exchanges of insurance contracts) is amended by 
striking the period at the end of paragraph (3) and inserting ``; or'', 
and by adding at the end thereof the following new paragraph:
            ``(4) a contract of life insurance or an endowment or 
        annuity contract for a long-term care insurance contract (as 
        defined in section 7702B(b)).''

SEC. 107. TREATMENT OF ACCELERATED DEATH BENEFITS BY RECIPIENT.

    (a) In General.--Section 101 of the Internal Revenue Code of 1986 
(relating to certain death benefits) is amended by adding at the end 
the following new subsection:
    ``(g) Treatment of Certain Accelerated Death Benefits.--
            ``(1) In general.--For purposes of this section, the 
        following amounts shall be treated as an amount paid by reason 
        of the death of an insured:
                    ``(A) Any amount received under a life insurance 
                contract on the life of an insured who is a terminally 
                ill individual.
                    ``(B) Any amount received under a life insurance 
                contract on the life of an insured who is a chronically 
                ill individual (as determined in such manner as the 
                Secretary may prescribe) but only if such amount is 
                received under a rider or other provision of such 
                contract which is treated as a qualified long-term care 
                insurance contract under section 7702B.
            ``(2) Treatment of viatical settlements.--
                    ``(A) In general.--In the case of a life insurance 
                contract on the life of an insured described in 
                paragraph (1), if--
                            ``(i) any portion of such contract is sold 
                        to any viatical settlement provider, or
                            ``(ii) any portion of the death benefit is 
                        assigned to such a provider,
                the amount paid for such sale or assignment shall be 
                treated as an amount paid under the life insurance 
                contract by reason of the death of such insured.
                    ``(B) Viatical settlement provider.--The term 
                `viatical settlement provider' means any person 
                regularly engaged in the trade or business of 
                purchasing, or taking assignments of, life insurance 
                contracts on the lives of insureds described in 
                paragraph (1) if--
                            ``(i) such person is licensed for such 
                        purposes in the State in which the insured 
                        resides, or
                            ``(ii) in the case of an insured who 
                        resides in a State not requiring the licensing 
                        of such persons for such purposes--
                                    ``(I) such person meets the 
                                requirements of sections 8 and 9 of the 
                                Viatical Settlements Model Act of the 
                                National Association of Insurance 
                                Commissioners, and
                                    ``(II) meets the requirements of 
                                the Model Regulations of the National 
                                Association of Insurance Commissioners 
                                (relating to standards for evaluation 
                                of reasonable payments) in determining 
                                amounts paid by such person in 
                                connection with such purchases or 
                                assignments.
            ``(3) Definitions.--For purposes of this section--
                    ``(A) Terminally ill individual.--The term 
                `terminally ill individual' means an individual who has 
                been certified by a physician as having an illness or 
                physical condition which can reasonably be expected to 
                result in death in 24 months or less after the date of 
                the certification.
                    ``(B) Physician.--The term `physician' has the 
                meaning given to such term by section 1861(r)(1) of the 
                Social Security Act (42 U.S.C. 1395x(r)(1)).
            ``(4) Exception for business-related policies.--This 
        subsection shall not apply in the case of any amount paid to 
        any taxpayer other than the insured if such taxpayer has an 
        insurable interest with respect to the life of the insured by 
        reason of the insured being a director, officer, or employee of 
        the taxpayer or by reason of the insured being financially 
        interested in any trade or business carried on by the 
        taxpayer.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts received after December 31, 1995.

SEC. 108. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED ACCELERATED 
              DEATH BENEFIT RIDERS.

    (a) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--Section 818 of the Internal Revenue Code of 1986 (relating 
to other definitions and special rules) is amended by adding at the end 
the following new subsection:
    ``(g) Qualified Accelerated Death Benefit Riders Treated as Life 
Insurance.--For purposes of this part--
            ``(1) In general.--Any reference to a life insurance 
        contract will be treated as including a reference to a 
        qualified accelerated death benefit rider on such contract.
            ``(2) Qualified accelerated death benefit riders.--For 
        purposes of this subsection the term `qualified accelerated 
        death benefit rider' means any rider on a life insurance 
        contract if the only payments under the rider are payments 
        meeting the requirements of section 101(g).
            ``(3) Exception for long-term care riders.--Paragraph (1) 
        shall not apply to any rider which is treated as a long-term 
        care insurance contract under section 7702B.''
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        take effect on January 1, 1996.
            (2) Issuance of rider not treated as material change.--For 
        purposes of applying sections 101(f), 7702, and 7702A of the 
        Internal Revenue Code of 1986 to any contract--
                    (A) the issuance of a qualified accelerated death 
                benefit rider (as defined in section 818(g) of such 
                Code (as added by this Act)), and
                    (B) the addition of any provision required to 
                conform an accelerated death benefit rider to the 
                requirements of such section 818(g),
        shall not be treated as a modification or material change in 
        such contract.

SEC. 109. EXCLUSION FROM GROSS INCOME FOR AMOUNTS WITHDRAWN FROM 
              INDIVIDUAL RETIREMENT PLANS OR 401(k) PLANS FOR LONG-TERM 
              CARE INSURANCE.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended--
            (1) by redesignating section 137 as section 138; and
            (2) by inserting after section 136 the following new 
        section:

``SEC. 137. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS AND 
              SECTION 401(k) PLANS FOR LONG-TERM CARE INSURANCE.

    ``(a) General Rule.--The amount includible in the gross income of 
an individual for the taxable year by reason of qualified distributions 
during such taxable year shall not exceed the excess of--
            ``(1) the amount which would (but for this section) be so 
        includible by reason of such distributions, over
            ``(2) the aggregate premiums paid by such individual during 
        such taxable year for any long-term care insurance contract (as 
        defined in section 7702B(b)) for the benefit of such individual 
        or the spouse of such individual.
    ``(b) Qualified Distribution.--For purposes of this section, the 
term `qualified distribution' means any distribution to an individual 
from an individual retirement account or a section 401(k) plan if such 
individual has attained the age of 59\1/2\ on or before the date of the 
distribution (and, in the case of a distribution used to pay premiums 
for the benefit of the spouse of such individual, such spouse has 
attained age 59\1/2\ on or before the date of the distribution).
    ``(c) Definitions.--For purposes of this section:
            ``(1) Individual retirement account.--The term `individual 
        retirement account' has the meaning given such term by section 
        408(a).
            ``(2) Section 401(k) plan.--The term `section 401(k) plan' 
        means any employer plan which meets the requirements of section 
        401(a) and which includes a qualified cash or deferred 
        arrangement (as defined in section 401(k)).
    ``(d) Special Rules for Section 401(k) Plans.--
            ``(1) Withdrawals cannot exceed elective contributions 
        under qualified cash or deferred arrangement.--This section 
        shall not apply to any distribution from a section 401(k) plan 
        to the extent the aggregate amount of such distributions for 
        the use described in subsection (a) exceeds the aggregate 
        employer contributions made pursuant to the employee's election 
        under section 401(k)(2).
            ``(2) Withdrawals not to cause disqualification.--A plan 
        shall not be treated as failing to satisfy the requirements of 
        section 401, and an arrangement shall not be treated as failing 
        to be a qualified cash or deferred arrangement (as defined in 
        section 401(k)(2)), merely because under the plan or 
        arrangement distributions are permitted which are excludable 
        from gross income by reason of this section.''
    (b) Conforming Amendments.--
            (1) Section 401(k) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(11) Cross reference.--

                                ``For provision permitting tax-free 
withdrawals for payment of long-term care premiums, see section 137.''
            (2) Section 408(d) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(8) Cross reference.--

                                ``For provision permitting tax-free 
withdrawals from individual retirement accounts for payment of long-
term care premiums, see section 137.''
            (3) The table of sections for such part III if amended by 
        striking the last item and inserting the following new items:

                              ``Sec. 137. Distributions from individual 
                                        retirement accounts and section 
                                        401(k) plans for long-term care 
                                        insurance.
                              ``Sec. 138. Cross references to other 
                                        Acts.''

SEC. 110. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this title shall apply to long-term care insurance 
policies issued in taxable years beginning after the date of the 
enactment of this Act.
    (b) Continuation of Existing Policies.--In the case of any long-
term care insurance policy issued before January 1, 1997, which met the 
long-term care insurance requirements of the State in which the policy 
was sitused at the time the policy was issued--
            (1) such policy shall be treated for purposes of the 
        Internal Revenue Code of 1986 as a long-term care insurance 
        contract (as defined in section 7702B(b) of such Code), and
            (2) services provided under such policy shall be treated 
        for such purposes as qualified long-term care services (as 
        defined in section 7702B(c) of such Code).
    (c) Exchanges of Existing Policies.--If, after the date of 
enactment of this Act and before January 1, 1996, a policy providing 
for long-term care insurance coverage is exchanged solely for a long-
term care insurance contract (as defined in section 7702B(b) of the 
Internal Revenue Code of 1986), no gain or loss shall be recognized on 
the exchange. If, in addition to a long-term care insurance contract, 
money or other property is received in the exchange, then any gain 
shall be recognized to the extent of the sum of the money and the fair 
market value of the other property received. For purposes of this 
subsection, the cancellation of a policy providing for long-term care 
insurance coverage and reinvestment of the cancellation proceeds in a 
qualified long-term care insurance contract within 60 days thereafter 
shall be treated as an exchange.
    (d) Issuance of Certain Riders Permitted.--For purposes of 
determining whether section 7702 or 7702A of the Internal Revenue Code 
of 1986 applies to any contract, the issuance, whether before, on, or 
after December 31, 1995, of a rider on a life insurance contract 
providing long-term care insurance coverage shall not be treated as a 
modification or material change of such contract.
    (e) Treasury To Specify Tax Treatment of Long-Term Care Contracts 
Which Do Not Meet Standards.--Not later than October 1, 1996, the 
Secretary of the Treasury shall submit to the Congress a report 
detailing the Department of the Treasury's interpretation of the 
treatment under the Internal Revenue Code of 1986 of contracts which 
provide long-term care services but which are not long-term care 
insurance contracts (as defined by section 7702B(b) of such Code).

              TITLE II--LONG-TERM CARE INSURANCE STANDARDS

SEC. 200. SHORT TITLE.

    This title may be cited as the ``Long-Term Care Insurance Standards 
Amendments of 1995''.

SEC. 201. NATIONAL LONG-TERM CARE INSURANCE ADVISORY COUNCIL.

    (a) Appointment.--Congress shall appoint an advisory board to be 
known as the National Long-Term Care Insurance Advisory Council 
(hereafter referred to in this title as the ``Advisory Council'').
    (b) Membership.--The Advisory Council shall consist of 5 members, 
each of whom has substantial expertise in matters relating to the 
provision and regulation of long-term care insurance or long-term care 
financing and delivery systems.
    (c) Duties.--The Advisory Council shall--
            (1) provide advice, recommendations, and assistance to 
        Congress on matters relating to long-term care insurance as 
        specified in this title and as otherwise required by the 
        Secretary of Health and Human Services (hereafter referred to 
        in this title as the ``Secretary'');
            (2) collect, analyze, and disseminate information relating 
        to long-term care insurance in order to increase the 
        understanding of insurers, providers, consumers, and regulatory 
        bodies of the issues relating to, and to facilitate 
        improvements in, such insurance, and to carry out the 
        educational program established under subsection (e);
            (3) develop for congressional consideration proposed 
        models, standards, requirements, and procedures relating to 
        long-term care insurance, as appropriate; and
            (4) monitor the development of the long-term care insurance 
        market, advise Congress concerning the need for statutory 
        changes, and establish a data collection system in accordance 
        with subsection (f).
    (d) Administration.--In order to carry out its responsibilities 
under this section, the Advisory Council is authorized to--
            (1) consult individuals and public and private entities 
        with experience and expertise in matters relating to long-term 
        care insurance;
            (2) conduct meetings and hold hearings;
            (3) conduct research (either directly or under grant or 
        contract);
            (4) collect, analyze, publish, and disseminate data and 
        information (either directly or under grant or contract); and
            (5) develop model formats and procedures for insurance 
        products, and develop proposed standards, rules, and procedures 
        for regulatory programs, as appropriate.
    (e) Educational Program.--
            (1) Establishment.--The Advisory Council, in consultation 
        with the Secretary, shall establish a program designed to 
        educate the public on--
                    (A) the risks of incurring catastrophic long-term 
                health care costs;
                    (B) types of long-term care services available;
                    (C) coverage limitations of Federal programs for 
                long-term care;
                    (D) private sector options for long-term care 
                planning; and
                    (E) methods for assessing the quality and cost of 
                long-term care services and obtaining consumer 
                information regarding long-term care such as facility 
                inspection information, service certification, client 
                complaints, special care units/programs, or other items 
                raised by public demand.
            (2) Dissemination of information.--Educational information 
        developed under the program established under paragraph (1) 
        shall be disseminated through collaborative arrangements with 
        providers of long-term services or health care services, 
        entities serving the aged, or others willing to participate.
    (f) Long-Term Care Data Collection System.--
            (1) In general.--The Advisory Council, in consultation with 
        the Secretary and the National Association of Insurance 
        Commissioners, shall establish a data collection system for 
        public and private long-term care services to be utilized--
                    (A) to assess the costs of long-term care services 
                and predict the future costs of such services;
                    (B) to determine the types of long-term care 
                services provided and predict the future need for such 
                services;
                    (C) to determine how long-term care relates to the 
                medical problems experienced by the elderly; and
                    (D) in any other manner determined appropriate by 
                the Advisory Council.
            (2) Report.--Not later than 2 years after the date of 
        enactment of this Act and annually thereafter, the Advisory 
        Council shall prepare and submit to the appropriate committees 
        of Congress a report that shall include--
                    (A) a description of the data collection system 
                described in paragraph (1);
                    (B) a description of the types of data collected 
                using such system and an analysis of such data;
                    (C) a description of the sources of the data;
                    (D) a description of the manner in which the data 
                was collected; and
                    (E) any other information determined appropriate by 
                such Advisory Council.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated, for the activities of the Advisory Council, $1,500,000 
for fiscal year 1996, and for each subsequent fiscal year.

SEC. 202. POLICY REQUIREMENTS.

    Section 7702B of the Internal Revenue Code of 1986 (as added by 
section 101) is amended by adding at the end thereof the following new 
subsection:
    ``(f) Consumer Protection Provisions.--
            ``(1) In general.--The requirements of this subsection are 
        met with respect to any contract if any long-term care 
        insurance policy issued under the contract meets--
                    ``(A) the requirements of the model regulation and 
                model Act described in paragraph (2),
                    ``(B) the disclosure requirement of paragraph (3), 
                and
                    ``(C) the requirements relating to 
                nonforfeitability under paragraph (4).
            ``(2) Requirements of model regulation and act.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any policy if such 
                policy meets:
                            ``(i) Model regulations.--The following 
                        requirements of the model regulation:
                                    ``(I) Section 7A (relating to 
                                guaranteed renewal or 
                                noncancellability), and the 
                                requirements of section 6B of the model 
                                Act relating to such section 7A.
                                    ``(II) Section 7B (relating to 
                                prohibitions on limitations and 
                                exclusions).
                                    ``(III) Section 7C (relating to 
                                extension of benefits).
                                    ``(IV) Section 7D (relating to 
                                continuation or conversion of 
                                coverage).
                                    ``(V) Section 7E (relating to 
                                discontinuance and replacement of 
                                policies).
                                    ``(VI) Section 8 (relating to 
                                unintentional lapse).
                                    ``(VII) Section 9 (relating to 
                                disclosure), other than section 9F 
                                thereof.
                                    ``(VIII) Section 10 (relating to 
                                prohibitions against post-claims 
                                underwriting).
                                    ``(IX) Section 11 (relating to 
                                minimum standards).
                                    ``(X) Section 12 (relating to 
                                requirement to offer inflation 
                                protection), except that any 
                                requirement for a signature on a 
                                rejection of inflation protection shall 
                                permit the signature to be on an 
                                application or on a separate form.
                                    ``(XI) Section 23 (relating to 
                                prohibition against preexisting 
                                conditions and probationary periods in 
                                replacement policies or certificates).
                            ``(ii) Model act.--The following 
                        requirements of the model Act:
                                    ``(I) Section 6C (relating to 
                                preexisting conditions).
                                    ``(II) Section 6D (relating to 
                                prior hospitalization).
                    ``(B) Definitions.--For purposes of this paragraph:
                            ``(i) Model provisions.--The terms `model 
                        regulation' and `model Act' mean the long-term 
                        care insurance model regulation, and the long-
                        term care insurance model Act, respectively, 
                        promulgated by the National Association of 
                        Insurance Commissioners (as adopted in January 
                        of 1993).
                            ``(ii) Coordination.--Any provision of the 
                        model regulation or model Act described 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.
            ``(3) Tax disclosure requirement.--The requirement of this 
        paragraph is met with respect to any policy if such policy 
        meets the requirements of section 4980D(d)(1).
            ``(4) Nonforfeiture requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met with respect to any level premium 
                long-term care insurance policy if the issuer of such 
                policy offers to the policyholder, including any group 
                policyholder, a nonforfeiture provision.
                    ``(B) Requirements of provision.--The nonforfeiture 
                provision required under subparagraph (A) shall meet 
                the following requirements:
                            ``(i) The nonforfeiture provision shall be 
                        appropriately captioned.
                            ``(ii) The nonforfeiture provision shall 
                        provide for a benefit available in the event of 
                        a default in the payment of any premiums and 
                        the amount of the benefit may be adjusted 
                        subsequent to being initially granted only as 
                        necessary to reflect changes in claims, 
                        persistency, and interest as reflected in 
                        changes in rates for premium paying policies 
                        approved by the Secretary for the same policy 
                        form.
                            ``(iii) The nonforfeiture provision shall 
                        provide for at least one of the following:
                                    ``(I) Reduced paid-up insurance.
                                    ``(II) Extended term insurance.
                                    ``(III) Shortened benefit period.
                                    ``(IV) Other similar offerings 
                                approved by the Secretary.
            ``(5) Long-term care insurance policy defined.--For 
        purposes of this subsection, the term `long-term care insurance 
        policy' has the meaning given such term by section 4980C(e).''

SEC. 203. ADDITIONAL REQUIREMENTS FOR ISSUERS OF LONG-TERM CARE 
              INSURANCE POLICIES.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 
(relating to qualified pension, etc. plans) is amended by adding at the 
end the following new section:

``SEC. 4980C. FAILURE TO MEET REQUIREMENTS FOR LONG-TERM CARE INSURANCE 
              POLICIES.

    ``(a) General Rule.--There is hereby imposed on any person failing 
to meet the requirements of subsection (c) or (d) a tax in the amount 
determined under subsection (b).
    ``(b) Amount of Tax.--
            ``(1) In general.--For purposes of subsection (a), the 
        amount of the tax shall not exceed the greater of--
                    ``(A) 3 times the amount of any commissions paid 
                for each policy involved in the violation, or
                    ``(B) $10,000.
            ``(2) Waiver.--In the case of a failure which is due to 
        reasonable cause and not to willful neglect, the Secretary may 
        waive part or all of the tax imposed by subsection (a) to the 
        extent that payment of the tax would be excessive relative to 
        the failure involved.
    ``(c) Additional Responsibilities.--The requirements of this 
subsection are as follows:
            ``(1) Requirements of model provisions.--
                    ``(A) Model regulation.--The following requirements 
                of the model regulation must be met:
                            ``(i) Section 13 (relating to application 
                        forms and replacement coverage).
                            ``(ii) Section 14 (relating to reporting 
                        requirements), except that the issuer shall 
                        also report at least annually the number of 
                        claims denied during the reporting period for 
                        each class of business (expended as a 
                        percentage of claims denied), other than claims 
                        denied for failure to meet the waiving period 
                        or because of any applicable preexisting 
                        condition.
                            ``(iii) Section 20 (relating to filing 
                        requirements for marketing).
                            ``(iv) Section 21 (relating to standards 
                        for marketing), including inaccurate completion 
                        of medical histories, other than section 
                        21C(1), 21C(3), and 21C(6) thereof, except 
                        that--
                                    ``(I) in addition to such 
                                requirements, no person shall in 
                                selling or offering to sell a long-term 
                                care insurance policy, misrepresent a 
                                material fact;
                                    ``(II) no such requirements shall 
                                include a requirement to inquire or 
                                identify whether a prospective 
                                applicant or enrollee for long-term 
                                care insurance has accident and 
                                sickness insurance; and
                                    ``(III) the association shall 
                                disclose in any long-term care 
                                insurance solicitation the amount of 
                                compensation that the association 
                                receives from endorsement or sale of 
                                the policy or certificate to its 
                                members, expressed as a percentage of 
                                annual premium generated by such 
                                policies.
                            ``(v) Section 22 (relating to 
                        appropriateness of recommended purchase).
                            ``(vi) Section 24 (relating to standard 
                        format outline of coverage).
                            ``(vii) Section 25 (relating to requirement 
                        to deliver shopper's guide).
                    ``(B) Model act.--The following requirements of the 
                model Act must be met:
                            ``(i) Section 6F (relating to right to 
                        return), except that such section shall also 
                        apply to denials of applications and any refund 
                        shall be made within 30 days of the return or 
                        denial.
                            ``(ii) Section 6G (relating to outline of 
                        coverage).
                            ``(iii) Section 6H (relating to 
                        requirements for certificates under group 
                        plans).
                            ``(iv) Section 6I (relating to policy 
                        summary).
                            ``(v) Section 6J (relating to monthly 
                        reports on accelerated death benefits).
                            ``(vi) Section 7 (relating to 
                        incontestability period).
                    ``(C) Definitions.--For purposes of this paragraph, 
                the terms `model regulation' and `model Act' shall have 
                the meanings given such terms by section 
                7702B(f)(2)(B).
            ``(2) Delivery of policy.--If an application for a long-
        term care insurance policy (or for a certificate under a group 
        long-term care insurance policy) is approved, the issuer shall 
        deliver to the applicant (or policyholder or certificate 
        holder) the policy (or certificate) of insurance not later than 
        30 days after the date of the approval or the date on which the 
        first premium is received, whichever is later.
            ``(3) Information on denials of claims.--If a claim under a 
        long-term care insurance policy is denied, the issuer shall, 
        within 60 days of the date of a written request by the 
        policyholder or certificate holder (or representative)--
                    ``(A) provide a written explanation of the reasons 
                for the denial, and
                    ``(B) make available all information directly 
                relating to such denial, except in cases where such 
                issuer would be prohibited from providing information 
                regarding claims denial under confidentiality statutes 
                or other Federal or State laws.
    ``(d) Disclosure.--The requirements of this subsection are met if 
either of the following statements, whichever is applicable, is 
prominently displayed on the front page of any long-term care insurance 
policy and in the outline of coverage required under subsection 
(c)(1)(B)(ii):
            ``(1) A statement that: `This policy is intended to be a 
        qualified long-term care insurance contract under section 
        7702B(b) of the Internal Revenue Code of 1986.'.
            ``(2) A statement that: `This policy is not intended to be 
        a qualified long-term care insurance contract under section 
        7702B(b) of the Internal Revenue Code of 1986.'.
    ``(e) Long-Term Care Insurance Policy Defined.--
            ``(1) In general.--For purposes of this section, the term 
        `long-term care insurance policy' means any insurance policy or 
        rider advertised, marketed, offered, or designed to provide 
        coverage for not less than 12 consecutive months for each 
        covered person on an expense incurred, indemnity, prepaid, or 
other basis for one or more necessary diagnostic, preventive, 
therapeutic, rehabilitative, maintenance, or personal care services, 
provided in a setting other than an acute care unit of a hospital. Such 
term includes group and individual annuities and life insurance 
policies or riders which provide directly or which supplement long-term 
care insurance. Such term also includes a policy or rider which 
provides for payment of benefits based upon cognitive impairment or the 
loss of functional capacity.
            ``(2) Issuance.--As defined in paragraph (1), a long-term 
        insurance policy may be issued by insurers, fraternal benefit 
        societies, nonprofit health, hospital and medical service 
        corporations, prepaid health plans, health maintenance 
        organizations, or any similar organization to the extent they 
        are otherwise authorized to issue life or health insurance.
            ``(3) Limitations.--The term `long-term care insurance 
        policy' shall not include any insurance policy which is offered 
        primarily to provide basic medicare supplemental coverage, 
        basic hospital expense coverage, basic medical-surgical expense 
        coverage, hospital confinement indemnity coverage, major 
        medical expense coverage, disability income or related asset-
        protection coverage, accident only coverage, specified disease 
        or specified accident coverage, or limited benefit health 
        coverage. With respect to life insurance, such term shall not 
        include life insurance policies which accelerate the death 
        benefit specifically for one or more of the qualifying events 
        of terminal illness, medical conditions requiring extraordinary 
        medical intervention, or permanent institutional confinement, 
        and which provide the option of a lump-sum payment for those 
        benefits and in which neither the benefits nor the eligibility 
        for the benefits is conditioned upon the receipt of long-term 
        care.''
    (b) Clerical Amendment.--The table of sections for chapter 43 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

                              ``Sec. 4980C. Failure to meet 
                                        requirements for long-term care 
                                        insurance policies.''

SEC. 204. RELATION TO STATE LAW.

    Insurance policies which have been deemed in compliance with the 
requirements of this title and the Internal Revenue Code of 1986 (as 
amended by this title) by the State Insurance Commissioner in the State 
of domicile shall be deemed approved for sale in any other State. No 
State may prohibit an insurance carrier from selling outside the State 
of domicile long-term care insurance policies which have been approved 
in the State of domicile.

SEC. 205. UNIFORM LANGUAGE AND DEFINITIONS.

    (a) Recommendations.--The Advisory Council shall develop 
recommendations for the use of uniform language and definitions in 
long-term care insurance policies (as defined in section 4980C(e) of 
the Internal Revenue Code of 1986) for approval by Congress.
    (b) Use of Nonuniform Language.--Recommendations under subsection 
(a) may permit the use of nonuniform language to the extent required to 
take into account differences among States in the licensing of nursing 
facilities and other providers of long-term care.

SEC. 206. CONSUMER ACCESS TO COMPLIANCE INFORMATION.

    (a) In General.--A State regulatory program must provide for 
consumer access to complaints filed with the State commissioner or 
superintendent of insurance with respect to long-term care insurance 
policies.
    (b) Confidentiality.--The access provided under subsection (a) 
shall be limited to the extent required to protect the confidentiality 
of the identity of individual policyholders.

SEC. 207. EFFECTIVE DATES.

    (a) Contracts.--The amendments made by section 202 shall apply to 
long-term care insurance contracts issued in taxable years beginning 
after the date of enactment of this Act.
    (b) Actions Taken.--The amendments made by section 202 shall apply 
to actions taken in taxable years beginning after the date of enactment 
of this Act.

            TITLE III--PREVENTIVE HEALTH PRACTICES PROMOTION

SEC. 301. DISTRIBUTION OF INFORMATION ON RECOMMENDED PREVENTIVE HEALTH 
              PRACTICES.

    (a) In General.--Section 1804 of the Social Security Act (42 U.S.C. 
1396b-2) is amended--
            (1) in the heading, by inserting ``and distribution of 
        preventive health information'' after ``medicare benefits'';
            (2) by inserting ``(a)'' after ``Sec. 1804.''; and
            (3) by adding at the end the following new subsection:
    ``(b)(1) The Secretary shall develop (and, from time to time, shall 
revise) a summary of recommended preventive health care practices for 
elderly individuals entitled to benefits under this title.
    ``(2) The summary shall be developed in consultation with national 
physician, consumer, and other health-related groups and shall be based 
on recommendations of any appropriate task force or similar group 
established by the Secretary.
    (3) The Secretary shall provide for the distribution of--
            ``(A) the summary developed under paragraph (1) to each 
        individual at the time of the individual's first becoming 
        eligible for benefits under part A under section 226(a), or 
        section 1818, as part of other materials sent to such an 
        individual at such a time, and
            ``(B) the summary developed under paragraph (1) to 
        individuals entitled to benefits under this title in 
        conjunction with general mailings sent under this title to such 
        individuals.''
    (b) Development of Summary and Form.--The Secretary of Health and 
Human Services shall initially develop the summary described in section 
1804(b) of the Social Security Act (as added by subsection (a)) not 
later than April 1, 1996, and shall first provide for the distribution 
of such summaries by not later than October 1, 1996.
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