II

104TH CONGRESS

1ST SESSION S. 707

To shift financial responsibility for providing welfare assistance and medical

care to welfare-related medicaid individuals to the States in exchange

for the Federal Government assuming financial responsibility for providing certain elderly low-income individuals and nonelderly low-income disabled individuals with benefits under the medicare program under title

XVIII of the Social Security Act and long-term care benefits under

a new Federal program established under title XIX of such Act, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 6 (legislative day, APRIL 5), 1995

Mrs. KASSEBAUM (for herself and Mr. BROWN) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To shift financial responsibility for providing welfare assistance and medical care to welfare-related medicaid individuals to the States in exchange for the Federal Government assuming financial responsibility for providing certain elderly low-income individuals and nonelderly lowincome disabled individuals with benefits under the medicare program under title XVIII of the Social Security

Act and long-term care benefits under a new Federal

program established under title XIX of such Act, and

for other purposes.
2

•S 707 IS

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Welfare and Medicaid Responsibility Exchange Act of

6 1995’’.

7 (b) TABLE OF CONTENTS.—The table of contents for

8 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Purpose.

Sec. 3. Definitions.

DIVISION A—EXCHANGE OF RESPONSIBILITIES FOR PROVIDING

WELFARE ASSISTANCE AND MEDICAL CARE

TITLE I—FEDERAL AND STATE RESPONSIBILITIES DURING AND

AFTER THE TRANSITION PERIOD

Subtitle A—Transition Period

Sec. 101. Exchange of financial responsibilities for certain welfare programs

and part of the medicaid program.

Sec. 102. Payments to States.

Sec. 103. State responsibility for providing medical care during the transition

period for welfare-related medicaid individuals.

Sec. 104. Waiver of medicaid requirements during the transition period.

Sec. 105. Termination of certain Federal welfare programs.

Sec. 106. Conforming amendments to the medicaid program.

Subtitle B—Post-Transition Period

PART 1—FEDERAL AND STATE RESPONSIBILITIES

Sec. 111. Assumption of Federal responsibility for providing acute and longterm care to nonwelfare-related medicaid individuals.

Sec. 112. State responsibility for providing medical care to welfare-related medicaid individuals.

PART 2—GRANT PROGRAM TO COMPENSATE DISADVANTAGED STATES

Sec. 121. Grant program.

Subtitle C—Legislative Proposals

Sec. 131. Legislative proposals.

Sec. 132. Congressional consideration of implementing bills.

Subtitle D—Health Benefits and Coverage Commission
3

•S 707 IS

Sec. 141. Creation of Health Benefits and Coverage Commission; membership;

termination.

Sec. 142. Qualifications of Commission members.

Sec. 143. Powers.

Sec. 144. Funding.

TITLE II—ACUTE CARE BENEFITS UNDER THE MEDICARE PROGRAM FOR ELDERLY LOW-INCOME AND NONELDERLY LOW-INCOME DISABLED INDIVIDUALS

Subtitle A—Eligibility Criteria and Acute Care Benefits for Elderly LowIncome Individuals

Sec. 201. Establishing a category of elderly low-income individuals.

Sec. 202. Medicare benefits for elderly low-income individuals.

Subtitle B—Eligibility Criteria and Acute Care Benefits for Nonelderly LowIncome Disabled Individuals

Sec. 211. Establishing a category of nonelderly low-income disabled individuals.

Sec. 212. Medicare benefits for nonelderly low-income disabled individuals.

Subtitle C—Premiums, Coinsurance, and Deductibles Established Without

Regard to Additional Costs

Sec. 221. Establishment of premiums, coinsurance and deductibles.

TITLE III—ESTABLISHMENT OF THE LONG-TERM CARE PROGRAM

Subtitle A—Establishment

Sec. 301. Establishment of program.

Subtitle B—Providing Long-Term Care

Sec. 311. Eligibility determinations.

Sec. 312. Authority to contract.

Sec. 313. No contracts in an area.

Sec. 314. Contract terms; powers and duties of the Secretary.

Subtitle C—Requirements for Long-Term Care Contractors

Sec. 321. Other general requirements for long-term care contractors.

Sec. 322. Needs assessment and plan of care.

Sec. 323. Quality assurance.

Sec. 324. Grievance procedures.

Sec. 325. Monitoring and compliance.

Subtitle D—Establishing Long-Term Care Benefits for Certain Individuals

PART 1—ELIGIBILITY CRITERIA AND BENEFITS

Sec. 331. Eligibility criteria for the long-term care program.

Sec. 332. Long-term care benefits under the long-term care program.

PART 2—FINANCING FOR THE LONG-TERM CARE PROGRAM

Sec. 341. Authorization of appropriations.
4

•S 707 IS

TITLE IV—ENSURING FINANCING FOR FEDERAL HEALTH CARE

FOR CERTAIN ELDERLY LOW-INCOME AND NONELDERLY LOWINCOME DISABLED INDIVIDUALS

Sec. 401. Ensuring financing for acute care benefits for elderly low-income individuals and nonelderly low-income disabled individuals and for

the long-term care program.

TITLE V—MISCELLANEOUS PROVISIONS

Sec. 501. Separate eligibility requirements.

Sec. 502. Encouraging integration of managed care and private health plans.

Sec. 503. Reform of the supplemental security income program.

Sec. 504. Annual report.

Sec. 505. Study and report on integration of acute and long-term care.

Sec. 506. Secretarial submission of legislative proposal for technical and conforming amendments.

DIVISION B—TAX INCENTIVES AND STANDARDS FOR LONG-TERM

CARE INSURANCE

TITLE I—TAX TREATMENT OF LONG-TERM CARE INSURANCE

Sec. 1001. Amendment of 1986 Code.

Sec. 1002. Qualified long-term care services treated as medical care.

Sec. 1003. Treatment of long-term care insurance.

Sec. 1004. Treatment of qualified long-term care plans.

Sec. 1005. Tax treatment of accelerated death benefits under life insurance

contracts.

Sec. 1006. Tax treatment of companies issuing qualified accelerated death benefit riders.

TITLE II—STANDARDS FOR LONG-TERM CARE INSURANCE

Sec. 2001. Additional requirements for issuers of long-term care insurance policies.

Sec. 2002. Coordination with State requirements.

Sec. 2003. Uniform language and definitions.

TITLE III—INCENTIVES TO ENCOURAGE THE PURCHASE OF

PRIVATE INSURANCE

Sec. 3001. Public information and education program.

1 SEC. 2. PURPOSE.

2 The purpose of this Act is—

3 (1) to shift financial responsibility for providing

4 welfare assistance and medical care to welfare-relat5 ed medicaid individuals to the States in exchange for

6 the Federal Government assuming financial respon-
5

•S 707 IS

1 sibility for providing certain elderly low-income indi2 viduals and nonelderly low-income disabled individ3 uals with benefits under the medicare program

4 under title XVIII of the Social Security Act and

5 long-term care benefits under a new Federal pro6 gram established under title XIX of such Act; and

7 (2) to establish the procedures by which—

8 (A) total financial responsibility for provid9 ing health care to certain elderly low-income

10 and nonelderly low-income disabled individuals

11 shall be assumed by the Federal Government by

12 repealing the medicaid program under title XIX

13 of the Social Security Act (42 U.S.C. 1396 et

14 seq.) and replacing it through—

15 (i) amendments to the medicare pro16 gram that provide that such individuals

17 may be eligible for acute care benefits

18 under that program; and

19 (ii) the establishment of a long-term

20 care program under which long-term care

21 benefits may be provided to individuals

22 who meet the eligibility criteria established

23 for such program;
6

•S 707 IS

1 (B) the States can better coordinate and

2 more effectively deliver health and welfare serv3 ices for low-income individuals;

4 (C) the Federal Government can simplify

5 the eligibility standards and better coordinate

6 the provision of acute and long-term health care

7 for low-income elderly and disabled individuals;

8 (D) the Federal Government can modify

9 the criteria for determining the eligibility of

10 children, alcoholics, and drug addicts for bene11 fits under title XVI of the Social Security Act

12 (42 U.S.C. 1381 et seq.); and

13 (E) the financial burden to both the States

14 and the Federal Government is reduced by cre15 ating incentives for individuals to purchase and

16 enroll in private health plans.

17 SEC. 3. DEFINITIONS.

18 For purposes of this Act:

19 (1) ACUTE CARE BENEFITS.—The term ‘‘acute

20 care benefits’’ means a health care service other

21 than the following:

22 (A) Nursing facility services.

23 (B) Intermediate care facility for the men24 tally retarded services.

25 (C) Personal care services.
7

•S 707 IS

1 (D) Homemaker and chore assistance.

2 (E) Respite services.

3 (F) Assistive devices.

4 (G) Adult day services.

5 (H) Habilitation and rehabilitation.

6 (I) Home health services.

7 (J) Home or community-based services.

8 (K) Case-management services that are

9 furnished to an individual who has a condition

10 or disability that qualifies the individual to re11 ceive any of the services described in any other

12 subparagraph of this paragraph.

13 (L) Services furnished in an institution for

14 mental diseases.

15 (M) Any other care or assistive services

16 (approved by the Secretary) that the Secretary

17 determines will help individuals with disabilities

18 to remain in their homes and communities.

19 (2) COMMISSION.—The term ‘‘Commission’’

20 means the Health Benefits and Coverage Commis21 sion established under section 141.

22 (3) DISABLED INDIVIDUAL.—The term ‘‘dis23 abled individual’’ means an individual determined to

24 be disabled under section 1614(a)(3) of the Social

25 Security Act (42 U.S.C. 1382c(a)(3)).
8

•S 707 IS

1 (4) ELDERLY.—The term ‘‘elderly’’ means an

2 individual who is 65 years of age or older.

3 (5) LONG-TERM CARE BENEFITS.—The term

4 ‘‘long-term care benefits’’ means the long-term care

5 health benefits and services (as recommended by the

6 Commission under section 332 and established in an

7 implementing bill enacted under section 132) pro8 vided under the long-term care program and may in9 clude the following:

10 (A) Nursing facility services.

11 (B) Intermediate care facility for the men12 tally retarded services.

13 (C) Personal care services.

14 (D) Homemaker and chore assistance.

15 (E) Respite services.

16 (F) Assistive devices.

17 (G) Adult day services.

18 (H) Habilitation and rehabilitation.

19 (I) Home health services.

20 (J) Home or community-based services.

21 (K) Case-management services that are

22 furnished to an individual who has a condition

23 or disability that qualifies the individual to re24 ceive any of the services described in any other

25 subparagraph of this paragraph.
9

•S 707 IS

1 (L) Services furnished in an institution for

2 mental diseases.

3 (M) Any other care or assistive services

4 (approved by the Secretary) that the Secretary

5 determines will help individuals with disabilities

6 to remain in their homes and communities.

7 (6) LONG-TERM CARE PROGRAM.—The term

8 ‘‘long-term care program’’ means the program estab9 lished in accordance with the provisions of title III.

10 (7) MEDICARE COST-SHARING.—The term

11 ‘‘medicare cost-sharing’’ includes all or any portion

12 of the following costs incurred with respect to indi13 viduals meeting the categories of elderly low-income

14 individuals and nonelderly low-income disabled indi15 viduals recommended by the Commission in accord16 ance with sections 201 and 211 and established in

17 an implementing bill enacted under section 132:

18 (A) Premiums under section—

19 (i) 1818 or 1818A of the Social Secu20 rity Act (42 U.S.C. 1395i–2, 1395i–2a);

21 and

22 (ii) 1839 of such Act (42 U.S.C.

23 1395r).
10

•S 707 IS

1 (B) Coinsurance under title XVIII of such

2 Act (including coinsurance described in section

3 1813 of such Act (42 U.S.C. 1395e)).

4 (C) Deductibles established under title

5 XVIII of such Act (including those described in

6 sections 1813 and 1833(b) of such Act (42

7 U.S.C. 1395e, 1395l(b)).

8 (D) The amount that would be payable by

9 an individual under section 1833(a) of such Act

10 (42 U.S.C. 1395l(a)).

11 (E) Premiums for the enrollment of an in12 dividual with an eligible organization under sec13 tion 1876 of such Act (42 U.S.C. 1395mm).

14 (8) MEDICARE PROGRAM.—The term ‘‘medicare

15 program’’ means the health insurance program

16 under title XVIII of the Social Security Act (42

17 U.S.C. 1395 et seq.).

18 (9) POVERTY LINE.—The term ‘‘poverty line’’

19 means the income official poverty line (as defined by

20 the Office of Management and Budget, and revised

21 annually in accordance with section 673(2) of the

22 Omnibus Budget Reconciliation Act of 1981) that is

23 applicable to a family of the size involved.

24 (10) SECRETARY.—The term ‘‘Secretary’’

25 means the Secretary of Health and Human Services.
11

•S 707 IS

1 (11) STATE.—The term ‘‘State’’ means any of

2 the 50 States, the District of Columbia, the Com3 monwealth of Puerto Rico, the Virgin Islands,

4 Guam, American Samoa, and the Commonwealth of

5 the Northern Mariana Islands.

6 (12) TRANSITION PERIOD.—The term ‘‘transi7 tion period’’ means the period beginning with fiscal

8 year 1997, and ending with the fiscal year imme9 diately before the fiscal year described in section

10 121(b)(5)(A).

11 (13) WELFARE-RELATED MEDICAID INDIVID12 UAL.—The term ‘‘welfare-related medicaid individ13 ual’’ means an individual who—

14 (A) would have been eligible for medical

15 assistance under the State plan for medical as16 sistance under title XIX of the Social Security

17 Act (42 U.S.C. 1396 et seq.) (as in effect on

18 the day before the date of the enactment of this

19 Act) solely by reason of the individual’s receipt

20 of or eligibility for aid or assistance under the

21 State plan approved under part A or E of title

22 IV of such Act (as so in effect), including indi23 viduals eligible for such medical assistance by

24 reason of—
12

•S 707 IS

1 (i) section 402(a)(37), 406(h), or

2 473(b) of such Act (42 U.S.C. 602(a)(37),

3 606(h), or 673(b)); or

4 (ii) the fact that the individual was

5 considered by a State to be receiving such

6 aid as authorized under section 482(e)(6)

7 of such Act (42 U.S.C. 682(e)(6));

8 (B) is a qualified pregnant woman or child,

9 as defined in section 1905(n) of such Act (42

10 U.S.C. 1396d(n));

11 (C) is a qualified family member, as de12 fined in section 1905(m)(1) of such Act (42

13 U.S.C. 1396d(m)(1));

14 (D) is described in subparagraph (A) or

15 (B) of section 1902(l)(1) of such Act (42

16 U.S.C. 1396a(l)(1)) and whose family income

17 does not exceed the minimum income level the

18 State is required to establish under section

19 1902(l)(2)(A) of such Act (42 U.S.C.

20 1396a(l)(2)(A)) for such a family;

21 (E) is described in section 1902(l)(1)(C) of

22 such Act (42 U.S.C. 1396a(l)(1)(C)) and whose

23 family income does not exceed the minimum in24 come level the State is required to establish
13

•S 707 IS

1 under section 1902(l)(2)(B) of such Act (42

2 U.S.C. 1396a(l)(2)(B)) for such a family;

3 (F) is—

4 (i) described in section 1902(l)(1)(D)

5 of such Act (42 U.S.C. 1396a(l)(1)(D));

6 (ii) between the ages of 6 and 12

7 years of age; and

8 (iii) whose family income does not ex9 ceed the minimum income level the State is

10 required to establish under section

11 1902(l)(2)(C) of such Act (42 U.S.C.

12 1396a(l)(2)(C)) for such a family; or

13 (G) if such an individual were covered

14 under the State plan for medical assistance

15 under title XIX of the Social Security Act (42

16 U.S.C. 1396 et seq.) on the day before the date

17 of the enactment of this Act, is an individual

18 described in the optional group of individuals

19 described in section 1902(a)(10)(A)(ii) of such

20 Act (42 U.S.C. 1396a(a)(10)(A)(ii)), other than

21 an individual who would be eligible for such

22 medical assistance by reason of such individ23 ual’s meeting, or being deemed to have met, the

24 eligibility requirements for aid or assistance

25 under the supplemental security income pro-
14

•S 707 IS

1 gram under title XVI of such Act (42 U.S.C.

2 1381 et seq.), or under an agreement between

3 the Commissioner of Social Security and the

4 State to provide State supplementary payments

5 under section 1616 of such Act (42 U.S.C.

6 1382e).

7 DIVISION A—EXCHANGE OF RE8 SPONSIBILITIES FOR PROVID9 ING WELFARE ASSISTANCE

10 AND MEDICAL CARE

11 TITLE I—FEDERAL AND STATE

12 RESPONSIBILITIES DURING

13 AND AFTER THE TRANSITION

14 PERIOD

15 Subtitle A—Transition Period

16 SEC. 101. EXCHANGE OF FINANCIAL RESPONSIBILITIES

17 FOR CERTAIN WELFARE PROGRAMS AND

18 PART OF THE MEDICAID PROGRAM.

19 (a) IN GENERAL.—In exchange for the Federal funds

20 received by a State under section 102 during the transi21 tion period, such State shall provide cash and noncash as22 sistance to low-income individuals in accordance with sub23 section (b).

24 (b) REQUIREMENT TO PROVIDE A CERTAIN LEVEL

25 OF LOW INCOME ASSISTANCE.—
15

•S 707 IS

1 (1) IN GENERAL.—Except as provided in para2 graph (4), the amount of cash and noncash assist3 ance provided to low-income individuals by a State

4 for any fiscal year quarter during the transition pe5 riod shall not be less than the sum of—

6 (A) the amount determined under para7 graph (2); and

8 (B) the amount determined under para9 graph (3).

10 (2) MAINTENANCE OF EFFORT WITH RESPECT

11 TO FEDERAL PROGRAMS TERMINATED.—

12 (A) IN GENERAL.—The amount deter13 mined under this paragraph is an amount equal

14 to one-quarter of the base expenditures deter15 mined under subparagraph (B) for the State.

16 (B) DETERMINATION OF BASE AMOUNT.—

17 The Secretary, in cooperation with the Sec18 retary of Agriculture, shall calculate for each

19 State an amount equal to the total State ex20 penditures for administering and providing—

21 (i) aid to families with dependent chil22 dren under a State plan under parts A and

23 F of title IV of the Social Security Act (42

24 U.S.C. 601 et seq.);
16

•S 707 IS

1 (ii) benefits under the food stamp pro2 gram under the Food Stamp Act of 1977

3 (7 U.S.C. 2011 et seq.), including benefits

4 provided under section 19 of such Act (7

5 U.S.C. 2028); and

6 (iii) benefits under the special supple7 mental program for women, infants, and

8 children established under section 17 of

9 the Child Nutrition Act of 1966 (42

10 U.S.C. 1786),

11 for the State during the 12-month period begin12 ning on July 1, 1995.

13 (3) MAINTENANCE OF EFFORT WITH RESPECT

14 TO MEDICAL ASSISTANCE FOR WELFARE-RELATED

15 MEDICAID INDIVIDUALS.—

16 (A) IN GENERAL.—The amount deter17 mined under this paragraph is an amount equal

18 to one-quarter of the base expenditures deter19 mined under subparagraph (B) for the State.

20 (B) DETERMINATION OF BASE AMOUNT.—

21 The Secretary shall calculate for each State an

22 amount equal to the total State expenditures

23 for administering and providing medical assist24 ance to welfare-related medicaid individuals

25 under the State plan for medical assistance
17

•S 707 IS

1 under title XIX of the Social Security Act (42

2 U.S.C. 1396 et seq.) (as in effect on the day be3 fore the date of the enactment of this Act) in

4 each State during the 12-month period begin5 ning on July 1, 1995.

6 (4) STATE OPTION TO REDUCE MAINTENANCE

7 OF EFFORT WITH RESPECT TO STATE SHARE OF

8 FEDERAL PROGRAMS TERMINATED.—During any fis9 cal year occurring during the transition period, a

10 State may reduce the total amount of State expendi11 tures for cash and noncash assistance to low-income

12 individuals determined under paragraph (2) by not

13 more than 15 percent in any such fiscal year, and

14 may use the funds resulting from such reduction for

15 any purpose.

16 SEC. 102. PAYMENTS TO STATES.

17 (a) IN GENERAL.—The Secretary shall make quar18 terly payments to each State during each fiscal year occur19 ring during the transition period in an amount equal to

20 one-quarter of the amount determined under subsection

21 (b) for the applicable fiscal year and such amount shall

22 be used for the purposes described in subsection (c).

23 (b) PAYMENT EQUIVALENT TO FEDERAL WELFARE

24 SAVINGS.—
18

•S 707 IS

1 (1) IN GENERAL.—The amount available to be

2 paid to a State for a fiscal year shall be an amount

3 equal to the sum of the amounts calculated under

4 paragraphs (2) and (3) for the State.

5 (2) AMOUNT BASED ON FEDERAL SHARE OF

6 TERMINATED WELFARE PROGRAMS.—

7 (A) FISCAL YEAR 1997.—In fiscal year

8 1997, the amount available under this para9 graph for a State is equal to the sum of—

10 (i) the base amount determined under

11 subparagraph (C) for the State;

12 (ii) the product of the amount deter13 mined under clause (i) and the increase in

14 the Consumer Price Index (for all urban

15 consumers, United States city average) for

16 the 12-month period described in subpara17 graph (C); and

18 (iii) the amount that the Federal Gov19 ernment and the State would have ex20 pended in the State in fiscal year 1997

21 under the programs terminated under sec22 tion 105 solely by reason of the increase in

23 recipients which the Secretary and the Sec24 retary of Agriculture estimate would have
19

•S 707 IS

1 occurred if such programs had not been

2 terminated.

3 (B) SUCCEEDING FISCAL YEARS.—In any

4 succeeding fiscal year during the transition pe5 riod, the amount available under this paragraph

6 for a State is equal to the sum of—

7 (i) the amount determined under this

8 paragraph for the State in the previous fis9 cal year;

10 (ii) the product of the amount deter11 mined under clause (i) and the estimated

12 increase in the Consumer Price Index (for

13 all urban consumers, United States city av14 erage) during the previous fiscal year; and

15 (iii) the amount that the Federal Gov16 ernment and the State would have ex17 pended in the State in the fiscal year

18 under the programs terminated under sec19 tion 105 solely by reason of the increase in

20 recipients which the Secretary and the Sec21 retary of Agriculture estimate would have

22 occurred if such programs had not been

23 terminated.

24 (C) DETERMINATION OF BASE AMOUNT.—

25 The Secretary, in cooperation with the Sec-
20

•S 707 IS

1 retary of Agriculture, shall calculate the

2 amount that the Federal Government expended

3 for administering and providing—

4 (i) aid to families with dependent chil5 dren under a State plan under parts A and

6 F of title IV of the Social Security Act (42

7 U.S.C. 601 et seq.);

8 (ii) benefits under the food stamp pro9 gram under the Food Stamp Act of 1977

10 (7 U.S.C. 2011 et seq.), including benefits

11 provided under section 19 of such Act (7

12 U.S.C. 2028); and

13 (iii) benefits under the special supple14 mental program for women, infants, and

15 children established under section 17 of

16 the Child Nutrition Act of 1966 (42

17 U.S.C. 1786),

18 in each State during the 12-month period be19 ginning on July 1, 1995.

20 (3) AMOUNT BASED ON FEDERAL SHARE OF

21 WELFARE-RELATED MEDICAID.—

22 (A) FISCAL YEAR 1997.—In fiscal year

23 1997, the amount available under this para24 graph for a State is equal to the sum of—
21

•S 707 IS

1 (i) the base amount determined under

2 subparagraph (C) for the State;

3 (ii) the product of the amount deter4 mined under clause (i) and 5 percent; and

5 (iii) the amount that the Federal Gov6 ernment and the State would have ex7 pended in the State in fiscal year 1997 to

8 provide medical assistance to welfare-relat9 ed medicaid individuals under title XIX of

10 the Social Security Act (42 U.S.C. 1396 et

11 seq.) (as in effect on the day before the

12 date of the enactment of this Act) solely by

13 reason of the increase in such recipients

14 which the Secretary estimates would have

15 occurred if total financial and administra16 tive responsibility for providing medical as17 sistance to such individuals had not been

18 shifted to the State as a result of this Act.

19 (B) SUCCEEDING FISCAL YEARS.—In any

20 succeeding fiscal year, the amount available

21 under this paragraph for a State is equal to the

22 sum of—

23 (i) the amount determined under this

24 paragraph for the State in the previous fis25 cal year;
22

•S 707 IS

1 (ii) the product of the amount deter2 mined under clause (i) and 5 percent; and

3 (iii) the amount that the Federal Gov4 ernment and the State would have ex5 pended in the State in the fiscal year to

6 provide medical assistance to welfare-relat7 ed medicaid individuals under title XIX of

8 the Social Security Act (42 U.S.C. 1396 et

9 seq.) (as in effect on the day before the

10 date of the enactment of this Act) solely by

11 reason of the increase in recipients which

12 the Secretary estimates would have oc13 curred if total financial and administrative

14 responsibility for providing medical assist15 ance to such individuals had not been

16 shifted to the State as a result of this Act.

17 (C) DETERMINATION OF BASE AMOUNT.—

18 The Secretary shall calculate the amount that

19 the Federal Government expended for admin20 istering and providing medical assistance to

21 welfare-related medicaid individuals under the

22 State plan for medical assistance under title

23 XIX of the Social Security Act (as in effect on

24 the day before the date of the enactment of this
23

•S 707 IS

1 Act) in each State during the 12-month period

2 beginning on July 1, 1995.

3 (c) AMOUNTS TO BE EXPENDED TO PROVIDE MEDI4 CAL ASSISTANCE TO NONWELFARE-RELATED MEDICAID

5 INDIVIDUALS.—Notwithstanding any other provision of

6 law, during the transition period, a State shall—

7 (1) provide medical assistance under title XIX

8 of the Social Security Act (42 U.S.C. 1396 et seq.)

9 to individuals who—

10 (A) meet the eligibility criteria for receiv11 ing medical assistance in accordance with the

12 terms of the State’s plan under title XIX of

13 such Act (as in effect on the day before the

14 date of the enactment of this Act); and

15 (B) are not welfare-related medicaid indi16 viduals; and

17 (2) use the funds it receives under this section

18 toward the State’s financial participation for expend19 itures made under such State plan in order to pro20 vide medical assistance to such individuals.

21 (d) EXCESS.—A State that receives funds under this

22 section that are in excess of the State’s financial participa23 tion for expenditures required to be made under sub24 section (c) under the State plan for medical assistance

25 under title XIX of the Social Security Act shall use such
24

•S 707 IS

1 excess funds to provide cash and noncash assistance for

2 low-income families.

3 (e) DENIAL OF PAYMENTS FOR FAILURE TO MAIN4 TAIN EFFORT.—No payment shall be made under sub5 section (a) for a fiscal year quarter if a State fails to com6 ply with the requirements of section 101(b) for the preced7 ing quarter of such fiscal year.

8 (f) ENTITLEMENT.—This section constitutes budget

9 authority in advance of appropriations Acts, and rep10 resents the obligation of the Federal Government to pro11 vide the payments described in subsection (a).

12 SEC. 103. STATE RESPONSIBILITY FOR PROVIDING MEDI13 CAL CARE DURING THE TRANSITION PERIOD

14 FOR WELFARE-RELATED MEDICAID INDIVID15 UALS.

16 (a) IN GENERAL.—Subject to subsection (b), during

17 the transition period, a State may provide medical care

18 to any welfare-related medicaid individual in any manner

19 that the State deems appropriate, including—

20 (1) providing a voucher to such an individual

21 for the purchase of private insurance;

22 (2) enrolling such an individual in a health plan

23 licensed, operated, or under contract with the State;

24 (3) modifying the benefits provided to such an

25 individual by the State;
25

•S 707 IS

1 (4) modifying the payment rates for providers

2 of medical services to such an individual; and

3 (5) modifying the eligibility requirements with

4 respect to such an individual.

5 (b) SPECIAL RULES FOR CHILDREN.—During the

6 transition period, a State shall continue to provide at least

7 the care and services listed in paragraphs (1) through (5),

8 (17), and (21) of section 1905(a) of the Social Security

9 Act (42 U.S.C. 1396d(a)), as in effect on the day before

10 the date of the enactment of this Act, to any child residing

11 in the State—

12 (1) who is a welfare-related medicaid individual;

13 and

14 (2) who is—

15 (A) under the age of 6 and has a family

16 income which does not exceed 133 percent of

17 the poverty line; or

18 (B) between the ages of 6 and 12 and has

19 a family income which does not exceed 100 per20 cent of the poverty line.

21 SEC. 104. WAIVER OF MEDICAID REQUIREMENTS DURING

22 THE TRANSITION PERIOD.

23 (a) FOR WELFARE-RELATED MEDICAID CHIL24 DREN.—The Secretary may grant a waiver of the require25 ments under section 103(b), in accordance with section
26

•S 707 IS

1 1115 or 1915(b) of the Social Security Act (42 U.S.C.

2 1315, 1396n(b)), or any other applicable law, if a State

3 makes an adequate showing of need in a waiver applica4 tion submitted in such manner as the Secretary deter5 mines appropriate.

6 (b) FOR NONWELFARE-RELATED MEDICAID INDI7 VIDUALS.—The Secretary may grant a waiver of the re8 quirements under section 102(c) in accordance with the

9 requirements of section 1115 or 1915(b) of the Social Se10 curity Act (42 U.S.C. 1315, 1396n(b)) or any other appli11 cable law.

12 (c) APPROVAL.—Notwithstanding any other provision

13 of law, if not later than 90 days after the receipt of a

14 completed waiver request submitted in accordance with

15 subsection (a) or (b), the Secretary has not notified the

16 State that submitted the request that the request has been

17 approved or denied, such request shall be deemed ap18 proved.

19 SEC. 105. TERMINATION OF CERTAIN FEDERAL WELFARE

20 PROGRAMS.

21 (a) TERMINATION.—

22 (1) AFDC.—Part A of title IV of the Social Se23 curity Act (42 U.S.C. 601 et seq.) is amended by

24 adding at the end the following new section:
27

•S 707 IS

1 ‘‘TERMINATION OF AUTHORITY

2 ‘‘SEC. 418. The authority provided by this part shall

3 terminate on October 1, 1996.’’.

4 (2) JOBS.—Part F of title IV of the Social Se5 curity Act (42 U.S.C. 681 et seq.) is amended by

6 adding at the end the following new section:

7 ‘‘TERMINATION OF AUTHORITY

8 ‘‘SEC. 488. The authority provided by this part shall

9 terminate on October 1, 1996.’’.

10 (3) SPECIAL SUPPLEMENTAL FOOD PROGRAM

11 FOR WOMEN, INFANTS, AND CHILDREN (WIC).—Sec12 tion 17 of the Child Nutrition Act of 1966 (42

13 U.S.C. 1786) is amended by adding at the end the

14 following new subsection:

15 ‘‘(q) The authority provided by this section shall ter16 minate on October 1, 1996.’’.

17 (4) FOOD STAMP PROGRAM.—The Food Stamp

18 Act of 1977 (7 U.S.C. 2011 et seq.) is amended by

19 adding at the end the following new section:

20 ‘‘SEC. 24. TERMINATION OF AUTHORITY.

21 ‘‘The authority provided by this Act shall terminate

22 on October 1, 1996.’’.

23 (b) REFERENCES IN OTHER LAWS.—

24 (1) IN GENERAL.—Any reference in any law,

25 regulation, document, paper, or other record of the

26 United States to any provision that has been termi-
28

•S 707 IS

1 nated by reason of the amendments made in sub2 section (a) shall, unless the context otherwise re3 quires, be considered to be a reference to such provi4 sion, as in effect immediately before the date of the

5 enactment of this Act.

6 (2) STATE PLANS.—Any reference in any law,

7 regulation, document, paper, or other record of the

8 United States to a State plan that has been termi9 nated by reason of the amendments made in sub10 section (a), shall, unless the context otherwise re11 quires, be considered to be a reference to such plan

12 as in effect immediately before the date of the enact13 ment of this Act.

14 SEC. 106. CONFORMING AMENDMENTS TO THE MEDICAID

15 PROGRAM.

16 (a) REMOVAL OF WELFARE-RELATED MEDICAID IN17 DIVIDUALS FROM STATE PLAN REQUIREMENTS.—

18 (1) IN GENERAL.—Section 1902(a)(10)(A) of

19 the Social Security Act (42 U.S.C. 1396a(a)(10)(A))

20 is amended—

21 (A) in clause (i)—

22 (i) in subclause (I), by striking ‘‘or

23 part A’’ and all that follows through

24 ‘‘482(e)(6))’’; and
29

•S 707 IS

1 (ii) by striking subclauses (III)

2 through (VII); and

3 (B) in clause (ii), striking subclauses

4 (VIII) and (IX).

5 (2) EFFECTIVE DATE.—The amendments made

6 by paragraph (1) shall become effective on October

7 1, 1996.

8 (b) TERMINATION OF PROGRAM.—Title XIX of the

9 Social Security Act (42 U.S.C. 1396 et seq.) is amended

10 by adding at the end the following new section:

11 ‘‘TERMINATION OF AUTHORITY

12 ‘‘SEC. 1932. The authority provided by this title shall

13 terminate on the date described in section 121(b)(5)(A)

14 of the Welfare and Medicaid Responsibility Exchange Act

15 of 1995.’’.

16 Subtitle B—Post-Transition Period

17 PART 1—FEDERAL AND STATE

18 RESPONSIBILITIES

19 SEC. 111. ASSUMPTION OF FEDERAL RESPONSIBILITY FOR

20 PROVIDING ACUTE AND LONG-TERM CARE TO

21 NONWELFARE-RELATED MEDICAID INDIVID22 UALS.

23 (a) ASSUMPTION OF FEDERAL RESPONSIBILITY.—In

24 the case of any fiscal year beginning after the transition

25 period—
30

•S 707 IS

1 (1) the Federal Government shall assume re2 sponsibility for providing—

3 (A) acute care benefits under the medicare

4 program under title XVIII of the Social Secu5 rity Act (42 U.S.C. 1395 et seq.) to elderly low6 income individuals and nonelderly low-income

7 disabled individuals in accordance with an im8 plementing bill enacted by Congress pursuant

9 to section 132; and

10 (B) long-term care benefits under the long11 term care program to individuals meeting the

12 eligibility criteria for such program established

13 in an implementing bill enacted by Congress

14 pursuant to section 132; and

15 (2) no Federal funds shall be available for pro16 viding medical assistance under any State plan for

17 medical assistance approved under title XIX of the

18 Social Security Act (42 U.S.C. 1396 et seq.).

19 SEC. 112. STATE RESPONSIBILITY FOR PROVIDING MEDI20 CAL CARE TO WELFARE-RELATED MEDICAID

21 INDIVIDUALS.

22 In the case of any fiscal year beginning after the

23 transition period, each State may provide medical care to

24 a welfare-related medicaid individual in any manner that

25 the State deems appropriate.
31

•S 707 IS

1 PART 2—GRANT PROGRAM TO COMPENSATE

2 DISADVANTAGED STATES

3 SEC. 121. GRANT PROGRAM.

4 (a) IN GENERAL.—The Commission established

5 under section 141 shall develop a legislative proposal rec6 ommending the grant program described in subsection (b).

7 (b) GRANT PROGRAM DESCRIBED.—

8 (1) IN GENERAL.—The grant program de9 scribed in this subsection shall be designed to ensure

10 that grant funds are awarded to States that—

11 (A) are among those States that experience

12 the greatest loss of Federal funds as a result of

13 the programs terminated in section 105 and the

14 amendments made by section 106(a); and

15 (B) contain cities or counties that—

16 (i) are among the least affluent (as

17 determined by the Commission) of all cities

18 or counties in the United States; and

19 (ii) have the greatest need (as deter20 mined by the Commission) for public serv21 ices for low-income and disadvantaged in22 dividuals.

23 (2) USE OF FUNDS.—The grant program shall

24 provide that grant funds shall only be used to pro25 vide cash and noncash assistance to low-income indi-
32

•S 707 IS

1 viduals (as determined by a State awarded a grant

2 under the program).

3 (3) ADMINISTRATION OF PROGRAM.—The grant

4 program shall provide that the Secretary shall—

5 (A) award grants on not less than an an6 nual basis; and

7 (B) administer the program.

8 (4) FINANCING.—

9 (A) AUTHORIZATION OF APPROPRIA10 TIONS.—The grant program shall provide that

11 there are to be authorized to be appropriated

12 an amount equal to the estimated amount de13 termined under subparagraph (B) for carrying

14 out the program.

15 (B) ESTIMATE OF SAVINGS.—The grant

16 program shall provide that the Secretary shall

17 estimate for each fiscal year that the grant pro18 gram is in effect the amount of total Federal

19 funds that would have been spent in such fiscal

20 year but for the enactment of this Act and the

21 legislative proposals described in paragraphs

22 (1), (2), and (3) of section 131(a).

23 (5) COMMENCEMENT AND TERMINATION.—

24 (A) COMMENCEMENT.—The grant pro25 gram shall become effective on the later of—
33

•S 707 IS

1 (i) October 1, 2001; or

2 (ii) October 1 of the first fiscal year

3 beginning after the date of the enactment

4 of the implementing bill described in sec5 tion 131(b)(2) and enacted in accordance

6 with section 132.

7 (B) TERMINATION.—The grant program

8 shall terminate on the date that is 5 years after

9 the date the program becomes effective under

10 subparagraph (A).

11 Subtitle C—Legislative Proposals

12 SEC. 131. LEGISLATIVE PROPOSALS.

13 (a) PROPOSALS DESCRIBED.—The Commission shall

14 develop the following legislative proposals:

15 (1) A legislative proposal recommending the eli16 gibility criteria and acute care benefits to be pro17 vided under the medicare program for elderly low-in18 come individuals and nonelderly low-income disabled

19 individuals in accordance with title II.

20 (2) A legislative proposal recommending, in ac21 cordance with subtitle D of title III, the eligibility

22 criteria and long-term care benefits to be provided

23 under the long-term care program established under

24 subtitles A, B, and C of title III.
34

•S 707 IS

1 (3) A legislative proposal recommending, in ac2 cordance with section 503, modifications to the cri3 teria for determining the eligibility of children, alco4 holics, and drug addicts for benefits under title XVI

5 of the Social Security Act (42 U.S.C. 1381 et seq.).

6 (4) A legislative proposal recommending, in ac7 cordance with section 121, a grant program to com8 pensate States which are financially disadvantaged

9 as a result of the enactment and implementation of

10 this Act.

11 (b) FORM AND SUBMISSION OF PROPOSALS.—

12 (1) ADDITION TO MEDICARE; ELIGIBILITY CRI13 TERIA AND BENEFITS FOR THE LONG-TERM CARE;

14 SUPPLEMENTAL SECURITY INCOME PROGRAM RE15 FORMS.—Not later than 2 years after the date of

16 the enactment of this Act, the Commission shall—

17 (A) submit the legislative proposals de18 scribed in paragraphs (1) through (3) of sub19 section (a) to Congress in the form of imple20 menting bills which contain the statutory provi21 sions necessary or appropriate to implement the

22 proposals; and

23 (B) submit a report accompanying each

24 such legislative proposal which describes alter25 native provisions for each proposal.
35

•S 707 IS

1 (2) GRANT PROGRAM.—Not later than 4 years

2 after the date of the enactment of this Act, the

3 Commission shall submit the legislative proposal de4 scribed in subsection (a)(4) to Congress in the form

5 of an implementing bill which contain the statutory

6 provisions necessary or appropriate to implement the

7 proposal.

8 (c) CONSIDERATION BY CONGRESS.—Any implement9 ing bill submitted under subsection (b) shall be considered

10 by Congress in accordance with the provisions of section

11 132.

12 SEC. 132. CONGRESSIONAL CONSIDERATION OF IMPLE13 MENTING BILLS.

14 (a) IN GENERAL.—Any implementing bill described

15 in section 131(b) shall be considered by Congress under

16 the procedures for consideration described in subsection

17 (b).

18 (b) CONGRESSIONAL CONSIDERATION.—

19 (1) RULES OF HOUSE OF REPRESENTATIVES

20 AND SENATE.—This subsection is enacted by Con21 gress—

22 (A) as an exercise of the rulemaking power

23 of the House of Representatives and the Sen24 ate, respectively, and as such is deemed a part

25 of the rules of each House, respectively, but ap-
36

•S 707 IS

1 plicable only with respect to the procedure to be

2 followed in that House in the case of an imple3 menting bill described in subsection (a), and su4 persedes other rules only to the extent that

5 such rules are inconsistent therewith; and

6 (B) with full recognition of the constitu7 tional right of either House to change the rules

8 (so far as relating to the procedure of that

9 House) at any time, in the same manner, and

10 to the same extent as in the case of any other

11 rule of that House.

12 (2) INTRODUCTION AND REFERRAL.—On the

13 day on which an implementing bill described in sub14 section (a) is transmitted to the House of Represent15 atives and the Senate, such bill shall be introduced

16 (by request) in the House of Representatives by the

17 Majority Leader of the House, for himself or herself

18 and the Minority Leader of the House, or by Mem19 bers of the House designated by the Majority Leader

20 and Minority Leader of the House and shall be in21 troduced (by request) in the Senate by the Majority

22 Leader of the Senate, for himself or herself and the

23 Minority Leader of the Senate, or by Members of

24 the Senate designated by the Majority Leader and

25 Minority Leader of the Senate. If either House is
37

•S 707 IS

1 not in session on the day on which the implementing

2 bill is transmitted, the bill shall be introduced in

3 that House, as provided in the preceding sentence,

4 on the first day thereafter on which that House is

5 in session. If the implementing bill is not introduced

6 within 5 days of its transmission, any Member of

7 the House and of the Senate may introduce such

8 bill. The implementing bill introduced in the House

9 of Representatives and the Senate shall be referred

10 to the appropriate committees of each House.

11 (3) PERIOD FOR COMMITTEE CONSIDER12 ATION.—If the committee or committees of either

13 House to which an implementing bill has been re14 ferred have not reported it at the close of the 45th

15 day after its introduction, such committee or com16 mittees shall be automatically discharged from fur17 ther consideration of the implementing bill and it

18 shall be placed on the appropriate calendar. A vote

19 on final passage of the implementing bill shall be

20 taken in each House on or before the close of the

21 45th day after the implementing bill is reported by

22 the committees or committee of that House to which

23 it was referred, or after such committee or commit24 tees have been discharged from further consideration

25 of the implementing bill. If prior to the passage by
38

•S 707 IS

1 one House of an implementing bill of that House,

2 that House receives the same implementing bill from

3 the other House then—

4 (A) the procedure in that House shall be

5 the same as if no implementing bill had been

6 received from the other House; but

7 (B) the vote on final passage shall be on

8 the implementing bill of the other House.

9 (4) FLOOR CONSIDERATION IN THE SENATE.—

10 (A) IN GENERAL.—Within 5 days after the

11 implementing bill is placed on the calendar, the

12 Majority Leader, at a time to be determined by

13 the Majority Leader in consultation with the

14 Minority Leader, shall proceed to the consider15 ation of the bill. If on the 6th day after the bill

16 is placed on the calendar, the Senate has not

17 proceeded to consideration of the bill, then the

18 presiding officer shall automatically place the

19 bill before the Senate for consideration. A mo20 tion in the Senate to proceed to the consider21 ation of an implementing bill shall be privileged

22 and not debatable. An amendment to the mo23 tion shall not be in order, nor shall it be in

24 order to move to reconsider the vote by which

25 the motion is agreed to or disagreed to.
39

•S 707 IS

1 (B) TIME LIMITATION ON CONSIDERATION

2 OF BILL.—

3 (i) IN GENERAL.—Debate in the Sen4 ate on an implementing bill, and all

5 amendments and debatable motions and

6 appeals in connection therewith, shall be

7 limited to not more than 40 hours. The

8 time shall be equally divided between, and

9 controlled by, the Majority Leader and the

10 Minority Leader or their designees.

11 (ii) DEBATE OF AMENDMENTS, MO12 TIONS, POINTS OF ORDER, AND AP13 PEALS.—In the Senate, no amendment

14 which is not relevant to the bill shall be in

15 order. Debate in the Senate on any amend16 ment, debatable motion or appeal, or point

17 of order in connection with an implement18 ing bill shall be limited to—

19 (I) not more than 2 hours for

20 each first degree relevant amendment;

21 (II) 1 hour for each second de22 gree relevant amendment; and

23 (III) 30 minutes for each debat24 able motion or appeal, or point of

25 order submitted to the Senate;
40

•S 707 IS

1 to be equally divided between, and con2 trolled by, the mover and the manager of

3 the implementing bill, except that in the

4 event the manager of the implementing bill

5 is in favor of any such amendment, mo6 tion, appeal, or point of order, the time in

7 opposition thereto, shall be controlled by

8 the Minority Leader or designee of the Mi9 nority Leader. The Majority Leader and

10 Minority Leader, or either of them, may,

11 from time under their control on the pas12 sage of an implementing bill, allot addi13 tional time to any Senator during the con14 sideration of any amendment, debatable

15 motion or appeal, or point of order.

16 (C) OTHER MOTIONS.—A motion to recom17 mit an implementing bill is not in order.

18 (D) FINAL PASSAGE.—Upon the expiration

19 of the 40 hours available for consideration of

20 the implementing bill, it shall not be in order to

21 offer or vote on any amendment to, or motion

22 with respect to, such bill. Immediately following

23 the conclusion of debate in the Senate on an

24 implementing bill that was introduced in the

25 Senate, such bill shall be deemed to have been
41

•S 707 IS

1 read a third time and the vote on final passage

2 of such bill shall occur without any intervening

3 action or debate.

4 (E) DEBATE ON DIFFERENCES BETWEEN

5 THE HOUSES.—Debate in the Senate on mo6 tions and amendments appropriate to resolve

7 the differences between the Houses, at any par8 ticular stage of the proceedings, shall be limited

9 to not more than 10 hours.

10 (F) DEBATE ON CONFERENCE REPORT.—

11 Debate in the Senate on the conference report

12 shall be limited to not more than 20 hours.

13 (5) FLOOR CONSIDERATION IN THE HOUSE OF

14 REPRESENTATIVES.—

15 (A) PROCEED TO CONSIDERATION.—On

16 the 6th day after the implementing bill is

17 placed on the calendar, it shall be privileged for

18 any Member to move without debate that the

19 House resolve itself into the Committee of the

20 Whole House on the State of the Union, for the

21 consideration of the bill, and the first reading

22 of the bill shall be dispensed with.

23 (B) GENERAL DEBATE.—After general de24 bate, which shall be confined to the implement25 ing bill and which shall not exceed 4 hours, to
42

•S 707 IS

1 be equally divided and controlled by the chair2 man and Ranking Minority Member of the com3 mittee or committees to which the bill had been

4 referred, the bill shall be considered for amend5 ment by title under the 5-minute rule and each

6 title shall be considered as having been read.

7 The total time for considering all amendments

8 shall be limited to 40 hours of which the total

9 time for debating each amendment under the 5-

10 minute rule shall not exceed 1 hour.

11 (C) RISE AND REPORT.—At the conclusion

12 of the consideration of the implementing bill for

13 amendment, the Committee of the Whole on the

14 State of the Union shall rise and report the bill

15 to the House with such amendments as may

16 have been adopted, and the previous question

17 shall be considered as ordered on the bill and

18 the amendments thereto, and the House shall

19 proceed to vote on final passage without inter20 vening motion except 1 motion to recommit.

21 (6) COMPUTATION OF DAYS.—For purposes of

22 this subsection, in computing a number of days in

23 either House, there shall be excluded—

24 (A) the days on which either House is not

25 in session because of an adjournment of more
43

•S 707 IS

1 than 3 days to a day certain, or an adjourn2 ment of the Congress sine die; and

3 (B) any Saturday and Sunday not ex4 cluded under subparagraph (A) when either

5 House is not in session.

6 (c) RESUBMISSIONS.—

7 (1) IN GENERAL.—If a legislative proposal de8 scribed in section 131 is not approved by Congress

9 under this section or is vetoed by the President (and

10 such veto is not overridden by the Congress), the

11 Commission shall resubmit a new legislative proposal

12 (as described in paragraph (1), (2), (3), or (4) of

13 section 131(a) (as the case may be) in such form as

14 described in paragraph (1) or (2) of section 131(b)

15 (as the case may be) not later than 90 days after

16 Congress failed to approve such legislative proposal

17 or failed to override the President’s veto, and such

18 new legislative proposal shall be subject to congres19 sional consideration as provided in subsection (b).

20 (2) LIMITATION.—Not more than 2 legislative

21 proposals described in paragraphs (1) through (4) of

22 section 131(a) may be resubmitted in accordance

23 with paragraph (1).
44

•S 707 IS

1 Subtitle D—Health Benefits and

2 Coverage Commission

3 SEC. 141. CREATION OF HEALTH BENEFITS AND COVERAGE

4 COMMISSION; MEMBERSHIP; TERMINATION.

5 (a) IN GENERAL.—There is hereby established the

6 Health Benefits and Coverage Commission.

7 (b) COMPOSITION.—The Commission is composed of

8 7 members appointed by the President, by and with the

9 advice and consent of the Senate. Not more than 4 mem10 bers of the Commission may be affiliated with the same

11 political party. Members shall be appointed not later than

12 90 days after the date of the enactment of this Act.

13 (c) CHAIR.—The President shall designate one of the

14 members of the Commission as chair.

15 (d) VACANCIES.—

16 (1) IN GENERAL.—If a vacancy occurs, other

17 than by expiration of term, a successor shall be ap18 pointed by the President, by and with the consent of

19 the Senate, to fill such vacancy. The appointment

20 shall be for the remainder of the term of the prede21 cessor.

22 (2) NO IMPAIRMENT OF FUNCTION.—A vacancy

23 in the membership of the Commission does not im24 pair the authority of the remaining members to exer25 cise all of the powers of the Commission.
45

•S 707 IS

1 (3) ACTING CHAIR.—The Commission may des2 ignate a member to act as chair during any period

3 in which there is no chair designated by the Presi4 dent.

5 (e) MEETINGS; QUORUM.—

6 (1) MEETINGS.—The chair shall preside at

7 meetings of the Commission, and in the absence of

8 the chair, the Commission shall elect a member to

9 act as chair pro tempore.

10 (2) FREQUENCY.—The Commission shall meet

11 not less frequently than 4 times each year.

12 (3) QUORUM.—Four members of the Commis13 sion shall constitute a quorum thereof.

14 (f) SUNSET.—The Commission shall terminate 6

15 years after the date of the enactment of this Act.

16 SEC. 142. QUALIFICATIONS OF COMMISSION MEMBERS.

17 (a) CITIZENSHIP.—Each member of the Commission

18 shall be a citizen of the United States.

19 (b) BASIS OF SELECTION.—Commission members

20 shall be selected on the basis of their experience and exper21 tise in relevant subjects, including the practice of medi22 cine, nursing, or other clinical practices, health care fi23 nancing and delivery, health insurance, State health sys24 tems, consumer protection, business, law, and delivery of

25 care to vulnerable populations.
46

•S 707 IS

1 (c) PAY AND TRAVEL EXPENSES.—

2 (1) PAY.—

3 (A) CHAIR.—The chair of the Commission

4 shall be paid at a rate equal to the daily equiva5 lent of the minimum annual rate of basic pay

6 payable for level II of the Executive Schedule

7 under section 5315 of title 5, United States

8 Code, for each day (including travel time) dur9 ing which the chair is engaged in the actual

10 performance of duties vested in the Commis11 sion.

12 (B) MEMBERS.—Each member of the

13 Commission shall be paid at a rate equal to the

14 daily equivalent of the minimum annual rate of

15 basic pay payable for level III of the Executive

16 Schedule under section 5315 of title 5, United

17 States Code, for each day (including travel

18 time) during which the member is engaged in

19 the actual performance of duties vested in the

20 Commission.

21 (2) TRAVEL EXPENSES.—Members of the Com22 mission shall receive travel expenses, including per

23 diem in lieu of subsistence, in accordance with sec24 tions 5702 and 5703 of title 5, United States Code.
47

•S 707 IS

1 SEC. 143. POWERS.

2 (a) EXECUTIVE DIRECTOR; STAFF.—

3 (1) EXECUTIVE DIRECTOR.—

4 (A) IN GENERAL.—The Commission shall,

5 without regard to section 5311(b) of title 5,

6 United States Code, appoint an Executive Di7 rector.

8 (B) PAY.—The Executive Director shall be

9 paid at a rate equivalent to a rate for the Sen10 ior Executive Service.

11 (2) STAFF.—

12 (A) IN GENERAL.—Subject to subpara13 graphs (B) and (C), the Executive Director,

14 with the approval of the Commission, may ap15 point and fix the pay of additional personnel.

16 (B) PAY.—The Executive Director may

17 make such appointments without regard to the

18 provisions of title 5, United States Code, gov19 erning appointments in the competitive service,

20 and any personnel so appointed may be paid

21 without regard to the provisions of chapter 51

22 and subchapter III of chapter 53 of such title,

23 relating to classification and General Schedule

24 pay rates, except that an individual so ap25 pointed may not receive pay in excess of 120
48

•S 707 IS

1 percent of the annual rate of basic pay payable

2 for GS–15 of the General Schedule.

3 (C) DETAILED PERSONNEL.—Upon re4 quest of the Executive Director, the head of any

5 Federal department or agency may detail any

6 of the personnel of that department or agency

7 to the Commission to assist the Commission in

8 carrying out its duties under this Act.

9 (b) CONTRACT AUTHORITY.—To the extent provided

10 in advance in appropriations Acts, the Commission may

11 contract with any person (including an agency of the Fed12 eral Government) for studies, analyses, or other functions

13 as required to execute its functions.

14 (c) CONSULTATIONS WITH EXPERTS.—The Commis15 sion may consult with any outside expert individuals or

16 groups that the Commission determines appropriate in

17 performing its duties under this Act. The Commission may

18 establish advisory committees.

19 (d) ACCESS TO INFORMATION.—The Commission

20 may secure directly from any department or agency of the

21 United States information necessary to enable it to carry

22 out its functions, to the extent such information is other23 wise available to a department or agency of the United

24 States. Upon request of the chair, the head of that depart-
49

•S 707 IS

1 ment or agency shall furnish that information to the Com2 mission.

3 (e) DELEGATION OF AUTHORITY.—Except as other4 wise provided, the Commission may delegate any function

5 to such officers and employees as the Commission may

6 designate and may authorize such successive redelegations

7 of such functions with the Commission as the Commission

8 deems to be necessary or appropriate. No delegation of

9 functions by the Commission shall relieve the Commission

10 of responsibility for the administration of such functions.

11 SEC. 144. FUNDING.

12 (a) AUTHORIZATION OF APPROPRIATIONS.—There

13 are authorized to be appropriated to the Commission

14 $2,000,000 for each of fiscal years 1996 through 2001.

15 (b) SUBMISSION OF BUDGET.—Under the procedures

16 of chapter 11 of title 31, United States Code, the budget

17 for the Commission for a fiscal year shall be reviewed by

18 the Director of the Office of Management and Budget and

19 submitted to Congress as part of the President’s submis20 sion of the Budget of the United States for the fiscal year.
50

•S 707 IS

1 TITLE II—ACUTE CARE BENE2 FITS UNDER THE MEDICARE

3 PROGRAM FOR ELDERLY

4 LOW-INCOME AND NON- EL5 DERLY LOW-INCOME DIS6 ABLED INDIVIDUALS

7 Subtitle A—Eligibility Criteria and

8 Acute Care Benefits for Elderly

9 Low-Income Individuals

10 SEC. 201. ESTABLISHING A CATEGORY OF ELDERLY LOW11 INCOME INDIVIDUALS.

12 (a) IN GENERAL.—The legislative proposal developed

13 by the Commission under section 131(a)(1) shall rec14 ommend a category of elderly low-income individuals, in

15 accordance with subsection (b), who will be eligible for

16 benefits under the medicare program (as such program

17 is amended in accordance with the amendments developed

18 under section 202), subject to the availability of appro19 priations.

20 (b) GUIDELINES FOR DEVELOPING CATEGORY.—

21 (1) IN GENERAL.—Subject to paragraphs (2)

22 and (3), the category of elderly low-income individ23 uals recommended by the Commission shall include

24 only the following categories of individuals:
51

•S 707 IS

1 (A) Elderly individuals who are eligible for

2 supplemental security income benefits under

3 title XVI of the Social Security Act (42 U.S.C.

4 1381 et seq.).

5 (B) Elderly individuals who meet a Federal

6 medically needy standard (determined by the

7 Commission) that may be based on—

8 (i) an individual having income (as de9 termined under section 1612 of such Act

10 (42 U.S.C. 1382a)) that has been reduced

11 through spending on medical care to a per12 centage (to be determined by the Commis13 sion) of the poverty line;

14 (ii) a sliding scale of income eligibility

15 for premium payments and cost-sharing re16 quirements (including a procedure by

17 which such premiums and cost-sharing

18 shall be collected); or

19 (iii) such other factors as the Com20 mission deems appropriate.

21 (C) Individuals who would have been eligi22 ble to receive medical assistance for medicare

23 cost-sharing as qualified medicare beneficiaries,

24 qualified disabled and working individuals, or

25 specified low-income medicare beneficiaries pur-
52

•S 707 IS

1 suant to section 1902(a)(10)(E) of the Social

2 Security Act (42 U.S.C. 1396a(a)(10)(E)) (as

3 in effect on the day before the date of the en4 actment of this Act), except that the Commis5 sion may modify the income and asset stand6 ards for determining who will be eligible, sub7 ject to the availability of appropriations, for

8 benefits under the medicare program (as

9 amended in accordance with the amendments

10 developed under section 202).

11 (2) COST CONTROLS.—

12 (A) IN GENERAL.—The Commission shall,

13 to the extent practicable, recommend the cat14 egories of individuals under paragraph (1) such

15 that total annual Federal expenditures for such

16 individuals under the medicare program result17 ing from the amendments developed under sec18 tion 202 will not exceed the amount described

19 in subparagraph (B).

20 (B) AMOUNT DESCRIBED.—The amount

21 described in this subparagraph is the estimated

22 total annual amount that would have been ex23 pended for medical assistance relating to acute

24 care benefits under all State plans approved

25 under title XIX of the Social Security Act (42
53

•S 707 IS

1 U.S.C. 1396 et seq.) (as in effect on the day

2 before the date of the enactment of this Act)

3 for—

4 (i) elderly individuals who received

5 supplemental security income benefits

6 under title XVI of such Act (42 U.S.C.

7 1381 et seq.);

8 (ii) elderly medically needy individuals

9 (as described in section 1902(a)(10)(C) of

10 such Act (42 U.S.C. 1396a(a)(10)(C)));

11 and

12 (iii) individuals who were eligible to

13 receive medical assistance for medicare

14 cost-sharing as qualified medicare bene15 ficiaries, qualified disabled and working in16 dividuals, or specified low-income medicare

17 beneficiaries pursuant to section

18 1902(a)(10)(E) of such Act (42 U.S.C.

19 1396a(a)(10)(E)).

20 (3) STATE SUPPLEMENTAL PAYMENTS CAP.—

21 (A) IN GENERAL.—In developing the cat22 egory of individuals under paragraph (1), the

23 Commission shall not include individuals who

24 are eligible for supplemental security income

25 benefits under title XVI of the Social Security
54

•S 707 IS

1 Act (42 U.S.C. 1381 et seq.) who receive com2 bined Federal supplemental security income

3 benefits and State supplemental payments

4 under section 1616 of such Act (42 U.S.C.

5 1382e) that are in excess of the national cap es6 tablished under subparagraph (B).

7 (B) NATIONAL CAP.—

8 (i) IN GENERAL.—The national cap

9 established under this subparagraph shall

10 be based on the median of each State’s

11 maximum allowable benefits that an indi12 vidual or couple may receive under title

13 XVI of the Social Security Act (42 U.S.C.

14 1381 et seq.) and a State supplemental

15 payments program under section 1616 of

16 such Act (42 U.S.C. 1382e) and remain el17 igible for medical assistance under a State

18 plan for medical assistance under title XIX

19 of such Act (42 U.S.C. 1396 et seq.) (as

20 in effect on the day before the date of the

21 enactment of this Act).

22 (ii) ADJUSTMENT.—

23 (I) IN GENERAL.—The cap estab24 lished under clause (i) shall be ad25 justed annually by the estimated per-
55

•S 707 IS

1 centage change in the consumer price

2 index (as determined by the Bureau

3 of Labor Statistics).

4 (II) SECRETARIAL DISCRE5 TION.—The Secretary may adjust the

6 cap established under clause (i) on a

7 regional or State-by-State basis.

8 (c) COST PROJECTIONS.—

9 (1) IN GENERAL.—The Commission shall in10 clude in the report submitted with the legislative

11 proposal under section 131(b)(1)(B) the following:

12 (A) An estimated cost and enrollment pro13 jection for each category of individuals de14 scribed in subsection (b)(1).

15 (B) A statement explaining why the Com16 mission recommended such categories of indi17 viduals.

18 (2) FORM OF PROJECTIONS.—The projections

19 described in paragraph (1) shall be—

20 (A) for a period of 10 years; and

21 (B) in such form as will enable Congress

22 to compare the projections for each category of

23 individuals described in subsection (b)(1) to the

24 estimated cost and enrollment projection of the

25 nearest equivalent population of individuals who
56

•S 707 IS

1 would be eligible to receive medical assistance

2 under all State plans approved under title XIX

3 of the Social Security Act (42 U.S.C. 1396 et

4 seq.) if a legislative proposal described in sec5 tion 131(a)(1) had not been enacted by Con6 gress through an implementing bill in accord7 ance with section 132.

8 SEC. 202. MEDICARE BENEFITS FOR ELDERLY LOW-INCOME

9 INDIVIDUALS.

10 (a) IN GENERAL.—The legislative proposal developed

11 by the Commission under section 131(a)(1) shall include

12 the amendments to the medicare program described in

13 subsection (b).

14 (b) PROPOSED CHANGES DESCRIBED.—The Com15 mission shall propose the following amendments to the

16 medicare program:

17 (1) Amendments providing that individuals

18 meeting the categories of elderly low-income individ19 uals recommended by the Commission under section

20 201 who are not otherwise entitled to benefits under

21 part A of title XVIII of the Social Security Act (42

22 U.S.C. 1395c–1395i–4) and eligible to enroll in part

23 B of such title (42 U.S.C. 1395j–1395w–4) are eligi24 ble to receive such benefits under the medicare pro25 gram, subject to the availability of appropriations.
57

•S 707 IS

1 (2) Subject to the provisions of paragraph (3),

2 amendments providing that payments (from the

3 Federal Hospital Insurance Trust Fund and the

4 Federal Supplementary Medical Insurance Trust

5 Fund, as applicable) may be made for medicare cost6 sharing for individuals meeting the categories of el7 derly low-income individuals recommended by the

8 Commission under section 201.

9 (3) Amendments providing for the imposition of

10 nominal copayments or other cost-sharing require11 ments on individuals meeting the categories of elder12 ly low-income individuals recommended by the Com13 mission under section 201.

14 (4) If the Commission determines it is appro15 priate, and subject to the availability of appropria16 tions—

17 (A) amendments that add a supplemental

18 category of acute care benefits to the medicare

19 program for individuals meeting the categories

20 of elderly low-income individuals recommended

21 by the Commission under section 201 that may

22 include acute care benefits provided under a

23 State plan for medical assistance under title

24 XIX of the Social Security Act (42 U.S.C. 1396

25 et seq.) (as in effect on the day before the date
58

•S 707 IS

1 of the enactment of this Act) or under policies

2 of private health insurance; and

3 (B) amendments that specify the scope

4 and duration of any supplemental acute care

5 benefits added pursuant to subparagraph (A).

6 (5) Amendments to section 1876 of the Social

7 Security Act (42 U.S.C. 1395mm) which require an

8 eligible organization with a risk-sharing contract

9 under such section to offer acute care benefits to in10 dividuals meeting the categories of elderly low-in11 come individuals recommended by the Commission

12 under section 201 (including any supplemental acute

13 care benefits added pursuant to paragraph (4)).

14 (6) Amendments that provide that increased

15 costs incurred by the Federal Hospital Insurance

16 Trust Fund and the Federal Supplementary Medical

17 Insurance Trust Fund as a result of the amend18 ments proposed under this subsection are authorized

19 to be appropriated to such Trust Funds (as applica20 ble), out of any moneys in the Treasury not other21 wise appropriated.

22 (c) COST LIMITATION.—

23 (1) IN GENERAL.—The Commission shall, to

24 the extent practicable, develop the amendments de25 scribed in subsection (b) such that annual Federal
59

•S 707 IS

1 expenditures as a result of such amendments will

2 not result in expenditures that are greater than the

3 amount described in paragraph (2).

4 (2) AMOUNT DESCRIBED.—The amount de5 scribed in this paragraph is the estimated total an6 nual amount that would have been expended for

7 medical assistance related to acute care benefits and

8 medicare cost-sharing under all State plans approved

9 under title XIX of the Social Security Act (42

10 U.S.C. 1396 et seq.) (as in effect on the day before

11 the date of the enactment of this Act) for individuals

12 meeting the categories of elderly low-income individ13 uals recommended by the Commission under section

14 201 (to the extent such individuals were eligible for

15 such medical assistance).

16 Subtitle B—Eligibility Criteria and

17 Acute Care Benefits for

18 Nonelderly Low-Income Dis19 abled Individuals

20 SEC. 211. ESTABLISHING A CATEGORY OF NONELDERLY

21 LOW-INCOME DISABLED INDIVIDUALS.

22 (a) IN GENERAL.—The legislative proposal developed

23 by the Commission under section 131(a)(1) shall rec24 ommend a category of nonelderly low-income disabled indi25 viduals, in accordance with subsection (b), who will be eli-
60

•S 707 IS

1 gible for benefits under the medicare program (as such

2 program is amended in accordance with the amendments

3 developed under section 212), subject to the availability

4 of appropriations.

5 (b) GUIDELINES FOR DEVELOPING CATEGORY.—

6 (1) IN GENERAL.—Subject to paragraphs (2)

7 and (3), the category of nonelderly low-income dis8 abled individuals recommended by the Commission

9 shall include only the following categories of individ10 uals:

11 (A) Individuals who are blind or disabled

12 and eligible for supplemental security income

13 benefits under title XVI of the Social Security

14 Act (42 U.S.C. 1381 et seq.).

15 (B) Individuals who—

16 (i) are blind or disabled and would be

17 eligible for supplemental security income

18 benefits under title XVI of such Act (42

19 U.S.C. 1381 et seq.) except that such indi20 viduals have income (as determined under

21 section 1612 of such Act (42 U.S.C.

22 1382a) in excess of the income allowable

23 under such title of such Act (42 U.S.C.

24 1382a(b)); and
61

•S 707 IS

1 (ii) meet a Federal medically needy

2 standard for the nonelderly blind or dis3 abled (as determined by the Commission)

4 that may require—

5 (I) such individuals having in6 come (as determined under section

7 1612 of such Act (42 U.S.C. 1382a))

8 that has been reduced through spend9 ing on medical care to a percentage

10 (to be determined by the Commission)

11 of the poverty line;

12 (II) a sliding scale of income eli13 gibility for premium payments and

14 cost-sharing requirements (including a

15 procedure by which such premiums

16 and cost-sharing shall be collected); or

17 (III) such other factors as the

18 Commission deems appropriate.

19 (2) COST CONTROLS.—

20 (A) IN GENERAL.—The Commission shall

21 recommend the categories of individuals under

22 paragraph (1) such that total annual Federal

23 expenditures for such individuals under the

24 medicare program resulting from the amend25 ments developed under section 212 will not ex-
62

•S 707 IS

1 ceed the amount described in subparagraph

2 (B).

3 (B) AMOUNT DESCRIBED.—The amount

4 described in this subparagraph is the estimated

5 total annual amount that would have been ex6 pended for medical assistance related to acute

7 care benefits under all State plans approved

8 under title XIX of the Social Security Act (42

9 U.S.C. 1396 et seq.) (as in effect on the day be10 fore the date of the enactment of this Act)

11 for—

12 (i) blind or disabled individuals who

13 received supplemental security income ben14 efits under title XVI of such Act (42

15 U.S.C. 1381 et seq.); and

16 (ii) blind or disabled nonelderly medi17 cally needy individuals (as described in sec18 tion 1902(a)(10)(C) of such Act (42

19 U.S.C. 1396a(a)(10)(C))).

20 (3) STATE SUPPLEMENTAL PAYMENTS CAP.—In

21 developing the category of individuals under para22 graph (1), the Commission shall not include individ23 uals who are eligible for supplemental security in24 come benefits under title XVI of the Social Security

25 Act (42 U.S.C. 1381 et seq.) and who receive com-
63

•S 707 IS

1 bined Federal supplemental security income benefits

2 and State supplemental payments under section

3 1616 of such Act (42 U.S.C. 1382e) that are in ex4 cess of the national cap established under section

5 201(b)(3)(B).

6 (c) COST PROJECTIONS.—

7 (1) IN GENERAL.—The Commission shall in8 clude in the report submitted with the legislative

9 proposal under section 131(b)(1)(B) the following:

10 (A) An estimated cost and enrollment pro11 jection for each category of individuals de12 scribed in subsection (b)(1).

13 (B) A statement explaining why the Com14 mission recommended such categories of indi15 viduals.

16 (2) FORM OF PROJECTIONS.—The projections

17 described in paragraph (1) shall be—

18 (A) for a period of 10 years; and

19 (B) in such form as will enable Congress

20 to compare the projections for each category of

21 individuals described in subsection (b)(1) to the

22 estimated cost and enrollment projection of the

23 nearest equivalent population of individuals who

24 would be eligible to receive medical assistance

25 under all State plans approved under title XIX
64

•S 707 IS

1 of the Social Security Act (42 U.S.C. 1396 et

2 seq.) if a legislative proposal described in sec3 tion 131(a)(1) had not been enacted by Con4 gress through an implementing bill in accord5 ance with section 132.

6 SEC. 212. MEDICARE BENEFITS FOR NONELDERLY LOW-IN7 COME DISABLED INDIVIDUALS.

8 (a) IN GENERAL.—The legislative proposal developed

9 by the Commission under section 131(a)(1) shall include

10 the amendments to the medicare program described in

11 subsection (b).

12 (b) PROPOSED CHANGES DESCRIBED.—The Com13 mission shall propose the following amendments to the

14 medicare program:

15 (1) Amendments providing that individuals

16 meeting the categories of nonelderly low-income dis17 abled individuals recommended by the Commission

18 under section 211 are eligible to receive benefits

19 under the medicare program, subject to the avail20 ability of appropriations.

21 (2) Subject to the provisions of paragraph (3),

22 amendments providing that payments (from the

23 Federal Hospital Insurance Trust Fund and the

24 Federal Supplementary Medical Insurance Trust

25 Fund, as applicable) may be made for medicare cost-
65

•S 707 IS

1 sharing for individuals meeting the categories of

2 nonelderly low-income disabled individuals rec3 ommended by the Commission under section 211.

4 (3) Amendments providing for the imposition of

5 nominal copayments or other cost-sharing require6 ments on individuals meeting the categories of

7 nonelderly low-income disabled individuals rec8 ommended by the Commission under section 211.

9 (4) If the Commission determines it is appro10 priate, and subject to the availability of appropria11 tions—

12 (A) amendments that add a supplemental

13 category of acute care benefits to the medicare

14 program for individuals meeting the categories

15 of nonelderly low-income disabled individuals

16 recommended by the Commission under section

17 211 that may include acute care benefits pro18 vided under a State plan for medical assistance

19 under title XIX of such Act (42 U.S.C. 1396 et

20 seq.) (as in effect on the day before the date of

21 the enactment of this Act) or under policies of

22 private health insurance; and

23 (B) amendments that specify the scope

24 and duration of any supplemental acute care

25 benefits added pursuant to subparagraph (A).
66

•S 707 IS

1 (5) Amendments to section 1876 of the Social

2 Security Act (42 U.S.C. 1395mm) which require an

3 eligible organization with a risk-sharing contract

4 under such section to offer acute care benefits to in5 dividuals meeting the categories of nonelderly low-in6 come disabled individuals recommended by the Com7 mission under section 211 (including any supple8 mental acute care benefits added pursuant to para9 graph (4)).

10 (6) Amendments that provide that increased

11 costs incurred by the Federal Hospital Insurance

12 Trust Fund and the Federal Supplementary Medical

13 Insurance Trust Fund as a result of the amend14 ments proposed under this subsection are authorized

15 to be appropriated to such Trust Funds (as applica16 ble), out of any moneys in the Treasury not other17 wise appropriated.

18 (c) COST LIMITATION.—

19 (1) IN GENERAL.—The Commission shall, to

20 the extent practicable, develop the amendments de21 scribed in subsection (b) such that annual Federal

22 expenditures as a result of such amendments will

23 not result in expenditures that are greater than the

24 amount described in paragraph (2).
67

•S 707 IS

1 (2) AMOUNT DESCRIBED.—The amount de2 scribed in this paragraph is the estimated total an3 nual amount that would have been expended for

4 medical assistance relating to acute care benefits

5 and medicare cost-sharing under all State plans ap6 proved under title XIX of the Social Security Act

7 (42 U.S.C. 1396 et seq.) (as in effect on the day be8 fore the date of the enactment of this Act) for indi9 viduals meeting the categories of nonelderly low-in10 come disabled individuals recommended by the Com11 mission under section 211 (to the extent such indi12 viduals were eligible for such medical assistance).

13 Subtitle C—Premiums, Coinsur14 ance, and Deductibles Estab15 lished Without Regard to Addi16 tional Costs

17 SEC. 221. ESTABLISHMENT OF PREMIUMS, COINSURANCE

18 AND DEDUCTIBLES.

19 In administering the medicare program after the

20 transition period, the Secretary shall establish premiums,

21 coinsurance, and deductibles for such program without re22 gard to the amount of additional Federal expenditures in23 curred for providing acute care benefits under such pro24 gram to individuals meeting the categories of elderly low25 income individuals and nonelderly low-income disabled in-
68

•S 707 IS

1 dividuals recommended by the Commission under sections

2 201 and 211 and enacted in an implementing bill under

3 section 132.

4 TITLE III—ESTABLISHMENT OF

5 THE LONG-TERM CARE PRO6 GRAM

7 Subtitle A—Establishment

8 SEC. 301. ESTABLISHMENT OF PROGRAM.

9 The Secretary shall establish a long-term care pro10 gram in accordance with the provisions of this title, to be11 come effective on the date described in section

12 121(b)(5)(A).

13 Subtitle B—Providing Long-Term

14 Care

15 SEC. 311. ELIGIBILITY DETERMINATIONS.

16 (a) IN GENERAL.—The Secretary shall establish a

17 procedure for making eligibility determinations under the

18 long-term care program and for periodic reassessment of

19 an individual’s financial and physical condition.

20 (b) TIMING OF REASSESSMENTS.—

21 (1) IN GENERAL.—Except as provided in para22 graph (2), a reassessment of an individual’s financial

23 and physical condition shall occur at intervals of not

24 less than every 12 months.
69

•S 707 IS

1 (2) EXCEPTION.—A reassessment of an individ2 ual’s physical condition may occur at an interval of

3 more than 12 months if the Secretary determines

4 that it is highly unlikely that there has been a sig5 nificant change in the individual’s condition that

6 would affect the reassessment.

7 (c) AUTHORITY TO CONTRACT.—The Secretary may

8 enter into contracts with entities to make eligibility deter9 minations and reassessments in accordance with this

10 section.

11 SEC. 312. AUTHORITY TO CONTRACT.

12 (a) IN GENERAL.—In the case of any fiscal year be13 ginning after the transition period, the Secretary may con14 tract on a statewide, marketwide, or regional basis (as de15 termined by the Secretary) with any State, local govern16 ment, community or civic organization, private entity,

17 joint public and private partnership, or fiscal intermediary

18 that meets the requirements of this subtitle and subtitle

19 C (hereafter for purposes of this title referred to as a

20 ‘‘long-term care contractor’’) to provide or deliver long21 term care benefits under the long-term care program.

22 (b) REQUIREMENT FOR THE SELECTION OF CON23 TRACTORS.—In contracting with a long-term care contrac24 tor, the Secretary shall consider—
70

•S 707 IS

1 (1) the eligibility criteria for the long-term care

2 program enacted in an implementing bill under sec3 tion 132; and

4 (2) the long-term care needs of the population

5 residing in the area to be served under the contract.

6 (c) CONTRACT PROVISIONS.—

7 (1) FORMS OF PAYMENT.—The Secretary may

8 make payments under a contract entered into in ac9 cordance with this title through the use of—

10 (A) vouchers;

11 (B) cash payments directly to individuals

12 meeting the eligibility criteria established for

13 the long-term care program;

14 (C) capitated payments; and

15 (D) payments to contractors providing

16 long-term care benefits under the long-term

17 care program.

18 (2) FLEXIBILITY.—

19 (A) IN GENERAL.—A contract entered into

20 in accordance with this title shall permit suffi21 cient flexibility for contractors providing long22 term care benefits under the long-term care

23 program to meet the needs of individuals receiv24 ing such benefits in a cost-effective manner.
71

•S 707 IS

1 (B) AVAILABILITY OF INFORMAL CARE.—A

2 contract entered into in accordance with this

3 title shall provide that in determining the

4 amount and array of services available to indi5 viduals meeting the eligibility criteria estab6 lished for the long-term care program, a long7 term care contractor may consider the availabil8 ity of informal care in the area served by such

9 contractor and the existence of any private

10 long-term care insurance held by an individual

11 that would be provided with long-term care ben12 efits under the contract.

13 (3) REQUIREMENTS FOR SUBCONTRACTORS, AF14 FILIATES, AND RELATED PARTIES.—A contract en15 tered into in accordance with this title shall permit

16 a long-term care contractor to provide long-term

17 care benefits under the contract through any sub18 contractors, affiliates, and related parties of the con19 tractor so long as any such subcontractor, affiliate,

20 or related party meets all applicable (as determined

21 by the Secretary) requirements of this subtitle and

22 subtitle C.

23 (d) AVAILABILITY OF CARE.—

24 (1) IN GENERAL.—Each individual meeting the

25 eligibility criteria established for the long-term care
72

•S 707 IS

1 program in an implementing bill enacted under sec2 tion 132 may be eligible to receive long-term care

3 benefits from any long-term care contractor with a

4 contract under the long-term care program which

5 serves the area in which the individual resides.

6 (2) INFORMATION.—

7 (A) DISTRIBUTION BY CONTRACTORS.—

8 (i) IN GENERAL.—The Secretary may

9 prescribe the procedures and conditions

10 under which each long-term care contrac11 tor with a contract under the long-term

12 care program may provide individuals eligi13 ble to receive long-term care benefits from

14 such contractor with information about the

15 long-term care benefits offered by the con16 tractor. No brochures, application forms,

17 or other promotional or informational ma18 terial may be distributed by a long-term

19 care contractor to (or for the use of) such

20 individuals unless—

21 (I) at least 45 days before its dis22 tribution, the long-term care contrac23 tor has submitted the material to the

24 Secretary for review; and
73

•S 707 IS

1 (II) the Secretary has not dis2 approved the distribution of the mate3 rial.

4 (ii) REVIEW BY SECRETARY.—The

5 Secretary shall review all material submit6 ted under this paragraph and shall dis7 approve such material if the Secretary de8 termines, in the Secretary’s discretion, that

9 the material is materially inaccurate or

10 misleading or otherwise makes a material

11 misrepresentation.

12 (B) DISTRIBUTION BY THE SECRETARY.—

13 If more than one long-term care contractor in

14 an area enters into a contract under the long15 term care program, the Secretary shall develop

16 and distribute comparative materials to individ17 uals eligible to receive long-term care benefits

18 from such contractors regarding available long19 term care benefits offered in the area by the

20 contractors.

21 SEC. 313. NO CONTRACTS IN AN AREA.

22 (a) IN GENERAL.—If at least one long-term care con23 tractor in an area does not enter into a contract under

24 the long-term care program, the Secretary shall provide

25 individuals residing in the area who meet the eligibility
74

•S 707 IS

1 criteria established for the long-term care program with

2 long-term care benefits under such program through any

3 other means that the Secretary deems appropriate and

4 cost-effective.

5 (b) FORMS OF PAYMENT.—The Secretary may make

6 payments to provide long-term care benefits under this

7 section through the use of—

8 (1) vouchers;

9 (2) cash payments directly to individuals meet10 ing the eligibility criteria established for the long11 term care program;

12 (3) capitated payments; and

13 (4) any other means that the Secretary deems

14 appropriate.

15 SEC. 314. CONTRACT TERMS; POWERS AND DUTIES OF THE

16 SECRETARY.

17 (a) DURATION AND TERMINATION.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), each contract under the long-term care

20 program shall be for a term of at least 1 year, as

21 determined by the Secretary, and may be made

22 automatically renewable from term to term in the

23 absence of notice by either party of intention to ter24 minate at the end of the current term.
75

•S 707 IS

1 (2) EXCEPTION.—The Secretary may terminate

2 a contract at any time (after such reasonable notice

3 and opportunity for hearing to the long-term care

4 contractor involved as the Secretary may provide in

5 regulations), if the Secretary finds that the contrac6 tor—

7 (A) has substantially failed to carry out

8 the contract;

9 (B) is carrying out the contract in a man10 ner inconsistent with the efficient and effective

11 administration of the long-term care program;

12 (C) no longer substantially complies with

13 the requirements of this subtitle or subtitle C;

14 or

15 (D) no longer substantially complies with

16 any other requirements of the long-term care

17 program.

18 (b) EFFECTIVE DATE.—The effective date of any

19 contract executed pursuant to the long-term care program

20 shall be specified in the contract.

21 (c) TERMS.—Each contract under the long-term care

22 program—

23 (1) shall provide that the Secretary, or any per24 son or organization designated by the Secretary—
76

•S 707 IS

1 (A) shall have the right to inspect or other2 wise evaluate—

3 (i) the quality, appropriateness, and

4 timeliness of services performed under the

5 contract; and

6 (ii) the facilities of the long-term care

7 contractor (or of any subcontractors, affili8 ates, and related parties of such contrac9 tor) when there is reasonable evidence of

10 the need for such inspection; and

11 (B) shall have the right to audit and in12 spect any books and records of the long-term

13 care contractor that pertain—

14 (i) to the ability of the contractor to

15 bear the risk of potential financial losses;

16 or

17 (ii) to services performed or deter18 minations of amounts payable under the

19 contract;

20 (2) shall require the long-term care contractor

21 to provide (and pay for) written notice in advance of

22 the contract’s termination, as well as a description

23 of alternatives for obtaining long-term care benefits

24 under the long-term care program, to each individual

25 receiving such benefits from the contractor;
77

•S 707 IS

1 (3) shall require the contractor to comply with

2 subsections (a), (c), and (h) of section 1318 of the

3 Public Health Service Act (42 U.S.C. 300e–17(a),

4 (c), and (h)) (relating to disclosure of certain finan5 cial information) and with the requirement of section

6 1301(c)(8) of such Act (42 U.S.C. 300e(c)(8)) (re7 lating to liability arrangements to protect members);

8 (4) shall require the contractor to notify the

9 Secretary of loans and other special financial ar10 rangements which are made between the contractor

11 and subcontractors, affiliates, and related parties of

12 such contractor; and

13 (5) shall contain such other terms and condi14 tions as the Secretary may find necessary and ap15 propriate, including requiring the long-term care

16 contractor to provide the Secretary with such infor17 mation as the Secretary deems appropriate.

18 (d) PERIOD OF DISQUALIFICATION.—The Secretary

19 may not enter into a contract with a long-term care con20 tractor if a previous contract under the long-term care

21 program with that contractor was terminated for cause

22 within the preceding 5-year period, except in cir23 cumstances which warrant special consideration, as deter24 mined by the Secretary.
78

•S 707 IS

1 (e) DISREGARD OF CERTAIN INCONSISTENT LAWS,

2 ETC.—The authority vested in the Secretary in accord3 ance with this title may be performed without regard to

4 such provisions of law or regulations relating to the mak5 ing, performance, amendment, or modification of contracts

6 of the United States as the Secretary may determine to

7 be inconsistent with the furtherance of the purposes of the

8 long-term care program.

9 (f) FINDINGS OF FAILURE.—

10 (1) IN GENERAL.—If the Secretary determines

11 that a long-term care contractor with a contract

12 under the long-term care program—

13 (A) substantially fails to provide long-term

14 care benefits that are required under the con15 tract to be provided to an individual covered

16 under the contract, and such failure has ad17 versely affected (or has a substantial likelihood

18 of adversely affecting) the individual;

19 (B) engages in any practice that would

20 reasonably be expected to have the effect of de21 nying or discouraging (except as permitted by

22 this title) any individual eligible to receive long23 term care benefits from the contractor from re24 ceiving such benefits, and whose medical condi-
79

•S 707 IS

1 tion or history indicates a need for substantial

2 future long-term care services; or

3 (C) misrepresents or falsifies information

4 that is furnished—

5 (i) to the Secretary under this title; or

6 (ii) to an individual or to any other

7 entity under this title,

8 the Secretary may provide, in addition to any

9 other remedies authorized by law, for any of the

10 remedies described in paragraph (2).

11 (2) REMEDIES.—

12 (A) IN GENERAL.—The remedies described

13 in this paragraph are—

14 (i) civil money penalties of not more

15 than $10,000 for each determination under

16 paragraph (1) or, with respect to a deter17 mination under subparagraph (B) or (C)(i)

18 of such paragraph, of not more than

19 $50,000 for each such determination, plus,

20 with respect to a determination under

21 paragraph (1)(C), $10,000 for each indi22 vidual not enrolled as a result of the prac23 tice involved; or

24 (ii) suspension of payment to the

25 long-term care contractor after the date
80

•S 707 IS

1 the Secretary notifies the contractor of a

2 determination under paragraph (1) and

3 until the Secretary is satisfied that the

4 basis for such determination has been cor5 rected and is not likely to recur.

6 (B) SPECIAL RULE.—The provisions of

7 section 1128A (other than subsections (a) and

8 (b)) of the Social Security Act (42 U.S.C.

9 1320a–7a) shall apply to a civil money penalty

10 described under subparagraph (A)(i) in the

11 same manner as such provisions apply to a civil

12 money penalty or proceeding under section

13 1128A(a) of such Act (42 U.S.C. 1320a–7a(a)).

14 Subtitle C—Requirements for

15 Long-Term Care Contractors

16 SEC. 321. OTHER GENERAL REQUIREMENTS FOR LONG17 TERM CARE CONTRACTORS.

18 Each long-term care contractor with a contract to

19 provide long-term care benefits under the long-term care

20 program, and any subcontractor, affiliate, or related party

21 thereof, shall, as determined by the Secretary—

22 (1) have a satisfactory, fiscally sound operation

23 which adequately provides against the risk of insol24 vency;
81

•S 707 IS

1 (2) have satisfactory administrative and mana2 gerial operations;

3 (3) have the adequate capacity and resources to

4 serve the long-term care needs of the population re5 siding in the area to be served under the contract;

6 and

7 (4) not expel or refuse to enroll or re-enroll any

8 individual eligible to receive long-term care benefits

9 under the long-term care program because of such

10 individual’s health status, requirement for long-term

11 care or other health services, or anticipated need for

12 long-term care or other health services.

13 SEC. 322. NEEDS ASSESSMENT AND PLAN OF CARE.

14 (a) IN GENERAL.—Each long-term care contractor,

15 and any subcontractor, affiliate, or related party thereof,

16 shall provide long-term care benefits to an individual meet17 ing the eligibility criteria established for the long-term

18 care program only if—

19 (1) a comprehensive assessment of the individ20 ual’s need for long-term care has been made;

21 (2) an individualized plan of care based on such

22 assessment is developed in accordance with sub23 sections (b) and (c); and

24 (3) the long-term care benefits provided are

25 consistent with the individualized plan of care.
82

•S 707 IS

1 (b) INVOLVEMENT OF INDIVIDUALS.—The individ2 ualized plan of care shall be—

3 (1) developed by qualified individuals (as deter4 mined by the Secretary);

5 (2) developed and implemented in close con6 sultation with the individual and the individual’s

7 family;

8 (3) approved by the individual (or the individ9 ual’s representative); and

10 (4) reviewed and updated not less than every 12

11 months.

12 (c) PLAN OF CARE.—The individualized plan of care

13 shall—

14 (1) specify which long-term care benefits speci15 fied under the plan will be provided;

16 (2) identify, to the extent possible, how the in17 dividual will be provided the long-term care benefits

18 specified under the plan; and

19 (3) specify how the provision of long-term care

20 benefits to the individual under the plan will be co21 ordinated with the provision of other health care

22 services to the individual.

23 (d) CONSUMER INPUT.—Each long-term care con24 tractor, and any subcontractor, affiliate, or related party

25 thereof, shall have procedures for obtaining meaningful
83

•S 707 IS

1 consumer input that measures the extent to which an indi2 vidual receives the long-term care benefits described in the

3 individualized plan of care and such individual’s satisfac4 tion with such benefits.

5 SEC. 323. QUALITY ASSURANCE.

6 (a) IN GENERAL.—Each long-term care contractor,

7 and any subcontractor, affiliate, or related party thereof,

8 shall establish procedures to assure that long-term care

9 benefits provided to individuals under the long-term care

10 program shall be rendered under reasonable standards of

11 quality of care consistent with prevailing professionally

12 recognized standards of medical practice. Such procedures

13 shall include mechanisms to assure availability, accessibil14 ity, and continuity of care.

15 (b) INTERNAL QUALITY ASSURANCE.—Each long16 term care contractor, and any subcontractor, affiliate, or

17 related party thereof, shall have an ongoing internal qual18 ity assurance program to monitor and evaluate the long19 term care benefits such contractor (or such subcontractor,

20 affiliate, or related party) provides under the long-term

21 care program.

22 SEC. 324. GRIEVANCE PROCEDURES.

23 (a) GRIEVANCE PROCEDURES.—Each long-term care

24 contractor with a contract under the long-term care pro25 gram, and any subcontractor, affiliate, or related party
84

•S 707 IS

1 thereof, shall provide meaningful procedures for hearing

2 and resolving grievances between the contractor (or any

3 subcontractor, affiliate, or related party thereof) and indi4 viduals eligible to receive long-term care benefits from the

5 contractor (or from a subcontractor, affiliate, or related

6 party thereof) under the long-term care program.

7 (b) APPEALS.—An individual receiving long-term

8 care benefits from a long-term care contractor under the

9 long-term care program, or from any subcontractor, affili10 ate, or related party thereof, who is dissatisfied by reason

11 of the individual’s failure to receive any long-term care

12 benefit for which the individual believes the individual is

13 eligible, shall, if the amount in controversy is $1,000 or

14 more, receive a hearing before the Secretary to the same

15 extent as is provided in section 205(b) of the Social Secu16 rity Act (42 U.S.C. 405(b)), and in any such hearing the

17 Secretary shall make the long-term care contractor and

18 the subcontractor, affiliate, or related party, as applicable,

19 a party. If the amount in controversy is $10,000 or more,

20 the individual or contractor (and the subcontractor, affili21 ate, or related party) shall, upon notifying the other party,

22 be entitled to judicial review of the Secretary’s final deci23 sion as provided in section 205(g) of such Act (42 U.S.C.

24 405(g)), and both the individual and the contractor (and
85

•S 707 IS

1 the subcontractor, affiliate, or related party) shall be enti2 tled to be parties to that judicial review.

3 (c) ADVANCE DIRECTIVES.—A contract entered into

4 under the long-term care program shall provide that a

5 long-term care contractor, and any subcontractor, affili6 ate, or related party thereof, shall meet the requirement

7 of section 1866(f) of the Social Security Act (42 U.S.C.

8 1395cc(f)) (relating to maintaining written policies and

9 procedures respecting advance directives).

10 SEC. 325. MONITORING AND COMPLIANCE.

11 (a) ACCESS BY THE SECRETARY.—The Secretary

12 shall have access to any records of a long-term care con13 tractor, and of any subcontractor, affiliate, or related

14 party thereof, that are required to be maintained in ac15 cordance with this title.

16 (b) PERIODIC REPORTS.—The Secretary shall re17 quire each long-term care contractor, and any subcontrac18 tor, affiliate, or related party thereof, to submit periodic

19 reports to the Secretary containing such information and

20 in such form as the Secretary determines to be appro21 priate.

22 (c) ADDITIONAL REPORTS.—The Secretary may re23 quire a long-term care contractor, and any subcontractor,

24 affiliate, or related party thereof, to provide any additional
86

•S 707 IS

1 reports or information as the Secretary deems necessary

2 and appropriate to carry out the provisions of this title.

3 Subtitle D—Establishing Long4 Term Care Benefits for Certain

5 Individuals

6 PART 1—ELIGIBILITY CRITERIA AND BENEFITS

7 SEC. 331. ELIGIBILITY CRITERIA FOR THE LONG-TERM

8 CARE PROGRAM.

9 (a) IN GENERAL.—The legislative proposal developed

10 by the Commission under section 131(a)(2) shall rec11 ommend national eligibility criteria (in accordance with

12 subsection (b)) for elderly or disabled individuals to receive

13 long-term care benefits under the long-term care program.

14 (b) GUIDELINES FOR DEVELOPING CRITERIA.—

15 (1) IN GENERAL.—In recommending the eligi16 bility criteria for elderly or disabled individuals the

17 Commission shall, subject to paragraphs (2) and

18 (3)—

19 (A) recommend, after surveying State eligi20 bility standards for nursing facility care, insti21 tutionalized care, and home and community22 based care under title XIX of the Social Secu23 rity Act (42 U.S.C. 1396 et seq.) (as in effect

24 on the day before the date of the enactment of
87

•S 707 IS

1 this Act), an income and resource-based stand2 ard that may be based on—

3 (i) an individual having income (as de4 termined under section 1612 of such Act

5 (42 U.S.C. 1382a)) that has been reduced

6 through spending on medical care to a per7 centage (to be determined by the Commis8 sion) of the poverty line;

9 (ii) the median State eligibility stand10 ard (as determined through the survey

11 conducted under this subparagraph); or

12 (iii) any income and resource-based

13 standard that the Commission deems ap14 propriate;

15 (B) recommend criteria excluding from eli16 gibility individuals enrolled in a private long17 term care health plan which provides items or

18 services (to the extent determined by the Com19 mission) that are provided under the long-term

20 care program;

21 (C) recommend criteria that allows an indi22 vidual or the individual’s spouse to retain a

23 greater amount of assets than would otherwise

24 be allowed if the individual has purchased a

25 qualified long-term care insurance policy (as de-
88

•S 707 IS

1 fined in section 7702B(b) of the Internal Reve2 nue Code (as amended by section 1003 of divi3 sion B)); and

4 (D) recommend any nominal copayments

5 or other cost-sharing requirements that the

6 Commission deems appropriate for individuals

7 meeting the eligibility criteria recommended for

8 the long-term care program.

9 (2) IMPAIRMENT CRITERIA.—

10 (A) IN GENERAL.—The eligibility criteria

11 for elderly or disabled individuals under sub12 section (a) shall include a requirement that an

13 individual shall not be eligible to receive long14 term care benefits under the long-term care

15 program unless such individual meets—

16 (i) the financial eligibility standard

17 recommended by the Commission; and

18 (ii) impairment eligibility criteria rec19 ommended by the Commission in accord20 ance with subparagraph (B).

21 (B) IMPAIRMENT ELIGIBILITY CRITERIA.—

22 The Commission shall recommend impairment

23 eligibility criteria that includes standardized as24 sessment tools which limit eligibility to the most
89

•S 707 IS

1 seriously disabled individuals, including individ2 uals, as determined by the Commission—

3 (i) having a severe physical disability;

4 (ii) having a severe cognitive or men5 tal impairment;

6 (iii) having severe or profound mental

7 retardation; and

8 (iv) who are severely disabled chil9 dren.

10 (3) COST CONTROLS.—The Commission shall,

11 to the extent practicable, recommend eligibility cri12 teria for the long-term care program such that an13 nual expenditures for providing long-term care bene14 fits to individuals meeting the criteria would not ex15 ceed the total annual amounts that would have been

16 expended under all State plans for providing long17 term care medical assistance under title XIX of the

18 Social Security Act (42 U.S.C. 1396 et seq.) (as in

19 effect on the day before the date of the enactment

20 of this Act) to individuals who received such assist21 ance.

22 SEC. 332. LONG-TERM CARE BENEFITS UNDER THE LONG23 TERM CARE PROGRAM.

24 (a) IN GENERAL.—The legislative proposal developed

25 by the Commission under section 131(a)(2) shall include
90

•S 707 IS

1 provisions which repeal the medicaid program under title

2 XIX of the Social Security Act (42 U.S.C. 1396 et seq.)

3 and replace such program with provisions requiring that

4 individuals meeting the eligibility criteria recommended by

5 the Commission are eligible to receive long-term care bene6 fits (as determined by the Commission) under such pro7 gram, in accordance with the provisions of subtitles A, B,

8 and C of this title.

9 (b) MAXIMUM FLEXIBILITY FOR CONTRACTORS AND

10 PROVIDERS.—In recommending the long-term care bene11 fits that an individual may receive under the long-term

12 care program, the Commission shall develop such rec13 ommendations so as to permit long-term care contractors

14 maximum flexibility to meet the needs of the individuals

15 eligible to receive such benefits in a cost-effective manner.

16 PART 2—FINANCING FOR THE LONG-TERM CARE

17 PROGRAM

18 SEC. 341. AUTHORIZATION OF APPROPRIATIONS.

19 The legislative proposal developed by the Commission

20 under section 131(a)(2) shall include provisions requiring

21 that there are authorized to be appropriated such sums

22 as are necessary for the purpose of carrying out the long23 term care program.
91

•S 707 IS

1 TITLE IV—ENSURING FINANC2 ING FOR FEDERAL HEALTH

3 CARE FOR CERTAIN ELDERLY

4 LOW-INCOME AND NON- EL5 DERLY LOW-INCOME DIS6 ABLED INDIVIDUALS

7 SEC. 401. ENSURING FINANCING FOR ACUTE CARE BENE8 FITS FOR ELDERLY LOW-INCOME INDIVID9 UALS AND NONELDERLY LOW-INCOME DIS10 ABLED INDIVIDUALS AND FOR THE LONG11 TERM CARE PROGRAM.

12 (a) REPORT TO CONGRESS.—In the case of any fiscal

13 year beginning after the transition period, if the Secretary

14 determines that the funds appropriated for a fiscal year

15 for the purpose of providing acute care benefits under the

16 medicare program to elderly low-income individuals and

17 nonelderly low-income disabled individuals, and for provid18 ing benefits under the long-term care program are, or are

19 estimated to be, insufficient to pay the total Federal ex20 penditures for such purposes, the Secretary shall submit

21 a report to Congress setting forth—

22 (1) the actual or estimated (as the case may be)

23 shortfall in such funds; and

24 (2) a legislative proposal containing—
92

•S 707 IS

1 (A) a request for a supplemental appro2 priation for the fiscal year to cover such short3 fall;

4 (B) proposed modifications to—

5 (i) the eligibility requirements for el6 derly low-income individuals and nonelderly

7 low-income disabled individuals to receive

8 acute care benefits under the medicare

9 program (as amended in an implementing

10 bill enacted under section 132);

11 (ii) the supplemental categories of

12 acute care benefits available for such indi13 viduals under such program; and

14 (iii) the benefits and eligibility re15 quirements under the long-term care pro16 gram; or

17 (C) a combination of the options described

18 in subparagraphs (A) and (B).

19 (b) CONGRESSIONAL RESPONSE.—

20 (1) IN GENERAL.—If, not later than 45 days

21 after the date Congress receives the legislative pro22 posal described in subsection (a)(2), Congress has

23 not enacted legislation in response to such proposal,

24 the Secretary shall, in order of the priorities de25 scribed in paragraph (2), and only with respect to
93

•S 707 IS

1 the remainder of the fiscal year, modify the acute

2 care benefits provided under the medicare program

3 (as amended in an implementing bill enacted under

4 section 132), or the long-term care program, or

5 both.

6 (2) PRIORITIES DESCRIBED.—The priorities de7 scribed in this paragraph are as follows:

8 (A) A reduction in the supplemental cat9 egories of benefits for elderly low-income indi10 viduals and nonelderly low-income disabled indi11 viduals under the medicare program (as amend12 ed by an implementing bill enacted under sec13 tion 132).

14 (B) A reduction in—

15 (i) the acute care benefits provided to

16 such individuals; and

17 (ii) the benefits provided under the

18 long-term care program.

19 (C) Increases in—

20 (i) the medicare cost-sharing require21 ments for elderly low-income individuals

22 and nonelderly low-income disabled individ23 uals under the medicare program (as

24 amended by an implementing bill enacted

25 under section 132); and
94

•S 707 IS

1 (ii) any cost-sharing requirements im2 posed under the long-term care program.

3 (D) A reduction, not greater than 2 per4 cent (and which shall constitute payment in

5 full), in the reimbursement rates for providers

6 and contractors providing—

7 (i) acute care benefits to elderly low8 income individuals and nonelderly low-in9 come disabled individuals under the medi10 care program (as amended by an imple11 menting bill enacted under section 132);

12 and

13 (ii) benefits under the long-term care

14 program.

15 (E) Modification of the Federal medically16 needy eligibility requirements established in ac17 cordance with the Commission’s proposals de18 veloped under sections 201 and 211.

19 (F) Modification of the eligibility require20 ments for the long-term care program.

21 TITLE V—MISCELLANEOUS

22 PROVISIONS

23 SEC. 501. SEPARATE ELIGIBILITY REQUIREMENTS.

24 (a) IN GENERAL.—In order to receive acute care ben25 efits under the medicare program (as amended in an im-
95

•S 707 IS

1 plementing bill enacted under section 132), or long-term

2 care benefits under the long-term care program, an indi3 vidual shall separately satisfy the eligibility criteria estab4 lished for each such program.

5 (b) DUAL APPLICABILITY OF ASSETS OR INCOME.—

6 Notwithstanding subsection (a), an individual may use the

7 same assets or income (as such income is determined

8 through any spenddown provisions that the Commission

9 may propose) to meet the eligibility criteria recommended

10 by the Commission for receiving acute care benefits under

11 the medicare program (as amended in an implementing

12 bill enacted under section 132) or long-term care benefits

13 under the long-term care program.

14 SEC. 502. ENCOURAGING INTEGRATION OF MANAGED CARE

15 AND PRIVATE HEALTH PLANS.

16 (a) INTEGRATION ENCOURAGED.—After the transi17 tion period, the Secretary shall take all necessary and ap18 propriate steps in administering the medicare program

19 and the long-term care program to facilitate and encour20 age opportunities for enrollment in private health care

21 plans and integrated systems of managed care plans by—

22 (1) elderly low-income individuals and

23 nonelderly low-income disabled individuals eligible to

24 receive acute care benefits under the medicare pro-
96

•S 707 IS

1 gram (as amended in an implementing bill enacted

2 under section 132); and

3 (2) individuals eligible to receive long-term care

4 benefits under the long-term care program.

5 (b) RULE OF CONSTRUCTION.—Nothing in this Act

6 shall be construed as preventing the Secretary from enter7 ing into a contract under title III to provide long-term

8 care benefits under the long-term care program with an

9 eligible organization with a risk-sharing contract under

10 section 1876 of the Social Security Act (42

11 U.S.C.1395mm) that satisfies the requirements for selec12 tion of long-term care contractors under such title.

13 SEC. 503. REFORM OF THE SUPPLEMENTAL SECURITY IN14 COME PROGRAM.

15 (a) IN GENERAL.—The legislative proposal developed

16 by the Commission under section 131(a)(3) shall rec17 ommend modifications to the criteria for determining

18 whether an individual described in subsection (b) is dis19 abled and eligible for benefits under title XVI of the Social

20 Security Act (42 U.S.C. 1381 et seq.) so that only such

21 individuals who are most severely disabled (as determined

22 by the Commission) shall be eligible for benefits under

23 such title.

24 (b) INDIVIDUAL DESCRIBED.—An individual de25 scribed in this subsection is an individual who is—
97

•S 707 IS

1 (1) a child, as defined in section 1614(c) of the

2 Social Security Act (42 U.S.C. 1382c(c));

3 (2) an alcoholic; or

4 (3) a drug addict.

5 SEC. 504. ANNUAL REPORT.

6 (a) IN GENERAL.—Not later than 1 year after the

7 date of the enactment of this Act, and annually thereafter,

8 the Secretary shall submit a report to Congress containing

9 the information described in subsection (b).

10 (b) INFORMATION REQUIRED.—

11 (1) IN GENERAL.—Subject to paragraph (2),

12 the report submitted in accordance with subsection

13 (a) shall contain the following information:

14 (A) A description of the progress of the

15 implementation of this Act.

16 (B) An analysis of whether and to what ex17 tent the benefits and eligibility standards rec18 ommended in the legislative proposals described

19 in paragraphs (1) and (2) of section 131(a) and

20 established through the enactment of imple21 menting bills in accordance with section 132,

22 and the contracting arrangements described in

23 subtitles B and C of title III, are—

24 (i) meeting the acute care needs of in25 dividuals eligible to receive acute care ben-
98

•S 707 IS

1 efits under the medicare program (as

2 amended in an implementing bill enacted

3 under section 132);

4 (ii) meeting the long-term care needs

5 of individuals eligible to receive long-term

6 care benefits under the long-term care pro7 gram; and

8 (iii) affecting the size and rate of

9 growth of Federal health care expendi10 tures.

11 (2) SPECIAL RULE FOR REPORTS SUBMITTED

12 IN CERTAIN YEARS.—A report submitted in any year

13 during the transition period need only include the in14 formation required under paragraph (1)(A).

15 SEC. 505. STUDY AND REPORT ON INTEGRATION OF ACUTE

16 AND LONG-TERM CARE.

17 (a) STUDY.—The Commission shall conduct a study

18 for the purpose of determining—

19 (1) what measures can be taken to integrate

20 acute and long-term care benefits for all elderly and

21 disabled individuals;

22 (2) the legislative and regulatory barriers (if

23 any) to integrating acute and long-term care benefits

24 and related insurance products for such individuals;
99

•S 707 IS

1 (3) whether standards concerning the integra2 tion of acute and long-term care benefits should be

3 uniform on a national basis or left to each State to

4 establish; and

5 (4) how to improve the quality and cost-effec6 tiveness of health care for all elderly and disabled in7 dividuals.

8 (b) REPORT AND RECOMMENDATIONS.—

9 (1) IN GENERAL.—Not later than 3 years after

10 the date of the enactment of this Act, the Commis11 sion shall submit a report to Congress setting

12 forth—

13 (A) the findings of the study conducted

14 under subsection (a); and

15 (B) any recommendations or proposals for

16 legislative action based on such findings.

17 (2) COST-BENEFIT ANALYSIS.—Each rec18 ommendation or proposal submitted under para19 graph (1)(B) shall be accompanied by a cost-benefit

20 analysis of the recommendation or proposal.

21 SEC. 506. SECRETARIAL SUBMISSION OF LEGISLATIVE PRO22 POSAL FOR TECHNICAL AND CONFORMING

23 AMENDMENTS.

24 Not later than 90 days after the transition period,

25 the Secretary shall submit to the appropriate committees
100

•S 707 IS

1 of Congress a legislative proposal providing for such tech2 nical and conforming amendments in the law as are re3 quired by the provisions of this Act.

4 DIVISION B—TAX INCENTIVES

5 AND STANDARDS FOR LONG6 TERM CARE INSURANCE

7 TITLE I—TAX TREATMENT OF

8 LONG-TERM CARE INSURANCE

9 SEC. 1001. AMENDMENT OF 1986 CODE.

10 Except as otherwise expressly provided, whenever in

11 this title an amendment or repeal is expressed in terms

12 of an amendment to, or repeal of, a section or other provi13 sion, the reference shall be considered to be made to a

14 section or other provision of the Internal Revenue Code

15 of 1986.

16 SEC. 1002. QUALIFIED LONG-TERM CARE SERVICES TREAT17 ED AS MEDICAL CARE.

18 (a) GENERAL RULE.—Paragraph (1) of section

19 213(d) (defining medical care) is amended by striking

20 ‘‘or’’ at the end of subparagraph (B), by striking subpara21 graph (C), and by inserting after subparagraph (B) the

22 following new subparagraphs:

23 ‘‘(C) for qualified long-term care services

24 (as defined in subsection (f)),
101

•S 707 IS

1 ‘‘(D) for insurance covering medical care

2 referred to in—

3 ‘‘(i) subparagraphs (A) and (B), or

4 ‘‘(ii) subparagraph (C), but only if

5 such insurance is provided under a quali6 fied long-term care insurance policy (as de7 fined in section 7702B(b)) and the deduc8 tion under this section for amounts paid

9 for such insurance is not disallowed under

10 section 7702B(d)(4), or

11 ‘‘(E) for premiums under part B of title

12 XVIII of the Social Security Act, relating to

13 supplementary medical insurance for the

14 aged.’’.

15 (b) QUALIFIED LONG-TERM CARE SERVICES DE16 FINED.—Section 213 (relating to the deduction for medi17 cal, dental, etc., expenses) is amended by adding at the

18 end the following new subsection:

19 ‘‘(f) QUALIFIED LONG-TERM CARE SERVICES.—For

20 purposes of this section—

21 ‘‘(1) IN GENERAL.—The term ‘qualified long22 term care services’ means necessary diagnostic, cur23 ing, mitigating, treating, preventive, therapeutic, and

24 rehabilitative services, and maintenance and per-
102

•S 707 IS

1 sonal care services (whether performed in a residen2 tial or nonresidential setting), which—

3 ‘‘(A) are required by an individual during

4 any period the individual is an incapacitated in5 dividual (as defined in paragraph (2)),

6 ‘‘(B) have as their primary purpose—

7 ‘‘(i) the provision of needed assistance

8 with 1 or more activities of daily living (as

9 defined in paragraph (3)), or

10 ‘‘(ii) protection from threats to health

11 and safety due to severe cognitive impair12 ment, and

13 ‘‘(C) are provided pursuant to a continuing

14 plan of care prescribed by a licensed profes15 sional (as defined in paragraph (4)).

16 ‘‘(2) INCAPACITATED INDIVIDUAL.—The term

17 ‘incapacitated individual’ means any individual who

18 has been certified by a licensed professional as—

19 ‘‘(A)(i) being unable to perform, without

20 substantial assistance from another individual,

21 at least 2 activities of daily living (as defined in

22 paragraph (3)), or

23 ‘‘(ii) having a level of disability similar (as

24 determined by the Secretary in consultation

25 with the Secretary of Health and Human Serv-
103

•S 707 IS

1 ices) to the level of disability described in clause

2 (i); or

3 ‘‘(B) having a level of disability similar to

4 the level of disability described in subparagraph

5 (A) due to cognitive impairment as defined by

6 the Secretary in consultation with the Secretary

7 of Health and Human Services.

8 ‘‘(3) ACTIVITIES OF DAILY LIVING.—

9 ‘‘(A) IN GENERAL.—Each of the following

10 is an activity of daily living:

11 ‘‘(i) Eating.

12 ‘‘(ii) Toileting.

13 ‘‘(iii) Bathing.

14 ‘‘(iv) Transferring.

15 ‘‘(v) Mobility.

16 ‘‘(vi) Dressing.

17 ‘‘(B) DEFINITIONS.—For purposes of this

18 paragraph:

19 ‘‘(i) EATING.—The term ‘eating’

20 means the process of getting food from a

21 plate or its equivalent into the mouth.

22 ‘‘(ii) TOILETING.—The term

23 ‘toileting’ means the act of going to the

24 toilet room for bowel and bladder function,

25 transferring on and off the toilet, cleaning
104

•S 707 IS

1 after elimination, and arranging clothes or

2 the ability to voluntarily control bowel and

3 bladder function, or in the event of inconti4 nence, the ability to maintain a reasonable

5 level of personal hygiene.

6 ‘‘(iii) BATHING.—The term ‘bathing’

7 means the overall complex behavior of

8 using water for cleansing the whole body,

9 including cleansing as part of a bath,

10 shower, or sponge bath, getting to, in, and

11 out of a tub or shower, and washing and

12 drying oneself.

13 ‘‘(iv) TRANSFERRING.—The term

14 ‘transferring’ means the process of getting

15 in and out of bed or in and out of a chair

16 or wheelchair.

17 ‘‘(v) MOBILITY.—The term ‘mobility’

18 means the process of walking or wheeling

19 on a level surface which may include the

20 use of an assistive device such as a cane,

21 walker, wheelchair, or brace.

22 ‘‘(vi) DRESSING.—The term ‘dressing’

23 means the overall complex behavior of get24 ting clothes from closets and drawers and

25 then getting dressed.
105

•S 707 IS

1 ‘‘(vi) CONTINENCE.—The term ‘con2 tinence’ means the ability to voluntarily

3 control bowel and bladder function and to

4 maintain a reasonable level of personal hy5 giene.

6 ‘‘(4) LICENSED PROFESSIONAL.—

7 ‘‘(A) IN GENERAL.—The term ‘licensed

8 professional’ means—

9 ‘‘(i) a physician or registered profes10 sional nurse,

11 ‘‘(ii) a qualified community care case

12 manager (as defined in subparagraph (B)),

13 or

14 ‘‘(iii) any other individual who meets

15 such requirements as may be prescribed by

16 the Secretary after consultation with the

17 Secretary of Health and Human Services.

18 ‘‘(B) QUALIFIED COMMUNITY CARE CASE

19 MANAGER.—The term ‘qualified community

20 care case manager’ means an individual or en21 tity which—

22 ‘‘(i) has experience or has been

23 trained in providing case management

24 services and in preparing individual care

25 plans,
106

•S 707 IS

1 ‘‘(ii) has experience in assessing indi2 viduals to determine their functional and

3 cognitive impairment, and

4 ‘‘(iii) meets such requirements as may

5 be prescribed by the Secretary after con6 sultation with the Secretary of Health and

7 Human Services.’’.

8 (c) TECHNICAL AMENDMENTS.—Paragraph (6) of

9 section 213(d) is amended—

10 (1) by striking ‘‘subparagraphs (A) and (B)’’

11 and inserting ‘‘subparagraphs (A), (B), and (C)’’,

12 and

13 (2) by striking ‘‘paragraph (1)(C) applies’’ in

14 subparagraph (A) and inserting ‘‘subparagraphs (C)

15 and (D) of paragraph (1) apply’’.

16 (d) EFFECTIVE DATE.—The amendments made by

17 this section shall apply to taxable years beginning after

18 December 31, 1995.

19 SEC. 1003. TREATMENT OF LONG-TERM CARE INSURANCE.

20 (a) GENERAL RULE.—Chapter 79 (relating to defini21 tions) is amended by inserting after section 7702A the fol22 lowing new section:

23 ‘‘SEC. 7702B. TREATMENT OF LONG-TERM CARE INSUR24 ANCE.

25 ‘‘(a) IN GENERAL.—For purposes of this title—
107

•S 707 IS

1 ‘‘(1) a qualified long-term care insurance policy

2 (as defined in subsection (b)) shall be treated as an

3 accident and health insurance contract,

4 ‘‘(2) any plan of an employer providing cov5 erage under a qualified long-term care insurance pol6 icy shall be treated as an accident and health plan

7 with respect to such coverage,

8 ‘‘(3) amounts (other than policyholder dividends

9 (as defined in section 808) or premium refunds) re10 ceived under a qualified long-term care insurance

11 policy (including nonreimbursement payments de12 scribed in subsection (b)(6)) shall be treated—

13 ‘‘(A) as amounts received for personal in14 juries and sickness, and

15 ‘‘(B) as amounts received for the perma16 nent loss of a function of the body and as

17 amounts computed with reference to the nature

18 of injury under section 105(c) to the extent

19 that such amounts do not exceed the dollar

20 amount in effect under subsection (f) for the

21 taxable year,

22 ‘‘(4) amounts paid for a qualified long-term

23 care insurance policy described in subsection (b)(11)

24 shall be treated as payments made for insurance for

25 purposes of section 213(d)(1)(D), and
108

•S 707 IS

1 ‘‘(5) a qualified long-term care insurance policy

2 shall be treated as a guaranteed renewable contract

3 subject to the rules of section 816(e).

4 ‘‘(b) QUALIFIED LONG-TERM CARE INSURANCE POL5 ICY.—For purposes of this title—

6 ‘‘(1) IN GENERAL.—The term ‘qualified long7 term care insurance policy’ means any long-term

8 care insurance policy (as defined in paragraph (10))

9 that—

10 ‘‘(A) limits benefits under such policy to

11 incapacitated individuals (as defined in section

12 213(f)(2)), and

13 ‘‘(B) satisfies the requirements of para14 graphs (2) through (9).

15 ‘‘(2) PREMIUM REQUIREMENTS.—The require16 ments of this paragraph are met with respect to a

17 long-term care insurance policy if such policy pro18 vides that premium payments may not be made ear19 lier than the date such payments would have been

20 made if the policy provided for level annual pay21 ments over the life expectancy of the insured or 20

22 years, whichever is shorter. A policy shall not be

23 treated as failing to meet the requirements of the

24 preceding sentence solely by reason of a provision in

25 the policy providing for a waiver of premiums if the
109

•S 707 IS

1 insured becomes an incapacitated individual (as de2 fined in section 213(f)(2)).

3 ‘‘(3) PROHIBITION OF CASH VALUE.—The re4 quirements of this paragraph are met with respect

5 to a long-term care insurance policy if such policy

6 does not provide for a cash value or other money

7 that can be paid, assigned, pledged as collateral for

8 a loan, or borrowed, other than as provided in para9 graph (4).

10 ‘‘(4) REFUNDS OF PREMIUMS AND DIVI11 DENDS.—The requirements of this paragraph are

12 met with respect to a long-term care insurance pol13 icy if such policy provides that—

14 ‘‘(A) policyholder dividends are required to

15 be applied as a reduction in future premiums or

16 to increase benefits described in subsection

17 (a)(2),

18 ‘‘(B) refunds of premiums upon a partial

19 surrender or a partial cancellation are required

20 to be applied as a reduction in future pre21 miums, and

22 ‘‘(C) any refund on the death of the in23 sured, or on a complete surrender or cancella24 tion of the policy, cannot exceed the aggregate

25 premiums paid under the policy.
110

•S 707 IS

1 Any refund on a complete surrender or cancellation

2 of the policy shall be includable in gross income to

3 the extent that any deduction or exclusion was allow4 able with respect to the premiums.

5 ‘‘(5) COORDINATION WITH OTHER ENTITLE6 MENTS.—The requirements of this paragraph are

7 met with respect to a long-term care insurance pol8 icy if such policy does not cover expenses incurred

9 to the extent that such expenses are also covered

10 under title XVIII of the Social Security Act. For

11 purposes of this paragraph, a long-term care insur12 ance policy which coordinates expenses incurred

13 under such policy with expenses incurred under title

14 XVIII of such Act shall not be considered to dupli15 cate such expenses.

16 ‘‘(6) REQUIREMENTS OF MODEL REGULATION

17 AND ACT.—

18 ‘‘(A) IN GENERAL.—The requirements of

19 this paragraph are met with respect to a long20 term care insurance policy if such policy

21 meets—

22 ‘‘(i) MODEL REGULATION.—The fol23 lowing requirements of the model regula24 tion:
111

•S 707 IS

1 ‘‘(I) Section 7A (relating to guar2 anteed renewal or noncancellability),

3 and the requirements of section 6B of

4 the model Act relating to such section

5 7A.

6 ‘‘(II) Section 7B (relating to pro7 hibitions on limitations and exclu8 sions).

9 ‘‘(III) Section 7C (relating to ex10 tension of benefits).

11 ‘‘(IV) Section 7D (relating to

12 continuation or conversion of cov13 erage).

14 ‘‘(V) Section 7E (relating to dis15 continuance and replacement of poli16 cies).

17 ‘‘(VI) Section 8 (relating to unin18 tentional lapse).

19 ‘‘(VII) Section 9 (relating to dis20 closure), other than section 9F there21 of.

22 ‘‘(VIII) Section 10 (relating to

23 prohibitions against post-claims un24 derwriting).
112

•S 707 IS

1 ‘‘(IX) Section 11 (relating to

2 minimum standards).

3 ‘‘(X) Section 12 (relating to re4 quirement to offer inflation protec5 tion), except that any requirement for

6 a signature on a rejection of inflation

7 protection shall permit the signature

8 to be on an application or on a sepa9 rate form.

10 ‘‘(XI) Section 23 (relating to pro11 hibition against preexisting conditions

12 and probationary periods in replace13 ment policies or certificates).

14 ‘‘(ii) MODEL ACT.—The following re15 quirements of the model Act:

16 ‘‘(I) Section 6C (relating to pre17 existing conditions).

18 ‘‘(II) Section 6D (relating to

19 prior hospitalization).

20 ‘‘(B) DEFINITIONS.—For purposes of this

21 paragraph—

22 ‘‘(i) MODEL PROVISIONS.—The terms

23 ‘model regulation’ and ‘model Act’ mean

24 the long-term care insurance model regula25 tion, and the long-term care insurance
113

•S 707 IS

1 model Act, respectively, promulgated by

2 the National Association of Insurance

3 Commissioners (as adopted in January of

4 1993).

5 ‘‘(ii) COORDINATION.—Any provision

6 of the model regulation or model Act listed

7 under clause (i) or (ii) of subparagraph

8 (A) shall be treated as including any other

9 provision of such regulation or Act nec10 essary to implement the provision.

11 ‘‘(7) TAX DISCLOSURE REQUIREMENT.—The re12 quirement of this paragraph is met with respect to

13 a long-term care insurance policy if such policy

14 meets the requirements of section 4980C(d)(1).

15 ‘‘(8) NONFORFEITURE REQUIREMENTS.—

16 ‘‘(A) IN GENERAL.—The requirements of

17 this paragraph are met with respect to a long18 term care insurance policy, if the issuer of such

19 policy offers to the policyholder, including any

20 group policyholder, a nonforfeiture provision

21 meeting the requirements specified in subpara22 graph (B).

23 ‘‘(B) REQUIREMENTS OF PROVISION.—The

24 requirements specified in this subparagraph are

25 as follows:
114

•S 707 IS

1 ‘‘(i) The nonforfeiture provision shall

2 be appropriately captioned.

3 ‘‘(ii) The nonforfeiture provision shall

4 provide for a benefit available in the event

5 of a default in the payment of any pre6 miums and the amount of the benefit may

7 be adjusted subsequent to being initially

8 granted only as necessary to reflect

9 changes in claims, persistency, and interest

10 as reflected in changes in rates for pre11 mium paying policies approved by the Sec12 retary for the same policy form.

13 ‘‘(iii) The nonforfeiture provision shall

14 provide at least 1 of the following:

15 ‘‘(I) Reduced paid-up insurance.

16 ‘‘(II) Extended term insurance.

17 ‘‘(III) Shortened benefit period.

18 ‘‘(IV) Other similar offerings ap19 proved by the Secretary.

20 ‘‘(9) RATE STABILIZATION.—

21 ‘‘(A) IN GENERAL.—The requirements of

22 this paragraph are met with respect to a long23 term care insurance policy, including any group

24 master policy, if—
115

•S 707 IS

1 ‘‘(i) such policy contains the minimum

2 rate guarantees specified in subparagraph

3 (B), and

4 ‘‘(ii) the issuer of such policy meets

5 the requirements specified in subparagraph

6 (C).

7 ‘‘(B) MINIMUM RATE GUARANTEES.—The

8 minimum rate guarantees specified in this sub9 paragraph are as follows:

10 ‘‘(i) Rates under the policy shall be

11 guaranteed for a period of at least 2 years

12 from the date of issue of the policy.

13 ‘‘(ii) After the expiration of the 2-year

14 period required under clause (i), any rate

15 increase shall be guaranteed for a period of

16 at least 1 year from the effective date of

17 such rate increase.

18 ‘‘(C) INCREASES IN PREMIUMS.—The re19 quirements specified in this subparagraph are

20 as follows:

21 ‘‘(i) IN GENERAL.—If an issuer of a

22 long-term care insurance policy, including

23 any group master policy, plans to increase

24 the premium rates for a policy, such issuer

25 shall, at least 90 days before the effective
116

•S 707 IS

1 date of the rate increase, offer to each in2 dividual policyholder under such policy the

3 option to remain insured under the policy

4 at a reduced level of benefits that main5 tains the premium rate at the rate in effect

6 on the day before the effective date of the

7 rate increase.

8 ‘‘(ii) INCREASES OF MORE THAN 50

9 PERCENT.—If an issuer of a long-term

10 care insurance policy, including any group

11 master policy, increases premium rates for

12 a policy by more than 50 percent in any 2-

13 year period—

14 ‘‘(I) in the case of an individual

15 long-term care insurance policy, the

16 issuer shall discontinue issuing all in17 dividual long-term care policies in any

18 State in which the issuer issues such

19 policy for a period of 2 years from the

20 effective date of such premium in21 crease, and

22 ‘‘(II) in the case of a group mas23 ter long-term care insurance policy,

24 the issuer shall discontinue issuing all

25 group master long-term care insur-
117

•S 707 IS

1 ance policies in any State in which the

2 issuer issues such policy for a period

3 of 2 years from the effective date of

4 such premium increase.

5 This clause shall apply to any issuer of

6 long-term care insurance policies or any

7 other person that purchases or otherwise

8 acquires any long-term care insurance poli9 cies from another issuer or person.

10 ‘‘(D) MODIFICATIONS OR WAIVERS OF RE11 QUIREMENTS.—The Secretary may modify or

12 waive any of the requirements under this para13 graph if—

14 ‘‘(i) such requirements will adversely

15 affect an issuer’s solvency,

16 ‘‘(ii) such modification or waiver is re17 quired for the issuer to meet other State or

18 Federal requirements,

19 ‘‘(iii) medical developments, new dis20 abling diseases, changes in long-term care

21 delivery, or a new method of financing

22 long-term care will result in changes to

23 mortality and morbidity patterns or as24 sumptions,
118

•S 707 IS

1 ‘‘(iv) judicial interpretation of a pol2 icy’s benefit features results in unintended

3 claim liabilities, or

4 ‘‘(v) in the case of a purchase or other

5 acquisition of long-term care insurance

6 policies of an issuer or other person, the

7 continued sale of other long-term care in8 surance policies by the purchasing issuer

9 or person is in the best interests of individ10 ual consumers.

11 ‘‘(10) LONG-TERM CARE INSURANCE POLICY

12 DEFINED.—

13 ‘‘(A) IN GENERAL.—For purposes of this

14 section, the term ‘long-term care insurance pol15 icy’ means any product which is advertised,

16 marketed, or offered as long-term care insur17 ance (as defined in subparagraph (B)).

18 ‘‘(B) LONG-TERM CARE INSURANCE.—

19 ‘‘(i) IN GENERAL.—The term ‘long20 term care insurance’ means any insurance

21 policy or rider—

22 ‘‘(I) advertised, marketed, of23 fered, or designed to provide coverage

24 for not less than 12 consecutive

25 months for each covered person on an
119

•S 707 IS

1 expense incurred, indemnity, prepaid

2 or other basis for 1 or more necessary

3 or medically necessary diagnostic, pre4 ventive, therapeutic, rehabilitative,

5 maintenance, or personal care services

6 provided in a setting other than an

7 acute care unit of a hospital, and

8 ‘‘(II) issued by insurers, fraternal

9 benefit societies, nonprofit health, hos10 pital, and medical service corpora11 tions, prepaid health plans, health

12 maintenance organizations or any

13 similar organization to the extent such

14 organizations are otherwise authorized

15 to issue life or health insurance.

16 Such term includes group and individual annu17 ities and life insurance policies or riders which

18 provide directly or which supplement long-term

19 care insurance and includes a policy or rider

20 which provides for payment of benefits based on

21 cognitive impairment or the loss of functional

22 capacity.

23 ‘‘(ii) EXCLUSIONS.—The term ‘long24 term care insurance’ shall not include—
120

•S 707 IS

1 ‘‘(I) any insurance policy which

2 is offered primarily to provide basic

3 coverage to supplement coverage

4 under the medicare program under

5 title XVIII of the Social Security Act,

6 basic hospital expense coverage, basic

7 medical-surgical expense coverage,

8 hospital confinement coverage, major

9 medical expense coverage, disability

10 income or related asset-protection cov11 erage, accident only coverage, speci12 fied disease or specified accident cov13 erage, or limited benefit health cov14 erage, or

15 ‘‘(II) life insurance policies—

16 ‘‘(aa) which accelerate the

17 death benefit specifically for 1 or

18 more of the qualifying events of

19 terminal illness or medical condi20 tions requiring extraordinary

21 medical intervention or perma22 nent institutional confinement,

23 ‘‘(bb) which provide the op24 tion of a lump-sum payment for

25 such benefits, and
121

•S 707 IS

1 ‘‘(cc) under which neither

2 such benefits nor the eligibility

3 for the benefits is conditioned

4 upon the receipt of long-term

5 care.

6 ‘‘(11) NONREIMBURSEMENT PAYMENTS PER7 MITTED.—For purposes of subsection (a)(4), a pol8 icy is described in this paragraph if, under the pol9 icy, payments are made to (or on behalf of) an in10 sured individual on a per diem or other periodic

11 basis without regard to the expenses incurred or

12 services rendered during the period to which the

13 payments relate.

14 ‘‘(c) TREATMENT OF LONG-TERM CARE INSURANCE

15 POLICIES.—For purposes of this title, any amount re16 ceived or coverage provided under a long-term care insur17 ance policy that is not a qualified long-term care insurance

18 policy shall not be treated as an amount received for per19 sonal injuries or sickness or provided under an accident

20 and health plan and shall not be treated as excludable

21 from gross income under any provision of this title.

22 ‘‘(d) TREATMENT OF COVERAGE PROVIDED AS PART

23 OF A LIFE INSURANCE CONTRACT.—Except as otherwise

24 provided in regulations, in the case of any long-term care
122

•S 707 IS

1 insurance coverage provided by a rider on a life insurance

2 contract, the following rules shall apply:

3 ‘‘(1) IN GENERAL.—This section shall apply as

4 if the portion of the contract providing such cov5 erage is a separate contract or policy.

6 ‘‘(2) PREMIUMS AND CHARGES FOR LONG-TERM

7 CARE COVERAGE.—Premium payments for long-term

8 care insurance policy coverage and charges against

9 the life insurance contract’s cash surrender value

10 (within the meaning of section 7702(f)(2)(A)) for

11 such coverage, shall be treated as premiums for pur12 poses of subsection (b)(2).

13 ‘‘(3) APPLICATION OF 7702.—Section

14 7702(c)(2) (relating to the guideline premium limi15 tation) shall be applied by increasing, as of any date,

16 the guideline premium limitation with respect to a

17 life insurance contract by an amount equal to—

18 ‘‘(A) the sum of any charges (but not pre19 mium payments) described in paragraph (2)

20 made to that date under the contract, reduced

21 by

22 ‘‘(B) any such charges the imposition of

23 which reduces the premiums paid for the con24 tract (within the meaning of section

25 7702(f)(1)).
123

•S 707 IS

1 ‘‘(4) APPLICATION OF SECTION 213.—No deduc2 tion shall be allowed under section 213(a) for

3 charges against the life insurance contract’s cash

4 surrender value described in paragraph (2), unless

5 such charges are includable in income as a result of

6 the application of section 72(e)(10) and the coverage

7 provided by the rider is a qualified long-term care

8 insurance policy under subsection (b).

9 For purposes of this subsection, the term ‘portion’ means

10 only the terms and benefits under a life insurance contract

11 that are in addition to the terms and benefits under the

12 contract without regard to the coverage under a qualified

13 long-term care insurance policy.

14 ‘‘(e) EMPLOYER PLANS NOT TREATED AS DE15 FERRED COMPENSATION PLANS.—For purposes of this

16 title, a plan of an employer providing coverage under a

17 qualified long-term care insurance policy shall not be

18 treated as a plan which provides for deferred compensa19 tion by reason of providing such coverage.

20 ‘‘(f) DOLLAR AMOUNT FOR PURPOSES OF GROSS IN21 COME EXCLUSION.—

22 ‘‘(1) DOLLAR AMOUNT.—

23 ‘‘(A) IN GENERAL.—The dollar amount in

24 effect under this subsection shall be $200 per

25 day.
124

•S 707 IS

1 ‘‘(B) INFLATION ADJUSTMENTS.—In the

2 case of any taxable year beginning in a calendar

3 year after 1996, the dollar amount contained in

4 subparagraph (A) shall be increased by an

5 amount equal to—

6 ‘‘(i) such dollar amount, multiplied by

7 ‘‘(ii) the cost-of-living adjustment de8 termined under section 1(f)(3) for the cal9 endar year in which the taxable year be10 gins, by substituting ‘calendar year 1995’

11 for ‘calendar year 1992’ in subparagraph

12 (B) thereof.

13 ‘‘(2) AGGREGATION RULE.—For purposes of

14 this subsection, all policies issued with respect to the

15 same taxpayer shall be treated as 1 policy.

16 ‘‘(g) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be necessary to carry out the re18 quirements of this section, including regulations to prevent

19 the avoidance of this section by providing long-term care

20 insurance coverage under a life insurance contract and to

21 provide for the proper allocation of amounts between the

22 long-term care and life insurance portions of a contract.’’.

23 (b) CLERICAL AMENDMENT.—The table of sections

24 for chapter 79 is amended by inserting after the item re25 lating to section 7702A the following new item:

‘‘Sec. 7702B. Treatment of long-term care insurance.’’.
125

•S 707 IS

1 (c) EFFECTIVE DATE.—

2 (1) IN GENERAL.—The amendments made by

3 this section shall apply to policies issued after De4 cember 31, 1995. Solely for purposes of the preced5 ing sentence, a policy issued prior to January 1,

6 1996, that satisfies the requirements of a qualified

7 long-term care insurance policy as set forth in sec8 tion 7702B(b) of the Internal Revenue Code of 1986

9 (as added by this section) shall, on and after Janu10 ary 1, 1996, be treated as having been issued after

11 December 31, 1995.

12 (2) TRANSITION RULE.—If, after the date of

13 enactment of this Act and before January 1, 1996,

14 a policy providing for long-term care insurance cov15 erage is exchanged solely for a qualified long-term

16 care insurance policy (as defined in such section

17 7702B(b)), no gain or loss shall be recognized on

18 the exchange. If, in addition to a qualified long-term

19 care insurance policy, money or other property is re20 ceived in the exchange, then any gain shall be recog21 nized to the extent of the sum of the money and the

22 fair market value of the other property received. For

23 purposes of this paragraph, the cancellation of a pol24 icy providing for long-term care insurance coverage

25 and reinvestment of the cancellation proceeds in a
126

•S 707 IS

1 qualified long-term care insurance policy within 60

2 days thereafter shall be treated as an exchange.

3 (3) ISSUANCE OF CERTAIN RIDERS PER4 MITTED.—For purposes of determining whether sec5 tion 7702 or 7702A of the Internal Revenue Code

6 of 1986 applies to any contract, the issuance, wheth7 er before, on, or after December 31, 1995, of a rider

8 on a life insurance contract providing long-term care

9 insurance coverage shall not be treated as a modi10 fication or material change of such contract.

11 SEC. 1004. TREATMENT OF QUALIFIED LONG-TERM CARE

12 PLANS.

13 (a) EXCLUSION FROM COBRA CONTINUATION RE14 QUIREMENTS.—Subparagraph (A) of section 4980B(f)(2)

15 (defining continuation coverage) is amended by adding at

16 the end the following new sentence: ‘‘The coverage shall

17 not include coverage for qualified long-term care services

18 (as defined in section 213(f)).’’.

19 (b) BENEFITS INCLUDED IN CAFETERIA PLANS.—

20 Section 125(f) (defining qualified benefits) is amended by

21 adding at the end the following new sentence: ‘‘Such term

22 includes coverage under a qualified long-term care insur23 ance policy (as defined in section 7702B(b)) which is in24 cludible in gross income only because it exceeds the dollar

25 limitation of section 7705B(f).’’.
127

•S 707 IS

1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to policies issued after December

3 31, 1995. Solely for purposes of the preceding sentence,

4 a policy issued prior to January 1, 1996, that satisfies

5 the requirements of a qualified long-term care insurance

6 policy as set forth in section 7702B(b) of the Internal Rev7 enue Code of 1986 (as added by section 1003) shall, on

8 and after January 1, 1996, be treated as having been is9 sued after December 31, 1995.

10 SEC. 1005. TAX TREATMENT OF ACCELERATED DEATH BEN11 EFITS UNDER LIFE INSURANCE CONTRACTS.

12 (a) IN GENERAL.—Section 101 (relating to certain

13 death benefits) is amended by adding at the end the fol14 lowing new subsection:

15 ‘‘(g) TREATMENT OF CERTAIN ACCELERATED

16 DEATH BENEFITS.—

17 ‘‘(1) IN GENERAL.—For purposes of this sec18 tion, any amount distributed to an individual under

19 a life insurance contract on the life of an insured

20 who is a terminally ill individual (as defined in para21 graph (3)) shall be treated as an amount paid by

22 reason of the death of such insured.

23 ‘‘(2) NECESSARY CONDITIONS.—

24 ‘‘(A) IN GENERAL.—Paragraph (1) shall

25 not apply to any distribution unless—
128

•S 707 IS

1 ‘‘(i) the distribution is not less than

2 the present value (determined under sub3 paragraph (B)) of the reduction in the

4 death benefit otherwise payable in the

5 event of the death of the insured, and

6 ‘‘(ii) the percentage derived by divid7 ing the cash surrender value of the con8 tract, if any, immediately after the dis9 tribution by the cash surrender value of

10 the contract immediately before the dis11 tribution is equal to or greater than the

12 percentage derived by dividing the death

13 benefit immediately after the distribution

14 by the death benefit immediately before the

15 distribution.

16 ‘‘(B) REDUCTION VALUE.—The present

17 value of the reduction in the death benefit oc18 curring by reason of the distribution shall be

19 determined by—

20 ‘‘(i) using as the discount rate a rate

21 not in excess of the highest rate set forth

22 in subparagraph (C), and

23 ‘‘(ii) assuming that the death benefit

24 (or the portion thereof) would have been

25 paid at the end of a period that is no more
129

•S 707 IS

1 than the insured’s life expectancy from the

2 date of the distribution or 12 months,

3 whichever is shorter.

4 ‘‘(C) RATES.—The rates set forth in this

5 subparagraph are the following:

6 ‘‘(i) the 90-day Treasury bill yield,

7 ‘‘(ii) the rate described as Moody’s

8 Corporate Bond Yield Average-Monthly

9 Average Corporates as published by

10 Moody’s Investors Service, Inc., or any

11 successor thereto, for the calendar month

12 ending 2 months before the date on which

13 the rate is determined,

14 ‘‘(iii) the rate used to compute the

15 cash surrender values under the contract

16 during the applicable period plus 1 percent

17 per annum, and

18 ‘‘(iv) the maximum permissible inter19 est rate applicable to policy loans under

20 the contract.

21 ‘‘(3) TERMINALLY ILL INDIVIDUAL.—For pur22 poses of this subsection, the term ‘terminally ill indi23 vidual’ means an individual who, as determined by

24 the insurer on the basis of an acceptable certifi25 cation by a licensed physician, has an illness or
130

•S 707 IS

1 physical condition which can reasonably be expected

2 to result in death within 12 months of the date of

3 certification.

4 ‘‘(4) APPLICATION OF SECTION 72(e)(10).—For

5 purposes of section 72(e)(10) (relating to the treat6 ment of modified endowment contracts), section

7 72(e)(4)(A)(i) shall not apply to distributions de8 scribed in paragraph (1).’’.

9 (b) EFFECTIVE DATE.—

10 (1) IN GENERAL.—The amendments made by

11 this section shall apply to amounts received after

12 December 31, 1995.

13 (2) TRANSITIONAL RULE.—For purposes of ap14 plying section 101(g), 7702, or 7702A of the Inter15 nal Revenue Code of 1986 to any contract, the issu16 ance, whether before, on, or after January 1, 1996,

17 of a rider on a life insurance contract permitting the

18 acceleration of death benefits (as described in sec19 tion 101(g) of such Code (as added by this section))

20 shall not be treated as a modification or material

21 change of such contract.
131

•S 707 IS

1 SEC. 1006. TAX TREATMENT OF COMPANIES ISSUING

2 QUALIFIED ACCELERATED DEATH BENEFIT

3 RIDERS.

4 (a) QUALIFIED ACCELERATED DEATH BENEFIT RID5 ERS TREATED AS LIFE INSURANCE.—Section 818 (relat6 ing to other definitions and special rules) is amended by

7 adding at the end the following new subsection:

8 ‘‘(g) QUALIFIED ACCELERATED DEATH BENEFIT

9 RIDERS TREATED AS LIFE INSURANCE.—For purposes of

10 this part—

11 ‘‘(1) IN GENERAL.—Any reference to a life in12 surance contract shall be treated as including a ref13 erence to a qualified accelerated death benefit rider

14 on such contract.

15 ‘‘(2) QUALIFIED ACCELERATED DEATH BENE16 FIT RIDERS.—For purposes of this subsection, the

17 term ‘qualified accelerated death benefit rider’

18 means any rider on a life insurance contract which

19 provides for a distribution to an individual upon the

20 insured becoming a terminally ill individual (as de21 fined in section 101(g)(3)).’’.

22 (b) DEFINITIONS OF LIFE INSURANCE AND MODI23 FIED ENDOWMENT CONTRACTS.—Paragraph (5)(A) of

24 section 7702(f) (defining qualified additional benefits) is

25 amended by striking ‘‘or’’ at the end of clause (iv), by
132

•S 707 IS

1 redesignating clause (v) as clause (vi), and by inserting

2 after clause (iv) the following new clause:

3 ‘‘(v) any qualified accelerated death

4 benefit rider (as defined in section 818(g)),

5 or’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall take effect on January 1, 1996.

8 TITLE II—STANDARDS FOR

9 LONG-TERM CARE INSURANCE

10 SEC. 2001. ADDITIONAL REQUIREMENTS FOR ISSUERS OF

11 LONG-TERM CARE INSURANCE POLICIES.

12 (a) IN GENERAL.—Chapter 43 is amended by adding

13 at the end the following new section:

14 ‘‘SEC. 4980C. FAILURE TO MEET REQUIREMENTS FOR

15 QUALIFIED LONG-TERM CARE INSURANCE

16 POLICIES.

17 ‘‘(a) GENERAL RULE.—There is hereby imposed on

18 the issuer of any qualified long-term care insurance policy

19 with respect to which any requirement of subsection (c)

20 or (d) is not met a tax in the amount determined under

21 subsection (b).

22 ‘‘(b) AMOUNT OF TAX.—

23 ‘‘(1) IN GENERAL.—

24 ‘‘(A) PER POLICY.—The amount of the tax

25 imposed by subsection (a) shall be $100 per
133

•S 707 IS

1 policy for each day any requirement of sub2 section (c) or (d) is not met with respect to the

3 policy.

4 ‘‘(B) LIMITATIONS.—

5 ‘‘(i) PER CARRIER.—The amount of

6 the tax imposed under subparagraph (A)

7 against any insurance carrier, association,

8 or any subsidiary thereof, shall not exceed

9 $25,000 per policy.

10 ‘‘(ii) PER AGENT.—The amount of the

11 tax imposed under subparagraph (A)

12 against any insurance agent or broker

13 shall not exceed $15,000 per policy.

14 ‘‘(2) WAIVER.—In the case of a failure which is

15 due to reasonable cause and not to willful neglect,

16 the Secretary may waive part or all of the tax im17 posed by subsection (a) to the extent that payment

18 of the tax would be excessive relative to the failure

19 involved.

20 ‘‘(c) ADDITIONAL RESPONSIBILITIES.—The require21 ments of this subsection with respect to any qualified long22 term care insurance policy are as follows:

23 ‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.—
134

•S 707 IS

1 ‘‘(A) MODEL REGULATION.—The following

2 requirements of the model regulation shall be

3 met:

4 ‘‘(i) Section 13 (relating to application

5 forms and replacement coverage).

6 ‘‘(ii) Section 14 (relating to reporting

7 requirements), except that the issuer shall

8 also report at least annually the number of

9 claims denied during the reporting period

10 for each class of business (expended as a

11 percentage of claims denied), other than

12 claims denied for failure to meet the wait13 ing period or because of any applicable

14 preexisting condition.

15 ‘‘(iii) Section 20 (relating to filing re16 quirements for marketing).

17 ‘‘(iv) Section 21 (relating to standards

18 for marketing), including inaccurate com19 pletion of medical histories, other than sec20 tions 21C(1) and 21C(6) thereof, except

21 that—

22 ‘‘(I) in addition to such require23 ments, no person shall, in selling or

24 offering to sell a qualified long-term
135

•S 707 IS

1 care insurance policy, misrepresent a

2 material fact; and

3 ‘‘(II) no such requirements shall

4 include a requirement to inquire or

5 identify whether a prospective appli6 cant or enrollee for qualified long7 term care insurance has accident and

8 sickness insurance.

9 ‘‘(v) Section 22 (relating to appro10 priateness of recommended purchase).

11 ‘‘(vi) Section 24 (relating to standard

12 format outline of coverage).

13 ‘‘(vii) Section 25 (relating to require14 ment to deliver shopper’s guide).

15 ‘‘(B) MODEL ACT.—The following require16 ments of the model Act must be met:

17 ‘‘(i) Section 6F (relating to right to

18 return), except that such section shall also

19 apply to denials of applications and any re20 fund shall be made within 30 days of the

21 return or denial.

22 ‘‘(ii) Section 6G (relating to outline of

23 coverage).

24 ‘‘(iii) Section 6H (relating to require25 ments for certificates under group plans).
136

•S 707 IS

1 ‘‘(iv) Section 6I (relating to policy

2 summary).

3 ‘‘(v) Section 6J (relating to monthly

4 reports on accelerated death benefits).

5 ‘‘(vi) Section 7 (relating to incontest6 ability period).

7 ‘‘(C) DEFINITIONS.—For purposes of this

8 paragraph, the terms ‘model regulation’ and

9 ‘model Act’ have the meanings given such terms

10 by section 7702B(b)(6)(B).

11 ‘‘(2) DELIVERY OF POLICY.—If an application

12 for a qualified long-term care insurance policy (or

13 for a certificate under a group qualified long-term

14 care insurance policy) is approved, the issuer shall

15 deliver to the applicant (or policyholder or certifi16 cate-holder) the policy (or certificate) of insurance

17 not later than 30 days after the date of the ap18 proval.

19 ‘‘(3) INFORMATION ON DENIALS OF CLAIMS.—

20 If a claim under a qualified long-term care insurance

21 policy is denied, the issuer shall, within 60 days of

22 the date of a written request by the policyholder or

23 certificate-holder (or representative)—

24 ‘‘(A) provide a written explanation of the

25 reasons for the denial, and
137

•S 707 IS

1 ‘‘(B) make available all information di2 rectly relating to such denial.

3 ‘‘(d) DISCLOSURE.—The requirements of this sub4 section are met with respect to any qualified long-term

5 care insurance policy if the following statement is promi6 nently displayed on the front page of the policy and in

7 the outline of coverage required under subsection

8 (c)(1)(B)(ii):

9 ‘‘ ‘This is a federally qualified long-term care

10 insurance contract. The policy meets all the Federal

11 consumer protection standards necessary to receive

12 favorable tax treatment under section 7702B(b) of

13 the Internal Revenue Code of 1986.’.

14 ‘‘(e) QUALIFIED LONG-TERM CARE INSURANCE POL15 ICY DEFINED.—For purposes of this section, the term

16 ‘qualified long-term care insurance policy’ has the mean17 ing given such term by section 7702B(b).’’.

18 (b) CONFORMING AMENDMENT.—The table of sec19 tions for chapter 43 is amended by adding at the end the

20 following new item:

‘‘Sec. 4980C. Failure to meet requirements for qualified long-term

care insurance policies.’’.

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to actions taken after December

23 31, 1995.
138

•S 707 IS

1 SEC. 2002. COORDINATION WITH STATE REQUIREMENTS.

2 Nothing in this title shall be construed as preventing

3 a State from applying standards that provide greater pro4 tection of policyholders of qualified long-term care insur5 ance policies (as defined in section 7702B(b) of the Inter6 nal Revenue Code of 1986 (as added by section 1003)),

7 except that such State standards may not be inconsistent

8 or in conflict with any of the requirements of this title.

9 SEC. 2003. UNIFORM LANGUAGE AND DEFINITIONS.

10 (a) IN GENERAL.—Not later than June 30, 1996, the

11 Secretary shall promulgate standards for the use of uni12 form language and definitions in qualified long-term care

13 insurance policies (as defined in section 7702B(b) of the

14 Internal Revenue Code of 1986 (as added by section

15 1003)).

16 (b) VARIATIONS.—Standards under subsection (a)

17 may permit the use of nonuniform language to the extent

18 required to take into account differences among States in

19 the licensing of nursing facilities and other providers of

20 long-term care.
139

•S 707 IS

1 TITLE III—INCENTIVES TO EN2 COURAGE THE PURCHASE OF

3 PRIVATE INSURANCE

4 SEC. 3001. PUBLIC INFORMATION AND EDUCATION PRO5 GRAM.

6 (a) IN GENERAL.—The Secretary shall provide for

7 the education of individuals regarding—

8 (1) the risk of incurring catastrophic long-term

9 care costs;

10 (2) the coverage or lack of coverage of such

11 costs through Federal programs;

12 (3) the importance of planning for such costs;

13 and

14 (4) the benefits of securing long-term care in15 surance coverage.

16 (b) AUTHORIZATION OF APPROPRIATIONS.—There

17 are authorized to be appropriated such sums as may be

18 necessary to carry out the purposes of this section.

Æ

S 707 IS——2

S 707 IS——3

S 707 IS——4

S 707 IS——5

S 707 IS——6

S 707 IS——7
140

•S 707 IS

S 707 IS——8

S 707 IS——9