II

106TH CONGRESS

2D SESSION S. 2420

To amend title 5, United States Code, to provide for the establishment

of a program under which long-term care insurance is made available

to Federal employees, members of the uniformed services, and civilian

and military retirees, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 13, 2000

Mr. GRASSLEY (for himself, Ms. MIKULSKI, Ms. COLLINS, and Mr. CLELAND)

introduced the following bill; which was read twice and referred to the

Committee on Governmental Affairs

A BILL

To amend title 5, United States Code, to provide for the

establishment of a program under which long-term care

insurance is made available to Federal employees, members of the uniformed services, and civilian and military

retirees, and for other purposes.

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.

4 This Act may be cited as the ‘‘Long-Term Care Secu5 rity Act’’.
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1 SEC. 2. LONG-TERM CARE INSURANCE.

2 (a) IN GENERAL.—Subpart G of part III of title 5,

3 United States Code, is amended by adding at the end the

4 following:

5 ‘‘CHAPTER 90—LONG-TERM CARE

6 INSURANCE

‘‘Sec.

‘‘9001. Definitions.

‘‘9002. Availability of insurance.

‘‘9003. Contracting authority.

‘‘9004. Financing.

‘‘9005. Preemption.

‘‘9006. Studies, reports, and audits.

‘‘9007. Jurisdiction of courts.

‘‘9008. Administrative functions.

‘‘9009. Cost accounting standards.

7 ‘‘§ 9001. Definitions

8 For purposes of this chapter:

9 ‘‘(1) EMPLOYEE.—The term ‘employee’

10 means—

11 ‘‘(A) an employee as defined by section

12 8901(1); and

13 ‘‘(B) an individual described in section

14 2105(e);

15 but does not include an individual employed by the

16 government of the District of Columbia.

17 ‘‘(2) ANNUITANT.—The term ‘annuitant’ has

18 the meaning such term would have under paragraph

19 (3) of section 8901 if, for purposes of such para20 graph, the term ‘employee’ were considered to have
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1 the meaning given to it under paragraph (1) of this

2 subsection.

3 ‘‘(3) MEMBER OF THE UNIFORMED SERV4 ICES.—The term ‘member of the uniformed services’

5 means a member of the uniformed services, other

6 than a retired member of the uniformed services.

7 ‘‘(4) RETIRED MEMBER OF THE UNIFORMED

8 SERVICES.—The term ‘retired member of the uni9 formed services’ means a member or former member

10 of the uniformed services entitled to retired or re11 tainer pay.

12 ‘‘(5) QUALIFIED RELATIVE.—The term ‘quali13 fied relative’ means each of the following:

14 ‘‘(A) The spouse of an individual described

15 in paragraph (1), (2), (3), or (4).

16 ‘‘(B) A parent, stepparent, or parent-in17 law of an individual described in paragraph (1)

18 or (3).

19 ‘‘(C) A child (including an adopted child, a

20 stepchild, or, to the extent the Office of Per21 sonnel Management by regulation provides, a

22 foster child) of an individual described in para23 graph (1), (2), (3), or (4), if such child is at

24 least 18 years of age.
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1 ‘‘(D) An individual having such other rela2 tionship to an individual described in paragraph

3 (1), (2), (3), or (4) as the Office may by regula4 tion prescribe.

5 ‘‘(6) ELIGIBLE INDIVIDUAL.—The term ‘eligible

6 individual’ refers to an individual described in para7 graph (1), (2), (3), (4), or (5).

8 ‘‘(7) QUALIFIED CARRIER.—The term ‘qualified

9 carrier’ means an insurance company (or consortium

10 of insurance companies) that is licensed to issue

11 long-term care insurance in all States, taking any

12 subsidiaries of such a company into account (and, in

13 the case of a consortium, considering the member

14 companies and any subsidiaries thereof, collectively).

15 ‘‘(8) STATE.—The term ‘State’ includes the

16 District of Columbia.

17 ‘‘(9) QUALIFIED LONG-TERM CARE INSURANCE

18 CONTRACT.—The term ‘qualified long-term care in19 surance contract’ has the meaning given such term

20 by section 7702B of the Internal Revenue Code of

21 1986.

22 ‘‘(10) APPROPRIATE SECRETARY.—The term

23 ‘appropriate Secretary’ means—

24 ‘‘(A) except as otherwise provided in this

25 paragraph, the Secretary of Defense;
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1 ‘‘(B) with respect to the Coast Guard when

2 it is not operating as a service of the Navy, the

3 Secretary of Transportation;

4 ‘‘(C) with respect to the commissioned

5 corps of the National Oceanic and Atmospheric

6 Administration, the Secretary of Commerce;

7 and

8 ‘‘(D) with respect to the commissioned

9 corps of the Public Health Service, the Sec10 retary of Health and Human Services.

11 ‘‘§ 9002. Availability of insurance

12 ‘‘(a) IN GENERAL.—The Office of Personnel Manage13 ment shall establish and, in consultation with the appro14 priate Secretaries, administer a program through which

15 an individual described in paragraph (1), (2), (3), (4), or

16 (5) of section 9001 may obtain long-term care insurance

17 coverage under this chapter for such individual.

18 ‘‘(b) GENERAL REQUIREMENTS.—Long-term care in19 surance may not be offered under this chapter unless—

20 ‘‘(1) the only coverage provided is under quali21 fied long-term care insurance contracts; and

22 ‘‘(2) each insurance contract under which any

23 such coverage is provided is issued by a qualified

24 carrier.
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1 ‘‘(c) DOCUMENTATION REQUIREMENT.—As a condi2 tion for obtaining long-term care insurance coverage under

3 this chapter based on one’s status as a qualified relative,

4 an applicant shall provide documentation to demonstrate

5 the relationship, as prescribed by the Office.

6 ‘‘(d) UNDERWRITING STANDARDS.—

7 ‘‘(1) DISQUALIFYING CONDITION.—Nothing in

8 this chapter shall be considered to require that long9 term care insurance coverage be made available in

10 the case of any individual who would be eligible for

11 benefits immediately.

12 ‘‘(2) SPOUSAL PARITY.—For the purpose of un13 derwriting standards, a spouse of an individual de14 scribed in paragraph (1), (2), (3), or (4) of section

15 9001 shall, as nearly as practicable, be treated like

16 that individual.

17 ‘‘(3) GUARANTEED ISSUE.—Nothing in this

18 chapter shall be considered to require that long-term

19 care insurance coverage be guaranteed to an eligible

20 individual.

21 ‘‘(4) REQUIREMENT THAT CONTRACT BE FULLY

22 INSURED.—In addition to the requirements other23 wise applicable under section 9001(9), in order to be

24 considered a qualified long-term care insurance con25 tract for purposes of this chapter, a contract must
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1 be fully insured, whether through reinsurance with

2 other companies or otherwise.

3 ‘‘(5) HIGHER STANDARDS ALLOWABLE.—Noth4 ing in this chapter shall, in the case of an individual

5 applying for long-term care insurance coverage

6 under this chapter after the expiration of such indi7 vidual’s first opportunity to enroll, preclude the ap8 plication of underwriting standards more stringent

9 than those that would have applied if that oppor10 tunity had not yet expired.

11 ‘‘(e) GUARANTEED RENEWABILITY.—The benefits

12 and coverage made available to eligible individuals under

13 any insurance contract under this chapter shall be guaran14 teed renewable (as defined by section 7A(2) of the model

15 regulations described in section 7702B(g)(2) of the Inter16 nal Revenue Code of 1986), including the right to have

17 insurance remain in effect so long as premiums continue

18 to be timely made. However, the authority to revise pre19 miums under this chapter shall be available only on a class

20 basis and only to the extent otherwise allowable under sec21 tion 9003(b).

22 ‘‘§ 9003. Contracting authority

23 ‘‘(a) IN GENERAL.—The Office of Personnel Manage24 ment shall, without regard to section 5 of title 41 or any

25 other statute requiring competitive bidding, contract with
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1 1 or more qualified carriers for a policy or policies of long2 term care insurance. The Office shall ensure that each re3 sulting contract (hereinafter in this chapter referred to as

4 a ‘master contract’) is awarded on the basis of contractor

5 qualifications, price, and reasonable competition.

6 ‘‘(b) TERMS AND CONDITIONS.—

7 ‘‘(1) IN GENERAL.—Each master contract

8 under this chapter shall contain—

9 ‘‘(A) a detailed statement of the benefits

10 offered (including any maximums, limitations,

11 exclusions, and other definitions of benefits);

12 ‘‘(B) the premiums charged (including any

13 limitations or other conditions on their subse14 quent adjustment);

15 ‘‘(C) the terms of the enrollment period;

16 and

17 ‘‘(D) such other terms and conditions as

18 may be mutually agreed to by the Office and

19 the carrier involved, consistent with the require20 ments of this chapter.

21 ‘‘(2) PREMIUMS.—Premiums charged under

22 each master contract entered into under this section

23 shall reasonably and equitably reflect the cost of the

24 benefits provided, as determined by the Office. The

25 premiums shall not be adjusted during the term of
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1 the contract unless mutually agreed to by the Office

2 and the carrier.

3 ‘‘(3) NONRENEWABILITY.—Master contracts

4 under this chapter may not be made automatically

5 renewable.

6 ‘‘(c) PAYMENT OF REQUIRED BENEFITS; DISPUTE

7 RESOLUTION.—

8 ‘‘(1) IN GENERAL.—Each master contract

9 under this chapter shall require the carrier to

10 agree—

11 ‘‘(A) to provide payments or benefits to an

12 eligible individual if such individual is entitled

13 thereto under the terms of the contract; and

14 ‘‘(B) with respect to disputes regarding

15 claims for payments or benefits under the terms

16 of the contract—

17 ‘‘(i) to establish internal procedures

18 designed to expeditiously resolve such dis19 putes; and

20 ‘‘(ii) to establish, for disputes not re21 solved through procedures under clause (i),

22 procedures for 1 or more alternative means

23 of dispute resolution involving independent

24 third-party review under appropriate cir-
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1 cumstances by entities mutually acceptable

2 to the Office and the carrier.

3 ‘‘(2) ELIGIBILITY.—A carrier’s determination

4 as to whether or not a particular individual is eligi5 ble to obtain long-term care insurance coverage

6 under this chapter shall be subject to review only to

7 the extent and in the manner provided in the appli8 cable master contract.

9 ‘‘(3) OTHER CLAIMS.—For purposes of apply10 ing the Contract Disputes Act of 1978 to disputes

11 arising under this chapter between a carrier and the

12 Office—

13 ‘‘(A) the agency board having jurisdiction

14 to decide an appeal relative to such a dispute

15 shall be such board of contract appeals as the

16 Director of the Office of Personnel Management

17 shall specify in writing (after appropriate ar18 rangements, as described in section 8(c) of such

19 Act); and

20 ‘‘(B) the district courts of the United

21 States shall have original jurisdiction, concur22 rent with the United States Court of Federal

23 Claims, of any action described in section

24 10(a)(1) of such Act relative to such a dispute.
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1 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in

2 this chapter shall be considered to grant authority

3 for the Office or a third-party reviewer to change the

4 terms of any contract under this chapter.

5 ‘‘(d) DURATION.—

6 ‘‘(1) IN GENERAL.—Each master contract

7 under this chapter shall be for a term of 7 years,

8 unless terminated earlier by the Office in accordance

9 with the terms of such contract. However, the rights

10 and responsibilities of the enrolled individual, the in11 surer, and the Office (or duly designated third-party

12 administrator) under such contract shall continue

13 with respect to such individual until the termination

14 of coverage of the enrolled individual or the effective

15 date of a successor contract thereto.

16 ‘‘(2) EXCEPTION.—

17 ‘‘(A) SHORTER DURATION.—In the case of

18 a master contract entered into before the end of

19 the period described in subparagraph (B), para20 graph (1) shall be applied by substituting ‘end21 ing on the last day of the 7-year period de22 scribed in paragraph (2)(B)’ for ‘of 7 years’.

23 ‘‘(B) DEFINITION.—The period described

24 in this subparagraph is the 7-year period begin25 ning on the earliest date as of which any long-
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1 term care insurance coverage under this chapter

2 becomes effective.

3 ‘‘(3) CONGRESSIONAL NOTIFICATION.—No later

4 than 180 days after receiving the second report re5 quired under section 9006(c), the President (or his

6 designee) shall submit to the Committees on Govern7 ment Reform and on Armed Services of the House

8 of Representatives and the Committees on Govern9 mental Affairs and on Armed Services of the Senate,

10 a written recommendation as to whether the pro11 gram under this chapter should be continued with12 out modification, terminated, or restructured. Dur13 ing the 180-day period following the date on which

14 the President (or his designee) submits the rec15 ommendation required under the preceding sentence,

16 the Office of Personnel Management may not take

17 any steps to rebid or otherwise contract for any cov18 erage to be available at any time following the expi19 ration of the 7-year period described in paragraph

20 (2)(B).

21 ‘‘(4) FULL PORTABILITY.—Each master con22 tract under this chapter shall include such provisions

23 as may be necessary to ensure that, once an indi24 vidual becomes duly enrolled, long-term care insur25 ance coverage obtained by such individual pursuant
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1 to that enrollment shall not be terminated due to

2 any change in status (such as separation from Gov3 ernment service or the uniformed services) or ceas4 ing to meet the requirements for being considered a

5 qualified relative (whether as a result of dissolution

6 of marriage or otherwise).

7 ‘‘§ 9004. Financing

8 ‘‘(a) IN GENERAL.—Each eligible individual obtain9 ing long-term care insurance coverage under this chapter

10 shall be responsible for 100 percent of the premiums for

11 such coverage.

12 ‘‘(b) WITHHOLDINGS.—

13 ‘‘(1) IN GENERAL.—The amount necessary to

14 pay the premiums for enrollment may—

15 ‘‘(A) in the case of an employee, be with16 held from the pay of such employee;

17 ‘‘(B) in the case of an annuitant, be with18 held from the annuity of such annuitant;

19 ‘‘(C) in the case of a member of the uni20 formed services described in section 9001(3), be

21 withheld from the basic pay of such member;

22 and

23 ‘‘(D) in the case of a retired member of

24 the uniformed services described in section
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1 9001(4), be withheld from the retired pay or re2 tainer pay payable to such member.

3 ‘‘(2) VOLUNTARY WITHHOLDINGS FOR QUALI4 FIED RELATIVES.—Withholdings to pay the pre5 miums for enrollment of a qualified relative may,

6 upon election of the appropriate eligible individual

7 (described in section 9001(1)–(4)), be withheld

8 under paragraph (1) to the same extent and in the

9 same manner as if enrollment were for such indi10 vidual.

11 ‘‘(c) DIRECT PAYMENTS.—All amounts withheld

12 under this section shall be paid directly to the carrier.

13 ‘‘(d) OTHER FORMS OF PAYMENT.—Any enrollee

14 who does not elect to have premiums withheld under sub15 section (b) or whose pay, annuity, or retired or retainer

16 pay (as referred to in subsection (b)(1)) is insufficient to

17 cover the withholding required for enrollment (or who is

18 not receiving any regular amounts from the Government,

19 as referred to in subsection (b)(1), from which any such

20 withholdings may be made, and whose premiums are not

21 otherwise being provided for under subsection (b)(2)) shall

22 pay an amount equal to the full amount of those charges

23 directly to the carrier.

24 ‘‘(e) SEPARATE ACCOUNTING REQUIREMENT.—Each

25 carrier participating under this chapter shall maintain
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1 records that permit it to account for all amounts received

2 under this chapter (including investment earnings on

3 those amounts) separate and apart from all other funds.

4 ‘‘(f) REIMBURSEMENTS.—

5 ‘‘(1) REASONABLE INITIAL COSTS.—

6 ‘‘(A) IN GENERAL.—The Employees’ Life

7 Insurance Fund is available, without fiscal year

8 limitation, for reasonable expenses incurred by

9 the Office of Personnel Management in admin10 istering this chapter before the start of the 7-

11 year period described in section 9003(d)(2)(B),

12 including reasonable implementation costs.

13 ‘‘(B) REIMBURSEMENT REQUIREMENT.—

14 Such Fund shall be reimbursed, before the end

15 of the first year of that 7-year period, for all

16 amounts obligated or expended under subpara17 graph (A) (including lost investment income).

18 Such reimbursement shall be made by carriers,

19 on a pro rata basis, in accordance with appro20 priate provisions which shall be included in

21 master contracts under this chapter.

22 ‘‘(2) SUBSEQUENT COSTS.—

23 ‘‘(A) IN GENERAL.—There is hereby estab24 lished in the Employees’ Life Insurance Fund a

25 Long-Term Care Administrative Account, which
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1 shall be available to the Office, without fiscal

2 year limitation, to defray reasonable expenses

3 incurred by the Office in administering this

4 chapter after the start of the 7-year period de5 scribed in section 9003(d)(2)(B).

6 ‘‘(B) REIMBURSEMENT REQUIREMENT.—

7 Each master contract under this chapter shall

8 include appropriate provisions under which the

9 carrier involved shall, during each year, make

10 such periodic contributions to the Long-Term

11 Care Administrative Account as necessary to

12 ensure that the reasonable anticipated expenses

13 of the Office in administering this chapter dur14 ing such year (adjusted to reconcile for any ear15 lier overestimates or underestimates under this

16 subparagraph) are defrayed.

17 ‘‘§ 9005. Preemption

18 ‘‘The terms of any contract under this chapter which

19 relate to the nature, provision, or extent of coverage or

20 benefits (including payments with respect to benefits)

21 shall supersede and preempt any State or local law, or

22 any regulation issued thereunder, which relates to long23 term care insurance or contracts.
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1 ‘‘§ 9006. Studies, reports, and audits

2 ‘‘(a) PROVISIONS RELATING TO CARRIERS.—Each

3 master contract under this chapter shall contain provi4 sions requiring the carrier—

5 ‘‘(1) to furnish such reasonable reports as the

6 Office of Personnel Management determines to be

7 necessary to enable it to carry out its functions

8 under this chapter; and

9 ‘‘(2) to permit the Office and representatives of

10 the General Accounting Office to examine such

11 records of the carrier as may be necessary to carry

12 out the purposes of this chapter.

13 ‘‘(b) PROVISIONS RELATING TO FEDERAL AGEN14 CIES.—Each Federal agency shall keep such records,

15 make such certifications, and furnish the Office, the car16 rier, or both, with such information and reports as the

17 Office may require.

18 ‘‘(c) REPORTS BY THE GENERAL ACCOUNTING OF19 FICE.—The General Accounting Office shall prepare and

20 submit to the President, the Office of Personnel Manage21 ment, and each House of Congress, before the end of the

22 third and fifth years during which the program under this

23 chapter is in effect, a written report evaluating such pro24 gram. Each such report shall include an analysis of the

25 competitiveness of the program, as compared to both

26 group and individual coverage generally available to indi-
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1 viduals in the private insurance market. The Office shall

2 cooperate with the General Accounting Office to provide

3 periodic evaluations of the program.

4 ‘‘§ 9007. Jurisdiction of courts

5 ‘‘The district courts of the United States have origi6 nal jurisdiction of a civil action or claim described in para7 graph (1) or (2) of section 9003(c), after such administra8 tive remedies as required under such paragraph (1) or (2)

9 (as applicable) have been exhausted, but only to the extent

10 judicial review is not precluded by any dispute resolution

11 or other remedy under this chapter.

12 ‘‘§ 9008. Administrative functions

13 ‘‘(a) IN GENERAL.—The Office of Personnel Manage14 ment shall prescribe regulations necessary to carry out

15 this chapter.

16 ‘‘(b) ENROLLMENT PERIODS.—The Office shall pro17 vide for periodic coordinated enrollment, promotion, and

18 education efforts in consultation with the carriers.

19 ‘‘(c) CONSULTATION.—Any regulations necessary to

20 effect the application and operation of this chapter with

21 respect to an eligible individual described in paragraph (3)

22 or (4) of section 9001, or a qualified relative thereof, shall

23 be prescribed by the Office in consultation with the appro24 priate Secretary.
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1 ‘‘(d) INFORMED DECISIONMAKING.—The Office shall

2 ensure that each eligible individual applying for long-term

3 care insurance under this chapter is furnished the infor4 mation necessary to enable that individual to evaluate the

5 advantages and disadvantages of obtaining long-term care

6 insurance under this chapter, including the following:

7 ‘‘(1) The principal long-term care benefits and

8 coverage available under this chapter, and how those

9 benefits and coverage compare to the range of long10 term care benefits and coverage otherwise generally

11 available.

12 ‘‘(2) Representative examples of the cost of

13 long-term care, and the sufficiency of the benefits

14 available under this chapter relative to those costs.

15 The information under this paragraph shall also

16 include—

17 ‘‘(A) the projected effect of inflation on the

18 value of those benefits; and

19 ‘‘(B) a comparison of the inflation-adjusted

20 value of those benefits to the projected future

21 costs of long-term care.

22 ‘‘(3) Any rights individuals under this chapter

23 may have to cancel coverage, and to receive a total

24 or partial refund of premiums. The information

25 under this paragraph shall also include—
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1 ‘‘(A) the projected number or percentage

2 of individuals likely to fail to maintain their

3 coverage (determined based on lapse rates expe4 rienced under similar group long-term care in5 surance programs and, when available, this

6 chapter); and

7 ‘‘(B)(i) a summary description of how and

8 when premiums for long-term care insurance

9 under this chapter may be raised;

10 ‘‘(ii) the premium history during the last

11 10 years for each qualified carrier offering long12 term care insurance under this chapter; and

13 ‘‘(iii) if cost increases are anticipated, the

14 projected premiums for a typical insured indi15 vidual at various ages.

16 ‘‘(4) The advantages and disadvantages of long17 term care insurance generally, relative to other

18 means of accumulating or otherwise acquiring the

19 assets that may be needed to meet the costs of long20 term care, such as through tax-qualified retirement

21 programs or other investment vehicles.

22 ‘‘§ 9009. Cost accounting standards

23 ‘‘The cost accounting standards issued pursuant to

24 section 26(f) of the Office of Federal Procurement Policy
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1 Act (41 U.S.C. 422(f)) shall not apply with respect to a

2 long-term care insurance contract under this chapter.’’.

3 (b) CONFORMING AMENDMENT.—The analysis for

4 part III of title 5, United States Code, is amended by add5 ing at the end of subpart G the following:

‘‘90. Long-Term Care Insurance ......................................................... 9001.’’.

6 SEC. 3. EFFECTIVE DATE.

7 The Office of Personnel Management shall take such

8 measures as may be necessary to ensure that long-term

9 care insurance coverage under title 5, United States Code,

10 as amended by this Act, may be obtained in time to take

11 effect not later than the first day of the first applicable

12 pay period of the first fiscal year which begins after the

13 end of the 18-month period beginning on the date of en14 actment of this Act.

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