Sec. 101. Short title; table of contents. 
Sec. 102. Findings. 
TITLE II—LONG-TERM CARE FINANCING 
Sec. 201. Long-term care awareness. 
Sec. 202. Long-term care financing commission. 
Sec. 203. Considerations in MedPAC recommendations on payment for skilled 
nursing facilities. 
TITLE III—LONG-TERM CARE INSURANCE 
Sec. 301. Treatment of premiums on qualified long-term care insurance con-
tracts. 
Sec. 302. Additional consumer protections for long-term care insurance. 
TITLE IV—MISCELLANEOUS PROVISIONS 
Sec. 401. Elimination of limitation on eligibility for supplemental security in-
come benefits for persons living in publicly operated community 
residences, based on the number of residents served by the fa-
cility. 
SEC. 102. FINDINGS. 
The Congress finds the following: 
(1) The United States needs a national strategy 
for long-term care. 
(2) Seventy-seven million baby-boomers will re-
tire by 2030. 
(3) Long-term care is an ever-increasing pro-
portion of Medicaid spending. 
(4) Encouraging planning, saving, and personal 
responsibility will strengthen the Medicaid program 
for other eligible populations. 
(5) Thirty-two percent of Medicaid spending is 
on long-term care and that number is expected to in-
crease over the next 20 years as baby-boomers begin 
to retire. 
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(6) Four-fifths of projected increases in Med-
icaid expenditures are estimated to come from the 
aged and disabled, who primarily have chronic dis-
eases and are in need of long-term care services. 
(7) The United States as a whole must get 
more private dollars into the long-term care system, 
or else be saddled by skyrocketing costs to the gov-
ernment that risk the collapse of Medicaid. 
TITLE II—LONG-TERM CARE 
FINANCING 
SEC. 201. LONG-TERM CARE AWARENESS. 
(a) ‘‘OWN YOUR OWN FUTURE’’ LONG-TERM CARE 
AWARENESS CAMPAIGN.—It is the sense of the Congress 
that— 
(1) the ‘‘Own Your Own Future’’ long-term 
care awareness campaign established jointly in Jan-
uary 2005, and implemented in 8 states in 2006, by 
Office of the Assistant Secretary for Planning and 
Evaluation, the Administration on Aging, and the 
Centers for Medicare & Medicaid Services (CMS), 
working closely with the National Governors Asso-
ciation (NGA) and the National Council of State 
Legislators, should be expanded and implemented in 
all the States, and 
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(2) as part of such campaign, the Administra-
tion on Aging should distribute, upon request, the 
document entitled ‘‘Long-Term Care Planning Kit’’, 
originally published by the Department Health and 
Human Services as publication CMS–11026 (De-
cember 2002) and as updated from time to time. 
(b) ‘‘DAY
FOR
A NATIONAL CONVERSATION
ON 
LONG-TERM CARE’’.— 
(1) DESIGNATION
AND
PROMOTION.—From 
among the holidays when families normally gather 
together, the Secretary of Health and Human Serv-
ices shall designate 1 particular day each year as the 
‘‘Day for a National Conversation on Long-Term 
Care’’ and shall provide public announcements and 
activities to encourage and facilitate the opportuni-
ties for families to discuss aging and retirement 
preparation with family members who are older indi-
viduals. 
(2) AUTHORIZATION
OF
APPROPRIATIONS.— 
There is authorized to be appropriated $2,000,000 
fore each of 5 fiscal years to carry out this sub-
section. 
SEC. 202. LONG-TERM CARE FINANCING COMMISSION. 
(a) ESTABLISHMENT.—There is hereby established a 
commission to be known as the ‘‘Long-Term Care Financ-
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ing Commission’’ (in this section referred to as the ‘‘Com-
mission’’). 
(b) COMPOSITION.—The Commission shall be com-
posed of 10 members appointed by the Comptroller Gen-
eral of the United States. 
(c) DUTIES.— 
(1) ANALYSES.—The Commission shall conduct 
analyses of the financing of long-term care, includ-
ing the financing of nursing facilities. Such analyses 
shall include an analysis of each of the following: 
(A) The adequacy of Medicaid program fi-
nancing of the long term care system. 
(B) Medicare’s cross-subsidization of long- 
term care for Medicaid patients. 
(C) Total industry margins in long-term 
care. 
(D) Long-term demographic challenges. 
(E) The impact of current trends, includ-
ing staffing shortages and litigation costs, on 
long-term care spending. 
(F) Different approaches to refinements in 
the per diem RUG payment amounts and re-
lated payment methodologies under section 
1888(e) of the Social Security Act (42 U.S.C. 
1395yy(e)) . 
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(2) REPORT.—The Commission shall submit to 
Congress an annual report on its analyses. Each 
such report shall include recommendations for such 
changes in financing of long-term care as the Com-
mission deems appropriate. 
(d) TERMS, COMPENSATION, CHAIRMAN, MEETINGS, 
STAFF, AND POWERS.—The provisions of subsections 
(c)(3), (c)(4), (c)(5), (c)(6), (d), and (e) of section 1805 
of the Social Security Act (42 U.S.C. 1395b–6) (relating 
to provisions for the Medicare Payment Advisory Commis-
sion) shall apply to the Commission in the same manner 
as they apply to the Medicare Payment Advisory Commis-
sion. 
SEC. 203. CONSIDERATIONS IN MEDPAC RECOMMENDA-
TIONS ON PAYMENT FOR SKILLED NURSING 
FACILITIES. 
In making recommendations regarding payment rates 
for skilled nursing facilities, the Medicare Payment Advi-
sory Commission (established under section 1805 of the 
Social Security Act, (42 U.S.C. 1395b–6)) shall con-
sider— 
(1) the operating margins of such facilities from 
all government payers and the adequacy of all gov-
ernment funding; and 
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(2) the quality improvement efforts by such fa-
cilities. 
TITLE III—LONG-TERM CARE 
INSURANCE 
SEC. 301. TREATMENT OF PREMIUMS ON QUALIFIED LONG- 
TERM CARE INSURANCE CONTRACTS. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
additional itemized deductions) is amended by redesig-
nating section 224 as section 225 and by inserting after 
section 223 the following new section: 
‘‘SEC. 224. PREMIUMS ON QUALIFIED LONG-TERM CARE IN-
SURANCE CONTRACTS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a deduction an amount equal to 
the applicable percentage of the amount of eligible long- 
term care premiums (as defined in section 213(d)(10)) 
paid during the taxable year for coverage for the taxpayer 
and the taxpayer’s spouse and dependents under a quali-
fied long-term care insurance contract (as defined in sec-
tion 7702B(b)). 
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 
subsection (a), the applicable percentage shall be deter-
mined in accordance with the following table: 
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‘‘For taxable years beginning in calendar year— 
The ap-
plicable 
percent-
age is— 
2006, 2007, or 2008 .......................................................................
2009 ................................................................................................
2010 ................................................................................................
2011 or thereafter ..........................................................................
100. 
‘‘(c) COORDINATION WITH OTHER DEDUCTIONS.— 
Any amount paid by a taxpayer for any qualified long- 
term care insurance contract to which subsection (a) ap-
plies shall not be taken into account in computing the 
amount allowable to the taxpayer as a deduction under 
section 162(l) or 213(a).’’. 
(b) LONG-TERM CARE INSURANCE PERMITTED TO 
BE OFFERED UNDER CAFETERIA PLANS AND FLEXIBLE 
SPENDING ARRANGEMENTS.— 
(1) CAFETERIA PLANS.—The last sentence of 
section 125(f) of such Code (defining qualified bene-
fits) is amended by inserting before the period at the 
end ‘‘; except that such term shall include the pay-
ment of premiums for any qualified long-term care 
insurance contract (as defined in section 7702B) to 
the extent the amount of such payment does not ex-
ceed the eligible long-term care premiums (as de-
fined in section 213(d)(10)) for such contract’’. 
(2) FLEXIBLE
SPENDING
ARRANGEMENTS.— 
Section 106 of such Code (relating to contributions 
by an employer to accident and health plans) is 
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amended by striking subsection (c) and redesig-
nating subsection (d) as subsection (c). 
(c) CONFORMING AMENDMENTS.— 
(1) Section 62(a) of such Code is amended by 
inserting before the last sentence at the end the fol-
lowing new paragraph: 
‘‘(21) PREMIUMS
ON
QUALIFIED
LONG-TERM 
CARE
INSURANCE
CONTRACTS.—The deduction al-
lowed by section 224.’’. 
(2) 
Sections 
223(b)(4)(B), 
223(d)(4)(C), 
223(f)(3)(B), 
3231(e)(11), 
3306(b)(18), 
3401(a)(22), 4973(g)(1), and 4973(g)(2)(B)(i) of 
such Code are each amended by striking ‘‘section 
106(d)’’ and inserting ‘‘section 106(c)’’. 
(3) Section 6041 of such Code is amended— 
(A) in subsection (f)(1) by striking ‘‘(as 
defined in section 106(c)(2))’’, and 
(B) by adding at the end the following new 
subsection: 
‘‘(h) FLEXIBLE
SPENDING
ARRANGEMENT
DE-
FINED.—For purposes of this section, a flexible spending 
arrangement is a benefit program which provides employ-
ees with coverage under which— 
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‘‘(1) specified incurred expenses may be reim-
bursed (subject to reimbursement maximums and 
other reasonable conditions), and 
‘‘(2) the maximum amount of reimbursement 
which is reasonably available to a participant for 
such coverage is less than 500 percent of the value 
of such coverage. 
In the case of an insured plan, the maximum amount rea-
sonably available shall be determined on the basis of the 
underlying coverage.’’. 
(4) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by 
striking the last item and inserting the following 
new items: 
‘‘Sec. 224. Premiums on qualified long-term care insurance contracts. 
‘‘Sec. 225. Cross reference.’’. 
(d) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to taxable years beginning after Decem-
ber 31, 2005. 
(2) CAFETERIA PLANS AND FLEXIBLE SPEND-
ING
ARRANGEMENTS.—The amendments made by 
subsection (b) shall apply to taxable years beginning 
after December 31, 2007. 
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SEC. 302. ADDITIONAL CONSUMER PROTECTIONS FOR 
LONG-TERM CARE INSURANCE. 
(a) ADDITIONAL
PROTECTIONS
APPLICABLE
TO 
LONG-TERM CARE INSURANCE.—Subparagraphs (A) and 
(B) of section 7702B(g)(2) of the Internal Revenue Code 
of 1986 (relating to requirements of model regulation and 
Act) are amended to read as follows: 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met with respect to any con-
tract if such contract meets— 
‘‘(i) MODEL
REGULATION.—The fol-
lowing requirements of the model regula-
tion: 
‘‘(I) Section 6A (relating to guar-
anteed renewal or noncancellability), 
other than paragraph (5) thereof, and 
the requirements of section 6B of the 
model Act relating to such section 6A. 
‘‘(II) Section 6B (relating to pro-
hibitions on limitations and exclu-
sions) other than paragraph (7) there-
of. 
‘‘(III) Section 6C (relating to ex-
tension of benefits). 
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‘‘(IV) Section 6D (relating to 
continuation or conversion of cov-
erage). 
‘‘(V) Section 6E (relating to dis-
continuance and replacement of poli-
cies). 
‘‘(VI) Section 7 (relating to unin-
tentional lapse). 
‘‘(VII) Section 8 (relating to dis-
closure), other than sections 8F, 8G, 
8H, and 8I thereof. 
‘‘(VIII) Section 11 (relating to 
prohibitions against post-claims un-
derwriting). 
‘‘(IX) Section 12 (relating to 
minimum standards). 
‘‘(X) Section 13 (relating to re-
quirement to offer inflation protec-
tion). 
‘‘(XI) Section 25 (relating to pro-
hibition against preexisting conditions 
and probationary periods in replace-
ment policies or certificates). 
‘‘(ii) MODEL ACT.—The following re-
quirements of the model Act: 
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‘‘(I) Section 6C (relating to pre-
existing conditions). 
‘‘(II) Section 6D (relating to 
prior hospitalization). 
‘‘(B) DEFINITIONS.—For purposes of this 
paragraph— 
‘‘(i) MODEL PROVISIONS.—The terms 
‘model regulation’ and ‘model Act’ mean 
the long-term care insurance model regula-
tion, and the long-term care insurance 
model Act, respectively, promulgated by 
the National Association of Insurance 
Commissioners (as adopted as of October 
2000). 
‘‘(ii) COORDINATION.—Any provision 
of the model regulation or model Act listed 
under clause (i) or (ii) of subparagraph 
(A) shall be treated as including any other 
provision of such regulation or Act nec-
essary to implement the provision. 
‘‘(iii) 
DETERMINATION.—For 
pur-
poses of this section and section 4980C, 
the determination of whether any require-
ment of a model regulation or the model 
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Act has been met shall be made by the 
Secretary.’’. 
(b) 
EXCISE
TAX.—Paragraph 
(1) 
of 
section 
4980C(c) of the Internal Revenue Code of 1986 (relating 
to requirements of model provisions) is amended to read 
as follows: 
‘‘(1) REQUIREMENTS OF MODEL PROVISIONS.— 
‘‘(A) MODEL REGULATION.—The following 
requirements of the model regulation must be 
met: 
‘‘(i) Section 9 (relating to required 
disclosure of rating practices to consumer). 
‘‘(ii) Section 14 (relating to applica-
tion forms and replacement coverage). 
‘‘(iii) Section 15 (relating to reporting 
requirements). 
‘‘(iv) Section 22 (relating to filing re-
quirements for marketing). 
‘‘(v) Section 23 (relating to standards 
for marketing), including inaccurate com-
pletion of medical histories, other than 
paragraphs (1), (6), and (9) of section 
23C. 
‘‘(vi) Section 24 (relating to suit-
ability). 
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‘‘(vii) Section 29 (relating to standard 
format outline of coverage). 
‘‘(viii) Section 30 (relating to require-
ment to deliver shopper’s guide). 
The requirements referred to in clause (vi) shall 
not include those portions of the personal work-
sheet described in Appendix B relating to con-
sumer protection requirements not imposed by 
section 4980C or 7702B. 
‘‘(B) MODEL ACT.—The following require-
ments of the model Act must be met: 
‘‘(i) Section 6F (relating to right to 
return). 
‘‘(ii) Section 6G (relating to outline of 
coverage). 
‘‘(iii) Section 6H (relating to require-
ments for certificates under group plans). 
‘‘(iv) Section 6J (relating to policy 
summary). 
‘‘(v) Section 6K (relating to monthly 
reports on accelerated death benefits). 
‘‘(vi) Section 7 (relating to incontest-
ability period). 
‘‘(C) DEFINITIONS.—For purposes of this 
paragraph, the terms ‘model regulation’ and 
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