I
104TH CONGRESS
1ST SESSION
H. R. 1221
To amend the Public Health Service Act to establish Federal standards
for long-term care insurance policies, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 14, 1995
Mr. WYDEN (for himself, Mrs. MORELLA, Mr. KENNEDY of Massachusetts,
and Mr. REGULA) introduced the following bill; which was referred to the
Committee on Commerce
A BILL
To amend the Public Health Service Act to establish Federal
standards for long-term care insurance policies, and for
other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Long-Term Care In-
surance Consumer Protection Act of 1995’’.
SEC. 2. ESTABLISHMENT OF FEDERAL STANDARDS FOR
LONG-TERM CARE INSURANCE POLICIES.
The Public Health Service Act (42 U.S.C. 201 et
seq.) is amended by adding at the end the following:
‘‘TITLE XXVII—LONG-TERM CARE
INSURANCE STANDARDS
‘‘SEC. 2701. IMPLEMENTATION OF POLICY STANDARDS.
‘‘(a) IN GENERAL.—
‘‘(1) NEW ISSUES.—No long-term care insur-
ance policy (as defined in section 2709) may be is-
sued, sold, or offered for sale in a State on or after
the date specified in subsection (d) unless—
‘‘(A) the Secretary determines that the
State has established a regulatory program
that—
‘‘(i) provides for the application and
enforcement of the standards established
under subsection (c); and
‘‘(ii) complies with the requirements
of subsection (e);
by the date specified in subsection (d), and the
policy has been approved by the State commis-
sioner or superintendent of insurance under
such program; or
‘‘(B) if the State has not established such
a program, the policy has been certified by the
Secretary (in accordance with such procedures
as the Secretary establishes) as meeting the
standards established under subsection (c).
For purposes of this subsection, the advertising or
soliciting with respect to a policy, directly or indi-
rectly, shall be deemed the offering for sale of the
policy.
‘‘(2) REVIEW
OF
STATE
REGULATORY
PRO-
GRAMS.—The Secretary periodically shall review reg-
ulatory programs described in paragraph (1)(A) to
determine if they continue to provide for the applica-
tion and enforcement of the standards established
under subsection (c).
‘‘(b) SANCTIONS.—Any person who issues or renews
a policy, on or after the date specified in subsection (d),
in violation of subsection (a), is subject to a civil money
penalty of not to exceed $25,000 for each such violation.
The provisions of section 1128A of the Social Security Act
(other than the first sentence of subsection (a) and other
than subsection (b)) shall apply to a civil money penalty
under this subsection in the same manner as such provi-
sions apply to a penalty or proceeding under such section
1128A(a).
‘‘(c) PROMULGATION OF STANDARDS.—
‘‘(1) IN GENERAL.—If, within 12 months after
the date of the enactment of this title, the National
Association of Insurance Commissioners (in this title
referred to as the ‘NAIC’) promulgates model stand-
ards that incorporate the requirements of sections
2704 through 2708, such standards shall apply
under subsection (a).
‘‘(2) DEFAULT.—If the NAIC does not promul-
gate the model standards under paragraph (1) by
the deadline established in that subsection, the Sec-
retary shall promulgate, within 12 months after such
deadline, a regulation that provides standards that
incorporate the requirements of sections 2704
through 2708 and such standards shall be applied
under subsection (a).
‘‘(3) CONSULTATION.—In establishing stand-
ards under this subsection, the NAIC or Secretary
shall consult with a working group composed of rep-
resentatives of issuers of long-term care insurance
policies, consumer groups, and other qualified indi-
viduals. Such representatives shall be selected in a
manner so as to assure balanced representation
among the interested groups.
‘‘(4) RELATION
TO
STATE
LAW.—Nothing in
this title shall be construed as preventing a State
from applying standards that provide greater protec-
tion to policyholders of long-term care insurance
policies.
‘‘(d) DEADLINE
FOR
APPLICATION
OF
STAND-
ARDS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the date specified in this subsection for a State is—
‘‘(A) the date the State adopts the stand-
ards established under subsection (c); or
‘‘(B) 1 year after the date such standards
are first established;
whichever is earlier.
‘‘(2) STATE REQUIRING LEGISLATION.—In the
case of a State which the Secretary identifies, in
consultation with the NAIC, as—
‘‘(A) requiring State legislation (other than
legislation appropriating funds) in order for the
standards established under subsection (c) to be
applied; but
‘‘(B) having a legislature which is not
scheduled to meet in 1997 in a legislative ses-
sion in which such legislation may be consid-
ered;
the date specified in this subsection is the first day
of the first calendar quarter beginning after the
close of the first legislative session of the State legis-
lature that begins on or after January 1, 1997. For
purposes of the previous sentence, in the case of a
State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate reg-
ular session of the State legislature.
‘‘(e) ADDITIONAL REQUIREMENTS FOR APPROVAL OF
STATE REGULATORY PROGRAMS.—For purposes of sub-
section (a)(1)(A)(ii), the requirements of this subsection
for a State regulatory program are as follows:
‘‘(1) CONSUMER ACCESS TO COMPLIANCE IN-
FORMATION.—
‘‘(A) IN
GENERAL.—The program must
provide for consumer access to complaints filed
with the State commissioner or superintendent
of insurance with respect to long-term care in-
surance policies.
‘‘(B) CONFIDENTIALITY.—The access pro-
vided under subparagraph (A) shall be limited
to the extent required to protect the confiden-
tiality of the identity of individual policyholders.
‘‘(2) ACCESS
TO
OTHER
INFORMATION.—The
program must provide for consumer access to infor-
mation reported under section 2703(d).
‘‘(3) PROCESS FOR APPROVAL OF PREMIUMS.—
The program must provide for a process for approv-
ing or disapproving proposed premium increases
with respect to long-term care insurance policies and
must establish a policy for the holding of public
hearings prior to approval of such a premium in-
crease. No such premium increase shall be approved
(or deemed approved) unless the proposed increase
is accompanied by an actuarial memorandum which
supports the increase and which contains such infor-
mation as may be required under the standards
under section 2701(c).
‘‘SEC. 2702. REGULATION OF SALES PRACTICES.
‘‘(a) DUTY OF GOOD FAITH AND FAIR DEALING.—
‘‘(1) IN GENERAL.—Each individual who is sell-
ing or offering for sale a long-term care insurance
policy has the duty of good faith and fair dealing to
the purchaser or potential purchaser of such a pol-
icy.
‘‘(2) PROHIBITED PRACTICES.—An individual is
considered to have violated paragraph (1) if the indi-
vidual engages in any of the following practices:
‘‘(A) TWISTING.—Knowingly making any
misleading representation or incomplete or
fraudulent comparison of any health care insur-
ance policy or insurers for the purpose of induc-
ing, or tending to induce, any person to retain
or effect a change with respect to a long-term
care insurance policy.
‘‘(B) HIGH PRESSURE TACTICS.—Employ-
ing any method of marketing having the effect
of, or intending to, induce the purchase of long-
term care insurance policy through undue pres-
sure.
‘‘(C) COLD LEAD ADVERTISING.—Making
use directly or indirectly of any method of mar-
keting which fails to disclose in a conspicuous
manner that a purpose of the method of mar-
keting is solicitation of insurance and that con-
tact will be made by an insurance agent or in-
surance company.
‘‘(b) COMPLETION OF MEDICAL HISTORIES PROHIB-
ITED.—A person who is selling or offering for sale a long-
term care insurance policy may not complete the medical
history portion of an application.
‘‘(c) PROHIBITION OF SALE OR ISSUANCE TO MEDIC-
AID BENEFICIARIES.—A person may not knowingly sell or
issue a long-term care insurance policy to an individual
who is eligible for medical assistance (other than only as
a qualified medicare beneficiary) under title XIX of the
Social Security Act.
‘‘(d) PROHIBITION OF SALE OR ISSUANCE OF DUPLI-
CATE SERVICE BENEFIT POLICIES.—A person may not
sell or issue a service-benefit long-term care insurance pol-
icy—
‘‘(1) knowing that the policy provides for cov-
erage that duplicates coverage already provided in
another service-benefit long-term care insurance pol-
icy (unless the policy is intended to replace such
other policy); or
‘‘(2) for the benefit of an individual unless the
individual (or a representative of the individual) pro-
vides a written statement to the effect that the cov-
erage (A) does not duplicate other coverage in effect
under a service-benefit long-term care insurance pol-
icy or (B) will replace another service-benefit long-
term care insurance policy.
In this subsection, the term ‘service-benefit long-term care
insurance policy’ means a long-term care insurance policy
which provides for benefits based on the amount of ex-
penses incurred, rather than on an indemnity basis.
‘‘(e) PROVISION OF OUTLINE OF COVERAGE.—No
person may sell or offer for a sale a long-term care insur-
ance policy without providing to the purchaser or potential
purchaser (or representative) an outline of coverage that
complies with the standards established under section
2701(c).
‘‘(f) INFORMATION ON FINANCIAL ARRANGEMENTS
WITH GROUPS.—No person may sell or offer for sale a
long-term care insurance policy with respect to a member
of an organization with which the person (or the issuer
of the policy) has a financial arrangement of any type un-
less the person discloses (in accordance with standards es-
tablished under section 2701(c)) the nature of the finan-
cial arrangement.
‘‘(g) PENALTIES.—Any person who sells, offers for
sale, or issues a long-term care insurance policy in viola-
tion of this section may be imprisoned not more than 5
years, or fined in accordance with title 18, United States
Code, and, in addition, is subject to a civil money penalty
of not to exceed $25,000 for each such violation. The pro-
visions of section 1128A of the Social Security Act (other
than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under
this subsection in the same manner as such provisions
apply to a penalty or proceeding under such section
1128A(a).
‘‘SEC. 2703. ADDITIONAL RESPONSIBILITIES OF ISSUERS.
‘‘(a) REFUND OF PREMIUMS.—If an application for
a long-term care insurance policy (or for a certificate
under a group long-term care insurance policy) is denied
or an applicant returns a policy or certificate within 30
days of the date of its issuance pursuant to section 2708,
the issuer shall refund to the applicant, not later than 30
days after the date of the denial or return, any premiums
paid with respect to such a policy.
‘‘(b) MAILING OF POLICY.—If an application for a
long-term care insurance policy (or for a certificate under
a group long-term care insurance policy) is approved, the
issuer shall transmit to the applicant the policy (or certifi-
cate) of insurance not later than 30 days after the date
of the approval.
‘‘(c) INFORMATION ON DENIALS OF CLAIMS.—If a
claim under a long-term care insurance policy is denied,
the issuer shall, within 60 days of the date of a written
request by the policyholder or certificateholder (or rep-
resentative)—
‘‘(1) provide a written explanation of the rea-
sons for the denial; and
‘‘(2) make available all information directly re-
lating to such denial.
No claim under such a policy may be denied on the basis
of a failure to disclose a condition at the time of issuance
of the policy if the application for the policy failed to re-
quest information respecting the condition.
‘‘(d) REPORTING OF INFORMATION.—The issuer of
a long-term care insurance policy shall periodically (not
less often than annually) report to the Commissioner or
superintendent of insurance of each State in which the
policy is sold, and shall make available to the Secretary,
upon request, information respecting—
‘‘(1) the long-term care insurance policies of the
issuer that are in force;
‘‘(2) the most recent premiums for such policies
and the premiums imposed for such policies during
the previous 5-year period;
‘‘(3) the lapse rates, replacement rates, and re-
scission rates for policies (by agent); and
‘‘(4) the claims denied (as a percentage of
claims submitted) for such policies.
Information under this subsection shall be reported in a
format specified in the standards established under section
2701(c) to carry out this section. For purposes of para-
graph (3), there shall not be included as a lapse of policy
such a lapse due to the death of the policyholder. For pur-
poses of paragraph (4), there shall not be included as a
denied claim that is denied solely because of the failure
to meet a deductible, waiting period, or exclusionary pe-
riod.
‘‘(e) ACCESS TO INFORMATION.—Each such issuer
shall provide the Secretary and the Commissioner or su-
perintendent of insurance of each State in which the policy
is sold such information as the Secretary, Commissioner,
or superintendent, may request.
‘‘(f) PROVISION OF OUTLINE OF COVERAGE FOR RE-
NEWALS.—Each issuer of a long-term care insurance pol-
icy shall provide, at the time of renewal of such a policy,
an outline of coverage that meets the applicable standards
established pursuant to this title.
‘‘(g) MEDICAL ASSESSMENTS FOR THE ELDERLY.—
Before issuing a long-term care insurance policy to an ap-
plicant who is 75 years of age or older, if the policy is
not guaranteed issue the issuer shall obtain one of the fol-
lowing:
‘‘(1) A report of a physical examination.
‘‘(2) An assessment of functional capacity.
‘‘(3) Copies of medical records.
‘‘(h) LIMITS ON COMPENSATION FOR SALE OF POLI-
CIES.—
‘‘(1) IN GENERAL.—The issuer of a long-term
care insurance policy may not provide a commission
or other compensation to an agent or other rep-
resentative for the sale of such a policy in an
amount that exceeds 200 percent of the commission
or other compensation paid for selling or servicing
such a policy in the second or subsequent year.
‘‘(2) COMPENSATION DEFINED.—In paragraph
(1), the term ‘compensation’ includes pecuniary or
nonpecuniary remuneration of any kind relating to
the sale or renewal of the policy or certification, in-
cluding 
deferred 
compensation, 
bonuses, 
gifts,
prizes, awards, and finders fees.
‘‘(i) CIVIL MONEY PENALTY.—Any issuer of a long-
term care insurance policy who—
‘‘(1) fails to make a refund in accordance with
subsection (a);
‘‘(2) fails to transmit a policy in accordance
with subsection (b);
‘‘(3) fails to provide, make available, or report
information in accordance with subsection (c), (d),
or (e);
‘‘(4) fails to provide an outline of coverage in
violation of subsection (f);
‘‘(5) issues a policy without obtaining certain
information in violation of subsection (g); or
‘‘(6) provides a commission or compensation in
violation of subsection (h),
is subject to a civil money penalty of not to exceed $25,000
for each such violation. The provisions of section 1128A
of the Social Security Act (other than the first sentence
of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under this subsection in
the same manner as such provisions apply to a penalty
or proceeding under such section 1128A(a).
‘‘SEC. 2704. REQUIREMENTS RELATING TO RENEWABILITY.
‘‘(a) IN GENERAL.—No long-term care insurance pol-
icy may be canceled or nonrenewed for any reason other
than nonpayment of premium or material misrepresenta-
tion.
‘‘(b) CONTINUATION AND CONVERSION RIGHTS FOR
GROUP POLICIES.—
‘‘(1) IN GENERAL.—Each group long-term care
insurance policy shall provide covered individuals
with a basis for continuation or conversion in ac-
cordance with this subsection.
‘‘(2) BASIS FOR CONTINUATION.—For purposes
of paragraph (1), a policy provides a basis for con-
tinuation of coverage if the policy maintains cov-
erage under the existing group policy when such cov-
erage would otherwise terminate and which is sub-
ject only to the continued timely payment of pre-
mium when due. A group policy which restricts pro-
vision of benefits and services to or contains incen-
tives to use certain providers or facility, may provide
continuation benefits which are substantially equiva-
lent to the benefits of the existing group policy.
‘‘(3) BASIS FOR CONVERSION.—For purposes of
paragraph (1), a policy provides a basis for conver-
sion of coverage if the policy entitles each individ-
ual—
‘‘(A) whose coverage under the group pol-
icy would otherwise be terminated for any rea-
son; and
‘‘(B) who has been continuously insured
under the policy (or group policy which was re-
placed) for at least 6 months before the date of
the termination;
to issuance of a policy providing benefits identical to,
substantially equivalent to, or in excess of, those of
the policy being terminated, without evidence of in-
surability.
‘‘(4) TREATMENT
OF
SUBSTANTIAL
EQUIVA-
LENCE.—In determining under this subsection
whether benefits are substantially equivalent, there
shall be taken into consideration the difference be-
tween managed care and non-managed care plans.
‘‘(5) GROUP REPLACEMENT OF POLICIES.—If a
group long-term care insurance policy is replaced by
another long-term care insurance policy purchased
by the same policyholder, the succeeding issuer shall
offer coverage to all persons covered under the old
group policy on its date of termination. Coverage
under the new group policy shall not result in any
exclusion for preexisting conditions that would have
been covered under the group policy being replaced.
‘‘(c) UPGRADE FOR CURRENT POLICIES.—Each long-
term care insurance policy in effect as of the effective date
of the standards established under section 2701(c) shall
permit the policyholder to purchase a policy that meets
all such standards. In offering such a policy, the issuer
may impose additional underwriting restrictions only for
benefits not held under the previously issued policy.
‘‘SEC. 2705. BENEFIT STANDARDS.
‘‘(a) USE OF STANDARD DEFINITIONS AND TERMI-
NOLOGY AND UNIFORM FORMAT.—Each long-term care
insurance policy shall, pursuant to standards established
under section 2701(c)—
‘‘(1) use uniform language and definitions; and
‘‘(2) use a uniform format for presenting the
outline of coverage under such a policy.
‘‘(b) DISCLOSURE.—
‘‘(1) OUTLINE OF COVERAGE.—The outline of
coverage for each long-term care insurance policy
shall include at least the following:
‘‘(A) A description of the principal benefits
and coverage under the policy.
‘‘(B) A statement of the principal exclu-
sions, reductions, and limitations contained in
the policy.
‘‘(C) A statement of the terms under which
the policy (or certificate) may be continued in
force or discontinued, the terms for continu-
ation or conversion, and any reservation in the
policy of a right to change premiums.
‘‘(D) A statement that the outline of cov-
erage is a summary only, not a contract of in-
surance, and that the policy (or master policy)
contains the contractual provisions that govern.
‘‘(E) A statement of the value of the policy
(determined in accordance with standard estab-
lished to carry out this paragraph).
‘‘(F) A description of the terms, specified
in section 2708, under which a policy or certifi-
cate may be returned and premium refunded.
‘‘(G) Information on national average costs
for nursing facility and home health care and
information (in graphic form) on the relation-
ship of the value of the benefits provided under
the policy to such national average costs.
‘‘(H) A statement of the percentage limit
on annual premium increases that is provided
under the policy pursuant to subsection (h).
‘‘(I) Information (in graphic form) on the
projected effect of inflation on the value of ben-
efits provided under the policy during a period
of at least 20 years.
‘‘(2) CERTIFICATES.—A certificate issued pur-
suant to a group long-term care insurance policy
shall include—
‘‘(A) a description of the principal benefits
and coverage provided in the policy;
‘‘(B) a statement of the principal exclu-
sions, reductions, and limitations contained in
the policy; and
‘‘(C) a statement that the group master
policy determines governing contractual provi-
sions.
‘‘(3) LONG-TERM CARE AS PART OF LIFE IN-
SURANCE.—In the case of a long-term care insur-
ance policy issued as a part of or a rider on a life
insurance policy, at the time of policy delivery there
shall be provided a policy summary that includes—
‘‘(A) an explanation of how the long-term
care benefits interact with other components of
the policy (including deductions from death
benefits);
‘‘(B) an illustration of the amount of bene-
fits, the length of benefit, and the guaranteed
lifetime benefits (if any) for each covered per-
son; and
‘‘(C) any exclusions, reductions, and limi-
tations on benefits of long-term care.
‘‘(c) LIMITING CONDITIONS ON BENEFITS; MINIMUM
BENEFITS.—
‘‘(1) IN GENERAL.—A long-term care insurance
policy may not condition or limit eligibility—
‘‘(A) for benefits for a type of services to
the need for or receipt of any other services;
‘‘(B) for any noninstitutional benefit on
the medical necessity for such benefit;
‘‘(C) for benefits furnished by licensed pro-
viders on compliance with conditions which are
in addition to those required for licensure under
State law; or
‘‘(D) for custodial care (if covered under
the policy) only (i) to care provided in facilities
which provide a higher level of care or (ii) to
care provided in facilities which provide for 24-
hour or other nursing care not required in order
to be licensed by the State.
‘‘(2) HOME
HEALTH
CARE
SERVICES.—If a
long-term care insurance policy provides benefits for
home health care services, the policy—
‘‘(A) may not limit such benefits to serv-
ices provided by registered nurses or licensed
practical nurses;
‘‘(B) may not require benefits for such
services to be provided by a nurse or therapist
that can be provided by a home health aide or
other licensed or certified home care worker
acting within the scope of the worker’s licensure
or certification;
‘‘(C) may not limit such benefits to serv-
ices provided by agencies or providers certified
under title XVIII of the Social Security Act;
and
‘‘(D) must provide benefits for custodial
care, personal care services (including home
health aide and homemaker services), home
health services, and respite care in an individ-
ual’s home.
‘‘(3) NURSING FACILITY SERVICES.—If a long-
term care insurance policy provides benefits for
nursing facility services, the policy must provide
such benefits with respect to all nursing facilities (as
defined in section 1919(a) of the Social Security
Act) in the State.
‘‘(4) MINIMUM PERIOD OF COVERAGE.—Each
long-term care insurance policy shall provide benefits
over a period of at least 12 consecutive months.
‘‘(5) PROHIBITION
OF
DISCRIMINATION.—A
long-term care insurance policy may not treat bene-
fits under the policy in the case of an individual with
Alzheimer’s disease, with any related progressive de-
generative dementia of an organic origin, or with
any organic or inorganic mental illness differently
from an individual having another medical condition
for which benefits may be made available.
‘‘(e) LIMITATION ON USE OF PREEXISTING CONDI-
TION LIMITS.—
‘‘(1) INITIAL ISSUANCE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a long-term care insurance policy
may not exclude or condition benefits based on
a medical condition for which the policyholder
received treatment or was otherwise diagnosed
before the issuance of the policy.
‘‘(B) 6-MONTH LIMIT.—A long-term care
insurance policy may exclude benefits under a
policy, during its first 6 months, based on a
condition for which the policyholder received
treatment or was otherwise diagnosed during
the 6 months before the policy became effective.
‘‘(2) REPLACEMENT POLICIES.—If a long-term
care insurance policy replaces another long-term
care insurance policy, the issuer of the replacing pol-
icy shall waive any time periods applicable to pre-
existing conditions, waiting period, elimination peri-
ods and probationary periods in the new policy for
similar benefits to the extent such time was spent
under the original policy.
‘‘(f) USE OF FUNCTIONAL ASSESSMENT.—
‘‘(1) IN GENERAL.—Each long-term care insur-
ance policy—
‘‘(A) shall determine eligibility for, and
level of, benefits (other than for nursing facility
services) available under the policy based on a
professional assessment of the policyholder’s
functional ability; and
‘‘(B) shall specify the level (or levels) of
functional impairment required under such an
assessment to obtain benefits other than for
nursing facility services) under the policy.
Such assessment may not be conducted by an indi-
vidual who has a direct or indirect ownership or con-
trol interest, or direct or indirect affiliation or rela-
tionship with, the issuer of the policy or an entity
that provides services for which benefits are avail-
able under the long-term care insurance policy.
‘‘(2) APPEALS PROCESS.—Each long-term care
insurance policy shall provide for an appeals process,
meeting standards established under this section, for
individuals who dispute the results of an assessment
conducted under this subsection.
‘‘(g) INFLATION PROTECTION.—Each long-term care
insurance policy shall provide, at the time of each annual
renewal, for an increase of a specified percentage (but not
less than 5 percent) in the dollar payment levels and the
maximum payment limit on benefit coverage above the lev-
els or limit in effect during the previous policy year. In
applying 
this 
subsection, 
the 
increases 
shall 
be
compounded annually and the policy may provide for
rounding such an increase to the nearest multiple of $1
(in the case of dollar payment levels) or $100 (in the case
of the maximum payment limit).
‘‘(h) SPECIFICATION OF LIMITS ON PREMIUM IN-
CREASES.—Each long-term care insurance policy shall
specify a limit on the percentage increase in premiums for
a policy that may be made in any between one policy year
and the subsequent policy year.
‘‘SEC. 2706. NONFORFEITURE.
‘‘(a) IN GENERAL.—Each long-term care insurance
policy shall provide that if the policy lapses after the policy
has been in effect for a minimum period (specified under
the standards under section 2701(c)), the policy will pro-
vide without payment of any additional premiums benefits
equal to—
‘‘(1) a percentage (specified under such stand-
ards) of the benefits otherwise available at term; or
‘‘(2) such other type of benefits as such stand-
ards may provide.
‘‘(b) ESTABLISHMENT OF STANDARDS.—The stand-
ards under section 2701(c)—
‘‘(1) may not provide more than 2 additional
types of benefits under subsection (a)(2); and
‘‘(2) may provide that the percentage or
amount of benefits under subsection (a) must in-
crease based upon the period of time in which the
policy was in effect.
‘‘SEC. 2707. LIMIT OF PERIOD OF CONTESTABILITY.
‘‘The issuer of a long-term care insurance policy may
not cancel such a policy or deny a claim under the policy
based on fraud or misrepresentation relating to the issu-
ance of the policy unless notice of such fraud or misrepre-
sentation is provided within 6 months after the date of
the issuance of the policy.
‘‘SEC. 2708. RIGHT TO RETURN (FREE LOOK).
‘‘Each applicant for a long-term care insurance policy
shall have the right to return the policy (or certificate)
within 30 days of the date of its delivery (and to have
the premium refunded) if, after examination of the policy
or certificate, the applicant is not satisfied for any reason.
‘‘SEC. 2709. LONG-TERM CARE INSURANCE POLICY DE-
FINED.
‘‘(a) IN GENERAL.—In this title, except as otherwise
provided in this section, the term ‘long-term care insur-
ance policy’ means any insurance policy, certificate, or
rider advertised, marketed, offered, or designed to provide
coverage for each covered person on an expense incurred,
indemnity, prepaid, or other basis, for one or more diag-
nostic, preventive, therapeutic, rehabilitative, maintenance
or personal care services, provided in a setting other than
an acute care unit of a hospital. Such term includes a
group or individual annuity or life insurance policy or
rider which provides directly (or which supplements) long-
term care insurance.
‘‘(b) POLICIES EXCLUDED.—Except as provided in
subsection (d), the term ‘long-term care insurance policy’
does not include any medicare supplemental policy (as de-
fined in section 1882(g) of the Social Security Act) and
any insurance which is offered primarily to provide—
‘‘(1) basic hospital expense coverage, basic med-
ical-surgical expense coverage, hospital confinement
indemnity coverage, or major medical expense cov-
erage;
‘‘(2) disability income or related asset-protec-
tion coverage;
‘‘(3) accident only coverage;
‘‘(4) specified disease or specified accident cov-
erage; or
‘‘(5) limited benefit health coverage.
‘‘(c) TREATMENT
OF CERTAIN LIFE INSURANCE
POLICIES.—Except as provided in subsection (d), the term
‘long-term care insurance policy’ does not include life in-
surance policies—
‘‘(1) which accelerate the death benefit specifi-
cally for—
‘‘(A) one or more of the qualifying events
of terminal illness;
‘‘(B) medical conditions requiring extraor-
dinary medical intervention; or
‘‘(C) permanent institutional confinement;
‘‘(2) which provide the option of a lump-sum
payment for those benefits; and
‘‘(3) in which neither the benefits nor the eligi-
bility for the benefits is conditioned upon the receipt
of long-term care.
‘‘(d) INCLUSION OF POLICIES MARKETED AS LONG-
TERM CARE INSURANCE.—The term ‘long-term care in-
surance policy’ also means any product which is adver-
tised, marketed, or offered as long-term care insurance.’’.
SEC. 3. AMENDMENTS TO THE MEDICAID PROGRAM.
(a) STATE MEDICAID REQUIREMENT
FOR REGU-
LATORY PROGRAM.—Section 1902(a) of the Social Secu-
rity Act (42 U.S.C. 1396(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(61);
(2) by striking the period at the end of para-
graph (62) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (62) the fol-
lowing new paragraph:
‘‘(63) establish, by the date specified in section
2701(d) of the Public Health Service Act, a State
regulatory program, that meets the requirements of
section 2701(a)(1)(A) of such Act.’’.
(b) DENIAL OF MEDICAID FUNDS FOR FAILURE TO
ESTABLISH REGULATORY PROGRAM.—Section 1903(i) of
the Social Security Act (42 U.S.C. 1396b(i)) is amend-
ed—
(1) by striking ‘‘or’’ at the end of paragraph
(14);
(2) by striking the period at the end of para-
graph (15) and inserting ‘‘; or’’; and
(3) by inserting after paragraph (15) the fol-
lowing new paragraph.
‘‘(16) with respect to any amount expended for
medical assistance for nursing facility services (fur-
nished on and after the date specified in section
2701(d) of the Public Health Service Act) during
such period as the state has failed to establish and
maintain a regulatory program that meets the re-
quirements of section 2701(a)(1)(A) of such Act.’’.
SEC. 4. REPORTS AND STUDY.
(a) REPORT ON ASSESSMENT METHODS FOR FUNC-
TIONAL ABILITY.—Within 2 years after the date of the
enactment of this Act, the Secretary of Health and
Human Services shall submit to Congress a report on the
different methods that may be used to conduct assess-
ments of functional ability described in section 2705(f)(1)
of the Public Health Service Act (including the methods
used under section 1929(c) of the Social Security Act) and
the relative effectiveness of each of such methods.
(b) REPORT ON SOLVENCY PROTECTION.—Within 2
years after the date of the enactment of this Act, the Sec-
retary of Health and Human Services shall submit to Con-
gress a report on standards that may be applied to assure
the solvency of insurers with respect to long-term care in-
surance policies.
(c) STUDY OF STANDARD MEASURE OF VALUE FOR
LONG-TERM CARE INSURANCE POLICIES.—The Secretary
of Health and Human Services shall provide for a study
to develop a standard measure of value for long-term care
insurance policies. Within 2 years after the date of the
enactment of this Act, the Secretary shall submit to Con-
gress a report on such study.
SEC. 5. FUNDING FOR LONG-TERM CARE INSURANCE IN-
FORMATION, COUNSELING, AND ASSISTANCE.
There are authorized to be appropriated to provide
information, counseling, and assistance relating to the
procurement of adequate and appropriate long-term care
insurance, $20,000,000 for each of fiscal years 1997,
1998, and 1999.
Æ
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