I
103D CONGRESS
2D SESSION
H. R. 4769
To amend the Internal Revenue Code of 1986 to provide for the treatment
of long-term care insurance, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 14, 1994
Ms. SNOWE introduced the following bill; which was referred jointly to the
Committees on Ways and Means and Energy and Commerce
A BILL
To amend the Internal Revenue Code of 1986 to provide
for the treatment of long-term care insurance, 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. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Section 1. Short title; table of contents.
TITLE I—TAX TREATMENT OF LONG-TERM CARE INSURANCE
Sec. 101. Treatment of long-term care insurance or plans.
Sec. 102. Exclusion for benefits provided under long-term care insurance; inclu-
sion of employer-provided coverage.
Sec. 103. Credit for qualified long-term care premiums.
Sec. 104. Qualified long-term services treated as medical care.
Sec. 105. Tax reserve treatment of long-term care insurance contracts.
Sec. 106. Exclusion from gross income for amounts withdrawn from individual
retirement plans or 401(k) plans for long-term care insurance.
Sec. 107. Tax treatment of accelerated death benefits under life insurance con-
tracts.
Sec. 108. Tax treatment of companies issuing qualified accelerated death bene-
fit riders.
Sec. 109. Qualified long-term care insurance contracts permitted to be offered
in cafeteria plans.
Sec. 110. Effective date.
TITLE II—ESTABLISHMENT OF FEDERAL STANDARDS FOR LONG-
TERM CARE INSURANCE
Sec. 201. Establishment of Federal standards for long-term care insurance.
TITLE III—DEDUCTION FOR CERTAIN EXPENSES FOR DEPEND-
ENTS WITH ALZHEIMER’S DISEASE OR RELATED ORGANIC
BRAIN DISORDERS
Sec. 301. Deduction allowance for home health care and adult day and respite
care expenses of individuals for dependents with alzheimer’s
disease or related organic brain disorders.
TITLE IV—DEPENDENT CARE CREDIT EXPANDED AND MADE
REFUNDABLE
Sec. 401. Dependent care tax credit expanded and made refundable.
TITLE I—TAX TREATMENT OF
LONG-TERM CARE INSURANCE
SEC. 101. TREATMENT OF LONG-TERM CARE INSURANCE
OR PLANS.
(a) GENERAL RULE.—Subpart E of part I of sub-
chapter L of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 818 the follow-
ing new section:
‘‘SEC. 818A. TREATMENT OF LONG-TERM CARE INSURANCE
OR PLANS.
‘‘(a) GENERAL RULE.—For purposes of this title—
‘‘(1) a long-term care insurance contract shall
be treated as an accident or health insurance con-
tract,
‘‘(2) amounts received under such a contract
with respect to qualified long-term care services shall
be treated as amounts received for personal injuries
or sickness, and
‘‘(3) any plan of an employer providing quali-
fied long-term care services shall be treated as an
accident or health plan.
‘‘(b) LONG-TERM CARE INSURANCE CONTRACT.—
‘‘(1) IN GENERAL.—For purposes of this part,
the term ‘long-term care insurance contract’ means
any insurance contract issued if—
‘‘(A) the only insurance protection pro-
vided under such contract is coverage of quali-
fied long-term care services and benefits inci-
dental to such coverage,
‘‘(B) the maximum benefit under the pol-
icy (or certificate for a group long-term care in-
surance policy) for expenses incurred for any
day does not exceed $200.00,
‘‘(C) such contract does not cover expenses
incurred for services or items to the extent that
such expenses are reimbursable under title
XVIII of the Social Security Act or would be so
reimbursable but for the application of a de-
ductible or coinsurance amount,
‘‘(D) such contract is guaranteed renew-
able,
‘‘(E) such contract does not have any cash
surrender value, and
‘‘(F) all refunds of premiums, and all pol-
icyholder dividends or similar amounts, under
such contract are to be applied as a reduction
in future premiums or to increase future bene-
fits.
‘‘(2) SPECIAL RULES.—
‘‘(A) CONTRACT
MAY
COVER
MEDICARE
REIMBURSABLE
EXPENSES
WHERE
MEDICARE
IS SECONDARY PAYOR.—Paragraph (1)(C) shall
not apply to expenses which are reimbursable
under title XVIII of the Social Security Act
only as a secondary payor.
‘‘(B) REFUNDS
OF
PREMIUMS.—Para-
graph (1)(F) shall not apply to any refund of
premiums on surrender or cancellation of the
contract.
‘‘(C) PER
DIEM, ETC. PAYMENTS
PER-
MITTED.—A contract shall not fail to be treated
as described in paragraph (1)(A) by reason of
payments being made on a per diem or other
periodic basis without regard to the expenses
incurred or services rendered during the period
to which the payments relate.
‘‘(c) QUALIFIED LONG-TERM CARE SERVICES.—For
purposes of this section:
‘‘(1) IN GENERAL.—The term ‘qualified long-
term care services’ means—
‘‘(A) 
necessary 
diagnostic, 
preventive,
therapeutic, and rehabilitative services, and
maintenance or personal care services, which—
‘‘(i) are required by a chronically ill
individual in a qualified facility, and
‘‘(ii) are provided pursuant to a plan
of care prescribed by a licensed health care
practitioner; or
‘‘(B) payments made on a per diem or
other periodic basis without regard to the ex-
penses incurred or services rendered during the
period to which the payments relate and which
are payable to a chronically ill individual in a
qualified facility who is receiving treatment pur-
suant to a plan of care prescribed by a licensed
health care practitioner.
‘‘(2) CHRONICALLY ILL INDIVIDUAL.—
‘‘(A) IN GENERAL.—The term ‘chronically
ill individual’ means any individual who has
been certified by a licensed health care practi-
tioner as—
‘‘(i)(I) being unable to perform (with-
out substantial assistance from another in-
dividual) at least 2 activities of daily living
(as defined in subparagraph (B)) for a pe-
riod of at least 90 days due to a loss of
functional capacity, or
‘‘(II) having a level of disability simi-
lar (as determined by the Secretary in con-
sultation with the Secretary of Health and
Human Services) to the level of disability
described in subclause (I), or
‘‘(ii) having a similar level of disabil-
ity due to cognitive impairment.
‘‘(B) ACTIVITIES OF DAILY LIVING.—For
purposes of subparagraph (A), each of the fol-
lowing is an activity of daily living:
‘‘(i) MOBILITY.—The process of walk-
ing or wheeling on a level surface which
may include the use of an assistive device
such as a cane, walker, wheelchair, or
brace.
‘‘(ii) DRESSING.—The overall complex
behavior of getting clothes from closets
and drawers and then getting dressed.
‘‘(iii) TOILETING.—The act of going
to the toilet room for bowel and bladder
function, transferring on and off the toilet,
cleaning after elimination, and arranging
clothes or the ability to voluntarily control
bowel and bladder function, or in the event
of incontinence, the ability to maintain a
reasonable level of personal hygiene.
‘‘(iv) TRANSFER.—The process of get-
ting in and out of bed or in and out of a
chair or wheelchair.
‘‘(v) EATING.—The process of getting
food from a plate or its equivalent into the
mouth.
‘‘(3) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means—
‘‘(A) a nursing, rehabilitative, hospice, or
adult day care facility (including a hospital, re-
tirement home, nursing home, skilled nursing
facility, intermediate care facility, or similar in-
stitution)—
‘‘(i) which is licensed under State law,
or
‘‘(ii) which is a certified facility for
purposes of title XVIII or XIX of the So-
cial Security Act, or
‘‘(B) an individual’s home if a licensed
health care practitioner certifies that without
home care the individual would have to be cared
for in a facility described in subparagraph (A).
‘‘(4) MAINTENANCE OR PERSONAL CARE SERV-
ICES.—The term ‘maintenance or personal care serv-
ices’ means any care the primary purpose of which
is to provide needed assistance with any of the ac-
tivities of daily living described in paragraph (2)(B).
‘‘(5) 
LICENSED
HEALTH
CARE
PRACTI-
TIONER.—The term ‘licensed health care practi-
tioner’ means any physician (as defined in section
1861(r) of the Social Security Act) and any reg-
istered professional nurse, licensed social worker, or
other individual who meets such requirements as
may be prescribed by the Secretary.
‘‘(d) CONTINUATION COVERAGE EXCISE TAX NOT
TO APPLY.—This section shall not apply in determining
whether section 4980B (relating to failure to satisfy con-
tinuation coverage requirements of group health plans) ap-
plies.
‘‘(e) INFLATION ADJUSTMENT
OF $200 BENEFIT
LIMIT.—
‘‘(1) IN GENERAL.—In the case of a calendar
year after 1995, the $200 amount contained in sub-
section (b)(1)(B) shall be increased for such cal-
endar year by the medical care cost adjustment for
such calendar year or 5 percent per year, whichever
is greater. If any increase determined under the pre-
ceding sentence is not a multiple of $10, such in-
crease shall be rounded to the nearest multiple of
$10.
‘‘(2) MEDICAL CARE COST ADJUSTMENT.—For
purposes of paragraph (1), the medical care cost ad-
justment for any calendar year is the percentage (if
any) by which—
‘‘(A) the medical care component of the
Consumer Price Index (as defined in section
1(f)(5)) for August of the preceding calendar
year, exceeds
‘‘(B) such component for August of 1994.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart E is amended by inserting after the item
relating to section 818 the following new item:
‘‘Sec. 818A. Treatment of long-term care insurance or plans.’’
SEC. 102. EXCLUSION FOR BENEFITS PROVIDED UNDER
LONG-TERM CARE INSURANCE; INCLUSION
OF EMPLOYER-PROVIDED COVERAGE.
(a) IN GENERAL.—Subsection (a) of section 104 of
the Internal Revenue Code of 1986 (relating to compensa-
tion for injuries or sickness) is amended by striking ‘‘and’’
at the end of paragraph (4), by striking the period at the
end of paragraph (5) and inserting ‘‘, and’’, and by insert-
ing after paragraph (4) the following new paragraph:
‘‘(6) benefits under a long-term care insurance
contract (as defined in section 818A(b)).’’
(b) INCLUSION
OF
EMPLOYER-PROVIDED
COV-
ERAGE.—Section 106 of such Code (relating to contribu-
tions by employer to accident and health plans) is amend-
ed by adding at the end thereof the following sentence:
‘‘The preceding sentence shall not apply to any plan pro-
viding coverage for qualified long-term care services.’’
SEC. 103. CREDIT FOR QUALIFIED LONG-TERM CARE PRE-
MIUMS.
(a) GENERAL RULE.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating section 35 as section 36 and by inserting after
section 34 the following new section:
‘‘SEC. 35. LONG-TERM CARE INSURANCE CREDIT.
‘‘(a) GENERAL RULE.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this subtitle for the taxable year an amount equal to
the applicable percentage of the eligible long-term care
premiums paid during such taxable year for such individ-
ual or the spouse of such individual.
‘‘(b) APPLICABLE PERCENTAGE.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘applicable percentage’ means 31 per-
cent reduced (but not below zero) by 1 percentage
point for each $1,000 (or fraction thereof) by which
the taxpayer’s adjusted gross income for the taxable
year exceeds the base amount.
‘‘(2) BASE
AMOUNT.—For purposes of para-
graph (1), the term ‘base amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $25,000,
‘‘(B) $40,000 in the case of joint return,
and
‘‘(C) zero in the case of a taxpayer who—
‘‘(i) is married at the close of the tax-
able year (within the meaning of section
7703) but does not file a joint return for
such taxable year, and
‘‘(ii) does not live apart from his or
her spouse at all times during the taxable
year.
‘‘(c) ELIGIBLE LONG-TERM CARE PREMIUMS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘eligible long-term care premiums’
means the amount paid during a taxable year for
any long-term care insurance contract (as defined in
section 818A) covering an individual, to the extent
such amount does not exceed the limitation deter-
mined under the following table:
‘‘In the case of an individual
with an attained age before the
The limitation
close of the taxable year of:
is:
40 or less ...........................................................................
$200
More than 40 but not more than 50 ................................
375
More than 50 but not more than 60 ................................
750
More than 60 but not more than 70 ................................
1,600
More than 70 ....................................................................
2,000.
‘‘(2) INDEXING.—
‘‘(A) IN
GENERAL.—In the case of any
taxable year beginning in a calendar year after
1995, each dollar amount contained in para-
graph (1) shall be increased by the medical care
cost adjustment of such amount for such cal-
endar year. If any increase determined under
the preceding sentence is not a multiple of $10,
such increase shall be rounded to the nearest
multiple of $10.
‘‘(B) 
MEDICAL
CARE
COST
ADJUST-
MENT.—For purposes of subparagraph (A), the
medical care cost adjustment for any calendar
year is the percentage (if any) by which—
‘‘(i) the medical care component of
the Consumer Price Index (as defined in
section 1(f)(5)) for August of the preced-
ing calendar year, exceeds
‘‘(ii) such component for August of
1994.
‘‘(d) COORDINATION WITH MEDICAL EXPENSE DE-
DUCTION.—Any amount allowed as a credit under this
section shall not be taken into account under section 213.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subpart C of part IV of subchapter A of chapter 1
of such Code is amended by striking the item relating to
section 35 and inserting the following:
‘‘Sec. 35. Long-term care insurance credit.
‘‘Sec. 36. Overpayments of tax.’’
SEC. 104. QUALIFIED LONG-TERM SERVICES TREATED AS
MEDICAL CARE.
(a) GENERAL RULE.—Paragraph (1) of section
213(d) of the Internal Revenue Code of 1986 (defining
medical care) is amended by striking ‘‘or’’ at the end of
subparagraph (B), by redesignating subparagraph (C) as
subparagraph (D), and by inserting after subparagraph
(B) the following new subparagraph:
‘‘(C) for qualified long-term care services
(as defined in section 818A(c)), or’’
(b) DEDUCTION FOR LONG-TERM CARE EXPENSES
FOR PARENT OR GRANDPARENT.—Section 213 of such
Code (relating to deduction for medical expenses) is
amended by adding at the end the following new sub-
section:
‘‘(g) SPECIAL RULE FOR CERTAIN LONG-TERM CARE
EXPENSES.—For purposes of subsection (a), the term ‘de-
pendent’ shall include any parent or grandparent of the
taxpayer for whom the taxpayer has expenses for long-
term care services described in section 818A(c), but only
to the extent of such expenses.’’
(c) TECHNICAL AMENDMENTS.—
(1) Subparagraph (D) of section 213(d)(1) of
such Code (as redesignated by subsection (a)) is
amended by striking ‘‘subparagraphs (A) and (B)’’
and inserting ‘‘subparagraphs (A), (B), and (C)’’.
(2) Paragraph (1) of section 213(d) of such
Code is amended by adding at the end thereof the
following new flush sentence:
‘‘In the case of a long-term care insurance contract
(as defined in section 818A), only eligible long-term
care premiums (as defined in section 35(c)) shall be
taken into account under subparagraph (D).’’
(3) Paragraph (6) of section 213(d) of such
Code is amended—
(A) by striking ‘‘subparagraphs (A) and
(B)’’ and inserting ‘‘subparagraphs (A), (B),
and (C)’’, and
(B) by striking ‘‘paragraph (1)(C)’’ in sub-
paragraph 
(A) 
and 
inserting 
‘‘paragraph
(1)(D)’’.
(4) Paragraph (7) of section 213(d) of such
Code is amended by striking ‘‘subparagraphs (A)
and (B)’’ and inserting ‘‘subparagraphs (A), (B),
and (C)’’.
SEC. 105. TAX RESERVE TREATMENT OF LONG-TERM CARE
INSURANCE CONTRACTS.
(a) IN GENERAL.—Subparagraph (A) of section
807(d)(3) of the Internal Revenue Code of 1986 (relating
to tax reserve method) is amended—
(1) by redesignating clause (iv) as clause (v),
(2) by striking ‘‘or (iii)’’ each place it appears
in clause (v) (as so redesignated) and inserting
‘‘(iii), or (iv), and
(3) by inserting after clause (iii) the following
new clause:
‘‘(iv) LONG-TERM
CARE
INSURANCE
CONTRACTS.—In the case of any long-term
care insurance contract, a one-year full
preliminary term method.’’
(b) TECHNICAL AMENDMENT.—Clause (iii) of section
807(d)(3)(A) of such Code is amended by inserting ‘‘other
than a long-term care insurance contract,’’ after ‘‘con-
tract,’’.
SEC. 106. EXCLUSION FROM GROSS INCOME FOR AMOUNTS
WITHDRAWN 
FROM 
INDIVIDUAL 
RETIRE-
MENT PLANS OR 401(k) PLANS FOR LONG-
TERM CARE INSURANCE.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 137 as section 138 and by insert-
ing after section 136 the following new section:
‘‘SEC. 137. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
ACCOUNTS AND SECTION 401(k) PLANS FOR
LONG-TERM CARE INSURANCE.
‘‘(a) GENERAL RULE.—The amount includible in the
gross income of an individual for the taxable year by rea-
son of qualified distributions during such taxable year
shall not exceed the excess of—
‘‘(1) the amount which would (but for this sec-
tion) be so includible by reason of such distributions,
over
‘‘(2) the aggregate premiums paid by such indi-
vidual during such taxable year for any long-term
care insurance contract (as defined in section 818A)
for the benefit of such individual or the spouse of
such individual.
‘‘(b) QUALIFIED DISTRIBUTION.—For purposes of
this section, the term ‘qualified distribution’ means any
distribution to an individual from an individual retirement
account or a section 401(k) plan if such individual has
attained age 591⁄2 on or before the date of the distribution
(and, in the case of a distribution used to pay premiums
for the benefit of the spouse of such individual, such
spouse has attained age 591⁄2 on or before the date of the
distribution).
‘‘(c) DEFINITIONS.—For purposes of this section:
‘‘(1) INDIVIDUAL RETIREMENT ACCOUNT.—The
term ‘individual retirement account’ has the mean-
ing given such term by section 408(a).
‘‘(2) SECTION 401(k) PLAN.—The term ‘section
401(k) plan’ means any employer plan which meets
the requirements of section 401(a) and which in-
cludes a qualified cash or deferred arrangement (as
defined in section 401(k)).
‘‘(d) SPECIAL RULES FOR SECTION 401(k) PLANS.—
‘‘(1) WITHDRAWALS
CANNOT
EXCEED
ELEC-
TIVE CONTRIBUTIONS UNDER QUALIFIED CASH OR
DEFERRED ARRANGEMENT.—This section shall not
apply to any distribution from a section 401(k) plan
to the extent the aggregate amount of such distribu-
tions for the use described in subsection (a) exceeds
the aggregate employer contributions made pursuant
to the employee’s election under section 401(k)(2).
‘‘(2) WITHDRAWALS NOT TO CAUSE DISQUALI-
FICATION.—A plan shall not be treated as failing to
satisfy the requirements of section 401, and an ar-
rangement shall not be treated as failing to be a
qualified cash or deferred arrangement (as defined
in section 401(k)(2)), merely because under the plan
or arrangement distributions are permitted which
are excludable from gross income by reason of this
section.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 401(k) of such Code is amended by
adding at the end the following new paragraph:
‘‘(11) CROSS REFERENCE.—
‘‘For provision permitting tax-free withdrawals
for payment of long-term care premiums, see section
137.’’
(2) Section 408(d) of such Code is amended by
adding at the end the following new paragraph:
‘‘(8) CROSS REFERENCE.—
‘‘For provision permitting tax-free withdrawals
from individual retirement accounts for payment of
long-term care premiums, see section 137.’’
(3) The table of sections for such part III is
amended by striking the last item and inserting the
following new items:
‘‘Sec. 137. Distributions from individual retirement accounts and
section 401(k) plans for long-term care insurance.
‘‘Sec. 138. Cross references to other Acts.’’
SEC. 107. TAX TREATMENT OF ACCELERATED DEATH BENE-
FITS UNDER LIFE INSURANCE CONTRACTS.
Section 101 of the Internal Revenue Code of 1986
(relating to certain death benefits) is amended by adding
at the end thereof the following new subsection:
‘‘(g) TREATMENT
OF
CERTAIN
ACCELERATED
DEATH BENEFITS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, any amount paid or advanced to an individual
under a life insurance contract on the life of an in-
sured—
‘‘(A) who is a terminally ill individual, or
‘‘(B) who is a chronically ill individual (as
defined in section 818A(c)(2)) who is confined
to a qualified facility (as defined in section
818A(c)(3)(A)),
shall be treated as an amount paid by reason of the
death of such insured.
‘‘(2) TERMINALLY ILL INDIVIDUAL.—For pur-
poses of this subsection, the term ‘terminally ill indi-
vidual’ means an individual who has been certified
by a physician as having an illness or physical condi-
tion which can reasonably be expected to result in
death in 12 months or fewer.
‘‘(3) PHYSICIAN.—For purposes of this sub-
section, the term ‘physician’ has the meaning given
to such term by section 213(d)(4).’’
SEC. 108. TAX TREATMENT OF COMPANIES ISSUING QUALI-
FIED ACCELERATED DEATH BENEFIT RID-
ERS.
(a) QUALIFIED ACCELERATED DEATH BENEFIT RID-
ERS TREATED AS LIFE INSURANCE.—Section 818 of the
Internal Revenue Code of 1986 (relating to other defini-
tions and special rules) is amended by adding at the end
thereof the following new subsection:
at the end of clause (iv), by redesignating clause (v)
as clause (vi), and by inserting after clause (iv) the
following new clause:
‘‘(v) any qualified accelerated death
benefit 
rider 
(as 
defined 
in 
section
818(g)(2)) or any long-term care insurance
contract rider which reduces the death
benefit, or’’.
(2) TRANSITIONAL RULE.—For purposes of ap-
plying section 7702 or 7702A of the Internal Reve-
nue Code of 1986 to any contract (or determining
whether either such section applies to such con-
tract), the issuance of a rider or addendum on, or
other provision of, a life insurance contract permit-
ting the acceleration of death benefits (as described
in section 101(g) of such Code) or payments for
qualified long-term care services (as defined in sec-
tion 818A of such Code) shall not be treated as a
modification or material change of such contract.
SEC. 109. QUALIFIED LONG-TERM CARE INSURANCE CON-
TRACTS PERMITTED TO BE OFFERED IN CAF-
ETERIA PLANS.
(a) IN GENERAL.—Paragraph (2) of section 125(d)
of the Internal Revenue Code of 1986 (relating to exclu-
sion of deferred compensation) is amended by adding at
the end thereof the following new subparagraph:
‘‘(D) EXCEPTION
FOR
LONG-TERM
CARE
INSURANCE CONTRACTS.—For purposes of sub-
paragraph (A), a plan shall not be treated as
providing deferred compensation by reason of
providing any long-term care insurance contract
(as defined in section 818A(b)) if—
‘‘(i) the employee may elect to con-
tinue the insurance upon cessation of par-
ticipation in the plan, and
‘‘(ii) the amount paid or incurred dur-
ing any taxable year for such insurance
does not exceed the premium which would
have been payable for such year under a
level premium structure.’’
SEC. 110. EFFECTIVE DATE.
The amendments made by this title shall apply to tax-
able years beginning after December 31, 1994.
TITLE II—ESTABLISHMENT OF
FEDERAL 
STANDARDS 
FOR
LONG-TERM 
CARE 
INSUR-
ANCE
SEC. 201. ESTABLISHMENT OF FEDERAL STANDARDS FOR
LONG-TERM CARE INSURANCE.
(a) IN GENERAL.—The Public Health Service Act is
amended—
(1) by redesignating title XXVII (42 U.S.C.
300cc et seq.) as title XXVIII; and
(2) by inserting after title XXVI the following
new title:
‘‘TITLE XXVII—LONG-TERM CARE
INSURANCE STANDARDS
‘‘PART A—PROMULGATION OF STANDARDS AND MODEL
BENEFITS
‘‘SEC. 2701. STANDARDS.
‘‘(a) APPLICATION OF STANDARDS.—
‘‘(1) NAIC.—The Secretary shall request that
the National Association of Insurance Commis-
sioners (hereinafter in this title referred to as the
‘NAIC’)—
‘‘(A) develop specific standards that incor-
porate the requirements of this title; and
‘‘(B) report to the Secretary on such
standards,
by not later than 12 months after enactment of this
title. If the NAIC develops such model standards
that incorporate the requirements of this title within
such period and the Secretary finds that such stand-
ards implement the requirements of this title, such
standards shall be the standards applied under this
title.
‘‘(2) DEFAULT.—If the NAIC does not promul-
gate the model standards under paragraph (1) by
the deadline established in that paragraph, the Sec-
retary shall promulgate, within 12 months after such
deadline, a regulation that provides standards that
incorporate the requirements of this title and such
standards shall apply as provided for in this title.
‘‘(3) 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 than the standards promulgated under this
title, except that such State standards may not be
inconsistent or in conflict with any of the require-
ments of this title.
‘‘(b) 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 (a)(1); or
‘‘(B) the date that is 1 year after the first
day of the first regular legislative session that
begins after the date such standards are first
established under subsection (a)(2);
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 (a) to be
applied; but
‘‘(B) having a legislature which is not
scheduled to meet within 1 year following the
beginning of the next regular legislative session
in which such legislation may be considered;
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, 1994. 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.
‘‘(c) ITEMS INCLUDED IN STANDARDS.—The stand-
ards promulgated under subsection (a) shall include—
‘‘(1) minimum Federal standards for long-term
care insurance consistent with the provisions of this
title;
‘‘(2) standards for the enhanced protection of
consumers with long-term care insurance;
‘‘(3) procedures for the modification of the
standards established under paragraph (1) in a
manner consistent with future laws to expand exist-
ing Federal or State long-term care benefits or es-
tablish a comprehensive Federal or State long-term
care benefit program; and
‘‘(4) other activities determined appropriate by
Congress.
‘‘(d) CONSULTATION.—In establishing standards and
models of benefits under this section, the Secretary shall
provide for and consult with an advisory committee to be
chosen by the Secretary, and composed of—
‘‘(1) three individuals who are representatives
of carriers;
‘‘(2) three individuals who are representatives
of consumer groups;
‘‘(3) three individuals who are representatives
of providers of long-term care services;
‘‘(4) three other individuals who are not rep-
resentatives of carriers or of providers of long-term
care services and who have expertise in the delivery
and financing of such services; and
‘‘(5) the Secretary of Veterans Affairs.
‘‘(e) DUTIES.—The advisory committee established
under subsection (d) shall—
‘‘(1) recommend the appropriate inflationary
index to be used with respect to the inflation protec-
tion benefit portion of the standards;
‘‘(2) recommend the uniform needs assessment
mechanism to be used in determining the eligibility
of individuals for benefits under a policy;
‘‘(3) recommend appropriate standards for ben-
efits under section 2715(c); and
‘‘(4) perform such other activities as deter-
mined appropriate by the Secretary.
‘‘(f) ADMINISTRATIVE PROVISIONS.—The following
provisions of section 1886(e)(6) of the Social Security Act
shall apply to the advisory committee chosen under sub-
section (d) in the same manner as such provisions apply
under such section:
‘‘(1) Subparagraph (C) (relating to staffing and
administration).
‘‘(2) Subparagraph (D) (relating to compensa-
tion of members).
‘‘(3) Subparagraph (F) (relating to access to
information).
‘‘(4) Subparagraph (G) (relating to use of
funds).
‘‘(5) Subparagraph (H) (relating to periodic
GAO audits).
‘‘(6) Subparagraph (J) (relating to requests for
appropriations).
‘‘PART B—ESTABLISHMENT AND IMPLEMENTATION OF
LONG-TERM CARE INSURANCE POLICY STANDARDS
‘‘SEC. 2711. IMPLEMENTATION OF POLICY STANDARDS.
‘‘(a) IN GENERAL.—
‘‘(1) REGULATORY
PROGRAM.—No long-term
care policy (as defined in section (2721)) may be is-
sued, sold, or offered for sale as a long-term care in-
surance policy in a State on or after the date speci-
fied in section 2701(b) 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 section 2701(a); and
‘‘(ii) complies with the requirements
of subsection (b);
by the date specified in section 2701(b), and
the policy has been approved by the State com-
missioner or superintendent of insurance under
such program; or
‘‘(B) if the State has not established such
a program, or if the State’s regulatory program
has been decertified, the policy has been cer-
tified by the Secretary (in accordance with such
procedures as the Secretary may establish) as
meeting the standards established under section
2701(a) by the date specified in section
2701(b).
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 and proce-
dures established under section 2701 (a) and (b). If
the Secretary determines that a State regulatory
program no longer meets such standards and re-
quirements, before making a final determination, the
Secretary shall provide the State an opportunity to
adopt such a plan of correction as would permit the
program to continue to meet such standards and re-
quirements. If the Secretary makes a final deter-
mination that the State regulatory program, after
such an opportunity, fails to meet such standards
and requirements, the Secretary shall assume re-
sponsibility under paragraph (1)(B) with respect to
certifying policies in the State and shall exercise full
authority under section 2701 for carriers, agents, or
associations or its subsidiary in the State plans in
the State.
‘‘(b) ADDITIONAL REQUIREMENTS FOR APPROVAL
OF STATE REGULATORY PROGRAMS.—For purposes of
subsection (a)(1)(A)(ii), the requirements of this sub-
section for a State regulatory program are as follows:
‘‘(1) ENFORCEMENT.—The enforcement under
the program—
‘‘(A) shall be designed in a manner so as
to secure compliance with the standards within
30 days after the date of a finding of non-
compliance with such standards; and
‘‘(B) shall provide for notice in the annual
report required under paragraph (5) to the Sec-
retary of cases where such compliance is not se-
cured within such 30-day period.
‘‘(2) 
PROCESS.—The 
enforcement 
process
under each State regulatory program shall provide
for—
‘‘(A) procedures for individuals and enti-
ties to file written, signed complaints respecting
alleged violations of the standards;
‘‘(B) responding on a timely basis to such
complaints;
‘‘(C) the investigation of—
‘‘(i) those complaints which have a
reasonable probability of validity, and
‘‘(ii) such other alleged violations of
the standards as the program finds appro-
priate; and