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serting ‘‘1128A (other than a penalty arising from a
health benefit plan, as defined in subsection (i))’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect January 1, 1995.
Subtitle 
E—Medicare 
Payment
Changes; Part B Premium Tax
for High-Income Individuals
PART 1—MEDICARE PAYMENT CHANGES
SEC. 2401. ELIMINATION OF MEMBERSHIP LIMITATION FOR
MEDICARE HMOS.
(a) IN GENERAL.—Section 1876 of the Social Secu-
rity Act (42 U.S.C. 1395mm) is amended by striking sub-
section (f).
(b) CONFORMING AMENDMENTS.—Such section is
further amended—
(1) in subsection (c)(3)(A)(i), by striking ‘‘in
failure to meet the requirements of subsection (f) or
would result’’, and
(2) in subsection (i)(1)(C), by striking ‘‘(e), and
(f)’’ and inserting ‘‘and (e)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to contracts entered into on or
after the date of the enactment of this Act.
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SEC. 2402. EXPANSION AND REVISION OF MEDICARE SE-
LECT POLICIES.
(a) PERMITTING MEDICARE SELECT POLICIES IN
ALL STATES.—
(1) IN
GENERAL.—Subsection (c) of section
4358 of the Omnibus Budget Reconciliation Act of
1990 (hereafter referred to as ‘‘OBRA–1990’’) is
hereby repealed.
(2) CONFORMING AMENDMENT.—Section 4358
of OBRA–1990 is amended by redesignating sub-
section (d) as subsection (c).
(b) REQUIREMENTS OF MEDICARE SELECT POLI-
CIES.—Section 1882(t)(1) of the Social Security Act (42
U.S.C. 1395ss(t)(1)) is amended to read as follows:
‘‘(1)(A) If a medicare supplemental policy meets the
1991 NAIC Model Regulation or 1991 Federal Regulation
and otherwise complies with the requirements of this sec-
tion except that—
‘‘(i) the benefits under such policy are re-
stricted to items and services furnished by certain
entities (or reduced benefits are provided when items
or services are furnished by other entities), and
‘‘(ii) in the case of a policy described in sub-
paragraph (C)(i)—
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‘‘(I) the benefits under such policy are not
one of the groups or packages of benefits de-
scribed in subsection (p)(2)(A),
‘‘(II) except for nominal copayments im-
posed for services covered under part B of this
title, such benefits include at least the core
group of basic benefits described in subsection
(p)(2)(B), and
‘‘(III) an enrollee’s liability under such pol-
icy for physician’s services covered under part
B of this title is limited to the nominal
copayments described in subclause (II),
the policy shall nevertheless be treated as meeting those
standards if the policy meets the requirements of subpara-
graph (B).
‘‘(B) A policy meets the requirements of this sub-
paragraph if—
‘‘(i) full benefits are provided for items and
services furnished through a network of entities
which have entered into contracts or agreements
with the issuer of the policy,
‘‘(ii) full benefits are provided for items and
services furnished by other entities if the services are
medically necessary and immediately required be-
cause of an unforeseen illness, injury, or condition
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and it is not reasonable given the circumstances to
obtain the services through the network,
‘‘(iii) the network offers sufficient access,
‘‘(iv) the issuer of the policy has arrangements
for an ongoing quality assurance program for items
and services furnished through the network,
‘‘(v)(I) the issuer of the policy provides to each
enrollee at the time of enrollment an explanation
of—
‘‘(aa) the restrictions on payment under
the policy for services furnished other than by
or through the network,
‘‘(bb) out of area coverage under the pol-
icy,
‘‘(cc) the policy’s coverage of emergency
services and urgently needed care, and
‘‘(dd) the availability of a policy through
the entity that meets the 1991 Model NAIC
Regulation or 1991 Federal Regulation without
regard to this subsection and the premium
charged for such policy, and
‘‘(II) each enrollee prior to enrollment acknowl-
edges receipt of the explanation provided under
subclause (I), and
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‘‘(vi) the issuer of the policy makes available to
individuals, in addition to the policy described in this
subsection, any policy (otherwise offered by the is-
suer to individuals in the State) that meets the 1991
Model NAIC Regulation or 1991 Federal Regulation
and other requirements of this section without re-
gard to this subsection.
‘‘(C)(i) A policy described in this subparagraph—
‘‘(I) is offered by an eligible organization (as
defined in section 1876(b)),
‘‘(II) is not a policy or plan providing benefits
pursuant to a contract under section 1876 or an ap-
proved demonstration project described in section
603(c) of the Social Security Amendments of 1983,
section 2355 of the Deficit Reduction Act of 1984,
or section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986, and
‘‘(III) provides benefits which, when combined
with benefits which are available under this title, are
substantially similar to benefits under policies of-
fered to individuals who are not entitled to benefits
under this title.
‘‘(ii) In making a determination under subclause (III)
of clause (i) as to whether certain benefits are substan-
tially similar, there shall not be taken into account, except
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in the case of preventive services, benefits provided under
policies offered to individuals who are not entitled to bene-
fits under this title which are in addition to the benefits
covered by this title and which are benefits an entity must
provide in order to meet the definition of an eligible orga-
nization under section 1876(b)(1).’’.
(c) RENEWABILITY
OF MEDICARE SELECT POLI-
CIES.—Section 1882(q)(1) of the Social Security Act (42
U.S.C. 1395ss(q)(1)) is amended—
(1) by striking ‘‘(1) Each’’ and inserting
‘‘(1)(A) Except as provided in subparagraph (B),
each’’;
(2) by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B)(i) Except as provided in clause (ii), in the
case of a policy that meets the requirements of sub-
section (t), an issuer may cancel or nonrenew such
policy with respect to an individual who leaves the
service area of such policy.
‘‘(ii) If an individual described in clause (i)
moves to a geographic area where an issuer de-
scribed in clause (i), or where an affiliate of such is-
suer, is issuing medicare supplemental policies, such
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(4) by striking ‘‘the previous sentence’’ and in-
serting ‘‘this subparagraph’’; and
(5) by adding at the end the following new sub-
paragraph:
‘‘(B) If the Secretary determines that an issuer of
a policy approved under paragraph (1) has made a mis-
representation to the Secretary or has provided the Sec-
retary with false information regarding such policy, the
issuer is subject to a civil money penalty in an amount
not to exceed $100,000 for each such determination. The
provisions of section 1128A (other than the first sentence
of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under this subparagraph
in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).’’.
(e) EFFECTIVE DATES.—
(1) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners
(hereafter in this subsection referred to as the
‘‘NAIC’’) makes changes in the 1991 NAIC Model
Regulation (as defined in section 1882(p)(1)(A) of
the Social Security Act) to incorporate the additional
requirements imposed by the amendments made by
this section, section 1882(g)(2)(A) of such Act shall
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be applied in each State, effective for policies issued
to policyholders on and after the date specified in
paragraph (3), as if the reference to the Model Reg-
ulation adopted on June 6, 1979, were a reference
to the 1991 NAIC Model Regulation (as so defined)
as changed under this paragraph (such changed
Regulation referred to in this subsection as the
‘‘1994 NAIC Model Regulation’’).
(2) SECRETARY
STANDARDS.—If the NAIC
does not make changes in the 1991 NAIC Model
Regulation (as so defined) within the 6-month period
specified in paragraph (1), the Secretary of Health
and Human Services (in this subsection as the ‘‘Sec-
retary’’) shall promulgate a regulation and section
1882(g)(2)(A) of the Social Security Act shall be ap-
plied in each State, effective for policies issued to
policyholders on and after the date specified in para-
graph (3), as if the reference to the Model Regula-
tion adopted in June 6, 1979, were a reference to
the 1991 NAIC Model Regulation (as so defined) as
changed by the Secretary under this paragraph
(such changed Regulation referred to in this sub-
section as the ‘‘1994 Federal Regulation’’).
(3) DATE SPECIFIED.—
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(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State adopts the 1994
NAIC Model Regulation or the 1994 Fed-
eral Regulation; or
(ii) 1 year after the date the NAIC or
the Secretary first adopts such regulations.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies, in consultation with the NAIC,
as—
(i) requiring State legislation (other
than legislation appropriating funds) in
order for medicare supplemental policies to
meet the 1994 NAIC Model Regulation or
the 1994 Federal Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1995 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
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ary 1, 1995. For purposes of the previous sen-
tence, 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 regular session
of the State legislature.
SEC. 2403. IMPROVED EFFICIENCY THROUGH CONSOLIDA-
TION OF ADMINISTRATION OF PARTS A AND
B.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall take such steps as may be necessary
to consolidate the administration (including processing
systems) of parts A and B of the medicare program (under
title XVIII of the Social Security Act) including over a
5-year period.
(b) COMBINATION OF INTERMEDIARY AND CARRIER
FUNCTIONS.—In taking such steps, the Secretary shall
contract with a single entity that combines the fiscal
intermediary and carrier functions in each area except
where the Secretary finds that special regional or national
contracts are appropriate.
(c) SUPERSEDING CONFLICTING REQUIREMENTS.—
The provisions of sections 1816 and 1842 of the Social
Security Act (including provider nominating provisions in
such section 1816) are superseded to the extent required
to carry out this section.
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PART 2—PART B PREMIUM TAX FOR HIGH-
INCOME INDIVIDUALS
SEC. 2411. INCREASE IN MEDICARE PART B PREMIUM FOR
INDIVIDUALS WITH HIGH INCOME.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new part:
‘‘PART VIII—MEDICARE PART B PREMIUMS FOR
HIGH-INCOME INDIVIDUALS
‘‘Sec. 59B. Medicare part B premium tax.
‘‘SEC. 59B. MEDICARE PART B PREMIUM TAX.
‘‘(a) IMPOSITION OF TAX.—In the case of an individ-
ual to whom this section applies for the taxable year, there
is hereby imposed (in addition to any other tax imposed
by this subtitle) a tax for such taxable year equal to the
aggregate of the Medicare part B premium taxes for each
of the months during such year that such individual is
covered by Medicare part B.
‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—
This section shall apply to any individual for any taxable
year if—
‘‘(1) such individual is covered under Medicare
part B for any month during such year, and
‘‘(2) the modified adjusted gross income of the
taxpayer for such taxable year exceeds the threshold
amount.
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‘‘(c) MEDICARE
PART
B PREMIUM
TAX
FOR
MONTH.—
‘‘(1) IN GENERAL.—The Medicare part B pre-
mium tax for any month is 2⁄3 the amount equal to
the excess of—
‘‘(A) 150 percent of the monthly actuarial
rate for enrollees age 65 and over determined
for that calendar year under section 1839(b) of
the Social Security Act, over
‘‘(B) the total monthly premium under sec-
tion 1839 of the Social Security Act (deter-
mined without regard to subsections (b) and (f)
of section 1839 of such Act).
‘‘(2) PHASEIN
OF
TAX.—If the modified ad-
justed gross income of the taxpayer for any taxable
years exceeds the threshold amount by less than
$50,000, the Medicare part B premium tax for any
month during such taxable year shall be an amount
which bears the same ratio to the amount deter-
mined under paragraph (1) (without regard to this
paragraph) as such excess bears to $50,000. The
preceding sentence shall not apply to any individual
whose threshold amount is zero.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
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‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $100,000,
‘‘(B) $125,000 in the case of a joint re-
turn, and
‘‘(C) zero in the case of a taxpayer who—
‘‘(i) is married at the close of the tax-
able year but does not file a joint return
for such year, and
‘‘(ii) does not live apart from his
spouse at all times during the taxable year.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income—
‘‘(A) determined without regard to sections
135, 911, 931, and 933, and
‘‘(B) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax.
‘‘(3) MEDICARE PART B COVERAGE.—An indi-
vidual shall be treated as covered under Medicare
part B for any month if a premium is paid under
part B of title XVIII of the Social Security Act for
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the coverage of the individual under such part for
the month.
‘‘(4) MARRIED
INDIVIDUAL.—The determina-
tion of whether an individual is married shall be
made in accordance with section 7703.’’
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end thereof the following new item:
‘‘Part VIII. Medicare Part B Premiums For High-Income Individ-
uals.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to months after December 1993
in taxable years ending after December 31, 1993.
Subtitle f—Removing Anti-Trust
Impediments
SEC. 2501. ESTABLISHMENT OF LIMITED EXEMPTION PRO-
GRAM FOR HEALTH CARE JOINT VENTURES.
(a) ESTABLISHMENT.—
(1) IN
GENERAL.—Not later than 6 months
after the date of the enactment of this Act, the At-
torney General, after consultation with the Secretary
of Health and Human Services and the Interagency
Advisory Committee on Competition, Antitrust Pol-
icy, and Health Care, shall promulgate specific
guidelines under which a health care joint venture
may submit an application requesting that the At-
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torney General provide the entities participating in
the joint venture with an exemption under which
(notwithstanding any other provision of law)—
(A) monetary recovery on a claim under
the antitrust laws shall be limited to actual
damages if the claim results from conduct with-
in the scope of the joint venture that occurs
while the exemption is in effect; and
(B) the conduct of the entity in making or
performing a contract to carry out the joint
venture shall not be deemed illegal per se under
the antitrust laws but shall be judged on the
basis of its reasonableness, taking into account
all relevant factors affecting competition, in-
cluding (but not limited to) effects on competi-
tion in properly defined, relevant research, de-
velopment, product, process, and service mar-
kets (taking into consideration worldwide capac-
ity to the extent that it may be appropriate in
the circumstances).
(2) DEADLINE FOR RESPONSE.—The Attorney
General, after consultation with the Secretary and
the Advisory Committee, shall approve or disapprove
the application of a health care joint venture for an
exemption under this subsection not later than 30
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days after the Attorney General receives the joint
venture’s application.
(3) PROVIDING REASONS FOR DISAPPROVAL.—
If the Attorney General disapproves the application
of a health care joint venture for an exemption
under this subsection, the Attorney General shall
provide the joint venture with a statement explaining
the reasons for the Attorney General’s disapproval.
(b) REQUIREMENTS FOR APPROVAL.—For purposes
of subsection (a), the Attorney General shall approve the
application of a health care joint venture for an exemption
under subsection (a) if an entity participating in the joint
venture submits to the Attorney General an application
not later than 30 days after the entity has entered into
a written agreement to participate in the joint venture (or
not later than 30 days after the date of the enactment
of this Act in the case of a joint venture in effect as of
such date) that contains the following information and as-
surances:
(1) The identities of the parties to the joint
venture.
(2) The nature, objectives, and planned activi-
ties of the joint venture.
(3) Assurances that the entities participating in
the joint venture shall notify the Attorney General
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of any changes in the information described in para-
graphs (1) and (2) during the period for which the
exemption is in effect.
(c) REVOCATION OF EXEMPTION.—
(1) IN GENERAL.—The Attorney General, after
consultation with the Secretary, may revoke an ex-
emption provided to a health care joint venture
under this section if, at any time during which the
exemption is in effect, the Attorney General finds
that the joint venture no longer meets the applicable
requirements for approval under subsection (b), ex-
cept that the Attorney General may not revoke such
an exemption if the failure of the health care joint
venture to meet such requirements is merely tech-
nical in nature.
(2) TIMING.—The revocation of an exemption
under paragraph (1) shall apply only to conduct of
the health care joint venture occurring after the ex-
emption is no longer in effect.
(d) WITHDRAWAL OF APPLICATION.—Any party that
submits an application under this section may withdraw
such application at any time before the Attorney General’s
response to the application.
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(e) REQUIREMENTS RELATING TO NOTICE AND PUB-
LICATION
OF EXEMPTIONS
AND RELATED INFORMA-
TION.—
(1) PUBLICATION OF APPROVED APPLICATIONS
FOR EXEMPTIONS IN FEDERAL REGISTER.—
(A) IN GENERAL.—With respect to each
exemption for a health care joint venture pro-
vided under subsection (a), the Attorney Gen-
eral (acting jointly with the Secretary) shall—
(i) prepare a notice with respect to
the joint venture that identifies the parties
to the venture and that describes the
planned activities of the venture;
(ii) submit the notice to the entities
participating in the joint venture; and
(iii) after submitting the notice to
such entities (but not later than 30 days
after approving the application for the ex-
emption for the joint venture), publish the
notice in the Federal Register.
(B) EFFECT
OF
PUBLICATION.—An ex-
emption provided by the Attorney General
under subsection (a) shall take effect as of the
date of the publication in the Federal Register
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of the notice with respect to the exemption pur-
suant to subparagraph (A).
(2) WAIVER
OF
DISCLOSURE
REQUIREMENTS
FOR INFORMATION RELATING TO APPLICATIONS FOR
EXEMPTIONS.—
(A) IN
GENERAL.—All information and
documentary material submitted as part of an
application of a health care joint venture for an
exemption under subsection (a), together with
any other information obtained by the Attorney
General, the Secretary, or the Advisory Com-
mittee in the course of any investigation, ad-
ministrative proceeding, or case with respect to
a potential violation of the antitrust laws by the
joint venture with respect to which the exemp-
tion applies, shall be exempt from disclosure
under section 552 of title 5, United States
Code, and shall not be made publicly available
by any agency of the United States to which
such section applies, except as relevant to a law
enforcement investigation or in a judicial or ad-
ministrative proceeding in which such informa-
tion and material is subject to any protective
order.
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(B) EXCEPTION
FOR
INFORMATION
IN-
CLUDED IN FEDERAL REGISTER NOTICE.—Sub-
paragraph (A) shall not apply with respect to
information contained in a notice published in
the Federal Register pursuant to paragraph
(1).
(3) USE OF INFORMATION TO SUPPORT OR AN-
SWER CLAIMS UNDER ANTITRUST LAWS.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the fact of disclosure of con-
duct under an application for an exemption
under subsection (a) and the fact of publication
of a notice in the Federal Register under para-
graph (1) shall be admissible into evidence in
any judicial or administrative proceeding for the
sole purpose of establishing that a person is en-
titled to the protections provided by an exemp-
tion granted under subsection (a).
(B) EFFECT
OF
REJECTED
APPLICA-
TION.—If the Attorney General denies, in whole
or in part, an application for an exemption
under subsection (a), or revokes an exemption
under such section, neither the negative deter-
mination nor the statement of reasons therefor
shall be admissible into evidence in any admin-
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istrative or judicial proceeding for the purpose
of supporting or answering any claim under the
antitrust laws.
SEC. 2502. ISSUANCE OF HEALTH CARE CERTIFICATES OF
PUBLIC ADVANTAGE.
(a) ISSUANCE AND EFFECT OF CERTIFICATE.—The
Attorney General, after consultation with the Secretary
and the Advisory Committee, shall issue in accordance
with this section a certificate of public advantage to each
eligible health care joint venture that complies with the
requirements in effect under this section on or after the
expiration of the 1-year period that begins on the date
of the enactment of this Act (without regard to whether
or not the Attorney General has promulgated regulations
to carry out this section by such date). Such venture, and
the parties to such venture, shall not be liable under any
of the antitrust laws for conduct described in such certifi-
cate and engaged in by such venture if such conduct oc-
curs while such certificate is in effect.
(b) REQUIREMENTS APPLICABLE TO ISSUANCE OF
CERTIFICATES.—
(1) STANDARDS
TO
BE
MET.—The Attorney
General shall issue a certificate to an eligible health
care joint venture if the Attorney General finds
that—
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(A) the benefits that are likely to result
from carrying out the venture outweigh the re-
duction in competition (if any) that is likely to
result from the venture, and
(B) such reduction in competition is rea-
sonably necessary to obtain such benefits.
(2) FACTORS TO BE CONSIDERED.—
(A) WEIGHING OF BENEFITS AGAINST RE-
DUCTION
IN
COMPETITION.—For purposes of
making the finding described in paragraph
(1)(A), the Attorney General shall consider
whether the venture is likely —
(i) to maintain or to increase the
quality of health care,
(ii) to increase access to health care,
(iii) to achieve cost efficiencies that
will be passed on to health care consumers,
such as economies of scale, reduced trans-
action costs, and reduced administrative
costs,
(iv) to preserve the operation of
health care facilities located in underserved
geographical areas,
(v) to improve utilization of health
care resources, and
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(vi) to reduce inefficient health care
resource duplication.
(B) NECESSITY OF REDUCTION IN COM-
PETITION.—For purposes of making the finding
described in paragraph (1)(B), the Attorney
General shall consider—
(i) the ability of the providers of
health care services that are (or likely to
be) affected by the health care joint ven-
ture and the entities responsible for mak-
ing payments to such providers to nego-
tiate societally optimal payment and serv-
ice arrangements,
(ii) the effects of the health care joint
venture on premiums and other charges
imposed by the entities described in clause
(i), and
(iii) the availability of equally effi-
cient, less restrictive alternatives to achieve
the benefits that are intended to be
achieved by carrying out the venture.
(c) ESTABLISHMENT
OF CRITERIA
AND PROCE-
DURES.—Subject to subsections (d) and (e), not later than
1 year after the date of the enactment of this Act, the
Attorney General and the Secretary shall establish jointly
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by rule the criteria and procedures applicable to the issu-
ance of certificates under subsection (a). The rules shall
specify the form and content of the application to be sub-
mitted to the Attorney General to request a certificate,
the information required to be submitted in support of
such application, the procedures applicable to denying and
to revoking a certificate, and the procedures applicable to
the administrative appeal (if such appeal is authorized by
rule) of the denial and the revocation of a certificate. Such
information may include the terms of the health care joint
venture (in the case of a venture in existence as of the
time of the application) and implementation plan for the
joint venture.
(d) ELIGIBLE HEALTH CARE JOINT VENTURE.—To
be an eligible health care joint venture for purposes of this
section, a health care joint venture shall submit to the At-
torney General an application that complies with the rules
in effect under subsection (c) and that includes—
(1) an agreement by the parties to the venture
that the venture will not foreclose competition by en-
tering into contracts that prevent health care provid-
ers from providing health care in competition with
the venture,
(2) an agreement that the venture will submit
to the Attorney General annually a report that de-
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scribes the operations of the venture and informa-
tion regarding the impact of the venture on health
care and on competition in health care, and
(3) an agreement that the parties to the ven-
ture will notify the Attorney General and the Sec-
retary of the termination of the venture not later
than 30 days after such termination occurs.
(e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—
Not later than 30 days after an eligible health care joint
venture submits to the Attorney General an application
that complies with the rules in effect under subsection (c)
and with subsection (d), the Attorney General shall issue
or deny the issuance of such certificate. If, before the expi-
ration of such 30-day period, the Attorney General fails
to issue or deny the issuance of such certificate, the Attor-
ney General shall be deemed to have issued such certifi-
cate.
(f) REVOCATION OF CERTIFICATE.—Whenever the
Attorney General finds that a health care joint venture
with respect to which a certificate is in effect does not
meet the standards specified in subsection (b), the Attor-
ney General shall revoke such certificate.
(g) WRITTEN REASONS; JUDICIAL REVIEW.—
(1) DENIAL
AND
REVOCATION
OF
CERTIFI-
CATES.—If the Attorney General denies an applica-
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tion for a certificate or revokes a certificate, the At-
torney General shall include in the notice of denial
or revocation a statement of the reasons relied upon
for the denial or revocation of such certificate.
(2) JUDICIAL REVIEW.—
(A) AFTER
ADMINISTRATIVE
PROCEED-
ING.—(i) If the Attorney General denies an ap-
plication submitted or revokes a certificate is-
sued under this section after an opportunity for
hearing on the record, then any party to the
health care joint venture involved may com-
mence a civil action, not later than 60 days
after receiving notice of the denial or revoca-
tion, in an appropriate district court of the
United States for review of the record of such
denial or revocation.
(ii) As part of the Attorney General’s an-
swer, the Attorney General shall file in such
court a certified copy of the record on which
such denial or revocation is based. The findings
of fact of the Attorney General may be set aside
only if found to be unsupported by substantial
evidence in such record taken as a whole.
(B) DENIAL OR REVOCATION WITHOUT AD-
MINISTRATIVE
PROCEEDING.—If the Attorney
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General denies an application submitted or re-
vokes a certificate issued under this section
without an opportunity for hearing on the
record, then any party to the health care joint
venture involved may commence a civil action,
not later than 60 days after receiving notice of
the denial or revocation, in an appropriate dis-
trict court of the United States for de novo re-
view of such denial or revocation.
(h) EXEMPTION.—A person shall not be liable under
any of the antitrust laws for conduct necessary—
(1) to prepare, agree to prepare, or attempt to
agree to prepare an application to request a certifi-
cate under this section, or
(2) to attempt to enter into any health care
joint venture with respect to which such a certificate
is in effect.
SEC. 2503. INTERAGENCY ADVISORY COMMITTEE ON COM-
PETITION, ANTITRUST POLICY, AND HEALTH
CARE.
(a) ESTABLISHMENT.—There is hereby established
the Interagency Advisory Committee on Competition,
Antitrust Policy, and Health Care. The Advisory Commit-
tee shall be composed of—
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(1) the Secretary of Health and Human Serv-
ices (or the designee of the Secretary);
(2) the Attorney General (or the designee of the
Attorney General);
(3) the Director of the Office of Management
and Budget (or the designee of the Director); and
(4) a representative of the Federal Trade Com-
mission.
(b) DUTIES.—The duties of the Advisory Committee
are—
(1) to discuss and evaluate competition and
antitrust policy, and their implications with respect
to the performance of health care markets;
(2) to analyze the effectiveness of health care
joint ventures receiving exemptions under the pro-
gram established under section 2501(a) or certifi-
cates under section 2502 in reducing the costs of
and expanding access to the health care services that
are the subject of such ventures; and
(3) to make such recommendations to Congress
not later than 2 years after the date of the enact-
ment of this Act (and at such subsequent periods as
the Advisory Committee considers appropriate) re-
garding modifications to the program established
under section 2501(a) or to section 2502 as the Ad-
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visory Committee considers appropriate, including
modifications relating to the costs to health care
providers of obtaining an exemption for a joint ven-
ture under such program.
SEC. 2504. DEFINITIONS.
For purposes of this subtitle:
(1) The term ‘‘Advisory Committee’’ means the
Interagency Advisory Committee on Competition,
Antitrust Policy, and Health Care established under
section 2503.
(2) The term ‘‘antitrust laws’’—
(A) has the meaning given it in subsection
(a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition; and
(B) includes any State law similar to the
laws referred to in subparagraph (A).
(3) The term ‘‘certificate’’ means a certificate
of public advantage authorized to be issued under
section 2502(a).
(4) The term ‘‘health care joint venture’’ means
an agreement (whether existing or proposed) be-
tween 2 or more providers of health care services
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that is entered into solely for the purpose of sharing
in the provision of health care services and that in-
volves substantial integration or financial risk-shar-
ing between the parties, but does not include the ex-
changing of information, the entering into of any
agreement, or the engagement in any other conduct
that is not reasonably required to carry out such
agreement.
(5) The term ‘‘health care services’’ includes
services related to the delivery or administration of
health care services.
(6) The term ‘‘liable’’ means liable for any civil
or criminal violation of the antitrust laws.
(7) The term ‘‘provider of health care services’’
means any individual or entity that is engaged in the
delivery of health care services in a State and that
is required by State law or regulation to be licensed
or certified by the State to engage in the delivery of
such services in the State.
(8) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
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Subtitle G—Encouraging Enforce-
ment Activities of Medical Self-
Regulatory Entities
PART 1—APPLICATION OF THE CLAYTON
ACT TO MEDICAL SELF-REGULATORY
ENTITIES
SEC. 2601. ANTITRUST EXEMPTION FOR MEDICAL SELF-
REGULATORY ENTITIES.
(a) IN GENERAL.—(1) Except as provided in para-
graph (2), no damages, interest on damages, cost of suit,
or attorney’s fee may be recovered under section 4, 4A,
or 4C of the Clayton Act (15 U.S.C. 15, 15a, 15c), or
under any State law similar to such section, from any
medical self-regulatory entity (including its members, offi-
cers, employees, consultants, and volunteers or committees
thereof) as a result of engaging in standard setting or en-
forcement activities that are—
(A) designed to promote the quality of health
care provided to patients, and
(B) not conducted for purposes of financial
gain.
(2) Paragraph (1) shall not prohibit the recovery of
actual damages, interest on damages, the cost of suit, or
a reasonable attorney’s fee under section 4 or 4A of the
Clayton Act (15 U.S.C. 15, 15a), or under any State law
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similar to such section, by a State or the United States
from a medical self-regulatory entity (including its mem-
bers, officers, employees, consultants, and volunteers or
committees thereof) for injury sustained as a result of en-
gaging in the conduct described in such paragraph.
(b) FEES.—In any action under section 4, 4C, or 16
of the Clayton Act (15 U.S.C. 15, 15c, 26), or under a
similar State law, brought against any medical self-regu-
latory entity (including its members, officers, employees,
consultants, and volunteers or committees thereof) as a
result of engaging in conduct described in subsection
(a)(1), the court shall award the cost of suit, including
a reasonable attorney’s fee, to a substantially prevailing
defendant.
SEC. 2602. DEFINITIONS.
For purposes of this subtitle:
(1) The term ‘‘medical self-regulatory entity’’
means a medical society or association, a specialty
board, a recognized accrediting agency, or a hospital
medical staff.
(2) The term ‘‘standard setting and enforce-
ment activities’’ means—
(A) accreditation of health care practition-
ers, health care providers, medical education in-
stitutions, or medical education programs,
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(B) technology assessment and risk man-
agement activities,
(C) the development and implementation of
practice guidelines or practice parameters, or
(D) official peer review proceedings under-
taken by a hospital medical staff (or committee
thereof) or a medical society or association for
purposes of evaluating the quality of health care
provided by a medical professional.
PART 2—CONSULTATION BY FEDERAL
AGENCIES
SEC. 2611. CONSULTATION WITH MEDICAL SELF-REGU-
LATORY 
ENTITIES 
RESPECTING 
MEDICAL
PROFESSIONAL 
GUIDELINES 
AND 
STAND-
ARDS.
Any Federal agency engaged in the establishment of
medical professional standards shall consult with appro-
priate medical societies or associations, specialty boards,
or recognized accrediting agencies, if available, in carrying
out medical professional standard setting and guidelines
or standards relating to the practice of medicine.
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Subtitle 
H—Prefunding 
Govern-
ment Health Benefits for Cer-
tain Annuitants
SEC. 
2701. 
REQUIREMENT 
THAT 
CERTAIN 
AGENCIES
PREFUND GOVERNMENT HEALTH BENEFITS
CONTRIBUTIONS FOR THEIR ANNUITANTS.
(a) DEFINITIONS.—For the purpose of this section—
(1) the term ‘‘agency’’ means any agency or
other instrumentality within the executive branch of
the Government, the receipts and disbursements of
which are not generally included in the totals of the
budget of the United States Government submitted
by the President;
(2) the term ‘‘health benefits plan’’ means, with
respect to an agency, a health benefits plan, estab-
lished by or under Federal law, in which employees
or annuitants of such agency may participate;
(3) the term ‘‘health-benefits coverage’’ means
coverage under a health benefits plan’’;
(4) an individual shall be considered to be an
‘‘annuitant of an agency’’ if such individual is enti-
tled to an annuity, under a retirement system estab-
lished by or under Federal law, by virtue of—
(A) such individual’s service with, and sep-
aration from, such agency; or
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(B) being the survivor of an annuitant
under subparagraph (A) or of an individual who
died while employed by such agency; and
(5) the term ‘‘Office’’ means the Office of Per-
sonnel Management.
(b) PREFUNDING REQUIREMENT.—
(1) IN GENERAL.—Effective as of October 1,
1994, each agency (or February 1, 1995, in the case
of the agency with the greatest number of employ-
ees, as determined by the Office) shall be required
to prepay the Government contributions which are
or will be required in connection with providing
health-benefits coverage for annuitants of such agen-
cy.
(2) REGULATIONS.—The Office shall prescribe
such regulations as may be necessary to carry out
this section. The regulations shall be designed to en-
sure at least the following:
(A) Amounts paid by each agency shall be
sufficient to cover the amounts which would
otherwise be payable by such agency (on a
‘‘pay-as-you-go’’ basis), on or after the applica-
ble effective date under paragraph (1), on be-
half of—
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(i) individuals who are annuitants of
the agency as of such effective date; and
(ii) individuals who are employed by
the agency as of such effective date, or
who become employed by the agency after
such effective date, after such individuals
have become annuitants of the agency (in-
cluding their survivors).
(B)(i) For purposes of determining any
amounts payable by an agency—
(I) this section shall be treated as if
it had taken effect at the beginning of the
20-year period which ends on the effective
date applicable under paragraph (1) with
respect to such agency; and
(II) in addition to any amounts pay-
able under subparagraph (A), each agency
shall also be responsible for paying any
amounts for which it would have been re-
sponsible, with respect to the 20-year pe-
riod described in subclause (I), in connec-
tion with any individuals who are annu-
itants or employees of the agency as of the
applicable effective date under paragraph
(1).
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(ii) Any amounts payable under this sub-
paragraph for periods preceding the applicable
effective date under paragraph (1) shall be pay-
able in equal installments over the 20-year pe-
riod beginning on such effective date.
(c) FASB STANDARDS.—Regulations under sub-
section (b) shall be in conformance with the provisions of
standard 106 of the Financial Accounting Standards
Board, issued in December 1990.
(d) CLARIFICATION.—Nothing in this section shall be
considered to permit or require duplicative payments on
behalf of any individuals.
(e) DRAFT LEGISLATION.—The Office shall prepare
and submit to Congress any draft legislation which may
be necessary in order to carry out this section.
Subtitle I—Miscellaneous
Provisions
SEC. 2801. INCREASE IN MINIMUM AGE REQUIRED IN
ORDER TO BE ELIGIBLE FOR AN IMMEDIATE
CIVIL SERVICE ANNUITY.
(a) CIVIL SERVICE RETIREMENT SYSTEM.—
(1) WITH
YEARS
OF
SERVICE.—Section
8336(a) of title 5, United States Code, is amended
to read as follows:
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‘‘(a)(1) An employee who is separated from the serv-
ice after attaining the minimum retirement age under
paragraph (2) and completing 30 years of service is enti-
tled to an annuity.
‘‘(2) The minimum retirement age under this para-
graph is—
‘‘(A) for an individual whose date of birth is be-
fore January 1, 1939, 55 years of age; and
‘‘(B) for an individual whose date of birth is
after December 31, 1938, and before January 1,
1942, 58 years of age.
‘‘(3) The preceding provisions of this subsection shall
not apply with respect to any individual whose date of
birth is after December 31, 1941.’’.
(2) WITH
YEARS
OF
SERVICE.—Section
8336(b) of title 5, United States Code, is amended
to read as follows:
‘‘(b)(1) An employee who is separated from the serv-
ice after attaining the minimum retirement age under
paragraph (2) and completing 20 years of service is enti-
tled to an annuity.
‘‘(2) The minimum retirement age under this para-
graph is, for an individual whose date of birth is before
January 1, 1935, 60 years of age.
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‘‘(3) The preceding provisions of this subsection shall
not apply with respect to any individual whose date of
birth is after December 31, 1934.’’.
(3) MEMBERS OF CONGRESS.—Section 8336(g)
of title 5, United States Code, is amended—
(A) by redesignating paragraphs (1) and
(2) as subparagraphs (A) and (B), respectively,
and by striking ‘‘(g)’’ and inserting ‘‘(g)(1)’’;
(B) in the first sentence by striking ‘‘be-
coming 60 years of age’’ and inserting ‘‘satisfy-
ing the requirements of paragraph (2)’’;
(C) in the second sentence by striking ‘‘be-
coming 55 years of age (but before becoming 60
years of age)’’ and inserting ‘‘satisfying the re-
quirements of paragraph (3)’’; and
(D) by adding at the end the following:
‘‘(2) A Member shall be considered to satisfy the re-
quirements of this paragraph if such Member has attained
the minimum retirement age which would apply to such
Member under section 8336(b), except that such require-
ments shall not be considered satisfied by any Member de-
scribed in section 8336(b)(3).
‘‘(3) A Member shall be considered to satisfy the re-
quirements of this paragraph if such Member—
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‘‘(A) has attained the minimum retirement age
which would apply to such Member under section
8336(a), but
‘‘(B) has not attained the minimum retirement
age which would apply to such Member under sec-
tion 8336(b),
except that such requirements shall not be considered sat-
isfied by any Member described in section 8336(b)(3).’’.
(b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.—
(1) WITH
YEARS
OF
SERVICE.—Section
8412(b) of title 5, United States Code, is amended
to read as follows:
‘‘(b)(1) An employee or Member who is separated
from the service after attaining the minimum retirement
age under paragraph (2) and completing 20 years of serv-
ice is entitled to an annuity.
‘‘(2) The minimum retirement age under this para-
graph is, for an individual whose date of birth is before
January 1, 1935, 60 years of age.
‘‘(3) The preceding provisions of this subsection shall
not apply with respect to any individual whose date of
birth is after December 31, 1934.’’.
(2) WITH
YEARS
OF
SERVICE.—Section
8412(h) of title 5, United States Code, is amended
to read as follows:
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‘‘(h)(1) The applicable minimum retirement age
under this subsection is—
‘‘(A) for an individual whose date of birth is be-
fore January 1, 1939, 55 years of age; and
‘‘(B) for an individual whose date of birth is
after December 31, 1938, and before January 1,
1948, 58 years of age.
‘‘(2) Nothing in paragraph (1) shall be considered to
apply with respect to any individual whose date of birth
is after December 31, 1947.’’.
(c) 
CONFORMING
AMENDMENT.—Section
8442(c)(2)(B)(i)(I) of title 5, United States Code, is
amended by striking ‘‘age 60’’ and inserting ‘‘the mini-
mum retirement age under section 8412(b)’’.
(d) CONFORMANCE OF THE RETIREMENT SYSTEMS
RELATING TO THE FOREIGN SERVICE AND THE CENTRAL
INTELLIGENCE AGENCY.—
(1) FOREIGN SERVICE.—The President shall, in
accordance with applicable provisions of section 827
of the Foreign Service Act of 1980 (22 U.S.C.
4067), provide that the Foreign Service Retirement
and Disability System and the Foreign Service Pen-
sion System are conformed to reflect the amend-
ments made by this section.
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(2) CENTRAL
INTELLIGENCE
AGENCY.—The
President shall, using the authority available to him
under section 292 of the Central Intelligence Agency
Retirement Act, as set forth in section 802 of the
CIARDS Technical Corrections Act of 1992 (Public
Law 102–496; 106 Stat. 3241), provide that the
Central Intelligence Agency Retirement and Disabil-
ity System shall be conformed to reflect the amend-
ments made by this section.
(e) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall take effect on January
1, 1994, and shall apply with respect to annuities based
on the service of any individual separating on or after that
date.
TITLE III—LONG-TERM CARE
Subtitle A—Tax Treatment of Long-
term Care Insurance
SEC. 3001. 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:
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‘‘SEC. 818A. TREATMENT OF LONG-TERM CARE INSURANCE
OR PLANS.
‘‘(a) GENERAL RULE.—For purposes of this part, a
long-term care insurance contract shall be treated as an
accident or health insurance contract.
‘‘(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 for expenses incurred for any day does not
exceed $200,
‘‘(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
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‘‘(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) 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 during the period to which the pay-
ments relate.
‘‘(B) 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.
‘‘(C) REFUNDS OF PREMIUMS.—Paragraph
(1)(F) shall not apply to any refund of pre-
miums on surrender or cancellation of the con-
tract.
‘‘(c) QUALIFIED LONG-TERM CARE SERVICES.—For
purposes of this section—
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‘‘(1) IN GENERAL.—The term ‘qualified long-
term care services’ means necessary diagnostic, pre-
ventive, therapeutic, and rehabilitative services, and
maintenance or personal care services, which—
‘‘(A) are required by a chronically ill indi-
vidual in a qualified facility, and
‘‘(B) are provided pursuant to a plan of
care prescribed by a licensed health care practi-
tioner.
‘‘(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
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‘‘(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.
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‘‘(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).
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‘‘(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 1994, 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. 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.
‘‘(2) MEDICAL CARE COST ADJUSTMENT.—For
purposes of paragraph (1), the medical care cost ad-
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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 1993.’’
(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. 3002. 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:
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‘‘The preceding sentence shall not apply to any plan pro-
viding coverage for long-term care services.’’
SEC. 3003. 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.—
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(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)(A) 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 paragraph (10)) shall
be taken into account under subparagraph (D).’’
(B) Subsection (d) of section 213 is amended
by adding at the end the following new paragraph:
‘‘(10) ELIGIBLE
LONG-TERM
CARE
PRE-
MIUMS.—
‘‘(A) IN GENERAL.—For purposes of this
section, the term ‘eligible long-term care pre-
miums’ means the amount paid during a tax-
able year for any long-term care insurance con-
tract (as defined in section 818A) covering an
individual, to the extent such amount does not
exceed the limitation determined under the fol-
lowing table:
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‘‘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.
‘‘(B) INDEXING.—
‘‘(i) IN GENERAL.—In the case of any
taxable year beginning in a calendar year
after 1993, each dollar amount contained
in paragraph (1) shall be increased by the
medical care cost adjustment of such
amount for such calendar year. If any in-
crease determined under the preceding sen-
tence is not a multiple of $10, such in-
crease shall be rounded to the nearest mul-
tiple of $10.
‘‘(ii) MEDICAL
CARE
COST
ADJUST-
MENT.—For purposes of clause (i), the
medical care cost adjustment for any cal-
endar year is the percentage (if any) by
which—
‘‘(I) the medical care component
of the Consumer Price Index (as de-
fined in section 1(f)(5)) for August of
the preceding calendar year, exceeds
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‘‘(II) such component for August
of 1991.’’
(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. 3004. CERTAIN EXCHANGES OF LIFE INSURANCE CON-
TRACTS FOR LONG-TERM CARE INSURANCE
CONTRACTS NOT TAXABLE.
Subsection (a) of section 1035 of the Internal Reve-
nue Code of 1986 (relating to certain exchanges of insur-
ance contracts) is amended by striking the period at the
end of paragraph (3) and inserting ‘‘; or’’, and by adding
at the end thereof the following new paragraph:
‘‘(4) a contract of life insurance or an endow-
ment or annuity contract for a long-term care insur-
ance contract (as defined in section 818A).’’
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SEC. 
3005. 
EXCLUSION 
FROM 
GROSS 
INCOME 
FOR
AMOUNTS WITHDRAWN FROM INDIVIDUAL
RETIREMENT 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
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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).
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‘‘(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.’’
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SEC. 3006. TAX TREATMENT OF ACCELERATED DEATH BEN-
EFITS 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 less.
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‘‘(3) PHYSICIAN.—For purposes of this sub-
section, the term ‘physician’ has the meaning given
to such term by section 213(d)(4).’’
SEC. 3007. EFFECTIVE DATE.
The amendments made by this subtitle shall apply to
taxable years beginning after December 31, 1994.
Subtitle B—Protection of Assets
Under Medicaid Through Use of
Qualified Long-term Care Insur-
ance
SEC. 3101. PROTECTION OF ASSETS THROUGH USE OF
QUALIFIED LONG-TERM CARE INSURANCE.
(a) IN GENERAL.—Title XIX of the Social Security
Act, as amended by section 1601(a), is amended—
(1) by redesignating section 1932 as section
1933; and
(2) by inserting after section 1931 the following
new section:
‘‘SPECIAL RULES FOR ASSET DISREGARD IN THE CASE OF
QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS
‘‘SEC. 1932. (a) IN GENERAL.—Each State plan
under this title, as a condition for the receipt of payment
under section 1903(a) with respect to long-term care serv-
ices (as defined in subsection (c)(1)), shall provide that
in determining the eligibility of an individual for medical
assistance under the plan with respect to such services
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there shall be disregarded some or all of the individual’s
assets which are attributable (as determined under sub-
section (c)(2)) to coverage under a qualified long-term
care insurance contract (as defined in subsection (b)).
‘‘(b) QUALIFIED
LONG-TERM
CARE
INSURANCE
CONTRACT DEFINED.—In this section, the term ‘qualified
long-term care insurance contract’ means, with respect to
a State, a long-term care insurance contract (as defined
in section 818A(b) of the Internal Revenue Code of 1986)
which—
‘‘(1) provides such protection against the costs
of receiving long-term care services as the State may
require by law;
‘‘(2) provides that benefits under the contract
shall be paid without regard to eligibility for medical
assistance under this title; and
‘‘(3) meets such other requirements (such as re-
quirements relating to premiums, disclosure, mini-
mum benefits, rights of conversion, and standards
for claims processing) as the State may determine to
be appropriate.
‘‘(c) OTHER DEFINITIONS.—In this section:
‘‘(1) LONG-TERM CARE SERVICES.—The term
‘long-term care services’ means nursing facility serv-
ices, home health care services, and home and com-
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munity-based services, and includes such other simi-
lar items and services described in section 1905(a)
as a State may specify.
‘‘(2) ATTRIBUTION RULES.—An individual’s as-
sets are considered to be ‘attributable’ to a qualified
long-term care insurance contract to the extent spec-
ified under the State plan. Such a plan shall provide
for at least one of the following:
‘‘(A) All assets are considered attributable
if the insurance contract provides coverage for
at least a specified period of coverage (of not
less than 3 years and of not more than 6 years)
for long-term care services.
‘‘(B) An amount of assets, up to the dollar
limitation on benefits for long-term care serv-
ices under the contract, is considered attrib-
utable to the contract.’’.
(b) 
CONFORMING
AMENDMENT.—Section
1902(a)(17)(A) of such Act (42 U.S.C. 1396a(a)(17)(A))
is amended by inserting ‘‘and section 1932’’ after ‘‘objec-
tives of this title’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply (except as provided under
paragraph (2)) to payments to States under title
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XIX of the Social Security Act for calendar quarters
beginning on or after one year after the date of the
enactment of this Act, without regard to whether
regulations to implement such amendment are pro-
mulgated by such date.
(2) DELAY PERMITTED IF STATE LEGISLATION
REQUIRED.—In the case of a State plan for medical
assistance under title XIX of the Social Security Act
which the Secretary of Health and Human Services
determines requires State legislation (other than leg-
islation authorizing or appropriating funds) in order
for the plan to meet the additional requirements im-
posed by the amendments made by this section, the
State plan shall not be regarded as failing to comply
with the requirements of such title solely on the
basis of its failure to meet these additional require-
ments before the first day of the first calendar quar-
ter beginning after the close of the first regular ses-
sion of the State legislature that begins after the
date of the enactment of this Act. 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 regular session of
the State legislature.
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Subtitle C—Studies
SEC. 3201. FEASIBILITY OF ENCOURAGING HEALTH CARE
PROVIDERS TO DONATE SERVICES TO HOME-
BOUND PATIENTS.
The Comptroller General of the United States shall
conduct a study on the feasibility of encouraging health
care providers to donate their services to homebound pa-
tients. Such study shall include an examination of the ef-
fects of qualifying such services as a charitable contribu-
tion.
SEC. 3202. FEASIBILITY OF TAX CREDIT FOR HEADS OF
HOUSEHOLDS WHO CARE FOR ELDERLY FAM-
ILY MEMBERS IN THEIR HOMES.
The Comptroller General of the United States shall
conduct a study on the feasibility of providing heads of
households who care for elderly family members in their
homes with a tax credit. Such study shall estimate the
cost of such a tax credit which would apply to expenses
incurred in the custodial care of such an elderly family
member to the extent such expenses exceed 5 percent of
adjusted gross income.
SEC. 3203. CASE MANAGEMENT OF CURRENT LONG-TERM
CARE BENEFITS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a study of the feasibility
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of encouraging or requiring the use of a single designated
public or nonprofit agency (such as an area agency on
aging) to coordinate, through case management, the provi-
sion of long-term care benefits under current Federal,
State, and local programs in a geographic area.
(b) REPORT.—The Secretary shall submit to Con-
gress a report on the study conducted under subsection
(a) by not later than 1 year after the date of the enact-
ment of this Act. Such report shall include such rec-
ommendations regarding changes in legislation to encour-
age or require the use (described in subsection (a)) of an
agency to coordinate long-term care benefits as may be
appropriate.
Subtitle D—Volunteer Service
Credit Demonstration Projects
SEC. 3301. AMENDMENT TO THE OLDER AMERICANS ACT
OF 1965.
(a) IN GENERAL.—Part B of title IV of the Older
Americans Act of 1965 (42 U.S.C. 3034–3035r) is amend-
ed by adding at the end the following:
‘‘SEC. 429K. VOLUNTEER SERVICE CREDIT DEMONSTRA-
TION PROJECTS.
‘‘(a) REQUIREMENTS.—The Commissioner shall—
‘‘(1) establish and operate (directly, or through
the State agency on aging or one or more area agen-
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cies on aging) a volunteer service credit demonstra-
tion project in all or part of each State;
‘‘(2) establish criteria for selecting individuals
to whom volunteer services will be provided under
volunteer service credit demonstration projects oper-
ated under paragraph (1);
‘‘(3) recruit and train (directly or through State
agencies on aging or area agencies on aging) individ-
uals who volunteer to provide services through such
projects;
‘‘(4) establish a minimum standard for each
service to be provided by volunteers through such
projects;
‘‘(5) monitor services provided by volunteers
through such projects to ensure that standards es-
tablished under paragraph (4) are met; and
‘‘(6) maintain (directly or through State agen-
cies on aging or area agencies on aging) with respect
to each individual who provides services through a
volunteer service credit demonstration project oper-
ated under paragraph (1) a separately identifiable
account showing the number of hours such individ-
ual provided such services.
‘‘(b) DEFINITION.—For purposes of subsection (a),
the term ‘volunteer service credit demonstration project’