IB
Union Calendar No. 333
106TH CONGRESS
2D SESSION
H. R. 4040
[Report No. 106–610, Part I]
To amend title 5, United States Code, to provide for the establishment
of a program under which long-term care insurance is made available
to Federal employees, members of the uniformed services, and civilian
and military retirees, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 21, 2000
Mr. SCARBOROUGH (for himself, Mr. CUMMINGS, Mr. MICA, Ms. NORTON, Mr.
MILLER of Florida, and Mr. ALLEN) introduced the following bill; which
was referred to the Committee on Government Reform, and in addition
to the Committee on Armed Services, for a period to be subsequently de-
termined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
MAY 8, 2000
Additional 
sponsors: 
Mrs. 
MORELLA, 
Mr. 
DAVIS
of 
Virginia, 
Mr.
BLUMENAUER, Mr. MORAN of Virginia, Mr. MCCOLLUM, Mr. HALL of
Ohio, Mr. OSE, Mr. MCHUGH, Mr. GILMAN, Mr. KASICH, Mr. FROST,
Ms. DANNER, Mr. PALLONE, Mr. PETRI, Mr. WELDON of Florida, Mr.
SAXTON, Mr. FOLEY, Mr. LIPINSKI, Mr. ENGLISH, Mr. WAMP, Mr. NAD-
LER, Mr. CALVERT, and Mr. MCINTOSH
MAY 8, 2000
Reported from the Committee on Government Reform with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
MAY 8, 2000
Committee on Armed Services discharged; committed to the Committee of the
Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on March 21, 2000]
A BILL
To amend title 5, United States Code, to provide for the
establishment of a program under which long-term care
insurance is made available to Federal employees, mem-
bers of the uniformed services, and civilian and military
retirees, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Long-Term Care Secu-
rity Act’’.
SEC. 2. LONG-TERM CARE INSURANCE.
(a) IN GENERAL.—Subpart G of part III of title 5,
United States Code, is amended by adding at the end the
following:
‘‘CHAPTER 90—LONG-TERM CARE
INSURANCE
‘‘Sec.
‘‘9001. Definitions.
‘‘9002. Availability of insurance.
‘‘9003. Contracting authority.
‘‘9004. Financing.
‘‘9005. Preemption.
‘‘9006. Studies, reports, and audits.
‘‘9007. Jurisdiction of courts.
‘‘9008. Administrative functions.
‘‘9009. Cost accounting standards.
‘‘§ 9001. Definitions
‘‘For purposes of this chapter:
‘‘(1) EMPLOYEE.—The term ‘employee’ means—
‘‘(A) an employee as defined by section
8901(1); and
‘‘(B) an individual described in section
2105(e);
but does not include an individual employed by the
government of the District of Columbia.
‘‘(2) ANNUITANT.—The term ‘annuitant’ has the
meaning such term would have under paragraph (3)
of section 8901 if, for purposes of such paragraph, the
term ‘employee’ were considered to have the meaning
given to it under paragraph (1) of this subsection.
‘‘(3) MEMBER OF THE UNIFORMED SERVICES.—
The term ‘member of the uniformed services’ means a
member of the uniformed services, other than a retired
member of the uniformed services.
‘‘(4) RETIRED
MEMBER
OF
THE
UNIFORMED
SERVICES.—The term ‘retired member of the uni-
formed services’ means a member or former member
of the uniformed services entitled to retired or re-
tainer pay.
‘‘(5) QUALIFIED RELATIVE.—The term ‘qualified
relative’ means each of the following:
‘‘(A) The spouse of an individual described
in paragraph (1), (2), (3), or (4).
‘‘(B) A parent, stepparent, or parent-in-law
of an individual described in paragraph (1) or
(3).
‘‘(C) A child (including an adopted child, a
stepchild, or, to the extent the Office of Personnel
Management by regulation provides, a foster
child) of an individual described in paragraph
(1), (2), (3), or (4), if such child is at least 18
years of age.
‘‘(D) An individual having such other rela-
tionship to an individual described in paragraph
(1), (2), (3), or (4) as the Office may by regula-
tion prescribe.
‘‘(6) ELIGIBLE INDIVIDUAL.—The term ‘eligible
individual’ refers to an individual described in para-
graph (1), (2), (3), (4), or (5).
‘‘(7) QUALIFIED CARRIER.—The term ‘qualified
carrier’ means an insurance company (or consortium
of insurance companies) that is licensed to issue long-
term care insurance in all States, taking any subsidi-
aries of such a company into account (and, in the
case of a consortium, considering the member compa-
nies and any subsidiaries thereof, collectively).
‘‘(8) STATE.—The term ‘State’ includes the Dis-
trict of Columbia.
‘‘(9) QUALIFIED
LONG-TERM
CARE
INSURANCE
CONTRACT.—The term ‘qualified long-term care insur-
ance contract’ has the meaning given such term by
section 7702B of the Internal Revenue Code of 1986.
‘‘(10) APPROPRIATE SECRETARY.—The term ‘ap-
propriate Secretary’ means—
‘‘(A) except as otherwise provided in this
paragraph, the Secretary of Defense;
‘‘(B) with respect to the Coast Guard when
it is not operating as a service of the Navy, the
Secretary of Transportation;
‘‘(C) with respect to the commissioned corps
of the National Oceanic and Atmospheric Ad-
ministration, the Secretary of Commerce; and
‘‘(D) with respect to the commissioned corps
of the Public Health Service, the Secretary of
Health and Human Services.
‘‘§ 9002. Availability of insurance
‘‘(a) IN GENERAL.—The Office of Personnel Manage-
ment shall establish and, in consultation with the appro-
priate Secretaries, administer a program through which an
individual described in paragraph (1), (2), (3), (4), or (5)
of section 9001 may obtain long-term care insurance cov-
erage under this chapter for such individual.
‘‘(b) GENERAL REQUIREMENTS.—Long-term care in-
surance may not be offered under this chapter unless—
‘‘(1) the only coverage provided is under quali-
fied long-term care insurance contracts; and
‘‘(2) each insurance contract under which any
such coverage is provided is issued by a qualified car-
rier.
‘‘(c) DOCUMENTATION REQUIREMENT.—As a condition
for obtaining long-term care insurance coverage under this
chapter based on one’s status as a qualified relative, an ap-
plicant shall provide documentation to demonstrate the re-
lationship, as prescribed by the Office.
‘‘(d) UNDERWRITING STANDARDS.—
‘‘(1) DISQUALIFYING
CONDITION.—Nothing in
this chapter shall be considered to require that long-
term care insurance coverage be made available in the
case of any individual who would be eligible for bene-
fits immediately.
‘‘(2) SPOUSAL PARITY.—For the purpose of un-
derwriting standards, a spouse of an individual de-
scribed in paragraph (1), (2), (3), or (4) of section
9001 shall, as nearly as practicable, be treated like
that individual.
remain in effect so long as premiums continue to be timely
made. However, the authority to revise premiums under
this chapter shall be available only on a class basis and
only to the extent otherwise allowable under section 9003(b).
‘‘§ 9003. Contracting authority
‘‘(a) IN GENERAL.—The Office of Personnel Manage-
ment shall, without regard to section 5 of title 41 or any
other statute requiring competitive bidding, contract with
1 or more qualified carriers for a policy or policies of long-
term care insurance. The Office shall ensure that each re-
sulting contract (hereinafter in this chapter referred to as
a ‘master contract’) is awarded on the basis of contractor
qualifications, price, and reasonable competition.
‘‘(b) TERMS AND CONDITIONS.—
‘‘(1) IN GENERAL.—Each master contract under
this chapter shall contain—
‘‘(A) a detailed statement of the benefits of-
fered (including any maximums, limitations, ex-
clusions, and other definitions of benefits);
‘‘(B) the premiums charged (including any
limitations or other conditions on their subse-
quent adjustment);
‘‘(C) the terms of the enrollment period; and
‘‘(D) such other terms and conditions as
may be mutually agreed to by the Office and the
carrier involved, consistent with the requirements
of this chapter.
‘‘(2) PREMIUMS.—Premiums charged under each
master contract entered into under this section shall
reasonably and equitably reflect the cost of the benefits
provided, as determined by the Office. The premiums
shall not be adjusted during the term of the contract
unless mutually agreed to by the Office and the car-
rier.
‘‘(3) 
NONRENEWABILITY.—Master 
contracts
under this chapter may not be made automatically
renewable.
‘‘(c) PAYMENT
OF REQUIRED BENEFITS; DISPUTE
RESOLUTION.—
‘‘(1) IN GENERAL.—Each master contract under
this chapter shall require the carrier to agree—
‘‘(A) to provide payments or benefits to an
eligible individual if such individual is entitled
thereto under the terms of the contract;
‘‘(B) to establish internal administrative
procedures designed to expeditiously resolve dis-
putes regarding claims for payments or benefits
under the terms of the contract; and
‘‘(C) for disputes not resolved under sub-
paragraph (B), to establish procedures for 1 or
more alternative means of dispute resolution in-
volving independent third-party review under
appropriate circumstances mutually acceptable
to the Office and the carrier.
‘‘(2) ELIGIBILITY.—A carrier’s determination as
to whether or not a particular individual is eligible
to obtain long-term care insurance coverage under
this chapter shall be subject to review only to the ex-
tent and in the manner provided in the applicable
master contract.
‘‘(3) OTHER
CLAIMS.—Disputes arising under
this chapter between a carrier and the Office shall,
after exhaustion of administrative remedies, be subject
to de novo judicial review under section 9007.
‘‘(4) RULE OF CONSTRUCTION.—Nothing in this
chapter shall be considered to grant authority for the
Office or a third-party reviewer to change the terms
of any contract under this chapter.
‘‘(d) DURATION.—
‘‘(1) IN GENERAL.—Each master contract under
this chapter shall be for a term of 7 years, unless ter-
minated earlier by the Office in accordance with the
terms of such contract. However, the rights and re-
sponsibilities of the enrolled individual, the insurer,
and the Office (or duly designated third-party admin-
istrator) under such contract shall continue with re-
spect to such individual until the termination of cov-
erage of the enrolled individual or the effective date
of a successor contract thereto.
‘‘(2) EXCEPTION.—
‘‘(A) SHORTER DURATION.—In the case of a
master contract entered into before the end of the
period described in subparagraph (B), para-
graph (1) shall be applied by substituting ‘end-
ing on the last day of the 7-year period described
in paragraph (2)(B)’ for ‘of 7 years’.
‘‘(B) DEFINITION.—The period described in
this subparagraph is the 7-year period beginning
on the earliest date as of which any long-term
care insurance coverage under this chapter be-
comes effective.
‘‘(3) CONGRESSIONAL
NOTIFICATION.—No later
than 180 days after receiving the second report re-
quired under section 9006(c), the Office of Personnel
Management shall submit to the Committees on Gov-
ernment Reform and on Armed Services of the House
of Representatives and the Committees on Govern-
mental Affairs and on Armed Services of the Senate,
a written recommendation as to whether the program
under this chapter should be continued without modi-
fication, terminated, or restructured. During the 180-
day period following the date on which it submits its
recommendation under this paragraph, the Office
may not take any steps to rebid or otherwise contract
for any coverage to be available at any time following
the expiration of the 7-year period described in para-
graph (2)(B).
‘‘(4) FULL PORTABILITY.—Each master contract
under this chapter shall include such provisions as
may be necessary to ensure that, once an individual
becomes duly enrolled, long-term care insurance cov-
erage obtained by such individual pursuant to that
enrollment shall not be terminated due to any change
in status (such as separation from Government serv-
ice or the uniformed services) or ceasing to meet the
requirements for being considered a qualified relative
(whether as a result of dissolution of marriage or oth-
erwise).
‘‘§ 9004. Financing
‘‘(a) IN GENERAL.—Each eligible individual obtaining
long-term care insurance coverage under this chapter shall
be responsible for 100 percent of the premiums for such cov-
erage.
‘‘(b) WITHHOLDINGS.—
‘‘(1) IN
GENERAL.—The amount necessary to
pay the premiums for enrollment may—
‘‘(A) in the case of an employee, be withheld
from the pay of such employee;
‘‘(B) in the case of an annuitant, be with-
held from the annuity of such annuitant;
‘‘(C) in the case of a member of the uni-
formed services described in section 9001(3), be
withheld from the basic pay of such member; and
‘‘(D) in the case of a retired member of the
uniformed services described in section 9001(4),
be withheld from the retired pay or retainer pay
payable to such member.
‘‘(2) VOLUNTARY WITHHOLDINGS FOR QUALIFIED
RELATIVES.—Withholdings to pay the premiums for
enrollment of a qualified relative may, upon election
of the appropriate eligible individual (described in
section 9001(1)–(4)), be withheld under paragraph
(1) to the same extent and in the same manner as if
enrollment were for such individual.
‘‘(c) DIRECT PAYMENTS.—All amounts withheld under
this section shall be paid directly to the carrier.
‘‘(d) OTHER FORMS OF PAYMENT.—Any enrollee who
does not elect to have premiums withheld under subsection
(b) or whose pay, annuity, or retired or retainer pay (as
referred to in subsection (b)(1)) is insufficient to cover the
withholding required for enrollment (or who is not receiving
any regular amounts from the Government, as referred to
in subsection (b)(1), from which any such withholdings may
be made, and whose premiums are not otherwise being pro-
vided for under subsection (b)(2)) shall pay an amount
equal to the full amount of those charges directly to the car-
rier.
‘‘(e) SEPARATE ACCOUNTING REQUIREMENT.—Each
carrier participating under this chapter shall maintain
records that permit it to account for all amounts received
under this chapter (including investment earnings on those
amounts) separate and apart from all other funds.
‘‘(f) REIMBURSEMENTS.—
‘‘(1) The Office shall have access to the Employ-
ees’ Life Insurance Fund without fiscal year limita-
tion for its reasonable expenses in administering this
chapter, including reasonable initial implementation
costs.
‘‘(2) Each master contract under this chapter
shall include appropriate provisions under which the
carrier involved shall reimburse the Employees’ Life
Insurance Fund for funds accessed under paragraph
(1) (including lost investment income), on a pro rata
basis.
‘‘§ 9005. Preemption
‘‘The terms of any contract under this chapter which
relate to the nature, provision, or extent of coverage or bene-
fits (including payments with respect to benefits) shall su-
persede and preempt any State or local law, or any regula-
tion issued thereunder, which relates to long-term care in-
surance or contracts.
‘‘§ 9006. Studies, reports, and audits
‘‘(a) PROVISIONS RELATING
TO CARRIERS.—Each
master contract under this chapter shall contain provisions
requiring the carrier—
‘‘(1) to furnish such reasonable reports as the Of-
fice of Personnel Management determines to be nec-
essary to enable it to carry out its functions under
this chapter; and
‘‘(2) to permit the Office and representatives of
the General Accounting Office to examine such records
of the carrier as may be necessary to carry out the
purposes of this chapter.
‘‘(b) PROVISIONS
RELATING
TO
FEDERAL
AGEN-
CIES.—Each Federal agency shall keep such records, make
such certifications, and furnish the Office, the carrier, or
both, with such information and reports as the Office may
require.
‘‘(c) REPORTS BY THE GENERAL ACCOUNTING OF-
FICE.—The General Accounting Office shall prepare and
submit to the Office of Personnel Management and each
House of Congress, before the end of the third and fifth years
during which the program under this chapter is in effect,
a written report evaluating such program. Each such report
shall include an analysis of the competitiveness of the pro-
gram, as compared to both group and individual coverage
generally available to individuals in the private insurance
market. The Office shall cooperate with the General Ac-
counting Office to provide periodic evaluations of the pro-
gram.
‘‘§ 9007. Jurisdiction of courts
‘‘The district courts of the United States have original
jurisdiction of a civil action or claim against the United
States or a carrier founded on this chapter, after such ad-
ministrative remedies as required under section 9003(c)(2)
or (3) have been exhausted, but only to the extent judicial
review is not precluded by any dispute resolution or other
administrative remedy under this chapter. In cases against
the United States, the jurisdiction of the district courts shall
be concurrent with that of the United States Court of Fed-
eral Claims.
‘‘§ 9008. Administrative functions
‘‘(a) IN GENERAL.—The Office of Personnel Manage-
ment shall prescribe regulations necessary to carry out this
chapter.
‘‘(b) ENROLLMENT PERIODS.—The Office shall provide
for periodic coordinated enrollment, promotion, and edu-
cation efforts in consultation with the carriers.
‘‘(c) CONSULTATION.—Any regulations necessary to ef-
fect the application and operation of this chapter with re-
spect to an eligible individual described in paragraph (3)
or (4) of section 9001, or a qualified relative thereof, shall
be prescribed by the Office in consultation with the appro-
priate Secretary.
‘‘(d) INFORMED DECISIONMAKING.—The Office shall
ensure that each eligible individual applying for long-term
care insurance under this chapter is furnished the informa-
tion necessary to enable that individual to evaluate the ad-
vantages and disadvantages of obtaining long-term care in-
surance under this chapter, including:
‘‘(1) The principal long-term care benefits and
coverage available under this chapter, and how those
benefits and coverage compare to the range of long-
term care benefits and coverage otherwise generally
available.
‘‘(2) Representative examples of the cost of long-
term care, and the sufficiency of the benefits available
under this chapter relative to those costs. The infor-
mation under this paragraph shall also include—
‘‘(A) the projected effect of inflation on the
value of those benefits; and
‘‘(B) a comparison of the inflation-adjusted
value of those benefits to the projected future
costs of long-term care.
‘‘(3) Any rights individuals under this chapter
may have to cancel coverage, and to receive a total or
partial refund of premiums. The information under
this paragraph shall also include—
‘‘(A) the projected number or percentage of
individuals likely to fail to maintain their cov-
erage (determined based on lapse rates experi-
enced under similar group long-term care insur-
ance programs and, when available, this chap-
ter); and
‘‘(B)(i) a summary description of how and
when premiums for long-term care insurance
under this chapter may be raised;
‘‘(ii) the premium history during the last
10 years for each qualified carrier offering long-
term care insurance under this chapter; and
‘‘(iii) if cost increases are anticipated, the
projected premiums for a typical insured indi-
vidual at various ages.
‘‘(4) The advantages and disadvantages of long-
term care insurance generally, relative to other means
of accumulating or otherwise acquiring the assets that
may be needed to meet the costs of long-term care,
such as through tax-qualified retirement programs or
other investment vehicles.
‘‘§ 9009. Cost accounting standards
‘‘The cost accounting standards issued pursuant to sec-
tion 26(f) of the Office of Federal Procurement Policy Act
(41 U.S.C. 422(f)) shall not apply with respect to a long-
term care insurance contract under this chapter.’’.
(b) CONFORMING AMENDMENT.—The analysis for part
III of title 5, United States Code, is amended by adding
at the end of subpart G the following:
‘‘90. Long-Term Care Insurance ...............................................................
9001.’’.
SEC. 3. EFFECTIVE DATE.
The Office of Personnel Management shall take such
measures as may be necessary to ensure that long-term care
insurance coverage under title 5, United States Code, as
amended by this Act, may be obtained in time to take effect
not later than the first day of the first applicable pay period
of the first fiscal year which begins after the end of the 18-
month period beginning on the date of enactment of this
Act.
Union Calendar No. 333
106TH CONGRESS
2D SESSION
H. R. 4040
[Report No. 106–610, Part I]
A BILL
To amend title 5, United States Code, to provide
for the establishment of a program under which
long-term care insurance is made available to
Federal employees, members of the uniformed
services, and civilian and military retirees, and
for other purposes.
MAY 8, 2000
Reported from the Committee on Government Reform
with an amendment
MAY 8, 2000
Committee on Armed Services discharged; committed to
the Committee of the Whole House on the State of the
Union and ordered to be printed