IIB
106TH CONGRESS
2D SESSION
H. R. 4040
IN THE SENATE OF THE UNITED STATES
MAY 10, 2000
Recieved; read twice and referred to the Committee on Governmental Affairs
AN ACT
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.
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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),
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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 para-
graph, the term ‘employee’ were considered to have
the meaning given to it under paragraph (1) of this
subsection.
‘‘(3) MEMBER
OF
THE
UNIFORMED
SERV-
ICES.—The term ‘member of the uniformed services’
means a member of the uniformed services, other
than a retired member of the uniformed services,
who is—
‘‘(A) on active duty or full-time National
Guard duty for a period of more than 30 days;
and
‘‘(B) a member of the Selected Reserve.
‘‘(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, including a member or former member
retired under chapter 1223 of title 10 who has at-
tained the age of 60 and who satisfies such eligi-
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bility requirements as the Office of Personnel Man-
agement prescribes under section 9008.
‘‘(5) QUALIFIED RELATIVE.—The term ‘quali-
fied 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 Per-
sonnel Management by regulation provides, a
foster child) of an individual described in para-
graph (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
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long-term care insurance in all States, taking any
subsidiaries of such a company into account (and, in
the case of a consortium, considering the member
companies and any subsidiaries thereof, collectively).
‘‘(8) STATE.—The term ‘State’ includes the
District of Columbia.
‘‘(9) QUALIFIED LONG-TERM CARE INSURANCE
CONTRACT.—The term ‘qualified long-term care in-
surance contract’ has the meaning given such term
by section 7702B of the Internal Revenue Code of
1986.
‘‘(10) APPROPRIATE
SECRETARY.—The term
‘appropriate 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
Administration, the Secretary of Commerce;
and
‘‘(D) with respect to the commissioned
corps of the Public Health Service, the Sec-
retary of Health and Human Services.
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‘‘§ 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
coverage 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
carrier.
‘‘(c) DOCUMENTATION REQUIREMENT.—As a condi-
tion for obtaining long-term care insurance coverage under
this chapter based on one’s status as a qualified relative,
an applicant shall provide documentation to demonstrate
the relationship, 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
benefits immediately.
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‘‘(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.
‘‘(3) GUARANTEED
ISSUE.—Nothing in this
chapter shall be considered to require that long-term
care insurance coverage be guaranteed to an eligible
individual.
‘‘(4) REQUIREMENT THAT CONTRACT BE FULLY
INSURED.—In addition to the requirements other-
wise applicable under section 9001(9), in order to be
considered a qualified long-term care insurance con-
tract for purposes of this chapter, a contract must
be fully insured, whether through reinsurance with
other companies or otherwise.
‘‘(5) HIGHER STANDARDS ALLOWABLE.—Noth-
ing in this chapter shall, in the case of an individual
applying for long-term care insurance coverage
under this chapter after the expiration of such indi-
vidual’s first opportunity to enroll, preclude the ap-
plication of underwriting standards more stringent
than those that would have applied if that oppor-
tunity had not yet expired.
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‘‘(e) GUARANTEED RENEWABILITY.—The benefits
and coverage made available to eligible individuals under
any insurance contract under this chapter shall be guaran-
teed renewable (as defined by section 7A(2) of the model
regulations described in section 7702B(g)(2) of the Inter-
nal Revenue Code of 1986), including the right to have
insurance remain in effect so long as premiums continue
to be timely made. However, the authority to revise pre-
miums under this chapter shall be available only on a class
basis and only to the extent otherwise allowable under sec-
tion 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
one or more qualified carriers for a policy or policies of
long-term care insurance. The Office shall ensure that
each resulting contract (hereafter in this chapter referred
to as a ‘master contract’) is awarded on the basis of con-
tractor qualifications, price, and reasonable competition.
‘‘(b) TERMS AND CONDITIONS.—
‘‘(1) IN
GENERAL.—Each master contract
under this chapter shall contain—
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‘‘(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; and
‘‘(B) with respect to disputes regarding
claims for payments or benefits under the terms
of the contract—
‘‘(i) to establish internal procedures
designed to expeditiously resolve such dis-
putes; and
‘‘(ii) to establish, for disputes not re-
solved through procedures under clause (i),
procedures for one or more alternative
means of dispute resolution involving inde-
pendent third-party review under appro-
priate circumstances by entities mutually
acceptable to the Office and the carrier.
‘‘(2) ELIGIBILITY.—A carrier’s determination
as to whether or not a particular individual is eligi-
ble to obtain long-term care insurance coverage
under this chapter shall be subject to review only to
the extent and in the manner provided in the appli-
cable master contract.
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‘‘(3) OTHER CLAIMS.—For purposes of apply-
ing the Contract Disputes Act of 1978 to disputes
arising under this chapter between a carrier and the
Office—
‘‘(A) the agency board having jurisdiction
to decide an appeal relative to such a dispute
shall be such board of contract appeals as the
Director of the Office of Personnel Management
shall specify in writing (after appropriate ar-
rangements, as described in section 8(c) of such
Act); and
‘‘(B) the district courts of the United
States shall have original jurisdiction, concur-
rent with the United States Court of Federal
Claims, of any action described in section
10(a)(1) of such Act relative to such a dispute.
‘‘(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 terminated earlier by the Office in accordance
with the terms of such contract. However, the rights
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and responsibilities of the enrolled individual, the in-
surer, and the Office (or duly designated third-party
administrator) under such contract shall continue
with respect to such individual until the termination
of coverage 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 de-
scribed in paragraph (2)(B)’ for ‘of 7 years’.
‘‘(B) DEFINITION.—The period described
in this subparagraph is the 7-year period begin-
ning on the earliest date as of which any long-
term care insurance coverage under this chapter
becomes effective.
‘‘(3) CONGRESSIONAL NOTIFICATION.—No later
than 180 days after receiving the second report re-
quired under section 9006(c), the President (or his
designee) shall submit to the Committees on Govern-
ment Reform and on Armed Services of the House
of Representatives and the Committees on Govern-
mental Affairs and on Armed Services of the Senate,
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a written recommendation as to whether the pro-
gram under this chapter should be continued with-
out modification, terminated, or restructured. Dur-
ing the 180-day period following the date on which
the President (or his designee) submits the rec-
ommendation required under the preceding sentence,
the Office of Personnel Management may not take
any steps to rebid or otherwise contract for any cov-
erage to be available at any time following the expi-
ration of the 7-year period described in paragraph
(2)(B).
‘‘(4) FULL
PORTABILITY.—Each master con-
tract under this chapter shall include such provisions
as may be necessary to ensure that, once an indi-
vidual becomes duly enrolled, long-term care insur-
ance coverage obtained by such individual pursuant
to that enrollment shall not be terminated due to
any change in status (such as separation from Gov-
ernment service or the uniformed services) or ceas-
ing to meet the requirements for being considered a
qualified relative (whether as a result of dissolution
of marriage or otherwise).
‘‘§ 9004. Financing
‘‘(a) IN GENERAL.—Each eligible individual obtain-
ing long-term care insurance coverage under this chapter
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shall be responsible for 100 percent of the premiums for
such coverage.
‘‘(b) WITHHOLDINGS.—
‘‘(1) IN GENERAL.—The amount necessary to
pay the premiums for enrollment may—
‘‘(A) in the case of an employee, be with-
held 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 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 re-
tainer pay payable to such member.
‘‘(2) VOLUNTARY WITHHOLDINGS FOR QUALI-
FIED
RELATIVES.—Withholdings to pay the pre-
miums 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 indi-
vidual.
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‘‘(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 sub-
section (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 provided for under subsection (b)(2)) shall
pay an amount equal to the full amount of those charges
directly to the carrier.
‘‘(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) REASONABLE INITIAL COSTS.—
‘‘(A) IN GENERAL.—The Employees’ Life
Insurance Fund is available, without fiscal year
limitation, for reasonable expenses incurred by
the Office of Personnel Management in admin-
istering this chapter before the start of the 7-