I
103D CONGRESS
1ST SESSION
H. R. 438
To amend title XIX of the Social Security Act to establish Federal standards
for long-term care insurance policies.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. WYDEN introduced the following bill; which was referred to the Committee
on Energy and Commerce
MAY 3, 1993
Additional sponsor: Ms. SLAUGHTER
A BILL
To amend title XIX of the Social Security Act to establish
Federal standards for long-term care insurance policies.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Long-Term Care In-
surance Consumer Protection Act of 1993’’.
SEC. 2. ESTABLISHMENT OF FEDERAL STANDARDS FOR
LONG-TERM CARE INSURANCE POLICIES.
(a) IN GENERAL.—Title XIX of the Social Security
Act is amended by adding at the end the following new
section:
‘‘LONG-TERM CARE INSURANCE STANDARDS
‘‘SEC. 1931. (a) IMPLEMENTATION
OF
POLICY
STANDARDS.—
‘‘(1) IN GENERAL.—
‘‘(A) NEW ISSUES.—No long-term care in-
surance policy (as defined in subsection (i))
may be issued, sold, or offered for sale in a
State on or after the date specified in para-
graph (4) unless—
‘‘(i) the Secretary determines that the
State has established a regulatory program
that—
‘‘(I) provides for the application
and enforcement of the standards es-
tablished under paragraph (3), and
‘‘(II) complies with the require-
ments of paragraph (5),
by the date specified in paragraph (4), and
the policy has been approved by the State
commissioner or superintendent of insur-
ance under such program; or
‘‘(ii) if the State has not established
such a program, the policy has been cer-
tified by the Secretary (in accordance with
such procedures as the Secretary estab-
lishes) as meeting the standards estab-
lished under paragraph (3).
For purposes of this paragraph, the advertising
or soliciting with respect to a policy, directly or
indirectly, shall be deemed the offering for sale
of the policy.
‘‘(B) REVIEW
OF
STATE
REGULATORY
PROGRAMS.—The Secretary periodically shall
review regulatory programs described in sub-
paragraph (A)(i) to determine if they continue
to provide for the application and enforcement
of the standards established under paragraph
(3).
‘‘(2) SANCTIONS.—Any person who issues or re-
news a policy, on or after the date specified in para-
graph (4), in violation of paragraph (1), is subject
to a civil money penalty of not to exceed $25,000 for
each such violation. 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 paragraph in the same
manner as such provisions apply to a penalty or pro-
ceeding under section 1128A(a).
‘‘(3) PROMULGATION OF STANDARDS.—
‘‘(A) IN GENERAL.—If, within 12 months
after the date of the enactment of this section,
the National Association of Insurance Commis-
sioners (in this section referred to as the
‘NAIC’) promulgates model standards that in-
corporate the requirements of subsections (d)
through (h), such standards shall apply under
paragraph (1).
‘‘(B) DEFAULT.—If the NAIC does not
promulgate the model standards under subpara-
graph (A) by the deadline established in that
paragraph, the Secretary shall promulgate,
within 12 months after such deadline, a regula-
tion that provides standards that incorporate
the requirements of subsections (d) through (h)
and such standards shall be applied under para-
graph (1).
‘‘(C) 
CONSULTATION.—In 
establishing
standards under this paragraph, the NAIC or
Secretary shall consult with a working group
composed of representatives of issuers of long-
term care insurance policies, consumer groups,
and other qualified individuals. Such represent-
atives shall be selected in a manner so as to as-
sure balanced representation among the inter-
ested groups.
‘‘(D) RELATION TO STATE LAW.—Nothing
in this section shall be construed as preventing
a State from applying standards that provide
greater protection to policyholders of long-term
care insurance policies.
‘‘(4) DEADLINE FOR APPLICATION OF STAND-
ARDS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is—
‘‘(i) the date the State adopts the
standards established under paragraph (3),
or
‘‘(ii) 1 year after the date such stand-
ards are first established,
whichever is earlier.
‘‘(B) STATE REQUIRING LEGISLATION.—In
the case of a State which the Secretary identi-
fies, in consultation with the NAIC, as—
‘‘(i) requiring State legislation (other
than legislation appropriating funds) in
order for the standards established under
paragraph (3) to be applied, 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-
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.
‘‘(5) ADDITIONAL
REQUIREMENTS
FOR
AP-
PROVAL
OF
STATE
REGULATORY
PROGRAMS.—For
purposes of paragraph (1)(A)(i)(II), the require-
ments of this paragraph for a State regulatory pro-
gram are as follows:
‘‘(A) CONSUMER ACCESS TO COMPLIANCE
INFORMATION.—
‘‘(i) 
IN
GENERAL.—The 
program
must provide for consumer access to com-
plaints filed with the State commissioner
or superintendent of insurance with respect
to long-term care insurance policies.
‘‘(ii) CONFIDENTIALITY.—The access
provided under clause (i) shall be limited
to the extent required to protect the con-
fidentiality of the identity of individual pol-
icyholders.
‘‘(B) ACCESS TO OTHER INFORMATION.—
The program must provide for consumer access
to information reported under subsection (c)(4).
‘‘(C) PROCESS
FOR
APPROVAL
OF
PRE-
MIUMS.—The program must provide for a proc-
ess for approving or disapproving proposed pre-
mium increases with respect to long-term care
insurance policies and must establish a policy
for the holding of public hearings prior to ap-
proval of such a premium increase. No such
premium increase shall be approved (or deemed
approved) unless the proposed increase is ac-
companied by an actuarial memorandum which
supports the increase and which contains such
information as may be required under the
standards under subsection (a)(3).
‘‘(b) REGULATION OF SALES PRACTICES.—
‘‘(1) DUTY OF GOOD FAITH AND FAIR DEAL-
ING.—
‘‘(A) IN GENERAL.—Each individual who
is selling or offering for sale a long-term care
insurance policy has the duty of good faith and
fair dealing to the purchaser or potential pur-
chaser of such a policy.
‘‘(B) PROHIBITED
PRACTICES.—An indi-
vidual is considered to have violated subpara-
graph (A) if the individual engages in any of
the following practices:
‘‘(i) TWISTING.—Knowingly making
any misleading representation or incom-
plete or fraudulent comparison of any
health care insurance policy or insurers for
the purpose of inducing, or tending to in-
duce, any person to retain or effect a
change with respect to a long-term care in-
surance policy.
‘‘(ii) HIGH PRESSURE TACTICS.—Em-
ploying any method of marketing having
the effect of, or intending to, induce the
purchase of long-term care insurance pol-
icy through undue pressure.
‘‘(iii) COLD
LEAD
ADVERTISING.—
Making use directly or indirectly of any
method of marketing which fails to disclose
in a conspicuous manner that a purpose of
the method of marketing is solicitation of
insurance and that contact will be made by
an insurance agent or insurance company.
‘‘(2) COMPLETION OF MEDICAL HISTORIES PRO-
HIBITED.—A person who is selling or offering for
sale a long-term care insurance policy may not com-
plete the medical history portion of an application.
‘‘(3) PROHIBITION OF SALE OR ISSUANCE TO
MEDICAID
BENEFICIARIES.—A person may not
knowingly sell or issue a long-term care insurance
policy to an individual who is eligible for medical as-
sistance (other than only as a qualified medicare
beneficiary) under this title.
‘‘(4) PROHIBITION OF SALE OR ISSUANCE OF
DUPLICATE SERVICE BENEFIT POLICIES.—A person
may not sell or issue a service-benefit long-term care
insurance policy—
‘‘(A) knowing that the policy provides for
coverage that duplicates coverage already pro-
vided in another service-benefit long-term care
insurance policy (unless the policy is intended
to replace such other policy), or
‘‘(B) for the benefit of an individual unless
the individual (or a representative of the indi-
vidual) provides a written statement to the ef-
fect that the coverage (i) does not duplicate
other coverage in effect under a service-benefit
long-term care insurance policy or (ii) will re-
place another service-benefit long-term care in-
surance policy.
In this paragraph, the term ‘service-benefit long-
term care insurance policy’ means a long-term care
insurance policy which provides for benefits based on
the amount of expenses incurred, rather than on an
indemnity basis.
‘‘(5) PROVISION OF OUTLINE OF COVERAGE.—
No person may sell or offer for a sale a long-term
care insurance policy without providing to the pur-
chaser or potential purchaser (or representative) an
outline of coverage that complies with the standards
established under subsection (a)(3).
‘‘(6) INFORMATION
ON
FINANCIAL
ARRANGE-
MENTS WITH GROUPS.—No person may sell or offer
for sale a long-term care insurance policy with re-
spect to a member of an organization with which the
person (or the issuer of the policy) has a financial
arrangement of any type unless the person discloses
(in accordance with standards established under sub-
section (a)(3)) the nature of the financial arrange-
ment.
‘‘(7) PENALTIES.—Any person who sells, offers
for sale, or issues a long-term care insurance policy
in violation of this subsection may be imprisoned not
more than 5 years, or fined in accordance with title
18, United States Code, and, in addition, is subject
to a civil money penalty of not to exceed $25,000 for
each such violation. The 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 paragraph in the same
manner as such provisions apply to a penalty or pro-
ceeding under section 1128A(a).
‘‘(c) ADDITIONAL RESPONSIBILITIES OF ISSUERS.—
‘‘(1) REFUND OF PREMIUMS.—If an application
for a long-term care insurance policy (or for a cer-
tificate under a group long-term care insurance pol-
icy) is denied or an applicant returns a policy or cer-
tificate within 30 days of the date of its issuance
pursuant to subsection (h), the issuer shall refund to
the applicant, not later than 30 days after the date
of the denial or return, any premiums paid with re-
spect to such a policy.
‘‘(2) MAILING
OF
POLICY.—If an application
for a long-term care insurance policy (or for a cer-
tificate under a group long-term care insurance pol-
icy) is approved, the issuer shall transmit to the ap-
plicant the policy (or certificate) of insurance not
later than 30 days after the date of the approval.
‘‘(3) INFORMATION ON DENIALS OF CLAIMS.—
If a claim under a long-term care insurance policy
is denied, the issuer shall, within 60 days of the date
of a written request by the policyholder or
certificateholder (or representative)—
‘‘(A) provide a written explanation of the
reasons for the denial, and
‘‘(B) make available all information di-
rectly relating to such denial.
No claim under such a policy may be denied on the
basis of a failure to disclose a condition at the time
of issuance of the policy if the application for the
policy failed to request information respecting the
condition.
‘‘(4) REPORTING
OF
INFORMATION.—The is-
suer of a long-term care insurance policy shall peri-
odically (not less often than annually) report to the
Commissioner or superintendent of insurance of
each State in which the policy is sold, and shall
make available to the Secretary, upon request, infor-
mation respecting—
‘‘(A) the long-term care insurance policies
of the issuer that are in force,
‘‘(B) the most recent premiums for such
policies and the premiums imposed for such
policies during the previous 5-year period,
‘‘(C) the lapse rates, replacement rates,
and rescission rates for policies (by agent), and
‘‘(D) the claims denied (as a percentage of
claims submitted) for such policies.
Information under this paragraph shall be reported
in a format specified in the standards established
under subsection (a)(3) to carry out this subsection.
For purposes of subparagraph (C), there shall not
be included as a lapse of policy such a lapse due to
the death of the policyholder. For purposes of sub-
paragraph (D), there shall not be included as a de-
nied claim that is denied solely because of the failure
to meet a deductible, waiting period, or exclusionary
period.
‘‘(5) ACCESS TO INFORMATION.—Each such is-
suer shall provide the Secretary and the Commis-
sioner or superintendent of insurance of each State
in which the policy is sold such information as the
Secretary, Commissioner, or superintendent, may re-
quest.
‘‘(6) PROVISION
OF
OUTLINE
OF
COVERAGE
FOR RENEWALS.—Each issuer of a long-term care
insurance policy shall provide, at the time of renewal
of such a policy, an outline of coverage that meets
the applicable standards established pursuant to this
section.
‘‘(7) MEDICAL ASSESSMENTS FOR THE ELDER-
LY.—Before issuing a long-term care insurance pol-
icy to an applicant who is 75 years of age or older,
if the policy is not guaranteed issue the issuer shall
obtain one of the following:
‘‘(A) A report of a physical examination.
‘‘(B) An assessment of functional capacity.
‘‘(C) Copies of medical records.
‘‘(8) LIMITS ON COMPENSATION FOR SALE OF
POLICIES.—
‘‘(A) IN GENERAL.—The issuer of a long-
term care insurance policy may not provide a
commission or other compensation to an agent
or other representative for the sale of such a
policy in an amount that exceeds 200 percent of
the commission or other compensation paid for
selling or servicing such a policy in the second
or subsequent year.
‘‘(B) COMPENSATION
DEFINED.—In sub-
paragraph (A), the term ‘compensation’ in-
cludes pecuniary or nonpecuniary remuneration
of any kind relating to the sale or renewal of
the policy or certification, including deferred
compensation, bonuses, gifts, prizes, awards,
and finders fees.
‘‘(9) CIVIL MONEY PENALTY.—Any issuer of a
long-term care insurance policy who—
‘‘(A) fails to make a refund in accordance
with paragraph (1),
‘‘(B) fails to transmit a policy in accord-
ance with paragraph (2),
‘‘(C) fails to provide, make available, or re-
port information in accordance with paragraph
(3), (4), or (5),
‘‘(D) fails to provide an outline of coverage
in violation of paragraph (6), or
‘‘(E) issues a policy without obtaining cer-
tain information in violation of paragraph (7),
or
‘‘(F) provides a commission or compensa-
tion in violation of paragraph (8),
is subject to a civil money penalty of not to exceed
$25,000 for each such violation. The provisions of
section 1128A (other than the first sentence of sub-
section (a) and other than subsection (b)) shall
apply to a civil money penalty under this paragraph
in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
‘‘(d) REQUIREMENTS RELATING
TO RENEWABIL-
ITY.—
‘‘(1) IN GENERAL.—No long-term care insur-
ance policy may be canceled or nonrenewed for any
reason other than nonpayment of premium or mate-
rial misrepresentation.
‘‘(2) CONTINUATION AND CONVERSION RIGHTS
FOR GROUP POLICIES.—
‘‘(A) IN GENERAL.—Each group long-term
care insurance policy shall provide covered indi-
viduals with a basis for continuation or conver-
sion in accordance with this paragraph.
‘‘(B) BASIS
FOR
CONTINUATION.—For
purposes of subparagraph (A), a policy provides
a basis for continuation of coverage if the policy
maintains coverage under the existing group
policy when such coverage would otherwise ter-
minate and which is subject only to the contin-
ued timely payment of premium when due. A
group policy which restricts provision of bene-
fits and services to or contains incentives to use
certain providers or facility, may provide con-
tinuation benefits which are substantially equiv-
alent to the benefits of the existing group pol-
icy.
‘‘(C) BASIS FOR CONVERSION.—For pur-
poses of subparagraph (A), a policy provides a
basis for conversion of coverage if the policy en-
titles each individual—
‘‘(i) whose coverage under the group
policy would otherwise be terminated for
any reason, and
‘‘(ii) who has been continuously in-
sured under the policy (or group policy
which was replaced) for at least 6 months
before the date of the termination,
to issuance of a policy providing benefits iden-
tical to, substantially equivalent to, or in excess
of, those of the policy being terminated, without
evidence of insurability.
‘‘(D) 
TREATMENT
OF
SUBSTANTIAL
EQUIVALENCE.—In 
determining 
under 
this
paragraph whether benefits are substantially
equivalent, there shall be taken into consider-
ation the difference between managed care and
non-managed care plans.
‘‘(E) GROUP
REPLACEMENT
OF
POLI-
CIES.—If a group long-term care insurance pol-
icy is replaced by another long-term care insur-
ance policy purchased by the same policyholder,
the succeeding issuer shall offer coverage to all
persons covered under the old group policy on
its date of termination. Coverage under the new
group policy shall not result in any exclusion
for preexisting conditions that would have been
covered under the group policy being replaced.
‘‘(3) UPGRADE FOR CURRENT POLICIES.—Each
long-term care insurance policy in effect as of the ef-
fective date of the standards established under sub-
section (a)(3) shall permit the policyholder to pur-
chase a policy that meets all such standards. In of-
fering such a policy, the issuer may impose addi-
tional underwriting restrictions only for benefits not
held under the previously issued policy.
‘‘(e) BENEFIT STANDARDS.—
‘‘(1) USE
OF
STANDARD
DEFINITIONS
AND
TERMINOLOGY AND UNIFORM FORMAT.—Each long-
term care insurance policy shall, pursuant to stand-
ards established under subsection (a)(3)—
‘‘(A) use uniform language and definitions,
and
‘‘(B) use a uniform format for presenting
the outline of coverage under such a policy.
‘‘(2) DISCLOSURE.—
‘‘(A) OUTLINE OF COVERAGE.—The out-
line of coverage for each long-term care insur-
ance policy shall include at least the following:
‘‘(i) A description of the principal
benefits and coverage under the policy.
‘‘(ii) A statement of the principal ex-
clusions, reductions, and limitations con-
tained in the policy.
‘‘(iii) A statement of the terms under
which the policy (or certificate) may be
continued in force or discontinued, the
terms for continuation or conversion, and
any reservation in the policy of a right to
change premiums.
‘‘(iv) A statement that the outline of
coverage is a summary only, not a contract
of insurance, and that the policy (or mas-
ter policy) contains the contractual provi-
sions that govern.
‘‘(v) A statement of the value of the
policy (determined in accordance with
standard established to carry out this sub-
paragraph).
‘‘(vi) A description of the terms, speci-
fied in subsection (h), under which a policy
or certificate may be returned and pre-
mium refunded.
‘‘(vii) Information on national average
costs for nursing facility and home health
care and information (in graphic form) on
the relationship of the value of the benefits
provided under the policy to such national
average costs.
‘‘(viii) A statement of the percentage
limit on annual premium increases that is
provided under the policy pursuant to
paragraph (8).
‘‘(ix) Information (in graphic form)
on the projected effect of inflation on the
value of benefits provided under the policy
during a period of at least 20 years.
‘‘(B) CERTIFICATES.—A certificate issued
pursuant to a group long-term care insurance
policy shall include—
‘‘(i) a description of the principal ben-
efits and coverage provided in the policy;
‘‘(ii) a statement of the principal ex-
clusions, reductions, and limitations con-
tained in the policy; and
‘‘(iii) A statement that the group mas-
ter policy determines governing contractual
provisions.
‘‘(C) LONG-TERM CARE AS PART OF LIFE
INSURANCE.—In the case of a long-term care
insurance policy issued as a part of or a rider
on a life insurance policy, at the time of policy
delivery there shall be provided a policy sum-
mary that includes—
‘‘(i) an explanation of how the long-
term care benefits interact with other com-
ponents of the policy (including deductions
from death benefits);
‘‘(ii) an illustration of the amount of
benefits, the length of benefit, and the
guaranteed lifetime benefits (if any) for
each covered person; and
‘‘(iii) any exclusions, reductions, and
limitations on benefits of long-term care.
‘‘(3) LIMITING CONDITIONS ON BENEFITS; MIN-
IMUM BENEFITS.—
‘‘(A) IN GENERAL.—A long-term care in-
surance policy may not condition or limit eligi-
bility—
‘‘(i) for benefits for a type of services
to the need for or receipt of any other
services,
‘‘(ii) for any noninstitutional benefit
on the medical necessity for such benefit,
‘‘(iii) for benefits furnished by li-
censed providers on compliance with condi-
tions which are in addition to those re-
quired for licensure under State law, or
‘‘(iv) for custodial care (if covered
under the policy) only (I) to care provided
in facilities which provide a higher level of
care or (II) to care provided in facilities
which provide for 24-hour or other nursing
care not required in order to be licensed by
the State.
‘‘(B) HOME HEALTH CARE SERVICES.—If
a long-term care insurance policy provides bene-
fits for home health care services, the policy—
‘‘(i) may not limit such benefits to
services provided by registered nurses or li-
censed practical nurses;
‘‘(ii) may not require benefits for such
services to be provided by a nurse or thera-
pist that can be provided by a home health
aide or other licensed or certified home
care worker acting within the scope of the
worker’s licensure or certification;
‘‘(iii) may not limit such benefits to
services provided by agencies or providers
certified under title XVIII; and
‘‘(iv) must provide benefits for custo-
dial care, personal care services (including
home health aide and homemaker services),
home health services, and respite care in
an individual’s home.
‘‘(C) NURSING FACILITY SERVICES.—If a
long-term care insurance policy provides bene-
fits for nursing facility services, the policy must
provide such benefits with respect to all nursing
facilities (as defined in section 1919(a)) in the
State.
‘‘(D) MINIMUM PERIOD OF COVERAGE.—
Each long-term care insurance policy shall pro-
vide benefits over a period of at least 12 con-
secutive months.
‘‘(4) PROHIBITION
OF
DISCRIMINATION.—A
long-term care insurance policy may not treat bene-
fits under the policy in the case of an individual with
Alzheimer’s disease, with any related progressive de-
generative dementia of an organic origin, or with
any organic or inorganic mental illness differently
from an individual having another medical condition
for which benefits may be made available.
‘‘(5) LIMITATION
ON
USE
OF
PREEXISTING
CONDITION LIMITS.—
‘‘(A) INITIAL ISSUANCE.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), a long-term care insurance policy may
not exclude or condition benefits based on
a medical condition for which the policy-
holder received treatment or was otherwise
diagnosed before the issuance of the policy.
‘‘(ii) 6-MONTH
LIMIT.—A long-term
care insurance policy may exclude benefits
under a policy, during its first 6 months,
based on a condition for which the policy-
holder received treatment or was otherwise
diagnosed during the 6 months before the
policy became effective.
‘‘(B) REPLACEMENT POLICIES.—If a long-
term care insurance policy replaces another
long-term care insurance policy, the issuer of
the replacing policy shall waive any time periods
applicable to preexisting conditions, waiting pe-
riod, elimination periods and probationary peri-
ods in the new policy for similar benefits to the
extent such time was spent under the original
policy.
‘‘(6) USE OF FUNCTIONAL ASSESSMENT.—
‘‘(A) IN GENERAL.—Each long-term care
insurance policy—
‘‘(i) shall determine eligibility for, and
level of, benefits (other than for nursing
facility services) available under the policy
based on a professional assessment of the
policyholder’s functional ability, and
‘‘(ii) shall specify the level (or levels)
of functional impairment required under
such an assessment to obtain benefits
of dollar payment levels) or $100 (in the case of the
maximum payment limit).
‘‘(8) SPECIFICATION OF LIMITS ON PREMIUM
INCREASES.—Each long-term care insurance policy
shall specify a limit on the percentage increase in
premiums for a policy that may be made in any be-
tween one policy year and the subsequent policy
year.
‘‘(f) NONFORFEITURE.—
‘‘(1) IN GENERAL.—Each long-term care insur-
ance policy shall provide that if the policy lapses
after the policy has been in effect for a minimum pe-
riod (specified under the standards under subsection
(a)(3)), the policy will provide without payment of
any additional premiums benefits equal to—
‘‘(A) a percentage (specified under such
standards) of the benefits otherwise available at
term, or
‘‘(B) such other type of benefits as such
standards may provide.
‘‘(2) ESTABLISHMENT
OF
STANDARDS.—The
standards under subsection (a)(3)—
‘‘(A) may not provide more than 2 addi-
tional types of benefits under paragraph (1)(B),
and
‘‘(B) may provide that the percentage or
amount of benefits under paragraph (1) must
increase based upon the period of time in which
the policy was in effect.
‘‘(g) LIMIT OF PERIOD OF CONTESTABILITY.—The
issuer of a long-term care insurance policy may not cancel
such a policy or deny a claim under the policy based on
fraud or misrepresentation relating to the issuance of the
policy unless notice of such fraud or misrepresentation is
provided within 6 months after the date of the issuance
of the policy.
‘‘(h) RIGHT TO RETURN (FREE LOOK).—Each appli-
cant for a long-term care insurance policy shall have the
right to return the policy (or certificate) within 30 days
of the date of its delivery (and to have the premium re-
funded) if, after examination of the policy or certificate,
the applicant is not satisfied for any reason.
‘‘(i) LONG-TERM CARE INSURANCE POLICY DE-
FINED.—
‘‘(1) IN GENERAL.—In this section, except as
otherwise provided in this subsection, the term ‘long-
term care insurance policy’ means any insurance pol-
icy, certificate, or rider advertised, marketed, of-
fered, or designed to provide coverage for each cov-
ered person on an expense incurred, indemnity, pre-
paid, or other basis, for one or more diagnostic, pre-
ventive, therapeutic, rehabilitative, maintenance or
personal care services, provided in a setting other
than an acute care unit of a hospital. Such term in-
cludes a group or individual annuity or life insur-
ance policy or rider which provides directly (or which
supplements) long-term care insurance.
‘‘(2) POLICIES EXCLUDED.—Except as provided
in paragraph (4), the term ‘long-term care insurance
policy’ does not include any medicare supplemental
policy (as defined in section 1882(g)) and any insur-
ance which is offered primarily to provide—
‘‘(A) basic hospital expense coverage, basic
medical-surgical expense coverage, hospital con-
finement indemnity coverage, or major medical
expense coverage,
‘‘(B) disability income or related asset-pro-
tection coverage,
‘‘(C) accident only coverage,
‘‘(D) specified disease or specified accident
coverage, or
‘‘(E) limited benefit health coverage.
‘‘(3) TREATMENT OF CERTAIN LIFE INSURANCE
POLICIES.—Except as provided in paragraph (4), the
term ‘long-term care insurance policy’ does not in-
clude life insurance policies—
‘‘(A) which accelerate the death benefit
specifically for—
‘‘(i) one or more of the qualifying
events of terminal illness,
‘‘(ii) medical conditions requiring ex-
traordinary medical intervention, or
‘‘(iii) permanent institutional confine-
ment;
‘‘(B) which provide the option of a lump-
sum payment for those benefits; and
‘‘(C) in which neither the benefits nor the
eligibility for the benefits is conditioned upon
the receipt of long-term care.
‘‘(4) INCLUSION
OF
POLICIES
MARKETED
AS
LONG-TERM
CARE
INSURANCE.—The term ‘long-
term care insurance policy’ also means any product
which is advertised, marketed, or offered as long-
term care insurance.’’.
(b) STATE MEDICAID REQUIREMENT
FOR REGU-
LATORY PROGRAM.—Section 1902(a) of the Social Secu-
rity Act (42 U.S.C. 1396(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(54);
(2) in the paragraph (55) inserted by section
4602(a)(3) of the Omnibus Budget Reconciliation
Act of 1990, by striking the period at the end and
inserting a semicolon;
(3) by redesignating the paragraph (55) in-
serted by section 4604(b)(3) of the Omnibus Budget
Reconciliation Act of 1990 as paragraph (56), by
transferring and inserting it after the paragraph
(55) inserted by section 4602(a)(3) of such Act, and
by striking the period at the end and inserting a
semicolon;
(4) by placing paragraphs (57) and (58), in-
serted by section 4751(a)(1)(C) of the Omnibus
Budget Reconciliation Act of 1990, immediately
after paragraph (56), as redesignated by paragraph
(3);
(5) in the paragraph (58) inserted by section
4751(a)(1)(C) of the Omnibus Budget Reconciliation
Act of 1990, by striking the period at the end and
inserting a semicolon;
(6) by redesignating the paragraph (58) in-
serted by section 4752(c)(1)(C) of the Omnibus
Budget Reconciliation Act of 1990 as paragraph
(59), by transferring and inserting it after the para-
graph (58) inserted by section 4751(a)(1)(C) of such
Act, and by striking the period at the end and in-
serting ‘‘; and’’; and
(7) by inserting after paragraph (59), as so re-
designated, the following new paragraph:
‘‘(60) establish, by the date specified in section
1931(a)(4), a State regulatory program, that meets
the requirements of section 1931(a)(1)(A)(i).’’.
(c) DENIAL OF MEDICAID FUNDS FOR FAILURE TO
ESTABLISH REGULATORY PROGRAM.—Section 1903(i) of
the Social Security Act (42 U.S.C. 1396b(i)) is amend-
ed—
(1) in paragraph (10), by striking all that fol-
lows ‘‘1927(g)’’ and inserting a semicolon;
(2) in paragraph (12) by striking the period at
the end and inserting a semicolon;
(3) by redesignating the paragraph (14) in-
serted by section 4752(e) of the Omnibus Budget
Reconciliation Act of 1990 as paragraph (13), and
by striking the period at the end and inserting
‘‘; or’’; and
(4) by inserting after paragraph (13), as so re-
designated, the following new paragraph.
‘‘(14) with respect to any amount expended for
medical assistance for nursing facility services (fur-
nished on and after the date specified in section