I
103D CONGRESS
1ST SESSION
H. R. 132
To amend the Social Security Act to protect consumers through the
establishment of standards for long-term care insurance policies.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mrs. COLLINS of Illinois introduced the following bill; which was referred to
the Committee on Energy and Commerce
A BILL
To amend the Social Security Act to protect consumers
through the establishment of 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; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Long-Term Care Insurance Standards and Consumer
Protection Act of 1993’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Establishment of national standards for long-term care insurance.
‘‘TITLE XXI—LONG-TERM CARE INSURANCE STANDARDS
‘‘PART A—GENERAL REQUIREMENT; ESTABLISHMENT OF STANDARDS
‘‘Subpart 1—Establishment and Application of Standards
‘‘Sec. 2101. General requirement.
‘‘Sec. 2102. Establishment of standards.
‘‘Sec. 2103. Deadline for application of standards in States.
‘‘Sec. 2104. Relation to State law.
‘‘Sec. 2105. Steering committee on long-term care insurance standards.
‘‘Subpart 2—Code of Conduct for Endorsements; Agent Training and
Certification Programs
‘‘Sec. 2111. Guidelines for code of conduct with respect to endorsements.
‘‘Sec. 2112. Requirements for agent training and certification programs.
‘‘Subpart 3—Definitions
‘‘Sec. 2116. Long-term care insurance policy.
‘‘Sec. 2117. Other terms.
‘‘PART B—STANDARDS
‘‘Subpart 1—Policy Standards
‘‘Sec. 2121. Use of standard definitions and terminology and uniform for-
mat.
‘‘Sec. 2122. Minimum benefits; limiting conditions on benefits.
‘‘Sec. 2123. Prohibition of discrimination against individuals with Alz-
heimer’s and related diseases.
‘‘Sec. 2124. Limitation on use of preexisting condition limits.
‘‘Sec. 2125. Use of functional assessment.
‘‘Sec. 2126. Requirements for premiums and premium increases.
‘‘Sec. 2127. Inflation protection.
‘‘Sec. 2128. Nonforfeiture benefits.
‘‘Sec. 2129. Designation of representatives.
‘‘Sec. 2130. Renewal and policy upgrades.
‘‘Subpart 2—Sales Practices
‘‘Sec. 2131. Certification of training of sales agents.
‘‘Sec. 2132. Duty of good faith and fair dealing.
‘‘Sec. 2133. Financial guidelines.
‘‘Sec. 2134. Prohibition of sale or issuance to medicaid beneficiaries.
‘‘Sec. 2135. Prohibition of sale or issuance of duplicate policies.
‘‘Sec. 2136. Provision of outline of coverage and other information.
‘‘Sec. 2137. Information on financial arrangements with groups.
‘‘Subpart 3—Carrier Standards
‘‘Sec. 2141. Refund of premiums (free look).
‘‘Sec. 2142. Mailing of policy.
‘‘Sec. 2143. Prompt payment.
‘‘Sec. 2144. Information on claims denials.
‘‘Sec. 2145. Limitation on rescission, cancellation, or nonrenewal or denial
of claims.
‘‘Sec. 2146. Reporting of information; access to information.
‘‘Sec. 2147. Provision of outline of coverage for renewals.
‘‘PART C—ENFORCEMENT OF STANDARDS
‘‘Subpart 1—General Provisions
‘‘Sec. 2151. Secretarial enforcement authority.
‘‘Sec. 2152. Complaints and investigations.
‘‘Sec. 2153. Hearings.
‘‘Sec. 2154. Cease and desist order with civil money penalty.
‘‘Sec. 2155. Establishment of toll-free telephone hotline.
‘‘Subpart 2—Conditions for Approval of State Regulatory Programs
‘‘Sec. 2161. General requirement.
‘‘Sec. 2162. Enforcement.
‘‘Sec. 2163. Toll-free telephone system.
‘‘Sec. 2164. Publication of information.
‘‘Sec. 2165. Process for approval of premiums.
‘‘Sec. 2166. Annual reports.
‘‘Sec. 2167. Increase in funding for long-term care insurance, information,
counseling, and assistance through State regulatory pro-
grams.
Sec. 3. Study of standard measure of value for long-term care insurance poli-
cies.
Sec. 4. Waiver of paperwork requirements.
SEC. 2. ESTABLISHMENT OF NATIONAL STANDARDS FOR
LONG-TERM CARE INSURANCE.
The Social Security Act is amended by adding at the
end the following new title:
‘‘TITLE XXI—LONG-TERM CARE INSURANCE
STANDARDS
‘‘PART A—GENERAL REQUIREMENT; ESTABLISHMENT
OF STANDARDS
‘‘Subpart 1—Establishment and Application of
Standards
‘‘GENERAL REQUIREMENT
‘‘SEC. 2101. (a) APPROVED REGULATORY STATES.—
No long-term care insurance policy (as defined in section
2116) may be issued, sold, or offered for sale in a State
which has a regulatory program that the Secretary has
approved consistent with the requirements of subpart 2
of part C, on or after the date specified in section 2103,
unless the policy has been certified by the State commis-
sioner of insurance under such program as meeting the
standards established under such program in the State.
‘‘(b) OTHER STATES.—No long-term care insurance
policy may be issued, sold, or offered for sale in a State
that does not have such an approved regulatory program,
on or after the date specified in section 2103, unless the
policy has been certified by the Secretary (in accordance
with such procedures as the Secretary may establish by
regulation) as meeting the standards established under
section 2102.
‘‘(c) TREATMENT OF ADVERTISING AND SOLICIT-
ING.—For purposes of this section, the advertising or so-
liciting with respect to a policy, directly or indirectly, shall
be deemed the offering for sale of the policy.
‘‘ESTABLISHMENT OF STANDARDS
‘‘SEC. 2102. (a) APPLICATION OF STANDARDS.—
‘‘(1) NAIC.—If, within 12 months after the
date of the enactment of this title, the National As-
sociation of Insurance Commissioners promulgates
model standards that incorporate the requirements
of part B and subpart 2 of part C, such standards
shall apply under section 2101, effective on the date
specified in section 2103(a).
‘‘(2) SUBSEQUENT STANDARDS.—If the NAIC
modifies the model standards previously established
under this subsection in a manner consistent with
the requirements of part B and subpart 2 of part C,
such modified standards shall apply under section
2101, effective as of the date specified in section
2103(a).
‘‘(3) USE OF TERM ‘STANDARDS’.—In this title,
the term ‘Standards’ means all standards estab-
lished under this section that apply in a State under
section 2101 and includes, with respect to subpart
2 of part C, standards to carry out the requirements
for State regulatory programs under such subpart.
‘‘(b) DEFAULT.—If the NAIC does not promulgate
the model standards under subsection (a) by the deadline
established in that subsection, the Secretary shall promul-
gate, within 12 months after such deadline, a regulation
that provides standards that incorporate the requirements
of part B and subpart 2 of part C and such standards
shall apply under section 2101.
‘‘(c) BALANCE IN STANDARDS.—The standards for
long-term care insurance established under this title shall
reflect a balance between—
2102 preempt provisions of State law which conflict with
such Standards.
‘‘(b) STRICTER STANDARDS PERMITTED.—A State
may apply standards that provide greater protection to
policyholders of long-term care insurance policies than the
Standards so long as such standards are not inconsistent
or in conflict with any of the requirements of this title.
‘‘STEERING COMMITTEE ON LONG-TERM CARE
INSURANCE STANDARDS
‘‘SEC. 2105. (a) ESTABLISHMENT.—
‘‘(1) IN GENERAL.—The NAIC shall establish a
Steering Committee on Long-Term Care Insurance
Standards (in this section referred to as the ‘Com-
mittee’).
‘‘(2) SECRETARIAL ESTABLISHMENT.—In case
the Secretary is required to promulgate standards
under section 2102(b)—
(A) the Secretary shall establish a Steering
Committee on Long-Term Care Insurance
Standards (in this section referred to as the
‘Committee’), and
(B) any subsequent reference in this sec-
tion to the NAIC is deemed a reference to the
Secretary.
‘‘(b) COMPOSITION.—
‘‘(1) IN
GENERAL.—The Committee shall be
composed of 11 individuals to be appointed by the
NAIC as follows:
‘‘(A) 3 individuals who are representative
of consumer groups and who have substantial
knowledge and expertise on the issue of long-
term care insurance.
‘‘(B) 3 individuals who are representative
of the long-term care insurance carriers.
‘‘(C) 1 individual who is representative of
agents who sell long-term care insurance.
‘‘(D) 1 individual who is representative of
providers of long-term care services.
‘‘(E) 1 individual who is a counselor or
consultant to purchasers of long-term care in-
surance.
‘‘(F) 2 individuals who are experts in long-
term care insurance who are from universities
or independent institutions and are not rep-
resentative 
of 
consumer 
groups, 
carriers,
agents, or providers.
‘‘(2) TERMS.—Members of the Committee shall
be appointed for terms of 3 years, except that the
initial members shall be appointed for staggered
terms as determined appropriate by the NAIC.
‘‘(c) FUNCTIONS.—
‘‘(1) IN GENERAL.—The Committee shall make
detailed recommendations to (and otherwise advise)
the NAIC concerning—
‘‘(A) the minimum standards for long-term
care insurance consistent with the provisions of
this title; and
‘‘(B) the modification of such standards
consistent with future laws to expand existing
Federal or State long-term care benefits or en-
hance protection of consumers.
‘‘(2) 
GENERAL
CONSULTATION
REQUIRE-
MENT.—NAIC shall carry out its activities under
this title in consultation with the Committee.
‘‘(d) SUPPORT.—The NAIC shall provide such assist-
ance as may be necessary for the operation of the Commit-
tee, which assistance may include per diem compensation
and travel expenses for members of the Committee while
serving on the business of the Committee.
‘‘(e) COMMITTEE
AUTHORITY.—The Committee
may—
‘‘(1) seek such assistance and support as may
be required in the performance of its duties from ap-
propriate Federal departments and agencies, and
‘‘(2) prescribe such rules and regulations as it
deems necessary with respect to the internal organi-
zation and operation of the Committee.
‘‘(f) ANNUAL REPORT.—Not later than March 31 of
each year, the NAIC is requested to prepare and submit
to the Congress a report concerning the activities of the
NAIC and of the Committee under this title during the
previous year.
‘‘Subpart 2—Code of Conduct for Endorsements; Agent
Training and Certification Programs
‘‘GUIDELINES FOR CODE OF CONDUCT WITH RESPECT TO
ENDORSEMENTS
‘‘SEC. 2111. Not later than 1 year after the date of
enactment of this title, the NAIC shall issue guidelines
that shall apply to organizations and associations and
their subsidiaries that provide endorsements of long-term
care insurance policies, or that permit such policies to be
offered for sale through the organization or association or
subsidiary. Such guidelines shall include, at a minimum,
the following:
‘‘(1) In endorsing or selling long-term care in-
surance policies, the primary responsibility of an or-
ganization or association or its subsidiary shall be to
educate their members concerning such policies and
assist such members in making informed decisions.
Such organizations and associations and their sub-
sidiaries may not function primarily as sales agents
for insurance companies.
‘‘(2) Organizations and associations and their
subsidiaries shall provide objective information re-
garding long-term care insurance policies sold or en-
dorsed by such organizations, associations, and sub-
sidiaries to ensure that members of such organiza-
tions, associations, and subsidiaries have a balanced
and complete understanding of both the strengths
and weaknesses of the policies that are being en-
dorsed or sold.
‘‘(3) Organizations and associations and their
subsidiaries selling or endorsing long-term care in-
surance policies shall disclose, in marketing lit-
erature concerning such policies that is provided to
their members, the manner in which such policies
and the insurance company issuing such policies
were selected. If the organization, association, or
subsidiary and the insurance company have inter-
locking directorates, the organization, association, or
subsidiary shall disclose such fact to their members.
‘‘(4) Organizations and associations and their
subsidiaries selling or endorsing long-term care in-
surance policies shall disclose, in marketing lit-
erature concerning such policies that is provided to
their members, the precise nature and amount of the
compensation arrangements (including all fees, com-
missions, administrative fees and other forms of fi-
nancial support) that the organization, association,
or subsidiary receives from the endorsement or sale
of the policies to its members. The Boards of Direc-
tors of organizations and associations and their sub-
sidiaries selling or endorsing long-term care insur-
ance policies shall review and approve the compensa-
tion arrangements relating to such policies.
‘‘(5) Organizations and associations and their
subsidiaries selling or endorsing long-term care in-
surance policies to their members also—
‘‘(A) shall disclose, in summary form, the
most recent information available pertaining to
the financial status (including solvency) of the
carrier;
‘‘(B) shall make periodic actuarial or inde-
pendent examinations of the policies, including
their benefits, features, and rates;
‘‘(C) shall actively monitor the marketing
efforts, with respect to its members, of the car-
rier and its agents;
‘‘(D) shall review and approve all market-
ing materials or other insurance communica-
tions used to promote sales among, or sent to,
members regarding such policies; and
‘‘(E) shall file with the State insurance
commissioner of the State in which they are
based—
‘‘(i) a copy of the policies,
‘‘(ii) a copy of the outline of coverage
which accompanies such policies,
‘‘(iii) a copy of each advertising and
other marketing materials utilized in con-
nection with the sale or endorsement of
such policies, and
‘‘(iv) a statement of compliance with
all the requirements of this section.
‘‘REQUIREMENTS FOR AGENT TRAINING AND
CERTIFICATION PROGRAMS
‘‘SEC. 2112. (a) ESTABLISHMENT.—The NAIC shall
establish requirements for long-term care insurance agent
training and certification that—
‘‘(1) specify requirements for a training pro-
gram, either as part of a life-health insurance train-
ing program or as a separate long-term care insur-
ance training program, to train insurance agents
who desire to sell or offer for sale long-term care in-
surance policies;
‘‘(2) specify that the agent must pass either—
‘‘(A) a comprehensive examination on long-
term care insurance coverage and appropriate
sales techniques, or
‘‘(B) an equally comprehensive long-term
care insurance portion of another examination
required by a State in order for the agent to
sell another insurance product in the State;
‘‘(3) specify procedures for certifying agents
who have completed such program as qualified to
sell or offer for sale long-term care insurance poli-
cies; and
‘‘(4) specify, on or after 18 months after the
date of establishment of such requirements, that no
one without a certification may sell or offer for sale
a long-term care insurance policy.
‘‘(b) ADMINISTRATION.—The program established
under subsection (a) shall be administered in each State
through the State insurance commissioner.
‘‘(c) CONTINUING EDUCATION REQUIREMENTS.—
‘‘(1) ESTABLISHMENT.—The NAIC shall con-
sider the appropriateness of establishing, and may
establish, continuing education requirements for
agents who continue to sell long-term care insurance
policies.
‘‘(2) APPLICATION
OF
REQUIREMENTS.—For
purposes of this title, if the NAIC has established a
continuing education requirement under paragraph
(1), an individual shall not be considered to be cer-
tified under a training and certification program es-
tablished under this section unless the individual
meets such continuing education requirement.
‘‘Subpart 3—Definitions
‘‘LONG-TERM CARE INSURANCE POLICY
‘‘SEC. 2116. (a) IN GENERAL.—In this title, except
as otherwise provided in this section, the term ‘long-term
care insurance policy’ means any insurance policy, certifi-
cate, or rider advertised, marketed, offered, or designed
to provide coverage for each covered individual on an ex-
pense incurred, indemnity, prepaid, service-benefit, or
other basis, for one or more diagnostic, preventive, thera-
peutic, rehabilitative, maintenance or personal care serv-
ices, provided in a setting other than an acute care unit
of a hospital. Such term includes a group or individual
annuity or life insurance policy or rider which provides di-
rectly (or which supplements) long-term care insurance
described in the previous sentence.
‘‘(b) POLICIES EXCLUDED.—Except as provided in
subsections (c) and (d), in this title the term ‘long-term
care insurance policy’ does not include any medicare sup-
plemental policy (as defined in section 1882(g)) and any
insurance which is offered primarily to provide—
‘‘(1) basic hospital expense coverage, basic med-
ical-surgical expense coverage, hospital confinement
indemnity coverage, or major medical expense cov-
erage,
‘‘(2) disability income or related asset-protec-
tion coverage,
‘‘(3) accident only coverage,
‘‘(4) specified disease or specified accident cov-
erage, or
‘‘(5) limited benefit health coverage.
‘‘(c) INCLUSION OF POLICIES MARKETED AS LONG-
TERM CARE INSURANCE.—In this title, the term ‘long-
term care insurance policy’ also includes any product
which is advertised, marketed, or offered as long-term care
insurance.
‘‘(d) DISCLOSURE REQUIREMENTS
FOR CERTAIN
DISABILITY INCOME POLICIES
AND LIFE INSURANCE
POLICIES.—
‘‘(1) IN GENERAL.—In this title, the term ‘long-
term care insurance policy’ includes—
‘‘(A) a policy described in subsection (b)(2)
under which the eligibility or amount of benefits
are based on an assessment of functional ability
(based on activities of daily living or otherwise),
or
‘‘(B) a life insurance policy described in
paragraph (3),
if the disclosure requirements of paragraph (2) are
not met.
‘‘(2) DISCLOSURE REQUIREMENTS.—The disclo-
sure requirements of this paragraph for a policy are
that—
‘‘(A) the policy discloses (in a form and
manner specified in the Standards) the fact
that the policy is not a long-term care insur-
ance policy;
‘‘(B) the policy outlines how the benefits in
the policy differ from the benefits required to
be provided under the Standards of a long-term
care insurance policy; and
‘‘(C) in the case of a life-insurance policy
described in subsection (c), at the time of policy
delivery there is provided to the purchaser and
the beneficiary a policy summary that in-
cludes—
‘‘(i) an explanation of how the long-
term care benefits interact with other com-
ponents of the policy (including deductions
from death benefits);
‘‘(ii) a description of the amount and
length of benefits and the guaranteed life-
time benefits (if any) for each covered indi-
vidual; and
‘‘(iii) any exclusions, reductions, and
limitations on benefits of long-term care.
‘‘(3) CERTAIN LIFE INSURANCE POLICIES.—A
life insurance policy described in this paragraph is
one—
‘‘(A) which accelerates 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 provides the option of a lump-
sum payment for those benefits; or
‘‘(C) which provides benefits based on the
use of nursing facility care.
‘‘OTHER TERMS
‘‘SEC. 2117. In this title:
‘‘(1) AGENT.—The term ‘agent’ means—
‘‘(A) prior to 1 year after the date of the
establishment of the agent training and certifi-
cation requirements of section 2112, an individ-
ual who sells or offers for sale a long-term care
insurance policy subject to the requirements of
section 2101; and
‘‘(B) after the date referred to in subpara-
graph (A), an individual certified under a train-
ing and certification program established under
section 2112.
‘‘(2) APPROVED REGULATORY PROGRAM.—The
term ‘approved regulatory program’ means a regu-
latory program in a State that the Secretary has ap-
proved consistent with the requirements of subpart
2 of part C.
‘‘(3) APPROVED
REGULATORY
STATE; NON-
REGULATORY
STATE.—The term ‘approved regu-
latory State’ means a State with an approved regu-
latory program (as defined in paragraph (2)) and
the term ‘nonregulatory State’ means a State other
than an approved regulatory State.
‘‘(4) CARRIER.—The term ‘carrier’ means any
person that issues a long-term care insurance policy,
including a licensed insurance company, a prepaid
hospital or medical service plan, a health mainte-
nance organization, and a multiple small employer
welfare arrangement.
‘‘(5) STATE COMMISSIONER OF INSURANCE.—
The term ‘State commissioner of insurance’ includes
a State superintendent of insurance.
‘‘(6) STEERING COMMITTEE.—The term ‘steer-
ing committee’ means the Steering Committee on
Long-Term Care Insurance Standards established
under section 2104(a).
‘‘(7) NAIC.—The term ‘NAIC’ means the Na-
tional Association of Insurance Commissioners.
‘‘PART B—STANDARDS
‘‘Subpart 1—Policy Standards
‘‘USE OF STANDARD DEFINITIONS AND TERMINOLOGY
AND UNIFORM FORMAT
‘‘SEC. 2121. Each long-term care insurance policy
shall, pursuant to the Standards—
‘‘(1) use uniform language and definitions for
description of benefits, coverage, providers of cov-
ered services, facilities at which covered services are
rendered, and eligibility for benefits, including defi-
nitions of ‘home and community care services’ and
of ‘nursing facility services’, and
‘‘(2) use a uniform format and simple, easily
understood English for presenting the marketing
material and outline of coverage under such a policy.
In establishing the Standards that specify the language
and definitions under paragraph (1), such language and
definitions shall take into account the definitions and ter-
minology used by States in relation to long-term care serv-
ices and providers.
‘‘MINIMUM BENEFITS; LIMITING CONDITIONS ON
BENEFITS
‘‘SEC. 2122. (a) MINIMUM BENEFITS.—In general.—
A long-term care insurance policy shall provide benefits
either—
‘‘(1) for nursing facility services, but not for
home and community care services, and be labeled
prominently as a ‘nursing home care’ policy;
‘‘(2) for home and community care services, but
not for nursing facility services, and be labeled
prominently as a ‘home and community care’ policy;
or
‘‘(3) for both nursing facility services and home
and community care services, and be labeled promi-
nently as a ‘comprehensive long-term care’ policy.
‘‘(b) RESTRICTIONS ON CONDITIONS.—A long-term
care insurance policy may not condition or limit eligi-
bility—
‘‘(1) for benefits for a type of services to the
need for or receipt of any other services, including
prior hospitalization;
‘‘(2) for any benefit solely on the medical neces-
sity for such benefit;
‘‘(3) for benefits furnished by licensed or cer-
tified providers on compliance with conditions which
are in addition to those required for licensure or cer-
tification under State law;
‘‘(4) for nursing facility services (if covered
under the policy) only—
‘‘(A) to care provided in facilities which
provide a specified level of care; or
‘‘(B) to care provided in facilities which
provide for 24-hour or other nursing care not
required in order to be licensed by the State; or
‘‘(5) for benefits on the continued payment of
premiums during periods when the policyholder or
certificate holder is eligible for benefits under the
long-term care insurance policy.
‘‘(c) HOME AND COMMUNITY CARE SERVICES.—
‘‘(1) SERVICES INCLUDED.—Home and commu-
nity care services under a long-term care insurance
policy shall include—
‘‘(A) home-based services (described in
paragraph (2)) which are provided in a place of
residence used as the individual’s home (or, in
the case of services described in subparagraphs
(C), (F), and (G) of that paragraph, which may
be provided outside the individual’s residence),
and
‘‘(B) community-based services (described
in paragraph (3)).
‘‘(2) HOME-BASED SERVICES.—The home-based
services described in this paragraph are as follows:
‘‘(A) Nursing care provided by or under
the supervision of a registered professional
nurse.
‘‘(B) Services which—
‘‘(i) are furnished by a homemaker/
home health aide who has successfully
completed a training and competency eval-
uation program that meets minimum
standards established by the Secretary
under section 1891(a)(3)(D), and
‘‘(ii)(I) are related to the inability of
the policyholder or certificate holder to
perform activities of daily living or instru-
mental activities of daily living, or (II) in
the case of an individual described in sec-
tion 2123, consist of providing supervision.
‘‘(C) Personal assistance services furnished
by an individual who has successfully completed
a training and competency evaluation program
that meets minimum standards established by
the Secretary.
‘‘(D) Medical social services.
‘‘(E) Physical, occupational, or respiratory
therapy or speech-language pathology.
‘‘(F) Provision of, or assistance with, med-
ical supplies (other than drugs and biologicals),
assistive technologies, and equipment that assist
in the performance of activities of daily living.
‘‘(G) Patient and caregiver (including fam-
ily caregiver) education and training to develop
skills necessary to permit the individual to re-
main in the home setting.
‘‘(H) Respite care.
‘‘(I) Such other home-based items and
services as the Secretary may approve.
‘‘(3) COMMUNITY-BASED SERVICES.—The com-
munity-based services described in this paragraph
are as follows:
‘‘(A) Adult day care services provided by
an adult day care program that meets such
standards (including the provision of at least 1
meal a day and the provision of necessary
transportation) established by the Secretary.
‘‘(B) In the case of individuals with chron-
ic mental illness, day treatment or other partial
hospitalization services, psychosocial rehabilita-
tion services, and clinic services (whether or not
furnished in a facility), but not including indi-
vidual therapy.
‘‘(C) Such other community-based items
and services as the Secretary may approve.
‘‘(4) LIMITATIONS ON CONDITIONS.—If a long-
term care insurance policy provides benefits for
home and community care services, the policy—
‘‘(A) may not limit such benefits to serv-
ices provided by registered nurses, licensed
practical nurses, occupational, physical, or
speech therapists, or social workers;
‘‘(B) may not require benefits for such
services to be provided by a nurse or therapist
that can be provided by a home health aide or
licensed or certified home care worker acting
within the scope of the worker’s licensure or
certification;
‘‘(C) may not limit such benefits to serv-
ices provided by agencies or providers certified
under title XVIII;
‘‘(D) may not limit or exclude benefits for
such services by requiring that the policyholder
have an acute condition before home and com-
munity care services are covered; and
‘‘(E) shall provide at least 365 days of
benefits for such services.
‘‘(d) NURSING FACILITY SERVICES.—
‘‘(1) TYPES
OF
SERVICES.—Nursing facility
services under a long-term care insurance policy
shall include the following:
‘‘(A) Nursing care provided by or under
the supervision of a registered professional
nurse.
‘‘(B) Bed and board in connection with the
furnishing of such nursing care.
‘‘(C) Physical, occupational, or respiratory
therapy, or speech-language pathology, fur-
nished by the facility or by others under ar-
rangements with them made by the facility.
‘‘(D) Medical social services.
‘‘(E) Such drugs, biologicals, supplies, ap-
pliances, and equipment, furnished for use in
the facility as are ordinarily furnished by such
facility for the care and treatment of residents.
‘‘(F) Medical services provided by an in-
tern or resident-in-training of a hospital with
which the facility has in effect a transfer agree-
ment (meeting the requirements of section
1861(l)), under a teaching program of such
hospital approved as provided in the last sen-
tence of section 1861(b), and other diagnostic
or therapeutic services provided by a hospital
with which the facility has such an agreement
in effect.
‘‘(G) Such other services necessary to the
health of the residents as are generally provided
by nursing facilities.
‘‘(2) MINIMUM DURATION.—If a long-term care
insurance policy provides benefits for nursing facility
services—
‘‘(A) the policy shall provide such benefits
with respect to all nursing facilities (as defined
in section 1919(a) or as subsequently provided
for by the NAIC in establishing uniform lan-
guage and definitions under section 2121(1)) in
the State, and
‘‘(B) the policy shall provide not less than
365 days of such benefits with respect to all
such nursing facilities.
‘‘PROHIBITION
OF
DISCRIMINATION
AGAINST
INDIVID-
UALS WITH ALZHEIMER’S AND RELATED DISEASES
‘‘SEC. 2123. A long-term care insurance policy may
not provide benefits under the policy for an individual with
Alzheimer’s disease, with any related progressive degen-
erative dementia of an organic origin, or with any mental
disorder of a demonstrable organic origin, that are any
less advantageous than the benefits for an individual hav-
ing another medical condition for which benefits may be
made available.
‘‘LIMITATION ON USE OF PREEXISTING CONDITION
LIMITS
‘‘SEC. 2124. (a) INITIAL ISSUANCE.—
‘‘(1) IN GENERAL.—Subject to paragraph (2), a
long-term care insurance policy may not exclude or
condition benefits based on a medical condition for
which the policyholder received treatment or was
otherwise diagnosed before the date of issuance of
the policy.
‘‘(2) 6-MONTH LIMIT.—A long-term care insur-
ance policy may exclude benefits under a policy, dur-
ing its first 6 months, based on a condition for
which the policyholder 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 replacing policy shall waive any time periods
(including waiting periods, elimination periods, and proba-
tionary periods) applicable to preexisting conditions in the
new policy for similar benefits to the extent such time was
spent under the original policy.
‘‘USE OF FUNCTIONAL ASSESSMENT
‘‘SEC. 2125. (a) IN GENERAL.—If a long-term care
insurance policy limits the eligibility for, or level of, bene-
fits, the policy—
‘‘(1) shall specify that eligibility for, and the
level of, benefits available under the policy are to be
based on a functional assessment (described in sub-
section (c)); and
‘‘(2) shall specify the level (or levels) of phys-
ical, cognitive, or mental impairment required under
such an assessment to obtain benefits under the pol-
icy.
‘‘(b) CONDUCT OF ASSESSMENT.—Such assessment
may not be conducted by a person who has a direct or
indirect ownership or control relation with the carrier issu-
ing the policy.
‘‘(c) UNIFORM ASSESSMENT INSTRUMENT AND UNI-
FORM FORMULAS.—
‘‘(1) UNIFORM
ASSESSMENT.—The functional
assessment referred to in subsection (a) must—
‘‘(A) be based on a professional assessment
of the policyholder’s physical, cognitive, and
mental abilities, and
‘‘(B) be conducted in accordance with a
standard, reproducible, uniform assessment in-
strument and methodology designated under
the Standards.
‘‘(2) UNIFORM FORMULAS.—Benefits shall be
determined in accordance with an eligibility formula
specified in the Standards and based on the assess-
ment described in paragraph (1).
‘‘(d) APPEALS PROCESS.—Each long-term care in-
surance policy shall provide for an appeals process, meet-
ing the Standards, for individuals who dispute the results
of an assessment conducted under this section, including
any determination of eligibility, level of functional impair-
ment, or level of benefits.
‘‘REQUIREMENTS FOR PREMIUMS AND PREMIUM
INCREASES
‘‘SEC. 2126. (a) INITIAL ISSUANCE.—The premiums
charged for the initial issuance of a long-term care insur-
ance policy shall be established in accordance with a sys-
tem that ensures that premiums—
‘‘(1) accurately reflect the true lifetime cost of
such a policy (in order to minimize premium rate in-
creases),
‘‘(2) are fully supported by an actuarial memo-
randum, and
‘‘(3) utilize lapse rates and other assumptions
in accordance with guidelines as specified in the
Standards,
and that discloses the specifics of the assumptions utilized.
‘‘(b) ADDITIONAL SYSTEM REQUIREMENTS.—The
standards established to carry out subsection (a) may in-
clude—
‘‘(1) requirements and restrictions on the origi-
nal pricing structure and methodology;
‘‘(2) a requirement that policies (particularly
indemnity policies) be non-cancellable and have pre-
miums that are fixed and level, except in the specific
cases of—
‘‘(A) verified, substantial changes in mor-
tality and morbidity rates,
‘‘(B) changes in medical technology which
have a major actuarial impact, and
‘‘(C) changes in government specified eligi-
bility requirements, covered services, and defini-
tions which have a major actuarial impact; and
‘‘(3) a requirement that policies (particularly
service-benefit policies) have guaranteed annual and
lifetime limits on premium rate increases, to be set
forth in such Standards.
‘‘(c) RENEWALS.—Except as provided in subsection
(d)—
‘‘(1) PROHIBITION ON INCREASES IN FIRST 3
YEARS.—No increase in premiums shall be allowable
during the first 3 years of a policy’s duration.
‘‘(2) REQUIREMENTS
FOR
CERTAIN
PREMIUM
INCREASES FOR INDIVIDUALS UNDER AGE 70.—In
the case of a policyholder or certificateholder who is
under the age of 70, a proposed premium increase
for renewal of the policy that would result either—
‘‘(A) in the premium exceeding twice the
original premium amount, or
‘‘(B) in a premium increase, over any 3-
year period, exceeding 30 percent of the pre-
mium in effect at the beginning of such period,
shall not be granted unless the requirements of sec-
tion 2165(a)(3) are met.
‘‘(3) REQUIREMENTS FOR PREMIUM INCREASES
FOR INDIVIDUALS BETWEEN 70 AND 80 YEARS OF
AGE.—In 
the 
case 
of 
a 
policyholder 
or
certificateholder who is at least 70 years of age but
under the age of 80, no proposed premium increase
for renewal of the policy shall be granted if the pro-
posed premium increase would result either—
‘‘(A) in a premium increase, over any 3-
year period, exceeding 15 percent of the pre-
mium in effect at the beginning of the period,
or
‘‘(B) in a premium increase, over the 10-
year period ending upon attaining age 80, ex-
ceeding 50 percent of the premium in effect at
the earliest time covered during such period.
‘‘(4) PROHIBITION
ON
PREMIUM
INCREASES
FOR INDIVIDUALS 80 YEARS OF AGE OR OLDER.—In
the case of a policyholder or certificate holder of a
long-term care insurance policy who is 80 years of
age or older, the premiums for such policy may not
be increased.
‘‘(d) SPECIAL RULES IN CASE OF INFLATION PRO-
TECTION.—In the case of a policy that includes inflation
protection benefits, the requirements of subsection (c)
shall not apply to any proposed or expected premium in-
creases if the increases are consistent with the increases
attributable to such inflation protection as scheduled with-
in the policy and were illustrated in a conspicuous manner
in the outline of coverage provided at the time of purchase.
‘‘INFLATION PROTECTION
‘‘SEC. 2127. (a) OPTIONAL RIDER AT TIME OF INI-
TIAL ISSUANCE.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
each long-term care insurance policy shall provide
for inflation protection in accordance with paragraph
(3).
‘‘(2) OPTION.—Paragraph (1) shall not apply
if, at the time of initial sale, the policy purchaser,
after being provided the information described in
section 2136(b)(9), executes a written waiver of such
inflation protection.
‘‘(3) CHOICE AMONG TYPES OF INFLATION PRO-
TECTION.—
‘‘(A) IN GENERAL.—In satisfying the re-
quirement of paragraph (1), each policy shall
provide the policyholder with a choice of the in-
flation protection described in subparagraph
(B) and the choice of any other inflation protec-
tion structure which the NAIC finds to be ap-
propriate and acceptable.
‘‘(B) 
SPECIFIED
INFLATION
PROTEC-
TION.—The inflation protection described in
this subparagraph is protection that provides,
at the time of each annual renewal of a policy,
for an increase of a specified percentage (but
not less than 5 percent) in the dollar payment
levels and the maximum payment limit on bene-
fit coverage above the levels or limit in effect
during the previous policy year. In applying this
subparagraph, 
the 
increases 
shall 
be
compounded annually and the policy may pro-
vide for rounding such an increase to the near-
est multiple of $1 (in the case of dollar pay-
ment levels) or $100 (in the case of the maxi-
mum payment limit).
‘‘(b) NAIC DETERMINATION.—The NAIC shall study
the issue of inflation protection to determine which types
of protection are appropriate and acceptable, and whether
it is appropriate to require that all long-term care insur-
ance policies must include provisions for protection
against inflation. If the NAIC determines that protection
against inflation should be a required feature of every
long-term care insurance policy, the NAIC shall determine
the characteristics and structure of not more than 3 types
of inflation protection, at least one of which must be in-
cluded in every such policy sold, effective 6 months after
the date of designation of such types of protection.
‘‘NONFORFEITURE BENEFITS
‘‘SEC. 2128. (a) IN GENERAL.—Each long-term care
insurance policy or certificate shall provide that if the pol-
icy lapses after the policy has been in effect for at least
a minimum period of time (specified in the Standards),
the policy will provide, without payment of any additional
premiums, benefits of a type and amount (specified in the
Standards) to the policyholder or certificate holder of the
lapsed policy.
‘‘(b) STANDARDS.—The Standards shall provide that
the benefits under subsection (a) must increase based
upon the period of time in which premiums were being
received under the policy.
‘‘DESIGNATION OF REPRESENTATIVES
‘‘SEC. 2129. (a) IN GENERAL.—The carrier issuing
a long-term care insurance policy—
‘‘(1) at the time of issuance of the policy shall
require the applicant or policyholder either—
‘‘(A) to designate 1 or more representa-
tives whom the carrier shall notify in the event
that the policyholder fails to pay premiums, or
‘‘(B) to provide a written waiver (signed
and dated by the applicant or policyholder) of
the right to make such designation; and
‘‘(2) shall permit the policyholder to make or
alter such a designation not less frequently than an-
nually at the time of renewal.
‘‘(b) NO LEGAL OBLIGATION TO PAY PREMIUMS.—
An individual designated as a representative under sub-
section (a) is not under any legal obligation to pay for
premiums or to otherwise act in the event of a notification
under this section.
‘‘RENEWAL AND POLICY UPGRADES
‘‘SEC. 2130. (a) IN GENERAL.—No long-term care
insurance 
policy 
may 
be 
rescinded, 
canceled, 
or
nonrenewed for any reason other than nonpayment of pre-
mium (subject to subsection (d) and any nonforfeiture
rights under section 2128) or fraud or material misrepre-
sentation (subject to subsections (c), (d), and (e) of sec-
tion 2145).
‘‘(b) CONTINUATION AND CONVERSION RIGHTS FOR
GROUP POLICIES.—
‘‘(1) IN GENERAL.—Each group long-term care
insurance policy shall provide covered individuals
with a basis for continuation or conversion in ac-
cordance with this subsection.
‘‘(2) BASIS FOR CONTINUATION.—For purposes
of paragraph (1), a policy provides a basis for con-
tinuation of coverage if the policy maintains cov-
erage under the existing group policy when such cov-
erage would otherwise terminate and which is sub-
ject only to the continued timely payment of pre-
mium when due. A group policy which restricts pro-
vision of benefits and services to or contains incen-
tives to use certain providers or facilities, may pro-
vide continuation benefits which are substantially
equivalent to the benefits of the existing group pol-
icy.
‘‘(3) BASIS FOR CONVERSION.—For purposes of
paragraph (1), a policy provides a basis for conver-
sion of coverage if the policy entitles each individ-
ual—
‘‘(A) whose coverage under the group pol-
icy would otherwise be terminated for any rea-
son; and
‘‘(B) who has been continuously insured
under the policy (or group policy which was re-
placed) for at least 6 months before the date of
the termination;
to issuance of a policy providing benefits identical to,
substantially equivalent to, or in excess of, those of
the policy being terminated, without evidence of in-
surability.
‘‘(4) TREATMENT
OF
SUBSTANTIAL
EQUIVA-
LENCE.—In determining under this subsection
whether benefits are substantially equivalent, consid-
eration should be given to the difference between
managed care and non-managed care plans.
‘‘(5) GROUP REPLACEMENT OF POLICIES.—If a
group long-term care insurance policy is replaced by
another long-term care insurance policy purchased
by the same policyholder, the succeeding carrier
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.
‘‘(6) PREMIUMS FOR REPLACEMENT OR CON-
VERSION.—In the case of a converted policy or a re-
placement policy issued by the same carrier that had
issued a previous policy and issued to the same
group or its successor, or issued to any individual
covered by the previous group policy, the premium
shall be calculated on the basis of the insured’s age
at the inception of coverage under the earliest pre-
vious policy which became the basis for the con-
verted or replaced policy in the case of benefits
which are the same as benefits that were provided
under any earlier policy.
‘‘(c) GUARANTEED ISSUANCE.—
‘‘(1) IN GENERAL.—A carrier that sells or is-
sues long-term care insurance policies shall guaran-
tee that such policies shall be sold or issued to an
individual if such individual meets the minimum
medical underwriting requirements of such policy.
‘‘(2) POLICY UPGRADES.—
‘‘(A) RIGHT TO PURCHASE POLICY THAT
CONFORMS
TO
STANDARDS.—Each long-term
care insurance policy in effect as of the effective
date of the Standards established under section
2102 shall permit the policyholder to purchase
a policy that meets all such standards and the
carrier shall directly inform each such policy-
holder of the right to purchase an upgraded
policy under this paragraph.
‘‘(B) RIGHT TO PURCHASE SUPPLEMENTAL
UPGRADES.—
‘‘(i) IN GENERAL.—If a carrier of a
long-term care insurance policy provides
for the issuance of policies with benefits
that are greater than the benefits pre-
viously provided under such policies, sub-
ject to clause (ii), the policyholder of a
long-term care insurance policy previously
issued by that carrier and still in force has
the right to purchase a policy that provides
for such upgraded benefits and the carrier
shall directly inform each such policyholder
of the existence of such an upgraded policy
and the right to purchase an upgraded pol-
icy under this paragraph.
‘‘(ii) LIMITATION.—Clause (i) shall
not apply to a policyholder who is eligible
(or was eligible at any time within the pre-
vious 3 months) for benefits under the
long-term care insurance policy.
‘‘(C) LIMITATION
ON
MEDICAL
UNDER-
WRITING
OF
UPGRADED
POLICIES
REQUIRED
UNDER
FEDERAL
OR
STATE
LAW.—With re-
spect to a policy that offers upgraded benefits
in accordance with a new Federal or State re-
quirement, the carrier issuing the policy may
not impose additional medical underwriting cri-
teria, except that—
‘‘(i) the carrier may establish a pre-
mium that is higher than the premium for
the previously issued policy only for the
benefits in the upgraded policy that exceed
the benefits in the previously issued policy,
to the extent consistent with a methodol-
ogy developed by the NAIC, and
‘‘(ii) the carrier may impose addi-
tional medical underwriting criteria that is
not more stringent than that used for new
prospective purchasers—
‘‘(I) in relation to benefits to the
extent they were not included in the
previously issued policy, and
‘‘(II) in cases where the State in-
surance commissioner determines that
the absence of such underwriting
would result in adverse selection of in-
sured risks.
‘‘(D) LIMITATION
ON
MEDICAL
UNDER-
WRITING ON SUPPLEMENTAL UPGRADES.—With
respect to an upgraded long-term care insur-
ance policy that offers benefits that are greater
than the benefits required under Federal or
State requirements, the carrier issuing the pol-
icy—
‘‘(i) except as provided in clause (ii),
may not impose additional medical under-
writing criteria in relation to benefits that
are the same as the benefits under the pre-
viously issued policy and the premiums
charged with respect to such benefits may
not be greater than the premiums charged
with respect to such benefits under the
previously issued policy, but
‘‘(ii) may impose additional medical
underwriting criteria in cases where the
State insurance commissioner determines
that the absence of such underwriting
would result in adverse selection of insured
risks.
‘‘(E) APPROVAL
OF
HIGHER
PREMIUMS
REQUIRED.—In the case of a carrier that in-
tends to offer upgraded policies at premiums
that are higher than the premiums charged for
their existing policies, such carrier must have
such higher premiums approved through the
process specified in section 2165.
‘‘(F) CREDIT
TOWARD
NONFORFEITURE
BENEFIT.—In the case that a policy is replaced
with an upgraded policy, the upgraded policy
shall provide for credit designed to assure re-
tention of a policyholder’s equity, according to
a formula specified by the NAIC, toward the
nonforfeiture benefit for periods of coverage
under the previous long-term care insurance
policy issued by the same carrier.
‘‘(d) EFFECT OF INCAPACITATION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a long-term care insurance policy in effect
as of the effective date of the Standards established
under section 2102 may not be canceled for
nonpayment if the policy holder is determined by a
long-term care provider, physician or other health
care provider, in accordance with a uniform assess-
ment under section 2125, to be cognitively, mentally,
or physically incapacitated.
‘‘(2) PERMITTED CANCELLATION.—A long-term
care insurance policy may be canceled under para-
graph (1) for nonpayment if—
‘‘(A) the period of such nonpayment is in
excess of 30 days; and
‘‘(B) notice of intent to cancel (and right
of reinstatement under paragraph (3)) is re-
ceived by all representatives designated by the
policyholder or certificate holder (in accordance
with section 2129) after the expiration of the
period specified in subparagraph (A) and not
less than 30 days prior to such cancellation.
‘‘(3) REINSTATEMENT.—If a long-term care in-
surance policy lapses or is canceled for nonpayment
under this subsection, the policy may be reinstated
without any loss in the policyholder’s equity (for
purposes of a nonforfeiture benefit) if the policy-
holder pays all premiums owing within a period
(specified in the standards and of not less than 6
months) after the date of the lapse or cancellation.
‘‘Subpart 2—Sales Practices
‘‘CERTIFICATION OF TRAINING OF SALES AGENTS
‘‘SEC. 2131. A person may not sell or offer for sale
a long-term care insurance policy unless the person has
been certified under the State regulatory program (or, in
nonregulatory States, by the Secretary) as having received
training (in accordance with section 2112) with respect
to such policies in accordance with the Standards.
‘‘DUTY OF GOOD FAITH AND FAIR DEALING
‘‘SEC. 2132. (a) IN GENERAL.—Each person who is
selling or offering for sale a long-term care insurance pol-
icy has the duty of good faith and fair dealing to the pur-
chaser or potential purchaser of such a policy.
‘‘(b) PROHIBITED PRACTICES.—A person is consid-
ered to have violated subsection (a) if the person engages
in any of the following practices:
‘‘(1) TWISTING.—
‘‘(A) IN
GENERAL.—Knowingly making
any misleading representation or incomplete or
fraudulent comparison of any long-term care in-
surance policy or carrier for the purpose of in-
ducing, or tending to induce, any person to re-
tain or effect a change with respect to a long-
term care insurance policy.
‘‘(B) POLICY REPLACEMENT FORM.—With
respect to any person who elects to replace or
effect a change in a long-term care insurance
policy, the individual that is selling such policy
shall ensure that such person completes a policy
replacement form developed by the NAIC. A
copy of such form shall be retained by the sell-
ing individual and additional copies shall be de-
livered by the selling individual to the old policy
carrier, the new carrier, and the State insur-
ance commissioner.
‘‘(2) HIGH
PRESSURE
TACTICS.—Employing
any method of marketing having the effect of, or in-
tending to, induce the purchase of long-term care in-
surance policy through undue pressure.
‘‘(3) 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 in-
surance agent or insurance company.
‘‘(4) 
ADDITIONAL
PRACTICES.—Such 
sales
practices as the Secretary may specify in regula-
tions.
‘‘(c) PERIODIC REPORTS AND ADDITIONAL UNFAIR
SALES PRACTICES.—The NAIC shall periodically report
to the Secretary on improper sales practices that should
be treated (under subsection (b)(4)) as violations of sub-
section (a). Any additional unfair sales practices specified
in regulations referred to in subsection (b)(4) shall only
apply to activities occurring after the date of promulgation
of the regulations.
‘‘(d) PROHIBITION
OF COMPLETION
OF MEDICAL
HISTORIES.—A person who is selling or offering for sale
a long-term care insurance policy may not complete the
medical history portion of an application for any other in-
dividual (other than a relative of the person). Except as
provided in the previous sentence, the medical history por-
tion of such application may be completed by any individ-
ual (including the applicant, an immediate relative of the
applicant, or the applicant’s physician).
‘‘FINANCIAL GUIDELINES
‘‘SEC. 2133. The NAIC, simultaneously with the es-
tablishment of the Standards, shall develop recommended
minimum financial guidelines (including income, assets,
and other criteria) that an individual should meet before
purchasing a long-term care insurance policy. Such guide-
lines also shall include a requirement that every prospec-
tive purchaser is provided, before a purchase of a long-
term care policy, a written statement, in prominent type-
face, that long-term care insurance is not an appropriate
product for every consumer to purchase and that a pro-
spective purchaser should consider whether the pur-
chaser’s financial situation necessitates such a purchase.
‘‘PROHIBITION OF SALE OR ISSUANCE TO MEDICAID
BENEFICIARIES
‘‘SEC. 2134. A person may not knowingly sell or issue
a long-term care insurance policy to an individual who is
eligible for medical assistance (other than only as a quali-
fied medicare beneficiary) under title XIX.