472
Title II, Subtitle B
under long-term care insurance policies, which shall in-
clude at a minimum the requirements specified in this sec-
tion.
(b) STANDARDS RELATING TO THRESHOLD CONDI-
TIONS
FOR RECEIPT
OF COVERED BENEFITS.—Each
long-term care insurance policy shall meet the following
requirements with respect to identification of, and deter-
mination of whether an insured individual meets, the
threshold conditions for receipt of benefits covered under
such policy:
(1) DECLARATION
OF
THRESHOLD
CONDI-
TIONS.—
(A) IN GENERAL.—The policy shall specify
the level (or levels) of functional or cognitive
mental impairment (or combination of impair-
ments) required as a threshold condition of en-
titlement to receive benefits under the policy
(which threshold condition or conditions shall
be consistent with any regulations promulgated
by the Secretary pursuant to subsection (B)).
(B) SECRETARIAL RESPONSIBILITY.—The
Secretary (after considering the views of the
Advisory Council on current practices of insur-
ers concerning, and the appropriateness of
standardizing, threshold conditions) may pro-
473
Title II, Subtitle B
mulgate such regulations as the Secretary finds
appropriate establishing standardized thresholds
to be used under such policies as preconditions
for varying levels of benefits.
(2) 
INDEPENDENT
PROFESSIONAL
ASSESS-
MENT.—The policy shall provide for a procedure for
determining whether the threshold conditions speci-
fied under paragraph (1) have been met with respect
to an insured individual which—
(A) applies such uniform assessment
standards, procedures, and formats as the Sec-
retary may specify, after consideration of rec-
ommendations by the Advisory Council;
(B) permits an initial evaluation (or, if the
initial evaluation was performed by a qualified
independent assessor selected by the insurer, a
reevaluation) to be made by a qualified inde-
pendent assessor selected by the insured indi-
vidual (or designated representative) as to
whether the threshold conditions for receipt of
benefits have been met;
(C) permits the insurer the option to ob-
tain a reevaluation by a qualified independent
assessor selected and reimbursed by the insurer;
474
Title II, Subtitle B
(D) provides that the insurer will consider
that the threshold conditions have been met in
any case where—
(i) the assessment under subpara-
graph (B) concluded that such conditions
had been met, and the insurer declined the
option under subparagraph (C), or
(ii) assessments under both subpara-
graphs (B) and (C) concluded that such
conditions had been met; and
(E) provides for final resolution of the
question by a State agency or other impartial
third party in any case where assessments
under subparagraphs (B) and (C) reach incon-
sistent conclusions.
(3) QUALIFIED INDEPENDENT ASSESSOR.—For
purposes of paragraph (2), the term ‘‘qualified inde-
pendent assessor’’ means a licensed or certified pro-
fessional, as appropriate, who—
(A) meets such standards with respect to
professional qualifications as may be established
by the Secretary, after consulting with the Sec-
retary of the Treasury, and
(B) has no significant or controlling finan-
cial interest in, is not an employee of, and does
475
Title II, Subtitle B
not derive more than 5 percent of gross income
from, the insurer (or any provider of services
for which benefits are available under the policy
and in which the insurer has a significant or
controlling financial interest).
(c) REQUIREMENTS RELATING TO CLAIMS FOR BEN-
EFITS.—Insurers shall be required—
(1) to promptly pay or deny claims for benefits
submitted by (or on behalf of) insured individuals
who have been determined pursuant to subsection
(b) to meet the threshold conditions for payment of
benefits;
(2) to provide an explanation in writing of the
reasons for payment, partial payment, or denial of
each such claim; and
(3) to provide an administrative procedure
under which an insured individual may appeal the
denial of any claim.
Subpart C—Enforcement
SEC. 2342. STATE PROGRAMS FOR ENFORCEMENT OF
STANDARDS.
(a) REQUIREMENT FOR STATE PROGRAMS IMPLE-
MENTING FEDERAL STANDARDS.—In order for a State to
be eligible for grants under this subpart, the State must
have in effect a program (including such laws and proce-
476
Title II, Subtitle B
dures as may be necessary) for the regulation of long-term
care insurance which the Secretary has determined—
(1) includes the elements required under this
subpart, and
(2) is designed to ensure the compliance of
long-term care insurance policies sold in the State,
and insurers offering such policies and their agents,
with the requirements established pursuant to sub-
part B.
(b) ACTIVITIES UNDER STATE PROGRAM.—A State
program approved under this subpart shall provide for the
following procedures and activities:
(1) MONITORING
OF
INSURERS
AND
POLI-
CIES.—Procedures for ongoing monitoring of the
compliance of insurers doing business in the State,
and of long-term care insurance policies sold in the
State, with requirements under this part, including
at least the following:
(A) 
POLICY
REVIEW
AND
CERTIFI-
CATION.—A program for review and certifi-
cation (and annual recertification) of each such
policy sold in the State.
(B) REPORTING BY INSURERS.—Require-
ments of annual reporting by insurers selling or
servicing long-term care insurance policies in
477
Title II, Subtitle B
the State, in such form and containing such in-
formation as the State may require to deter-
mine whether the insurer (and policies) are in
compliance with requirements under this part.
(C) DATA
COLLECTION.—Procedures for
collection, from insurers, service providers, in-
sured individuals, and others, of information re-
quired by the State for purposes of carrying out
its responsibilities under this part (including
authority to compel compliance of insurers with
requests for such information).
(D) MARKETING OVERSIGHT.—Procedures
for monitoring (through sampling or other ap-
propriate procedures) the sales practices of in-
surers and agents, including review of mar-
keting literature.
(E) OVERSIGHT
OF
ADMINISTRATION
OF
BENEFITS.—Procedures 
for 
monitoring
(through sampling or other appropriate proce-
dures) insurers’ administration of benefits, in-
cluding monitoring of—
(i) determinations of insured individ-
uals’ eligibility to receive benefits, and
(ii) disposition of claims for payment.
478
Title II, Subtitle B
(2) INFORMATION
TO
INSURERS.—Procedures
for furnishing, to insurers selling or servicing any
long-term care insurance policies in the State, infor-
mation on conditions of eligibility for, and benefits
under, each public long-term care program adminis-
tered by the State, in order to enable them to com-
ply with the requirement under section 2321(e)(3).
(3) CONSUMER COMPLAINTS AND DISPUTE RES-
OLUTION.—Administrative procedures for the inves-
tigation and resolution of complaints by consumers,
and disputes between consumers and insurers, with
respect to long-term care insurance, including—
(A) procedures for the filing, investigation,
and adjudication of consumer complaints with
respect to the compliance of insurers and poli-
cies with requirements under this part, or other
requirements under State law; and
(B) procedures for resolution of disputes
between insured individuals and insurers con-
cerning eligibility for, or the amount of, benefits
payable under such policies, and other issues
with respect to the rights and responsibilities of
insurers and insured individuals under such
policies.
480
Title II, Subtitle B
failed to comply with requirements of this part, or
with the terms of a policy, with respect to a con-
sumer or insured individual, to direct the insurer
(subject to appropriate due process) to eliminate
such noncompliance within 30 days.
(4) CIVIL MONEY PENALTIES.—Authority to as-
sess civil money penalties, in amounts for each viola-
tive act up to the greater of $10,000 or three times
the amount of any commission involved—
(A) for violations of subsections (d) (con-
cerning compensation or sale of policies), (e)
(concerning prohibited sales practices), and (f)
(prohibition on sale of duplicate benefits) of
section 2324,
(B) for such other violative acts as the
Secretary may specify in regulations, and
(C) in such other cases as the State finds
appropriate.
(5) OTHER AUTHORITIES.—Such other authori-
ties as the State finds necessary or appropriate to
enforce requirements under this part.
(d) RECORDS, REPORTS, AND AUDITS.—As a condi-
tion of approval of its program under this part, a State
must agree to maintain such records, make such reports
(including expenditure reports), and cooperate with such
481
Title II, Subtitle B
audits, as the Secretary finds necessary to determine the
compliance of such State program (and insurers and poli-
cies regulated under such program) with the requirements
of this part.
(e) SECRETARIAL RESPONSIBILITIES.—
(1) APPROVAL OF STATE PROGRAMS.—The Sec-
retary shall approve a State program meeting the re-
quirements of this part.
(2) INFORMATION ON MEDICARE BENEFITS.—
The Secretary shall furnish, to the official in each
State with chief responsibility for the regulation of
long-term care insurance, a description of the Medi-
care programs under title XVIII of the Social Secu-
rity Act which makes clear the unavailability of long-
term benefits under such programs, for distribution
by such State official to insurers selling long-term
care insurance in the State, in accordance with sub-
section (b)(2).
SEC. 2342. AUTHORIZATION OF APPROPRIATIONS FOR
STATE PROGRAMS.
There are authorized to be appropriated $10,000,000
for fiscal year 1996, $10,000,000 for fiscal year 1997,
$7,500,000 for fiscal year 1998, and $5,000,000 for fiscal
year 1999 and each succeeding fiscal year, for grants to
482
Title II, Subtitle B
States with programs meeting the requirements of this
part, to remain available until expended.
SEC. 2343. ALLOTMENTS TO STATES.
The allotment for any fiscal year to a State with a
program approved under this part shall be an amount de-
termined by the Secretary, taking into account the num-
bers of long-term care insurance policies sold, and of elder-
ly individuals residing, in the State, and such other factors
as the Secretary finds appropriate.
SEC. 2344. PAYMENTS TO STATES.
(a) IN GENERAL.—Each State with a program ap-
proved under this part shall be entitled to payment under
this title for each fiscal year in an amount equal to its
allotment for such fiscal year, for expenditure by such
State for up to 50 percent of the cost of activities under
such program.
(b) STATE SHARE OF PROGRAM EXPENDITURES.—
No Federal funds from any source may be used as any
part of the non-Federal share of expenditures under the
State program under this subpart.
(c) TRANSFER AND DEPOSIT REQUIREMENTS.—The
Secretary shall make payments under this section in ac-
cordance with section 6503 of title 31, United States
Code.
483
Title II, Subtitle B
SEC. 2345. FEDERAL OVERSIGHT OF STATE ENFORCEMENT.
(a) IN GENERAL.—The Secretary shall periodically
review State regulatory programs approved under section
2341 to determine whether they continue to comply with
the requirements of this part.
(b) NOTICE OF DETERMINATION OF NONCOMPLI-
ANCE.—The Secretary shall promptly notify the State of
a determination that a State program fails to comply with
this part, specifying the requirement or requirements not
met and the elements of the State program requiring cor-
rection.
(c) OPPORTUNITY FOR CORRECTION.—
(1) IN GENERAL.—The Secretary shall afford a
State notified of noncompliance pursuant to sub-
section (b) a reasonable opportunity to eliminate
such noncompliance.
(2) CORRECTION PLANS.—In a case where sub-
stantial corrections are needed to eliminate non-
compliance of a State program, the Secretary may—
(A) permit the State a reasonable time
after the date of the notice pursuant to sub-
section (b) to develop and obtain the Sec-
retary’s approval of a correction plan, and
(B) permit the State a reasonable time
after the date of approval of such plan to elimi-
nate the noncompliance.
484
Title II, Subtitle B
(d) WITHDRAWAL OF PROGRAM APPROVAL.—In the
case of a State that fails to eliminate noncompliance with
requirements under this part by the date specified by the
Secretary pursuant to subsection (c), the Secretary shall
withdraw the approval of the State program pursuant to
section 2341(e).
SEC. 2346. EFFECT OF FAILURE TO HAVE APPROVED STATE
PROGRAM.
(a) RESTRICTION ON SALE OF LONG-TERM CARE IN-
SURANCE.—
(1) IN GENERAL.—No insurer may sell or offer
for sale any long-term care insurance policy, on or
after the date specified in subsection (c), in a State
that does not have in effect a regulatory program
approved under section 2341(e).
(2) APPLICATION OF PROHIBITION.—For pur-
poses of paragraph (1), an insurance policy shall not
be considered to be sold or offered for sale in a
State solely because it is sold or offered to a resident
of such State.
(b) CIVIL MONEY PENALTY.—
(1) IN GENERAL.—An insurer shall be subject
to a civil money penalty, in an amount up to the
greater of $10,000 or three times any commission
involved, for each incident in which the insurer sells,
485
Title II, Subtitle B
or offers to sell, an insurance policy to an individual
in violation of subsection (a).
(2) ENFORCEMENT
PROCEDURE.—The Sec-
retary shall enforce the provisions of this subsection
in accordance with the procedures provided under
section 5412 of this Act.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The date specified in this
subsection, for purposes of subsection (a), with re-
spect to any requirement under this part, is the date
one year after the date the Secretary first promul-
gates regulations with respect to such requirement.
(2) EXCEPTION.—To the extent that a State
demonstrates to the Secretary that State legislation
is required to meet any such requirement, the State
shall not be regarded as failing to have in effect a
program in compliance with this part solely on the
basis of its failure to comply with such requirement
before the first day of the first calendar quarter be-
ginning after the close of the first regular session of
the State legislature that begins after the promulga-
tion of the regulation imposing such requirement.
For purposes of the preceding sentence, in the case
of a State that has a 2-year legislative session, each