‘‘(D) the imposition of appropriate sanc-
tions (which include, in appropriate cases, the
imposition of a civil money penalty as provided
for in section 2718) in the case of a carrier,
agent, or association or its subsidiary deter-
mined to have violated the standards.
‘‘(3) CONSUMER ACCESS TO COMPLIANCE IN-
FORMATION.—
‘‘(A) IN
GENERAL.—A State regulatory
program must provide for consumer access to
complaints filed with the State commissioner or
superintendent of insurance with respect to
long-term care insurance policies.
‘‘(B) CONFIDENTIALITY.—The access pro-
vided under subparagraph (A) shall be limited
to the extent required to protect the confiden-
tiality of the identity of individual policyholders.
‘‘(4) PROCESS FOR APPROVAL OF PREMIUMS.—
‘‘(A) IN GENERAL.—Each State regulatory
program shall—
‘‘(i) provide for a process for approv-
ing or disapproving proposed premium in-
creases or decreases with respect to long-
term care insurance policies; and
‘‘(ii) establish a policy for receipt and
consideration of public comments before
approving such a premium increase or de-
crease.
‘‘(B) CONDITIONS
FOR
APPROVAL.—No
premium increase shall be approved (or deemed
approved) under subparagraph (A) unless the
proposed increase is accompanied by an actuar-
ial memorandum which—
‘‘(i) includes a description of the as-
sumptions that justify the increase;
‘‘(ii) contains such information as
may be required under the Standards; and
‘‘(iii) is made available to the public.
‘‘(C) APPLICATION.—Except as provided in
subparagraph (D), this paragraph shall not
apply to a group long-term care insurance pol-
icy issued to a group described in section
4(E)(1) of the NAIC Long Term Care Insur-
ance Model Act (effective January 1991), ex-
cept that such group policy shall, pursuant to
guidelines developed by the NAIC, provide no-
tice to policyholders and certificate holders of
any premium change under such group policy.
‘‘(D) 
EXCEPTION.—Subparagraph 
(C)
shall not apply to—
‘‘(i) group conversion policies;
‘‘(ii) the group continuation feature of
a group policy if the insurer separately
rates employee and continuation coverages;
and
‘‘(iii) group policies where the func-
tion of the employer is limited solely to col-
lecting premiums (through payroll deduc-
tions or dues checkoff) and remitting them
to the insurer.
‘‘(E) CONSTRUCTION.—Nothing in this
paragraph shall be construed as preventing the
NAIC from promulgating standards, or a State
from enacting and enforcing laws, with respect
to premium rates or loss ratios for all, including
group, long-term care insurance policies.
‘‘(5) ANNUAL
REPORTS.—Each State regu-
latory program shall provide for annual reports to be
submitted to the Secretary on the implementation
and enforcement of the standards in the State, in-
cluding information concerning violations in excess
of 30 days.
‘‘(6) ACCESS
TO
OTHER
INFORMATION.—The
State regulatory program must provide for consumer
access to actuarial memoranda provided under para-
graph (4).
‘‘(7) DEFAULT.—In the case of a State without
a regulatory program approved under subsection (a),
the Secretary shall provide for the enforcement ac-
tivities described in subsection (c).
‘‘(c) SECRETARIAL ENFORCEMENT AUTHORITY.—
‘‘(1) IN GENERAL.—The Secretary shall exer-
cise authority under this section in the case of a
State that does not have a regulatory program ap-
proved under this section.
‘‘(2) COMPLAINTS AND INVESTIGATIONS.—The
Secretary shall establish procedures—
‘‘(A) for individuals and entities to file
written, signed complaints respecting alleged
violations of the requirements of this title;
‘‘(B) for responding on a timely basis to
such complaints; and
‘‘(C) for the investigation of—
‘‘(i) those complaints that have a rea-
sonable probability of validity; and
‘‘(ii) such other alleged violations of
the requirements of this title as the Sec-
retary determines to be appropriate.
In conducting investigations under this subsection,
agents of the Secretary shall have reasonable access
necessary to enable such agents to examine evidence
of any carrier, agent, or association or its subsidiary
being investigated.
‘‘(3) HEARINGS.—
‘‘(A) IN GENERAL.—Prior to imposing an
order described in paragraph (4) against a car-
rier, agent, or association or its subsidiary
under this section for a violation of the require-
ments of this title, the Secretary shall provide
the carrier, agent, association or subsidiary
with notice and, upon request made within a
reasonable time (of not less than 30 days, as
established by the Secretary by regulation) of
the date of the notice, a hearing respecting the
violation.
‘‘(B) CONDUCT OF HEARING.—Any hear-
ing requested under subparagraph (A) shall be
conducted before an administrative law judge.
If no hearing is so requested, the Secretary’s
imposition of the order shall constitute a final
and unappealable order.
‘‘(C) AUTHORITY IN HEARINGS.—In con-
ducting hearings under this paragraph—
‘‘(i) agents of the Secretary and ad-
ministrative law judges shall have reason-
able access necessary to enable such agents
and judges to examine evidence of any car-
rier, agent, or association or its subsidiary
being investigated; and
‘‘(ii) administrative law judges, may,
if necessary, compel by subpoena the at-
tendance of witnesses and the production
of evidence at any designated place or
hearing.
In case of contumacy or refusal to obey a sub-
poena lawfully issued under this subparagraph
and upon application of the Secretary, an ap-
propriate district court of the United States
may issue an order requiring compliance with
such subpoena and any failure to obey such
order may be punished by such court as a con-
tempt thereof.
‘‘(D) ISSUANCE OF ORDERS.—If an admin-
istrative law judge determines in a hearing
under this paragraph, upon the preponderance
of the evidence received, that a carrier, agent,
or association or its subsidiary named in the
complaint has violated the requirements of this
title, the administrative law judge shall state
the findings of fact and issue and cause to be
served on such carrier, agent, association, or
subsidiary an order described in paragraph (4).
‘‘(4) CEASE AND DESIST ORDER WITH CIVIL
MONEY PENALTY.—
‘‘(A) IN GENERAL.—Subject to the provi-
sions of subparagraphs (B) through (F), an
order under this paragraph—
‘‘(i) shall require the agent, associa-
tion or its subsidiary, or a carrier—
‘‘(I) to cease and desist from
such violations; and
‘‘(II) to pay a civil penalty in an
amount not to exceed $15,000 in the
case of each agent, and not to exceed
$25,000 for each association or its
subsidiary or a carrier for each such
violation; and
‘‘(ii) may require the agent, associa-
tion or its subsidiary, or a carrier to take
such other remedial action as is appro-
priate.
‘‘(B) CORRECTIONS WITHIN 30 DAYS.—No
order shall be imposed under this paragraph by
reason of any violation if the carrier, agent, or
association or its subsidiary establishes to the
satisfaction of the Secretary that—
‘‘(i) such violation was due to reason-
able cause and was not intentional and was
not due to willful neglect; and
‘‘(ii) such violation is corrected within
the 30-day period beginning on the earliest
date the carrier, agent, association, or sub-
sidiary knew, or exercising reasonable dili-
gence could have known, that such a viola-
tion was occurring.
‘‘(C) WAIVER BY SECRETARY.—In the case
of a violation under this title that is due to rea-
sonable cause and not to willful neglect, the
Secretary may waive part or all of the civil
money penalty imposed under subparagraph
(A)(i)(II) to the extent that payment of such
penalty would be grossly excessive relative to
the violation involved and to the need for deter-
rence of violations.
‘‘(D) ADMINISTRATIVE
APPELLATE
RE-
VIEW.—The decision and order of an adminis-
trative law judge under this paragraph shall be-
come the final agency decision and order of the
Secretary unless, within 30 days, the Secretary
modifies or vacates the decision and order, in
which case the decision and order of the Sec-
retary shall become a final order under this
paragraph.
‘‘(E) JUDICIAL REVIEW.—A carrier, agent,
or association or its subsidiary or any other in-
dividual adversely affected by a final order is-
sued under this paragraph may, within 45 days
after the date the final order is issued, file a pe-
tition in the Court of Appeals for the appro-
priate circuit for review of the order.
‘‘(F) ENFORCEMENT
OF
ORDERS.—If a
carrier, agent, or association or its subsidiary
fails to comply with a final order issued under
this paragraph against the carrier, agent, asso-
ciation or subsidiary after opportunity for judi-
cial review under subparagraph (E), the Sec-
retary shall file a suit to seek compliance with
the order in any appropriate district court of
the United States. In any such suit, the validity
and appropriateness of the final order shall not
be subject to review.
‘‘(d) DEMONSTRATION GRANT PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary may award
grants to States for the establishment of demonstra-
tion programs to improve the enforcement within
such States of long-term care insurance standards
applicable under this title.
‘‘(2) APPLICATION.—To be eligible to receive a
grant under paragraph (1), a State shall prepare
and submit to the Secretary an application at such
time, in such manner, and containing such informa-
tion as the Secretary may require, including a de-
scription of the program for which the State intends
to use the amounts provided under the grant.
‘‘(3) MINIMUM
AMOUNT
OF
GRANTS.—The
amount of a grant awarded under this subsection
shall not be less than $100,000.
‘‘(4) EVALUATION.—A State that receives a
grant under this subsection shall comply with such
evaluation procedures as the Secretary shall by regu-
lation establish. The Secretary shall utilize such
evaluations to conduct an overall evaluation of the
results of the demonstration programs established
under this section.
‘‘(5) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated to carry out
this subsection, $5,000,000 for each of the fiscal
years 1993 through 1997.
‘‘SEC. 2712. REGULATION OF SALES PRACTICES.
‘‘(a) DUTY OF GOOD FAITH AND FAIR DEALING.—
‘‘(1) IN GENERAL.—Each agent (as defined in
section 2733) or association that is selling or offer-
ing for sale a long-term care insurance policy has
the duty of good faith and fair dealing to the pur-
chaser or potential purchaser of such a policy.
‘‘(2) PROHIBITED PRACTICES.—An agent or as-
sociation is considered to have violated paragraph
(1) if the agent or association engages in any of the
following practices:
‘‘(A) TWISTING.—
‘‘(i) IN GENERAL.—Knowingly making
any misleading representation (including
the inaccurate completion of medical his-
tories) or incomplete or fraudulent com-
parison of any long-term care insurance
policy or insurers for the purpose of induc-
ing, or tending to induce, any person to re-
tain or effect a change with respect to a
long-term care insurance policy.
‘‘(ii) 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 provided to such person
and additional copies shall be delivered by
the selling individual to the old policy is-
suer and the new issuer and kept on file
for inspection by the State regulatory
agency.
‘‘(B) HIGH PRESSURE TACTICS.—Employ-
ing any method of marketing having the effect
of, or intending to, induce the purchase of long-
term care insurance policy through force, fright,
threat or undue pressure, whether explicit or
implicit.
‘‘(C) COLD LEAD ADVERTISING.—Making
use directly or indirectly of any method of mar-
keting which fails to disclose in a conspicuous
manner that a purpose of the method of mar-
keting is solicitation of insurance and that con-
tact will be made by an insurance agent or in-
surance company.
‘‘(D) OTHERS.—Engaging in such other
practices determined inappropriate under guide-
lines issued by the NAIC.
‘‘(b) FINANCIAL STANDARDS.—The NAIC shall de-
velop recommended financial minimum standards (includ-
ing both income and asset criteria) for the purpose of ad-
vising individuals considering the purchase of a long-term
care insurance policy.
‘‘(c) PROHIBITION OF SALE OR ISSUANCE TO MEDIC-
AID BENEFICIARIES.—An agent, an association, or a car-
rier may not knowingly sell or issue a long-term care in-
surance policy to an individual who is eligible for medical
assistance under title XIX of the Social Security Act.
‘‘(d) PROHIBITION OF SALE OR ISSUANCE OF DUPLI-
CATE SERVICE BENEFIT POLICIES.—An agent, associa-
tion or its subsidiary, or a carrier may not sell or issue
a service-benefit long-term care insurance policy to an in-
dividual—
‘‘(1) knowing that the policy provides for cov-
erage that duplicates coverage already provided in
another service-benefit long-term care insurance pol-
icy held by such individual (unless the policy is in-
tended to replace such other policy); or
‘‘(2) for the benefit of an individual unless the
individual (or a representative of the individual) pro-
vides a written statement to the effect that the cov-
erage—
‘‘(A) does not duplicate other coverage in
effect under a service-benefit long-term care in-
surance policy; or
‘‘(B) will replace another service-benefit
long-term care insurance policy.
In this subsection, the term ‘service-benefit long-term care
insurance policy’ means a long-term care insurance policy
which provides for benefits based on the type and amount
of services furnished.
‘‘(e) PROHIBITION BASED
ON ELIGIBILITY
FOR
OTHER BENEFITS.—A carrier may not sell or issue a
long-term care insurance policy that reduces, limits or co-
ordinates the benefits provided under the policy on the
basis that the policyholder has or is eligible for other long-
term care insurance coverage or benefits.
‘‘(f) PROVISION OF OUTLINE OF COVERAGE.—No
agent, association or its subsidiary, or carrier may sell or
offer for a sale a long-term care insurance policy (or for
a certificate under a group long-term care insurance pol-
icy) without providing to the purchaser or potential pur-
chaser (or representative) an outline of coverage that com-
plies with the standards established under section
2701(a).
‘‘(g) PENALTIES.—Any agent who sells, offers for
sale, or issues a long-term care insurance policy in viola-
tion of this section 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 $15,000 for each such violation. Any asso-
ciation or its subsidiary or carrier that sells, offers for
sale, or issues a long-term care insurance policy in viola-
tion of this section may be 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 vio-
lation.
‘‘(h) AGENT TRAINING
AND CERTIFICATION RE-
QUIREMENTS.—The NAIC, shall establish requirements
for long-term care insurance agent training and certifi-
cation that—
‘‘(1) specify requirements for training insurance
agents who desire to sell or offer for sale long-term
care insurance policies; and
‘‘(2) specify procedures for certifying agents
who have completed such training and who are as
qualified to sell or offer for sale long-term care in-
surance policies.
‘‘SEC. 2713. ADDITIONAL RESPONSIBILITIES FOR CAR-
RIERS.
‘‘(a) REFUND OF PREMIUMS.—If an application for
a long-term care insurance policy (or for a certificate
under a group long-term care insurance policy) is denied
or an applicant returns a policy or certificate within 30
days of the date of its issuance pursuant to subsection
2717, the carrier shall refund directly to the applicant,
or in the case of an employer to whomever remits the pre-
mium, and not by delivery by the agent, not later than
30 days after the date of the denial or return, any pre-
miums paid with respect to such a policy (or certificate).
‘‘(b) MAILING OF POLICY.—If an application for a
long-term care insurance policy (or for a certificate under
a group long-term care insurance policy) is approved, the
carrier shall provide the applicant, or in the case of a
group plan the employer, the policy (or certificate) of in-
surance not later than 30 days after the date of the ap-
proval.
‘‘(c) INFORMATION ON DENIALS OF CLAIMS.—If a
claim under a long-term care insurance policy is denied,
the carrier shall, within 30 days of the date of a written
request by the policyholder or certificate holder (or rep-
resentative)—
‘‘(1) provide a written explanation of the rea-
sons for the denial; and
‘‘(2) make available all medical and patient
records directly relating to such denial.
Except as provided in subsection (e) of section 2715, 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 re-
quest information respecting the condition.
‘‘(d) REPORTING OF INFORMATION.—A carrier that
issues one or more long-term care insurance policies shall
periodically (not less often than annually) report, in a
form and in a manner determined by the NAIC, to the
Commissioner, superintendent or director of insurance of
each State in which the policy is delivered, and shall make
available to the Secretary, upon request, information in
a form and manner determined by the NAIC concerning—
‘‘(1) the long-term care insurance policies of the
carrier that are in force;
‘‘(2) the most recent premiums for such policies
and the premiums imposed for such policies since
their initial issuance;
‘‘(3) the lapse rate, replacement rate, and re-
scission rates by policy;
‘‘(4) the names of that 10 percent of its agents
that—
‘‘(A) have the greatest lapse and replace-
ment rate; and
‘‘(B) have produced at least $50,000 of
long-term care insurance sales in the previous
year; and
‘‘(5) the claims denied (expressed as a number
and as a percentage of claims submitted) by policy.
Information required under this subsection shall be re-
ported in a format specified in the standards established
under section 2701(a). For purposes of paragraph (3),
there shall be included (but reported separately) data con-
cerning lapses due to the death of the policyholder. For
purposes of paragraph (4), there shall not be included as
a claim any claim that is denied solely because of the fail-
ure to meet a deductible, waiting period, or exclusionary
period.
‘‘(e) STANDARDS ON COMPENSATION FOR SALE OF
POLICIES.—
‘‘(1) IN GENERAL.—A carrier that issues one or
more long-term care insurance policies may provide
a commission or other compensation to an agent or
other representative for the sale of such a policy only
if the first year commission or other first year com-
pensation to be paid does not exceed 200 percent of
the commission or other compensation paid for sell-
ing or servicing the policy in the second year, or if
the first year commission or other compensation to
be paid does not exceed 50 percent of the premium
paid on the first year policy, until the NAIC promul-
gates mandatory standards concerning compensation
for the sale of such policies.
‘‘(2) SUBSEQUENT YEARS.—The commission or
other compensation provided for the sale of long-
term care insurance policies in years subsequent to
the first year of the policy shall be the same as that
provided in the second subsequent year and shall be
provided for no fewer than 5 subsequent years.
‘‘(3) LIMITATION.—No carrier shall provide
compensation to its agents for the sale of a long-
term care insurance policy and no agent shall receive
compensation greater than the renewal compensation
payable by the replacing carrier on renewal policies
if an existing policy is replaced.
‘‘(4) COMPENSATION
DEFINED.—As used in
this subsection, the term ‘compensation’ includes pe-
cuniary or nonpecuniary remuneration of any kind
relating to the sale or renewal of the policy, includ-
ing but not limited to deferred compensation, bo-
nuses, gifts, prizes, awards, and finders fees.
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 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.
‘‘(c) STANDARDS FOR ISSUANCE.—
‘‘(1) IN GENERAL.—
‘‘(A) GUARANTEE.—An agent, association
or carrier that sells or issues long-term care in-
surance policies shall guarantee that such poli-
cies shall be sold or issued to an individual, or
eligible individual in the case of a group plan,
if such individual meets the minimum medical
underwriting requirements of such policy.
‘‘(B) PREMIUM
FOR
CONVERTED
POL-
ICY.—If a group policy from which conversion
is made is a replacement for a previous group
policy, the premium for the converted policy
shall be calculated on the basis of the insured’s
age at the inception of coverage under the
group policy from which conversion is made.
Where the group policy from which conversion
is made replaced previous group coverage, the
premium for the converted policy shall be cal-
culated on the basis of the insured’s age at in-
ception of coverage under the group policy re-
placed.
‘‘(2) UPGRADE FOR CURRENT POLICIES.—The
NAIC shall establish standards, including those pro-
viding guidance on medical underwriting and age
rating, with respect to the access of individuals to
policies offering upgraded benefits.
‘‘(d) EFFECT OF INCAPACITATION.—
‘‘(1) IN GENERAL.—
‘‘(A) PROHIBITION.—Except as provided
in paragraph (2), a long-term care insurance
policy in effect as of the effective date of the
standards established under section 2701(a)
may not be canceled for nonpayment if the pol-
icy holder is determined by a long-term care
provider, physician or other health care pro-
vider, independent of the issuer of the policy, to
be cognitively or mentally incapacitated so as to
not make payments in a timely manner.
‘‘(B) REINSTATEMENT.—A long-term care
policy shall include a provision that provides for
the reinstatement of such coverage, in the event
of lapse, if the insurer is provided with proof of
cognitive or mental incapacitation. Such rein-
statement option shall remain available for a
period of not less than 5 months after termi-
nation and shall allow for the collection of past
due premium.
‘‘(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 is provided
to the policyholder or designated representative
of the policy holder not less than 30 days prior
to such cancellation, except that notice may not
be provided until the expiration of 30 days after
a premium is due and unpaid.
Notice under this paragraph shall be deemed to have
been given as of 5 days after the mailing date.
‘‘SEC. 2715. BENEFIT STANDARDS.
‘‘(a) USE OF STANDARD DEFINITIONS AND TERMI-
NOLOGY, UNIFORM FORMAT, AND STANDARD BENE-
FITS.—Each long-term care insurance policy shall, with
respect to services, providers or facilities, pursuant to
standards established under section 2701(a)—
‘‘(1) use uniform language and definitions, ex-
cept that such language and definitions may take
into account the differences between States with re-
spect to definitions and terminology used for long-
term care services and providers;
‘‘(2) use a uniform format for presenting the
outline of coverage under such a policy; and
‘‘(3) provide coverage for at least one standard
benefits package (of those developed by the NAIC)
that shall include the limitations on the amount of
payments per day and the lengths of covered stays
for nursing facility and home health care services;
as prescribed under guidelines issued by the NAIC and
periodically updated.
‘‘(b) DISCLOSURE.—
‘‘(1) OUTLINE OF COVERAGE.—
‘‘(A) REQUIREMENT.—Each carrier that
sells or offers for sale a long-term care insur-
ance policy shall provide an outline of coverage
under such policy that meets the applicable
standards established pursuant to section
2701(a), complies with the requirements of sub-
paragraph (B), and is in a uniform format as
prescribed in guidelines issued by the NAIC
and periodically updated.
‘‘(B) CONTENTS.—The outline of coverage
for each long-term care insurance 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, in bold face type
on the face of the document in language
that is understandable to an average indi-
vidual, that the outline of coverage is a
summary only, not a contract of insurance,
and that the policy (or master policy) con-
tains the contractual provisions that gov-
ern, except that such summary shall sub-
stantially and accurately reflect the con-
tents of the policy or the master policy.
‘‘(v) A description of the terms, speci-
fied in section 2717, under which a policy
or certificate may be returned and pre-
mium refunded.
‘‘(vi) 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 and State average costs,
where available.
‘‘(vii) A statement of the percentage
limit on annual premium increases that is
provided under the policy pursuant to this
section.
‘‘(2) CERTIFICATES.—A certificate issued pur-
suant to a group long-term care insurance policy
shall include—
‘‘(A) a description of the principal benefits
and coverage provided in the policy;
‘‘(B) a statement of the principal exclu-
sions, reductions, and limitations contained in
the policy; and
‘‘(C) a statement that the group master
policy determines governing contractual provi-
sions.
‘‘(3) LONG-TERM CARE AS PART OF LIFE IN-
SURANCE.—In the case of a long-term care insur-
ance 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 summary that includes—
‘‘(A) an explanation of how the long-term
care benefits interact with other components of
the policy (including deductions from death
benefits);
‘‘(B) an illustration of the amount of bene-
fits, the length of benefit, and the guaranteed
lifetime benefits (if any) for each covered per-
son; and
‘‘(C) any exclusions, reductions, and limi-
tations on benefits of long-term care.
‘‘(4) ADDITIONAL
INFORMATION.—The NAIC
shall develop recommendations with respect to in-
forming consumers of the long-term economic viabil-
ity of carriers issuing long-term care insurance poli-
cies.
‘‘(c) LIMITING CONDITIONS ON BENEFITS; MINIMUM
BENEFITS.—
‘‘(1) IN GENERAL.—A long-term care insurance
policy may not condition or limit eligibility—
‘‘(A) for benefits for a type of services to
the need for or receipt of any other services;
‘‘(B) for any benefit on the medical neces-
sity for such benefit;
‘‘(C) for benefits furnished by licensed or
certified providers in compliance with conditions
which are in addition to those required for li-
censure or certification under State law, except
that if no State licensure or certification laws
exists, in compliance with qualifications devel-
oped by the NAIC; or
‘‘(D) for residential 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.
‘‘(2) HOME
HEALTH
CARE
OR
COMMUNITY-
BASED
SERVICES.—If a long-term care insurance
policy provides benefits for the payment of specified
home health care or community-based services, the
policy—
‘‘(A) may not limit such benefits to serv-
ices provided by registered nurses or licensed
practical nurses;
‘‘(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, except
that if no State licensure or certification laws
exists, in compliance with qualifications devel-
oped by the NAIC;
‘‘(C) may not limit such benefits to serv-
ices provided by agencies or providers certified
under title XVIII of the Social Security Act;
and
‘‘(D) must provide, at a minimum, benefits
for personal care services (including home
health aide and home care worker services as
defined by the NAIC) home health services,
adult day care, and respite care in an individ-
ual’s home or in another setting in the commu-
nity, or any of these benefits on a respite care
basis.
‘‘(3) NURSING FACILITY SERVICES.—If a long-
term care insurance policy provides benefits for the
payment of specified nursing facility services, the
policy must provide such benefits with respect to all
nursing facilities (as defined in section 1919(a) of
the Social Security Act or until such time as subse-
quently provided for by the NAIC in establishing
uniform language and definitions under section
2715(a)(1)) in the State.
‘‘(4) PER DIEM POLICIES.—
‘‘(A) DEFINITION.—For purposes of this
title, the term ‘per diem long-term care insur-
ance policy’ means a long-term care insurance
policy (or certificate under a group long-term
care insurance policy) that provides for benefit
payments on a periodic basis due to cognitive
impairment or loss of functional capacity with-
out regard to the expenses incurred or services
rendered during the period to which the pay-
ments relate.
‘‘(B) LIMITATION.—No per diem long-term
care insurance policy (or certificate) may condi-
tion or otherwise exclude benefit payments
based on the receipt of any type of nursing fa-
cility, home health care or community-based
services.
‘‘(d) PROHIBITION
OF DISCRIMINATION.—A long-
term care insurance policy may not treat benefits under
the policy in the case of an individual with Alzheimer’s
disease, with any related progressive degenerative demen-
tia of an organic origin, with any organic or inorganic
mental illness, or with mental retardation or any other
cognitive or mental impairment differently from an indi-
vidual having another medical condition for which benefits
may be made available.
‘‘(e) LIMITATION ON USE OF PREEXISTING CONDI-
TION LIMITS.—
‘‘(1) INITIAL ISSUANCE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), 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 issuance of the policy.
‘‘(B) 6-MONTH LIMIT.—
‘‘(i) IN GENERAL.—No long-term care
insurance policy or certificate issued under
this title shall utilize a definition of ‘pre-
existing condition’ that is more restrictive
than the following: The term ‘preexisting
condition’ means a condition for which
medical advice or treatment was rec-
ommended by, or received from a provider
of health care services, within 6 months
preceding the effective date of coverage of
an insured individual.
‘‘(ii) PROHIBITION ON EXCLUSION OF
COVERAGE.—No long-term care insurance
policy or certificate may exclude coverage
for a loss or confinement that is the result
of a preexisting condition unless such loss
or confinement begins within 6 months fol-
lowing the effective date of the coverage of
the insured individual.
‘‘(2) REPLACEMENT POLICIES.—If a long-term
care insurance policy replaces another long-term
care insurance policy, the issuer of the replacing pol-
icy shall waive any time periods applicable to pre-
existing conditions, waiting period, elimination peri-
ods and probationary periods in the new policy for
similar benefits to the extent such time was spent
under the original policy.
‘‘(f) ELIGIBILITY FOR BENEFITS.—
‘‘(1) LONG-TERM CARE POLICIES.—Each long-
term care insurance policy shall—
‘‘(A) describe the level of benefits available
under the policy; and
‘‘(B) specify in clear, understandable
terms, the level (or levels) of physical, cognitive,
or mental impairment required in order to re-
ceive benefits under the policy.
‘‘(2) FUNCTIONAL ASSESSMENT.—In order to
submit a claim under any long-term care insurance
policy, each claimant shall have a professional func-
tional assessment of his or her physical, cognitive,
and mental abilities. Such initial assessment shall be
conducted by an individual or entity, meeting the
qualifications established by the NAIC to assure the
professional competence and credibility of such indi-
vidual or entity and that such individual meets any
applicable State licensure and certification require-
ments. The individual or entity conducting such as-
sessment may not control, or be controlled by, the
issuer of the policy. For purposes of this paragraph
and paragraph (4), the term ‘control’ means the di-
rect or indirect possession of the power to direct the
management and policies of a person. Control is pre-
sumed to exist, if any person directly or indirectly,
owns, controls, holds with the power to vote, or
holds proxies representing 10 percent of the voting
securities of another person.
‘‘(3) CLAIMS REVIEW.—Except as provided in
paragraph (4), each long-term care insurance policy
shall be subject to final claims review by the carrier
pursuant to the terms of the long-term care insur-
ance policy.
‘‘(4) APPEALS PROCESS.—
‘‘(A) IN GENERAL.—Each long-term care
insurance policy shall provide for a timely and
independent appeals process, meeting standards
established by the NAIC, for individuals who
dispute the results of the claims review, con-
ducted under paragraph (3), of the claimant’s
functional assessment, conducted under para-
graph (2).
‘‘(B) 
INDEPENDENT
ASSESSMENT.—An
appeals process under this paragraph shall in-
clude, at the request of the claimant, an inde-
pendent assessment of the claimant’s physical,
cognitive or mental abilities.
‘‘(C) CONDUCT.—An independent assess-
ment under subparagraph (B) shall be con-
ducted by an individual or entity meeting the
qualifications established by the NAIC to as-
sure the professional competence and credibility
of such individual or entity and any applicable
State licensure and certification requirements
and may not be conducted—
‘‘(i) by an individual who has a direct
or indirect significant or controlling inter-
est in, or direct affiliation or relationship
with, the issuer of the policy;
‘‘(ii) by an entity that provides serv-
ices to the policyholder or certificateholder
for which benefits are available under the
long-term care insurance policy; or
‘‘(iii) by an individual or entity in con-
trol of, or controlled by, the issuer of the
policy.
‘‘(5) STANDARD ASSESSMENTS.—Not later than
2 years after the date of enactment of this title, the
advisory 
committee 
established 
under 
section
2701(d) shall recommend uniform needs assessment
mechanisms for the determination of eligibility for
benefits under such assessments.
‘‘(g) INFLATION PROTECTION.—
‘‘(1) OPTION
TO
PURCHASE.—A carrier may
not offer a long-term care insurance policy unless
the carrier also offers to the proposed policyholder,
including each group policyholder, the option to pur-
chase a policy that provides for increases in benefit
levels, with benefit maximums or reasonable dura-
tions that are meaningful, to account for reasonably
anticipated increases in the costs of long-term care
services covered by the policy. A carrier may not
offer to a policyholder an inflation protection feature
that is less favorable to the policyholder than one of
the following:
‘‘(A) With respect to policies that provide
for automatic periodic increases in benefits, the
policy provides for an annual increase in bene-
fits in a manner so that such increases are
computed annually at a rate of not less than 5
percent.
‘‘(B) With respect to policies that provide
for periodic opportunities to elect an increase in
benefits, the policy guarantees that the insured
individual will have the right to periodically in-
crease the benefit levels under the policy with-
out providing evidence of insurability or health
status so long as the option for the previous pe-
riod was not declined. The amount of any such
additional benefit may not be less than the dif-
ference between—
‘‘(i) the existing policy benefit; and
‘‘(ii) such existing benefit compounded
annually at a rate of at least 5 percent for
the period beginning on the date on which
the existing benefit is purchased and ex-
tending until the year in which the offer of
increase is made.
‘‘(C) With respect to service benefit poli-
cies, the policy covers a specified percentage of
the actual or reasonable charges and does not
include a maximum specified indemnity amount
or limit.
‘‘(2) EXCEPTION.—The requirements of para-
graph (1) shall not apply to life insurance policies or
riders containing accelerated long-term care benefits.
‘‘(3) REQUIRED INFORMATION.—Carriers shall
include the following information in or together with
the outline of coverage provided under this title:
‘‘(A) A graphic comparison of the benefit
levels of a policy that increases benefits over the
policy period with a policy that does not in-
crease benefits. Such comparison shall show
benefit levels over not less than a 20-year pe-
riod.
‘‘(B) Any expected premium increases or
additional premiums required to pay for any
automatic or optional benefit increases, whether
the individual who purchases the policy obtains
the inflation protection initially or whether such
individual delays purchasing such protection
until a future time.
‘‘(4) CONTINUATION
OF
PROTECTION.—Infla-
tion protection benefit increases under this sub-
section under a policy that contains such protection
shall continue without regard to an insured’s age,
claim status or claim history, or the length of time
the individual has been insured under the policy.
‘‘(5) CONSTANT PREMIUM.—An offer of infla-
tion protection under this subsection that provides
for automatic benefit increases shall include an offer
of a premium that the carrier expects to remain con-
stant. Such offer shall disclose in a conspicuous
manner that the premium may change in the future
unless the premium is guaranteed to remain con-
stant.
‘‘(6) REJECTION.—Inflation protection under
this subsection shall be included in a long-term care
insurance policy unless a carrier obtains a written
rejection of such protection signed by the policy-
holder.
‘‘SEC. 2716. NONFORFEITURE.
‘‘(a) IN GENERAL.—Each long-term care insurance
policy (or certificate) shall provide that if the policy lapses
after the policy has been in effect for a minimum period
(specified under the standards under section 2701(a)), the
policy will provide, without payment of any additional pre-
miums, nonforfeiture benefits as determined appropriate
by the NAIC.
‘‘(b) ESTABLISHMENT OF STANDARDS.—The stand-
ards under section 2701(a) shall provide that the percent-
age or amount of benefits under subsection (a) must in-
crease based upon the policyholder’s equity in the policy.
‘‘SEC. 2717. LIMIT OF PERIOD OF CONTESTABILITY AND
RIGHT TO RETURN.
‘‘(a) CONTESTABILITY.—A carrier may not cancel or
renew a long-term care insurance policy or deny a claim
under the policy based on fraud or material misrepresenta-
tion relating to the issuance of the policy unless notice
of such fraud or material misrepresentation is provided
within a time period to be determined by the NAIC.
‘‘(b) RIGHT TO RETURN.—Each applicant for a long-
term care insurance policy shall have the right to return
the policy (or certificates) within 30 days of the date of
its delivery (and to have the premium refunded) if, after
examination of the policy or certificate, the applicant is
not satisfied for any reason.
‘‘SEC. 2718. CIVIL MONEY PENALTY.
‘‘(a) CARRIER.—Any carrier, association or its sub-
sidiary that sells or offers for sale a long-term care insur-
ance policy and that—
‘‘(1) fails to make a refund in accordance with
section 2713(a);
‘‘(2) fails to transmit a policy in accordance
with section 2713(b);
‘‘(3) fails to provide, make available, or report
information in accordance with subsections (c) or (d)
of section 2713;
‘‘(4) provides a commission or compensation in
violation of section 2713(e);
‘‘(5) fails to provide an outline of coverage in
violation of section 2715(b)(1); or
‘‘(6) issues a policy without obtaining certain
information in violation of section 2715(f);
is subject to a civil money penalty of not to exceed $25,000
for each such violation.
‘‘(b) AGENTS.—Any agent that sells or offers for sale
a long-term care insurance policy and that—
‘‘(1) fails to make a refund in accordance with
section 2713(a);
‘‘(2) fails to transmit a policy in accordance
with section 2713(b);
‘‘(3) fails to provide, make available, or report
information in accordance with subsections (c) or (d)
of section 2713;
‘‘(4) fails to provide an outline of coverage in
violation of section 2715(b)(1); or
‘‘(5) issues a policy without obtaining certain
information in violation of section 2715(f);
is subject to a civil money penalty of not to exceed $15,000
for each such violation.
‘‘PART C—LONG-TERM CARE INSURANCE POLICIES,
DEFINITION AND ENDORSEMENTS
‘‘SEC. 2721. LONG-TERM CARE INSURANCE POLICY DE-
FINED.
‘‘(a) IN GENERAL.—As used in this section, the term
‘long-term care insurance policy’ means any insurance pol-
icy, rider or certificate advertised, marketed, offered or de-
signed to provide coverage for not less than 12 consecutive
months for each covered person on an expense incurred,
indemnity prepaid or other basis, for one or more nec-
essary diagnostic, preventive, therapeutic, rehabilitative,
maintenance or personal care services, provided in a set-
ting other than an acute care unit of a hospital. Such term
includes—
‘‘(1) group and individual annuities and life in-
surance policies, riders or certificates that provide
directly, or that supplement long-term care insur-
ance; and
‘‘(2) a policy, rider or certificates that provides
for payment of benefits based on cognitive impair-
ment or the loss of functional capacity.
‘‘(b) ISSUANCE.—Long-term care insurance policies
may be issued by—
‘‘(1) carriers;
‘‘(2) fraternal benefit societies;
‘‘(3) nonprofit health, hospital, and medical
service corporations;
‘‘(4) prepaid health plans;
‘‘(5) health maintenance organizations; or
‘‘(6) any similar organization to the extent they
are otherwise authorized to issue life or health insur-
ance.
‘‘(c) POLICIES EXCLUDED.—The term ‘long-term
care insurance policy’ shall not include any insurance pol-
icy, rider or certificate that is offered primarily to provide
basic Medicare supplement coverage, basic hospital ex-
pense coverage, basic medical-surgical expense coverage,
hospital confinement indemnity coverage, major medical
expense coverage, disability income or related asset-protec-
tion coverage, accident only coverage, specified disease or
specified accident coverage, or limited benefit health cov-
erage. With respect to life insurance, such term shall not
include life insurance policies, riders or certificates that
accelerate the death benefit specifically for one or more
of the qualifying events of terminal illness, medical condi-
tions requiring extraordinary medical intervention, or per-
manent institutional confinement, and that provide the op-
tion of a lump-sum payment for those benefits and in
which neither the benefits nor the eligibility for the bene-
fits is conditioned upon the receipt of long-term care.
‘‘(d) APPLICATIONS.—Notwithstanding any other
provision of this title, this title shall apply to any product
advertised, marketed or offered as a long-term insurance
policy, rider or certificate.
‘‘SEC. 2722. CODE OF CONDUCT WITH RESPECT TO EN-
DORSEMENTS.
‘‘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, other than em-
ployers and labor organizations that do not accept com-
pensation, and their subsidiaries that provide endorse-
ments of long-term care insurance policies, or that permit
such policies to be offered for sale through the organiza-
tion or association. Such guidelines shall include at mini-
mum the following:
‘‘(1) In endorsing or selling long-term care in-
surance policies, the primary responsibility of an or-
ganization or association shall be to educate their
members concerning such policies and assist such
members in making informed decisions. Such organi-
zations and associations may not function primarily
as sales agents for insurance companies.
‘‘(2) Organizations and associations shall pro-
vide objective information regarding long-term care
insurance policies sold or endorsed by such organiza-
tions and associations to ensure that members of
such organizations and associations 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 selling or
endorsing long-term care insurance policies shall dis-
close in marketing literature provided to their mem-
bers concerning such policies the manner in which
such policies and the insurance company issuing
such policies were selected. If the organization or as-
sociation and the insurance company have interlock-
ing directorates, the organization or association shall
disclose such fact to their members.
‘‘(4) Organizations and associations selling or
endorsing long-term care insurance policies shall dis-
close in marketing literature provided to their mem-
bers concerning such policies the nature and amount
of the compensation arrangements (including all
fees, commissions, administrative fees and other
forms of financial support that the organization or
association receives) from the endorsement or sale of
the policy to its members.
‘‘(5) The Boards of Directors of organizations
and associations selling or endorsing long-term care
insurance policies, if such organizations and associa-
tions have a Board of Directors, shall review and ap-
prove such insurance policies, the compensation ar-
rangements and the marketing materials used to
promote sales of such policies.
‘‘PART D—MISCELLANEOUS PROVISIONS
‘‘SEC. 2731. FUNDING FOR LONG-TERM CARE INSURANCE
INFORMATION, COUNSELING, AND ASSIST-
ANCE.
‘‘(a) IN GENERAL.—The Secretary, acting through
the Public Health Service, may award grants to States,
and national organizations with demonstrated experience
in long-term care insurance, for the establishment of pro-
grams to provide information, counseling, and assistance
relating to the procurement of adequate and appropriate
long-term care insurance.
‘‘(b) APPLICATION.—To be eligible to receive a grant
under subsection (a), a State or national organization
shall prepare and submit to the Secretary an application
at such time, in such manner, and containing such infor-
mation as the Secretary may require, including a descrip-
tion of the program for which the State or organization
intends to use the amounts provided under the grant.
‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—There are authorized to be
appropriate for grants to States under subsection
(a), $10,000,000 for each of the fiscal years 1994
through 1996.
‘‘(2) NATIONAL
ORGANIZATIONS.—There are
authorized to be appropriate for grants to national
organizations under subsection (a), $1,000,000 for
each of the fiscal years 1994 through 1996.
‘‘SEC. 2732. DEFINITIONS.
‘‘As used in this title:
‘‘(1) AGENT.—The term ‘agent’ means—
‘‘(A) prior to 2 years after the date of en-
actment of this Act, an individual who sells or
offers for sale a long-term care insurance policy
subject to the requirements of this title and is
licensed or required to be licensed under State
law for such purpose; and
‘‘(B) after the date referred to in subpara-
graph (A), an individual who meets the training
and certification requirements established under
section 2712(f).
‘‘(2) ASSOCIATION.—The term ‘association’ in-
cludes the association and its subsidiaries.
‘‘(3) CARRIER.—The term ‘carrier’ means any
person that offers a health benefit plan, whether
through insurance or otherwise, including a licensed
insurance company, a prepaid hospital or medical
service plan, a health maintenance organization, a
self-insured carrier, a reinsurance carrier, and a
multiple employer welfare arrangement (a combina-
tion of employers associated for the purpose of pro-
viding health benefit plan coverage for their employ-
ees).’’.
(b) CONFORMING AMENDMENTS.—
(1) Sections 2701 through 2714 of the Public
Health Service Act (42 U.S.C. 300cc through
300cc–15) are redesignated as sections 2801
through 2814, respectively.
(2)(A) Sections 465(f) and 497 of such Act (42
U.S.C. 286(f) and 289(f)) are amended by striking
out ‘‘2701’’ each place that such appears and insert-
ing in lieu thereof ‘‘2801’’.
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