689
Title VIII, Subtitle A
‘‘TITLE XXII—LONG-TERM CARE INSURANCE
STANDARDS
‘‘PART A—PROMULGATION OF STANDARDS AND MODEL
BENEFITS
‘‘SEC. 2201. STANDARDS.
‘‘(a) APPLICATION OF STANDARDS.—
‘‘(1) NAIC.—The Secretary shall request that
the National Association of Insurance Commis-
sioners (hereinafter in this title referred to as the
‘NAIC’), in consultation with the advisory committee
provided under subsection (d)—
‘‘(A) to develop specific standards that in-
corporate the requirements of this title; and
‘‘(B) to report to the Secretary on such
standards,
by not later than 12 months after enactment of this
title. If the NAIC develops such model standards
that incorporate the requirements of this title within
such period and the Secretary finds that such stand-
ards implement the requirements of this title, such
standards shall be the standards applied under this
title.
‘‘(2) DEFAULT.—If the NAIC does not promul-
gate the model standards under paragraph (1) by
the deadline established in that paragraph, the Sec-
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Title VIII, Subtitle A
retary shall promulgate, within 12 months after such
deadline, a regulation that provides standards that
incorporate the requirements of this title and such
standards shall apply as provided for in this title.
‘‘(3) STATE STANDARDS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B)—
‘‘(i) a State may not establish, imple-
ment, or continue in effect standards dif-
ferent from those established under this
title;
‘‘(ii) carriers shall be exempt from
any State law, rule, regulation, or order
not meeting the requirements of this title;
and
‘‘(iii) nothing in this title shall prevent
carriers from marketing or selling long-
term care insurance policies in any State
in which the carrier is licensed to sell such
policies, if the carrier and such policies
meet the applicable requirements estab-
lished under Federal law.
‘‘(B) EXCEPTION.—
‘‘(i) IN GENERAL.—If, upon applica-
tion by an appropriate State agency and
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Title VIII, Subtitle A
taking into account the considerations de-
scribed in clause (iii), the Secretary deter-
mines that a State has a law that estab-
lishes a standard which is different from
the standards established under section
2701(a) and the standard meets the re-
quirements of clause (ii), the Secretary
may permit by order or regulation imple-
mentation and enforcement of the stand-
ard.
‘‘(ii) REQUIREMENTS
FOR
STAND-
ARD.—The requirements of this clause are,
with respect to a standard, that—
‘‘(I) the standard would more ef-
fectively and to an appreciable greater
degree promote the availability and
affordability of long-term care insur-
ance than the standards established
under this title,
‘‘(II) the standard would not be
directly inconsistent with or in conflict
with the specific requirements of this
title, and
‘‘(III) the standard would not
unduly burden interstate commerce.
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Title VIII, Subtitle A
‘‘(iii) CONSIDERATIONS.—In permit-
ting such a State standard under clause
(i), the Secretary shall consider a standard
favorably to the extent that the Secretary
finds that following apply with respect to
the standard:
‘‘(I) There will be no negative
economic impact of such a standard
on carriers and employers.
‘‘(II) The cost of complying with
the standard will be low.
‘‘(III) There will be a minimal
impact of the standard on the sol-
vency of carriers.
‘‘(IV) The standard will promote
the continuation of a competitive mar-
ket for long-term care insurance poli-
cies.
‘‘(V) There is a high probability
of other States applying for such an
exception under this subparagraph
with respect to the standard.
‘‘(VI) There will be no significant
negative impact on national uniform-
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Title VIII, Subtitle A
ity in long-term care insurance policy
standards.
‘‘(iv) PERIODIC
REVIEW.—The Sec-
retary shall periodically review the impact
of standards permitted under this subpara-
graph, taking into account the consider-
ations described in clause (iii) and the re-
quirements of clause (ii). If the Secretary
determines that a standard of a State per-
mitted under clause (i) should no longer be
permitted because it no longer meets such
requirements taking into account such con-
siderations, the Secretary, after notice and
opportunity for rebuttal by the State, may
revoke or rescind the order or regulation
permitting the State to implement the
standard.
‘‘(b) DEADLINE
FOR
APPLICATION
OF
STAND-
ARDS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the date specified in this subsection for a State is—
‘‘(A) the date the State adopts the stand-
ards established under subsection (a)(1); or
‘‘(B) the date that is 1 year after the first
day of the first regular legislative session that
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Title VIII, Subtitle A
begins after the date such standards are first
established under subsection (a)(2);
whichever is earlier.
‘‘(2) STATE REQUIRING LEGISLATION.—In the
case of a State which the Secretary identifies, in
consultation with the NAIC, as—
‘‘(A) requiring State legislation (other than
legislation appropriating funds) in order for the
standards established under subsection (a) to be
applied; but
‘‘(B) having a legislature which is not
scheduled to meet within 1 year following the
beginning of the next regular legislative session
in which such legislation may be considered;
the date specified in this subsection is the first day
of the first calendar quarter beginning after the
close of the first legislative session of the State legis-
lature that begins on or after January 1, 1995. For
purposes of the previous sentence, in the case of a
State that has a 2-year legislative session, each year
of such session shall be deemed to be a separate reg-
ular session of the State legislature.
‘‘(c) ITEMS INCLUDED IN STANDARDS.—The stand-
ards promulgated under subsection (a) shall include—
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Title VIII, Subtitle A
missioner or superintendent of insurance under
such program; or
‘‘(B) if the State has not established such
a program, or if the State’s regulatory program
has been decertified, the policy has been cer-
tified by the Secretary (in accordance with such
procedures as the Secretary may establish) as
meeting the standards established under section
2201(a) by the date specified in section
2201(b).
For purposes of this subsection, the advertising or
soliciting with respect to a policy, directly or indi-
rectly, shall be deemed the offering for sale of the
policy.
‘‘(2) REVIEW
OF
STATE
REGULATORY
PRO-
GRAMS.—The Secretary periodically shall review reg-
ulatory programs described in paragraph (1)(A) to
determine if they continue to provide for the applica-
tion and enforcement of the standards and proce-
dures established under section 2201(a) and (b). If
the Secretary determines that a State regulatory
program no longer meets such standards and re-
quirements, before making a final determination, the
Secretary shall provide the State an opportunity to
adopt such a plan of correction as would permit the
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Title VIII, Subtitle A
program to continue to meet such standards and re-
quirements. If the Secretary makes a final deter-
mination that the State regulatory program, after
such an opportunity, fails to meet such standards
and requirements, the Secretary shall assume re-
sponsibility under paragraph (1)(B) with respect to
certifying policies in the State and shall exercise full
authority under section 2201 for carriers, agents, or
associations or its subsidiary in the State plans in
the State.
‘‘(b) ADDITIONAL REQUIREMENTS FOR APPROVAL
OF STATE REGULATORY PROGRAMS.—For purposes of
subsection (a)(1)(A)(ii), the requirements of this sub-
section for a State regulatory program are as follows:
‘‘(1) ENFORCEMENT.—The enforcement under
the program—
‘‘(A) shall be designed in a manner so as
to secure compliance with the standards within
30 days after the date of a finding of non-
compliance with such standards;
‘‘(B) shall provide for notice in the annual
report required under paragraph (5) to the Sec-
retary of cases where such compliance is not se-
cured within such 30-day period; and
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Title VIII, Subtitle A
‘‘(C) shall provide, in addition to any other
penalties provided by the laws of a State, that
any carrier, agent, or association that is found
under the program to have violated such stand-
ards shall each be subject to a fine of up to 3
times the amount of any commissions paid for
each policy involved or $10,000, whichever is
greater.
‘‘(2) 
PROCESS.—The 
enforcement 
process
under each State regulatory program shall provide
for—
‘‘(A) procedures for individuals and enti-
ties to file written, signed complaints respecting
alleged violations of the standards;
‘‘(B) responding on a timely basis to such
complaints;
‘‘(C) the investigation of—
‘‘(i) those complaints which have a
reasonable probability of validity, and
‘‘(ii) such other alleged violations of
the standards as the program finds appro-
priate; and
‘‘(D) the imposition of appropriate sanc-
tions (which include, in appropriate cases, the
imposition of a civil money penalty as provided
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Title VIII, Subtitle A
for in section 2218) 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.
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Title VIII, Subtitle A
‘‘(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 es-
tablished under section 2701(a); 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;
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Title VIII, Subtitle A
‘‘(ii) the group continuation feature of
a group policy if the carrier 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 carrier.
‘‘(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).
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Title VIII, Subtitle A
‘‘(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 subsection 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
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Title VIII, Subtitle A
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
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Title VIII, Subtitle A
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 3 times the
amount of any commissions paid for
each policy involved or $10,000,
whichever is greater, 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
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Title VIII, Subtitle A
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
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Title VIII, Subtitle A
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.
‘‘SEC. 2212. REGULATION OF SALES PRACTICES.
‘‘(a) DUTY OF GOOD FAITH AND FAIR DEALING.—
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Title VIII, Subtitle A
‘‘(1) IN GENERAL.—Each agent (as defined in
section 2233) 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 carriers 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
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Title VIII, Subtitle A
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-
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Title VIII, Subtitle A
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 knowing that the policy provides for coverage that
duplicates existing coverage already provided in another
service-benefit long-term care insurance policy held by
such individual unless—
‘‘(1) the policy is intended to replace such other
policy, or
‘‘(2) the benefits under the new policy are fully
payable directly to or on behalf of the individual
without regard to other long-term care coverage of
the individual.
In this subsection, the term ‘service-benefit long-term care
insurance policy’ means a long-term care insurance policy
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Title VIII, Subtitle A
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
2201(a).
‘‘(g) 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
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Title VIII, Subtitle A
qualified to sell or offer for sale long-term care in-
surance policies.
‘‘SEC. 2213. 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
2217, 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
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Title VIII, Subtitle A
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 2215, 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 or superintendent 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;
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Title VIII, Subtitle A
‘‘(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 2201(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) INFORMATION
ON AGENT COMMISSIONS.—A
carrier that issues one or more long-term care insurance
policies shall provide to the State commissioner or super-
intendent of insurance such information relating to agent
sales commissions and compensation as the commissioner
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Title VIII, Subtitle A
or superintendent may require in order to monitor and
make recommendations for regulatory action relating to
such commissions and compensation.
‘‘SEC. 2214. RENEWABILITY STANDARDS FOR ISSUANCE,
AND BASIS FOR CANCELLATION OF POLICIES.
‘‘(a) IN GENERAL.—No long-term care insurance pol-
icy may be canceled or nonrenewed for any reason other
than nonpayment of premium, material misrepresentation
or fraud.
‘‘(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
718
Title VIII, Subtitle A
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
719
Title VIII, Subtitle A
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-
720
Title VIII, Subtitle A
culated on the basis of the insured’s age at in-
ception of coverage under the group policy re-
placed.
‘‘(2) UPGRADE FOR POLICIES.—
‘‘(A) CURRENT POLICIES.—Each long-term
care insurance policy in effect as of the effective
date of the standards established under section
2701(a) shall permit the policyholder to pur-
chase a policy that complies with all such
standards and the carrier shall directly inform
each such policyholder of the right to purchase
an upgraded policy under this paragraph.
‘‘(B) FUTURE UPGRADES.—
‘‘(i) IN GENERAL.—If a carrier pro-
viding a long-term care insurance policy
provides for the issuance of policies with
benefits that are greater than the benefits
previously provided under such policies, the
policyholder of a long-term care insurance
policy previous issued by that carrier and
still in force has the right to purchase a
policy that provides for such upgraded ben-
efits and the carrier shall directly inform
each such policyholder of the existence of
such an upgraded policy and the right to
721
Title VIII, Subtitle A
purchase an upgraded policy 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 6 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 long-term care insurance policy that
offers upgraded benefits in accordance with a
requirement of Federal or State law, the carrier
issuing the policy may not impose additional
medical underwriting criteria, except that—
‘‘(i) the carrier may utilize an age
rate for such policy, and
‘‘(ii) the carrier may impose addi-
tional medical underwriting criteria in rela-
tion to benefits to the extent they were not
included in the previously issued policy.
‘‘(D) LIMITATION
ON
MEDICAL
UNDER-
WRITING
ON
OTHER
UPGRADED
POLICIES.—
With respect to an upgraded long-term care in-
surance policy that offers benefits that are
722
Title VIII, Subtitle A
greater than the benefits required under Fed-
eral or State requirements, the carrier issuing
the policy—
‘‘(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 relation to benefits
to the extent they were not included in the
previously issued policy.
‘‘(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 2201(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-
723
Title VIII, Subtitle A
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 carrier 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.
724
Title VIII, Subtitle A
‘‘SEC. 2215. BENEFIT STANDARDS.
‘‘(a) USE OF STANDARD DEFINITIONS AND TERMI-
NOLOGY AND UNIFORM FORMAT.—Each long-term care
insurance policy shall, with respect to services, providers
or facilities, pursuant to standards established under sec-
tion 2201(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; and
‘‘(2) use a uniform format for presenting the
outline of coverage under such a policy;
as prescribed under guidelines issued by the NAIC, after
consultation with the advisory committee provided for
under section 2701(d), 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
2201(a), complies with the requirements of sub-
paragraph (B), and is in a uniform format as
725
Title VIII, Subtitle A
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-
726
Title VIII, Subtitle A
stantially and accurately reflect the con-
tents of the policy or the master policy.
‘‘(v) A description of the terms, speci-
fied in section 2217, under which a policy
or certificate may be returned and pre-
mium refunded.
‘‘(vi) 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
727
Title VIII, Subtitle A
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 Sec-
retary shall collect and distribute to each State com-
missioner or superintendent of insurance on an an-
nual basis information on national average costs for
nursing facility and home care. This information
shall be delivered to prospective policyholders of
long-term care insurance policies in the following
manner:
‘‘(A) In the case of agent solicitations,
agents shall deliver the information to prospec-
tive policyholders prior to the presentation of an
application or enrollment form.
728
Title VIII, Subtitle A
‘‘(B) In the case of direct response solicita-
tions, the information shall be presented in con-
junction with any application or enrollment
form.
‘‘(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
729
Title VIII, Subtitle A
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,
730
Title VIII, Subtitle A
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) or
until such time as subsequently provided for by the
NAIC in establishing uniform language and defini-
tions under section 2215(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-
731
Title VIII, Subtitle A
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
732
Title VIII, Subtitle A
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.
733
Title VIII, Subtitle A
‘‘(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-
734
Title VIII, Subtitle A
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-
735
Title VIII, Subtitle A
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
2201(d) shall recommend uniform needs assessment
mechanisms for the determination of eligibility for
benefits under such assessments.
‘‘(g) INFLATION PROTECTION.—
736
Title VIII, Subtitle A
‘‘(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-
737
Title VIII, Subtitle A
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
738
Title VIII, Subtitle A
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
739
Title VIII, Subtitle A
insurance policy unless a carrier obtains a written
rejection of such protection signed by the policy-
holder.
‘‘SEC. 2216. OFFER OF NONFORFEITURE BENEFITS.
‘‘The issuer of a long-term care insurance policy shall
offer to the policyholder (including any certificate holder
under the policy) a nonforfeiture benefit provision that
meets the following requirements:
‘‘(1) The provision is appropriately captioned.
‘‘(2) The provision provides for a benefit avail-
able in the event of a default in the payment of any
premiums and the amount of such benefit may be
adjusted subsequent to being initially granted only
as necessary to reflect changes in claims, persist-
ency, and interest as reflected in changes in pre-
miums rates. The percent or amount of benefits
shall increase based upon the policyholder’s equity in
the policy.
‘‘(3) The provision includes at least one of the
following:
‘‘(A) Reduced paid-up insurance.
‘‘(B) Extended term insurance.
‘‘(C) Shortened benefit period.
740
Title VIII, Subtitle A
‘‘(D) Another similar offering specified
under the standards established under section
2701(a).
‘‘SEC. 2217. 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. 2218. 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 2213(a);
‘‘(2) fails to transmit a policy in accordance
with section 2213(b);
741
Title VIII, Subtitle A
‘‘(3) fails to provide, make available, or report
information in accordance with subsections (c), (d),
or (e) of section 2213;
‘‘(4) fails to provide an outline of coverage in
violation of section 2215(b)(1); or
‘‘(5) issues a policy without obtaining certain
information in violation of section 2215(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 2213(a);
‘‘(2) fails to transmit a policy in accordance
with section 2213(b);
‘‘(3) fails to provide, make available, or report
information in accordance with subsections (c) or (d)
of section 2213;
‘‘(4) fails to provide an outline of coverage in
violation of section 2215(b)(1); or
‘‘(5) issues a policy without obtaining certain
information in violation of section 2215(f);
is subject to a civil money penalty of not to exceed $15,000
for each such violation.
742
Title VIII, Subtitle A
‘‘PART C—LONG-TERM CARE INSURANCE POLICIES,
DEFINITION AND ENDORSEMENTS
‘‘SEC. 2221. 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;
743
Title VIII, Subtitle A
‘‘(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.
744
Title VIII, Subtitle A
‘‘(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. 2222. 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-
745
Title VIII, Subtitle A
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
746
Title VIII, Subtitle A
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. 2231. 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 2212(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
747
Title VIII, Subtitle B
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).’’.
Subtitle B—Tax Treatment of Long-
Term Care Insurance
SEC. 8101. TREATMENT OF LONG-TERM CARE INSURANCE
OR PLANS.
(a) GENERAL RULE.—Subpart E of part I of sub-
chapter L of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 818 the follow-
ing new section:
‘‘SEC. 818A. TREATMENT OF LONG-TERM CARE INSURANCE
OR PLANS.
‘‘(a) GENERAL RULE.—For purposes of this part, a
long-term care insurance contract shall be treated as an
accident or health insurance contract.
‘‘(b) LONG-TERM CARE INSURANCE CONTRACT.—
‘‘(1) IN GENERAL.—For purposes of this part,
the term ‘long-term care insurance contract’ means
any insurance contract issued if—
‘‘(A) the only insurance protection pro-
vided under such contract is coverage of quali-
748
Title VIII, Subtitle B
fied long-term care services and benefits inci-
dental to such coverage,
‘‘(B) the maximum benefit under the pol-
icy for expenses incurred for any day does not
exceed $200,
‘‘(C) such contract does not cover expenses
incurred for services or items to the extent that
such expenses are reimbursable under title
XVIII of the Social Security Act or would be so
reimbursable but for the application of a de-
ductible or coinsurance amount,
‘‘(D) such contract is guaranteed renew-
able,
‘‘(E) such contract does not have any cash
surrender value, and
‘‘(F) all refunds of premiums, and all pol-
icyholder dividends or similar amounts, under
such contract are to be applied as a reduction
in future premiums or to increase future bene-
fits.
‘‘(2) SPECIAL RULES.—
‘‘(A) PER
DIEM, ETC. PAYMENTS
PER-
MITTED.—A contract shall not fail to be treated
as described in paragraph (1)(A) by reason of
payments being made on a per diem or other
749
Title VIII, Subtitle B
periodic basis without regard to the expenses
incurred during the period to which the pay-
ments relate.
‘‘(B) CONTRACT
MAY
COVER
MEDICARE
REIMBURSABLE
EXPENSES
WHERE
MEDICARE
IS SECONDARY PAYOR.—Paragraph (1)(C) shall
not apply to expenses which are reimbursable
under title XVIII of the Social Security Act
only as a secondary payor.
‘‘(C) REFUNDS OF PREMIUMS.—Paragraph
(1)(F) shall not apply to any refund of pre-
miums on surrender or cancellation of the con-
tract.
‘‘(3) TREATMENT OF COVERAGE PROVIDED AS
PART OF A LIFE INSURANCE CONTRACT.—Except as
otherwise provided in regulations prescribed by the
Secretary, in the case of any long-term care insur-
ance coverage provided by rider on a life insurance
contract—
‘‘(A) IN GENERAL.—This subsection shall
be applied as if the portion of the contract pro-
viding such coverage were a separate contract.
‘‘(B) PREMIUMS AND CHARGES FOR LONG-
TERM
CARE
COVERAGE.—Premium payments
for coverage under a long-term care insurance
750
Title VIII, Subtitle B
contract and charges against the life insurance
contract’s cash surrender value (within the
meaning of section 7702(f)(2)(A)) for such cov-
erage shall be treated as premiums for purposes
of paragraph (1)(F).
‘‘(C) APPLICATION
OF
SECTION
7702.—
Section 7702(c)(2) (relating to the guideline
premium limitation) shall be applied by increas-
ing the guideline premium limitation with re-
spect to a life insurance contract, as of any
date, by the excess of—
‘‘(i) the sum of any charges (but not
premium payments) described in subpara-
graph (B) made on or before such date
under the contract, over
‘‘(ii) any such charges the imposition
of which reduces the premiums paid for
the contract (within the meaning of section
7702(f)(1)).
‘‘(D) APPLICATION OF SECTION 213.—No
deduction shall be allowed under section 213(a)
for charges against the life insurance contract’s
cash surrender value described in subparagraph
(B), unless such charges are includible in in-
come as a result of the application of section
751
Title VIII, Subtitle B
72(e)(10) and the coverage provided by the
rider is a long-term care insurance contract
under subsection (b)(1).
‘‘(E) AMOUNT
OF
DISTRIBUTION
UNDER
RIDER.—This paragraph shall not apply to any
rider on a life insurance contract unless the
percentage reduction in the cash surrender
value of the contract by reason of any payment
under the rider does not exceed the percentage
reduction in the death benefit payable under
the contract by reason of the payment.
For purposes of this paragraph, the term ‘portion’
means only the terms and benefits under a life in-
surance contract that are in addition to the terms
and benefits under the contract without regard to
the coverage under a long-term care insurance con-
tract, except that the coverage under a rider de-
scribed in this paragraph shall not fail to be treated
as such an addition by reason of a reduction in the
contract’s death benefit or cash surrender value re-
sulting from any payment under the rider.
‘‘(c) QUALIFIED LONG-TERM CARE SERVICES.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified long-
term care services’ means necessary diagnostic, pre-
752
Title VIII, Subtitle B
ventive, therapeutic, and rehabilitative services, and
maintenance or personal care services, which—
‘‘(A) are required by a chronically ill indi-
vidual in a qualified facility, and
‘‘(B) are provided pursuant to a plan of
care prescribed by a licensed health care practi-
tioner.
‘‘(2) CHRONICALLY ILL INDIVIDUAL.—
‘‘(A) IN GENERAL.—The term ‘chronically
ill individual’ means any individual who has
been certified by a licensed health care practi-
tioner as—
‘‘(i)(I) being unable to perform (with-
out substantial assistance from another in-
dividual) at least 2 activities of daily living
(as defined in subparagraph (B)) for a pe-
riod of at least 90 days due to a loss of
functional capacity, or
‘‘(II) having a level of disability simi-
lar (as determined by the Secretary in con-
sultation with the Secretary of Health and
Human Services) to the level of disability
described in subclause (I), or
‘‘(ii) having a similar level of disabil-
ity due to cognitive impairment.
753
Title VIII, Subtitle B
‘‘(B) ACTIVITIES OF DAILY LIVING.—For
purposes of subparagraph (A), each of the fol-
lowing is an activity of daily living:
‘‘(i) MOBILITY.—The process of walk-
ing or wheeling on a level surface which
may include the use of an assistive device
such as a cane, walker, wheelchair, or
brace.
‘‘(ii) DRESSING.—The overall complex
behavior of getting clothes from closets
and drawers and then getting dressed.
‘‘(iii) TOILETING.—The act of going
to the toilet room for bowel and bladder
function, transferring on and off the toilet,
cleaning after elimination, and arranging
clothes or the ability to voluntarily control
bowel and bladder function, or in the event
of incontinence, the ability to maintain a
reasonable level of personal hygiene.
‘‘(iv) TRANSFER.—The process of get-
ting in and out of bed or in and out of a
chair or wheelchair.
‘‘(v) EATING.—The process of getting
food from a plate or its equivalent into the
mouth.
754
Title VIII, Subtitle B
‘‘(3) QUALIFIED FACILITY.—The term ‘quali-
fied facility’ means—
‘‘(A) a nursing, rehabilitative, hospice, or
adult day care facility (including a hospital, re-
tirement home, nursing home, skilled nursing
facility, intermediate care facility, or similar in-
stitution)—
‘‘(i) which is licensed under State law,
or
‘‘(ii) which is a certified facility for
purposes of title XVIII or XIX of the So-
cial Security Act, or
‘‘(B) an individual’s home if a licensed
health care practitioner certifies that without
home care the individual would have to be cared
for in a facility described in subparagraph (A).
‘‘(4) MAINTENANCE OR PERSONAL CARE SERV-
ICES.—The term ‘maintenance or personal care serv-
ices’ means any care the primary purpose of which
is to provide needed assistance with any of the ac-
tivities of daily living described in paragraph (2)(B).
‘‘(5) 
LICENSED
HEALTH
CARE
PRACTI-
TIONER.—The term ‘licensed health care practi-
tioner’ means any physician (as defined in section
1861(r) of the Social Security Act) and any reg-
755
Title VIII, Subtitle B
istered professional nurse, licensed social worker, or
other individual who meets such requirements as
may be prescribed by the Secretary.
‘‘(d) CONTINUATION COVERAGE EXCISE TAX NOT
TO APPLY.—This section shall not apply in determining
whether section 4980B (relating to failure to satisfy con-
tinuation coverage requirements of group health plans) ap-
plies.
‘‘(e) INFLATION ADJUSTMENT
OF $200 BENEFIT
LIMIT.—
‘‘(1) IN GENERAL.—In the case of a calendar
year after 1994, the $200 amount contained in sub-
section (b)(1)(B) shall be increased for such cal-
endar year by the medical care cost adjustment for
such calendar year. If any increase determined
under the preceding sentence is not a multiple of
$10, such increase shall be rounded to the nearest
multiple of $10.
‘‘(2) MEDICAL CARE COST ADJUSTMENT.—For
purposes of paragraph (1), the medical care cost ad-
justment for any calendar year is the percentage (if
any) by which—
‘‘(A) the medical care component of the
Consumer Price Index (as defined in section
756
Title VIII, Subtitle B
1(f)(5)) for August of the preceding calendar
year, exceeds
‘‘(B) such component for August of 1993.’’
(b) RESERVES.—Clause (iii) of section 807(d)(3)(A)
of such Code is amended by inserting ‘‘(other than a long-
term care insurance contract within the meaning of sec-
tion 818A)’’ after ‘‘contract’’.
(c) CLERICAL AMENDMENT.—The table of sections
for subpart E of part I of subchapter L of chapter 1 of
such Code is amended by inserting after the item relating
to section 818 the following new item:
‘‘Sec. 818A. Treatment of long-term care insurance or plans.’’
SEC. 8102. EXCLUSION FOR BENEFITS PROVIDED UNDER
LONG-TERM CARE INSURANCE AND FOR CER-
TAIN EMPLOYER-PROVIDED COVERAGE.
(a) IN GENERAL.—Subsection (a) of section 104 of
the Internal Revenue Code of 1986 (relating to compensa-
tion for injuries or sickness) is amended by striking ‘‘and’’
at the end of paragraph (4), by striking the period at the
end of paragraph (5) and inserting ‘‘, and’’, and by insert-
ing after paragraph (5) the following new paragraph:
‘‘(6) benefits under a long-term care insurance
contract (as defined in section 818A(b)).’’
(b) EMPLOYER-PROVIDED COVERAGE.—Section 106
of such Code (relating to contributions by employer to ac-
cident and health plans), as amended by section 2003, is
757
Title VIII, Subtitle B
amended by adding at the end the following new sub-
section:
‘‘(c) TREATMENT OF LONG-TERM CARE INSURANCE
CONTRACTS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a long-term care insurance contract (as
defined in section 818A(b)) shall be treated as a
health plan for purposes of subsection (a).
‘‘(2) EXCEPTION FOR CAFETERIA PLANS AND
FLEXIBLE
SPENDING
ARRANGEMENTS.—Paragraph
(1) shall not apply to coverage under a long-term
care insurance contract (as so defined) which is pro-
vided through a cafeteria plan (as defined in section
125(c)) or flexible spending or similar arrange-
ment.’’.
SEC. 8103. QUALIFIED LONG-TERM SERVICES TREATED AS
MEDICAL CARE.
(a) GENERAL RULE.—Paragraph (1) of section
213(d) of the Internal Revenue Code of 1986 (defining
medical care) is amended by striking ‘‘or’’ at the end of
subparagraph (B), by redesignating subparagraph (C) as
subparagraph (D), and by inserting after subparagraph
(B) the following new subparagraph:
‘‘(C) for qualified long-term care services
(as defined in section 818A(c)), or’’.
758
Title VIII, Subtitle B
(b) DEDUCTION FOR LONG-TERM CARE EXPENSES
FOR PARENT OR GRANDPARENT.—Section 213 of such
Code (relating to deduction for medical expenses) is
amended by adding at the end the following new sub-
section:
‘‘(g) SPECIAL RULE FOR CERTAIN LONG-TERM CARE
EXPENSES.—For purposes of subsection (a), the term ‘de-
pendent’ shall include any parent or grandparent of the
taxpayer for whom the taxpayer has expenses for long-
term care services described in section 818A(c), but only
to the extent of such expenses.’’
(c) TECHNICAL AMENDMENTS.—
(1) Subparagraph (D) of section 213(d)(1) of
such Code (as redesignated by subsection (a)) is
amended by striking ‘‘subparagraphs (A) and (B)’’
and inserting ‘‘subparagraphs (A), (B), and (C)’’.
(2)(A) Paragraph (1) of section 213(d) of such
Code is amended by adding at the end thereof the
following new flush sentence:
‘‘In the case of a long-term care insurance contract
(as defined in section 818A), only eligible long-term
care premiums (as defined in paragraph (10)) shall
be taken into account under subparagraph (D).’’
(B) Subsection (d) of section 213 is amended
by adding at the end the following new paragraph:
759
Title VIII, Subtitle B
‘‘(10) 
ELIGIBLE
LONG-TERM
CARE
PRE-
MIUMS.—
‘‘(A) IN GENERAL.—For purposes of this
section, the term ‘eligible long-term care pre-
miums’ means the amount paid during a tax-
able year for any long-term care insurance con-
tract (as defined in section 818A) covering an
individual, to the extent such amount does not
exceed the limitation determined under the fol-
lowing table:
‘‘In the case of an individual
with an attained age before the
The limitation
close of the taxable year of:
is:
40 or less ...................................................................
$200
More than 40 but not more than 50 .........................
375
More than 50 but not more than 60 .........................
750
More than 60 but not more than 70 .........................
1,600
More than 70 .............................................................
2,000.
‘‘(B) INDEXING.—
‘‘(i) IN GENERAL.—In the case of any
taxable year beginning in a calendar year
after 1993, each dollar amount contained
in paragraph (1) shall be increased by the
medical care cost adjustment of such
amount for such calendar year. If any in-
crease determined under the preceding sen-
tence is not a multiple of $10, such in-
crease shall be rounded to the nearest mul-
tiple of $10.
760
Title VIII, Subtitle B
‘‘(ii) MEDICAL
CARE
COST
ADJUST-
MENT.—For purposes of clause (i), the
medical care cost adjustment for any cal-
endar year is the percentage (if any) by
which—
‘‘(I) the medical care component
of the Consumer Price Index (as de-
fined in section 1(f)(5)) for August of
the preceding calendar year, exceeds
‘‘(II) such component for August
of 1991.’’
(3) Paragraph (6) of section 213(d) of such
Code is amended—
(A) by striking ‘‘subparagraphs (A) and
(B)’’ and inserting ‘‘subparagraphs (A), (B),
and (C)’’, and
(B) by striking ‘‘paragraph (1)(C)’’ in sub-
paragraph 
(A) 
and 
inserting 
‘‘paragraph
(1)(D)’’.
(4) Paragraph (7) of section 213(d) of such
Code is amended by striking ‘‘subparagraphs (A)
and (B)’’ and inserting ‘‘subparagraphs (A), (B),
and (C)’’.
761
Title VIII, Subtitle B
SEC. 
8104. 
EXCLUSION 
FROM 
GROSS 
INCOME 
FOR
AMOUNTS OTHERWISE INCLUDIBLE ON THE
SURRENDER OR CANCELLATION OF ANY LIFE
INSURANCE POLICY WHICH ARE USED FOR
LONG-TERM CARE INSURANCE PREMIUMS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 137 as section 138 and by insert-
ing after section 136 the following new section:
‘‘SEC. 137. AMOUNTS RECEIVED ON CANCELLATION, ETC.,
OF LIFE INSURANCE CONTRACTS AND USED
TO PAY PREMIUMS FOR QUALIFIED LONG-
TERM CARE INSURANCE.
‘‘No amount which would (but for this section) be in-
cludible in the gross income of an individual shall be in-
cluded in gross income on the whole or partial surrender,
cancellation, or exchange of any life insurance contract
during the taxable year if—
‘‘(1) such individual has attained age 65 on or
before the date of the transaction, and
‘‘(2) the amount otherwise includible in gross
income is used during such year to pay premiums
for any qualified long-term care insurance policy (as
defined in section 2721(a) of the Public Health
Service Act) for the benefit of such individual or the
762
Title VIII, Subtitle B
spouse of such individual if such spouse has attained
age 65 on or before the date of the transaction.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for such part III is amended by striking the last item and
inserting the following new items:
‘‘Sec. 137. Amounts received on cancellation, etc., of life insur-
ance contracts and used to pay premiums for quali-
fied long-term care insurance.
‘‘Sec. 138. Cross references to other Acts.’’.
SEC. 8105. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by this
subtitle shall apply to taxable years beginning after De-
cember 31, 1995.
(b) TRANSITION RULE.—If, after the date of enact-
ment of this Act and before January 1, 1996, a contract
providing for long-term care insurance coverage is ex-
changed solely for a long-term care insurance contract, no
gain or loss shall be recognized on the exchange. If, in
addition to a long-term care insurance contract, money or
other property is received in the exchange, then any gain
shall be recognized to the extent of the sum of the money
and the fair market value of the other property received.
For purposes of this subsection, the cancellation of a con-
tract providing for long-term care insurance coverage and
reinvestment of the cancellation proceeds in a long-term
care insurance contract within 60 days thereafter shall be
treated as an exchange. For purposes of this subsection,
763
Title VIII, Subtitle C
the term ‘‘long-term care insurance contract’’ has the
meaning given to such term by section 818A(b) of the In-
ternal Revenue Code of 1986.
(c) ISSUANCE OF RIDER NOT TREATED AS MATE-
RIAL CHANGE.—For purposes of applying sections 101(f),
7702, and 7702A of the Internal Revenue Code of 1986
to any contract, the issuance of a rider on a life insurance
contract providing long-term care insurance coverage shall
not be treated as a modification or material change of
such contract.
Subtitle C—Studies
SEC. 8201. FEASIBILITY OF ENCOURAGING HEALTH CARE
PROVIDERS TO DONATE SERVICES TO HOME-
BOUND PATIENTS.
The Comptroller General of the United States shall
conduct a study on the feasibility of encouraging health
care providers to donate their services to homebound pa-
tients. Such study shall include an examination of the ef-
fects of qualifying such services as a charitable contribu-
tion.
SEC. 8202. FEASIBILITY OF TAX CREDIT FOR HEADS OF
HOUSEHOLDS WHO CARE FOR ELDERLY FAM-
ILY MEMBERS IN THEIR HOMES.
The Comptroller General of the United States shall
conduct a study on the feasibility of providing heads of
764
Title VIII, Subtitle C
households who care for elderly family members in their
homes with a tax credit. Such study shall estimate the
cost of such a tax credit which would apply to expenses
incurred in the custodial care of such an elderly family
member to the extent such expenses exceed 5 percent of
adjusted gross income.
SEC. 8203. CASE MANAGEMENT OF CURRENT LONG-TERM
CARE BENEFITS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a study of the feasibility
of encouraging or requiring the use of a single designated
public or nonprofit agency (such as an area agency on
aging) to coordinate, through case management, the provi-
sion of long-term care benefits under current Federal,
State, and local programs in a geographic area.
(b) REPORT.—The Secretary shall submit to Con-
gress a report on the study conducted under subsection
(a) by not later than 1 year after the date of the enact-
ment of this Act. Such report shall include such rec-
ommendations regarding changes in legislation to encour-
age or require the use (described in subsection (a)) of an
agency to coordinate long-term care benefits as may be
appropriate.
765
Title VIII, Subtitle C
SEC. 8204. SUBACUTE CARE STUDY.
(a) STUDY.—The Secretary of Health and Human
Services shall—
(1) define the level and type of care that should
constitute subacute care;
(2) determine the appropriateness of furnishing
subacute care in different settings by evaluating the
quality of care and patient outcomes;
(3) determine the cost and effectiveness of pro-
viding subacute care under the medicare program
under title XVIII of the Social Security Act to indi-
viduals who are eligible for benefits under part A of
such title;
(4) determine the extent to which hospital DRG
prospective payment rates under section 1886(d) of
such Act (42 U.S.C. 1395ww(d)) are appropriate for
the less restrictive institutional settings that provide
subacute care; and
(5) study the relationships between institutions
and their payment methodologies in order to develop
ways in which to maximize the continuity of care for
each patient episode in which subacute care is fur-
nished.
(b) REPORT.—Not later than October 1, 1996, the
Secretary shall submit to the Congress a report on the
matters described in subsection (a).
766
Title IX
SEC. 8205. STUDY OF LONG-TERM CARE INSURANCE.
(a) REPORT.—Not later than one year after the date
of enactment of this Act, the Secretary of Health and
Human Services shall report to Congress on alternatives
for extending access to long-term care through the private
insurance market. The Secretary shall specifically study
the cost of current policies, their effectiveness in providing
care and their availability to the general population.
(b) RECOMMENDATIONS.—The Secretary shall rec-
ommend any changes in Federal law which may be nec-
essary to increase access to long-term care for all Ameri-
cans through the private insurance market. In conducting
this study, the Secretary shall consult with the National
Association of Insurance Commissioners and other private
entities with expertise in private health insurance and
long-term care.
TITLE IX—DEPARTMENT OF
VETERANS AFFAIRS
TABLE OF CONTENTS OF TITLE
Sec. 9001. Benefits and eligibility through Department of Veterans Affairs
medical system.
‘‘CHAPTER 18—ELIGIBILITY AND BENEFITS UNDER
ENROLLMENT-BASED SYSTEM
‘‘SUBCHAPTER I—GENERAL
‘‘1801. Definitions.
‘‘SUBCHAPTER II—ENROLLMENT
‘‘1811. Enrollment: veterans.
‘‘1812. Enrollment: CHAMPVA eligibles.
‘‘1813. Enrollment: family members.
767
Title IX
‘‘1814. Enrollment ceilings.
‘‘SUBCHAPTER III—BENEFITS
‘‘1821. Benefits for VA enrollees.
‘‘1822. Chapter 17 benefits.
‘‘1823. Supplemental benefits packages and policies.
‘‘1824. Limitation regarding veterans who elect not to enroll to obtain VA
health coverage.
‘‘1825. Limitation on use of funds for abortions.
‘‘SUBCHAPTER IV—FINANCIAL MATTERS
‘‘1831. Premiums, copayments, etc.
‘‘1832. Recovery of cost of certain care and services.
‘‘1833. Health Coverage Fund.’’
Sec. 9002. Organization of Department of Veterans Affairs facilities as facili-
ties offering qualified health coverage.
‘‘SUBCHAPTER IV—PARTICIPATION AS PART OF NATIONAL
HEALTH CARE REFORM
‘‘7341. Organization of health care facilities as facilities offering qualified
health coverage.
‘‘7342. Operation of health care facilities within States operating as single
payer areas.
‘‘7343. Health care resource agreements.
‘‘7344. Administrative and personnel flexibility.
‘‘7345. Veterans Health Care Transition Fund.
‘‘7346. Funding provisions: grants and other sources of assistance.’’
Sec. 9003. Eligibility for Chapter 17 care.
Sec. 9004. Authority to provide health care for herbicide and radiation expo-
sure.
Sec. 9005. Extension of authority to provide priority outpatient health care for
exposure to environmental hazards.
Sec. 9006. Report on waiving cost-sharing for certain medical care for depend-
ents of Persian Gulf veterans who may have been exposed to
environmental hazards.
Sec. 9007. Study of the effect of telemedicine on the delivery of VA health care
services.
Sec. 9008. Legislative proposal on VA health coverage for medicare bene-
ficiaries.
Sec. 9009. Outpatient clinic pilot program.
SEC. 9001. BENEFITS AND ELIGIBILITY THROUGH DEPART-
MENT OF VETERANS AFFAIRS MEDICAL SYS-
TEM.
(a) DVA AS A PARTICIPANT IN HEALTH CARE RE-
FORM.—
768
Title IX
(1) IN
GENERAL.—Title 38, United States
Code, is amended by inserting after chapter 17 the
following new chapter:
‘‘CHAPTER 18—ELIGIBILITY AND BENE-
FITS 
UNDER 
ENROLLMENT-BASED
SYSTEM
‘‘SUBCHAPTER I—GENERAL
‘‘1801. Definitions.
‘‘SUBCHAPTER II—ENROLLMENT
‘‘1811. Enrollment: veterans.
‘‘1812. Enrollment: CHAMPVA eligibles.
‘‘1813. Enrollment: family members.
‘‘1814. Enrollment ceilings.
‘‘SUBCHAPTER III—BENEFITS
‘‘1821. Benefits for VA enrollees.
‘‘1822. Chapter 17 benefits.
‘‘1823. Supplemental benefits packages and policies.
‘‘1824. Limitation regarding veterans who elect not to enroll with a VA health
plan.
‘‘SUBCHAPTER IV—FINANCIAL MATTERS
‘‘1831. Premiums, copayments, etc.
‘‘1832. Medicare coverage and reimbursement.
‘‘1833. Recovery of cost of certain care and services.
‘‘1834. Health Plan Fund.
‘‘1835. Guaranteed funding of Government costs
‘‘SUBCHAPTER I—GENERAL
‘‘§ 1801. Definitions
‘‘For purposes of this chapter:
‘‘(1) The term ‘qualified health coverage’ has
the meaning given such term in section 1101 of the
Bipartisan Health Care Reform Act of 1994.
769
Title IX
‘‘(2) The term ‘VA health coverage’ means
qualified health coverage provided by the Secretary
under section 7341 of this title.
‘‘(3) The term ‘VA enrollee’ means an individ-
ual enrolled under subchapter II of this chapter with
VA health coverage.
‘‘(4) The term ‘standard coverage’ has the
meaning given such term in section 1102 of the Bi-
partisan Health Care Reform Act of 1994.
‘‘SUBCHAPTER II—ENROLLMENT
‘‘§ 1811. Enrollment: veterans
‘‘Subject to section 1814, each veteran residing in the
United States may enroll to obtain VA health coverage.
A veteran who wants to receive the standard coverage
through the Department shall enroll to obtain VA health
coverage.
‘‘§ 1812. Enrollment: CHAMPVA eligibles
‘‘(a) ELIGIBILITY.—Subject to section 1814, an indi-
vidual described in subsection (b) who resides in the Unit-
ed States may enroll to obtain VA health coverage.
‘‘(b) APPLICABILITY.—This section applies to the fol-
lowing individuals who are not otherwise eligible for medi-
cal care under chapter 55 of title 10 (CHAMPUS):
‘‘(1) The surviving spouse or child of a veteran
who (A) died as a result of a service-connected dis-
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ability, or (B) at the time of death had a total dis-
ability permanent in nature, resulting from a serv-
ice-connected disability.
‘‘(2) The surviving spouse or child of a person
who died in the active military, naval, or air service
in the line of duty and not due to such person’s own
misconduct.
‘‘(c) DEFINITION OF CHILD.—For purposes of this
section, the term ‘child’ includes a child described in sec-
tion 1901(2)(B) of the Bipartisan Health Care Reform
Act of 1994.
‘‘§ 1813. Enrollment: family members
‘‘(a) ELIGIBILITY.—Subject to section 1814, mem-
bers of the family of an enrollee under section 1811 or
1812 of this title may enroll to obtain VA health coverage.
The enrollee shall have the option of enrolling to obtain
VA health coverage as an individual or with family mem-
bers. If the enrollee chooses to enroll to obtain VA health
coverage with family members, all such family members
must be so enrolled.
‘‘(b) REQUIRED PAYMENTS.—Any family member
with VA health coverage shall (except as provided in sec-
tion 1831(c)(2)(B) of this title) be subject to payment of
premiums, deductibles, copayments, and coinsurance in
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accordance with the Bipartisan Health Care Reform Act
of 1994.
‘‘(c) ENROLLMENT ELIGIBILITY TO SURVIVE DEATH
OF VETERAN.—An individual with VA health coverage
pursuant to subsection (a) as a member of the family of
a veteran enrolled under section 1811 of this title shall
not lose eligibility to obtain such coverage by reason of
the death of that veteran.
‘‘(d) MEMBERS OF FAMILY.—For purposes of this
section, the members of the family of an enrollee are those
individuals (other than the enrollee) included as family
members under section 1901(2) of the Bipartisan Health
Care Reform Act of 1994.
‘‘§ 1814. Enrollment ceilings
‘‘(a) The Secretary shall limit the number of individ-
uals eligible to enroll for VA health coverage by establish-
ing and applying enrollment ceilings in accordance with
this section.
‘‘(b) The Secretary shall establish separate enroll-
ment ceilings under subsection (a) applicable to individ-
uals described in subsections (b), (c)(1), and (c)(2), re-
spectively, of section 1831 of this title. The Secretary shall
set such enrollment ceilings for each applicable enrollment
period at levels that, when multiplied by an estimate
(based on prior Department experience) of the cost to the
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Secretary of providing the items and services in standard
coverage under the Bipartisan Health Care Reform Act
of 1994, would (1) result in a total cost that can be accom-
modated within the appropriation available for this pur-
pose in each fiscal year, and (2) avoid any need for the
Secretary to take actions described in section 1821(b) of
this title.
‘‘(c) In establishing and managing enrollment ceilings
under this section applicable to individuals described in
section 1831(b), the Secretary shall establish and imple-
ment priorities for enrollment consistent with priorities in
chapter 17 of this title in effect on the day preceding the
date of the enactment of the Bipartisan Health Care Re-
form Act of 1994.
‘‘SUBCHAPTER III—BENEFITS
‘‘§ 1821. Benefits for VA enrollees
‘‘(a) To the extent that such items and services can
be provided consistent with appropriations for that pur-
pose, the Secretary shall ensure that each individual en-
rolled with VA health coverage is provided the items and
services in standard coverage under the Bipartisan Health
Care Reform Act of 1994 which the Secretary determines
are clinically necessary for such individual.
‘‘(b) In the event that the Secretary determines at
any time during a fiscal year that appropriations are in-
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sufficient to provide individuals enrolled with VA health
coverage all needed items and services in standard cov-
erage under the Bipartisan Health Care Reform Act of
1994, the Secretary shall take appropriate action to limit
expenditures to the amount appropriated. Such actions
may include revising the scope of coverage described in
subsection (a). At least 15 days before taking an action
under this subsection, the Secretary shall submit to the
Committees on Veterans Affairs of the House of Rep-
resentatives and the Senate a report describing such pro-
posed action and the circumstances requiring the Sec-
retary to take such proposed action.
‘‘§ 1822. Chapter 17 benefits
‘‘(a) CARE AND SERVICES NOT INCLUDED IN STAND-
ARD COVERAGE.—In the case of care and services that
may be provided under chapter 17 of this title that are
not included in standard coverage, the Secretary shall pro-
vide to any veteran (whether or not enrolled with qualified
health coverage) the care and services authorized under
that chapter in accordance with the terms and conditions
applicable to that veteran and that care under that chap-
ter.
‘‘(b) VETERANS WHO ARE NOT ELIGIBLE TO EN-
ROLL UNDER THE BIPARTISAN HEALTH CARE REFORM
ACT OF 1994.—In the case of a veteran who is not eligible
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for enrollment under this chapter, the Secretary shall pro-
vide to the veteran the care and services that may be pro-
vided under chapter 17 of this title through any facility
of the department, whether or not the facility is operating
pursuant to VA health coverage.
‘‘(c) PRESERVATION OF SPECIALIZED DVA TREAT-
MENT CAPACITIES.—In carrying out subsection (a), the
Secretary shall ensure that the Department maintains the
capacity to provide for the specialized treatment and reha-
bilitative needs of disabled veterans (including veterans
with spinal cord dysfunction, blindness, and mental ill-
ness) within distinct programs or facilities of the Depart-
ment that are dedicated to the specialized needs of those
veterans in a manner that affords those veterans reason-
able access to care and services for those specialized needs.
The Secretary shall ensure that overall capacity of the De-
partment to provide such specialized services is not re-
duced below the capacity of the Department, nationwide,
to provide those services, as of the date of the enactment
of this chapter. Nothing in this subsection precludes the
Secretary from expanding the number or type of facilities
or programs that provide treatment and rehabilitation
services for the specialized needs of such veterans, includ-
ing provision of specialized services on an outpatient basis.
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‘‘(d) ANNUAL REPORT.—Not later than March 1 of
each year, the Secretary shall submit to the Committees
on Veterans’ Affairs of the Senate and House of Rep-
resentatives a report describing the actions the Secretary
has taken to carry out subsection (c) during the preceding
fiscal year. Each such report shall include a statement of
the number of veterans to whom the Department provided
specialized services that are covered by the report and the
expense of providing those services, and a description of
the alternatives available in the private sector for the pro-
vision of those services to veterans.
‘‘§ 1823. Supplemental benefits packages and policies
‘‘Subject to section 1814, VA health coverage may
include supplemental health benefits packages and supple-
mental cost sharing policies consistent with the Bipartisan
Health Care Reform Act of 1994. However, such coverage
may not include a supplemental health benefits package
to a veteran that provides coverage for services that the
Department is required to provide to that veteran under
chapter 17 of this title.
‘‘§ 1824. Limitation regarding veterans who elect not
to enroll to obtain VA health coverage
‘‘(a) REIMBURSEMENT REQUIRED.—A veteran who is
residing in an area in which the Department offers VA
health coverage and who elects not to enroll to obtain such