HR 63 - Long-Term Care Insurance Reform Act of 2011

HR 63

112th CONGRESS 1st Session

H. R. 63

To amend the Internal Revenue Code of 1986 and title XIX of the Social Security Act to reform the provision of long-term care insurance.

IN THE HOUSE OF REPRESENTATIVES

January 5, 2011

Mr. DOGGETT (for himself and Ms. SCHAKOWSKY) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 and title XIX of the Social Security Act to reform the provision of long-term care insurance.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the `Long-Term Care Insurance Reform Act of 2011'.

(b) Table of Contents- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I--NATIONAL MARKET SURVEY; MODEL DISCLOSURES AND DEFINITIONS; LTC INSURANCE COMPARE

Sec. 101. NAIC National Market Survey.

Sec. 102. Model disclosure form.

Sec. 103. LTC Insurance Compare.

TITLE II--IMPROVED STATE CONSUMER PROTECTIONS FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS AND MEDICAID PARTNERSHIP POLICIES

Sec. 201. Application of Medicaid partnership required model provisions to all tax-qualified long-term care insurance contracts.

Sec. 202. Streamlined process for applying new or updated model provisions.

TITLE III--IMPROVED CONSUMER PROTECTIONS FOR MEDICAID PARTNERSHIP POLICIES

Sec. 301. Biennial reports on impact of Medicaid long-term care insurance partnerships.

Sec. 302. Additional consumer protections for Medicaid partnerships.

Sec. 303. Report to Congress regarding need for minimum annual compound inflation protection.

TITLE IV--PRESERVATION OF STATE AUTHORITY

Sec. 401. Preservation of State authority.

TITLE I--NATIONAL MARKET SURVEY; MODEL DISCLOSURES AND DEFINITIONS; LTC INSURANCE COMPARE

SEC. 101. NAIC NATIONAL MARKET SURVEY.

(a) In General- The Secretary shall request the NAIC to conduct reviews of the national and State-specific markets for long-term care insurance policies and to submit reports to the Secretary on the results of such reviews every 5 years.

(b) Content- The Secretary shall request that the reviews include, with respect to the period occurring since any prior review, analysis of the following:

(1) Information on key market parameters, including the number of carriers offering long-term care insurance, and the scope of coverage offered under those policies (such as policies offering nursing-home only benefits, policies offering comprehensive coverage, cash plans, and reimbursement plans, and hybrid products in which long-term care benefits are present).

(2) The number of complaints received and resolved, including benefit denials.

(3) The number of policies that have lapsed.

(4) The number of agents trained and whether the training included competency tests.

(5) The number of policyholders exhausting benefits.

(6) The number of premium rate increases filed by carriers on a policy basis with the States, including the ranges of the increases approved for or finally used.

(7) The number of policyholders affected by any premium rate increases.

(8) Requests for exceptions to State permitted accounting practices, as defined by the NAIC.

(1) complete the initial market review under this section not later than 2 years after the date of enactment of this Act;

(2) submit a report to the Secretary on the results of the initial review not later than December 31, 2012; and

(3) complete each subsequent review and submit each subsequent report not later than December 31 of the fifth succeeding year.

The Secretary shall make available to the public the reports submitted by the NAIC under this subsection.

(d) Consultation Required- The Secretary shall request the NAIC to consult with State insurance commissioners, appropriate Federal agencies, issuers of long-term care insurance, States with experience in long-term care insurance partnership plans, other States, representatives of consumer groups, consumers of long-term care insurance policies, and such other stakeholders as the Secretary or the NAIC determine appropriate, to conduct the market reviews requested under this section.

(e) Definitions- In this section and section 102:

(1) LONG-TERM CARE INSURANCE POLICY- The term `long-term care insurance policy'--

(A) means--

(i) a qualified long-term care insurance contract (as defined in section 7702B(b) of the Internal Revenue Code of 1986); and

(ii) a qualified long-term care insurance contract that covers an insured who is a resident of a State with a qualified State long-term care insurance partnership under clause (iii) of section 1917(b)(1)(C) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)) or a long-term care insurance policy offered in connection with a State plan amendment described in clause (iv) of such section; and

(B) includes any other insurance policy or rider described in the definition of `long-term care insurance' in section 4 of the model Act promulgated by the National Association of Insurance Commissioners (as adopted December 2006).

(2) NAIC- The term `NAIC' means the National Association of Insurance Commissioners.

(3) SECRETARY- The term `Secretary' means the Secretary of Health and Human Services.

SEC. 102. MODEL DISCLOSURE FORM.

(a) NAIC Study and Report on State Disclosure Requirements for Long-Term Care Insurance-

(1) IN GENERAL- The Secretary shall request the NAIC to carry out the activities described in paragraph (2) and issue the report described in paragraph (3).

(2) REVIEW AND DEVELOPMENT OF PROPOSED MODEL DISCLOSURE REQUIREMENTS- The activities described in this paragraph are the following:

(A) MODEL ACT AND REGULATION DISCLOSURE REQUIREMENTS- Review and describe disclosure requirements for long-term care insurance policies under the Model Act and regulation.

(B) STATE LAW DISCLOSURE REQUIREMENTS- Review and describe disclosure requirements for long-term care insurance policies under State laws, including as part of such description an analysis of the effectiveness of the various existing disclosures.

(C) LONG-TERM CARE SERVICES- Review and describe differences in long-term care services, including with respect to providers of such services and the settings in which such services are provided among States and develop standardized definitions for long-term care services.

(D) IDENTIFICATION OF KEY ISSUES FOR DEVELOPMENT OF MODEL DISCLOSURE MARKETING FORM- Identify and describe key issues to consider in the development of a proposed form for marketing long-term care insurance policies.

(3) REPORT- The report described in this paragraph is an NAIC White Paper that is issued not later than 12 months after the date of enactment of this Act and contains the results of the reviews conducted under paragraph (2) and the descriptions required under that paragraph.

(b) NAIC Working Group To Develop Model Disclosure Form for Long-Term Care Insurance-

(1) IN GENERAL- The Secretary shall request the NAIC to establish, not later than 60 days after the date on which the NAIC White Paper described in subsection (a)(3) is issued and in consultation with the Secretary and the Secretary of the Treasury, a Working Group to develop a model disclosure form for marketing long-term care insurance policies.

(2) WORKING GROUP MEMBERS- The Working Group established under paragraph (1) shall be composed of the following:

(A) Representatives from State Departments of Health (or the most appropriate State agencies with responsibility for oversight of the provision of long-term care).

(B) Representatives of long-term care providers and facilities.

(D) Representatives of issuers of long-term care insurance policies.

(E) Representatives of the NAIC or State insurance commissioners.

(F) Other experts in long-term care and long-term care insurance policies selected by the Secretary and Secretary of the Treasury or the NAIC.

(3) REQUIREMENTS FOR DEVELOPMENT OF FORM-

(A) CONSIDERATIONS- In developing the model form, the Working Group shall consider the following:

(i) Variations among providers, services, and facilities in the long-term care and long-term care insurance markets.

(ii) The results of the reviews and the descriptions included in the NAIC White Paper issued under subsection (a)(3).

(iii) Such other information and factors as the Working Group determines appropriate.

(B) MINIMUM STANDARDS- The Working Group shall ensure that the model has--

(i) minimum standard definitions for coverage of the various types of services and benefits provided under long-term care insurance policies;

(ii) minimum standard language for use by issuers of such policies, and for agents selling such policies, in explaining the services and benefits covered under the policies and restrictions on the services and benefits;

(iii) minimum standard format, color and type size for disclosure documents; and

(iv) such other minimum standards as the Working Group determines appropriate.

(4) DEADLINE FOR DEVELOPMENT- The Working Group shall issue a proposed model disclosure form for marketing long-term care insurance policies not later than 1 year after the date on which the Working Group is established.

(5) ADOPTION AND INCORPORATION INTO MODEL ACT AND REGULATION- The Secretary shall request the NAIC to amend the Model Act and regulation to incorporate the use of the proposed model disclosure form issued by the Working Group, not later than 1 year after the date on which the Working Group issues the form.

(1) APPLICATION TO TAX-QUALIFIED AND MEDICAID PARTNERSHIP POLICIES- Not later than 1 year after the date on which the Working Group issues the proposed model disclosure form for marketing long-term care insurance policies under subsection (b):

(A) TAX-QUALIFIED POLICIES- The Secretary of the Treasury shall promulgate a regulation requiring, not later than 1 year after the date on which the regulation is final, any issuer of a qualified long-term care insurance contract (as defined in section 7702B(b) of the Internal Revenue Code of 1986) to use the proposed model disclosure form for marketing such contracts, to the extent such disclosure is not inconsistent with State law.

(B) MEDICAID PARTNERSHIP POLICIES- The Secretary shall promulgate a regulation requiring, not later than 1 year after the date on which the regulation is final, any issuer that markets a qualified long-term care insurance contract intended to cover an insured who is a resident of a State with a qualified State long-term care insurance partnership under clause (iii) of section 1917(b)(1)(C) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)) or a long-term care insurance policy offered in connection with a State plan amendment described in clause (iv) of such section to use the proposed model disclosure form for marketing such contracts.

(2) APPLICATION TO ALL OTHER LONG-TERM CARE INSURANCE POLICIES- Not later than 18 months, or the earliest date on which an amendment could be enacted for those States with legislatures which meet only every other year, after the date on which the NAIC adopts an amended Model Act and regulation to require the use of the proposed model disclosure form issued by the Working Group under subsection (b), each State shall require by statute or regulation any issuer of a long-term care insurance policy to use the proposed model disclosure form when marketing such a policy in the State.

SEC. 103. LTC INSURANCE COMPARE.

(a) In General- Section 6021(d) of the Deficit Reduction Act of 2005 (42 U.S.C. 1396p note) is amended--

(1) in paragraph (2)--

(A) in subparagraph (A)--

(i) in clause (ii), by striking `and' at the end;

(ii) in clause (iii), by striking the period at the end and inserting `; and'; and

(iii) by adding at the end the following:

`(iv) establish an Internet directory of information regarding long-term care insurance, to be known as `LTC Insurance Compare', that shall include the following:

`(I) Comparison tools to assist consumers in evaluating long-term care insurance policies (as defined in subparagraph (D)) with different benefits and features and that allow consumers to compare the price, long-term premium stability, and carrier financial strength of such policies.

`(II) State-specific information about the long-term care insurance policies marketed in a State, including the following:

`(aa) Whether a State has promulgated rate stability provisions or has rate stability procedures in place, and how the standards or procedures work.

`(bb) The rating history for at least the most recent preceding 5 years for issuers selling long-term care insurance policies in the State.

`(cc) An appropriate sampling of the policy forms marketed in the State.

`(III) Links to State information regarding long-term care under State Medicaid programs (which may be provided, as appropriate, through Internet linkages to the Web sites of State Medicaid programs) that includes the following:

`(aa) The medical assistance provided under each State's Medicaid program for nursing facility services and other long-term care services (including any functional criteria imposed for receipt of such services, as reported in accordance with section 1902(a)(28)(D) of the Social Security Act) and any differences from benefits and services offered under long-term care insurance policies in the State and the criteria for triggering receipt of such benefits and services.

`(bb) If the State has a qualified State long-term care insurance partnership under clause (iii) of section 1917(b)(1)(C) of the Social Security Act (or is exempt from the application of clause (i) of such section because of the application of clauses (ii) and (iv) of such section), information regarding how and when an individual with a partnership long-term care insurance policy who is receiving benefits under the policy should apply for medical assistance for nursing facility services or other long-term care services under the State Medicaid program and information regarding about how Medicaid asset protection is accumulated over time.'; and

(B) by adding at the end the following:

`(C) CURRENT INFORMATION- The Secretary of Health and Human Services shall ensure that, to the greatest extent practicable, the information maintained in the National Clearinghouse for Long-Term Care Information, including the information required for LTC Insurance Compare, is the most recent information available.

`(D) LONG-TERM CARE INSURANCE POLICY DEFINED- In subparagraph (A)(iv), the term `long-term care insurance policy' means a qualified long-term care insurance contract (as defined in section 7702B(b) of the Internal Revenue Code of 1986), a qualified long-term care insurance contract that covers an insured who is a resident of a State with a qualified State long-term care insurance partnership under clause (iii) of section 1917(b)(1)(C) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)) or a long-term care insurance policy offered in connection with a State plan amendment described in clause (iv) of such section, and includes any other insurance policy or rider described in the definition of `long-term care insurance' in section 4 of the model Act promulgated by the National Association of Insurance Commissioners (as adopted December 2006).';

(2) by redesignating paragraph (3) as paragraph (4); and

(3) by inserting after paragraph (2) the following:

`(3) CONSULTATION ON LTC INSURANCE COMPARE- The Secretary of Health and Human Services shall consult with the National Association of Insurance Commissioners and other entities and stakeholders in designing and implementing the LTC Insurance Compare required under paragraph (2)(A)(iv).'.

(b) Medicaid State Plan Requirement To Submit Nursing Facility Services Functional Criteria Data- Section 1902(a)(28) of the Social Security Act (42 U.S.C. 1396a(a)(28)) is amended--

(1) in subparagraph (C), by striking `and' after the semicolon;

(2) in subparagraph (D)(iii), by adding `and' after the semicolon; and

(3) by inserting after subparagraph (D)(iii), the following new subparagraph:

`(E) for the annual submission of data relating to functional criteria for the receipt of nursing facility services under the plan (in such form and manner as the Secretary shall specify);'.

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section take effect on the date of enactment of this Act.

(2) EXTENSION OF EFFECTIVE DATE FOR STATE LAW AMENDMENT- In the case of a State plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) which the Secretary of Health and Human Services determines requires State legislation or State regulation in order for the plan to meet the additional requirements imposed by the amendments made by subsection (b), the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of the session is considered to be a separate regular session of the State legislature.

TITLE II--IMPROVED STATE CONSUMER PROTECTIONS FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS AND MEDICAID PARTNERSHIP POLICIES

SEC. 201. APPLICATION OF MEDICAID PARTNERSHIP REQUIRED MODEL PROVISIONS TO ALL TAX-QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS.

(a) In General- Section 7702B(g)(1) of the Internal Revenue Code of 1986 (relating to consumer protection provisions) is amended--

(1) in subparagraph (A), by inserting `(but only to the extent such requirements do not conflict with requirements applicable under subparagraph (B)),' after `paragraph (2)',

(2) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, and

(3) by inserting after subparagraph (A), the following new subparagraph:

`(B) the requirements of the model regulation and model Act described in section 1917(b)(5) of the Social Security Act,'.

(b) Effective Date- The amendments made by subsection (a) shall apply to contracts issued on or after the date that is 1 year after the date of enactment of this Act.

SEC. 202. STREAMLINED PROCESS FOR APPLYING NEW OR UPDATED MODEL PROVISIONS.

(a) Secretarial Review-

(1) TAX-QUALIFIED POLICIES-

(A) 2000 AND 2006 MODEL PROVISIONS- Not later than 12 months after the date of enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, shall review the model provisions specified in subsection (c)(1) for purposes of determining whether updating any such provisions for a provision specified in section 7702B(g)(2) of the Internal Revenue Code of 1986, or the inclusion of any such provisions in such section, for purposes of an insurance contract qualifying for treatment as a qualified long-term care insurance contract under such Code, would improve consumer protections for insured individuals under such contracts.

(B) SUBSEQUENT MODEL PROVISIONS- Not later than 12 months after model provisions described in paragraph (2) or (3) of subsection (c) are adopted by the National Association of Insurance Commissioners, the Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, shall review the model provisions to determine whether the application of such provisions to an insurance contract for purposes of qualifying for treatment as a qualified long-term care insurance contract under section 7702B(g)(2) of the Internal Revenue Code of 1986, would improve consumer protections for insured individuals under such contracts.

(2) MEDICAID PARTNERSHIP POLICIES-

(A) SUBSEQUENT MODEL PROVISIONS- Not later than 12 months after model provisions described in paragraph (2) or (3) of subsection (c) are adopted by the National Association of Insurance Commissioners, the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury, shall review the model provisions to determine whether the application of such provisions to an insurance contract for purposes of satisfying the requirements for participation in a qualified State long-term care insurance partnership under section 1917(b)(1)(C)(iii) of such Act (42 U.S.C. 1396p(b)(1)(C)(iii)) would improve consumer protections for insured individuals under such contracts.

(B) REVIEW OF OTHER PARTNERSHIP REQUIREMENTS- The Secretary of Health and Human Services, in consultation with the Secretary of the Treasury, shall review clauses (iii) and (iv) of section 1917(b)(1)(C) for purposes of determining whether the requirements specified in such clauses should be modified to provide improved consumer protections or, as appropriate, to resolve any conflicts with the application of the 2006 model provisions under paragraph (5) of section 1917(b) (as amended by section 302(a)) or with the application of any model provisions that the Secretary determines should apply to an insurance contract as a result of a review required under subparagraph (A).

(b) Expedited Rulemaking-

(1) TAX-QUALIFIED POLICIES- Subject to paragraph (3), if the Secretary of the Treasury determines that any model provisions reviewed under subsection (a)(1) should apply for purposes of an insurance contract qualifying for treatment as a qualified long-term care insurance contract under the Internal Revenue Code of 1986, the Secretary shall promulgate an interim final rule applying such provisions for such purposes not later than 3 months after making such determination.

(2) MEDICAID PARTNERSHIP POLICIES- Subject to paragraph (3), if the Secretary of Health and Human Services determines that any model provisions or requirements reviewed under subsection (a)(2) should apply for purposes of an insurance contract satisfying the requirements for participation in a qualified State long-term care insurance partnership under clauses (iii) and (iv) of section 1917(b)(1)(C) of such Act (42 U.S.C. 1396p(b)(1)(C)), the Secretary shall promulgate an interim final rule applying such provisions for such purposes not later than 3 months after making such determination.

(3) CONSULTATION REQUIRED- The Secretary of the Treasury and the Secretary of Health and Human Services, respectively, shall consult with the National Association of Insurance Commissioners and the entities and stakeholders specified in section 101(d) regarding the extent to which it is appropriate to apply the model provisions described in paragraph (1) or (2) (as applicable) to insurance contracts described in such paragraphs through promulgation of an interim final rule. If, after such consultation--

(A) the Secretary of the Treasury determines it would be appropriate to promulgate an interim final rule, the Secretary of the Treasury shall use notice and comment rulemaking to promulgate a rule applying such provisions to insurance contracts described in paragraph (1); and

(B) the Secretary of Health and Human Services determines it would be appropriate to promulgate an interim final rule, the Secretary of Health and Human Services shall use notice and comment rulemaking to promulgate a rule applying such provisions to insurance contracts described in paragraph (2).

(4) RULE OF CONSTRUCTION RELATING TO APPLICATION OF CONGRESSIONAL REVIEW ACT- Nothing in paragraphs (1), (2), or (3) shall be construed as affecting the application of the sections 801 through 808 of title 5, United States Code (commonly known as the `Congressional Review Act') to any interim final rule issued in accordance with such paragraphs.

(5) TECHNICAL AMENDMENT ELIMINATING PRIOR REVIEW STANDARD MADE OBSOLETE- Section 1917(b)(5) of the Social Security Act (42 U.S.C. 1396p(b)(5)) is amended by striking subparagraph (C).

(1) each provision of the long-term care insurance model regulation, and the long-term care insurance model Act, respectively, promulgated by the National Association of Insurance Commissioners (as adopted as of October 2000 and as of December 2006);

(2) each provision of the model language relating to marketing disclosures and definitions developed under section 102(b)(1); and

(3) each provision of any long-term care insurance model regulation, or the long-term care insurance model Act, respectively, promulgated by the National Association of Insurance Commissioners and adopted after December 2006.

TITLE III--IMPROVED CONSUMER PROTECTIONS FOR MEDICAID PARTNERSHIP POLICIES

SEC. 301. BIENNIAL REPORTS ON IMPACT OF MEDICAID LONG-TERM CARE INSURANCE PARTNERSHIPS.

Section 6021(c) of the Deficit Reduction Act of 2005 (42 U.S.C. 1396p note) is amended to read as follows:

`(c) Biennial Reports-

`(1) IN GENERAL- Not later than January 1, 2012, and biennially thereafter, the Secretary of Health and Human Services (in this subsection referred to as the `Secretary') shall issue a report to States and Congress on the long-term care insurance partnerships established in accordance with section 1917(b)(1)(C)(ii) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)(ii)). Each report shall include (with respect to the period the report addresses) the following information, nationally and on a State-specific basis:

`(A) Analyses of the extent to which such partnerships improve access of individuals to affordable long-term care services and benefits and the impact of such partnerships on Federal and State expenditures on long-term care under the Medicare and Medicaid programs.

`(B) Analyses of the impact of such partnerships on consumer decisionmaking with respect to purchasing, accessing, and retaining coverage under long-term care insurance policies (as defined in subsection (d)(2)(D)), including a description of the benefits and services offered under such policies, the average premiums for coverage under such policies, the number of policies sold and at what ages, the number of policies retained and for how long, the number of policies for which coverage was exhausted, the number of insured individuals who were determined eligible for medical assistance under the State Medicaid program, and the number of insured individuals who were determined ineligible for medical assistance under the State plan and the reason for such determinations.

`(2) DATA- The reports by issuers of partnership long-term care insurance policies required under section 1917(b)(1)(C)(iii)(VI) of the Social Security Act shall include such data as the Secretary shall specify in order to conduct the analyses required under paragraph (1).

`(3) PUBLIC AVAILABILITY- The Secretary shall make each report issued under this subsection publicly available through the LTC Insurance Compare Web site required under subsection (d).

`(4) RULE OF CONSTRUCTION- Nothing in this section shall be construed as requiring the Secretary to conduct an independent review of each long-term care insurance policy offered under or in connection with such a partnership.'.

SEC. 302. ADDITIONAL CONSUMER PROTECTIONS FOR MEDICAID PARTNERSHIPS.

(a) Application of 2006 Model Provisions-

(1) UPDATING OF 2000 REQUIREMENTS-

(A) IN GENERAL- Section 1917(b)(5)(B)(i) of the Social Security Act (42 U.S.C. 1396p(b)(5)(B)(i)) is amended by striking `October 2000' and inserting `December 2006'.

(B) CONFORMING AMENDMENTS-

(i) Subclause (XVII) of such section is amended by striking `section 26' and inserting `section 28'.

(ii) Subclause (XVIII) of such section is amended by striking `section 29' and inserting `section 31'.

(iii) Subclause (XIX) of such section is amended by striking `section 30' and inserting `section 32'.

(2) APPLICATION TO GRANDFATHERED PARTNERSHIPS- Section 1917(b)(1)(C)(iv) of such Act (42 U.S.C. 1396p(b)(1)(C)(iv)) is amended by inserting `, and the State satisfies the requirements of paragraph (5)' after `2005'.

(b) Application of Producer Training Model Act Requirements- Section 1917(b)(1)(C) of such Act (42 U.S.C. 1396p(b)(1)(C)) is amended--

(1) in clause (iii)(V), by inserting `and satisfies the producer training requirements specified in section 9 of the model Act specified in paragraph (5)' after `coverage of long-term care'; and

(2) in clause (iv), as amended by subsection (a)(2), by inserting `clause (iii)(V) and' before `paragraph (5)'.

(c) Application of Additional Requirements for All Partnerships- Section 1917(b) of the Social Security Act (42 U.S.C. 1396p(b)) is amended--

(1) in paragraph (1)(C)--

(A) in clause (iii)--

(i) by inserting after subclause (VII) the following new subclause:

`(VIII) The State satisfies the requirements of paragraph (6).'; and

(ii) in the flush sentence at the end, by striking `paragraph (5)' and inserting `paragraphs (5) and (6)'; and

(B) in clause (iv), as amended by subsections (a)(2) and (b)(2), by striking `paragraph (5)' and inserting `paragraphs (5) and (6)'; and

(2) by adding at the end the following new paragraph:

`(6) For purposes of clauses (iii)(VIII) and (iv) of paragraph (1)(C), the requirements of this paragraph are the following:

`(A) The State requires issuers of long-term care insurance policies to--

`(i) use marketing materials filed with the State for purposes of the partnership in all sales and marketing activities conducted or supported by the issuers in the State with respect to any long-term care insurance policies marketed by the issuer in the State;

`(ii) provide such materials to all agents selling long-term care insurance policies in the State;

`(iii) ensure that agent training and education courses conducted or supported by the issuers incorporate discussion of such marketing materials; and

`(iv) make such materials available to any consumer upon request, and to make such materials available to all prospective purchasers of a policy offered under a qualified State long-term care insurance partnership before submission of an application for coverage under that policy.

`(B) The State requires issuers of long-term care insurance policies sold in the State to require agents to use any inflation protection comparison form developed by the National Association of Insurance Commissioners when selling the policies in the State.

`(C) The State requires issuers of long-term care insurance policies sold in the State to comply with the provisions of section 8 of the model Act specified in paragraph (5) relating to contingent nonforfeiture benefits.

`(D) The State enacts legislation, not later than January 1, 2013, that establishes rating standards for all issuers of long-term care insurance policies sold in the State that result in rates over the life of the policy that are no less protective of consumers than those produced by the premium rate schedule increase standards specified in section 20 of the model regulation specified in paragraph (5), unless the State has more stringent procedures or requirements.

`(E) The State develops and updates marketing materials filed with the State whenever changes are made under the State plan that relate to eligibility for medical assistance for nursing facility services or other long-term care services or the amount, duration, or scope of medical assistance for nursing facility services or other long-term care services, and also provides to individuals at the time of application for medical assistance under the State plan, or under a waiver of the plan materials that describe in clear, simple language the terms of eligibility, the benefits and services provided as such assistance, and rules relating to adjustment or recovery from the estate of an individual who receives such assistance. Such materials shall include a clear disclosure that medical assistance is not guaranteed to partnership policyholders who exhaust or use benefits under a partnership policy, and that Federal changes to the program under this title or State changes to the State plan may affect an individual's eligibility for, or receipt of, such assistance.

`(F) The State--

`(i) through the State Medicaid agency under section 1902(a)(5) and in consultation with the State insurance department, develops materials explaining how the benefits and rules of long-term care policies offered by issuers participating in the partnership interact with the benefits and rules under the State plan under this title;

`(ii) requires agents to use such materials when selling or otherwise discussing how long-term care policies offered by issuers participating in the partnership work with potential purchasers and to provide the materials to any such purchasers upon request;

`(iii) informs holders of such policies of any changes in eligibility requirements and covered services under the State plan under this title and of any changes in estate recovery rules under the State plan as soon as practicable after such changes are made at the time and at the time of application for medical assistance; and

`(iv) agrees to honor the asset protections of any such policy that were provided under the policy when purchased, regardless of whether the State subsequently terminates a partnership program under the State plan.

The materials under clause (i) shall include information on how benefits under a State plan under this title may not be available based on an individual's moving to a State that is identified as not offering partnership reciprocity (and, to the extent practicable, the identify of those States), based an individual's home value exceeding the applicable limits as modified by the State (and, to the extent practicable, the limits applicable in different States), or based on an individual's income exceeding the applicable limits (and, to the extent practicable, information on current average long-term care costs and on applied income requirements for different States).

`(G) The State Medicaid agency under section 1902(a)(5) and the State insurance department enter into a memorandum of understanding to--

`(i) inform consumers about long-term care policies offered by issuers participating in the partnership, the amount, duration, or scope of medical assistance for nursing facility services and other long-term care services offered under the State plan, consumer protections, and any other issues such agency and department determine appropriate through such means as the State determines appropriate; and

`(ii) jointly facilitate coordination in eligibility determinations for medical assistance under the State plan and the provision of benefits or other services under such policies and medical assistance provided under the State plan that includes--

`(I) the number of policyholders applying for medical assistance under the State plan; and

`(II) the number of policyholders deemed eligible (and, if applicable, ineligible) for such assistance.

`(H) Subject to subparagraph (I), the State enters into agreements with other States that have established qualified State long-term care insurance partnerships under which such States agree to provide reciprocity for policyholders under such partnerships, including providing guaranteed asset protection to all individuals covered under a policy offered under a qualified State long-term care insurance partnership who bought such a policy in the State or in another State with such a partnership and with which the State has a reciprocity agreement.

`(I)(i) In the case of a State described in paragraph (1)(C)(iv) (in this subparagraph referred to as a `grandfathered partnership State')--

`(I) the grandfathered partnership State may, in lieu of entering into agreements that satisfy subparagraph (I), enter into individual reciprocity agreements with other States that have established qualified State long-term care insurance partnerships; and

`(II) if the grandfathered partnership State has not, as of January 1, 2013, entered into a reciprocity agreement with each State that has a qualified State long-term care insurance partnership, the grandfathered partnership State shall enter into and comply with a reciprocity agreement developed by the Secretary in accordance with clause (ii) for each partnership State that the grandfathered State does not have a reciprocity agreement with and, with respect to each such State, for so long as the grandfathered partnership State does not have an individual reciprocity agreement with that State.

`(ii) In developing a reciprocity agreement for purposes of clause (i)(II), the Secretary shall take into account--

`(I) the difference in consumer protections under the partnership program of the grandfathered partnership State and the other partnership State that will be covered by the agreement, and, to the greatest extent possible, preserve the more protective requirements; and

`(II) the impact the reciprocity agreement will have on expenditures under the State plan under this title (including under any waivers of such plan) of each such State and, to the greatest extent possible, minimize any negative impact on such expenditures and States.'.

(d) Effective Date-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section take effect on the date that is 1 year after the date of enactment of this Act.

(2) EXTENSION OF EFFECTIVE DATE FOR STATE LAW AMENDMENT- In the case of a State plan under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) which the Secretary of Health and Human Services determines requires State legislation in order for the plan to meet the additional requirements imposed by the amendments made by this section, the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet these additional requirements before the first day of the first calendar quarter beginning after the close of the first regular session of the State legislature that begins after the date of enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of the session is considered to be a separate regular session of the State legislature.

SEC. 303. REPORT TO CONGRESS REGARDING NEED FOR MINIMUM ANNUAL COMPOUND INFLATION PROTECTION.

Not later than 18 months after the date of enactment of this Act, the Secretary of Health and Human Services (in this section referred to as the `Secretary') shall submit a report to Congress that includes the Secretary's recommendation regarding whether legislative or other administrative action should be taken to require all long-term care insurance policies sold after a date determined by the Secretary in connection with a qualified State long-term care insurance partnership under clause (iii) of section 1917(b)(1)(C) of the Social Security Act (42 U.S.C. 1396p(b)(1)(C)) or a long-term care insurance policy offered in connection with a State plan amendment described in clause (iv) of such section, provide a minimum level of annual compound inflation protection, and if so, whether such requirements should be imposed on a basis related to the age of the policyholder at the time of purchase. The Secretary shall include in the report information on the various levels of inflation protection available under such long-term care insurance partnerships and the methodologies used by issuers of such policies to calculate and present various inflation protection options under such policies, including policies with a future purchase option feature.

TITLE IV--PRESERVATION OF STATE AUTHORITY

SEC. 401. PRESERVATION OF STATE AUTHORITY.

Nothing in this Act, any amendments made by this Act, or any rules promulgated to carry out this Act or such amendments, shall be construed to limit the authority of a State to enact, adopt, promulgate, and enforce any law, rule, regulation, or other measure with respect to long-term care insurance that is in addition to, or more stringent than, requirements established under this Act and the amendments made by this Act.

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