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Boomers May Lose Their Inheritance Due to New Budget
Bill
Thirty states now have laws, too, saying you are
responsible for your parents - half with criminal penalties
By Tucker Sutherland,
editor
Feb. 3, 2006 Baby Boomers probably paid little
attention to the final passage of the budget reduction bill on Wednesday
it reduces federal spending over the next 10 years by $99.3 billion
with half of this coming out of Medicare and Medicaid. Middle aged
Americans don't identify much with these social programs for the poor
and the elderly. They may be in for a surprise, however, as the feds,
and even the states, are moving to force the financial support for these
aging parents back on their children.
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Children in the Dark about Aging Parents
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The Deficit Reduction Act of 2005, which narrowly
passed by a vote of 216-214 in the House, after passing by one vote in
the Senate, is now on its way to President Bush for his promised
signature.
One of the most controversial provisions in this
budget bill imposes punitive new restrictions on the ability of the
elderly to transfer assets before qualifying for Medicaid coverage of
nursing home care. This means many boomers, expecting to inherit a home
and other assets from their parents, may see these assets used to pay
for nursing home care.
Essentially, the new law attempts to save the
Medicaid program money by shifting more of the cost of long-term care to
families and nursing homes.
ElderLawAnswers.com, and associate of SeniorJournal.com, has kept a
close watch on this legislation and much of what we report on this is
from their Website.
The controversial asset transfer legislation will
extend Medicaid's "look back" period for all asset transfers from three
to five years. In other words, under current law, the government can
check to see if an elderly person has transferred major assets within
the last three years to lower their net-worth to the level required to
receive Medicaid assistance. The new law extends this to five years.
It also will change the start of the penalty period
for transferred assets from the date of transfer to the date when the
individual transferring the assets enters a nursing home and would
otherwise be eligible for Medicaid coverage. In other words, the penalty
period does not begin until the nursing home resident is out of funds,
meaning she cannot afford to pay the nursing home.
Because the change in the penalty period start date
will likely leave nursing homes on the hook for the care of residents
waiting out extended penalty periods, ElderLawAnswers.com has dubbed the
bill The Nursing Home Bankruptcy Act of 2005.
Nursing homes will likely be flooded with residents
who need care but have no way to pay for it.
These nursing homes, however, are finding help at
getting money from the residents' children through "filial
responsibility laws," which have been passed in many states.
These rarely-enforced laws, which are on the books
in 30 states, hold adult children responsible for financial support of
indigent parents and, in some cases, medical and nursing home costs.
Pennsylvania, for example recently re-enacted its
law making children liable for the financial support of their indigent
parents.
And, it is not just civil actions these boomer
children may face - 15 states impose criminal penalties for filial
nonsupport.
The bill also will make any individual with home
equity above $500,000 ineligible for Medicaid nursing home care,
although states may raise this threshold as high as $750,000.
The legislation also:
● Establishes new rules for the treatment of
annuities, including a requirement that the state be named as the
remainder beneficiary.
● Allows Continuing Care Retirement Communities
(CCRCs) to require residents to spend down their declared resources
before applying for medical assistance.
● Sets forth rules under which an individual's
CCRC entrance fee is considered an available resource.
● Requires all states to apply the so-called
income-first rule to community spouses who appeal for an increased
resource allowance based on their need for more funds invested to meet
their minimum income requirements.
● Extends long-term care partnership programs to
any state.
In addition, the legislation incorporates
provisions in the original budget bill passed by the Senate closing
certain asset transfer "loopholes," among them:
● The purchase of a life estate will be included
in the definition of "assets" unless the purchaser resides in the home
for at least one year after the date of purchase.
● Funds to purchase a promissory note, loan or
mortgage will be included among assets unless the repayment terms are
actuarially sound, provide for equal payments and prohibit the
cancellation of the balance upon the death of the lender.
● States will be barred from "rounding down"
fractional periods of ineligibility when determining ineligibility
periods resulting from asset transfers.
● States will be permitted to treat multiple
transfers of assets as a single transfer and begin any penalty period on
the earliest date that would apply to such transfers.
While the federal law applies to all transfers made
on or after February 1, it also gives the states time to come into
compliance. This gives many people in most states a little time to plan.
The deadline for states to enact their own laws varies from state to
state, but generally is the first day of the first calendar quarter
beginning after the end of the next full legislative session.
Our friends at ElderLawAnswers recommend that
parents and their adult children should not hesitate before discussing
their long-term care situation with an attorney. Their site is primarily
supported by qualified elder law attorneys and is a good place to start.
More information:
● To read the asset transfer provisions in the
Deficit Reduction Act of 2005 - Click Here, or scroll down below this
story.
● For the full text of the Deficit Reduction Act
of 2005 in PDF format (the section on the transfer provisions begins on
page 222) -
Click here
● For the full text in HTML,
Click Here, and type "S 1932" in the Search Bill Text box. Then
click on the fourth version of the bill (S. 1932 EAS).
● Related ElderLawAnswers articles:
To read the full text of the ElderLawAnswers
referenced above
click here.
● Related stories on ElderLawAnswers:com
>
New Medicaid Law Means Adult Children
Could Be on Hook for Parents' Nursing Home Bills
>
Many Poor Will Lose Medicaid Under Budget
Bill, Report Predicts
> ElderLawAnsers.com home page
click here
●
Medicaid Website at
Kaiser Family Foundation
●
Congressional Budget Office Analysis of the bill (pdf)
Deficit
Reduction Act of 2005 (Engrossed Amendment as Agreed to by Senate)
CHAPTER 2--LONG-TERM CARE UNDER MEDICAID
Subchapter A--Reform of Asset Transfer Rules
SEC.
6011. Lengthening Look-Back Period; Change In Beginning Date For Period
Of Ineligibility.
(a)
Lengthening Look-Back Period for All Disposals to 5 Years- Section
1917(c)(1)(B)(i) of the Social Security Act (42 U.S.C. 1396p(c)(1)(B)(i))
is amended by inserting `or in the case of any other disposal of assets
made on or after the date of the enactment of the Deficit Reduction Act
of 2005' before `, 60 months'.
(b)
Change in Beginning Date for Period of Ineligibility- Section
1917(c)(1)(D) of such Act (42 U.S.C. 1396p(c)(1)(D)) is amended--
(1)
by striking `(D) The date' and inserting `(D)(i) In the case of a
transfer of asset made before the date of the enactment of the Deficit
Reduction Act of 2005, the date'; and
(2)
by adding at the end the following new clause:
`(ii) In the case of a transfer of asset made on or after the date of
the enactment of the Deficit Reduction Act of 2005, the date specified
in this subparagraph is the first day of a month during or after which
assets have been transferred for less than fair market value, or the
date on which the individual is eligible for medical assistance under
the State plan and would otherwise be receiving institutional level care
described in subparagraph (C) based on an approved application for such
care but for the application of the penalty period, whichever is later,
and which does not occur during any other period of ineligibility under
this subsection.'.
(c)
Effective Date- The amendments made by this section shall apply to
transfers made on or after the date of the enactment of this Act.
(d)
Availability of Hardship Waivers- Each State shall provide for a
hardship waiver process in accordance with section 1917(c)(2)(D) of the
Social Security Act (42 U.S.C. 1396p(c)(2)(D))--
(1)
under which an undue hardship exists when application of the transfer of
assets provision would deprive the individual--
(A)
of medical care such that the individual's health or life would be
endangered; or
(B)
of food, clothing, shelter, or other necessities of life; and
(2)
which provides for--
(A)
notice to recipients that an undue hardship exception exists;
(B)
a timely process for determining whether an undue hardship waiver will
be granted; and
(C)
a process under which an adverse determination can be appealed.
(e)
Additional Provisions on Hardship Waivers-
(1)
APPLICATION BY FACILITY- Section 1917(c)(2) of the Social Security Act
(42 U.S.C. 1396p(c)(2)) is amended--
(A)
by striking the semicolon at the end of subparagraph (D) and inserting a
period; and
(B)
by adding after and below such subparagraph the following:
`The
procedures established under subparagraph (D) shall permit the facility
in which the institutionalized individual is residing to file an undue
hardship waiver application on behalf of the individual with the consent
of the individual or the personal representative of the individual.'.
(2)
Authority to make bed hold payments for hardship applicants- Such
section is further amended by adding at the end the following: `While an
application for an undue hardship waiver is pending under subparagraph
(D) in the case of an individual who is a resident of a nursing
facility, if the application meets such criteria as the Secretary
specifies, the State may provide for payments for nursing facility
services in order to hold the bed for the individual at the facility,
but not in excess of payments for 30 days.'.
SEC.
6012. DISCLOSURE AND TREATMENT OF ANNUITIES.
(a)
In General- Section 1917 of the Social Security Act (42 U.S.C. 1396p) is
amended by redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following new subsection:
`(e)(1) In order to meet the requirements of this section for purposes
of section 1902(a)(18), a State shall require, as a condition for the
provision of medical assistance for services described in subsection
(c)(1)(C)(i) (relating to long-term care services) for an individual,
the application of the individual for such assistance (including any
recertification of eligibility for such assistance) shall disclose a
description of any interest the individual or community spouse has in an
annuity (or similar financial instrument, as may be specified by the
Secretary), regardless of whether the annuity is irrevocable or is
treated as an asset. Such application or recertification form shall
include a statement that under paragraph (2) the State becomes a
remainder beneficiary under such an annuity or similar financial
instrument by virtue of the provision of such medical assistance.
`(2)(A) In the case of disclosure concerning an annuity under subsection
(c)(1)(F), the State shall notify the issuer of the annuity of the right
of the State under such subsection as a preferred remainder beneficiary
in the annuity for medical assistance furnished to the individual.
Nothing in this paragraph shall be construed as preventing such an
issuer from notifying persons with any other remainder interest of the
State's remainder interest under such subsection.
`(B)
In the case of such an issuer receiving notice under subparagraph (A),
the State may require the issuer to notify the State when there is a
change in the amount of income or principal being withdrawn from the
amount that was being withdrawn at the time of the most recent
disclosure described in paragraph (1). A State shall take such
information into account in determining the amount of the State's
obligations for medical assistance or in the individual's eligibility
for such assistance.
`(3)
The Secretary may provide guidance to States on categories of
transactions that may be treated as a transfer of asset for less than
fair market value.
`(4)
Nothing in this subsection shall be construed as preventing a State from
denying eligibility for medical assistance for an individual based on
the income or resources derived from an annuity described in paragraph
(1).'.
(b)
REQUIREMENT FOR STATE TO BE NAMED AS A REMAINDER BENEFICIARY- Section
1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), is amended by adding at
the end the following:
`(F)
For purposes of this paragraph, the purchase of an annuity shall be
treated as the disposal of an asset for less than fair market value
unless--
`(i)
the State is named as the remainder beneficiary in the first position
for at least the total amount of medical assistance paid on behalf of
the annuitant under this title; or
`(ii) the State is named as such a beneficiary in the second position
after the community spouse or minor or disabled child and is named in
the first position if such spouse or a representative of such child
disposes of any such remainder for less than fair market value.'.
(c)
INCLUSION OF TRANSFERS TO PURCHASE BALLOON ANNUITIES- Section 1917(c)(1)
of such Act (42 U.S.C. 1396p(c)(1)), as amended by subsection (b), is
amended by adding at the end the following:
`(G)
For purposes of this paragraph with respect to a transfer of assets, the
term `assets' includes an annuity purchased by or on behalf of an
annuitant who has applied for medical assistance with respect to nursing
facility services or other long-term care services under this title
unless--
`(i)
the annuity is--
`(I)
an annuity described in subsection (b) or (q) of section 408 of the
Internal Revenue Code of 1986; or
`(II) purchased with proceeds from--
`(aa) an account or trust described in subsection (a), (c), or (p) of
section 408 of such Code;
`(bb) a simplified employee pension (within the meaning of section
408(k) of such Code); or
`(cc) a Roth IRA described in section 408A of such Code; or
`(ii) the annuity--
`(I)
is irrevocable and nonassignable;
`(II) is actuarially sound (as determined in accordance with actuarial
publications of the Office of the Chief Actuary of the Social Security
Administration); and
`(III) provides for payments in equal amounts during the term of the
annuity, with no deferral and no balloon payments made.'.
(d)
Effective Date- The amendments made by this section shall apply to
transactions (including the purchase of an annuity) occurring on or
after the date of the enactment of this Act.
SEC.
6013. APPLICATION OF `INCOME-FIRST' RULE IN APPLYING COMMUNITY SPOUSE'S
INCOME BEFORE ASSETS IN PROVIDING SUPPORT OF COMMUNITY SPOUSE.
(a)
In General- Section 1924(d) of the Social Security Act (42 U.S.C.
1396r-5(d)) is amended by adding at the end the following new
subparagraph:
`(6)
APPLICATION OF `INCOME FIRST' RULE TO REVISION OF COMMUNITY SPOUSE
RESOURCE ALLOWANCE- For purposes of this subsection and subsections (c)
and (e), a State must consider that all income of the institutionalized
spouse that could be made available to a community spouse, in accordance
with the calculation of the community spouse monthly income allowance
under this subsection, has been made available before the State
allocates to the community spouse an amount of resources adequate to
provide the difference between the minimum monthly maintenance needs
allowance and all income available to the community spouse.'.
(b)
Effective Date- The amendment made by subsection (a) shall apply to
transfers and allocations made on or after the date of the enactment of
this Act by individuals who become institutionalized spouses on or after
such date.
SEC.
6014. DISQUALIFICATION FOR LONG-TERM CARE ASSISTANCE FOR INDIVIDUALS
WITH SUBSTANTIAL HOME EQUITY.
(a)
In General- Section 1917 of the Social Security Act, as amended by
section 6012(a), is further amended by redesignating subsection (f) as
subsection (g) and by inserting after subsection (e) the following new
subsection:
`(f)(1)(A) Notwithstanding any other provision of this title, subject to
subparagraphs (B) and (C) of this paragraph and paragraph (2), in
determining eligibility of an individual for medical assistance with
respect to nursing facility services or other long-term care services,
the individual shall not be eligible for such assistance if the
individual's equity interest in the individual's home exceeds $500,000.
`(B)
A State may elect, without regard to the requirements of section
1902(a)(1) (relating to statewideness) and section 1902(a)(10)(B)
(relating to comparability), to apply subparagraph (A) by substituting
for `$500,000', an amount that exceeds such amount, but does not exceed
$750,000.
`(C)
The dollar amounts specified in this paragraph shall be increased,
beginning with 2011, from year to year based on the percentage increase
in the consumer price index for all urban consumers (all items; United
States city average), rounded to the nearest $1,000.
`(2)
Paragraph (1) shall not apply with respect to an individual if--
`(A)
the spouse of such individual, or
`(B)
such individual's child who is under age 21, or (with respect to States
eligible to participate in the State program established under title
XVI) is blind or permanently and totally disabled, or (with respect to
States which are not eligible to participate in such program) is blind
or disabled as defined in section 1614,
is
lawfully residing in the individual's home.
`(3)
Nothing in this subsection shall be construed as preventing an
individual from using a reverse mortgage or home equity loan to reduce
the individual's total equity interest in the home.
`(4)
The Secretary shall establish a process whereby paragraph (1) is waived
in the case of a demonstrated hardship.'.
(b)
Effective Date- The amendment made by subsection (a) shall apply to
individuals who are determined eligible for medical assistance with
respect to nursing facility services or other long-term care services
based on an application filed on or after January 1, 2006.
SEC.
6015. ENFORCEABILITY OF CONTINUING CARE RETIREMENT COMMUNITIES (CCRC)
AND LIFE CARE COMMUNITY ADMISSION CONTRACTS.
(a)
Admission Policies of Nursing Facilities- Section 1919(c)(5) of the
Social Security Act (42 U.S.C. 1396r(c)(5)) is amended--
(1)
in subparagraph (A)(i)(II), by inserting `subject to clause (v),' after
`(II)'; and
(2)
by adding at the end of subparagraph (B) the following new clause:
`(v)
TREATMENT OF CONTINUING CARE RETIREMENT COMMUNITIES ADMISSION CONTRACTS-
Notwithstanding subclause (II) of subparagraph (A)(i), subject to
subsections (c) and (d) of section 1924, contracts for admission to a
State licensed, registered, certified, or equivalent continuing care
retirement community or life care community, including services in a
nursing facility that is part of such community, may require residents
to spend on their care resources declared for the purposes of admission
before applying for medical assistance.'.
(b)
Treatment of Entrance Fees- Section 1917 of such Act (42 U.S.C. 1396p),
as amended by sections 6012(a) and 6014(a), is amended by redesignating
subsection (g) as subsection (h) and by inserting after subsection (f)
the following new subsection:
`(g)
Treatment of Entrance Fees of Individuals Residing in Continuing Care
Retirement Communities-
`(1)
IN GENERAL- For purposes of determining an individual's eligibility for,
or amount of, benefits under a State plan under this title, the rules
specified in paragraph (2) shall apply to individuals residing in
continuing care retirement communities or life care communities that
collect an entrance fee on admission from such individuals.
`(2)
TREATMENT OF ENTRANCE FEE- For purposes of this subsection, an
individual's entrance fee in a continuing care retirement community or
life care community shall be considered a resource available to the
individual to the extent that--
`(A)
the individual has the ability to use the entrance fee, or the contract
provides that the entrance fee may be used, to pay for care should other
resources or income of the individual be insufficient to pay for such
care;
`(B)
the individual is eligible for a refund of any remaining entrance fee
when the individual dies or terminates the continuing care retirement
community or life care community contract and leaves the community; and
`(C)
the entrance fee does not confer an ownership interest in the continuing
care retirement community or life care community.'.
SEC.
6016. ADDITIONAL REFORMS OF MEDICAID ASSET TRANSFER RULES.
(a)
REQUIREMENT TO IMPOSE PARTIAL MONTHS OF INELIGIBILITY- Section
1917(c)(1)(E) of the Social Security Act (42 U.S.C. 1396p(c)(1)(E)) is
amended by adding at the end the following:
`(iv) A State shall not round down, or otherwise disregard any
fractional period of ineligibility determined under clause (i) or (ii)
with respect to the disposal of assets.'.
(b)
Authority for States To Accumulate Multiple Transfers Into One Penalty
Period- Section 1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), as
amended by subsections (b) and (c) of section 6012, is amended by adding
at the end the following:
`(H)
Notwithstanding the preceding provisions of this paragraph, in the case
of an individual (or individual's spouse) who makes multiple fractional
transfers of assets in more than 1 month for less than fair market value
on or after the applicable look-back date specified in subparagraph (B),
a State may determine the period of ineligibility applicable to such
individual under this paragraph by--
`(i)
treating the total, cumulative uncompensated value of all assets
transferred by the individual (or individual's spouse) during all months
on or after the look-back date specified in subparagraph (B) as 1
transfer for purposes of clause (i) or (ii) (as the case may be) of
subparagraph (E); and
`(ii) beginning such period on the earliest date which would apply under
subparagraph (D) to any of such transfers.'.
(c)
INCLUSION OF TRANSFER OF CERTAIN NOTES AND LOANS ASSETS- Section
1917(c)(1) of such Act (42 U.S.C. 1396p(c)(1)), as amended by subsection
(b), is amended by adding at the end the following:
`(I)
For purposes of this paragraph with respect to a transfer of assets, the
term `assets' includes funds used to purchase a promissory note, loan,
or mortgage unless such note, loan, or mortgage--
`(i)
has a repayment term that is actuarially sound (as determined in
accordance with actuarial publications of the Office of the Chief
Actuary of the Social Security Administration);
`(ii) provides for payments to be made in equal amounts during the term
of the loan, with no deferral and no balloon payments made; and
`(iii) prohibits the cancellation of the balance upon the death of the
lender.
In
the case of a promissory note, loan, or mortgage that does not satisfy
the requirements of clauses (i) through (iii), the value of such note,
loan, or mortgage shall be the outstanding balance due as of the date of
the individual's application for medical assistance for services
described in subparagraph (C).'.
(d)
INCLUSION OF TRANSFERS TO PURCHASE LIFE ESTATES- Section 1917(c)(1) of
such Act (42 U.S.C. 1396p(c)(1)), as amended by subsection (c), is
amended by adding at the end the following:
`(J)
For purposes of this paragraph with respect to a transfer of assets, the
term `assets' includes the purchase of a life estate interest in another
individual's home unless the purchaser resides in the home for a period
of at least 1 year after the date of the purchase.'.
(e)
EFFECTIVE DATES-
(1)
IN GENERAL- Except as provided in paragraphs (2) and (3), the amendments
made by this section shall apply to payments under title XIX of the
Social Security Act (42 U.S.C. 1396 et seq.) for calendar quarters
beginning on or after the date of enactment of this Act, without regard
to whether or not final regulations to carry out such amendments have
been promulgated by such date.
(2)
EXCEPTIONS- The amendments made by this section shall not apply--
(A)
to medical assistance provided for services furnished before the date of
enactment;
(B)
with respect to assets disposed of on or before the date of enactment of
this Act; or
(C)
with respect to trusts established on or before the date of enactment of
this Act.
(3)
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 a provision of 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 the 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.
Subchapter B--Expanded Access to Certain Benefits
SEC.
6021. EXPANSION OF STATE LONG-TERM CARE PARTNERSHIP PROGRAM.
(a)
EXPANSION AUTHORITY-
(1)
IN GENERAL- Section 1917(b) of the Social Security Act (42 U.S.C.
1396p(b)) is amended--
(A)
in paragraph (1)(C)--
(i)
in clause (ii), by inserting `and which satisfies clause (iv), or which
has a State plan amendment that provides for a qualified State long-term
care insurance partnership (as defined in clause (iii))' after `1993,';
and
(ii)
by adding at the end the following new clauses:
`(iii) For purposes of this paragraph, the term `qualified State
long-term care insurance partnership' means an approved State plan
amendment under this title that provides for the disregard of any assets
or resources in an amount equal to the insurance benefit payments that
are made to or on behalf of an individual who is a beneficiary under a
long-term care insurance policy if the following requirements are met:
`(I)
The policy covers an insured who was a resident of such State when
coverage first became effective under the policy.
`(II) The policy is a qualified long-term care insurance policy (as
defined in section 7702B(b) of the Internal Revenue Code of 1986) issued
not earlier than the effective date of the State plan amendment.
`(III) The policy meets the model regulations and the requirements of
the model Act specified in paragraph (5).
`(IV) If the policy is sold to an individual who--
`(aa) has not attained age 61 as of the date of purchase, the policy
provides compound annual inflation protection;
`(bb) has attained age 61 but has not attained age 76 as of such date,
the policy provides some level of inflation protection; and
`(cc) has attained age 76 as of such date, the policy may (but is not
required to) provide some level of inflation protection.
`(V)
The State Medicaid agency under section 1902(a)(5) provides information
and technical assistance to the State insurance department on the
insurance department's role of assuring that any individual who sells a
long-term care insurance policy under the partnership receives training
and demonstrates evidence of an understanding of such policies and how
they relate to other public and private coverage of long-term care.
`(VI) The issuer of the policy provides regular reports to the
Secretary, in accordance with regulations of the Secretary, that include
notification regarding when benefits provided under the policy have been
paid and the amount of such benefits paid, notification regarding when
the policy otherwise terminates, and such other information as the
Secretary determines may be appropriate to the administration of such
partnerships.
`(VII) The State does not impose any requirement affecting the terms or
benefits of such a policy unless the State imposes such requirement on
long-term care insurance policies without regard to whether the policy
is covered under the partnership or is offered in connection with such a
partnership.
In
the case of a long-term care insurance policy which is exchanged for
another such policy, subclause (I) shall be applied based on the
coverage of the first such policy that was exchanged. For purposes of
this clause and paragraph (5), the term `long-term care insurance
policy' includes a certificate issued under a group insurance contract.
`(iv) With respect to a State which had a State plan amendment approved
as of May 14, 1993, such a State satisfies this clause for purposes of
clause (ii) if the Secretary determines that the State plan amendment
provides for consumer protection standards which are no less stringent
than the consumer protection standards which applied under such State
plan amendment as of December 31, 2005.
`(v)
The regulations of the Secretary required under clause (iii)(VI) shall
be promulgated after consultation with the National Association of
Insurance Commissioners, issuers of long-term care insurance policies,
States with experience with long-term care insurance partnership plans,
other States, and representatives of consumers of long-term care
insurance policies, and shall specify the type and format of the data
and information to be reported and the frequency with which such reports
are to be made. The Secretary, as appropriate, shall provide copies of
the reports provided in accordance with that clause to the State
involved.
`(vi) The Secretary, in consultation with other appropriate Federal
agencies, issuers of long-term care insurance, the National Association
of Insurance Commissioners, State insurance commissioners, States with
experience with long-term care insurance partnership plans, other
States, and representatives of consumers of long-term care insurance
policies, shall develop recommendations for Congress to authorize and
fund a uniform minimum data set to be reported electronically by all
issuers of long-term care insurance policies under qualified State
long-term care insurance partnerships to a secure, centralized
electronic query and report-generating mechanism that the State, the
Secretary, and other Federal agencies can access.'; and
(B)
by adding at the end the following:
`(5)(A) For purposes of clause (iii)(III), the model regulations and the
requirements of the model Act specified in this paragraph are:
`(i)
In the case of the model regulation, the following requirements:
`(I)
Section 6A (relating to guaranteed renewal or noncancellability), other
than paragraph (5) thereof, and the requirements of section 6B of the
model Act relating to such section 6A.
`(II) Section 6B (relating to prohibitions on limitations and
exclusions) other than paragraph (7) thereof.
`(III) Section 6C (relating to extension of benefits).
`(IV) Section 6D (relating to continuation or conversion of coverage).
`(V)
Section 6E (relating to discontinuance and replacement of policies).
`(VI) Section 7 (relating to unintentional lapse).
`(VII) Section 8 (relating to disclosure), other than sections 8F, 8G,
8H, and 8I thereof.
`(VIII) Section 9 (relating to required disclosure of rating practices
to consumer).
`(IX) Section 11 (relating to prohibitions against post-claims
underwriting).
`(X)
Section 12 (relating to minimum standards).
`(XI) Section 14 (relating to application forms and replacement
coverage).
`(XII) Section 15 (relating to reporting requirements).
`(XIII) Section 22 (relating to filing requirements for marketing).
`(XIV) Section 23 (relating to standards for marketing), including
inaccurate completion of medical histories, other than paragraphs (1),
(6), and (9) of section 23C.
`(XV) Section 24 (relating to suitability).
`(XVI) Section 25 (relating to prohibition against preexisting
conditions and probationary periods in replacement policies or
certificates).
`(XVII) The provisions of section 26 relating to contingent
nonforfeiture benefits, if the policyholder declines the offer of a
nonforfeiture provision described in paragraph (4).
`(XVIII) Section 29 (relating to standard format outline of coverage).
`(XIX) Section 30 (relating to requirement to deliver shopper's guide).
`(ii) In the case of the model Act, the following:
`(I)
Section 6C (relating to preexisting conditions).
`(II) Section 6D (relating to prior hospitalization).
`(III) The provisions of section 8 relating to contingent nonforfeiture
benefits.
`(IV) Section 6F (relating to right to return).
`(V)
Section 6G (relating to outline of coverage).
`(VI) Section 6H (relating to requirements for certificates under group
plans).
`(VII) Section 6J (relating to policy summary).
`(VIII) Section 6K (relating to monthly reports on accelerated death
benefits).
`(IX) Section 7 (relating to incontestability period).
`(B)
For purposes of this paragraph and paragraph (1)(C)--
`(i)
the terms `model regulation' and `model Act' mean 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);
`(ii) any provision of the model regulation or model Act listed under
subparagraph (A) shall be treated as including any other provision of
such regulation or Act necessary to implement the provision; and
`(iii) with respect to a long-term care insurance policy issued in a
State, the policy shall be deemed to meet applicable requirements of the
model regulation or the model Act if the State plan amendment under
paragraph (1)(C)(iii) provides that the State insurance commissioner for
the State certifies (in a manner satisfactory to the Secretary) that the
policy meets such requirements.
`(C)
Not later than 12 months after the National Association of Insurance
Commissioners issues a revision, update, or other modification of a
model regulation or model Act provision specified in subparagraph (A),
or of any provision of such regulation or Act that is substantively
related to a provision specified in such subparagraph, the Secretary
shall review the changes made to the provision, determine whether
incorporating such changes into the corresponding provision specified in
such subparagraph would improve qualified State long-term care insurance
partnerships, and if so, shall incorporate the changes into such
provision.'.
(2)
STATE REPORTING REQUIREMENTS- Nothing in clauses (iii)(VI) and (v) of
section 1917(b)(1)(C) of the Social Security Act (as added by paragraph
(1)) shall be construed as prohibiting a State from requiring an issuer
of a long-term care insurance policy sold in the State (regardless of
whether the policy is issued under a qualified State long-term care
insurance partnership under section 1917(b)(1)(C)(iii) of such Act) to
require the issuer to report information or data to the State that is in
addition to the information or data required under such clauses.
(3)
EFFECTIVE DATE- A State plan amendment that provides for a qualified
State long-term care insurance partnership under the amendments made by
paragraph (1) may provide that such amendment is effective for long-term
care insurance policies issued on or after a date, specified in the
amendment, that is not earlier than the first day of the first calendar
quarter in which the plan amendment was submitted to the Secretary of
Health and Human Services.
(b)
STANDARDS FOR RECIPROCAL RECOGNITION AMONG PARTNERSHIP STATES- In order
to permit portability in long-term care insurance policies purchased
under State long-term care insurance partnerships, the Secretary of
Health and Human Services shall develop, not later than January 1, 2007,
and in consultation with the National Association of Insurance
Commissioners, issuers of long-term care insurance policies, States with
experience with long-term care insurance partnership plans, other
States, and representatives of consumers of long-term care insurance
policies, standards for uniform reciprocal recognition of such policies
among States with qualified State long-term care insurance partnerships
under which--
(1)
benefits paid under such policies will be treated the same by all such
States; and
(2)
States with such partnerships shall be subject to such standards unless
the State notifies the Secretary in writing of the State's election to
be exempt from such standards.
(c)
ANNUAL REPORTS TO CONGRESS-
(1)
IN GENERAL- The Secretary of Health and Human Services shall annually
report to 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)) (as amended by subsection
(a)(1)).
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