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1230 l~Olicies had been sold. The market for priv:~te long-term care insurance is growing rapidly, with the number of policies outstanding increasing four- fold since 1987. But at this time, the tax law does not explicitly recognize or define long- term care or long-term care insurance. And there are no consistent require- ments applied to ensure that only le- gitimate policies, sold in a fair manner, can qualify as long-term care instrr- This bill would make three major • changes to improve the tax treatment of long-term care e.xPenses and ensure that purctmsers of tong-term-care In- surance are protected from abusive sales practices. First, the bill would clarify that long-term care expenses of a chron- ically ill individual will be treated as medical expenses for income tax pur- poses. This means that a chronically ill person oath $20,00{) in nursing home costs v,.~A! generally be able to deduct the majority of those ewpenses for Income tax purposes. For a son or daughter paying t~e costs of a chron- ically ill dependant parent in a nursing home, those costs would be deductible as medical expenses for the son or daughter. Second, the bill would clarify that benefits paid trader qualified long- term care insurance contracts will not be taxable. Once again, this is compa- rable to the rule that applies for health Insurance. A person buying a qualified long-term care insurance policy today would know, and the tax law would say, that they wouldn't have to pay tax on benefits If they re- quire long-term care. L~surance com- panies selling these products will, how- ever, be required to structure the in- surance to avoid the potential for abu- sive tax shelters. The bill would also add major new consumer protection provisions. Insur- ance companies and insurance agents that want to sell long-term care insur- ance that qualifies for the favorable tax treatment would have to meet these tough new standards. These standards include a requirement that qualified long-term care L urance policies be guaranteed renewable or noncance!lable. Participants in group policies wou!d be able to keep the surance in force even if they were no longer a part of the group. Generally, a policy could not exclude coverage for specified illnesses like _aAzheimer's dis- ease. Individuals with preexisting con- ditions would have to be treated £alrly by insurance companies and so-called postc!alms underwriting would be pro- hibited. Insurance agents and In~urauce com- panies would be prohibited frdm using certain abusive sales techniques and would have to provide adequate disclo- sure to the people buying the l~Olicies. A person buying a policy would be given a "free-look"---they could return a policy withYm 3{} days ef purchase and have t~eir premiums refunded if CONGRESSIONAL RECORD -- SENATE they changed their mind. Violations of these rules would have serious conse- quences for the companies and agents. They might lose the favorable tax_ treatment and in some cases could be subject to penalties of up to $5,000 per viplation. These cor~tmer protection provi- sions are a critical element of this package and I want to point out Sena- tor l~YOR's longstand~g interest in enacting provisions to protect individ- uals who buy long-term care L~urance products. The last major provision in the bill is a clarification of the tax treatment of payments to terminally ill individ- uals under life Insurance contracts. This type of "living benefits" legisla- tion has been included in b~Xls L~tro- duced by Senators BmmL~r and m~m~ and I want to commend them for their leadership on this Issue. have incorporated the "living bene- fits" concept into th~ bill with one sig- nificant modLfication--the addition of a requirement that spousal approval be obtained before life Lrmurance pro- tectLug tha~ spouse can be used for an accelerated death benefit. This is a bill that would go a long way to clearing up questions about the taxation of long-term care expenses and insurance. It would ensure th_ut purchasers of those long-te~m care products are protected from unscrupu- lous practices by unethical insurance companies or ~gents. It is a good bill, that takes one step down the path of solving the long-term care financing problem~ that are of great concern to millions of elderly Americans and their adult children. But ~s is only one step dow~ that p~th. There is a t.ong way to go. The comp!ex problems of nancing the long-term care expenses of tens of millions of Americans are of critical importance. Th~ bill won't solve all those problems, but this bill v~'ll take us a ways down the path to a solution. Before this bill can be enacted it vAll be necessary to address the question of cost. We do not yet have a revent~e timate on this proposal, but I've asked the Joint Committee on Taxation to prepare cost estimates for this bill. To the extent of any revenue lo.~s, we will have to find a way to ensure that the proposal wlil not Increase the budget deficit. One final point. This is not a ~Lmple issue and not even the sponsors of th~ legislation think that the bill is sartly the final answer. I see this bill as a bipartisan attempt to address some important issues that can hope- fully be dealt with relatively quickly. We are open to ~1 suggestions to im- prove the bill and I expect that hear- ings will be held in the Finance Com- mittee in the near future to give inter- ested parties an opportunity to com- ment. I ask unanimous consent that the text of the bill be printed in the R~co~ along with a brief summary of the major provisions of the biLL I also Au a st 19Yl ask u~mni_mons consent that a letter from Senator l~a~o~ be ~uded in the ~co~ at tP~ po~t. ~ere berg no objection, ~e mat~ ~1 w~ ordered to be pr~t~ ~ the Rsvp, ~ fo~o~: S. 1693 Be ~ ~acted by ~ Senate and Ho~e R~resent~ves of ~e U~$e~ S$a~ of A~ca in Confess SE~ON L SHO~ ~E; A~IEND~ OF CODE. (a) S~ ~.--~ Act may be cI~d ~ the "~va~ Lo~-T~ C~e ~u~ce Act of 199r'. (b} ~z oF ~986 CODE.--EXCept othello exp~e~ly prodded, whenever t~ Act ~ ~en~ent or repe~ ~ ex- pr~sed ~ te~ of ~ ~en~nt to, or repe~ of, a so.ion or other pro~Zqn, the re~erence sha~ be co~idered to ~ m~e a section or other pro~on of the Internal Revenue Code of 1988. TITLE I--T~ ~A~,~R~ OF Sub~Ie A--~nera] ~D ~ ~DZC~ CA~ (a) ~L R~.--~aph (1) of sec- tion 213(d) (def~g me~ c~e) ~ ~end- ed by s~g "o~' at ~e end of ~'aph (B), hy redesi~at~g subp~a~ph (C) as subp~ph (D), ~d by ~e~g ~ ~bp~a~aph (B) ~e fo~o~ new subp~graph: "(C) ~or queried long-~ ~e sen,ices (~ d~ed ~ ~bsec~ion (gD, or". (b} Qu~ Lozz~ C~ ~vIc~s D~.~ection 213 (relat~g to d~uctJon for m~c~, dent~, etc. exposes) ~ ~end- ed by add~g at the ~d ~eof the fo~ow- ~g new subs~tion: "(g) ~ Lo~ C~ S~v- i~s.--~or D~oses of th~ s~ction-- "(1) ~ ~,--The te~ 'quiZZed long- te~ c~e se~ces' me~ necess~y dZa~- t~c, ~'~enttve, therapeutic, ~d rehabi~a- tire soccer, ~d m~ten~ce ~d care se~ce~ "(A) w~ch ~e req~ed by ~ ~dMdu~ d~ ~ peri~ d~g w~ch such ~- vidu~ ~ a c~o~caHy ~ ~du~, "(B) w~ch have ~ the~ pr~ pu~ose the ~rov~ion of needed ~ist~ce ~th 1 or more ~ti~ties of ~y li~ng w~ch a i~Hy ~ ~du~ ~ cert~ied ~ berg ~ble to perfo~ ~der D~a~Dh and "(C) w~ ~e prodded p~su~t to a cont~ui~ p~ of care presc~bed by a ceded heath ~e pmctiti~er. "(2) ~O~CA~Y ~ "(A) I~ G~--~e te~ 'chro~y in~vldu~' me~ ~y ~di~du~ who ~ cer- tified by a p~i~ or restored pmfes- ~o~ n~e ~ berg ~able to ~thout subst~ti~ ~s~t~ce from ~other ~dual (~u~ ~t~e ~volv~ cueL~g or subst~al ~pe~ion), at le~t ~ti~ti~ of d~y ~ described ~ p~- s~c~.~In the ~e of se~c~ which ~e provided d~ ~y period dung w~ch ~ ~vidu~ ~ r~g ~ the home (whe~ cr not the s~ ~ Dr~ ~ded wit~ ~e home}, ~ub~aph ~} ~ be appli~ by ~tltut~ "~" for ~g home or s~ f~ty ~ not ~ "(3) ~ o~ ~Y ~.--E~ of TI4662-4641

August 2, ling1 ~'(C) ~ansferHng. "(D) Bathing ~nd dressing. °'CE) i~obillty. "(4) L~cg~s~m ~T~ ccm~ The term 'licensed health care practitioner" mes.us-- "(A) a physici~-I or registered l~refessional nurse, or "(B) any other individual who meets such requirements as may be prescribed by the Secretary after consultation with the Secre- tary of Health and Human Services. "(5) CERTAIN SERVICES PROV~ED BY PJE~o TXVSS Z~O~ INC~.U~ED.--The term 'qualified long-term care services' shall not include any services provided to an individual by a relative unless the relative is a licensed health care practitioner with respect to such services. For purposes of this para- graph, the term 'relative' means an individ- ual bearing a relationship to another indi- vidual which is described in paragraphs (I) through (g) of section (c) T~C~,NrCAL (1) Subparagraph (D) of section 213(d)(1) (as redeslgnated by subsection (a)) is amended to read as follows: "(D) for insurance (including amounts paid as premiums under part B of title X'V~II of the Social Security Act, relating to supplementary medical insurance for the aged)-- "(1) covering medical care referred to in subparagraphs (A) and (B), or "(ii) covering medical care referred to in subparagraph (C), but only if such insur- ance is provided under a qualified long-term care insurance contract (as defined in sec- tion ~702B(b))." (~-) Paragraph (6) of section ~.IS(d) is amended- (A) by striking "subparagraphs (A) and (B)" and inserting "subparagraphs (A), and (C)", and (B) hy striking "paragraph (if(C)" in sub- paragraph (A) and inserting "paragraph SEC. I02. TREATMENT OF LONG-TERM CAPE [NS~JR- ANCE OR PLANB. (a) ~ENERAL R~LE.--Chapter q9 (relating to definitions) is amended by inserting after section qq02A the following new section: "sEe. 77028. TREATMENT OF LONG-TERM CARE SURANCE OR PLANS. "(a) OENEILa.L R~7~,--l~or purposes of this title-- "~) a qualified long-term care insurance contract shall be treated as an accident or health insurance contract, "(2) any plan of an employer providing coverage of qualified long-term care services shall be treated as an accident or health plan with respect to such services, "(8) amounts received under such a con- tract or plan with respect to qualified long- term care services shall be treated as amounts received for personal injuries or sickness, and "(4) payments described in subsection (b)(5) shall be treated as payments made with respect to qualified long-term care services. "(b) QUALZFr~ LOZ~0-T~u~ C~Z IZ~Sm~- ANCE "(l} I~ o~rsP.~.--For purposes of this tltle, the term 'qualified long-term care in- surance contract' means any insurance con- tract "(A) the only insurance protection provid- ed under such contract is coverage of quail- fled long-term care services, and "(B) such contract meets the require- merits of paragraphs (2), (3), and (4). "'(A) Is c=mt~--The requirements of this paragraph are met with respect; to a contract if such contract provides that-- CONGRESSIONAL RECORD -- SENATE S 12305 "(i) premium payments may not be made earlier than the d~te such pa)~nents would have been made if the contract provided for level anuual payments over the life of the contract (or. if shorter, 20 years), and "(li) all refunds of premiums, and all pol- icyholder dividends or similar amounts, under such contract are to he ~pplied as reduction in future premiums or to increase future benefits. A contract shall not be treated as failing to meet the requirements of clause (i) solely by reason of a provision providing for a waiver of premiums if the insured becomes a chron- ically ill individual. "(B) I~UNDS U~0Z~ DEATH OR COMPLETE SURR~NDEX OR cANC~m~AT~ON.--Subparagraph (A)¢ii) shall not apply to any refund on the death of the insured, or on any complete surrender or cancellation of the contract, if, under the contract, the amount refunded may not exceed the amount of the premi- ums paid under the contract. For purposes of this title, any refund described in the pre- ceding sentence shall be inchidible in gross income to the extent that any deduction or exclusion was allowed with respect to the refund. "($) T~ORROWINS, PLEDOINO, OR ASSIGNING PRO~I'B~TED.--The requirements of this Dara- grapt~ are met with respect to a contract if such contract provides that no money rn~y be borrowed under such contract and that such contract (or any portion thereof) may not be assigned or pledged as collateral for a loan. "(4) COORDINATXON WXTH MED~CA~E.--The requirements of this paragraph are met with respect to a contract if such contract does not cover expenses incurred to the extent that such expenses are reimbursable under title ~-9qII of the Social Security Act. "(5) PER DIE~ AND OTHER PERIODIC PAY- NIENTS pERMITTED.-- "(A) I~ ~Emm~.--For purposes of subsec- tion (a)(4), and except as provided in sub- paragraph (B), payments are described in this paragraph for any calendar year if, under the contract, such payments are made to (or on behalf of) a chronically ill individual on a per diem or other periodic basis without retard to the expenses in- curred during the period to which the pay- merits relate. "(B) EXC~TION WHERE A0SRE6AT~ PaY- ME~S EXC~En Lr~T.--If the aggregate pay- ments under the contract for any period (whether on a periodic basis or otherwise) exceed the dollar amount in effect for such period-- "(i) subparagraph (A) shall rYot apply for such period, and "(ii) the requirements of paragraph (1)(A) shall be met only if such pasunents are made with respect to qualified long-term care services provided during such period. "(C) DoLr~a ~.MouIrr.--The dollar amount in effect under this paragraph shall be $100 per day (or the equivalent amount in the case of pa~unents on another periodic basis). "(D) A~ros~?a~.rzs ~OR INC~F~SER COSTS.-- "(i) IN ~m~m~u.--In the case of any calen- dar year after 1992, the dollar amount in effect under subparagraph (C) for any period occurring dur'mg such calendar year shall be equal to the sum of-- "(I) the ~mount in effect under subpara- graph (C) for the preceding calendar year (after application of this subperagraph), plus "(II) the applicable percentage of the amount under subclanse "(ii) AP~.~camm P~cz~rrAor.--For pur- poses of clause (1), the term 'applicable per° centage" means, with respect to any calen- dar year, th~ ~reater of-- "(1) 5 percent, or "(ID the cost-of-living adjustment for such r_~lendar year. "(ill) COST-O~-r~N~ ~m~-~STMmcr.--For purposes of clause riD, the enst-of-living ad- jnstment for any calendar year is the centage (if any) by which the cost index under clause (iv) for the preceding calend: r year exceeds such index for the second pre- ceding calendar year. In the case of any endar year beginning before 1995, this elanse shall be applied by substituting the Consumer Price Index (as defined in section 1(f)(5)) for the cost index under clause (ivL "(iv) Cost z~r~x.--The Secretary, in con- sultation with the Secretary of Health and Hunch Services, slmll before January 1, 1994, establish a cost index to measure in- creases in costs of nursing home and similar facilities. The Secretary may from time to time revise such index to the extent neces- sary to accurately measure increases or creases in such costs. "(E) AG~_m~SATZON RULE.--~'or purposes of this paragraph, all contracts issued with re- spect to the same insured by the same com- pany shall be treated as I contract. "(c) SPECr~J~ I~ULkS FOR T~ TR~T~m~T OF PO~ZCYHOLUERS.--t~or purposes of this title, solely with resl0ect to the policyholder under any qualLfied lone-term care insur- ance contracf~-- ,,(t_) AGGREGATE PAYMENTS IN EXCESS OF mMrrS.--If the aggregate payments under all qualified long-term care insurance con- tracts with respect to an insured for any period (whether on a periodic basis or other- wise) exceed the dollar s/noun~ in effect for such period under subsection "(A) ~ubscetion (b)(5) shall not apply for such period, and "(B) such payments shall be treatsd as made for qualified long-term care services only if made with respect to such services provided during such period. ,,(9.) ASSIGB-MENT OR PLEDSE.--SUeh con- tract shall not be treated as ~ qualified long- term care insurance contract during any period on or after the date on which the contract (or any portion thereof) is assigned or pledged as collateral for a loan. "(d) TB_F.~TM:gNT OF COVF_J~GE AS PART OF LZFE I~SU~NCE CONT~CT.--Except aS pro- vided in regulations, in .the case of coverage of qualified long-term care services provided as part of ~. life insurance contract, the re- quirements of this section shall apply as if the portion of the contract providLng such coverage was a separate contract, "(e) QUA~zFr~ Loz~-Tmu~ CA~ S~v- ~CES.--FOr purposes of this section-- "(1) IN OE1TERA~--The term 'qualified long- term care services' has the meaning given such term by section "(2) RECE~TL~ZeaTZON.--If an individual has been certified as a chronically ill indi- .vidual under sehtion 213(g)(2)(A). services shall not be treated as qualified long-term care services with respect to the individual unless such individual is recertlfied no lees frequently than annually as a chronically ill individual in the same manner as under such section, except that such recertifica- tion may be made by tony licensed health care practitioner (as defined in section 213(g)(4)). "(f) COZ~rn~A~ZON COV~Ac.Z Exczs~. TAX NOT TO A~PLY.---Section 4980B shall not apply to- "'(1) qualified long-term care instLra_nce contracts, or "'(2) plans described in subsection (a)(2). "(g) Rz~u-,2~oss.--The SecreLary sh~ll prescn'be such reEulatiens as may be nece~ sary to carry out the reqnlreznents of this section, inclucllr~ regulations to prevent the avoidance of this section by providin~ quail- TI4662-4642

S 12306 £i,~d !ong-term care ser~.2ces under a life in- snl~ce contTact." (b) CLE~UC~L A:.~:~-vr.--The table of sections for c1~pter 79 Ls amended by h-mort- ins after the It~ relating te section the following new item: "See. 7702B. Treatment o£ long-term care SEC. lS3. EFFEC~IV~ DA~ES. (a) S~c¢~oI~ 101.--The PJnendments made by section I0~ sh~1 apply to taxable years beg~-mJng a~ter the cl~te of the of this Act~ (b) SEC~O.'~ 102.--The amendments made ~y section 102 sh~ Rpp~ to i~ued after the d~te o~ the enactment of ~s Act. (c) ~Nsz~o~ R~.--If, ~ter the de~ the en~c~ent o£ t~ Act ~d before cry I, I%9~, ~ contr~c~ pro~g coverage for servic~ which ~e s~ar to qu~ffled long-te~ c.~re se~c~ (as de~ed ~ section 213(g) o~ ~e LRte~ Revenue C~e 1986) ~d ~sued on or before J~RR~ 1, 1992, ~ ~c~ged £or a quR~ied long-te~ care ~ce con~r~t (~ d~ed ~ sec- tion 7702B(b) 0£ such Code), such exch~ge sh~l be treated ~ ~ exchange to w~ch sector 1035 of such Code app~ Subtile B--~nsumer Pro~tion SEC IH. POLICY by section 1~2) ~ ~ended by redesi~Rt~g subsection (~) ~ subsection (h) ~nd by se~g ~ter subsec~on (f) the new "(1) IN G~--The req~emen~ of ~bsection ~e me~ with ~pec~ to ~ con- tract if, ~dsr ~he contr~ "(A) ~be re~uiremen~ of the model re~- lation ~d m~el ~ct described ~ p~a~ ~2) ~e met, "(B) the d~closure re~uiremen~ of graph (3) ~e me~, ~d "(C) the req~r~en~ of ~ ~o~ed ~der p~g~ph (~) (relat~g nonfo~eitab~y) ~ met. requ~remen~ of the mo~el regulation be "(D Section 6A (feinting ~o ~ar~teed r~ new~ or nonc~ce~ab~ty), ~d the merits of set,on 6B of the model ACt rela~- ~ to such se~lon 'XID Section 8B {re!~ting te pro~bi~ons on l~i~a~ ~d "(iiD Section 6C (relating to waiver of pre- "(iv) Section ~ (relating to contL~uation or eonve~icn of c~verage). "(~) S~tion 6~ (r~lating to ~scont~u~ce and replacement of policies). "(vD Section 7 (relat~g te d~sclosure}, o~her th~ section 7F "(vii} ~ction 8 (rela~ng to prohib~tio~ that ~ection 8C(3) sh~ be a¢~H~d by su~i- tut~g age ~5 for age 8~. "(vi~) Section 9 (re,stag ~ m~um such ~remen~ "(D a q~ffied long-term care contract ma~ no~ condition or l~it i~ for beneHts ~hed by lice~e~ ere (an) ca comp~ce with con~tlons which ~e ~ edition to thos~ requ~d for licens~ under ~tate law. or (bb) for cns~ ~ ~ (~ cove~d ~der the co~) o~y ~ c~e p~qdc~ ~ fac~ti~ ~ch ~de a higher level el c~e ~ c~t~ ~ or ~ ~ ~ro~d~ ~ ~ whi~ p~vide for 21-ho~ or other n~ ~e not req~ ~ order to ~ H~ by S~, CONGRESSIONAL RECOP -- SENATE "(iI) ~f a qual~ed long-term care /nsur- ance contr',mt provides benefits for home health care services, the contract must pro- vide benefits for personal care services eluding home health aide ~nd homemaker services), home health settees, and respite care in an individual's home, and "(III) if a qualified long.term care L-tour- ance contract provides benefits for nursing facility services, the contract must provide such benefits w~th respect to all nursing fa- cilities that are licensed in the State. "(ix) Section I0 (relating to requirement to offer huqation protect!on), except that such requirements shall not be treated as met unless such protection is offered at least annually. "(x) Section 21 (relating to prohibition against preexisting conditions and proba- tionary periods in replacement policies or cer~cates). "(B) 1V~OD~. ACT.--The follo~.2ng require- ments of the model Act mu~t be met: "(t) Section 6C (re]a~2ng to preexisting condition.~J. "(li) Section 6D (relating to prior hospital- ization). • "(C) Dmm~rz~o~s.--For purposes of this paragraph-- "(i} I~ODEL PROV:fS~-ONS.--The te~:ns 'modeI reguIatlon" and 'model ~ct" mean the long- term care insurance model regulation, and the long-term care insurance model Act, re- spectively, promttlgated by the National sociation of Insurance Commi~oners (as adopted in December of 1990). "(ii) CO0~DI~Tmr~.--Any provision of the model regulation or model Act listed under subparagraph (A} or (B) shall be treated as including any other provision of such regu- lation or Act necessary to implement the provision. "(3) TAX DZSCLOSUm~ REQU~-~rr.--A con- tract meets ~he requirements of this para- graph only ff such contract meets the qutrements of sect2on 4980C(e)(1). "(4) NO~r~0R~E~TD~E "(A) L~ ~E~m~.--The requirements of this paragraph are met ff the contract meets such requirements as to nonforfeJta- bflity as take effect under this paragraph. "(B) NP_[C STaNg~s.--The National As- sociation ol Insurance Commissioners shall promulgate and certify to the Secretary before January ~-, 1993, requirements relat- ing to non~or~eitability. Such requirements s ~hall at least include a requirement that the i~suer of the contract offers the insured an opportunity to obtain a type of nonforfe!ta- bllit y benef~to "(C) Dm'a~r~r.--If no requirements are timely certified to the Secretary under sub- paragraph (BL the Secretary sbalI no !ster than January l, 1994, prescribe require- ments as "to nonforfeitability for purposes of this pmragraph. "(D~ 7r~smo~ au~z.--Any requirements trader this pa~graph shall not apply to con- tracts Issued before the date which is 1 year • fter the certification under subparagraph (B) or the date of the pubt!cation of the re- quirements under s--bparagraph '~702B(b)(1)(B) (as added by section 102) Is amendedby inse~ing "and of subsection (g)" after "and SEC. 112. ADDrr|ONAL REQUIIIE.'h'EN'I"S FOE ISSU- ERS OF LONG-TERM CARE • POLICIES. (a) I~ G~r~_~u_--Chapter 43 is amended by adding at the end thereof the foli3wLug new sectiom FOI~ bONC~TERM CAZE POLICIF_.S. "(a) Gm~-~ Roz~.--There is hereby posed on m~y person fc~L~ to meet the qu~ements of subsection {c), (d). or (el a August 2, 1 91 in the amount determined under subsection "(b) A~ou~,~T OF Tax_-- "(D ~ a~--The ~o~t of the ~posed by ~bsection (a} on each f~ure sh~ be equ~ ~ $5,000. "(2) W~.--~ the ~e of a failure which ~ due to re~onable ca~e ~d not ~i~f~ neg!ect, ~e Secret~ may w~ve p~ or ~ of the ~ ~posed by ~bscction (a) to the extent that pa~ent of the t~ wo~d be exce~lve relative to the failure vo!ved. "(C) REG~ON O~ S~ ~s.--~e requ~remen~ of ~h~s subsection are ~ fop ]o~: "(!) Co~zo~ OF ~c~ msTo~Es PRo~.--A Demon who ~ se~g or of- fe~g for s~e a long-te~ c~e ~ce policy may not complete the medl~ h]sto~ p~on of ~ appHc~tion. "(2) ~o~moN o~ SALE OR ~SSV~ TO ~ICAID B~It~A~ES.--A posen m~y not ~o~ly sell or ~e a long-te~ c~e s~ance po~ to ~ ~du~ who is e~- ble for me~c~ ~ce ~der tiNe ~ of the So~a~ Se~ty Act. '~(d) ~DITIO~ RESPONSIBI~s.--The req~rements of th~ ~bsectlon ~e ~ lowm "(A) ~OD~ ~oN.--The follow~g requ~emen~ of the model re~st~on be met: "(i) Section II (relat~g ~0 application fo~ ~d replacement coverage). "(ill Section 12 (relates to report.S quiremen~), exc~t that the ~uer sh~l ~so repo~ at le~ a~u~y the n~ber of cl~ de~ed d~ing the redoing period for each ~ of b~ess (expended ~ a percentage of cla~ denied). "(Hi) Sec~on 18 (relaling to fB~g require- men~ for m~ket~). "(iv) Section 19 (re~ting to st~d~ds for market.g), exce~ ~hat ~ addition to such requirement, no person sh~l, ~ sellhng or offering te sell a long-term care i~su~ce policy, ~represent ~ material fact. "(v) Section 20 (relates to apDropHale- heSS of teen.ended "(~) Section 22 (rel~t~g to st~nd~d fo~a~ outi~e of cove~ge), excep~ that such outl~e shaB ~clude the ~sclosure quid under subsection (el. "(vii) Section 23 (relating to requ~em~nt to deliver shopper's ~Ide). "(~) ~oD~ a~.--~e foHowin~ re~ulre- men~ of the model Act m~ be me~: "(D S~tion 6~ (~lat~g te dght ~o re~m), except that such section shall ~iso ~pp]y ~ denials of zppllcatio~ ~d ref~d sh~ be made ~th~ 88 days of the ~u*~ or deni~. "(ID Section 6~ (relating to outline of cov- e~ge), except that such outl~e shall c~ude the disclosure required ~der subsec- tion (el. "(iID Section 6H (relating to r£qu~rements for complicates 1md~ ~oup "(~v) Section 6I (re!adng te policy summR- ~). "(v) Section 6J (relating to monthly po~s on a~ele~ted death benefit). "(C) D~LW~ONS.--For purp~ of p~r~aph, the te~ "~del reg~atIon' ~d 'm~£1 Act" have the m~in~ given such te~ by s~tion "'(2) MAP~NG OF POLI~.--~ ~ application for a long-te~ ~re i~ce policy (or for a certifi~te ~der a ~oup long-te~ t~ur~ ~]i~) ~ approved, the sh~ t~it to the appH~t the ~Iicy (or cert~i~te) of ~ no~ ~r th~ 30 ~ ~ ~e ~te o£ the TI4662-4643

August policy is deuied, the issuer shaZ1, within 60 days of the date of a written request by the policyholder or certificate-holder (or repre- sentative}- "{A) provide a written explanation of the reasons for the denIal,~md "(B) make available all information direct- ly relating to such denial. "(e) Dzsc~osYR~.--The requirements of this section are met if either of the follow- ing statements, whichever is applicable, is prominently displayed on the front page of any long-term care insurance policy and in the outline of coverage required under sub- section "(1) A statement that: 'This policy is in- tended to be a qualified long-term care in- surance contract under section 7702B(b) of the Internal Revenue Code of 1988.'. "(2) A statement that: 'This policy is not intended to be a qualified long-term care in- surance contract under section 7702B(b) of the Internal Revenue Code of 1986.'. "(f) LONo-Tm~£ CARE INSURAWC~ POLICY DzznTzv.--For purposes of this section, the term 'long-term care insurance policy' means any product which is advertised, mar- keted, or offered as long-term care insur- ance." (b) CONFOP~Z~G A~m~z~T.--The table of sections for chapter 43 ~s amended by adding at the end thereof the following new item: "See. 4980C. Failure to meet requirements for long-term care insuxance policies." SEC. 113. COORDmATION WITH STATE REQUIRE- ~IENTS. Nothing in this .Act shall be construed as preventing a State from applying standards that provide greater protection of policy- holders of long-term care insurance policies (as defined in section 4989C(f) of the Inter- nal Revenue Code of 1986). sEc. n4. ~[FOR~i LANGUAGE &'qD DE~-~I~ONS. (a) IN GE~RAL.--The National Association of Insurance Commissioners shall not later than January 1. 1993. promulgate standards for the use of ur~orm language and defiui- tions in long-term care insurance policies (as defined in section 4980C(f) of the Internal Revenue Code 1986). (b} V-~a~T~ONs.--Standards under subsec- tion (a) may permit the use of nonuniform language to the extent required to take into account differences among States in the li- censing of nursing facilities m~d other pro- ciders of long-term care. sEc. ~. EFFECTIVE DATE~ (a) SEC~OZ# lll.--The amendments made by section 11~ shall apply to contracts issued after the date of the enactment of this Act, except that the provisions of sec~ tlon I03(c) of this Act shall apply to such contracts. (b) SECr£ON ll2.--The amendments made by section 112 shall apply to actions taken after December 31, 1992. TITLE II--TREAT1F/E~ OF ACCELERATED DEATH BENEFITS SEC. 2~1. TAX TREATMENT OF ACCELERATED DEATH BENEFITS IJNDER LIFE INSUR- ANCE CONTRACTS. Section 101 (relating to certain death ben- elite) is amended by adding at the end thereof the following new subsection: "(g) T~z~rr DEAz~z BmvEFr~s.-- "'(D IN ~ENZR~L.--For purposes of this sec- tion, any amount paid or advanced to an in- dividual under a life Insurance contract on the life of an Insured who is a terminally ill individual shall be treated as an amount paid by reason of the death of such in~ured. "(2l SPo~sA~ "(A) IN ~--Paragraph (1) shall not apply to any payment or advanc~ unless-- CONGRESSIONAL P,_ECOPd3 -- SENATE 12307 "(D the spouse of the insured who is ~ qualified beneficiary consents to such pay- merit or advance, or "{H) it is established that the consent re- quired under clause (1) may not be obtained because s'.~ch spouse may not be located, or because of such other circumstances as the Secretary may by regulations prescribe. "(B) Tn~z ~oR co~sz~z.--Any consent under subparagraph (A) shall occur during the 90-day period ending on the date of the payment (or in the case of a series of period- Ic p~yments, the date of the first of such payments). "(C) QUALIF_VED BE~*E~ICIKRY.--I~or pur- poses of this paragraph, the term 'qualified beneficiary' means an individual who-- "(i) is the spouse of the individual on the last day of the period described in subpara- graph (B), and "(ii) at any t~me during the 1-year period ending on such last day, was a beneficiary under the life insurance contract~ "(3) T~RM~.~LY ILL I~mZvIvuA~.--For pur- poses of this subsection, the term 'terminal- ly iS individual' means an individual who has been certified by a physician as having an illness or physical condition which can reasonably be expected to result in death ha 12 months or less. "(4) P~rrs~ci~v.--:For purposes of this sub- section, the term 'physician' has the mean- ing given to such term by section 213(d)(4)." see. 202. TAX TREATMENT OF COMPANIES ISSUING QUALIFIED ACCELERATED DEATH BENEFIT RIDERS. (a) QUAr~F~m) AeC~LERATE~ DEATH BENEFXT RmERS Tm~ZZD ~S LZ~E I~suP~'~cz.--Section 818 (relating to other definitions and special rules) is amended by ~ddlng at the end thereof the following new subsection: "(g) QUAX~q:~D ACCELERATEn DEATH BENE- FIT RIDERS TF~ZAT~D ~S LZ~ INSURANCE.--I~or purposes of this par~-- "(1) IN GZNm~L.--Auy reference to a life insurance contract shall be treated as in- cluding s reference to a qualified acceler- ated death benefit rider on such contract. "(2) QUALr~D ~CC~TED DEATH BE~zFr~ RmEas.--For purposes of this subsection, the term 'qualified accelerated death bene- fit rider' means any rider or addendum on, or other provision of, a life insurance con- tract which provides for payments to an in- dividual upon the ~ured becoming a termi- nally ill individual (as defined in section 101(g)(2)). "(3) SPOUS,~ CONSENT.-- "(A) IN GENEa~L.--A rider or addendum on, or other provision of, a life insurance con- tzact shall not be treated as a qualified ac- celerated death benefit rider unless such contract provides that~ "(i) the spouse of the insured who is a qualified beneficiary must consent to the ac- celerated payments, or "(ii) it is established that the consent re- quired under clause (i) may not be obtained because such spouse may not be located, or because of such other circumstances as the Secretary may by regulations prescribe. "(B) Tnvm FOR CO~SZ~T,--Auy consent under subparagraph (A) shall occur during the 90-day period ending on the date of the payment (or in the case of a series of period- ic payments, the date el the first of such payments). "(C) QUALZFI~ szm~Fzc~aaz.--For pur- poses of this paragraph, the term "qualified beneficiary' means an individual who-- "(i) is the spouse of the individual on the last day of the period described in subpara- graph (B), and "(li) at any time during the 1-year period ending on such last day, was z benefic~'y under the llfe tusurance c~ntract." ~z.--Paragraph (5}{A) of section ~702(~ ~ ~ended by s~ "or" at the end of cla~e (iv), by red~t~ clause (Y} ~ cla~e (I~), ~d by i~ert~g ~ter CIRce {IV) the following new ~aus~ "(v) ~y qu~i~ accelerated death bene- fit rider (~ defined ~ section 818(g)(2)), (2) ~S~ON~ R~.--~er DU~OS~ debug whe~er section ~Y02 er ~702A of the ~tem~ Revenue Code of 1986 plies ~ ~y con~ct, the ~u~ce o~ a rider or ~dend~ on, or other provision eL a ~ance contract pe~itt~g the accelera- tion of death benefi~ (~ desc~bed ~ sec- tion 101(g} of such Code) sh~ not be tree, t- ed ~ a medication ur ma~ri~ change such contact. SE~ 20~. APPLIC&~ OR RECIPIE~ ~DER P~C ASSIST~CE PROG~MS NOT TO BE ~Q~RED ~ ~ ELE~ION R~PE~ING ACCELE~TED DEA~ BE~FI~ L~DER LIF~ INSURANC~ POL1CIE~ P~ A of title ~ of the Soci~ Sec~ity Act (42 U.S.C. !3~1 et seq.) ~ ~ended by ad~ng at the end thereof the follow~g new section: ~*TR~T OF ~C~ D~ATH "Szc. 1143. (a) ~ G~--Not~th- stand~g ~y other pro~ion of law, no lndi- ~dual who ~ ~ appli~nt fur or r~i~ient aid or ~tance ~der a State plan proved ~der title IV, X, ~, ~I, or ~, of ~sistance f~ded by pa~en~ under title V or ~, or of benefits under the Sum plement~ Sec~ity Income pro~ estab- ~shed by title XVI sh~l-- "(I) be req~ed, ~ a condition of eligibil- ity for (or of cont~uing to receive) such aid, ~s~t~ce, or benefits, to make ~ election to receive ~ accelerated death benefit ~der a policy of life ~ur~ce, or "(2) by re,on of failure to m~e such an election, be de~ed (or suffer a reduction the amo~t of) such aid, ~sistance, or bene- fits. purposes of th~ section, the te~ 'acceler- ated death benefit' me~ ~y pa~ent made ~der the te~ of ~ life ~urance policy, while the ~ed ~dividual is alive. ~ a result of a reticulation of the ~ured ~dividuars life expectancy." aRC. 204, EFFE~ DA~S. (a) Szc~o~s 201 A~ 202.--The ~end- merits made by- (l) section 20~ shall apply to taxable years be~ing ~ter December 31, 1989, ~d (2) section 202 shall apply to contmc~ issued before, on, or ~ter December 31, 1989, except that ~y spous~ cement require- ment sh~ not apply before J~u~ 1, 1992. (b) Szc~o~ 203.--The ~en~ent m~e by section 203 sh~l t~e effect on J~uary 1, 1990. E~A~ON OF ~va~ ~N6-TE~ INS~C~ Ac~ O~ 1991 TI~ I~T~ ~ OF ~ON~T~M C~ Presen$ ~w Deduction for medi~ expe~ ~ deter~g t~able ~me for Federal ~come t~ p~, a t~payer ~ ~owed ~ ttem~d deduction for ~e~b~ed ex- penes that ~ p~d by the ~payer d~ng ~y ~able y~ for m~c~ ~e of the t~- payer, the ~ayer's ~o~, or a dependent of the t~payer, ~ the extent ~at such ex- ~es ~d ~.~ pe~ent of the ~ ~me of ~e ~pa~ for ~ch ye~ (~ 213Z ~r t~ pu~, e~ for me~ c~ g~er~ ~e d~ ~ TI4662-4644

S 12308 amounts paid: (1) for the diagnosis, cure, mitigation, treatment, or prevention o£ dis- ease, er for the purpose of affecting any structure or £anction of the body; (2) for transportation primarily for, and essential to, medical care refe~ed to in (1); re (3) for in~urence covering medic2.1 care referred to in (I) and C2). Exclusion for Amounts Received Under Accident or Health Insurance Amounts received by a taxpayer under ac- cident or health insurance for personal inju- ries or sickness generally are excluded from gross income to the extent that the amounts received are not attributable to medical exper.~es that were allowed as a de- duction for a prior taxable year (see. 104). Treatment of _Accident or Health Plans Maintained by F~nployers Contributions o:~ an employer to an acci- dent or health plan that provides compensa- tion (~ough insurance or otherwise) to an employee for personal injuries or siclmess of the employee, the employee's spouse, or a dependent of the employee, are excluded from the gross income of the employee (See. 108). In add~tion, amounts received by an employee under such a plan generally are excluded from gross income to the extent that the amount~ received are paid, directly or indirectly to reimbume the employee for expenses incurred by the employee for the medical care of the employee, the employ- ee's spouse, or a dependent of the employee (see. 105). For this purpose, expenses in- curred ~or medical care are defined in the same manner as under the rules regarding the deduc~ion for medical expenses. In General The bill provides a safe harbor with re- spect to certain long-term care services and certain insurance contracts that provide coverage for such services. Services and con- tracts that satisfy the requh'ements of the bill are subject to the become tax treatment described in the bill. Services and contracts that do not satisfy such requirements con- tinue to be ,subject to presen~ !a~. The bill provides that certsin services that are provided to a chronically El individual (defined as "qualified long-term care serv- ices") are to be treated a~ medical care for purposes of the deduction for medical penses. Thus, under the bill a taxpayer is to be allowed an itemized deduction for unre- hnbursed expenses that are paid by the tax- payer during any taxable year for qualified long-term care services that are provided to the taxpayer, the taxpayer's spouse, or a de- pendent of the taxpayer, to the extent that such expenses and other eligible medical penses of the taxpayer exceed 7.5 percent of the adj'~ted gross income of the taxpay.er for such year. In addition, under the bill, el- igible medical expenses for purposes of the medical expense deduction are to include premiums pald for ~urance that provides coverage for quailed long-term care serv- lcc~, but only if such Insurance is provided under a ~uai~ied long-term care insurance contract as de~Lned below. The bill a~o provide that for purposes of the Internal Revenue Cede (1) a qualified long-term care insurance contract is to be tlT.ated as an accident or health insurance contract, (2) any plan of an employer that provides coverage o£ qualified long-term care services is to be treated an au acciden~ or health plan with respect to such services. and (3~ amounts received under such a con- tract or plan with respect to qual~ied long- term care services are to be treated as amoants received for personal Injuries or CONGKESSIONAL RECORD -- SENATE Thus. undar the biLL mounts received under a qualLfied long-term ca.re insurance contract with respect to qualified long-term care services generally are to by excluded from the g~oss income of the recipient to the extent that the amounts are not attrib- utable to medical expens~ or expen~_s for qualified long-term care services that were allowed as a deduction for a prior taxable year. In addition, under the bill, contributions of an employer to a plan that provides cov- erage of qualified long-term care services are to be excluded from the gross income cf the employee to the extend that the plan l~rovides compensation (through insurance or otherwise) to the employee for qualified long-term care services that are provided to the employee, the employee's sponse, cr a dependent of the employee. Finally, under the b~, amounts received by an employee under such a plan generally are t~ be ex- cluded from gross hncome to the extent tha~ the amounts received are paid, directly or indirectly, to reimburse the employee for expenses incurred by the employee for qualified long-term care services that are provided to the employee, the employee's spouse, or a dependent of the employee. No inference is intended as to the present- law treatment of (1) amounts paid for quali- fied long-term care services (or premiums paid under a qualified long-term care insur- ance contract), (2) amounts received under qualified long-term care insurance contract, and (3) contributions to, and amounts re- ceived under, any plan of an employer that provides coverage ~or qualified long-term care services. Definition of Qualified Long-Term Care Services In general The term "qualified long-term care serv- ices" is defined as the necessary diagnostic. preventive, therapeutic, rehabilitative, maintenance, and personal care services that are required by an individual during any period that such individua/ is a chron- ically fll individual, but only if (i) the pri- mzxy purpose of the services is to provide needed assistance with any activity of da~y ll~ug (as de.fined below) which the chron- ically El individual is certified as being unable to perform, and (2) the s~erviees are provided pursuant to a continuing plan care that is prescribed by a licensed health care practitioner. In addition, h-~ order to constitute qualified long-term care services. the services m~y not be pro-dried by any rel- ative o£ the chronically ill individa~ unless the relative is a licensed health care practi- tioner with respect to the services provided.L Definition of chrencially El individual A chronically ill individual generally is fined as any individual who is certified by a physician or registered professional nurse as being unable to perform, without substan- tial assistance from another individual: at ler~t three activities of daily !i,~ing. in the case of services that are provided during any period that an ~ndividuai is residing L~.. his or her home (whether or not the services are provided in the home),~ an individual need ' For this purpose, a relative of a cP~ov~ca[ly fll indJvidu~l includes: 11) a ~on or ~h~. or a de- (3) a b~th~, ~r, s~p~o~, or ~e~te~ the ~d~'s fa~er or mother, or ~ ~or of ei~ (5) • ~a~ of stepmo~e~ (6) a ~n or ~t~ ~ the ~'~id~'s ~a~er ~r mo~ ~d ~8) • ~-~w. ~-~w, ~ ~r-~-l=w. ~t ~ ~ a n,~g home or ~ f~y ~t August 1991 only be certified as b~Ang unable to perform. without substantial assistance ~om ~other ~d~, at le~t ~o ~ti~es of It~ ~ order ~ be co~idered a c~c~ ~ ~du~. For p~oses of de~ng whether ~ ~du~ ~ cr~onci~y ~, su~ st~ti~ ~is~ce ~udes ene~g or sub- st~tiM ~e~islon. For ~ of the def~tion of a chron- i~Y iH ~du~. the activities of daffy ferr~g. (4) bating ~d &~g. mobElty. A Hce~ed heath cam pr~ti~on~ ~ a physici~ red,red profession~ nurse. or ~y other in~vidual who satisfies such req~remen~ ~ m~ be ~r~ribed by Secretary of the ~e~ ~ter cerebration ~th the Secret.a~ of Health ~d H~ Se~ic~. It ~ ~tended ~at such req~re- men~ ~ ~clude ~ a Hce~ed heMth c~e practition~ ~ ~viduai who h~ expe~- ~ce or h~ been tr~ed ~ provi~ sea- ices ~ the elderly, such ~ a llce~ed worker. Perdition of Quatffied Long-Te~ Cm-e ~ce Contr~ ~ generM ~e te~ "qualified long-term c~e ~ur- ance contract" ~ defied ~ m~y i~nce contract ~ (1) the o~y ~urance protection provided ~der the contract ~ covemge of qualified long-tm~ c~e se~ces. ~d (2) the contract set,lies the requirements specified below re~ting to (a) the Da~ent reI~ of pre~. (b) the belong money. (c) the coverage of expe~es re~- b~sable ~der ~edi~e. ~d (d) the Dr~ tection of co~e~. ~or p~poses of the def~tion of a qu~i- fled long-te~ c~e ~ur~co contr~t, the te~ "q~Hfied long-tern c~e se~ces" to have the s~e me~g ~ prodded above, except that se~ces are not to tute qu~ied long-te~ c~e se~ ~ess the ~vldu~ with respect ~ whom the se~ces ~e perfo~ed ~ rece~ied no lees frequently t~ ~u~y ~ a chro~c~ly ~du~ by a Hce~ed heath care practi- tioner. Pa~ent ~d ref~d of prem~ In order for ~ ~nce contra~ ~ con- stitute a quMified long-tern cam contract, the contact m~t pro~de that the pre~ pa~en~ ~der the contract may not be made e~lier th~ the date that ~ch pa~ents wo~d have been made ff the contract provided for level ~u~ pre~um pa~en~ over the ~fe of the contract,~ or. if sho~er. 20 years. ~d (2} ~ rely& pre~ ~d ~ po~cyholder ~den~ or other s~il~ amo~ts ~der the contr~t ~ ~ be applied ~ a reduction ~ fut~e premi~ or to ~cre~e furze beneIl~ ~der ~e contact. ~e requirement relat~g to the ref~d ~r~. however. ~ not to ap~ to ref~d that occ~s by re,on of the death of the ~s~ed or upon the complete s~render cr ~ce~ation of a con~t, but only ~der the con~ ~e ~o~t ref~ded may not exceed the total pre~ prevl- v~ly paid ~der ~e contract. If ~ ~ount ~ ~f~ded ~der a qu~ied lo~-te~ ~s~ce contract by re~on of the death of the ~ed or upon comple~ s~nder or ~ce~on of ~e con~t, the ~o~t r~ ceived ~ ~ be ~cluded ~ the ~ss ~me of the m~plent to the extent that a deduc- tion or ~cl~ion w~ ~o~d ~th re~t ~ the ~d For ~th~s I~. the ]~e of -- contra~"t is the pe~od for which Lhe ~ cov~ ~ ~ ~ ~ eff~ ~d ~ W ~lu~ ~ ~cd for w~ ~e TI4662-4645

A gust 2, 1 91 CONGRESSIONAL- RECORD--SENATE S 12309 ProhFoition on borrowing An Lnsurm~ce c~ntract is to con~Itute quarried lOngotenn care insurance contract only ~f the contrac~ provid~ that (1) no money may be borrowed under the con~raei~ and (2) the contr~'t (or any portion there- of) m~y not be ~ed or plcd~ed ~ collat- ez~l for ~ loam Coverage of expenses reimbursable under ~ed~c~e In addition, in order for an insurance con- tract to c~nstitute a qualified long-term care insurance contract, the contr~-t may not cover any ex.uense Incurred to the extent ttmt the expense is re~nbuzsahle under ~Zedlcare. Consumer pro~tion provisions In order for an h~-uranee contract to con- stitute a qualified long-term care !nsurance contact, the contract must satisfy the fol- lowing consumer protection provision. First, the contract mns~ satisfy the requirements speckled in section 6B (relatLug to guaran- teed renewal and noncanceilabilityL section ~C (relating to pre.e~ist~ng hospitalization) of the long-te~rn e~re insurance model Act o~ the N~tional Associa~on of !nsurancc Counn~ssioners (NAI. C) as adopted by the NA~C ~u December of In addition, the contract must satisfy the requirements specified in each of the follow- ~g provisions of the NAIC long-term care insurance model regulations as adopted by the NAIC in December of 1990: O) section 6,% (relating to the guaranteed renewal or noncanccllabflity); (2) section 6B (relating to prordbition on lhnitatiens aud excin- sions);. (3) s~ction 6C (relating to waiver of premtttm); (4) section 8D (relating to con- tinuation or conversion of coverage); (5) sec- tion 6~ (relating to replacement of discon- t~nued polisies); (~) section ~A (relating to disctnsure); (~) s~t~on 8 (retatLug to prot~Ibi- tions agains~ post-clalms underwriting);. (8) section ~ relatin~ to min£mum standards for home health ecre benefits); • (9l section 10 qualified long-term c~re lnsm~nce contract, and employee ~y be a~owed ~ e~clusion ~om ~o~ ~come for cont~but!o~ of ~ employer to a p~ that p~d~ eove~ge 0f qu~lfied lo~-te~ ~e se~c~ Drovld~ ~ ~he employs. ~ addition. e~clu~on m~ be ~Rowed for ~stment ~come e~ on the exc~. ~- ~y) o~ (.1) ~e premIu~ u~d under the can--t, ov~ (2) ~e c~ent cost of the ~ coverage proxqde~ ~der the con- ~t. ~ for exhale, ff the to~ mo~t cf pre- ~u~ paid ~der a quMifi~ long-te~ ~e ~- anee ~nt~t ~ ~f~d~ by re.on of the death of the ~ed or u~on the complete ~ender or c~- ~tion of ~e ~n~act. the ~o~t ~cludible ~ ~me ~ not to be 1~ t~ ~e value o~ the ~surance ~vemge provided ~der the ~nt~ the ~o~t re~unded ~ le~ th~ the ~ of premi~ paid under the confer, the ~clu~ble ~ ~o~ lnceme ~ to equ~ the exc~ ~y) o~ (1) the mo~t that would here beeu cludible ~ ~ ~eome ~d the totfl ~otmt premi~ p~d ~der the ~nt~t been ref~ded. over t2) the mt~ mo~t of Dremiu~ paid under the comet that ~a not ~f~ded. ~ ~ ap~lyL~g the req~remen~ conta~ed ~ the NA~C long-~m ~ ~ce model Act or model cont~t, appropriate mo~fl~tio~ are to ~ m~e to su~ r~n~ to reflect ~e f~g that the contact ~ a ~up ~n~ * In ap~l~ng the re~uiremen~ ~t s~tion 8C~3~ of the NAIC lang~ ~ra ~r~ce model re~a- ~. a~ ~ ~ to b~ su~ti~t~ for age s~tion 9 0I the NAIC lo~g-te~ care lo~ng ~ement~ (1) the ~nt~t m~t not ~t~n or l~t el~b~ty f~ b~fl~ ft~ by ca~ ~der S~ ~. or tb~ for c~ ~ ~ve~ ~der the ~nt~t) o~y ~ ~ (relRtlng to the required offeM_ng of Lrd~L~- tion protection): a and [I0) section 21 (re!at~ ~ng ~ prohibitions agah-~ pre-existing con- ditions and probationary periods ~n replace- ment or certificates). Second. the ~ollowing sr~.tement must be prominently di~-played on the front page of the contract: "~'Fnis policy is intended to be a qualified long-term care insurauce con- tract under section ~0P, B(b) of the L~ternal Code o~ ~986.". ~R~rd, the contract mu~ satisfy the non- forfeiture requirements that are in effect the date that the contract is issued. The bill r~qntres the i~C to promulgate and certi- fy nonforfeiture requirements to the Secre- tary of the Trezsury before January 1. 1993. The NAIC is to have flexibility in determin- ing the type and extent o£ appropr~te non- forfeiture benefits and the extent to which those benefits would have to be offered or provided under a long-term care insurance contr~t, that the NAIC is to at least in- clude a requirement that the issuer of a Ionffoterm care insurance contrac~ offer the policyholder an 0pp0rtLmity to obtain type of nonforfeiture benefit Ym the event that the NAZC does not certify any such re- tirements to the Secretary of the Treasury he~ore January 1, 1993, then, no later than January !, 1994, the Secretary of the Treas- ur~ is to prescribe nonforfeitttre require- ment~ that mnst be satisfied in order £or contract to constitute a qualified long-term care insurance contract. The nor~orfeiture requirements are not to apply to contracts that m'e issued before the d~te that is one y~ar a~ter (I) the date that the requir~ merits are certified by the NAIC to the Sec- retary of the Treasury. or. (2) if a-pplicable, the da~ that, the requirement~ are pub- Eshed by the Secretary o~ the Treasury. Treatment of l~e insurance contracts th~ pro~de coverage of qualified long-term care selwices ~.xccpt ~s provided in regulations, in the case of a life insu_rance contract that pro- vides coverage of qu~ified long-term care services, the requirements that must be sat- isfied in order Iora contract to cons~itut~ a qual~ied long-term care insurance contract are to apply~ ff the portion of the contract that provides coverage of qualified long- term care services Is a separate contract. Treatment of Per Diem and Other Periodic Payments The bill provides that except as provided below, payments under a contract that are made to (or on behalf of) a chronically Ill lndlvidual on a per diem or other periodic b~sis without regard to expenses incurred during the period to which the expenses relate are to be treated as payments made with respect to qualified long-term care services. Thus. any such payments that are made under a qualified long-term care in- su~ance contract generally arc to be ex- cluded from the gross income of the recipi- ent to the e~tent tt~at the pa~Tnents are not attributable to medical expenses or penses for qualified long-term care sen, lees which provide ~or 24-hour or other nn~Lnz care not required in order ~ be ~c~ by the S~t~: (2) g a ~t pro~dd~ benefI~ for home he~dth c~-e se~'Ic~ ~e cont~ m~t p~de ~n~fi~ for per- so~ ~ s~ (~clud~ home health ~de ~d home,Rot se~c~), hom~ heath se~c~. ~d ~e ~ ~ ~ ~du~'s t~s. t~ coast must ~de ~ch b~ne£t~ the S~ rathe ~u~ of ~tion 10 of ~e N.~C thzt were allowed a deduction for a prior tm~ble year., This special rule relatL':g to per diem or other periodic payments is not to apply. however, l~ the aggregate payments ~uder the contract for any period (whether on a periodic basis or otherwise) exceed the dollar limitation in effect for such period.~o For any portion of a period that occurs du~_ug any calendex year before 1993. the dollex limitation ~ $100 per day (or the equivalent amount in the case of payment~ on another periodic basis). ~or any portion of a ]period that occurs during muy calendar year after 1992, the dollar limitation is to be incre~ed- by a percentage of the dol/ar limi- tation in effect for the preceding calendar year. The percentage to be used for any c~l- endsr year is to equal the greater o~ (1) 5 years, or (2) the cost-of-ll~ng adjustment for the calendar year. •x Specie/Rules Applicable to Policyholders The bill contains two special rules that appl~ ouly to the policyholder of a long- term care insurance contract. FL~st, if the aggregate pay~ne~uts under all long-te~Ta esre insttrance cuntracts with respect to an insured for any period (whether on a period- ~c b~sis or otherwise) exceed the dollar limi- tation as described above in effect for the period, the special rule desc~bed ~bove that treats per diem or other periodic payments as payments made with respect to qualified long-term care services is not to apply. Second. a contract is not to be treated as qualified long-term care insur~mce contract. during any pe~0d on or Rfber the date that the contract (or any portion thereof) is as° signed or pledged as collateral for a Continuation Coverage Excise The bill provides that the excise tax is imposed on the failuxe of a g-roup health plan to satisfy continuation coverage re- quirements is not to apply to a long-term care insurs~ce contract or nny plan of Rn employer than provides coverage of quali- fied long-term care services. Excise Tax on t~ailure to Satisfy Require- ment~ With ~espect to Long-Tm~ Care Insurance Policies The bill imposes an excise tax on any person tllat farts to satisfy certain require- merits with respect to a long-term care su.~mce l~olicy, which is defined as any product that Ls advertised, marketed, or of- fered ~s long-term care insurance. ~'Fne amount of the excise tax is $5,000 for each failure to satisfy any such requirement. In the case of a failure that is due to reasona- ble cause and not to willful neglect, the ~ec- rotary of the Treasury may w~ive all or part of the tax to the extent that the payment of ~ On the other l'~ud. In determining the deduct- ibflity of expenses l~aid for qu~lff|ed long-term ~re ser~c~. ~o~ receh'ed by a chroni~lty vidual on R per ~ or ozher peI[odic b~ under a q~ffled long-te~ ~e ~u~ce c~ntract ~e be treat~ ~ ~mpe~tlsn for such ex~e~s, ~In de~ whether th~ dollar l~tion h~ been e~ded for ~y period, ~l cont~ ~ by ~e ~e ~ur~ce comply with respect to the ~e i~ ~ ~ be t~Rted ~ ~ sidle ~n~. ~ The ~s~f-Hv~ Edju~m~n~ for ~y hom~ ~ ~dex for the ~ce~g ~end~ Ye~ e~- c~ such ~ndex for the ~nd preening csl~nd~ y~. ~e n~ home ~ ~dex ~ ~ ~ l~d before J~u~ 1. 1~. by the Se~ the ~e~ ~r co~tfon ~qth the DM~ ~ex ~ to ~ ~d for ~ ~on for such ~ y~. TI4662-4646

S 12310 the tax would be excessive relative to tlze ~allure involved. The excise tax is imposed on each failure to satisfy either of the following require- ments relating to sales practice~ First, a person who is selling or offering for sale a long-term care Ir~uranes policy may not complete the medical history portion of an application- Second, a person may not know- lngly sell or issue a long-term care insurance policy to an individual who is eligible for medical assistance under Medicaid. In addition, the excise tax is imposed on each failure to satisfy any requirement spec- ified in each of the following provisions of the NAIC Inng-term care hnsurance model regulations as adopted by the lqAIC in De- cember of 1990: (1) section 11 (relating to application forms and replacement cover- age); (2) section 12 (relating to reporting re- quirements); TM (3) section 18 {relating to filing requtrement~ for marketing); {4) sec- tion 19 (relating to standards for market- ing); ~* (5) section 20 (relating to appropri- ateness of recormnended purchase); {6) sec- tion 22 (relating to standard format outline of coverage); and (7) section 23 (relating to requirement to deliver shopper's guide). The excise tax is also imposed on each failure to satisfy any requirement specified • in each of the following provisions of the NAIC long-term care Insurance model Act as adopted by the NAIC in December of 1990: (1) section 6F (relating to right of return); ~ (2) section 6G (relating to outline of coverage); (3) section 6H (relating to re- quirements for certificates raider group plans); (4) section 6I (relating to policy sum- mary); and (5) section 6J (relating to monthly reports on accelerated death bene- fits). In addition, the excise tax is imposed on each failure of the issuer of a long-term care insurance policy to satisfy any of the follow- lag requirements. First, if an application for a long-term care insurance policy {or for a certificate under a group long-term care in- surance policy) is approved, the issuer must transmit to the applicant the policy {or cer- tificate) of insurance not l~ter than 30 days after the date of approval. Second, if a claim under a long-term care insurance policy is denied, within 60 days of the date of a written request by the policyholder (or a representative of the policyholder), the ~ssuer must provide a written explanation of the reasons for the denial and make avail- able all information relating to the denial, Finally, in the case of a lone-term care in- surance policy that is intended to be a quali- fied long-term care insurance contract, the fogowing statement ts to be prominently displayed on the front page of the policy and on the front page of the outline of cov- er~e with respect to the policy: "This policy is ~ntended to be a qualified long- term care insurance contract under section ~F/02B(b) of the Internal Revenue Code of 1986.". In the case of a long-term care insur- ance po]icy that is not intended to be a qualified long-term care lrmurance contract, ==The pr~vi~on of a general securit~ interest in the propert~ of a policyholder/~ not to be consid- ered an a~slgnment or pledge for this purpose. ==In addition to the requtremant~ contained in ~ec~lon 12 o! the NAIC ~on¢-term care insurance model regulations, the f~suer must also report at least ~unuall~ the number of claims de~u~ed durhlg the relmrting period for each ~ of busin~ =~ Iu ~ldltlon ~o the requirements contained In gection ~9 of the N~a-IC long-term care kr~uranco model re~latlon~ a ~ may not mL~r~prc~eut a ~tcrial fa~ in ~¢lllng or offering ~or sale a long- ~" In m~kLition to the r~luircment~ ~onts.ined In sectio~ 6i• of the NAIC long-ten~ care ~ model Act. the requiremants o~ ~ueh section are to n~ms ts to be made wRh~ 30 d~ of the return or CONGRESSIONAL RECORD SENATE the following statement is to be prominent- ly dk~played on the front page of the policy and on the outline of coverage with respect to the policy:. "This policy is not intended to be a qualified long-term care insurance con- tract under section 7702B(b) of the Internal Revenue Code of 1986.". Treasury regulations The bill requires the Treasury Depart- ment to prescribe such regulations as may be necessary to cerry out the requirements of the provisions of the bill relating to long- term care, including regulations to prevent the avoidance of such provisions by provid- ing qualified long-~erra care services under a life insurance contract. Effective da~es The provision of the bill relating to the deductibility of expenses paid for qualified long-term care services applies to taxable years beginning after the date of enact- meat. The excise tax that is imposed with respect to Iong-term care insurance policies applies to actions taken after December 31, 1992. The other provisions of the bL11 relat- ing to long-term care apply to contracts issued after the date of enact.meat. A special transitional rule is provided for any insurance contract that is Issued on or before January 1, 1992, and that provides coverage for services that are similar to qualified long-term care services but that does not qualify as a qualified long-term care Insurance contract. Under this rule, if, after the date of enactment of the bill and before January 1, 19~4, any such contract is exchanged for a qualified long-term care In- surance contract, such exchange is to be treated as an exchange to which s.ection 1035 of the Code appiied {which generally provides that no gain or loss is to be recog- nized upon the exchange of certain Insur- ance contracts). TITLE ][]~--TREATMENT OF ACC~TED DEATII Preser~ In general The undistributed invest~ent income {"inside buildup") earned on premiums cred- Ited nnder a contract that satisfies a statu- tory definition of life insurance is not in- cludible in the gross income of the owner of the contract. In addition, death benefits paid under a contract that satisfies the stat- utory definition are excluded from the gross income of the receipt, so that neither the owner of the contract nor the beneficiary of the contract is ever taxed on the inside buildup if the proceeds are paid to the bene- ficiary by reason of the death of the in- sured. Amounts received under a life insur- ance contract (other than a modified endow- meat contract) prior to the death o~ the In- sured are includible in the gross income of the receiplent to the exten~ that the amount received exceeds the rectpient's in- vestment in the contract (generally, the ag- gregate amount of premiums paid less amounts l~revlonsiy received that were ex- cluded from gross income). Definition of a Life Insurance Contract In order to qualify as a life insurance con- tract for Federal income tax purposes, a contract must be a life insurance contract under the applicable State or foreign law and must sat~fy either of two alternative tests: (1) a cash value accumulation test; or ~2) a test consisting of a guideline premium requirement and a cash ~alue corridor quirement. A contract satisfies the cash value accumulation test if the cash mn-reno der value of the contra~t m~v not. at any time exceed the net single l~remlum that would have to be l~d at ~uch time to lind future benefits ,under the contract. K con- August 2, 19 1 tract satisfies the guideline premium/cash value corridor test [f the premiums paid under the contract do not at any time exceed the greatest of the guid~ine single premium or the sum of the guideline level premiums, and the death benefit under the contract Is not less than varying statutory percentage of the cash surrender value of the contract. The net single premium for purposes of the cash value accumulation test and the guideline single premium or guideline level premiums for purposes of the guideline pre- mium/cash value corridor test are the amounts necessary to fund the future bene- fits under the contract. For thi~purpose. the term "future benefits" means death benefits and endowment benefits. In addi- tion, the charge stated in a contract for any qualified additional benefit is treated as a future benefit, thereby increasing the appli- cable limitation by the discounted value of the charge. The term "qualified additional benefit" means guaranteed insurability, ac- cidental death or disability, family term cov- erage, disability waiver, and any other bene- fit prescribed under Treasury regulations. Explunatio~ of provisions In General The bill provides an exclusion from gross income for amounts paid or advanced to an individual under a life insurance contract if (1) the insured under the contract is term.i- nally ill, and {2) the spousal consent re- quirement described below is satisfied. For this purpose, an individual is considered ter- minally ill if the individual has been certi- fied by a licensed physician as having an ill- ness or physical condition that can reason- ably be expected to result in death in 12 months or less. Spousal Consent Requirement The spousal consent requirement applies to an enmunt that is paid or advanced under a life insurance contract if, at any time during the one-year period that ends on the date that the mnount is paid or advanced, the spouse of the insured is a beneficiary under the life insurance contract. The spousal consent requirement is satisfied with respect to an amount that is paid or advanced under a life insurance contract if (1) during the 90-day period that ends on the date that the amount is paid or ad- vanced, the spouse of the insured consents to the payment or advance of such amount, or (2) it is established that the consent of the spouse to the payment or advance may not be obtained because the spouse may not be located, or because of such other circum- stances as the Secretary of the Treasury may prescribe in regulations. Treatment of Life Insurance Companies The hill provides that for purposes of the income tax treatment of life insurance com- panies, any reference to a life insurance con- tract is to be treated as a reference to a qualified accelerated death benefit rider on such contract. For this purpose, the term "qualified accelerated death benefit rider" is defined as any rider or addendum on, or other provision of, a life insurance contract that provides for payments to an individual upon the insured becoming a terminally ill h~divldual (as defined above), but only if the rider or other pro~slon of the contract con- rains the spousal consent requirement deo ~xibed above. Definition of a Life Insurance Contract The b~ll provides that in determining whether a contract qualifies as a life L~ur- ance contract for Federal income tax pur- po~e~ a qualified accelerated death benefit rider (as defined above} is to constitute • qualHied additional benefit. Consequently, TI4662-4647

August 2, 1991 the applicable limitations for pur~osea of ~e de~tion o£ a l~e ~e con~t ~e ~ ~ ~cr~ed by ~e ~o~ed v~ue of the ~ge for ~he ~u~ied ~erat~ death b~efit ~der. Ad~on o~ ~e~ted Dea~ B~efit Rider t~ ~t~ ~e ~ce Con~ ~e b~ ~o pro~d~ that the ad~tion to a life ~urance contr~ of ~ ~der that per- ~ the ~emti~n of the death benefit upon the ~ beco~ a te~a~ ~ ~du~ (~ def~ above} ~ not ~ be trea~d ~ a mc~cation of, or a mate~M ch~ge to. ~e contact. ~r D~es of d~ teeing whether ~e ~ntract is su~t to section ~02 or ~0~ of the Code. H the con~k ~ ~bject to s~tion ~02 or however, the ~tion of ~e ~der ~ to be t~en ~t9 ~co~t ~ dete~ whether the contr~t sat~fies the req~remen~ of section ~02 or ~02~ ~b~lty for Ce~a~ ~blic ~s~ce - Benefits. F~y. the bill pro~des that the right ~ receive ~ ac~lerat~ d~th ben~l~ ~ not ~ be taken ~t9 ~t ~ de~ng eli- ~b~ty for ~nefi~ ~der.~ pubic s~t~ce pro~, such ~ ~e~cai~ For t~ P~e, ~ ~celera~d death benefit defied ~ ~y pa~ent ~de ~der a ~e ~ce contr~ while the ~d ~ ~ve ~ a r~t of ~ r~lc~tion of the ~e ex- ~ect~cy of the ~e~ ~e pra~on of the bi~' ~at pm~d~ ~ excl~on from ~oss ~come for ~o~ p~id or adv~ced to ~ ~d~ ~der a ~e ~ce cont~t app~. to taxable ye~s berg ~ter December 1989. except tha~ the spo~ cogent rm quirement ~ not to apply before J~u~ 1~2. the other ~come tax pro~io~ o~ the b~ relating ~ ~celemte~ death benefits apply to taxable ye~ be~ before, on~ or ~ter D~ember ~1. 198ff, except that ~he spo~ cogent req~ement ~ not to apply before J~u~y 1. ~992. The ~ro~ion of the b~ that relates ~ eH~bfii~y ~or pubic ~- s~t~ce benefi~ Is ~£ective on J~ 1990. U.S. S~, ~n. L~o~ Senat~ W~htngto~ PC. D~ ~ C~I~: ~ you may earMer t~ ye~ I ~oduced S. 846, the Long-Tern Care Comber ~otecflon A~ of 199L ~]le re~g co~ed to the enactment of t~ !e~slatlo~ I ~ to jo~ you ~y ~ ~odu~g the ~ivate Long-Te~ C~e ~ce Act ol 199L There Is no qu~tion ~at yo~ bffi. and your leade~hip ~ t~ ~e~ m~e a ~jor ~ntri- bution to the lo~-~ ~re debate. D~g the Pepper Co~sston's s~ggle ~ f~d solutio~ to meet the long-te~ c~e nee~ of Americ~ of ~ ages. we att~p~ ed t~ de~e whether ~ere ~ ~ a~ pmp~ate role for Drl~te lo~-~ c~e ~- sur~ce. Reco~g ~at, for the for~eea- ble furze, the pubic s~tor ~ not be able to com~re~mlve~ mee~ eve~e's long- ~m c~ ne~. the Co--on conc!uded that p~va~ ~nce wo~d b~ c~led on to play a role. One of ~he Pe~er Co~on's ~endatiom, wMch I ~Meve I ~ve ~- co~o~d ~t~ S. 846, ~ ~e ~equate To f~h~ em~ co~ ~Idence ~ the m~ket, the ~ion ~ ~m- mend~ ~ ~e ¢o~ ~ ~ CONGP,_ SSIONAL RECORD -- SENATE ~rhe le~lai~on we ure introducing repr~ ~g ~er D~t~on ~d ~e~g t~- paye~s qu~o~ ~g the of ~e ~o~ ~ ~th ~ le~la~on b~ ~duc~ ~ ~ ~ hut the ~ ~e~ ~ the p~es~ ~ues~o~-about the adequacy ~d ~r~en~ of co~ t~o~ ~ ~e~ ~ ~e revenue o~ ~ b~ ~w yet ~ be ~wer~ ~ f~ I a~ ~th yo~ ~. Ch~ that ~es8 ~u~o~ ~ not b8 sa~fac~ ~t~ a b~ ~ ~t~du~ ~d d~trlbu~d ~. Ch~ I look fo~d t~ ~or~g ~th ~o~ Senator Packwood, Senator Dole, the m~y ~u~ s~o~g the 1ong-t~ ~re i~ce market. L~ew~ you ~ b8 ~ed t~t I w~ cont~ue ~he ~tlon~ ~oclat~on of ~ce Com- ~one~, the ~ ~d~try and the ~ce ag~ to ~ther ~en~hen leg- mat8 go~ of pro~ct~g the c~on~c~y ~ ~ gengr~tlo~ b~ the cat~oD~c c~ of ]ong-~ ~ look fo~d ~o ~t~g ~ the furze ~ wor~ ~th you ~d ~nator wood' on t~ and other ~o~ le~l~ tlo~ Den~g b~o~ the ~c8 S~cer~y, ~hed coHea~es" Senato~ B~s~,~ Do~, ~d ~o~ in ~troducing the ~iwte ~ong-Te~ Care ~snce Act of 1~9t. T~ b~ is the tax p~. ~ more comprehemive p~n~ed. Secure Chofc~that Senator Do~ ~d I have been wor~g on ~ ~ess the long-tern e~e nee~ of se~ors. This b~ is ~nded ~ remove tax b~lers to the development of a pri- va~ market for long-term ~e ~ce ~d to enco~age employers to o~er long-tern ~e benefi~ to the~ employe~. ~ ~ pave the way for ~e~ca~. to protect the~elves aga~t, the dev~tat~g f~ci~ ~pact of long-te~ me~c~y related problem. ~eric~ are ~pi~y a~g. The el- derly ~op~ation has doubled over the. p~t 30 ~ears. The elderly pop~ation ~ double aga~ ever the ne~ ye~s, swe~g to more than 66 ~ion ~e~c~ ov~ age 65. Most of o~ so,ors ~ eventu~y enter a n~sing home or need help to cont~ue ~g. at home, I be~eve the p~vate sector can play ~ ~poAant role ~ pro~g se~ors ~th access to ~ordable ~e. I~- ance complies want to offer a ~de ~y o~ cover~e that c~ be tailored ~ the nee~ of ~du~ seniors. ~- ployem w~t to offer long-te~ c~e benefi~ to the~ employees ~d ret~- ees. But thee efforts ~e berg tiered by amb~ties in ~e T~ Code re~g the t~ation of Io~-te~ ~e b~ we ~e ~t~uc~g to~y c~ t~t long-~ ~re e~s ~d qu~ied Io~-te~ c~ ~e ~eat~ the s~e ~ me~ ex- ~ ~d m~l ~ ~der ~e t~ law. S 12311 Out-of-pocket long-term care ex- pauses and the cost of ~ualified long- term care insurance will be tax deduct- ible above 7.~ percent of adic~d gross income; Payments for long-term care services under qualified long-term care insur- ance policies will not be taxable; and Employer-paid long-term care serv- ices and qualified long-term care insur- ance will be a tax-free employee frhnge benefit. The bill also c]arifles that reserves set aside by insurance companies to pay benefits under qualified long-term care insurance policies are tax deducti- ble. Lastly, the bill incorporates a pro- Dosal of Senator BP~vi~r's" which I have cosponsored, to allow life insur- ance companies to pay death benefits to terminally ill individuals on a tax- free basis. TI~ will help the terminal- ly ill afford quality care when they need it the most. I believe this bill is an exce]~.ent step toward addressing the long-term care needs of our seniors. I hope many of my colleagues will join us and cospon- sor the bill.® By i~Ir. F.dkUTENBERG: S.J. Res. 188. Joint resolution to des- ignate November 1991, as "National Red Ribbon Month"; to the Commit- tee on the Judiciary. ~ I~h'. I~U~I~NBERG. Mr. President, I rise today to introduce a joint resolu- tion designating the month of Novem- ber as "National Red Ribbon Month." As the traditional holiday season ap- proaches" more and more intoxicated i~dividuais will try to decide whether they are capable of drivfl]g safely. In November, Mothers Against Drunk Driving [M2kDD] will be launching a national campaign to significantly reduce the number of drunk drivers on oar Nation's highways. I am proud to join l!r~DD in this effort. MADD is observing its 10-year armi- versary as a grass roots advocacy orga- nization. MADD's first 18 years have been marked by hard work and suc- cess. Part of lVIADD's success is a new awareness on the part of the general public of the tra~c consequences of drinking and driving. MADD pio- neered the phr~e "tie one on for safety," urging all of us to tie a red ribbon on our vehicles as a remlp_ der not to drink and drive. Over the years, Congress has passed legislation to fight the battle against drunk driving. In 1984, with !VL~DD to pass the national uni- form minimum drinking age law. In 1988, we joined forces again and the Drtmk Driving Prevention Act was passed which authorizes incentive grants to States to adopt laws to pro- ~ide for admin~trative revocation of licenses of d~mk drh, ers. Despite oar effort~, drunk dr~ving is the mast frequently committed crime in ~-meHca~ Over 45,000 l~eop!e T14662-4648

S 12312 killed in traHic crashes each year and ~early half of those fatalities were al- cohol related. This November, MADD will distribute more than 90 million red ribbons nationwide. These red rib- bons will serve as a reminder to all of us that each year more than 345,000 injuries result from drunk driving. This is a problem that we can do something about. There is evidence that Federal, State, local, and private efforts to reduce drunk driving are having an impact. In fact, it is estimat- ed that over 10,000 lives have been saved from alcohol related accidents since 1982. "National Red Ribbon Month" will heighten awareness of this deadly problem and its tragedies. Mr. President, I am pleased to join in the fight against drunk driving on dur Nation's highways and urge my colleagues to cosponsor this resolution to declare November "National Red Ribbon Month." I ask unanimous con- sent that the test of the joL-~t resolu- tion be printed in the R~.coRu. There being no objection, the joint resolution was ordered to be printed in the RECOP~U, as fOllOWS: S.J. Rzs. 188 Whereas the most frequently committed crime in America is drunk d~'lving; and Whereas each year on our Nation's high- ways more than 45,000 people lose their lives due to auto crashes, approximately half of these involving alcohol; and Whereas more than 345,000 people are jured in alcohol-related crashes each year; and ~.Vhereas Mothers Against Drunk DrivLng {r~DD) is an organization of nearly 3 mil- lion members and supporters across the nation which has had a major impact on re- duc~g death on our highways; and Whereas in November 1991, MADD will launch a major holiday public awarness campaign by a~king America to "Tie One on for Safety" this holiday season; and Whereas beginning in November I~2~DD and other concerned groups will distribute more than 90 million red ribbons nationwide to create awareneas about the dangers of 'drinking and driving; Resolved by the Senate ttnd.House of Representatives of ~ze United ~tates of America i~ Congress ~ssembted, That November 1991, is designated as tional Red Ribbon Month", and the Presi- dent is authorized and requested to issue a procl~nation caning upon the people of the United States t~ obsem, e the month with ap- propriate activities devoted to reducing dearth and injury on our Nation's highways due to drinking and driving.@ By Mr. GORE (for himself and Mr. SASSER): S.J. Re~ 189. JOint resolution to es- tablish the month Of October 1991, as "Country Music Month"; to the Com- mittee on the Judiciary. COUNTRY MUSIC MONTK @ Mr. GORE. Mr. President, I am pleased to introduce, along with my distinguished colleague, Senator SAss~ s; resolution to designate Octo- ber 1991 as "Country Music Month.'" This resolution will highlight the con- tributions which country music, as an authentic American art form, has m.~le to American culture. CONGI SSIONAL I CORI)-- SENATE From 1923, when ~iddlin" John Carson made the first successful coun- try music recording, until today's big- gest counl~ry stars like George Strait and Clint Black, country music has become one of the most popttlar forms of music in our Nation. As a cln'Id growing up in Smith County, TN, I listened to the "Grand Ole Opry" and followed the legendary careers of so many country music leg- ends. I realized at a very young age that country music-was in step with our everyday lives and that the shn- plest song could touch the lives of country music lovers throughout the Nation. Although Nashville, TN, is heralded as "IvIusic City, U.S.A., Country Music Capital of the World," country music is indeed enjoyed by people through- out the United S~ates. In fact, the Grand O!e Opry's audience is made up of people who have traveled an aver- age of 450 miles one way to be there. Whether we live on a farm or in a city, country music is in tune with our varied lifestyles. The music expresses human emotions we all share: love of family; faith in God; pride in country; reverence for nature. The roots of country music can be traced to early American Iolk songs and spirituals which were sung on front porches and around campfires and reflected the striving of a young, ambitious n.ation. Today country music and its distinctively American harmonies are enjoyed by people worldwide. The Country Music Association first officially celebrated Country 1V~usic Month in November 1964. The first Presidential proclamation recognizing October as County Music Month was issued in 1970. Presidential proclama- tions have been issued every year since. I urge my colleagues to support this resolution to commemorate this 27th Country Music Month. Mr. President,'I ask unanimous con- sent that the joint resolution be print- ed in the R~.co~_u. There being no objection, the joint resolution was ordered to be printed in the RECORD, as ~0ll0WS.* S.J. R~S. 189 Whereas country music derives its roo~s from the folk songs of our Nation's workers, captures the spirit of our religious humans, rel~ects the sorrow and Joy of our tradition- al ballads, and echoes the drive and soulful- hess of rhythm and blues; Whereas country music has played an in- tegral part in our Nation's histbry, accompa- nying the growth of the Nation and reflect- ing the ethnic and cultural diversity of our people; Whereas country music embodies a spirit of America and the deep and genuine feel- ings individuals experience throughout their lives; Whereas the distinctively American re- frains of country music have been per- formed for audiences throughout the world, striking a chord deep within the hearts.and souls of its fans; and Whereas October. 1991, marks the 2"/th annual observance of Country Music Month: No~', the~fore, be it August _o, ResoZveg by the Senate and Hou*e of Rep- res~tativ~ of ~e Unite~ ~tates of Ame~ca tn Cong~ss ~s~ That ~e month of October, 1991, ~ d~a~d ~ "Coun~ M~ic Month". ~e ~ident ~ authored and reques~d to i~ue a proc]~ation ~ upon ~e people of the Unit~ Stat~ to obse~e ~ month ~th approp~te cere- mo~es and activlties.$ e ~. S~S~. ~r. ~estdent, today, along ~th my collea~e ~T Ja., I am pleased to ~oduce a resolu- tion to desi~ate October 1991 Co.try ~ic Month. ~ you ~ow, country music is u~quely ~eri~n ~d reflec~ our Nation's history, ~o~h, and c~ture. I am very proud to represent the Great State of Te~essee, whose cap- it~ city, N~h~He, ~ "~usic City U.S.A.," the home of co~tr~ m~ic. To m~k the 27th ~ivers~y of Co.try ~usic ~onth, ~. Goa~ and ask your support ~ co~emorating co.try m~ic ~ a vital thre~ ~ the fabric of o~ Nation.e S.J. Res. 190. Jolt resolution to des- i~ate J~u~y 1, 1992, ~ "Nation~ E~ Isled Day"; to the Co~ittee on the Juicily. NA~ONAL ~IS IS~I~ DAY ~ ~. ~OYNI~, ~. ~esident, I r~e to~y to ~troduce a jolt resolu- tion to desi~ate J~uary 1, 1992, as "~ational EH~ Isled Day," which will mark the 100th ~ivers~y of this ~toric gateway to ~e~dca. ~ iden- t~c~ resolution w~ p~sed by the House on July 10. Approximately 100 mitlion of us can trace our ~nerican ~cestry to some- one who entered t~ough ~lis Island, much of which w~ built o£ landfill from the New York City subway system. The reg~tratlon hall, w~ch w~ desired to manage 5,000 grs~ a day or 8,000 in an dmergency, processed ~00 people ~ i~ fi~t day. On April 17, 190~, 11,~4~ entered through the Ellis ~land station, m~k- ~g the apex of ~I~ation ~ our h~- tory. ~elve ~llton entered between its ope~g ~ 1892 ~d 1924. The ren- ovation ~d rebuild~g of ~is Isled, together ~th the Statue of Liberty, co~titutes the single l~gest h~toric prese~ation proj~t ~ U.S. history and provid~ a vit~ 1~ to o~ p~t. ~i~tio~ it ~y be fa~ to say, is the most si~i~nt dete~t forei~ po~cy--what we do often de- pen~ upon who we are ~d where we c~e from. ~d it ~ ~possible to derst~d our ~t~ry ~d politi~ with- out tang ~co~t of our diverse mi~t pop~atio~. ~1~ ~d st.~ ~one ~ o~ ethic It ~o~d do ~ we~ to reex~e that h~ory, not le~t to ~ed the m~hs ~at su=ound it. Con~ the f~o~ wor~ of the poet ~a ~, thee who a=lved on o~ ~or~ t~ough ~ ~d were not s~, hud~ m~ ~e~ ~d ~ord the~ o~ tl~e~, the eq~va- l~t of ~h c~ on a ~~tic TI4662-4649

S 123~0 w/th both the cen*=er and the repub- lics. He s/so slated, correctly, in my view, that the United States would not pick sides between the center and the republics, but would support "those in the center and the republics who pursue f~eedom, democr~y ~und e~o- n0mlc liberty." However, no sooner had he said this than he proceeded to endorse Mr. Gorbachev's program, and ~n particular, the Draft Union Treaty. This is the same union treat, Mr. President, that the Ukrainian Parlia- ment has rejected until that has a chance to eusure that this proposed treaty is in the interest of the people of U~raine. Is this not the prerogative of the U~rainlan people? Pm~l~er- more, the President's vei~ed attempts to equate the relationship between the center and republics with American Federalism i~nores both the brutal history and the involuntary nature of this u~uion. Most egregious was the President's imDlica.tion that the people of Ukraine ~.~e to "replace a far-off tyranny ~th a loc~1 despotism.*' These marks are inexplicable. How can the President intimate that a nation that lost millions as a direct result of Mos- cow's policies would promote "a suici- dal nationalism based upon ethnic hatred"? The fact of the matter is the RUKH and other Democratic forces ~'e committed to Democratic princi- ~les and respect ~ur ~he rights of all ~he peop!es of Ukraine. Indeed, ~r. President, it is ironic that President l~u~h embraces Mr. Gorbachev--a reader who has never been elected by ~he people--while at the seine time re- fu~g to meet with democraticaliy-- e!ected l~arlismentarians from RUKIt. President Bush quotes the great Ukrainie_u ~oet Taras Shevchenko: "Only in your own house can you have ~he truth, your strength and free- ¢~om." The people of Ukraine seek ~ :othing more than this--to rule their 0w~l house.@ ]~-~D FOR DIALOG ON HEA~TH REFO!~ VTITH AMERICAN PEOPLE ~ ~r. I~cCAIN. Mr. President, all of u~ remember the ~irestorm that devel- oped smong our Nation's elderly as they learned about the l~edicare Cata- sU'ophic Coverage Act. There has been much focus of late on the need for the reform of our Nation's health care system. I come to the floor today to express n~ heartfelt concern that if we ~ct in haste, and without a full un- d~,.rstanding of what the American plublic wo~d li~e in the way of health ~e reform, we very definitely ris~ the same response that we found with the ~edicare Cata~trophic Coverage Ac~.. Mr. President~ the state of our h*~th care delive~ system is increas- in~l~ on the minds of the American people, with good reason. Over 31 m~on Americaus lack h6alth CONGRESSIONAL RECORD -- SENATE Business ~nd Government health ex- pendltm:es eont~uue to escalate raDid- ly, with no end in sight. There is unequal access to medical services. A number of policy physicians have proposed t~eatments for these toms. Many of their proposals, I be- lieve, demonstrate a lack of under- standing of the problem and a com- plete d~regard for the views of the American people. Mr. President, I shudder at this thoughf~ because that's exactl~ what happened with the Medicare Catastrophic Coverage Act-- and look where that got us. l~r. President, America's health care sy~em is suffering from financial perteusion: explosive cost pressure which is pusl~.~ug every part of the system to the bre~ing point. Health care costs are the fastest rising compo- nent in our entire economy. From 198I to 1989, health care costs grew some 93.5 l~rcen~-whi~e general inflation for the same period rose only 44.8 per- cent. This is certainly re,on for con- corn. This year we v~l spend $~0 million on our health care system, 1~ percent of our GNP. By the year 2000, we are projected to spend $1.0 trillion, or 15 percent o~ our GNP. ~r. President, our health care system is able to deliver high quality services to aH Americans who need care in an equitable manner. It just does not do it. It should also reward L~uovation and eHicient de~ivery o~ ser~ices. Instead, it encourages defensive medicine; sh~fts uncompensated care costs to pri- vate payers; and forces hospitals and cIinics to compete in an unending med- ical arms race. As a society, we have allowed enor- mous layers of bureaucracy to be placed on the physician-patient rela- tiouship, resulting in tens of billions of health care do~lars spent on nonpa- tient-care activities. Worst of all, b~ minimizing the fi- nancial exposure of patients through fully paid insurance coverage, we have d~couraged personal responsibility for health and for the appropriate use of health services. Mr. President, so difficult is this burden for our people and businesses to be~r that th~s ~ear we are experi- encing an unprecedented movement aimed at national~z~g at le~ast some part of the health care system. Daily, we hear and read of the C~mdian system, of mandated health benefit plans, and of big business support for some form of national health insur- ance. The pressure to adopt such a system is growin~ to a fe~er pitch. I wonder, however, if th~e~Amerlcan people aren't being sold a blllof good~ Just wait till they figure this out. I just pray it is not after Congress has blindly stabbed in the dark--en~ctin~ some well-in- tended bu~ poorly conceived legisla- tion, as was the case w~th the Medi- care Cat~troph~c Coverage Act. August 2, 1~gl To their credit, our neighbors to the north have a health care system ttmt provides universal ~ccess to primary care and preventive services for all Ca- nadians. Providers are paid on a fee- for-service basis and there is little cost sharing ~or the patient. "I~ne taxpay- ers, however, certainly share the cost, There are some serious problems with the Canadian-style system that must be recognized: the Government controls costs by rationin~ services, and there is virtually no innovation. It is not a gre~t system if you have seri- ous health problems that could be well served by sophisticated technology or innovative treatment methods. In ad- dltion, most Canadians lack access to necessary diagnostic services--includ- ing the critical diagnostic procedures for detecting breast cancer, brain tumors, and sDin~l problems. Another point we often fail to ac- knowledge is that hi ~ddition to differ. ent levels of expectation regarding health care, the sociodemographic composition of Canada Ls different from the United States. For the most part, Canada. ]ust doesn't have to deal with the type and magnitude of prob- lems that we find, for example, in Washington, DC, as a result of the crime rate and the illlcit drug trade. l~r. President, i~ has been my experi- ence that the majority of those indi- cating SUPD0rt for a Canadian-style system are focusin~ on the availability of priraary care and the lower cost the doctors office. They are often aware of the lack of access to high- tech diagnostic end treatment services that we have come to expect as com- monplace, the higher taxes or the r~- tioning "that comes with a Canadian- style system. And, when they learn of these facts about the Canadian system, most quickly run the other way. This ought to be instructive to us, iV/r. President. There is another option for reform that some have been turning toward that is halfway to Cane~la. In fact, it's within our borders--the so-called l~as- sachusetts m!r~ ac!e. What a miracle. It required that businesses either provide a specific set of health benefits to their employees or render a tax to Caesar. It was a mandate, pure and sknple. And, it failed to ~cknowledge the reason why some small businesses did not provide insurance to their em- ployees was because they couldn't afford the premiums. Massachusetts ttunled a deaf ear to that /ssue. IYir. President, if any s~e business has an interest in seeing their employees cov- ered for health care expenses it is small business. After all, they don't have the size of work force that would permit them to move employees around wlthln the orgrmlzatlon when an employee gets sick. Me~v hailed it ~s the Mmssachusetts mfr~le. It is now known as the Massa- chusetts debacle. Ye~ some still want to repe~t l~. T14662-4650