[Congressional Record Volume 154, Number 122 (Thursday, July 24, 2008)]
[Senate]
[Pages S7291-S7299]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY (for himself and Mr. Grassley):
  S. 3327. A bill amend title XIX of the Social Security Act to improve 
the State plan amendment option for providing home and community-based 
services under the Medicaid program, and for other purposes; to the 
Committee on Finance.
  Mr. KERRY. Mr. President, every day millions of Americans are faced 
with significant challenges when it comes to meeting their own personal 
needs or caring for a loved one who needs significant support. Many 
elderly Americans and individuals of all ages with disabilities need 
long-term services and supports, such as assistance with dressing, 
bathing, preparing meals, and managing chronic conditions. They prefer 
to live and work in their community, and it is time that the Federal

[[Page S7292]]

Government and states act as better partners to provide improved access 
to home- and community-based long-term care services HCBS.
  The Medicaid program, administered by the states but jointly financed 
with the Federal Government, is our Nation's largest payer for long-
term care services. Medicaid spends about $100 billion per year on 
long-term services. Despite recognizing that per person spending is 
much lower in community settings, and that people generally prefer 
community services, Medicaid still spends 61 percent of its long-term 
services spending in institutional settings. This disparity is due, in 
large part, to a strong access and payment bias in the program for 
institutional care.
  Where Medicaid does offer HCBS, it is often in short supply, with 
more than 280,000 Medicaid beneficiaries on waiting lists for HCBS 
waiver services. Further, eligibility for HCBS waiver services requires 
beneficiaries to already have a very significant level of disability 
before gaining access they must meet a level of functional need that 
qualifies them for a nursing home. This not only contributes to the 
unmet needs of those in the community but it also prevents states from 
providing services that can help prevent beneficiaries from one day 
requiring high-cost institutional care. While institutionalized care 
may be an appropriate choice for some, it should be just that: a choice 
that individuals and families are allowed to make about the most 
appropriate setting for their own care.
  The result of Medicaid's ``institutional bias'' is that, according to 
the Georgetown Health Policy Institute, ``one in five persons living in 
the community with a need for assistance from others has unmet needs, 
endangering their health and demeaning their quality of life.'' This is 
simply unacceptable.
  The lack of long-term care options available to families has a 
significant impact on their lives. Many of my constituents are 
affected, as are countless Americans across the country. Take the 
parents living in Newton who continue to wait for their physically 
disabled daughter, Julia, to have the opportunity to live 
independently. Julia is a young adult and instead of starting out on 
her own, she must watch as her peers move away and begin their 
independent lives- something she yearns to do as well. Growing up, 
Julia was able to attend Newton schools and keep a similar schedule to 
other children in the community but now has limited social interaction, 
as there is no other option but to live at home with her parents. 
Julia's parents are her full time caregivers and would like to see her 
able to live in an environment more conducive to both her needs and 
their own. Community based care or home based care in an apartment she 
could share with a roommate are options Julia and her parents would 
mutually benefit from. As the opportunities for the future grow for her 
peers, Julia's options continue to shrink because housing and home 
based supports for adults with disabilities are limited at best. I have 
heard many stories similar to that of Julia, which emphasizes the 
urgency in which HCBS is needed. In addition to individual lives being 
put on hold, entire families must deal with the consequences of 
inadequate services available to their family members.
  Access to HCBS affects individuals in all stages of life, including 
Americans dealing with conditions such as Alzheimer's. Take Ann Bowers 
and Jay Sweatman for example. Without access to HCBS services, Jay, who 
suffers from early onset Alzheimer's, was forced to first move into 
assisted living and then a nursing home. By the time Jay was approved 
for HCBS it was too late and he was no longer able to live 
independently. Ann had worked tirelessly to coordinate her husband's 
care and get additional HCBS support but the process was so difficult 
that by the time help came, it was simply too late. This is just one 
case of many where early HCBS intervention would have not only saved 
time, money, and stress for family members, but would have made a 
significant impact on the quality of life and personal independence for 
Jay and Ann.
  So today, I am introducing with my colleague from the Finance 
Committee, Senator Grassley, the Empowered at Home Act, a bill that 
increases access to home and community based services by giving states 
new tools and incentives to make these services more available to those 
in need. It has four basic parts.
  First, it will improve the Medicaid HCBS State Plan Amendment Option 
by giving states more flexibility in determining eligibility for which 
services they can offer under the program, which will create greater 
options for individuals in need of long-term supports. In return we ask 
that states no longer cap enrollment and that services be offered 
throughout the entire state.
  Second, the bill ensures that the same spousal impoverishment 
protections offered for new nursing home beneficiaries will be in place 
for those opting for home and community based services. In addition, 
low-income recipients of home and community based services will be able 
to keep more of their assets when they become eligible for Medicaid, 
allowing them to stay in their community as long as possible.
  Third, the Empowered at Home Act addresses the financial needs of 
spouses and family members caring for a loved one by offering tax-
related provisions to support family caregivers and promote the 
purchase of meaningful private long-term care insurance.
  Finally, the bill seeks to improve the overall quality of home and 
community based services available by providing grants for states to 
invest in organizations and systems that can help to ensure a 
sufficient supply of high quality workers, promote health, and 
transform home and community based care to be more consumer-centered.
  I want to say a word about the Community Choice Act, legislation 
long-championed by Senator Harkin that would make HCBS a mandatory 
benefit in Medicaid. I am a strong supporter and co-sponsor of this 
landmark legislation, and look forward to working for its enactment as 
soon as possible. The legislation I am introducing today seeks to 
supplement--not supplant--the Community Choice Act by increasing access 
to HCBS for those who are disabled but not at a sufficient level of 
need to qualify for nursing home services. These two complimentary 
bills will finally make HCBS a right while vastly improving HCBS 
availability to vulnerable citizens of varying levels of disability.
  I would also like to thank a number of organizations who have been 
integral to the development of the Empowered at Home Act and who have 
endorsed it today, including the National Council on Aging, the Arc of 
the United States, United Cerebral Palsy, the American Association of 
Homes and Services for the Aging, the Alzheimer's Association, the 
National Association of Area Agencies on Aging, the American Geriatrics 
Society, ANCOR, the Trust for America's Health, and SEIU.
  Improving access to a range of long term care services for the 
elderly and Americans of all ages with disabilities is an issue that 
must not stray from the top of our Nation's health care priorities. I 
believe this legislation can move forward in a bi-partisan manner to 
dramatically improve access to high-quality home- and community-based 
care for the millions of Americans who are not receiving the 
significant supports and services they need.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3327

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Empowered 
     at Home Act of 2008''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

TITLE I--STRENGTHENING THE MEDICAID HOME AND COMMUNITY-BASED STATE PLAN 
                            AMENDMENT OPTION

Sec. 101. Removal of barriers to providing home and community-based 
              services under State plan amendment option for 
              individuals in need.
Sec. 102. State option to provide home and community-based services to 
              individuals for whom such services are likely to prevent, 
              delay, or decrease the likelihood of an individual's need 
              for institutionalized care.

[[Page S7293]]

Sec. 103. Implementation assistance grants for States electing to 
              provide home and community-based services under Medicaid 
              through the State plan amendment option.

TITLE II--STATE GRANTS TO FACILITATE HOME AND COMMUNITY-BASED SERVICES 
                           AND PROMOTE HEALTH

Sec. 201. Reauthorization of medicaid transformation grants and 
              expansion of permissible uses in order to facilitate the 
              provision of home and community-based and other long-term 
              care services.
Sec. 202. Health promotion grants.

                  TITLE III--LONG TERM CARE INSURANCE

Sec. 301. Treatment of premiums on qualified long-term care insurance 
              contracts.
Sec. 302. Credit for taxpayers with long-term care needs.
Sec. 303. Treatment of premiums on qualified long-term care insurance 
              contracts.
Sec. 304. Additional consumer protections for long-term care insurance.

          TITLE IV--PROMOTING AND PROTECTING COMMUNITY LIVING

Sec. 401. Mandatory application of spousal impoverishment protections 
              to recipients of home and community-based services.
Sec. 402. State authority to elect to exclude up to 6 months of average 
              cost of nursing facility services from assets or 
              resources for purposes of eligibility for home and 
              community-based services.

                         TITLE V--MISCELLANEOUS

Sec. 501. Improved data collection.
Sec. 502. GAO report on Medicaid home health services and the extent of 
              consumer self-direction of such services.

TITLE I--STRENGTHENING THE MEDICAID HOME AND COMMUNITY-BASED STATE PLAN 
                            AMENDMENT OPTION

     SEC. 101. REMOVAL OF BARRIERS TO PROVIDING HOME AND 
                   COMMUNITY-BASED SERVICES UNDER STATE PLAN 
                   AMENDMENT OPTION FOR INDIVIDUALS IN NEED.

       (a) Parity With Income Eligibility Standard for 
     Institutionalized Individuals.--Paragraph (1) of section 
     1915(i) of the Social Security Act (42 U.S.C. 1396n(i)) is 
     amended by striking ``150 percent of the poverty line (as 
     defined in section 2110(c)(5))'' and inserting ``300 percent 
     of the supplemental security income benefit rate established 
     by section 1611(b)(1)''.
       (b) Additional State Option to Provide Home and Community-
     Based Services to Individuals Eligible for Services Under a 
     Waiver.--Section 1915(i) of the Social Security Act (42 
     U.S.C. 1396n(i)) is amended by adding at the end the 
     following new paragraph:
       ``(6) State option to provide home and community-based 
     services to individuals eligible for services under a 
     waiver.--
       ``(A) In general.--A State that provides home and 
     community-based services in accordance with this subsection 
     to individuals who satisfy the needs-based criteria for the 
     receipt of such services established under paragraph (1)(A) 
     may, in addition to continuing to provide such services to 
     such individuals, elect to provide home and community-based 
     services in accordance with the requirements of this 
     paragraph to individuals who are eligible for home and 
     community-based services under a waiver approved for the 
     State under subsection (c), (d), or (e) or under section 1115 
     to provide such services, but only for those individuals 
     whose income does not exceed 300 percent of the supplemental 
     security income benefit rate established by section 
     1611(b)(1).
       ``(B) Application of same requirements for individuals 
     satisfying needs-based criteria.--Subject to subparagraph 
     (C), a State shall provide home and community-based services 
     to individuals under this paragraph in the same manner and 
     subject to the same requirements as apply under the other 
     paragraphs of this subsection to the provision of home and 
     community-based services to individuals who satisfy the 
     needs-based criteria established under paragraph (1)(A).
       ``(C) Authority to offer different type, amount, duration, 
     or scope of home and community-based services.--A State may 
     offer home and community-based services to individuals under 
     this paragraph that differ in type, amount, duration, or 
     scope from the home and community-based services offered for 
     individuals who satisfy the needs-based criteria established 
     under paragraph (1)(A), so long as such services are within 
     the scope of services described in paragraph (4)(B) of 
     subsection (c) for which the Secretary has the authority to 
     approve a waiver and do not include room or board.''.
       (c) Removal of Limitation on Scope of Services.--Paragraph 
     (1) of section 1915(i) of the Social Security Act (42 U.S.C. 
     1396n(i)), as amended by subsection (a), is amended by 
     striking ``or such other services requested by the State as 
     the Secretary may approve''
       (d) Optional Eligibility Category to Provide Full Medicaid 
     Benefits to Individuals Receiving Home and Community-Based 
     Services Under a State Plan Amendment.--
       (1) In general.--Section 1902(a)(10)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended--
       (A) in subclause (XVIII), by striking ``or'' at the end;
       (B) in subclause (XIX), by adding ``or'' at the end; and
       (C) by inserting after subclause (XIX), the following new 
     subclause:

       ``(XX) who are eligible for home and community-based 
     services under needs-based criteria established under 
     paragraph (1)(A) of section 1915(i), or who are eligible for 
     home and community-based services under paragraph (6) of such 
     section, and who will receive home and community-based 
     services pursuant to a State plan amendment under such 
     subsection;''.

       (2) Conforming amendments.--
       (A) Section 1903(f)(4) of the Social Security Act (42 
     U.S.C. 1396b(f)(4)) is amended in the matter preceding 
     subparagraph (A), by inserting ``1902(a)(10)(A)(ii)(XX),'' 
     after ``1902(a)(10)(A)(ii)(XIX),''.
       (B) Section 1905(a) of the Social Security Act (42 U.S.C. 
     1396d(a)) is amended in the matter preceding paragraph (1)--
       (i) in clause (xii), by striking ``or'' at the end;
       (ii) in clause (xiii), by adding ``or'' at the end; and
       (iii) by inserting after clause (xiii) the following new 
     clause:
       ``(xiv) individuals who are eligible for home and 
     community-based services under needs-based criteria 
     established under paragraph (1)(A) of section 1915(i), or who 
     are eligible for home and community-based services under 
     paragraph (6) of such section, and who will receive home and 
     community-based services pursuant to a State plan amendment 
     under such subsection,''.
       (e) Elimination of Option to Limit Number of Eligible 
     Individuals or Length of Period for Grandfathered Individuals 
     if Eligibility Criteria Is Modified.--Paragraph (1) of 
     section 1915(i) of such Act (42 U.S.C. 1396n(i)) is amended--
       (1) by striking subparagraph (C) and inserting the 
     following:
       ``(C) Projection of number of individuals to be provided 
     home and community-based services.--The State submits to the 
     Secretary, in such form and manner, and upon such frequency 
     as the Secretary shall specify, the projected number of 
     individuals to be provided home and community-based 
     services.''; and
       (2) in subclause (II) of subparagraph (D)(ii), by striking 
     ``to be eligible for such services for a period of at least 
     12 months beginning on the date the individual first received 
     medical assistance for such services'' and inserting ``to 
     continue to be eligible for such services after the effective 
     date of the modification and until such time as the 
     individual no longer meets the standard for receipt of such 
     services under such pre-modified criteria''.
       (f) Elimination of Option to Waive Statewideness.--
     Paragraph (3) of section 1915(i) of such Act (42 U.S.C. 
     1396n(3)) is amended by striking ``section 1902(a)(1) 
     (relating to statewideness) and''.
       (g) Effective Date.--The amendments made by this section 
     take effect on the first day of the first fiscal year quarter 
     that begins after the date of enactment of this Act.

     SEC. 102. STATE OPTION TO PROVIDE HOME AND COMMUNITY-BASED 
                   SERVICES TO INDIVIDUALS FOR WHOM SUCH SERVICES 
                   ARE LIKELY TO PREVENT, DELAY, OR DECREASE THE 
                   LIKELIHOOD OF AN INDIVIDUAL'S NEED FOR 
                   INSTITUTIONALIZED CARE.

       (a) State Plan Amendment Required.--
       (1) In general.--Section 1915 of the Social Security Act 
     (42 U.S.C. 1396n) is amended by adding at the end the 
     following new subsection:
       ``(k) State Plan Amendment Option to Provide Home and 
     Community-Based Services to Individuals for Whom Such 
     Services Are Likely to Prevent, Delay, or Decrease the 
     Likelihood of an Individual's Need for Institutionalized 
     Care.--
       ``(1) In general.--Subject to the succeeding provisions of 
     this subsection, a State that has an approved State plan 
     amendment under subsection (i) may provide, through a State 
     plan amendment for the provision of medical assistance for 
     home and community-based services that are within the scope 
     of services described in paragraph (4)(B) of subsection (c) 
     for which the Secretary has the authority to approve a waiver 
     and do not include room or board to individuals--
       ``(A) who are not otherwise eligible for medical assistance 
     under the State plan or under a waiver of such plan;
       ``(B) whose income does not exceed 300 percent of the 
     supplemental security income benefit rate established by 
     section 1611(b)(1); and
       ``(C) who satisfy such needs-based criteria for determining 
     eligibility for medical assistance for such services as the 
     State shall establish in accordance with paragraph (2).
       ``(2) Requirement for needs-based criteria.--In 
     establishing needs-based criteria for purposes of determining 
     eligibility for medical assistance for home and community-
     based services under this subsection, a State shall specify 
     the specific physical, mental, cognitive, or intellectual 
     impairments, or the inability of an individual to perform 1 
     or more specific activities of daily living (as defined in 
     section 7702B(c)(2)(B) of the Internal Revenue Code of 1986) 
     or the need for significant assistance to perform such 
     activities, for which the State determines that the provision 
     of home and community-based services are reasonably expected 
     to prevent, delay, or decrease the likelihood of an 
     individual's need for institutionalized care.
       ``(3) Application of same requirements for providing home 
     and community-based

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     services under subsection (i).--Subject to paragraphs (4) and 
     (5), a State shall provide home and community-based services 
     to individuals under this paragraph in the same manner and 
     subject to the same requirements as apply to the provision of 
     home and community-based services to individuals under 
     subsection (i).
       ``(4) Authority to limit number of individuals.--A State 
     may limit the number of individuals who are eligible to 
     receive home and community-based services under this 
     subsection and may establish waiting lists for the receipt of 
     such services.
       ``(5) Authority to offer different type, amount, duration, 
     or scope of home and community-based services.--A State may 
     offer home and community-based services to individuals under 
     this subsection that differ in type, amount, duration, or 
     scope from the home and community-based services offered for 
     individuals under paragraph (1)(A) of subsection (i) and, if 
     applicable, under paragraph (6) of such subsection.''.
       (2) Optional categorically needy group; state option to 
     limit benefits to home and community-based services or to 
     provide full medical assistance.--
       (A) In general.--Section 1902(a)(10) of the Social Security 
     Act (42 U.S.C. 1396a(a)(10)) is amended--
       (i) in subparagraph (A)(ii), as amended by section 
     101(d)(1)--

       (I) in subclause (XIX), by striking ``or'' at the end;
       (II) in subclause (XX), by adding ``or'' at the end; and
       (III) by inserting after subclause (XX), the following new 
     subclause:
       ``(XXI) who are eligible for home and community-based 
     services under section 1915(k) and who will receive home and 
     community-based services pursuant to a State plan amendment 
     under such subsection;''; and

       (ii) in the matter following subparagraph (G)--

       (I) by striking ``and (XIV)'' and inserting ``(XIV)''; and
       (II) by inserting ``, and (XV) at the option of the State, 
     the medical assistance made available to an individual 
     described in section 1915 (k) who is eligible for medical 
     assistance only because of subparagraph (A)(ii)(XXI) may be 
     limited to medical assistance for home and community-based 
     services described in a State plan amendment submitted under 
     that section'' before the semicolon.

       (B) Conforming amendments.--
       (i) Section 1903(f)(4) of the Social Security Act (42 
     U.S.C. 1396b(f)(4)), as amended by section 101(d)(2)(A), is 
     amended in the matter preceding subparagraph (A), by 
     inserting ``1902(a)(10)(A)(ii)(XXI),'' after 
     ``1902(a)(10)(A)(ii)(XX),''.
       (ii) Section 1905(a) of the Social Security Act (42 U.S.C. 
     1396d(a)), as amended by section 101(d)(2)(B), is amended in 
     the matter preceding paragraph (1)--

       (I) in clause (xiii), by striking ``or'' at the end;
       (II) in clause (xiv), by adding ``or'' at the end; and

       (iii) by inserting after clause (xiv) the following new 
     clause:
       ``(xv) who are eligible for home and community-based 
     services under section 1915(k) and who will receive home and 
     community-based services pursuant to a State plan amendment 
     under such subsection,''.
       (b) Effective Date.--The amendments made by this section 
     take effect on the first day of the first fiscal year quarter 
     that begins after the date of enactment of this Act.

     SEC. 103. IMPLEMENTATION ASSISTANCE GRANTS FOR STATES 
                   ELECTING TO PROVIDE HOME AND COMMUNITY-BASED 
                   SERVICES UNDER MEDICAID THROUGH THE STATE PLAN 
                   AMENDMENT OPTION.

       (a) Authority to Award Grants.--The Secretary of Health and 
     Human Services (in this section referred to as the 
     ``Secretary'') shall award grants to eligible States to 
     provide incentives to States for the implementation of State 
     plan amendments that meet the requirements of section 1915(i) 
     of the Social Security Act (42 U.S.C. 1396n(i)).
       (b) Eligible State.--For purposes of this section, an 
     eligible State is a State that--
       (1) has an approved State plan amendment described in 
     subsection (a); and
       (2) submits an application to the Secretary, in such form 
     and manner as the Secretary shall require, specifying the 
     costs the State will incur in implementing such amendment and 
     such additional information as the Secretary may require.
       (c) Amount and Duration of Grants.--
       (1) Amount.--The Secretary shall determine the amount to be 
     awarded all eligible States under this section for a fiscal 
     year based on the applications submitted by such States and 
     the amount available for such fiscal year under subsection 
     (d).
       (2) Limitation on duration of award.--A State may receive a 
     grant under this section for not more than 3 consecutive 
     fiscal years.
       (d) Appropriations.--There are appropriated, from any funds 
     in the Treasury not otherwise appropriated, $40,000,000 for 
     each of fiscal years 2009 through 2013 for making grants to 
     States under this section. Funds appropriated under this 
     subsection for a fiscal year shall remain available for 
     expenditure through September 30, 2013.

TITLE II--STATE GRANTS TO FACILITATE HOME AND COMMUNITY-BASED SERVICES 
                           AND PROMOTE HEALTH

     SEC. 201. REAUTHORIZATION OF MEDICAID TRANSFORMATION GRANTS 
                   AND EXPANSION OF PERMISSIBLE USES IN ORDER TO 
                   FACILITATE THE PROVISION OF HOME AND COMMUNITY-
                   BASED AND OTHER LONG-TERM CARE SERVICES.

       (a) 2-Year Reauthorization; Increased Funding.--Section 
     1903(z)(4)(A) of the Social Security Act (42 U.S.C. 
     1396b(z)(4)(A)) is amended--
       (1) in clause (i), by striking ``and'' at the end;
       (2) in clause (ii), by striking the period at the end and 
     inserting ``; and''; and
       (3) by inserting after clause (ii), the following new 
     clauses:
       ``(iii) $150,000,000 for fiscal year 2009; and
       ``(iv) $150,000,000 for fiscal year 2010.''.
       (b) Expansion of Permissible Uses.--Section 1903(z)(2) of 
     the Social Security Act (42 U.S.C. 1396b(z)(2)) is amended by 
     adding at the end the following new subparagraphs:
       ``(G)(i) Methods for ensuring the availability and 
     accessibility of home and community-based services in the 
     State, recognizing multiple delivery options that take into 
     account differing needs of individuals, through the creation 
     or designation (in consultation with organizations 
     representing elderly individuals and individuals of all ages 
     with physical, mental, cognitive, or intellectual 
     impairments, and organizations representing the long-term 
     care workforce, including organized labor, and health care 
     and direct service providers) of one or more statewide or 
     regional public entities or non-profit organizations (such as 
     fiscal intermediaries, agencies with choice, home care 
     commissions, public authorities, worker associations, 
     consumer-owned and controlled organizations (including 
     representatives of individuals with severe intellectual or 
     cognitive impairment), area agencies on aging, independent 
     living centers, aging and disability resource centers, or 
     other disability organizations) which may --
       ``(I) develop programs where qualified individuals provide 
     home- and community-based services while solely or jointly 
     employed by recipients of such services;
       ``(II) facilitate the training and recruitment of qualified 
     health and direct service professionals and consumers who use 
     services;
       ``(III) recommend or develop a system to set wages and 
     benefits, and recommend commensurate reimbursement rates;
       ``(IV) with meaningful ongoing involvement from consumers 
     and workers (or their respective representatives), develop 
     procedures for the appropriate screening of workers, create a 
     registry or registries of available workers, including 
     policies and procedures to ensure no interruption of care for 
     eligible individuals;
       ``(V) assist consumers in identifying workers;
       ``(VI) act as a fiscal intermediary;
       ``(VII) assist workers in finding employment, including 
     consumer-directed employment;
       ``(VIII) provide funding for disability organizations, 
     aging organizations, or other organizations, to assume roles 
     that promote consumers' ability to acquire the necessary 
     skills for directing their own services and financial 
     resources; or
       ``(IX) create workforce development plans on a regional or 
     statewide basis (or both), to ensure a sufficient supply of 
     qualified home and community-based services workers, 
     including reviews and analyses of actual and potential worker 
     shortages, training and retention programs for home and 
     community-based services workers (which may include, as 
     determined appropriate by the State, allowing participation 
     in such training to count as an allowable work activity under 
     the State temporary assistance for needy families program 
     funded under part A of title IV), and plans to assist 
     consumers with finding and retaining qualified workers.
       ``(ii) Nothing in clause (i) shall be construed as 
     prohibiting the use of funds made available to carry out this 
     subparagraph for start-up costs associated with any of the 
     activities described in subclauses (I) through (IX), as 
     requiring any consumer to hire workers who are listed in a 
     worker registry developed with such funds, or to limit the 
     ability of consumers to hire or fire their own workers.
       ``(H) Methods for providing an integrated and efficient 
     system of long-term care through a review of the Federal, 
     State, local, and private long-term care resources, services, 
     and supports available to elderly individuals and individuals 
     of all ages with physical, mental, cognitive, or intellectual 
     impairments and the development and implementation of a plan 
     to fully integrate such resources, services, and supports by 
     aggregating such resources, services, and supports to create 
     a consumer-centered and cost-effective resource and delivery 
     system and expanding the availability of home and community-
     based services, and that is designed to result in 
     administrative savings, consolidation of common activities, 
     and the elimination of redundant processes.''.
       (c) Allocation of Funds.--
       (1) Elimination of current law requirements for allocation 
     of funds.--Section 1903(z)(4)(B) of the Social Security Act 
     (42 U.S.C. 1396b(z)(4)(B)) is amended by striking the second 
     and third sentences.
       (2) Assurance of funds to facilitate the provision of home 
     and community-based services and integrated systems of long-

[[Page S7295]]

     term care.--Section 1903(z)(4)(B) of the Social Security Act 
     (42 U.S.C. 1396b(z)(4)(B)), as amended by paragraph (1), is 
     amended by inserting after the first sentence the following 
     new sentence: ``Such method shall provide that 50 percent of 
     such funds shall be allocated among States that design 
     programs to adopt the innovative methods described in 
     subparagraph (G) or (H) (or both) of paragraph (2).''.
       (d) Effective Date.--The amendments made by this section 
     take effect on October 1, 2008.

     SEC. 202. HEALTH PROMOTION GRANTS.

       (a) Definitions.--In this section:
       (1) Eligible medicaid beneficiary.--The term ``eligible 
     Medicaid beneficiary'' means an individual who is enrolled in 
     the State Medicaid plan under title XIX of the Social 
     Security Act and--
       (A) has attained the age of 60 and is not a resident of a 
     nursing facility; or
       (B) is an adult with a physical, mental, cognitive, or 
     intellectual impairment.
       (2) Eligible state.--The term ``eligible State'' means a 
     State that submits an application to the Secretary for a 
     grant under this section, in such form and manner as the 
     Secretary shall require.
       (3) Evidence- and community-based health promotion 
     program.--The term ``evidence- and community-based health 
     promotion program'' means a community-based program (such as 
     a program for chronic disease self-management, physical or 
     mental activity, falls prevention, smoking cessation, or 
     dietary modification) that has been objectively evaluated and 
     found to improve health outcomes or meet health promotion 
     goals by preventing, delaying, or decreasing the severity of 
     physical, mental, cognitive, or intellectual impairment and 
     that meets generally accepted standards for best professional 
     practice.
       (4) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.
       (b) Authority to Conduct Demonstration Project.--The 
     Secretary shall award grants on a competitive basis to 
     eligible States to conduct in accordance with this section an 
     evidence- and community-based health promotion program that 
     is designed to achieve the following objectives with respect 
     to eligible Medicaid beneficiaries:
       (1) Lifestyle changes.--To empower eligible Medicaid 
     beneficiaries to take more control over their own health 
     through lifestyle changes that have proven effective in 
     reducing the effects of chronic disease and slowing the 
     progression of disability.
       (2) Diffusion.--To mobilize the Medicaid, aging, 
     disability, public health, and nonprofit networks at the 
     State and local levels to accelerate the translation of 
     credible research into practice through the deployment of 
     low-cost evidence-based health promotion and disability 
     prevention programs at the community level.
       (c) Selection and Amount of Grant Awards.--In awarding 
     grants to eligible States under this section and determining 
     the amount of the awards, the Secretary shall--
       (1) take into consideration the manner and extent to which 
     the eligible State proposes to achieve the objectives 
     specified in subsection (b); and
       (2) give preference to eligible States proposing--
       (A) programs through public service provider organizations 
     or other organizations with expertise in serving eligible 
     Medicaid beneficiaries;
       (B) strong State-level collaboration across, Medicaid 
     agencies, State units on aging, State independent living 
     councils, State associations of Area Agencies on Aging, and 
     State agencies responsible for public health; or
       (C) interventions that have already demonstrated 
     effectiveness and replicability in a community-based, non-
     medical setting.
       (d) Use of Funds.--An eligible State awarded a grant under 
     this section shall use the funds awarded to develop, 
     implement, and sustain high quality evidence- and community-
     based health promotion programs. As a condition of being 
     awarded such a grant, an eligible State shall agree to--
       (1) implement such programs in at least 3 geographic areas 
     of the State; and
       (2) develop the infrastructure and partnerships that will 
     be necessary over the long-term to effectively embed 
     evidence-and community-based health promotion programs for 
     eligible Medicaid beneficiaries within the statewide health, 
     aging, disability, and long-term care systems.
       (e) Technical Assistance.--The Secretary shall provide 
     assistance to eligible States awarded grants under this 
     section, sub-grantees and their partners, program organizers, 
     and others in developing evidence- and community-based health 
     promotion programs.
       (f) Payments to Eligible States; Carryover of Unused Grant 
     Amounts.--
       (1) Payments.--For each calendar quarter of a fiscal year 
     that begins during the period for which an eligible State is 
     awarded a grant under this section, the Secretary shall pay 
     to the State from its grant award for such fiscal year an 
     amount equal to the lesser of--
       (A) the amount of qualified expenditures made by the State 
     for such quarter; or
       (B) the total amount remaining in such grant award for such 
     fiscal year (taking into account the application of paragraph 
     (2)).
       (2) Carryover of unused amounts.--Any portion of a State 
     grant award for a fiscal year under this section remaining 
     available at the end of such fiscal year shall remain 
     available for making payments to the State for the next 4 
     fiscal years, subject to paragraph (3).
       (3) Reawarding of certain unused amounts.--In the case of a 
     State that the Secretary determines has failed to meet the 
     conditions for continuation of a demonstration project under 
     this section in a succeeding year, the Secretary shall 
     rescind the grant award for each succeeding year, together 
     with any unspent portion of an award for prior years, and 
     shall add such amounts to the appropriation for the 
     immediately succeeding fiscal year for grants under this 
     section.
       (4) Preventing duplication of payment.--The payment under a 
     demonstration project with respect to qualified expenditures 
     shall be in lieu of any payment with respect to such 
     expenditures that would otherwise be paid to the State under 
     section 1903(a) of the Social Security Act (42 U.S.C. 
     1396a(a)). Nothing in the previous sentence shall be 
     construed as preventing a State from being paid under such 
     section for expenditures in a grant year for which payment is 
     available under such section 1903(a) after amounts available 
     to pay for such expenditures under the grant awarded to the 
     State under this section for the fiscal year have been 
     exhausted.
       (g) Evaluation.--Not later than 3 years after the date on 
     which the first grant is awarded to an eligible State under 
     this section, the Secretary shall, by grant, contract, or 
     interagency agreement, conduct an evaluation of the 
     demonstration projects carried out under this section that 
     measures the health-related, quality of life, and cost 
     outcomes for eligible Medicaid beneficiaries and includes 
     information relating to the quality, infrastructure, 
     sustainability, and effectiveness of such projects.
       (h) Appropriations.--There are appropriated, from any funds 
     in the Treasury not otherwise appropriated, the following 
     amounts to carry out this section:
       (1) Grants to states.--For grants to States, to remain 
     available until expended--
       (A) $4,000,000 for fiscal year 2009;
       (B) $6,000,000 for fiscal year 2010;
       (C) $8,000,000 for fiscal year 2011;
       (D) $10,000,000 for fiscal year 2012; and
       (E) $12,000,000 for fiscal year 2013.
       (2) Technical assistance.--For the provision of technical 
     assistance through such center in accordance with subsection 
     (e)--
       (A) $800,000 for fiscal year 2009;
       (B) $1,200,000 for fiscal year 2010;
       (C) $1,600,000 for fiscal year 2011;
       (D) $2,000,000 for fiscal year 2012; and
       (E) $2,400,000 for fiscal year 2013.
       (3) Evaluation.--For conducting the evaluation required 
     under subsection (g), $4,000,000 for fiscal year 2011.

                  TITLE III--LONG TERM CARE INSURANCE

     SEC. 301. TREATMENT OF PREMIUMS ON QUALIFIED LONG-TERM CARE 
                   INSURANCE CONTRACTS.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions) is amended by redesignating section 224 
     as section 225 and by inserting after section 223 the 
     following new section:

     ``SEC. 224. PREMIUMS ON QUALIFIED LONG-TERM CARE INSURANCE 
                   CONTRACTS.

       ``(a) In General.--In the case of an individual, there 
     shall be allowed as a deduction an amount equal to the 
     applicable percentage of the amount of eligible long-term 
     care premiums (as defined in section 213(d)(10)) paid during 
     the taxable year for coverage for the taxpayer and the 
     taxpayer's spouse and dependents under a qualified long-term 
     care insurance contract (as defined in section 7702B(b)).
       ``(b) Applicable Percentage.--For purposes of subsection 
     (a), the applicable percentage shall be determined in 
     accordance with the following table:

``For taxable years beginning in calendar year--                The ap-
                                                               plicable
                                                               percent-
                                                               age is--
  2010 or 2011......................................................25 
  2012..............................................................35 
  2013..............................................................65 
  2014 or thereafter...............................................100.

       ``(c) Coordination With Other Deductions.--Any amount paid 
     by a taxpayer for any qualified long-term care insurance 
     contract to which subsection (a) applies shall not be taken 
     into account in computing the amount allowable to the 
     taxpayer as a deduction under section 162(l) or 213(a).''.
       (b) Conforming Amendments.--
       (1) Section 62(a) of the Internal Revenue Code of 1986 is 
     amended by inserting before the last sentence at the end the 
     following new paragraph:
       ``(22) Premiums on qualified long-term care insurance 
     contracts.--The deduction allowed by section 224.''.
       (2) The table of sections for part VII of subchapter B of 
     chapter 1 of such Code is amended by striking the last item 
     and inserting the following new items:

``Sec. 224. Premiums on qualified long-term care insurance contracts.
``Sec. 225. Cross reference.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 302. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal

[[Page S7296]]

     Revenue Code of 1986 (relating to nonrefundable personal 
     credits) is amended by inserting after section 25D the 
     following new section:

     ``SEC. 25E. CREDIT FOR TAXPAYERS WITH LONG-TERM CARE NEEDS.

       ``(a) Allowance of Credit.--
       ``(1) In general.--There shall be allowed as a credit 
     against the tax imposed by this chapter for the taxable year 
     an amount equal to the applicable credit amount multiplied by 
     the number of applicable individuals with respect to whom the 
     taxpayer is an eligible caregiver for the taxable year.
       ``(2) Applicable credit amount.--For purposes of paragraph 
     (1), the applicable credit amount shall be determined in 
     accordance with the following table:

``For taxable years beginning in calendar year--                The ap-
                                                               plicable
                                                                 credit
                                                                 amount
                                                                   is--
  2010..........................................................$1,000 
  2011...........................................................1,500 
  2012...........................................................2,000 
  2013...........................................................2,500 
  2014 or thereafter.............................................3,000.

       ``(b) Limitation Based on Adjusted Gross Income.--
       ``(1) In general.--The amount of the credit allowable under 
     subsection (a) shall be reduced (but not below zero) by $100 
     for each $1,000 (or fraction thereof) by which the taxpayer's 
     modified adjusted gross income exceeds the threshold amount. 
     For purposes of the preceding sentence, the term `modified 
     adjusted gross income' means adjusted gross income increased 
     by any amount excluded from gross income under section 911, 
     931, or 933.
       ``(2) Threshold amount.--For purposes of paragraph (1), the 
     term `threshold amount' means--
       ``(A) $150,000 in the case of a joint return, and
       ``(B) $75,000 in any other case.
       ``(3) Indexing.--In the case of any taxable year beginning 
     in a calendar year after 2010, each dollar amount contained 
     in paragraph (2) shall be increased by an amount equal to the 
     product of--
       ``(A) such dollar amount, and
       ``(B) the medical care cost adjustment determined under 
     section 213(d)(10)(B)(ii) for the calendar year in which the 
     taxable year begins, determined by substituting `August 2009' 
     for `August 1996' in subclause (II) thereof.
     If any increase determined under the preceding sentence is 
     not a multiple of $50, such increase shall be rounded to the 
     next lowest multiple of $50.
       ``(c) Definitions.--For purposes of this section--
       ``(1) Applicable individual.--
       ``(A) In general.--The term `applicable individual' means, 
     with respect to any taxable year, any individual who has been 
     certified, before the due date for filing the return of tax 
     for the taxable year (without extensions), by a physician (as 
     defined in section 1861(r)(1) of the Social Security Act) as 
     being an individual with long-term care needs described in 
     subparagraph (B) for a period--
       ``(i) which is at least 180 consecutive days, and
       ``(ii) a portion of which occurs within the taxable year.
     Notwithstanding the preceding sentence, a certification shall 
     not be treated as valid unless it is made within the 39\1/2\ 
     month period ending on such due date (or such other period as 
     the Secretary prescribes).
       ``(B) Individuals with long-term care needs.--An individual 
     is described in this subparagraph if the individual meets any 
     of the following requirements:
       ``(i) The individual is at least 6 years of age and--

       ``(I) is unable to perform (without substantial assistance 
     from another individual) at least 3 activities of daily 
     living (as defined in section 7702B(c)(2)(B)) due to a loss 
     of functional capacity, or
       ``(II) requires substantial supervision to protect such 
     individual from threats to health and safety due to severe 
     cognitive impairment and is unable to perform, without 
     reminding or cuing assistance, at least 1 activity of daily 
     living (as so defined) or to the extent provided in 
     regulations prescribed by the Secretary (in consultation with 
     the Secretary of Health and Human Services), is unable to 
     engage in age appropriate activities.

       ``(ii) The individual is at least 2 but not 6 years of age 
     and is unable due to a loss of functional capacity to perform 
     (without substantial assistance from another individual) at 
     least 2 of the following activities: eating, transferring, or 
     mobility.
       ``(iii) The individual is under 2 years of age and requires 
     specific durable medical equipment by reason of a severe 
     health condition or requires a skilled practitioner trained 
     to address the individual's condition to be available if the 
     individual's parents or guardians are absent.
       ``(2) Eligible caregiver.--
       ``(A) In general.--A taxpayer shall be treated as an 
     eligible caregiver for any taxable year with respect to the 
     following individuals:
       ``(i) The taxpayer.
       ``(ii) The taxpayer's spouse.
       ``(iii) An individual with respect to whom the taxpayer is 
     allowed a deduction under section 151(c) for the taxable 
     year.
       ``(iv) An individual who would be described in clause (iii) 
     for the taxable year if section 151(c) were applied by 
     substituting for the exemption amount an amount equal to the 
     sum of the exemption amount, the standard deduction under 
     section 63(c)(2)(C), and any additional standard deduction 
     under section 63(c)(3) which would be applicable to the 
     individual if clause (iii) applied.
       ``(v) An individual who would be described in clause (iii) 
     for the taxable year if--

       ``(I) the requirements of clause (iv) are met with respect 
     to the individual, and
       ``(II) the requirements of subparagraph (B) are met with 
     respect to the individual in lieu of the support test under 
     subsection (c)(1)(D) or (d)(1)(C) of section 152.

       ``(B) Residency test.--The requirements of this 
     subparagraph are met if an individual has as his principal 
     place of abode the home of the taxpayer and--
       ``(i) in the case of an individual who is an ancestor or 
     descendant of the taxpayer or the taxpayer's spouse, is a 
     member of the taxpayer's household for over half the taxable 
     year, or
       ``(ii) in the case of any other individual, is a member of 
     the taxpayer's household for the entire taxable year.
       ``(C) Special rules where more than 1 eligible caregiver.--
       ``(i) In general.--If more than 1 individual is an eligible 
     caregiver with respect to the same applicable individual for 
     taxable years ending with or within the same calendar year, a 
     taxpayer shall be treated as the eligible caregiver if each 
     such individual (other than the taxpayer) files a written 
     declaration (in such form and manner as the Secretary may 
     prescribe) that such individual will not claim such 
     applicable individual for the credit under this section.
       ``(ii) No agreement.--If each individual required under 
     clause (i) to file a written declaration under clause (i) 
     does not do so, the individual with the highest adjusted 
     gross income shall be treated as the eligible caregiver.
       ``(iii) Married individuals filing separately.--In the case 
     of married individuals filing separately, the determination 
     under this subparagraph as to whether the husband or wife is 
     the eligible caregiver shall be made under the rules of 
     clause (ii) (whether or not one of them has filed a written 
     declaration under clause (i)).
       ``(d) Identification Requirement.--No credit shall be 
     allowed under this section to a taxpayer with respect to any 
     applicable individual unless the taxpayer includes the name 
     and taxpayer identification number of such individual, and 
     the identification number of the physician certifying such 
     individual, on the return of tax for the taxable year.
       ``(e) Taxable Year Must Be Full Taxable Year.--Except in 
     the case of a taxable year closed by reason of the death of 
     the taxpayer, no credit shall be allowable under this section 
     in the case of a taxable year covering a period of less than 
     12 months.''.
       (b) Conforming Amendments.--
       (1) Section 6213(g)(2) of the Internal Revenue Code of 1986 
     is amended by striking ``and'' at the end of subparagraph 
     (L), by striking the period at the end of subparagraph (M) 
     and inserting ``, and'', and by inserting after subparagraph 
     (M) the following new subparagraph:
       ``(N) an omission of a correct TIN or physician 
     identification required under section 25E(d) (relating to 
     credit for taxpayers with long-term care needs) to be 
     included on a return.''.
       (2) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 of such Code is amended by 
     inserting after the item relating to section 25D the 
     following new item:

``Sec. 25E. Credit for taxpayers with long-term care needs.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 303. TREATMENT OF PREMIUMS ON QUALIFIED LONG-TERM CARE 
                   INSURANCE CONTRACTS.

       (a) In General.--
       (1) Cafeteria plans.--The last sentence of section 125(f) 
     of the Internal Revenue Code of 1986 (defining qualified 
     benefits) is amended by inserting before the period at the 
     end ``; except that such term shall include the payment of 
     premiums for any qualified long-term care insurance contract 
     (as defined in section 7702B) to the extent the amount of 
     such payment does not exceed the eligible long-term care 
     premiums (as defined in section 213(d)(10)) for such 
     contract''.
       (2) Flexible spending arrangements.--Section 106 of such 
     Code (relating to contributions by an employer to accident 
     and health plans) is amended by striking subsection (c) and 
     redesignating subsection (d) as subsection (c).
       (b) Conforming Amendments.--
       (1) Section 6041 of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new subsection:
       ``(h) Flexible Spending Arrangement Defined.--For purposes 
     of this section, a flexible spending arrangement is a benefit 
     program which provides employees with coverage under which--
       ``(1) specified incurred expenses may be reimbursed 
     (subject to reimbursement maximums and other reasonable 
     conditions), and
       ``(2) the maximum amount of reimbursement which is 
     reasonably available to a participant for such coverage is 
     less than 500 percent of the value of such coverage.
     In the case of an insured plan, the maximum amount reasonably 
     available shall be determined on the basis of the underlying 
     coverage.''.

[[Page S7297]]

       (2) The following sections of such Code are each amended by 
     striking ``section 106(d)'' and inserting ``section 106(c)'': 
     sections 223(b)(4)(B), 223(d)(4)(C), 223(f)(3)(B), 
     3231(e)(11), 3306(b)(18), 3401(a)(22), 4973(g)(1), and 
     4973(g)(2)(B)(i).
       (3) Section 6041(f)(1) of such Code is amended by striking 
     ``(as defined in section 106(c)(2))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2009.

     SEC. 304. ADDITIONAL CONSUMER PROTECTIONS FOR LONG-TERM CARE 
                   INSURANCE.

       (a) Additional Protections Applicable to Long-Term Care 
     Insurance.--Subparagraphs (A) and (B) of section 7702B(g)(2) 
     of the Internal Revenue Code of 1986 (relating to 
     requirements of model regulation and Act) are amended to read 
     as follows:
       ``(A) In general.--The requirements of this paragraph are 
     met with respect to any contract if such contract meets--
       ``(i) Model regulation.--The following requirements of the 
     model regulation:

       ``(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 11 (relating to prohibitions against post-
     claims underwriting).
       ``(IX) Section 12 (relating to minimum standards).
       ``(X) Section 13 (relating to requirement to offer 
     inflation protection).
       ``(XI) Section 25 (relating to prohibition against 
     preexisting conditions and probationary periods in 
     replacement policies or certificates).
       ``(XII) The provisions of section 28 relating to contingent 
     nonforfeiture benefits, if the policyholder declines the 
     offer of a nonforfeiture provision described in paragraph (4) 
     of this subsection.

       ``(ii) Model act.--The following requirements of the model 
     Act:

       ``(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, if the policyholder declines the 
     offer of a nonforfeiture provision described in paragraph (4) 
     of this subsection.

       ``(B) Definitions.--For purposes of this paragraph--
       ``(i) Model regulation.--The term `model regulation' means 
     the long-term care insurance model regulation promulgated by 
     the National Association of Insurance Commissioners (as 
     adopted as of December 2006).
       ``(ii) Model act.--The term `model Act' means the long-term 
     care insurance model Act promulgated by the National 
     Association of Insurance Commissioners (as adopted as of 
     December 2006).
       ``(iii) Coordination.--Any provision of the model 
     regulation or model Act listed under clause (i) or (ii) of 
     subparagraph (A) shall be treated as including any other 
     provision of such regulation or Act necessary to implement 
     the provision.
       ``(iv) Determination.--For purposes of this section and 
     section 4980C, the determination of whether any requirement 
     of a model regulation or the model Act has been met shall be 
     made by the Secretary.''.
       (b) Excise Tax.--Paragraph (1) of section 4980C(c) of the 
     Internal Revenue Code of 1986 (relating to requirements of 
     model provisions) is amended to read as follows:
       ``(1) Requirements of model provisions.--
       ``(A) Model regulation.--The following requirements of the 
     model regulation must be met:
       ``(i) Section 9 (relating to required disclosure of rating 
     practices to consumer).
       ``(ii) Section 14 (relating to application forms and 
     replacement coverage).
       ``(iii) Section 15 (relating to reporting requirements).
       ``(iv) Section 22 (relating to filing requirements for 
     marketing).
       ``(v) Section 23 (relating to standards for marketing), 
     including inaccurate completion of medical histories, other 
     than paragraphs (1), (6), and (9) of section 23C.
       ``(vi) Section 24 (relating to suitability).
       ``(vii) Section 26 (relating to policyholder 
     notifications).
       ``(viii) Section 27 (relating to the right to reduce 
     coverage and lower premiums).
       ``(ix) Section 31 (relating to standard format outline of 
     coverage).
       ``(x) Section 32 (relating to requirement to deliver 
     shopper's guide).
       ``(B) Model act.--The following requirements of the model 
     Act must be met:
       ``(i) Section 6F (relating to right to return).
       ``(ii) Section 6G (relating to outline of coverage).
       ``(iii) Section 6H (relating to requirements for 
     certificates under group plans).
       ``(iv) Section 6J (relating to policy summary).
       ``(v) Section 6K (relating to monthly reports on 
     accelerated death benefits).
       ``(vi) Section 7 (relating to incontestability period).
       ``(vii) Section 9 (relating to producer training 
     requirements).
       ``(C) Definitions.--For purposes of this paragraph, the 
     terms `model regulation' and `model Act' have the meanings 
     given such terms by section 7702B(g)(2)(B).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to policies issued more than 1 year after the 
     date of the enactment of this Act.

          TITLE IV--PROMOTING AND PROTECTING COMMUNITY LIVING

     SEC. 401. MANDATORY APPLICATION OF SPOUSAL IMPOVERISHMENT 
                   PROTECTIONS TO RECIPIENTS OF HOME AND 
                   COMMUNITY-BASED SERVICES.

       (a) In General.--Section 1924(h)(1)(A) of the Social 
     Security Act (42 U.S.C. 1396r-5(h)(1)(A)) is amended by 
     striking ``(at the option of the State)is described in 
     section 1902(a)(10)(A)(ii)(VI)'' and inserting ``is eligible 
     for medical assistance for home and community-based services 
     under subsection (c), (d), (e), (i), or (k) of section 
     1915''.
       (b) Effective Date.--The amendment made by subsection (a) 
     takes effect on October 1, 2008.

     SEC. 402. STATE AUTHORITY TO ELECT TO EXCLUDE UP TO 6 MONTHS 
                   OF AVERAGE COST OF NURSING FACILITY SERVICES 
                   FROM ASSETS OR RESOURCES FOR PURPOSES OF 
                   ELIGIBILITY FOR HOME AND COMMUNITY-BASED 
                   SERVICES.

       (a) In General.--Section 1917 of the Social Security Act 
     (42 U.S.C. 1396p) is amended by adding at the end the 
     following new subsection:
       ``(i) State Authority To Exclude Up to 6 Months of Average 
     Cost of Nursing Facility Services From Home and Community-
     Based Services Eligibility Determinations.--Nothing in this 
     section or any other provision of this title, shall be 
     construed as prohibiting a State from excluding from any 
     determination of an individual's assets or resources for 
     purposes of determining the eligibility of the individual for 
     medical assistance for home and community-based services 
     under subsection (c), (d), (e), (i), or (k) of section 1915 
     (if a State imposes an limitation on assets or resources for 
     purposes of eligibility for such services), an amount equal 
     to the product of the amount applicable under subsection 
     (c)(1)(E)(ii)(II) (at the time such determination is made) 
     and such number, not to exceed 6, as the State may elect.''.
       (b) Rule of Construction.--Nothing in the amendment made by 
     subsection (a) shall be construed as affecting a State's 
     option to apply less restrictive methodologies under section 
     1902(r)(2) for purposes of determining income and resource 
     eligibility for individuals specified in that section.
       (c) Effective Date.--The amendment made by subsection (a) 
     takes effect on October 1, 2008.

                         TITLE V--MISCELLANEOUS

     SEC. 501. IMPROVED DATA COLLECTION.

       (a) Secretarial Requirement To Revise Data Reporting Forms 
     and Systems To Ensure Uniform and Consistent Reporting by 
     States.--Not later than 6 months after the date of enactment 
     of this Act, the Secretary of Health and Human Services, 
     acting through the Administrator of the Centers for Medicare 
     & Medicaid Services, shall revise CMS Form 372, CMS Form 64, 
     and CMS Form 64.9 (or any successor forms) and the Medicaid 
     Statistical Information Statistics (MSIS) claims processing 
     system to ensure that, with respect to any State that 
     provides medical assistance to individuals under a waiver or 
     State plan amendment approved under subsection (c), (d), (e), 
     (i), (j), or (k) of section 1915 of the Social Security Act 
     (42 U.S.C. 1396n), the State reports to the Secretary, not 
     less than annually and in a manner that is consistent and 
     uniform for all States (and, in the case of medical 
     assistance provided under a waiver or State plan amendment 
     under any such subsection for home and community-based 
     services, in a manner that is consistent and uniform with the 
     data required to be reported for purposes of monitoring or 
     evaluating the provision of such services under the State 
     plan or under a waiver approved under section 1115 of the 
     Social Security Act (42 U.S.C. 1315) to provide such 
     services) the following data:
       (1) The total number of individuals provided medical 
     assistance for such services under each waiver to provide 
     such services conducted by the State and each State plan 
     amendment option to provide such services elected by the 
     State.
       (2) The total amount of expenditures incurred for such 
     services under each such waiver and State plan amendment 
     option, disaggregated by expenditures for medical assistance 
     and administrative or other expenditures.
       (3) The types of such services provided by the State under 
     each such waiver and State plan amendment option.
       (4) The number of individuals on a waiting list (if any) to 
     be enrolled under each such waiver and State plan amendment 
     option or to receive services under each such waiver and 
     State plan amendment option.
       (5) With respect to home health services, private duty 
     nursing services, case management services, and 
     rehabilitative services provided under each such waiver and 
     State plan amendment option, the total number of individuals 
     provided each type of such services, the total amount of 
     expenditures incurred for each type of services, and whether

[[Page S7298]]

     each such service was provided for long-term care or acute 
     care purposes.
       (b) Public Availability.--Not later than 6 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services, acting through the Administrator of the 
     Centers for Medicare & Medicaid Services, shall make publicly 
     available, in a State identifiable manner, the data described 
     in subsection (a) through an Internet website and otherwise 
     as the Secretary determines appropriate.

     SEC. 502. GAO REPORT ON MEDICAID HOME HEALTH SERVICES AND THE 
                   EXTENT OF CONSUMER SELF-DIRECTION OF SUCH 
                   SERVICES.

       (a) Study.--The Comptroller General of the United States 
     shall study the provision of home health services under State 
     Medicaid plans under title XIX of the Social Security Act. 
     Such study shall include an examination of the extent to 
     which there are variations among the States with respect to 
     the provision of home health services in general under State 
     Medicaid plans, including the extent to which such plans 
     impose limits on the types of services that a home health 
     aide may provide a Medicaid beneficiary and the extent to 
     which States offer consumer self-direction of such services 
     or allow for other consumer-oriented policies with respect to 
     such services.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Comptroller General shall submit a 
     report to Congress on the results of the study conducted 
     under subsection (a), together with such recommendations for 
     legislative or administrative changes as the Comptroller 
     General determines appropriate in order to provide home 
     health services under State Medicaid plans in accordance with 
     identified best practices for the provision of such services.

  Mr. GRASSLEY. Mr. President, I am pleased to join my colleague 
Senator Kerry today to introduce the Empowered at Home Act. This bill 
is a continuation of efforts that I undertook in 2005 to improve access 
to home and community based services for those needing long-term care. 
This is an important piece of legislation that continues our efforts to 
make cost-effective home and community based care options more 
available to those who need it.
  In 2005, I introduced the Improving Long-term Care Choices Act with 
Senator Bayh. That legislation set forth a series of proposals aimed at 
improving the accessibility of long-term care insurance and promoting 
awareness about the protection that long-term care insurance can offer. 
It also sought to broaden the availability of the types of long-term 
care services such as home and community-based care, which many people 
prefer to institutional care.
  The year 2005 ended up being a very important year for health policy 
as it relates to Americans who need extensive care. In the Deficit 
Reduction Act of 2005, Congress passed into law the Family Opportunity 
Act, the Money Follows the Person initiative, and many critical pieces 
of the Improving Long-term Care Choices Act. With the bill I am 
introducing today with Senator Kerry, I hope to set us on the path to 
completing the work we started in 2005.
  Making our long-term care system more efficient is a critical goal as 
we consider the future of health care. There are more than 35 million 
Americans, roughly 12 percent of the U.S. population, over the age of 
65. This number is expected to increase dramatically over the next few 
decades as the baby boomers age and life expectancy increases. 
According to the U.S. Administration on Aging, by the year 2030, there 
will be more than 70 million elderly persons in the United States. As 
the U.S. population ages, more and more Americans will require long-
term care services.
  The need for long-term care will also be affected by the number of 
individuals under the age of 65 who may require a lifetime of care. 
Currently, almost half of all Americans who need long-term care 
services are individuals with disabilities under the age of 65. This 
number includes over 5 million working-age adults and approximately 
400,000 children.
  Long-term care for elderly and disabled individuals, including care 
at home and in nursing homes, represents almost 40 percent of Medicaid 
expenditures. Contrary to general assumptions, it is Medicaid, not 
Medicare, that pays for the largest portion of long-term care for the 
elderly. Over 65 percent of Medicaid long-term care expenditures 
support elderly and disabled individuals in nursing facilities and 
institutions. Although most people who need long-term care prefer to 
remain at home, Medicaid spending for long-term care remains heavily 
weighted toward institutional care.
  Section 6086 of the Deficit Reduction Act of 2005 (DRA, P.L. 109-171) 
was based on the Improving Long-term Care Choices Act. The DRA 
provision authorized a new optional benefit under Medicaid that allows 
States to extend home and community-based services to Medicaid 
beneficiaries under the section 1915(i) Home and Community-Based 
Services State Option. Under this authority, States can offer Medicaid-
covered home and community-based services under a State's Medicaid plan 
without obtaining a section 1915(c) home and community-based waiver. 
Eligibility for these section 1915(i) services may be extended only to 
Medicaid beneficiaries already enrolled in the program whose income 
does not exceed 150 percent of the Federal poverty level.
  To date, only one State, my own State of Iowa, has sought to take 
advantage of the provision authorized through the DRA. While we had 
hoped far more States would participate, we know that the relatively 
low income cap, 150 percent, in the DRA provision creates an 
administrative complexity that has not made the option appealing for 
States.
  In this bill we are introducing today, the income eligibility 
standard would be raised for access to covered services under section 
1915(i) to persons who qualify for Medicaid because their income does 
not exceed a specified level established by the State up to 300 percent 
of the maximum Supplemental Security Income, SSI, payment applicable to 
a person living at home. This will significantly increase the number of 
people eligible for these services. States will be able to align their 
institutional and home and community-based care income eligibility 
levels.
  The bill would also establish two new optional eligibility pathways 
into Medicaid. These groups would be eligible for section 1915(i) home 
and community-based services as well as services offered under a 
State's broader Medicaid program. Under this bill, States with an 
approved 1915(k) State plan amendment would have the option to extend 
Medicaid eligibility to individuals: (1) who are not otherwise eligible 
for medical assistance; (2) whose income does not exceed 300 percent of 
the supplemental security income benefit rate; and (3) who would 
satisfy State-established needs-based criteria based upon a State's 
determination that the provision of home and community-based services 
would reasonably be expected to prevent, delay, or decrease the need 
for institutionalized care. Under this new eligibility pathway, States 
could choose to either limit Medicaid benefits to those home and 
community-based services offered under section 1915(k) or allow 
eligibles to access services available under a State's broader Medicaid 
program in addition to the 1915(k) benefits. These changes will give 
the States the option of exploring the use of an interventional use of 
home and community-based services. If States have the flexibility to 
provide the benefit as contemplated in the bill, they can try to delay 
the need for institutional care and people in their homes longer.
  As the number of Americans reaching retirement age grows 
proportionally larger, ultimately the number of Americans needing more 
extensive care will grow. Many of those Americans will look to Medicaid 
for assistance. States need more tools to provide numerous options to 
people in need so that they can stay in their own homes as long as 
possible.
  The cost of providing long-term care in an institutional setting is 
far more expensive care than providing care in the home. States will 
benefit from having options before them that allow them to keep people 
appropriately in home settings longer. The more States learn how to use 
those tools, the more states and ultimately the Federal taxpayer will 
benefit from reduced costs for institutional care.
  I am also pleased that this bill will include key provisions from S. 
2337, the Long-Term Care Affordability and Security Act of 2007. The 
bill includes important tax provisions that I introduced in previous 
Congresses as well--most recently, the Improving Long-term Care Choices 
Act of 2005, introduced in the 109 Congress.
  Research shows that the elderly population will nearly double by 
2030. By 2050, the population of those aged 85

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and older will have grown by more than 300 percent. Research also shows 
that the average age at which individuals need long-term care services, 
such as home health care or a private room at a nursing home, is 75. 
Currently, the average annual cost for a private room at a nursing home 
is more than $75,000. This cost is expected to be in excess of $140,000 
by 2030.
  Based on these facts, we can see that our Nation needs to prepare its 
citizens for the challenges they may face in old age. One way to 
prepare for these challenges is by encouraging more Americans to obtain 
long-term care insurance coverage. To date, only 10 percent of seniors 
have long-term care insurance policies, and only 7 percent of all 
private-sector employees are offered long-term care insurance as a 
voluntary benefit.
  Under current law, employees may pay for certain health-related 
benefits, which may include health insurance premiums, co-pays, and 
disability or life insurance, on a pre-tax basis under cafeteria plans 
and flexible spending arrangements, ``FSAs''. Essentially, an employee 
may elect to reduce his or her annual salary to pay for these benefits, 
and the employee doesn't pay taxes on the amounts used to pay these 
costs. Employees, however, are explicitly prohibited from paying for 
the cost of long-term care insurance coverage tax free.
  Our bill would allow employers, for the first time, to offer 
qualified long-term care insurance to employees under FSAs and 
cafeteria plans. This means employees would be permitted to pay for 
qualified long-term care insurance premiums on a tax-free basis. This 
would make it easier for employees to purchase long-term care 
insurance, which many find unaffordable. This should also encourage 
younger individuals to purchase long-term care insurance. The younger 
the person is at the time the long-care insurance contract is 
purchased, the lower the insurance premium.
  Our bill also allows an individual taxpayer to deduct the cost of 
their long-term care insurance policy. In other words, the individual 
can reduce their gross income by the premiums that they pay for a long-
term care policy, and therefore, pay less in taxes. This tax benefit 
for long-term care insurance should encourage more individuals to 
purchase these policies. It certainly makes a policy more affordable, 
especially for younger individuals. This would allow a middle-aged 
taxpayer to start planning for the future now.
  Finally, a provision that is included in our bill that I am really 
proud of is one that provides a tax credit to long-term caregivers. 
Long-term caregivers could include the taxpayer, him- or herself. 
Senator Kerry and I recognize that these taxpayers--who have long-term 
care needs, yet are taking care of themselves--should be provided extra 
assistance. Also, taxpayers taking care of a family member with long-
term care needs would also be eligible for the tax credit. These 
taxpayers should be given a helping hand. As our population continues 
to age, the least that we can do is provide a tax benefit for these 
struggling individuals.
                                 ______