§ 4980C. — Requirements for issuers of qualified longterm care insurance contracts.
[Laws in effect as of January 7, 2003]
[Document not affected by Public Laws enacted between
January 7, 2003 and December 19, 2003]
[CITE: 26USC4980C]
TITLE 26--INTERNAL REVENUE CODE
Subtitle D--Miscellaneous Excise Taxes
CHAPTER 43--QUALIFIED PENSION, ETC., PLANS
Sec. 4980C. Requirements for issuers of qualified long-term care
insurance contracts
(a) General rule
There is hereby imposed on any person failing to meet the
requirements of subsection (c) or (d) a tax in the amount determined
under subsection (b).
(b) Amount
(1) In general
The amount of the tax imposed by subsection (a) shall be $100
per insured for each day any requirement of subsection (c) or (d) is
not met with respect to each qualified long-term care insurance
contract.
(2) Waiver
In the case of a failure which is due to reasonable cause and
not to willful neglect, the Secretary may waive part or all of the
tax imposed by subsection (a) to the extent that payment of the tax
would be excessive relative to the failure involved.
(c) Responsibilities
The requirements of this subsection are as follows:
(1) Requirements of model provisions
(A) Model regulation
The following requirements of the model regulation must be
met:
(i) Section 13 (relating to application forms and
replacement coverage).
(ii) Section 14 (relating to reporting requirements),
except that the issuer shall also report at least annually
the number of claims denied during the reporting period for
each class of business (expressed as a percentage of claims
denied), other than claims denied for failure to meet the
waiting period or because of any applicable preexisting
condition.
(iii) Section 20 (relating to filing requirements for
marketing).
(iv) Section 21 (relating to standards for marketing),
including inaccurate completion of medical histories, other
than sections 21C(1) and 21C(6) thereof, except that--
(I) in addition to such requirements, no person
shall, in selling or offering to sell a qualified long-
term care insurance contract, misrepresent a material
fact; and
(II) no such requirements shall include a
requirement to inquire or identify whether a prospective
applicant or enrollee for long-term care insurance has
accident and sickness insurance.
(v) Section 22 (relating to appropriateness of
recommended purchase).
(vi) Section 24 (relating to standard format outline of
coverage).
(vii) Section 25 (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), except
that such section shall also apply to denials of
applications and any refund shall be made within 30 days of
the return or denial.
(ii) Section 6G (relating to outline of coverage).
(iii) Section 6H (relating to requirements for
certificates under group plans).
(iv) Section 6I (relating to policy summary).
(v) Section 6J (relating to monthly reports on
accelerated death benefits).
(vi) Section 7 (relating to incontestability period).
(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).
(2) Delivery of policy
If an application for a qualified long-term care insurance
contract (or for a certificate under such a contract for a group) is
approved, the issuer shall deliver to the applicant (or policyholder
or certificateholder) the contract (or certificate) of insurance not
later than 30 days after the date of the approval.
(3) Information on denials of claims
If a claim under a qualified long-term care insurance contract
is denied, the issuer shall, within 60 days of the date of a written
request by the policyholder or certificateholder (or
representative)--
(A) provide a written explanation of the reasons for the
denial, and
(B) make available all information directly relating to such
denial.
(d) Disclosure
The requirements of this subsection are met if the issuer of a long-
term care insurance policy discloses in such policy and in the outline
of coverage required under subsection (c)(1)(B)(ii) that the policy is
intended to be a qualified long-term care insurance contract under
section 7702B(b).
(e) Qualified long-term care insurance contract defined
For purposes of this section, the term ``qualified long-term care
insurance contract'' has the meaning given such term by section 7702B.
(f) Coordination with State requirements
If a State imposes any requirement which is more stringent than the
analogous requirement imposed by this section or section 7702B(g), the
requirement imposed by this section or section 7702B(g) shall be treated
as met if the more stringent State requirement is met.
(Added Pub. L. 104-191, title III, Sec. 326(a), Aug. 21, 1996, 110 Stat.
2065.)
Effective Date
Section 327 of title III of Pub. L. 104-191 provided that:
``(a) In General.--The provisions of, and amendments made by, this
part [part II (Secs. 325-327) of subtitle C of title III of Pub. L. 104-
191, enacting this section and amending section 7702B of this title]
shall apply to contracts issued after December 31, 1996. The provisions
of section 321(f) [set out as an Effective Date note under section 7702B
of this title] (relating to transition rule) shall apply to such
contracts.
``(b) Issuers.--The amendments made by section 326 [enacting this
section] shall apply to actions taken after December 31, 1996.''
Section Referred to in Other Sections
This section is referred to in sections 101, 7702B of this title.
