Title II, SEC. 2322. REQUIREMENTS RELATING TO COVERAGE. (a) In General. The Secretary, after considering (where appropriate) recommendations of the Advisory Council, shall promulgate regulations establishing requirements with respect to the terms of and benefits under long-term care insurance policies, which shall include at a minimum the requirements specified in this section. (b) Limitations on Preexisting Condition Exclusions. (1) Initial policies. A long-term care insurance policy may not exclude or limit coverage for any service or benefit, the need for which is the result of a medical condition or disability because an insured individual received medical treatment for, or was diagnosed as having, such condition before the issuance of the policy, unless (A) the insurer, prior to issuance of the policy, determines and documents (with evidence including written evidence that such condition has been treated or diagnosed by a qualified health care professional) that the insured individual had such condition during the 6-month period (or such longer period as the Secretary may specify) ending on the effective date of the policy; and (B) the need or such service or benefit begins within 6 months (or such longer period as the Secretary may specify) following the effective date of the policy. (2) Replacement policies. Solely for purposes of the requirements of paragraph (1), with respect to an insured individual, the effective date of a long-term care insurance policy issued to replace a previous policy, with respect to benefits which are the same as or substantially equivalent to benefits under such previous policy, shall be considered to be the effective date of such previous policy with respect to such individual. (c) Limiting Conditions on Benefits. (1) In general. A long-term care insurance policy may not (A) condition eligibility for benefits for a type of service on the need for or receipt of any other type of service (such as prior hospitalization or institutionalization, or a higher level of care than the care for which benefits are covered); (B) condition eligibility for any benefit (where the need for such benefit has been established by an independent assessment of impairment) on any particular medical diagnosis (including any acute condition) or on one of a group of diagnoses; (C) condition eligibility for benefits furnished by licensed or certified providers on compliance by such providers with conditions not required under Federal or State law; or (D) condition coverage of any service on provision of such service by a provider, or in a setting, providing a higher level of care than that required by an insured individual. (2) Home care or community-based services. A long-term care insurance policy that provides benefits for any home care or community-based services provided in a setting other than a residential care facility (A) may not limit such benefits to services provided by registered nurses or licensed practical nurses; (B) may not limit such benefits to services furnished by persons or entities participating in programs under titles XVIII and XIX of the Social Security Act and in part 1 of this subtitle; and (C) must provide, at a minimum, benefits for personal assistance with activities of daily living, home health care, adult day care, and respite care. (3) Nursing facility services. A long-term care insurance policy that provides benefits for any nursing facility services (A) must provide benefits for such services provided by all types of nursing facilities licensed by the State, and (B) may provide benefits for care in other residential facilities. (4) Prohibition on discrimination by diagnosis. A long-term care insurance policy may not provide for treatment of (A) Alzheimer's disease or any other progressive degenerative dementia of an organic origin, (B) any organic or inorganic mental illness, (C) mental retardation or any other cognitive or mental impairment, or (D) HIV infection or AIDS, different from the treatment of any other medical condition for purposes of determining whether threshold conditions for the receipt of benefits have been met, or the amount of benefits under the policy. (d) Inflation Protection. (1) Requirement to offer. An insurer offering for sale any long-term care insurance policy shall be required to afford the purchaser the option to obtain coverage under such policy (upon payment of increased premiums) of annual increases in benefits at rates in accordance with paragraph (2). (2) Rate increase in benefits. For purposes of paragraph (1), the benefits under a policy for each year shall be increased by a percentage of the full value of benefits under the policy for the previous year, which shall be not less than 5 percent of such value (or such other rate of increase as may be determined by the Secretary to be adequate to offset increases in the costs of long-term care services for which coverage is provided under the policy). (3) Requirement of written rejection. Inflation protection in accordance with paragraph (1) may be excluded from the coverage under a policy only if the insured individual (or, if different, the person responsible for payment of premiums has rejected in writing the option to obtain such coverage.