To amend title XIX of the Social Security Act to restrict imposition of Medicaid liens and Medicaid estate recovery for long-term care services in the case of certain individuals who have received benefits under long-term care insurance policies for at least 3 years, and to amend the Internal Revenue Code of 1986 to allow the carryover of reimbursement maximums for flexible spending arrangements, to allow the reimbursement of long-term care insurance premiums by FSA's, and to repeal the inclusion in income of long-term care coverage provided through FSA's.

Amends title XIX (Medicaid) of the Social Security Act to prohibit the imposition of Medicaid home liens and Medicaid estate recovery for long-term care services in the case of an individual who has received benefits under a qualified long-term care insurance policy for at least three years during the five-year period ending on the date of provision of such services.

Amends the Internal Revenue Code to: (1) repeal the inclusion in an employee's gross income of employer-provided coverage (through a flexible spending or similar arrangement (FSA)) of qualified long-term care services; (2) allow the carryover of amounts in excess of the maximum amount of reimbursement under an FSA; and (3) exclude from gross income the reimbursement of long-term care insurance premiums by FSAs (as well as the reimbursement of health insurance premiums during unemployment).