Amendment #873 to H4000
Medicaid Life Settlements
Mr. Mariano of Quincy moves to amend the bill by adding the following sections:
SECTION XXXX. Chapter 175 of the General Laws is hereby amended by inserting after section 223F the following section:-
Section 223G. (a) (1) The owner of a life insurance policy, as those terms are defined in Chapter 175 of the General Laws, section 212, with a face value in excess of $10,000, may enter into a life settlement contract pursuant to Chapter 175 of the General Laws, section 213 to 223F, inclusive, in exchange for payments directly to a health care long-term care service provider for long-term care services, hereinafter defined to include home health care, assisted living and nursing home services, as well as any other service or support deemed a long-term care service by the Department of Health and Human Services for the purposes of this section pursuant to regulation, for the recipient of such long-term care services as of the effective date of the life settlement contract in accordance with this section.
(2) To the extent allowable under state or federal law, the proceeds of a life settlement contract entered into pursuant to this section shall not be considered as a resource or asset in determining a Medicaid applicant’s or recipient’s eligibility for Medicaid and shall only be used as allowed for long-term care services in accordance with this section.
(3) No state or federal Medicaid funds can be used for such Medicaid recipient’s care until such available proceeds are spent down, except for the amount provided for in subsection (2)(b)(1) of this section.
(4) If, pursuant to subdivision (2) of this subsection, such proceeds of a life settlement are not considered a resource or asset in determining a Medicaid applicant’s or recipient’s eligibility for Medicaid, the Medicaid applicant shall provide notice or proof, in a manner prescribed by the Department of Health and Human Services, that the proceeds of the life settlement in the irrevocable account established pursuant to this section are exhausted or will become exhausted on a specified date.
(b) In addition to the requirements of Chapter 175 of the General Laws, section 213 to 223F, inclusive, any life settlement contract entered into with respect to this section must include the following:
(1) That the lesser of five percent of the face value of the life insurance policy or $5,000 is reserved and be payable to the owner’s estate or a named beneficiary of the account established in subsection (c) of this section upon the death of the insured under the policy that is the subject of the life settlement contract for final expenses.
(2) That the balance of proceeds of the life settlement contract that are unpaid at the death of the insured must be paid to the owner’s estate or a named beneficiary of the account established in subsection (c) of this section.
(3) The total amount of the proceeds of the life settlement contract payable on behalf of the recipient of such services pursuant to the life settlement contract.
(c) All proceeds of the life settlement contract entered into pursuant to this section must be held in an irrevocable state or federally insured account for the benefit of the recipient of the services and administered in accordance with this section.
(d) The long-term care services to be payable from the irrevocable state or federally insured account shall be chosen only by the recipient of the services. Any attempt by any person to require the use of a specific provider to obtain long-term care services pursuant to this section is strictly prohibited and constitutes an unfair trade practice under Chapter 175 of the General Laws, section 223E.
(e) Any life settlement provider entering into a life settlement contract pursuant to this section must maintain one (1) of the following:
(1) A surety bond executed and issued by an insurer authorized to issue bonds in this state in the amount of five hundred thousand dollars ($500,000). Any surety bond issued shall be in favor of this state and shall specifically authorize recovery by the commissioner on behalf of any person in this state who sustained damages as the result of erroneous acts, failure to act, conviction of fraud, or conviction of unfair practices by the life settlement provider; or
(2) A policy of errors and omissions insurance covering legal liability resulting from erroneous acts or failure to act in their capacity as a life settlement provider in the sum of no less than five hundred thousand dollars ($500,000) per occurrence and in the aggregate.
(f) For purposes of this section, in addition to any requirements of Chapter 175 of the General Laws, section 213 to 223F, inclusive:
(1) Life settlement contract forms entered into pursuant to this section must be filed and approved by the Department of Insurance; and
(2) Advertising and marketing materials used by a life settlement provider pursuant to this section must be filed with the Department of Insurance.
(g) For purposes of this section only, for any policy that is the subject of a life settlement contract that has been in force for five years or more, the provisions of Chapter 175 of the General Laws, section 223B(g), shall not apply.
(h) Any claim against a life settlement provider from an owner of a policy, the owner’s estate, any beneficiary, or any other person with respect to the life settlement contract may not exceed the face amount of the policy, less the proceeds paid under the life settlement contract, the total amount of premiums paid subsequent to entering into the life settlement contract and any other reasonable costs or expenses associated with the acquisition or maintenance of the policy that is the subject of a life settlement contract. Any payment of a claim by a life settlement provider shall be made from the funds established pursuant to subsection (e) of this section.
(i) The Department of Insurance shall conduct periodic market examinations of each life settlement provider regarding the life settlement contracts entered into pursuant to this section, in accordance with Chapter 175 of the General Laws, section 218.
(j) The Department of Health and Human Services:
(1) Must provide, as part of the application for enrollment in the Medicaid program, written notice of the options provided in this section; and
(2) May provide information about the options in this section other state and local, public and private agencies and organizations in cooperation with one (1) or more nonprofit organizations, pursuant to an agreement between the state and each nonprofit organization. Costs for materials and distribution of information required by this subsection shall not be the responsibility of the state.
(k) The Department of Health and Human Services, in consultation with the Department of Insurance, is authorized to adopt rules to implement this section.
SECTION XXXX. Section 3, Part B, paragraph (a) of Chapter 62 of the General Laws, as appearing in the 1988 Official Edition, is hereby amended by adding the following new paragraph:
(17) An amount equal to the amount received by the taxpayer pursuant to a life settlement contract entered into pursuant to section 223G of Chapter 175.