Louisiana House Bill HB1201

Louisiana 2014 Regular Session

• Introduced: 4/1/14
• Refer: 4/2/14

Caption

Provides for an alternative long-term care benefit option for Medicaid applicants with life insurance policies who enter into certain viatical settlement contracts

Impact

The legislation is set to amend existing statutes governing Medicaid eligibility that currently require applicants to surrender life insurance policies with cash values to qualify for benefits. Under HB1201, settlement proceeds would be excluded from the calculation of an applicant's resources, thereby retaining access to Medicaid services without the need to liquidate these assets. The bill also provides for a small amount to be reserved for burial expenses, ensuring that some funds remain available to the beneficiary upon the insured's death.

Summary

House Bill 1201 aims to provide an alternative long-term care benefit option for Medicaid applicants who own life insurance policies. Specifically, the bill enables these individuals to enter into viatical settlement contracts, where the proceeds from their life insurance can be allocated for Medicaid-covered long-term care services. By placing the settlement proceeds in a state or federally insured irrevocable trust, the bill seeks to ensure that these funds are utilized specifically for healthcare needs, allowing Medicaid applicants to potentially defer or avoid entering the Medicaid system altogether after exhausting the settlement funds.

Sentiment

The sentiment around HB1201 appears to be cautiously optimistic among those supporting the provision for alternative funding for long-term care. Advocates argue that the bill enhances financial security for elderly individuals facing health challenges, while simultaneously lessening the financial burden on the state Medicaid program. However, there may also be concerns about the regulatory implications and ensuring that such viatical settlements are conducted transparently and fairly.

Contention

Notable points of contention may arise around the regulation of viatical settlement contracts and the protections for consumers engaging in these contracts. There may be differing opinions on the appropriateness of exempting such proceeds from personal income tax, as well as ensuring that the trusts maintaining these funds provide adequate safeguards for healthcare providers. The balance between enabling more options for Medicaid applicants while mitigating possible abuse within the viatical settlement market remains a critical focus.