By: Eiland, Goldman, Toth, Price H.B. No. 2383
A BILL TO BE ENTITLED
AN ACT
relating to life settlement contracts for the payment of long-term
care services under the medical assistance program and the
consideration of a life insurance policy in determining eligibility
for medical assistance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 32, Human Resources Code,
is amended by adding Section 32.02613 to read as follows:
Sec. 32.02613. LIFE INSURANCE ASSETS; LIFE INSURANCE POLICY
CONVERSION. (a) The owner of a life insurance policy with a face
amount of more than $10,000 may enter into a life settlement
contract under Chapter 1111A, Insurance Code, for the benefit of a
recipient of medical assistance long-term care services in exchange
for direct payments to a health care provider for the provision of
those services to that recipient.
(b) The proceeds of a life settlement contract entered into
under this section may not be considered as an asset or resource in
determining the eligibility of a person for medical assistance.
(c) The proceeds of a life settlement contract entered into
under this section must be used for the payment of medical
assistance long-term care services.
(d) State or federal medical assistance funds may not be
used to provide medical assistance long-term care services to a
person for whose benefit an owner of a life insurance policy has
entered into a life settlement contract under this section until
the proceeds of the contract are exhausted.
(e) In addition to the requirements under Chapter 1111A,
Insurance Code, a life settlement contract entered into under this
section must:
(1) provide that the lesser of five percent of the face
amount of the life insurance policy or $5,000 is reserved as a death
benefit payable to the owner's estate or a named beneficiary;
(2) provide that the balance of proceeds under the
contract that are unpaid on the death of the owner must be paid to
the owner's estate or a named beneficiary; and
(3) specify the total amount payable for the benefit
of the recipient of medical assistance long-term care services
under the contract.
(f) All proceeds of a life settlement contract entered into
under this section must be held in an irrevocable state or federally
insured account for the benefit of the recipient of medical
assistance long-term care services or for payment as otherwise
required by this section.
(g) Only a recipient of medical assistance long-term care
services for whose benefit an owner enters into a life settlement
contract under this section may choose the provider and type of
services provided to the recipient and paid for out of an account
described by Subsection (f). Any attempt by a person to require the
recipient to choose a specific provider is strictly prohibited and
constitutes an unfair method of competition or an unfair or
deceptive act or practice under the Insurance Code.
(h) A person who enters into a life settlement contract with
an owner of a life insurance policy under this section must
maintain:
(1) a surety bond executed and issued by an insurer
authorized to issue surety bonds in this state;
(2) a policy of errors and omissions insurance; or
(3) a deposit in the amount of $500,000 in any
combination of cash, certificates of deposit, or securities.
(i) In addition to the requirements of Chapter 1111A,
Insurance Code, a person who enters into life settlement contracts
with owners of life insurance policies under this section must file
with the Texas Department of Insurance all life settlement contract
forms and advertising and marketing materials used by the person.
(j) Section 1111A.022(a)(2)(A), Insurance Code, does not
apply to a life insurance policy that is the subject of a life
settlement contract entered into under this section if the contract
has been in force at least five years.
(k) A claim against a person with whom an owner of a life
insurance policy enters into a life settlement contract under this
section by the owner, the owner's estate, a named beneficiary, or
any other person with respect to the contract may not exceed the
face amount of the policy, less the proceeds paid under the
contract, plus the total amount of premiums paid by the owner since
entering into the contract. A person must pay a claim under this
subsection from the funds in an account described by Subsection
(f).
(l) In accordance with Chapter 1111A, Insurance Code, the
Texas Department of Insurance may conduct periodic market
examinations of each person who enters into a life settlement
contract with an owner of a life insurance policy under this
section.
(m) The department shall develop policies for educating an
applicant for nursing home care under the medical assistance
program about options for the applicant's life insurance policies,
including options that do not allow a life insurance policy to be
considered as an asset or resource in determining the applicant's
eligibility for medical assistance.
(n) The executive commissioner of the Health and Human
Services Commission, in consultation with the commissioner of
insurance, shall adopt rules necessary to implement this section.
The rules must ensure that:
(1) proceeds from a life settlement contract are used
to reimburse the provider of medical assistance long-term care
services chosen by the recipient for whose benefit the owner of a
life insurance policy entered into the contract;
(2) eligibility and need for medical assistance are
determined without considering the balance of proceeds from a life
settlement contract; and
(3) medical assistance payments to a provider of
medical assistance long-term care services and applied income
payments to a recipient begin the day following exhaustion of the
life settlement contract proceeds.
(o) The entry into a life settlement contract by an owner of
a life insurance policy under this section is not the only method by
which the owner may avoid having the policy considered as an asset
or resource in determining the eligibility of the owner for medical
assistance.
SECTION 2. Not later than January 1, 2014, the executive
commissioner of the Health and Human Services Commission shall
adopt rules necessary to implement Section 32.02613, Human
Resources Code, as added by this Act.
SECTION 3. The change in law made by this Act applies only
to a determination of eligibility of a person for medical
assistance benefits made on or after January 1, 2014. A
determination of eligibility made before January 1, 2014, is
governed by the law in effect immediately before the effective date
of this Act, and the former law is continued in effect for that
purpose.
SECTION 4. If before implementing any provision of this Act
a state agency determines that a waiver or authorization from a
federal agency is necessary for implementation of that provision,
the agency affected by the provision shall request the waiver or
authorization and may delay implementing that provision until the
waiver or authorization is granted.
SECTION 5. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2013.