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AN ACT
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relating to life settlement contracts for the payment of long-term |
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care services and support and the consideration of a life insurance |
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policy in determining eligibility for medical assistance. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter B, Chapter 32, Human Resources Code, |
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is amended by adding Section 32.02613 to read as follows: |
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Sec. 32.02613. LIFE INSURANCE ASSETS; LIFE INSURANCE POLICY |
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CONVERSION. (a) For purposes of this section, "long-term care |
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services and support" includes home health care, assisted living, |
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and nursing home services. |
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(b) The owner of a life insurance policy with a face amount |
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of more than $10,000 may enter into a life settlement contract under |
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Chapter 1111A, Insurance Code, for the benefit of a recipient of |
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long-term care services and support in exchange for direct payments |
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to: |
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(1) a health care provider for the provision of those |
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services to that recipient; or |
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(2) the state to offset the costs of providing those |
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services to that recipient under the medical assistance program. |
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(c) The proceeds of a life settlement contract entered into |
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under this section must be used for the payment of long-term care |
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services and support, except for the amount specified in Subsection |
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(d)(1). To the extent feasible and allowed under federal law, the |
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medical assistance program may act only as the secondary payor for |
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long-term care services and support provided to a person who is |
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eligible for medical assistance and for whose benefit an owner of a |
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life insurance policy has entered into a life settlement contract |
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under this section. |
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(d) In addition to the requirements under Chapter 1111A, |
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Insurance Code, a life settlement contract entered into under this |
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section must: |
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(1) provide that the lesser of five percent of the face |
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amount of the life insurance policy or $5,000 is reserved and is |
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payable to the owner's estate or a named beneficiary for funeral |
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expenses; |
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(2) provide that the balance of proceeds under the |
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life settlement contract that are unpaid on the death of the owner |
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must be paid to the owner's estate or a named beneficiary; and |
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(3) specify the total amount payable for the benefit |
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of the recipient of long-term care services and support under the |
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life settlement contract. |
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(e) All proceeds of a life settlement contract entered into |
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under this section must be held in an irrevocable state or federally |
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insured account for the benefit of the recipient of long-term care |
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services and support or for payment as otherwise required by this |
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section. |
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(f) Only a recipient of long-term care services and support |
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for whose benefit an owner enters into a life settlement contract |
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under this section may choose the provider and type of services |
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provided to the recipient and paid for out of an account described |
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by Subsection (e). Any attempt by a person to require the recipient |
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to choose a specific provider is strictly prohibited and |
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constitutes an unfair method of competition or an unfair or |
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deceptive act or practice under the Insurance Code. |
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(g) A person who enters into a life settlement contract with |
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an owner of a life insurance policy under this section must |
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maintain: |
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(1) a surety bond executed and issued by an insurer |
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authorized to issue surety bonds in this state; |
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(2) a policy of errors and omissions insurance; or |
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(3) a deposit in the amount of $500,000 in any |
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combination of cash, certificates of deposit, or securities. |
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(h) In accordance with the requirements of Chapter 1111A, |
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Insurance Code, a life settlement contract provider who enters into |
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life settlement contracts with owners of life insurance policies |
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under this section must file with the Texas Department of |
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Insurance: |
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(1) all life settlement contract forms used by the |
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provider; and |
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(2) all advertising and marketing materials used by |
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the provider. |
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(i) Section 1111A.022(a)(2)(A), Insurance Code, does not |
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apply to a life insurance policy that is the subject of a life |
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settlement contract entered into under this section if the contract |
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has been in force at least five years. |
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(j) A claim against a life settlement contract provider with |
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whom an owner of a life insurance policy enters into a life |
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settlement contract under this section by the owner, the owner's |
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estate, a named beneficiary, or any other person with respect to the |
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contract may not exceed the face amount of the policy, less the |
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proceeds paid under the contract, plus the total amount of premiums |
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paid by the owner since entering into the contract. A life |
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settlement contract provider must pay a claim under this subsection |
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from the funds in an account described by Subsection (e). |
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(k) In accordance with Chapter 1111A, Insurance Code, the |
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Texas Department of Insurance may conduct periodic market |
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examinations of each life settlement contract provider who enters |
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into a life settlement contract with an owner of a life insurance |
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policy under this section. |
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(l) The department shall educate applicants for long-term |
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care services and support under the medical assistance program |
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about options for life insurance policies, including options that |
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do not allow a life insurance policy to be considered as an asset or |
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resource in determining eligibility for medical assistance. |
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(m) The executive commissioner of the Health and Human |
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Services Commission, in consultation with the commissioner of |
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insurance, shall adopt rules necessary to implement this section. |
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The rules must ensure that: |
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(1) proceeds from a life settlement contract are used |
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to reimburse a provider of long-term care services and support or |
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the state to offset the cost of medical assistance long-term care |
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services and support; |
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(2) eligibility and need for medical assistance are |
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determined without considering the balance of proceeds from a life |
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settlement contract as provided in this section; and |
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(3) payments to a provider of long-term care services |
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and support and applied income payments are made in accordance with |
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this chapter. |
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(n) The entry into a life settlement contract by an owner of |
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a life insurance policy under this section is not the only method by |
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which the owner may avoid having the policy considered as an asset |
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or resource in determining the eligibility of the owner for medical |
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assistance. |
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(o) Notwithstanding the provisions of this section, the |
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department may not implement a provision of this section if the |
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commission determines that implementation of the provision is not |
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cost-effective or feasible. |
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SECTION 2. Subject to Section 32.02613(o), Human Resources |
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Code, as added by this Act, the executive commissioner of the Health |
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and Human Services Commission shall adopt rules necessary to |
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implement Section 32.02613, Human Resources Code, as added by this |
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Act, not later than January 1, 2014. |
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SECTION 3. The change in law made by this Act applies only |
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to a determination of eligibility of a person for medical |
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assistance benefits made on or after January 1, 2014, subject to |
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Section 32.02613(o), Human Resources Code, as added by this Act. A |
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determination of eligibility made before January 1, 2014, is |
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governed by the law in effect immediately before the effective date |
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of this Act, and the former law is continued in effect for that |
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purpose. |
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SECTION 4. If before implementing any provision of this Act |
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a state agency determines that a waiver or authorization from a |
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federal agency is necessary for implementation of that provision, |
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the agency affected by the provision shall request the waiver or |
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authorization and may delay implementing that provision until the |
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waiver or authorization is granted. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2013. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I certify that H.B. No. 2383 was passed by the House on May 4, |
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2013, by the following vote: Yeas 114, Nays 17, 4 present, not |
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voting; and that the House concurred in Senate amendments to H.B. |
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No. 2383 on May 23, 2013, by the following vote: Yeas 134, Nays 5, |
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2 present, not voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2383 was passed by the Senate, with |
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amendments, on May 21, 2013, by the following vote: Yeas 25, Nays |
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6. |
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______________________________ |
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Secretary of the Senate |
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APPROVED: __________________ |
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Date |
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__________________ |
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Governor |