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A BILL TO BE ENTITLED
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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 under the medical assistance program and the |
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consideration of a life insurance policy in determining eligibility |
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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) The owner of a life insurance policy with a face |
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amount of more than $10,000 may enter into a life settlement |
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contract under Chapter 1111A, Insurance Code, for the benefit of a |
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recipient of medical assistance long-term care services in exchange |
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for direct payments to a health care provider for the provision of |
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those services to that recipient. |
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(b) The proceeds of a life settlement contract entered into |
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under this section may not be considered as an asset or resource in |
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determining the eligibility of a person for medical assistance. |
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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 medical |
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assistance long-term care services. |
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(d) State or federal medical assistance funds may not be |
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used to provide medical assistance long-term care services to a |
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person for whose benefit an owner of a life insurance policy has |
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entered into a life settlement contract under this section until |
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the proceeds of the contract are exhausted. |
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(e) 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 as a death |
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benefit payable to the owner's estate or a named beneficiary; |
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(2) provide that the balance of proceeds under the |
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contract that are unpaid on the death of the owner must be paid to |
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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 medical assistance long-term care services |
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under the contract. |
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(f) 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 medical |
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assistance long-term care services or for payment as otherwise |
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required by this section. |
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(g) Only a recipient of medical assistance long-term care |
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services for whose benefit an owner enters into a life settlement |
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contract under this section may choose the provider and type of |
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services provided to the recipient and paid for out of an account |
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described by Subsection (f). Any attempt by a person to require the |
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recipient 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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(h) 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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(i) In addition to the requirements of Chapter 1111A, |
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Insurance Code, a person who enters into life settlement contracts |
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with owners of life insurance policies under this section must file |
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with the Texas Department of Insurance all life settlement contract |
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forms and advertising and marketing materials used by the person. |
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(j) 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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(k) A claim against a person with whom an owner of a life |
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insurance policy enters into a life settlement contract under this |
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section by the owner, the owner's estate, a named beneficiary, or |
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any other person with respect to the contract may not exceed the |
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face amount of the policy, less the proceeds paid under the |
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contract, plus the total amount of premiums paid by the owner since |
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entering into the contract. A person must pay a claim under this |
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subsection from the funds in an account described by Subsection |
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(f). |
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(l) 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 person who enters into a life settlement |
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contract with an owner of a life insurance policy under this |
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section. |
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(m) The department must provide an applicant for medical |
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assistance notice of the option to enter into a life settlement |
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contract as provided in this section. |
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(n) 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 the provider of medical assistance long-term care |
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services chosen by the recipient for whose benefit the owner of a |
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life insurance policy entered into the contract; |
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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; and |
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(3) medical assistance payments to a provider of |
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medical assistance long-term care services and applied income |
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payments to a recipient begin the day following exhaustion of the |
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life settlement contract proceeds. |
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SECTION 2. Not later than January 1, 2014, the executive |
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commissioner of the Health and Human Services Commission shall |
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adopt rules necessary to implement Section 32.02613, Human |
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Resources Code, as added by this Act. |
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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. 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. |