CA, FL, KY, LA, ME, NJ and TX introduce legislation to stimulate private pay dollars by encouraging the conversion of a life insurance policy into a Medicaid qualified Long Term Care Benefit Plan
Texas first state to enact life policy conversion law to give seniors more long term care choices and save Medicaid tax payers millions of dollars
PORTLAND, Maine—Seven states have introduced ground breaking consumer legislation to give seniors more choice in how they pay for long term care services while saving state Medicaid budgets millions of dollars. Among them, Texas is the first state in the nation to enact this law giving the state Medicaid Department authority to notify and educate their citizens that they have the legal right to convert an in-force life insurance policy into a Long Term Care Benefit Plan. This “Policy Conversion” or “Medicaid Life Settlement” option allows a senior to remain private pay longer and delay their need to go onto Medicaid. By remaining private pay, the senior is able to choose the form of long term care they desire including Homecare, Assisted Living, Skilled Nursing Home Care, Memory Care, or Hospice.
Chris Orestis, CEO of Life Care Funding explained, “Texas is the first state to enact this important legislation to stimulate more private pay dollars by encouraging the conversion of a life insurance policy into a private market Long Term Care Benefit Plan. But Texas is not the only state to recognize the importance of making sure that the owners of a life insurance policy are informed of their right to convert their policy as an alternative to abandoning the policy and going directly onto Medicaid. By converting a policy, the senior will remain private pay longer and be able to choose the form of care they want which is in their best interest and it will save tax payers’ money.”
In addition to Texas, this bill has been introduced in California, Florida, Kentucky, Louisiana, Maine, New Jersey and a number of other states are pending for 2013. Florida State University released an economic impact study that estimated Florida’s Medicaid budget would save $150 million annually if this bill is enacted in their state. Upon introduction, AARP of Florida was quoted in testimony before the Senate Banking and Insurance Committee, “I believe it could be a win for Medicaid service recipients, a win for the fiscal soundness for Medicaid, it could be a win for potential beneficiaries under life insurance policies and I think it could be a win for long-term care service providers,” said Jack McRay, a spokesman for the Florida AARP.
To qualify for the program as a Medicaid qualified spend-down, the Policy Conversion law calls for a specific structure based on the Long Term Care Benefit Plan designed and offered by Life Care Funding. Specifically, the bill accomplishes two primary outcomes:
- Grants authority to the state Medicaid Department to educate citizens about the option to convert a life insurance policy into a specifically configured Long Term Care Benefit Plan as part of a Medicaid qualified spend-down.
- Codifies how the Long Term Care Benefit Plan must be configured to qualify:
- A schedule evidencing the total amount payable, the number of payments and the amount of each payment required to be paid for long term care;
- All proceeds must be held in an irrevocable state or federally insured account;
- The lesser of five percent (5%) of the face amount of the life insurance or $5,000 is reserved as death benefit payable to the estate or beneficiary;
- And, the balance of payments required under the contract unpaid at death of the must be paid to the estate or a named beneficiary.
A Long Term Care Benefit Plan is the conversion of an in-force life insurance policy into a pre-funded, irrevocable Benefit Account that is professionally administered with payments made monthly on behalf of the individual receiving care. It is a unique financial option for seniors because all health conditions are accepted, and there are no wait periods, no care limitations, no costs to apply, no requirement to be terminally ill, and there are no premium payments. Policy owners use their legal right to convert an in-force life insurance policy to enroll in the benefit plan, and are able to immediately direct payments to cover their senior housing and long term care costs.
About Life Care Funding
Founded in 2007, Life Care Funding assists people in need of funds to cover the costs of senior housing and long term care. Life Care Funding is the first company in the nation to specialize in converting the death benefit of an in-force life insurance policy into a Long Term Care Benefit Plan to cover the costs of skilled nursing home care, assisted living, home healthcare, and hospice.