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An Act To Increase the Use of Long-term Care Insurance
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  22 MRSA §3174-WW  is enacted to read:
§ 3174-WW. Alternative Long-term Care Benefits Program
There is established within the department the Alternative Long-term Care Benefits Program, referred to in this section as "the program," to provide alternatives for persons to insure the costs of their own long-term care and to alleviate some of the costs of long-term care being paid by MaineCare. The department shall administer the program as a part of MaineCare.
 
1.  Eligibility.     A person is eligible for the program if the person owns a life insurance policy with any face amount in excess of $10,000 and that person enters into a settlement contract pursuant to Title 24-A, chapter 85 in exchange for payments directly to a provider of long-term care benefits for the owner of the policy from proceeds of the settlement contract in accordance with this section. In order to qualify for benefits under the program, a person must be eligible under this section and meet the other criteria required for long-term care benefits under the MaineCare program as provided in this chapter and in rules adopted by the department.
 
2.  Benefits.     The benefits of the program include coverage for long-term care services under MaineCare after the person participating in the program has used the available proceeds from the applicable settlement contract.
 
3.  Disregard.     In addition to assets disregarded or exempt under MaineCare program rules, in determining eligibility for MaineCare and the amount of MaineCare benefits and in estate recovery pursuant to section 14, subsection 2-I, the program must disregard the value of a life insurance policy as defined in Title 24-A, section 6802-A, subsection 7 that is in force and owned by an eligible person if the applicant or recipient enters into a settlement contract in accordance with this section. As used in this subsection, "value" means the value received pursuant to the settlement contract.
 
4.  Requirements for settlement contract.     In addition to any requirements in Title 24-A, chapter 85, any settlement contract entered into in accordance with this section must meet the following requirements.
 
A.  The lesser of 5% of the face amount of the life insurance policy and $5,000 must be reserved as a death benefit payable to the policy owner's estate or beneficiary.
 
B.  The balance of payments required under the settlement contract unpaid at the death of the policy owner must be paid to the policy owner's estate or a named beneficiary.
 
C.  The settlement contract must include a schedule evidencing the total amount payable to the policy owner under the settlement contract.
 
D.  All proceeds of the settlement contract must be held in an irrevocable federally insured deposit account in a financial institution authorized to do business in this State pursuant to Title 9-B.
 
E.  Notwithstanding the provisions of Title 24-A, section 6810, subsection 1, the proceeds of a settlement contract entered into pursuant to this section must be greater than the cash surrender value or accelerated death benefit in the life insurance policy available at the time the contract is executed by all parties.
 
F.  Notwithstanding any other provision of law, a claim from a policy owner, the policy owner's estate, a beneficiary or any other person with respect to the settlement contract may not exceed the face amount of the life insurance policy, less the proceeds paid under the settlement contract and the total amount of premiums paid subsequent to entering into the settlement contract. A payment of a claim by a settlement provider must be made from any bond, insurance or deposits maintained pursuant to paragraph I.
 
G.  For purposes of this section, for a life insurance policy that is the subject of a settlement contract that has been in force for 5 years or more, the provisions of Title 24-A, section 6818 do not apply.
 
H.  For purposes of this section, all advertisements of the settlement provider related to the program must be filed with the Department of Professional and Financial Regulation, Bureau of Insurance.
 
I.  A settlement provider entering into a settlement contract pursuant to this section must maintain one of the following or any combination thereof in the amount of $500,000:
 
(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; and
 
(3) A deposit of cash, certificates of deposit or securities.
 
5.  Disclosures.     In cooperation with the Department of Professional and Financial Regulation, Bureau of Insurance, the department shall provide, as part of the application for MaineCare benefits or in a separate document to be signed by an applicant, the disclosures required by Title 24-A, section 6808-A.
 
6.  Other laws.     Eligibility for the program does not preclude enforcement of laws regarding recovery of MaineCare benefits incorrectly paid or 3rd-party liability claims by the department. The provisions of this section do not enlarge or otherwise modify medical assistance benefits under the MaineCare program. The provisions of section 14, subsection 2-I, paragraph A, subparagraph (3) do not apply to assets disregarded under the program.
 
7.  Rulemaking.     The department, after consultation with the Superintendent of Insurance within the Department of Professional and Financial Regulation, shall adopt rules to implement this section. Rules adopted pursuant to this subsection are routine technical rules as defined in Title 5, chapter 375, subchapter 2-A.
 
SUMMARY
This bill establishes an alternative long-term care benefit program for those persons that qualify for long-term benefits under the MaineCare program. The bill allows persons otherwise eligible for long-term care benefits under MaineCare that own life insurance policies with face amounts exceeding $10,000 to enter into life settlement contracts in exchange for direct payments to a health care provider for long-term care benefits. The bill prohibits the Department of Health and Human Services from considering the value of the life settlement contract as an asset or resource in determining eligibility for MaineCare. The bill also establishes the conditions under which a life settlement contract may be used, requires certain disclosures to be made to MaineCare applicants and authorizes the Department of Health and Human Services to adopt rules after consultation with the Department of Professional and Financial Regulation, Bureau of Insurance.