1.1 	A bill for an act
1.2 	relating to human services; allowing medical assistance applicants to retain 
1.3 	certain life insurance policies if proceeds from these policies will be shared with 
1.4 	the state; proposing coding for new law in Minnesota Statutes, chapter 256B.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [256B.0565] LIFE INSURANCE POLICIES.
1.7 		Subdivision 1.Option to retain policies. (a) The commissioner may allow 
1.8 	applicants for medical assistance under this chapter, with respect to whom there could 
1.9 	be an actual or potential claim for recovery of medical assistance under section 256B.15, 
1.10 	the option of retaining their permanent life insurance policies as provided under this 
1.11 	section.  Permanent life insurance policies retained by applicants under this section shall 
1.12 	be excluded assets for purposes of determining an applicant's initial and continuing 
1.13 	eligibility for medical assistance.
1.14 	(b) The cash surrender value of life insurance policies that applicants retain under 
1.15 	this section shall not be an asset for purposes of determining and setting off any of the 
1.16 	community spouse's allowances under section 256B.059.
1.17 		Subd. 2.Definitions. (a) For purposes of this section, the following definitions 
1.18 	apply.
1.19 	(b) "Permanent life insurance policy,"  "life insurance policy," "policy," or similar 
1.20 	terms mean a nonvariable life insurance policy for which all of the following apply:
1.21 	(1) the applicant is the sole owner of the policy;
1.22 	(2) the applicant is the insured life under the policy;
1.23 	(3) the contestability period has expired;
1.24 	(4) the policy is unencumbered;
2.1 	(5) all of the premiums and other sums due and owing to the insurer under the terms 
2.2 	of the policy have been paid in full or there is sufficient cash value to pay all premiums 
2.3 	and other charges due the insurer under the terms of the policy until the policy is paid in 
2.4 	full; and
2.5 	(6) the applicant has the full and complete right to designate or change the 
2.6 	designation of beneficiaries under the policy and to do all things necessary to comply with 
2.7 	this section, and to do so without the consent or approval of any other person. 
2.8 	(c) "Insurer" means the issuer of the permanent life insurance policy or the issuer's 
2.9 	successors and assigns.
2.10 		Subd. 3.Agreement with commissioner. (a) An applicant who wants to retain a 
2.11 	policy under this section must:
2.12 	(1) enter into an irrevocable written agreement with the commissioner to designate 
2.13 	the commissioner as a beneficiary under the policy to the extent provided for in subdivision 
2.14 	5 and to do all things, take all actions, and sign all documents necessary to comply with 
2.15 	the requirements of this section; and
2.16 	(2) execute and file with the insurer all of the forms and documents necessary to:
2.17 	(i) irrevocably designate the commissioner as a beneficiary under the policy upon 
2.18 	the death of the applicant to the extent provided for in this section;
2.19 	 (ii) irrevocably waive the applicant's right to cash-in, sell, assign, transfer, encumber, 
2.20 	or borrow against the policy or to use it as collateral or security for any purpose except 
2.21 	as otherwise provided for in this section;
2.22 	(iii) direct the insurer to send the commissioner a copy of all notices it sends to the 
2.23 	owner of the policy that the policy will lapse, at the same time and in the same manner as 
2.24 	the policy requires the insurer to give such notices to the owner of the policy; and
2.25 	(iv) direct the insurer to comply with paragraph (d).
2.26 	(b) The agreement with the commissioner must be irrevocable and shall remain in 
2.27 	effect throughout the remainder of the applicant's life, regardless of whether the applicant 
2.28 	remains eligible for or enrolled in the medical assistance program after the date of the 
2.29 	agreement.
2.30 	(c) The agreement must expressly provide that the applicant shall retain the right 
2.31 	to designate or change beneficiaries under the policy, other than the commissioner, with 
2.32 	respect to the portion of the death benefit not payable to the commissioner under this 
2.33 	section and the applicant's written agreement with the commissioner.
2.34 	(d) The agreement must expressly provide that the applicant shall instruct the 
2.35 	insurer to pay all future premiums and other amounts due to the insurer under the terms 
2.36 	of the policy from the cash value of the policy, or to provide the applicant and the 
3.1 	commissioner with written notice that the cash value of the policy is not sufficient to do 
3.2 	so. This paragraph does not prohibit the insurer from applying payments received from 
3.3 	the beneficiary or any other person toward payment of premiums and other amounts 
3.4 	due to the insurer.
3.5 	(e) The commissioner shall prepare a form of agreement for use under this section. 
3.6 	This form must contain contents and make requirements as the commissioner deems 
3.7 	necessary or appropriate, consistent with this section.
3.8 		Subd. 4.Procedure. (a) The applicant shall provide the county social services 
3.9 	agency with a full and complete copy of each of the policies the applicant wishes to retain 
3.10 	under this section, including a full and complete current designation of all beneficiaries 
3.11 	under the policies.  The applicant shall execute a separate agreement with the commissioner 
3.12 	in triplicate for each policy. The applicant shall retain one copy.  The county agency shall 
3.13 	retain one copy of the executed agreement in the applicant's file.  The applicant shall send 
3.14 	the third copy of the executed agreement to the insurer, together with all of the documents 
3.15 	necessary to satisfy the requirements of this section, including the address of the county.  
3.16 	(b) The insurer shall make changes with regard to the policy provided for in this 
3.17 	section and the agreement, and shall notify the applicant  and the county agency that the 
3.18 	insurer has done so or that the insurer is unable to do so. If the insurer does not provide 
3.19 	the county with notice that it has made all of the changes to the policy required by the 
3.20 	agreement and this section, the county agency shall require the applicant to cash in the 
3.21 	policy and apply the proceeds it receives according to this chapter.
3.22 	(c) The county agency shall provide the insurer with the name, address, and 
3.23 	telephone number of an individual the insurer can contact upon the death of the applicant, 
3.24 	in order to request a written statement of the total amount of medical assistance paid for 
3.25 	the applicant which could be recovered under section 256B.15.
3.26 		Subd. 5.State's share of death benefit. (a) Upon the death of the applicant, the 
3.27 	insurer shall pay the applicant's beneficiaries one-half of all amounts payable under the 
3.28 	terms of the permanent life insurance policy.  The insurer shall also pay the applicant's 
3.29 	beneficiaries, at a later date, any amount owed the beneficiaries under paragraph (c).  If a 
3.30 	beneficiary is the applicant's estate, any policy proceeds received by that beneficiary under 
3.31 	this paragraph and paragraph (c) are not subject to estate recovery under section 256B.15.  
3.32 	(b) Upon the death of the applicant, the insurer shall request a written statement of 
3.33 	the total amount of medical assistance paid for the applicant which could be recovered 
3.34 	under section 256B.15.  The commissioner shall provide the written statement to the 
3.35 	insurer within 30 days after receipt of the request.  If the commissioner fails to provide 
4.1 	a written statement within the 30-day period, all policy proceeds revert to named 
4.2 	beneficiaries other than the commissioner.  
4.3 	(c) Upon timely receipt of the written statement of the amount of medical assistance 
4.4 	paid requested under paragraph (b), the insurer shall pay the commissioner the lesser of 
4.5 	one-half of all amounts payable under the terms of the permanent life insurance policy or 
4.6 	the total amount of medical assistance paid for the applicant which could be recovered 
4.7 	under section 256B.15, whichever is less.  If the amount of medical assistance paid for 
4.8 	the applicant is less than one-half of all amounts payable under the terms of the policy, 
4.9 	the insurer shall pay the difference between those two amounts to the other beneficiaries 
4.10 	under the policy according to the terms of the policy.  Payments made under this paragraph 
4.11 	are exempt from section 72A.201, subdivision 4, clause (3).
4.12 	(d)  For purposes of  this section and United States Code, title 42, section 1396p, a 
4.13 	recipient shall be deemed to have an interest under the laws of this state in the policies 
4.14 	the recipient retains under this section and the amounts payable under those policies to 
4.15 	the extent of the amounts payable to the commissioner under this subdivision.  These 
4.16 	policies and amounts, to the extent described in the preceding sentence, shall be part 
4.17 	of the recipient??a??a??s estate solely for the purposes of United States Code, title 42, section 
4.18 	1396p, and recovery of medical assistance as provided for by federal law and the laws 
4.19 	of this state and shall be payable directly to the commissioner for that purpose, and shall 
4.20 	not be subject to payment of any of the recipient??a??a??s debts, charges, or obligations at law, 
4.21 	in equity, or otherwise.
4.22 		Subd. 6.Federal waivers and approval. The commissioner shall seek any federal 
4.23 	waivers and approvals necessary to implement this section.

4.24 	EFFECTIVE DATE. This section is effective July 1, 2006, or upon receipt of any 
4.25 	necessary federal waivers and approvals, whichever is later.