HF 3697

3rd Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to the operation of state government; making changes to health and
human services programs and policy; making changes to health policy to comply
with federal law; modifying long-term care provisions; modifying treatment
of asset recovery for medical assistance eligibility; requiring evidence of
citizenship or nationality for qualified noncitizens; modifying the treatment of
payment of benefits from an annuity; making changes to children and families
policy to comply with federal law; modifying treatment of MFIP expenditures;
allowing waiver of administrative costs under MFIP; imposing an annual federal
collections fee; making supplemental appropriations and budget reductions;
establishing the Pharmacy Payment Reform Advisory Committee; amending
Minnesota Statutes 2004, sections 62A.045; 62S.05, by adding a subdivision;
62S.08, subdivision 3; 62S.081, subdivision 4; 62S.10, subdivision 2; 62S.13,
by adding a subdivision; 62S.14, subdivision 2; 62S.15; 62S.20, subdivision 1;
62S.24, subdivisions 1, 3, 4, by adding subdivisions; 62S.25, subdivision 6, by
adding a subdivision; 62S.26; 62S.266, subdivision 2; 62S.29, subdivision 1;
62S.30; 144.6501, subdivision 6; 256B.02, subdivision 9; 256B.056, subdivision
2, by adding subdivisions; 256B.0595, subdivisions 1, 3, 4; 256B.76; 256J.021;
256J.626, subdivision 2; 256L.04, subdivision 10; 518.551, subdivision
7; Minnesota Statutes 2005 Supplement, sections 256B.0571; 256B.0595,
subdivision 2; 256B.06, subdivision 4; 256D.03, subdivision 3; proposing coding
for new law in Minnesota Statutes, chapters 62S; 256B; repealing Minnesota
Statutes 2005 Supplement, section 256B.0571, subdivisions 2, 5, 11.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

HEALTH CARE FEDERAL COMPLIANCE

Section 1.

Minnesota Statutes 2004, section 62A.045, is amended to read:

62A.045 PAYMENTS ON BEHALF OF ENROLLEES IN GOVERNMENT
HEALTH PROGRAMS.

(a) new text begin As a condition of doing business in Minnesota, each health insurer shall comply
with the requirements of the federal Deficit Reduction Act of 2005, Public Law 109-171,
including any federal regulations adopted under that act, to the extent that it imposes a
requirement that applies in this state and that is not also required by the laws of this state.
This section does not require compliance with any provision of the federal act prior to
the effective date provided for that provision in the federal act. The commissioner shall
enforce this section.
new text end

new text begin "Health insurer" for the purpose of this section includes self-insured plans, group
health plans (as defined in section 607(1) of the Employee Retirement Income Security
Act of 1974), service benefit plans, managed care organizations, pharmacy benefit
managers, or other parties that are by contract legally responsible to pay a claim for a
healthcare item or service for an individual receiving benefits under paragraph (b).
new text end

new text begin (b) new text end No health plan issued or renewed to provide coverage to a Minnesota resident
shall contain any provision denying or reducing benefits because services are rendered to a
person who is eligible for or receiving medical benefits pursuant to title XIX of the Social
Security Act (Medicaid) in this or any other state; chapter 256; 256B; or 256D or services
pursuant to section 252.27; 256L.01 to 256L.10; 260B.331, subdivision 2; 260C.331,
subdivision 2; or 393.07, subdivision 1 or 2. No health carrier providing benefits under
plans covered by this section shall use eligibility for medical programs named in this
section as an underwriting guideline or reason for nonacceptance of the risk.

deleted text begin (b) deleted text end new text begin (c) new text end If payment for covered expenses has been made under state medical programs
for health care items or services provided to an individual, and a third party has a legal
liability to make payments, the rights of payment and appeal of an adverse coverage
decision for the individual, or in the case of a child their responsible relative or caretaker,
will be subrogated to the state agency. The state agency may assert its rights under this
section within three years of the date the service was rendered. For purposes of this
section, "state agency" includes prepaid health plans under contract with the commissioner
according to sections 256B.69, 256D.03, subdivision 4, paragraph (c), and 256L.12;
children's mental health collaboratives under section 245.493; demonstration projects for
persons with disabilities under section 256B.77; nursing homes under the alternative
payment demonstration project under section 256B.434; and county-based purchasing
entities under section 256B.692.

deleted text begin (c) deleted text end new text begin (d) new text end Notwithstanding any law to the contrary, when a person covered by a health
plan receives medical benefits according to any statute listed in this section, payment for
covered services or notice of denial for services billed by the provider must be issued
directly to the provider. If a person was receiving medical benefits through the Department
of Human Services at the time a service was provided, the provider must indicate this
benefit coverage on any claim forms submitted by the provider to the health carrier for
those services. If the commissioner of human services notifies the health carrier that
the commissioner has made payments to the provider, payment for benefits or notices
of denials issued by the health carrier must be issued directly to the commissioner.
Submission by the department to the health carrier of the claim on a Department of
Human Services claim form is proper notice and shall be considered proof of payment of
the claim to the provider and supersedes any contract requirements of the health carrier
relating to the form of submission. Liability to the insured for coverage is satisfied to the
extent that payments for those benefits are made by the health carrier to the provider or the
commissioner as required by this section.

deleted text begin (d) deleted text end new text begin (e) new text end When a state agency has acquired the rights of an individual eligible for
medical programs named in this section and has health benefits coverage through a
health carrier, the health carrier shall not impose requirements that are different from
requirements applicable to an agent or assignee of any other individual covered.

deleted text begin (e) deleted text end new text begin (f) new text end For the purpose of this section, health plan includes coverage offered by
community integrated service networks, any plan governed under the federal Employee
Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, sections
1001 to 1461, and coverage offered under the exclusions listed in section 62A.011,
subdivision 3, clauses (2), (6), (9), (10), and (12).

Sec. 2.

Minnesota Statutes 2004, section 62S.05, is amended by adding a subdivision
to read:

new text begin Subd. 4. new text end

new text begin Extension of limitation periods. new text end

new text begin The commissioner may extend the
limitation periods set forth in subdivisions 1 and 2 as to specific age group categories in
specific policy forms upon finding that the extension is in the best interest of the public.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 3.

Minnesota Statutes 2004, section 62S.08, subdivision 3, is amended to read:

Subd. 3.

Mandatory format.

The following standard format outline of coverage
must be used, unless otherwise specifically indicated:

COMPANY NAME

ADDRESS - CITY AND STATE

TELEPHONE NUMBER

LONG-TERM CARE INSURANCE

OUTLINE OF COVERAGE

Policy Number or Group Master Policy and Certificate Number

(Except for policies or certificates which are guaranteed issue, the following caution
statement, or language substantially similar, must appear as follows in the outline of
coverage.)

CAUTION: The issuance of this long-term care insurance (policy) (certificate)
is based upon your responses to the questions on your application. A copy of your
(application) (enrollment form) (is enclosed) (was retained by you when you applied).
If your answers are incorrect or untrue, the company has the right to deny benefits or
rescind your policy. The best time to clear up any questions is now, before a claim
arises. If, for any reason, any of your answers are incorrect, contact the company at this
address: (insert address).

(1) This policy is (an individual policy of insurance) (a group policy) which was
issued in the (indicate jurisdiction in which group policy was issued).

(2) PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides
a very brief description of the important features of the policy. You should compare
this outline of coverage to outlines of coverage for other policies available to you. This
is not an insurance contract, but only a summary of coverage. Only the individual or
group policy contains governing contractual provisions. This means that the policy or
group policy sets forth in detail the rights and obligations of both you and the insurance
company. Therefore, if you purchase this coverage, or any other coverage, it is important
that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY.

(3) THIS PLAN IS INTENDED TO BE A QUALIFIED LONG-TERM CARE
INSURANCE CONTRACT AS DEFINED UNDER SECTION 7702(B)(b) OF THE
INTERNAL REVENUE CODE OF 1986.

(4) new text begin TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE
CONTINUED IN FORCE OR DISCONTINUED.
new text end

new text begin (a) (For long-term care health insurance policies or certificates describe one of the
following permissible policy renewability provisions:)
new text end

new text begin (1) (Policies and certificates that are guaranteed renewable shall contain the
following statement:) RENEWABILITY: THIS POLICY (CERTIFICATE) IS
GUARANTEED RENEWABLE. This means you have the right, subject to the terms of
your policy, (certificate) to continue this policy as long as you pay your premiums on time.
(Company name) cannot change any of the terms of your policy on its own, except that, in
the future, IT MAY INCREASE THE PREMIUM YOU PAY.
new text end

new text begin (2) (Policies and certificates that are noncancelable shall contain the following
statement:) RENEWABILITY: THIS POLICY (CERTIFICATE) IS NONCANCELABLE.
This means that you have the right, subject to the terms of your policy, to continue this
policy as long as you pay your premiums on time. (Company name) cannot change any
of the terms of your policy on its own and cannot change the premium you currently
pay. However, if your policy contains an inflation protection feature where you choose
to increase your benefits, (company name) may increase your premium at that time for
those additional benefits.
new text end

new text begin (b) (For group coverage, specifically describe continuation/conversion provisions
applicable to the certificate and group policy.)
new text end

new text begin (c) (Describe waiver of premium provisions or state that there are not such
provisions.)
new text end

new text begin (5) TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS.
new text end

new text begin (In bold type larger than the maximum type required to be used for the other
provisions of the outline of coverage, state whether or not the company has a right to
change the premium and, if a right exists, describe clearly and concisely each circumstance
under which the premium may change.)
new text end

new text begin (6) new text end TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE
RETURNED AND PREMIUM REFUNDED.

(a) (Provide a brief description of the right to return -- "free look" provision of
the policy.)

(b) (Include a statement that the policy either does or does not contain provisions
providing for a refund or partial refund of premium upon the death of an insured or
surrender of the policy or certificate. If the policy contains such provisions, include a
description of them.)

deleted text begin (5) deleted text end new text begin (7) new text end THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are
eligible for Medicare, review the Medicare Supplement Buyer's Guide available from
the insurance company.

(a) (For agents) neither (insert company name) nor its agents represent Medicare, the
federal government, or any state government.

(b) (For direct response) (insert company name) is not representing Medicare, the
federal government, or any state government.

deleted text begin (6) deleted text end new text begin (8) new text end LONG-TERM CARE COVERAGE. Policies of this category are designed to
provide coverage for one or more necessary or medically necessary diagnostic, preventive,
therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting
other than an acute care unit of a hospital, such as in a nursing home, in the community,
or in the home.

This policy provides coverage in the form of a fixed dollar indemnity benefit for
covered long-term care expenses, subject to policy (limitations), (waiting periods), and
(coinsurance) requirements. (Modify this paragraph if the policy is not an indemnity
policy.)

deleted text begin (7) deleted text end new text begin (9) new text end BENEFITS PROVIDED BY THIS POLICY.

(a) (Covered services, related deductible(s), waiting periods, elimination periods,
and benefit maximums.)

(b) (Institutional benefits, by skill level.)

(c) (Noninstitutional benefits, by skill level.)

new text begin (d) (Eligibility for payment of benefits.)
new text end

new text begin (Activities of daily living and cognitive impairment shall be used to measure an
insured's need for long-term care and must be defined and described as part of the outline
of coverage.)
new text end

(Any benefit screens must be explained in this section. If these screens differ for
different benefits, explanation of the screen should accompany each benefit description. If
an attending physician or other specified person must certify a certain level of functional
dependency in order to be eligible for benefits, this too must be specified. If activities of
daily living (ADLs) are used to measure an insured's need for long-term care, then these
qualifying criteria or screens must be explained.)

deleted text begin (8) deleted text end new text begin (10) new text end LIMITATIONS AND EXCLUSIONS:

Describe:

(a) preexisting conditions;

(b) noneligible facilities/provider;

(c) noneligible levels of care (e.g., unlicensed providers, care or treatment provided
by a family member, etc.);

(d) exclusions/exceptions; and

(e) limitations.

(This section should provide a brief specific description of any policy provisions
which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify
payment of the benefits described in paragraph deleted text begin (6) deleted text end new text begin (8) new text end .)

THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH
YOUR LONG-TERM CARE NEEDS.

deleted text begin (9) deleted text end new text begin (11) new text end RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs
of long-term care services will likely increase over time, you should consider whether and
how the benefits of this plan may be adjusted. As applicable, indicate the following:

(a) that the benefit level will not increase over time;

(b) any automatic benefit adjustment provisions;

(c) whether the insured will be guaranteed the option to buy additional benefits and
the basis upon which benefits will be increased over time if not by a specified amount
or percentage;

(d) if there is such a guarantee, include whether additional underwriting or health
screening will be required, the frequency and amounts of the upgrade options, and any
significant restrictions or limitations; and

(e) whether there will be any additional premium charge imposed and how that
is to be calculated.

deleted text begin (10) deleted text end new text begin (12) new text end ALZHEIMER'S DISEASE AND OTHER ORGANIC BRAIN
DISORDERS. (State that the policy provides coverage for insureds clinically diagnosed as
having Alzheimer's disease or related degenerative and dementing illnesses. Specifically,
describe each benefit screen or other policy provision which provides preconditions to the
availability of policy benefits for such an insured.)

deleted text begin (11) deleted text end new text begin (13) new text end PREMIUM.

(a) State the total annual premium for the policy.

(b) If the premium varies with an applicant's choice among benefit options, indicate
the portion of annual premium which corresponds to each benefit option.

deleted text begin (12) deleted text end new text begin (14) new text end ADDITIONAL FEATURES.

(a) Indicate if medical underwriting is used.

(b) Describe other important features.

new text begin (15) CONTACT THE STATE DEPARTMENT OF COMMERCE OR SENIOR
LINKAGE LINE IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM
CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE
SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE
POLICY OR CERTIFICATE.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 4.

Minnesota Statutes 2004, section 62S.081, subdivision 4, is amended to read:

Subd. 4.

Forms.

An insurer shall use the forms in Appendices B new text begin (Personal
Worksheet) new text end and F new text begin (Potential Rate Increase Disclosure Form) new text end of the Long-term Care
Insurance Model Regulation adopted by the National Association of Insurance
Commissioners to comply with the requirements of subdivisions 1 and 2.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 5.

Minnesota Statutes 2004, section 62S.10, subdivision 2, is amended to read:

Subd. 2.

Contents.

The summary must include the following information:

(1) an explanation of how the long-term care benefit interacts with other components
of the policy, including deductions from death benefits;

(2) an illustration of the amount of benefits, the length of benefits, and the guaranteed
lifetime benefits, if any, for each covered person; deleted text begin and
deleted text end

(3) any exclusions, reductions, and limitations on benefits of long-term care new text begin ; and
new text end

new text begin (4) a statement that any long-term care inflation protection option required by section
62S.23 is not available under this policy new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 6.

Minnesota Statutes 2004, section 62S.13, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Death of insured. new text end

new text begin In the event of the death of the insured, this section shall
not apply to the remaining death benefit of a life insurance policy that accelerates benefits
for long-term care. In this situation, the remaining death benefits under these policies shall
be governed by section 61A.03, subdivision 1, paragraph (c). In all other situations, this
section shall apply to life insurance policies that accelerate benefits for long-term care.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 7.

Minnesota Statutes 2004, section 62S.14, subdivision 2, is amended to read:

Subd. 2.

Terms.

The terms "guaranteed renewable" and "noncancelable" may not
be used in an individual long-term care insurance policy without further explanatory
language that complies with the disclosure requirements of section 62S.20. new text begin The term
"level premium" may only be used when the insurer does not have the right to change
the premium. new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 8.

Minnesota Statutes 2004, section 62S.15, is amended to read:

62S.15 AUTHORIZED LIMITATIONS AND EXCLUSIONS.

No policy may be delivered or issued for delivery in this state as long-term care
insurance if the policy limits or excludes coverage by type of illness, treatment, medical
condition, or accident, except as follows:

(1) preexisting conditions or diseases;

(2) mental or nervous disorders; except that the exclusion or limitation of benefits on
the basis of Alzheimer's disease is prohibited;

(3) alcoholism and drug addiction;

(4) illness, treatment, or medical condition arising out of war or act of war;
participation in a felony, riot, or insurrection; service in the armed forces or auxiliary
units; suicide, attempted suicide, or intentionally self-inflicted injury; or non-fare-paying
aviation; deleted text begin and
deleted text end

(5) treatment provided in a government facility unless otherwise required by
law, services for which benefits are available under Medicare or other government
program except Medicaid, state or federal workers' compensation, employer's liability
or occupational disease law, motor vehicle no-fault law; services provided by a member
of the covered person's immediate family; and services for which no charge is normally
made in the absence of insurance new text begin ; and
new text end

new text begin (6) expenses for services or items available or paid under another long-term care
insurance or health insurance policy new text end .

This subdivision does not prohibit exclusions and limitations by type of provider or
territorial limitations.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 9.

Minnesota Statutes 2004, section 62S.20, subdivision 1, is amended to read:

Subdivision 1.

Renewability.

new text begin (a) new text end Individual long-term care insurance policies
must contain a renewability provision that is appropriately captioned, appears on the first
page of the policy, and clearly states deleted text begin the duration, where limited, of renewability and the
duration of the term of coverage for which the policy is issued and for which it may be
renewed deleted text end new text begin that the coverage is guaranteed renewable or noncancelable new text end . This subdivision
does not apply to policies which are part of or combined with life insurance policies
which do not contain a renewability provision and under which the right to nonrenew is
reserved solely to the policyholder.

new text begin (b) A long-term care insurance policy or certificate, other than one where the insurer
does not have the right to change the premium, shall include a statement that premium
rates may change.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 10.

Minnesota Statutes 2004, section 62S.24, subdivision 1, is amended to read:

Subdivision 1.

Required questions.

An application form must include the following
questions designed to elicit information as to whether, as of the date of the application, the
applicant has another long-term care insurance policy or certificate in force or whether a
long-term care policy or certificate is intended to replace any other new text begin accident and sickness
or new text end long-term care policy or certificate presently in force. A supplementary application
or other form to be signed by the applicant and agent, except where the coverage is sold
without an agent, containing the following questions may be used. If a replacement policy
is issued to a group as defined under section 62S.01, subdivision 15, clause (1), the
following questions may be modified only to the extent necessary to elicit information
about long-term care insurance policies other than the group policy being replaced;
provided, however, that the certificate holder has been notified of the replacement:

(1) do you have another long-term care insurance policy or certificate in force new text begin
(including health care service contract or health maintenance organization contract) new text end ?;

(2) did you have another long-term care insurance policy or certificate in force
during the last 12 months?;

(i) if so, with which company?; and

(ii) if that policy lapsed, when did it lapse?; deleted text begin and
deleted text end

(3) are you covered by Medicaid? new text begin ; and
new text end

new text begin (4) do you intend to replace any of your medical or health insurance coverage with
this policy (certificate)?
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 11.

Minnesota Statutes 2004, section 62S.24, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Other health insurance policies sold by agent. new text end

new text begin Agents shall list all other
health insurance policies they have sold to the applicant that are still in force or were sold
in the past five years and are no longer in force.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 12.

Minnesota Statutes 2004, section 62S.24, subdivision 3, is amended to read:

Subd. 3.

Solicitations other than direct response.

After determining that a
sale will involve replacement, an insurer, other than an insurer using direct response
solicitation methods or its agent, shall furnish the applicant, before issuance or delivery of
the individual long-term care insurance policy, a notice regarding replacement of accident
and sickness or long-term care coverage. One copy of the notice must be retained by the
applicant and an additional copy signed by the applicant must be retained by the insurer.
The required notice must be provided in the following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT OF

INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM
CARE INSURANCE

(Insurance company's name and address)

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to (your application) (information you have furnished), you intend to
lapse or otherwise terminate existing new text begin accident and sickness or new text end long-term care insurance
and replace it with an individual long-term care insurance policy to be issued by (company
name) insurance company. Your new policy provides 30 days within which you may
decide, without cost, whether you desire to keep the policy. For your own information and
protection, you should be aware of and seriously consider certain factors which may affect
the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all new text begin accident
and sickness or new text end long-term care insurance coverage you now have, and terminate your
present policy only if, after due consideration, you find that purchase of this long-term
care coverage is a wise decision.

STATEMENT TO APPLICANT BY AGENT

(BROKER OR OTHER REPRESENTATIVE):

(Use additional sheets, as necessary.)

I have reviewed your current new text begin medical health new text end insurance coverage. I believe the
replacement of insurance involved in this transaction materially improves your position.
My conclusion has taken into account the following considerations, which I call to your
attention:

(a) Health conditions which you presently have (preexisting conditions) may not
be immediately or fully covered under the new policy. This could result in denial or
delay in payment of benefits under the new policy, whereas a similar claim might have
been payable under your present policy.

(b) State law provides that your replacement policy or certificate may not contain
new preexisting conditions or probationary periods. The insurer will waive any time
periods applicable to preexisting conditions or probationary periods in the new policy (or
coverage) for similar benefits to the extent such time was spent (depleted) under the
original policy.

(c) If you are replacing existing long-term care insurance coverage, you may wish to
secure the advice of your present insurer or its agent regarding the proposed replacement of
your present policy. This is not only your right, but it is also in your best interest to make
sure you understand all the relevant factors involved in replacing your present coverage.

(d) If, after due consideration, you still wish to terminate your present policy and
replace it with new coverage, be certain to truthfully and completely answer all questions
on the application concerning your medical health history. Failure to include all material
medical information on an application may provide a basis for the company to deny any
future claims and to refund your premium as though your policy had never been in force.
After the application has been completed and before you sign it, reread it carefully to be
certain that all information has been properly recorded.

.

(Signature of Agent, Broker, or Other Representative)

(Typed Name and Address of Agency or Broker)

The above "Notice to Applicant" was delivered to me on:

	.
	(Date)
	.
	(Applicant's Signature)

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 13.

Minnesota Statutes 2004, section 62S.24, subdivision 4, is amended to read:

Subd. 4.

Direct response solicitations.

Insurers using direct response solicitation
methods shall deliver a notice regarding replacement of long-term care coverage to
the applicant upon issuance of the policy. The required notice must be provided in the
following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT OF new text begin
ACCIDENT AND SICKNESS OR
new text end

LONG-TERM CARE INSURANCE

(Insurance company's name and address)

SAVE THIS NOTICE! IT MAY BE

IMPORTANT TO YOU IN THE FUTURE.

According to (your application) (information you have furnished), you intend to
lapse or otherwise terminate existing new text begin accident and sickness or new text end long-term care insurance
and replace it with the long-term care insurance policy delivered herewith issued by
(company name) insurance company.

Your new policy provides 30 days within which you may decide, without cost,
whether you desire to keep the policy. For your own information and protection, you
should be aware of and seriously consider certain factors which may affect the insurance
protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all long-term care
insurance coverage you now have, and terminate your present policy only if, after due
consideration, you find that purchase of this long-term care coverage is a wise decision.

(a) Health conditions which you presently have (preexisting conditions) may not
be immediately or fully covered under the new policy. This could result in denial or
delay in payment of benefits under the new policy, whereas a similar claim might have
been payable under your present policy.

(b) State law provides that your replacement policy or certificate may not contain
new preexisting conditions or probationary periods. Your insurer will waive any time
periods applicable to preexisting conditions or probationary periods in the new policy (or
coverage) for similar benefits to the extent such time was spent (depleted) under the
original policy.

(c) If you are replacing existing long-term care insurance coverage, you may wish to
secure the advice of your present insurer or its agent regarding the proposed replacement of
your present policy. This is not only your right, but it is also in your best interest to make
sure you understand all the relevant factors involved in replacing your present coverage.

(d) (To be included only if the application is attached to the policy.)

If, after due consideration, you still wish to terminate your present policy and replace
it with new coverage, read the copy of the application attached to your new policy and be
sure that all questions are answered fully and correctly. Omissions or misstatements in
the application could cause an otherwise valid claim to be denied. Carefully check the
application and write to (company name and address) within 30 days if any information is
not correct and complete, or if any past medical history has been left out of the application.

	.
	(Company Name)

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 14.

Minnesota Statutes 2004, section 62S.24, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Life insurance policies. new text end

new text begin Life insurance policies that accelerate benefits for
long-term care shall comply with this section if the policy being replaced is a long-term
care insurance policy. If the policy being replaced is a life insurance policy, the insurer
shall comply with the replacement requirements of sections 61A.53 to 61A.60. If a
life insurance policy that accelerates benefits for long-term care is replaced by another
such policy, the replacing insurer shall comply with both the long-term care and the life
insurance replacement requirements.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 15.

Minnesota Statutes 2004, section 62S.24, is amended by adding a subdivision
to read:

new text begin Subd. 8. new text end

new text begin Exchange for long-term care partnership policy; addition of policy
rider. new text end

new text begin (a) If federal law is amended or a federal waiver is granted with respect to the
long-term care partnership program referenced in section 256B.0571, issuers of long-term
care policies may voluntarily exchange a current long-term care insurance policy for a
long-term care partnership policy that meets the requirements of Public Law 109-171,
section 6021, after the effective date of the state plan amendment implementing the
partnership program in this state.
new text end

new text begin (b) If federal law is amended or a federal waiver is granted with respect to the
long-term care partnership program referenced in section 256B.0571, allowing an existing
long-term care insurance policy to qualify as a partnership policy by addition of a policy
rider, the issuer of the policy is authorized to add the rider to the policy after the effective
date of the state plan amendment implementing the partnership program in this state.
new text end

new text begin (c) The commissioner, in cooperation with the commissioner of human services,
shall pursue any federal law changes or waivers necessary to allow the implementation
of paragraphs (a) and (b).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 16.

Minnesota Statutes 2004, section 62S.25, subdivision 6, is amended to read:

Subd. 6.

Claims denied.

Each insurer shall report annually by June 30 the number
of claims denied new text begin for any reason new text end during the reporting period for each class of business,
expressed as a percentage of claims denied, other than claims denied for failure to meet
the waiting period or because of any applicable preexisting condition. new text begin For purposes of
this subdivision, "claim" means a request for payment of benefits under an in-force policy
regardless of whether the benefit claimed is covered under the policy or any terms or
conditions of the policy have been met.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 17.

Minnesota Statutes 2004, section 62S.25, is amended by adding a subdivision
to read:

new text begin Subd. 7. new text end

new text begin Reports. new text end

new text begin Reports under this section shall be done on a statewide basis and
filed with the commissioner. They shall include, at a minimum, the information in the
format contained in Appendix E (Claim Denial Reporting Form) and in Appendix G
(Replacement and Lapse Reporting Form) of the Long-Term Care Model Regulation
adopted by the National Association of Insurance Commissioners.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 18.

Minnesota Statutes 2004, section 62S.26, is amended to read:

62S.26 LOSS RATIO.

new text begin Subdivision 1. new text end

new text begin Minimum loss ratio. new text end

deleted text begin (a) deleted text end The minimum loss ratio must be at least 60
percent, calculated in a manner which provides for adequate reserving of the long-term
care insurance risk. In evaluating the expected loss ratio, the commissioner shall give
consideration to all relevant factors, including:

(1) statistical credibility of incurred claims experience and earned premiums;

(2) the period for which rates are computed to provide coverage;

(3) experienced and projected trends;

(4) concentration of experience within early policy duration;

(5) expected claim fluctuation;

(6) experience refunds, adjustments, or dividends;

(7) renewability features;

(8) all appropriate expense factors;

(9) interest;

(10) experimental nature of the coverage;

(11) policy reserves;

(12) mix of business by risk classification; and

(13) product features such as long elimination periods, high deductibles, and high
maximum limits.

new text begin Subd. 2. new text end

new text begin Life insurance policies. new text end

new text begin Subdivision 1 shall not apply to life insurance
policies that accelerate benefits for long-term care. A life insurance policy that funds
long-term care benefits entirely by accelerating the death benefit is considered to provide
reasonable benefits in relation to premiums paid, if the policy complies with all of the
following provisions:
new text end

new text begin (1) the interest credited internally to determine cash value accumulations, including
long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest
rate for cash value accumulations without long-term care set forth in the policy;
new text end

new text begin (2) the portion of the policy that provides life insurance benefits meets the
nonforfeiture requirements of section 61A.24;
new text end

new text begin (3) the policy meets the disclosure requirements of sections 62S.09, 62S.10, and
62S.11; and
new text end

new text begin (4) an actuarial memorandum is filed with the insurance department that includes:
new text end

new text begin (i) a description of the basis on which the long-term care rates were determined;
new text end

new text begin (ii) a description of the basis for the reserves;
new text end

new text begin (iii) a summary of the type of policy, benefits, renewability, general marketing
method, and limits on ages of issuance;
new text end

new text begin (iv) a description and a table of each actuarial assumption used. For expenses,
an insurer must include percentage of premium dollars per policy and dollars per unit
of benefits, if any;
new text end

new text begin (v) a description and a table of the anticipated policy reserves and additional reserves
to be held in each future year for active lives;
new text end

new text begin (vi) the estimated average annual premium per policy and the average issue age;
new text end

new text begin (vii) a statement as to whether underwriting is performed at the time of application.
The statement shall indicate whether underwriting is used and, if used, the statement
shall include a description of the type or types of underwriting used, such as medical
underwriting or functional assessment underwriting. Concerning a group policy, the
statement shall indicate whether the enrollee or any dependent will be underwritten and
when underwriting occurs; and
new text end

new text begin (viii) a description of the effect of the long-term care policy provision on the required
premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both
for active lives and those in long-term care claim status.
new text end

new text begin Subd. 3. new text end

new text begin Nonapplication. new text end

deleted text begin (b) deleted text end This section does not apply to policies or certificates
that are subject to sections 62S.021, 62S.081, and 62S.265, and that comply with those
sections.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 19.

Minnesota Statutes 2004, section 62S.266, subdivision 2, is amended to read:

Subd. 2.

Requirement.

new text begin (a) new text end An insurer must offer each prospective policyholder a
nonforfeiture benefit in compliance with the following requirements:

(1) a policy or certificate offered with nonforfeiture benefits must have coverage
elements, eligibility, benefit triggers, and benefit length that are the same as coverage to be
issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer must
be the benefit described in subdivision 5; and

(2) the offer must be in writing if the nonforfeiture benefit is not otherwise described
in the outline of coverage or other materials given to the prospective policyholder.

new text begin (b) When a group long-term care insurance policy is issued, the offer required in
paragraph (a) shall be made to the group policy holder. However, if the policy is issued as
group long-term care insurance as defined in section 62S.01, subdivision 15, clause (4),
other than to a continuing care retirement community or other similar entity, the offering
shall be made to each proposed certificate holder.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 20.

Minnesota Statutes 2004, section 62S.29, subdivision 1, is amended to read:

Subdivision 1.

Requirements.

An insurer or other entity marketing long-term care
insurance coverage in this state, directly or through its producers, shall:

(1) establish marketing procedures new text begin and agent training requirements new text end to assure that deleted text begin a
deleted text end new text begin any marketing activities, including any new text end comparison of policies by its agents or other
producers new text begin , new text end are fair and accurate;

(2) establish marketing procedures to assure excessive insurance is not sold or issued;

(3) display prominently by type, stamp, or other appropriate means, on the first page
of the outline of coverage and policy, the following:

"Notice to buyer: This policy may not cover all of the costs associated with
long-term care incurred by the buyer during the period of coverage. The buyer is advised
to review carefully all policy limitations.";

(4) new text begin provide copies of the disclosure forms required in section 62S.081, subdivision
4, to the applicant;
new text end

new text begin (5) new text end inquire and otherwise make every reasonable effort to identify whether a
prospective applicant or enrollee for long-term care insurance already has long-term care
insurance and the types and amounts of the insurance;

deleted text begin (5) deleted text end new text begin (6) new text end establish auditable procedures for verifying compliance with this subdivision;
deleted text begin and
deleted text end

deleted text begin (6) deleted text end new text begin (7) new text end if applicable, provide written notice to the prospective policyholder and
certificate holder, at solicitation, that a senior insurance counseling program approved
by the commissioner is available and the name, address, and telephone number of the
program new text begin ;
new text end

new text begin (8) use the terms "noncancelable" or "level premium" only when the policy or
certificate conforms to section 62S.14; and
new text end

new text begin (9) provide an explanation of contingent benefit upon lapse provided for in section
62S.266 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 21.

Minnesota Statutes 2004, section 62S.30, is amended to read:

62S.30 deleted text begin APPROPRIATENESS OF RECOMMENDED PURCHASE deleted text end new text begin
SUITABILITY new text end .

deleted text begin In recommending the purchase or replacement of a long-term care insurance policy
or certificate, an agent shall comply with section 60K.46, subdivision 4.
deleted text end

new text begin Subdivision 1. new text end

new text begin Standards. new text end

new text begin Every insurer or other entity marketing long-term care
insurance shall:
new text end

new text begin (1) develop and use suitability standards to determine whether the purchase or
replacement of long-term care insurance is appropriate for the needs of the applicant;
new text end

new text begin (2) train its agents in the use of its suitability standards; and
new text end

new text begin (3) maintain a copy of its suitability standards and make them available for
inspection upon request by the commissioner.
new text end

new text begin Subd. 2. new text end

new text begin Procedures. new text end

new text begin (a) To determine whether the applicant meets the standards
developed by the insurer or other entity marketing long-term care insurance, the agent
and insurer or other entity marketing long-term care insurance shall develop procedures
that take the following into consideration:
new text end

new text begin (1) the ability to pay for the proposed coverage and other pertinent financial
information related to the purchase of the coverage;
new text end

new text begin (2) the applicant's goals or needs with respect to long-term care and the advantages
and disadvantages of insurance to meet those goals or needs; and
new text end

new text begin (3) the values, benefits, and costs of the applicant's existing insurance, if any, when
compared to the values, benefits, and costs of the recommended purchase or replacement.
new text end

new text begin (b) The insurer or other entity marketing long-term care insurance, and where an
agent is involved, the agent, shall make reasonable efforts to obtain the information set
forth in paragraph (a). The efforts shall include presentation to the applicant, at or prior
to application, of the "Long-Term Care Insurance Personal Worksheet." The personal
worksheet used by the insurer or other entity marketing long-term care insurance shall
contain, at a minimum, the information in the format contained in Appendix B of the
Long-Term Care Model Regulation adopted by the National Association of Insurance
Commissioners, in not less than 12-point type. The insurer or other entity marketing
long-term care insurance may request the applicant to provide additional information to
comply with its suitability standards. The insurer or other entity marketing long-term care
insurance shall file a copy of its personal worksheet with the commissioner.
new text end

new text begin (c) A completed personal worksheet shall be returned to the insurer or other entity
marketing long-term care insurance prior to consideration of the applicant for coverage,
except the personal worksheet need not be returned for sales of employer group long-term
care insurance to employees and their spouses. The sale or dissemination by the insurer
or other entity marketing long-term care insurance, or the agent, of information obtained
through the personal worksheet, is prohibited.
new text end

new text begin (d) The insurer or other entity marketing long-term care insurance shall use the
suitability standards it has developed under this section in determining whether issuing
long-term care insurance coverage to an applicant is appropriate. Agents shall use the
suitability standards developed by the insurer or other entity marketing long-term care
insurance in marketing long-term care insurance.
new text end

new text begin (e) At the same time as the personal worksheet is provided to the applicant, the
disclosure form entitled "Things You Should Know Before You Buy Long-Term Care
Insurance" shall be provided. The form shall be in the format contained in Appendix C of
the Long-Term Care Insurance Model Regulation adopted by the National Association of
Insurance Commissioners in not less than 12-point type.
new text end

new text begin (f) If the insurer or other entity marketing long-term care insurance determines
that the applicant does not meet its financial suitability standards, or if the applicant has
declined to provide the information, the insurer or other entity marketing long-term
care insurance may reject the application. In the alternative, the insurer or other entity
marketing long-term care insurance shall send the applicant a letter similar to Appendix D
of the Long-Term Care Insurance Model Regulation adopted by the National Association
of Insurance Commissioners. However, if the applicant has declined to provide financial
information, the insurer or other entity marketing long-term care insurance may use some
other method to verify the applicant's intent. The applicant's returned letter or a record of
the alternative method of verification shall be made part of the applicant's file.
new text end

new text begin Subd. 3. new text end

new text begin Reports. new text end

new text begin The insurer or other entity marketing long-term care insurance
shall report annually to the commissioner the total number of applications received from
residents of this state, the number of those who declined to provide information on the
personal worksheet, the number of applicants who did not meet the suitability standards,
and the number of those who chose to confirm after receiving a suitability letter.
new text end

new text begin Subd. 4. new text end

new text begin Application. new text end

new text begin This section shall not apply to life insurance policies that
accelerate benefits for long-term care.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 22.

new text begin [62S.315] PRODUCER TRAINING.
new text end

new text begin The commissioner shall approve producer training requirements in accordance with
the NAIC Long-Term Care Insurance Model Act provisions. The commissioner of the
Department of Human Services shall provide technical assistance and information to the
commissioner in accordance with Public Law 109-171, section 6021.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 23.

Minnesota Statutes 2004, section 144.6501, subdivision 6, is amended to read:

Subd. 6.

Medical assistance payment.

(a) An admission contract for a facility that
is certified for participation in the medical assistance program must state that neither the
prospective resident, nor anyone on the resident's behalf, is required to pay privately any
amount for which the resident's care at the facility has been approved for payment by
medical assistance or to make any kind of donation, voluntary or otherwise. new text begin Except as
permitted under section 6015 of the Deficit Reduction Act of 2005, Public Law 109-171,
new text end an admission contract must state that the facility does not require as a condition of
admission, either in its admission contract or by oral promise before signing the admission
contract, that residents remain in private pay status for any period of time.

(b) The admission contract must state that upon presentation of proof of eligibility,
the facility will submit a medical assistance claim for reimbursement and will return any
and all payments made by the resident, or by any person on the resident's behalf, for
services covered by medical assistance, upon receipt of medical assistance payment.

(c) A facility that participates in the medical assistance program shall not charge for
the day of the resident's discharge from the facility or subsequent days.

(d) If a facility's charges incurred by the resident are delinquent for 30 days, and
no person has agreed to apply for medical assistance for the resident, the facility may
petition the court under chapter 525 to appoint a representative for the resident in order to
apply for medical assistance for the resident.

(e) The remedy provided in this subdivision does not preclude a facility from seeking
any other remedy available under other laws of this state.

Sec. 24.

Minnesota Statutes 2004, section 256B.02, subdivision 9, is amended to read:

Subd. 9.

Private health care coverage.

"Private health care coverage" means any
plan regulated by chapter 62A, 62C or 64B. Private health care coverage also includes
any deleted text begin self-insurance deleted text end new text begin self-insured new text end plan providing health care benefits new text begin , pharmacy benefit
manager, service benefit plan, managed care organization, and other parties that are by
contract legally responsible for payment of a claim for a health care item or service for an
individual receiving medical benefits under chapter 256B, 256D, or 256L new text end .

Sec. 25.

Minnesota Statutes 2004, section 256B.056, subdivision 2, is amended to read:

Subd. 2.

Homestead deleted text begin ; deleted text end exclusion new text begin and homestead equity limit new text end for institutionalized
persons.

new text begin (a) new text end The homestead shall be excluded for the first six calendar months of a
person's stay in a long-term care facility and shall continue to be excluded for as long as
the recipient can be reasonably expected to return to the homestead. For purposes of
this subdivision, "reasonably expected to return to the homestead" means the recipient's
attending physician has certified that the expectation is reasonable, and the recipient can
show that the cost of care upon returning home will be met through medical assistance
or other sources. The homestead shall continue to be excluded for persons residing in
a long-term care facility if it is used as a primary residence by one of the following
individuals:

deleted text begin (a) deleted text end new text begin (1) new text end the spouse;

deleted text begin (b) deleted text end new text begin (2) new text end a child under age 21;

deleted text begin (c) deleted text end new text begin (3) new text end a child of any age who is blind or permanently and totally disabled as defined
in the supplemental security income program;

deleted text begin (d) deleted text end new text begin (4) new text end a sibling who has equity interest in the home and who resided in the home for
at least one year immediately before the date of the person's admission to the facility; or

deleted text begin (e) deleted text end new text begin (5) new text end a child of any age, or, subject to federal approval, a grandchild of any age,
who resided in the home for at least two years immediately before the date of the person's
admission to the facility, and who provided care to the person that permitted the person to
reside at home rather than in an institution.

new text begin (b) Effective for applications filed on or after July 1, 2006, and for renewals after
July 1, 2006, for persons who first applied for payment of long-term care services on
or after January 2, 2006, the equity interest in the homestead of an individual whose
eligibility for long-term care services is determined on or after January 1, 2006, shall not
exceed $500,000, unless it is the lawful residence of the individual's spouse or child
who is under age 21, blind, or disabled. The amount specified in this paragraph shall be
increased beginning in year 2011, from year to year based on the percentage increase in
the Consumer Price Index for all urban consumers, all items - United States city average,
rounded to the nearest $1,000. This provision may be waived in the case of demonstrated
hardship by a process to be determined by the secretary of health and human services
pursuant to section 6014 of the Deficit Reduction Act of 2005, Public Law 109-171.
new text end

Sec. 26.

Minnesota Statutes 2004, section 256B.056, is amended by adding a
subdivision to read:

new text begin Subd. 3e. new text end

new text begin Treatment of continuing care retirement and life care community
entrance fees. new text end

new text begin An entrance fee paid by an individual to a continuing care retirement or
life care community shall be treated as an available asset to the extent that:
new text end

new text begin (1) the individual has the ability to use the entrance fee, or the contract provides that
the entrance fee may be used, to pay for care should other resources or income of the
individual be insufficient to pay for care;
new text end

new text begin (2) the individual is eligible for a refund of any remaining entrance fees when
the individual dies or terminates the continuing care retirement or life care community
contract and leaves the community; and
new text end

new text begin (3) the entrance fee does not confer an ownership interest in the continuing care
retirement or life care community.
new text end

Sec. 27.

Minnesota Statutes 2004, section 256B.056, is amended by adding a
subdivision to read:

new text begin Subd. 11. new text end

new text begin Treatment of annuities. new text end

new text begin (a) Any individual applying for or seeking
recertification of eligibility for medical assistance payment of long-term care services
shall provide a complete description of any interest either the individual or the individual's
spouse has in annuities. The individual and the individual's spouse shall furnish the
agency responsible for determining eligibility with complete current copies of their
annuities and related documents for review as part of the application process on disclosure
forms provided by the department as part of their application.
new text end

new text begin (b) The disclosure form shall include a statement that the department becomes the
remainder beneficiary under the annuity or similar financial instrument by virtue of the
receipt of medical assistance. The disclosure form shall include a notice to the issuer of
the department's right under this section as a preferred remainder beneficiary under the
annuity or similar financial instrument for medical assistance furnished to the individual
or the individual's spouse, and require the issuer to provide confirmation that a remainder
beneficiary designation has been made and to notify the county agency when there is a
change in the amount of the income or principal being withdrawn from the annuity or
other similar financial instrument at the time of the most recent disclosure required under
this section. The individual and the individual's spouse shall execute separate disclosure
forms for each annuity or similar financial instrument that they are required to disclose
under this section and in which they have an interest.
new text end

new text begin (c) An issuer of an annuity or similar financial instrument who receives notice on a
disclosure form as described in paragraph (b) shall provide confirmation to the requesting
agency that a remainder beneficiary designating the state has been made and shall notify
the county agency when there is a change in the amount of income or principal being
withdrawn from the annuity or other similar financial instrument. The county agency shall
provide the issuer with the name, address, and telephone number of a unit within the
department that the insurer can contact to comply with this paragraph.
new text end

Sec. 28.

Minnesota Statutes 2005 Supplement, section 256B.0571, is amended to read:

256B.0571 LONG-TERM CARE PARTNERSHIP new text begin PROGRAM new text end .

Subdivision 1.

Definitions.

For purposes of this section, the following terms have
the meanings given them.

deleted text begin Subd. 2. deleted text end

deleted text begin Home care service. deleted text end

deleted text begin "Home care service" means care described in section
.
deleted text end

Subd. 3.

Long-term care insurance.

"Long-term care insurance" means a policy
described in section 62S.01.

Subd. 4.

Medical assistance.

"Medical assistance" means the program of medical
assistance established under section 256B.01.

deleted text begin Subd. 5. deleted text end

deleted text begin Nursing home. deleted text end

deleted text begin "Nursing home" means a nursing home as described
in section .
deleted text end

Subd. 6.

Partnership policy.

"Partnership policy" means a long-term care insurance
policy that meets the requirements under subdivision 10 deleted text begin or 11, regardless of when the
policy deleted text end new text begin and new text end was deleted text begin first deleted text end issued new text begin on or after the effective date of the state plan amendment new text end .

Subd. 7.

Partnership program.

"Partnership program" means the Minnesota
partnership for long-term care program established under this section.

new text begin Subd. 7a. new text end

new text begin Protected assets. new text end

new text begin "Protected assets" means assets or proceeds of assets
that are protected from recovery under subdivisions 13 and 15.
new text end

Subd. 8.

Program established.

(a) The commissioner, in cooperation with the
commissioner of commerce, shall establish the Minnesota partnership for long-term care
program to provide for the financing of long-term care through a combination of private
insurance and medical assistance.

(b) An individual who meets the requirements in this paragraph is eligible to
participate in the partnership program. The individual must:

(1) be a Minnesota resident new text begin at the time coverage first became effective under the
partnership policy new text end ;

(2) deleted text begin purchase a partnership policy that is delivered, issued for delivery, or renewed on
or after the effective date of Laws 2005, First Special Session chapter 4, article 7, section
5, and maintain the partnership policy in effect throughout the period of participation in
the partnership program deleted text end new text begin be a beneficiary of a partnership policy that (i) is issued on or
after the effective date of the state plan amendment implementing the partnership program
in Minnesota, or (ii) qualifies as a partnership policy under the provisions of section
62S.24, subdivision 8 new text end ; and

(3) deleted text begin exhaust the minimum deleted text end new text begin have exhausted all of the new text end benefits under the partnership
policy as described in this section. Benefits received under a long-term care insurance
policy before deleted text begin the effective date of Laws 2005, First Special Session chapter 4, article 7,
section 5 deleted text end new text begin July 1, 2006 new text end , do not count toward the exhaustion of benefits required in this
subdivision.

Subd. 9.

Medical assistance eligibility.

(a) Upon application deleted text begin of deleted text end new text begin for medical
assistance program payment of long-term care services by new text end an individual who meets the
requirements described in subdivision 8, the commissioner shall determine the individual's
eligibility for medical assistance according to paragraphs (b) deleted text begin and (c) deleted text end new text begin to (i) new text end .

(b) After deleted text begin disregarding financial deleted text end new text begin determining new text end assets deleted text begin exempted under medical
assistance eligibility requirements deleted text end new text begin subject to the asset limit under section 256B.056,
subdivision 3 or 3c, or section 256B.057, subdivision 9 or 10 new text end , the commissioner shall
deleted text begin disregard an additional amount of financial assets equal deleted text end new text begin allow the individual to designate
assets to be protected from recovery under subdivisions 13 and 15 up new text end to the dollar amount
of deleted text begin coverage deleted text end new text begin the benefits new text end utilized under the partnership policy. new text begin Designated assets shall be
disregarded for purposes of determining eligibility for payment of long-term care services.
new text end

(c) deleted text begin The commissioner shall consider the individual's income according to medical
assistance eligibility requirements. deleted text end new text begin The individual shall identify the designated assets and
the full fair market value of those assets and designate them as assets to be protected at
the time of initial application for medical assistance. The full fair market value of real
property or interests in real property shall be based on the most recent full assessed value
for property tax purposes for the real property, unless the individual provides a complete
professional appraisal by a licensed appraiser to establish the full fair market value. The
extent of a life estate in real property shall be determined using the life estate table in the
health care program's manual. Ownership of any asset in joint tenancy shall be treated as
ownership as tenants in common for purposes of its designation as a disregarded asset.
The unprotected value of any protected asset is subject to estate recovery according to
subdivisions 13 and 15.
new text end

new text begin (d) The right to designate assets to be protected is personal to the individual and
ends when the individual dies, except as otherwise provided in subdivisions 13 and
15. It does not include the increase in the value of the protected asset and the income,
dividends, or profits from the asset. It may be exercised by the individual or by anyone
with the legal authority to do so on the individual's behalf. It shall not be sold, assigned,
transferred, or given away.
new text end

new text begin (e) If the dollar amount of the benefits utilized under a partnership policy is greater
than the full fair market value of all assets protected at the time of the application for
medical assistance long-term care services, the individual may designate additional assets
that become available during the individual's lifetime for protection under this section.
The individual must make the designation in writing to the county agency no later than
the last date on which the individual must report a change in circumstances to the county
agency, as provided for under the medical assistance program. Any excess used for this
purpose shall not be available to the individual's estate to protect assets in the estate from
recovery under section 256B.15, 524.3-1202, or otherwise.
new text end

new text begin (f) This section applies only to estate recovery under United States Code, title 42,
section 1396p, subsections (a) and (b), and does not apply to recovery authorized by other
provisions of federal law, including, but not limited to, recovery from trusts under United
States Code, title 42, section 1396p, subsection (d)(4)(A) and (C), or to recovery from
annuities, or similar legal instruments, subject to section 6012, subsections (a) and (b), of
the Deficit Reduction Act of 2005, Public Law 109-171.
new text end

new text begin (g) An individual's protected assets owned by the individual's spouse who applies
for payment of medical assistance long-term care services shall not be protected assets or
disregarded for purposes of eligibility of the individual's spouse solely because they were
protected assets of the individual.
new text end

new text begin (h) Assets designated under this subdivision shall not be subject to penalty under
section 256B.0595.
new text end

new text begin (i) The commissioner shall otherwise determine the individual's eligibility
for payment of long-term care services according to medical assistance eligibility
requirements.
new text end

Subd. 10.

deleted text begin Dollar-for-dollar asset protection policies deleted text end new text begin Inflation protection new text end .

deleted text begin (a) A
dollar-for-dollar asset protection policy must meet all of the requirements in paragraphs
(b) to (e).
deleted text end

deleted text begin (b) The policy must satisfy the requirements of chapter 62S.
deleted text end

deleted text begin (c) The policy must offer an elimination period of not more than 180 days for an
adjusted premium.
deleted text end

deleted text begin (d) The policy must satisfy the requirements established by the commissioner of
human services under subdivision 14.
deleted text end

deleted text begin (e) Minimum daily benefits shall be $130 for nursing home care or $65 for home
care, with inflation protection provided in the policy as described in section deleted text begin 62S.23,
subdivision 1 deleted text end , clause (1). These minimum daily benefit amounts shall be adjusted by the
commissioner on October 1 of each year by a percentage equal to the inflation protection
feature described in section deleted text begin 62S.23, subdivision 1 deleted text end , clause (1), for purposes of setting
minimum requirements that a policy must meet in future years in order to initially qualify
as an approved policy under this subdivision. Adjusted minimum daily benefit amounts
shall be rounded to the nearest whole dollar.
deleted text end

new text begin A long-term care partnership policy must provide the inflation protection described
in this paragraph. If the policy is sold to an individual who:
new text end

new text begin (1) has not attained age 61 as of the date of purchase, the policy provides compound
annual inflation protection;
new text end

new text begin (2) has attained age 61, but has not attained age 76 as of such date, the policy
provides some level of inflation protection; and
new text end

new text begin (3) has attained age 76 as of such date, the policy may, but is not required to, provide
some level of inflation protection.
new text end

deleted text begin Subd. 11. deleted text end

deleted text begin Total asset protection policies. deleted text end

deleted text begin (a) A total asset protection policy must
meet all of the requirements in subdivision 10, paragraphs (b) to (d), and this subdivision.
deleted text end

deleted text begin (b) Minimum coverage shall be for a period of not less than three years and for a
dollar amount equal to 36 months of nursing home care at the minimum daily benefit rate
determined and adjusted under paragraph (c).
deleted text end

deleted text begin (c) Minimum daily benefits shall be $150 for nursing home care or $75 for home
care, with inflation protection provided in the policy as described in section deleted text begin 62S.23,
subdivision 1 deleted text end , clause (1). These minimum daily benefit amounts shall also be adjusted
by the commissioner on October 1 of each year by a percentage equal to the inflation
protection feature described in section deleted text begin 62S.23, subdivision 1 deleted text end , clause (1), for purposes of
setting minimum requirements that a policy must meet in future years in order to initially
qualify as an approved policy under this subdivision. Adjusted minimum daily benefit
amounts shall be rounded to the nearest whole dollar.
deleted text end

deleted text begin (d) The policy must cover all of the following services:
deleted text end

deleted text begin (1) nursing home stay;
deleted text end

deleted text begin (2) home care service; and
deleted text end

deleted text begin (3) care management.
deleted text end

Subd. 12.

Compliance with federal law.

An issuer of a partnership policy must
comply with deleted text begin any federal law authorizing partnership policies in Minnesota deleted text end new text begin Public Law
109-171, section 6021 new text end , including any federal regulations, as amended, adopted under that
law. deleted text begin This subdivision does not require compliance with any provision of this federal
law until the date upon which the law requires compliance with the provision. The
commissioner has authority to enforce this subdivision.
deleted text end

Subd. 13.

Limitations on estate recovery.

(a) deleted text begin For an individual who exhausts the
minimum benefits of a deleted text end deleted text begin dollar-for-dollar asset protection deleted text end deleted text begin policy under subdivision 10, and
is determined eligible for medical assistance under subdivision 9, the state shall limit
recovery under the provisions of section 256B.15 against the estate of the individual or
individual's spouse for medical assistance benefits received by that individual to an amount
that exceeds the dollar amount of coverage utilized under the partnership policy. deleted text end new text begin Protected
assets of the individual shall not be subject to recovery under section 256B.15 or section
524.3-1201 for medical assistance or alternative care paid on behalf of the individual.
Protected assets of the individual in the estate of the individual's surviving spouse shall
not be liable to pay a claim for recovery of medical assistance paid for the predeceased
individual that is filed in the estate of the surviving spouse under section 256B.15.
Protected assets of the individual shall not be protected assets in the surviving spouse's
estate by reason of the preceding sentence and shall be subject to recovery under section
256B.15 or 524.3-1201 for medical assistance paid on behalf of the surviving spouse.
new text end

(b) deleted text begin For an individual who exhausts the minimum benefits of a total asset protection
policy under subdivision 11, and is determined eligible for medical assistance under
subdivision 9, the state shall not seek recovery under the provisions of section 256B.15
against the estate of the individual or individual's spouse for medical assistance benefits
received by that individual. deleted text end new text begin The personal representative may protect the full fair market
value of an individual's unprotected assets in the individual's estate in an amount equal
to the unused amount of asset protection the individual had on the date of death. The
personal representative shall apply the asset protection so that the full fair market value of
any unprotected asset in the estate is protected. When or if the asset protection available
to the personal representative is or becomes less than the full fair market value of any
remaining unprotected asset, it shall be applied to partially protect one unprotected asset.
new text end

new text begin (c) The asset protection described in paragraph (a) terminates with respect to an asset
includable in the individual's estate under chapter 524 or section 256B.15:
new text end

new text begin (1) when the estate distributes the asset; or
new text end

new text begin (2) if the estate of the individual has not been probated within one year from the
date of death.
new text end

new text begin (d) If an individual owns a protected asset on the date of death and the estate is
opened for probate more than one year after death, the state or a county agency may file
and collect claims in the estate under section 256B.15, and no statute of limitations in
chapter 524 that would otherwise limit or bar the claim shall apply.
new text end

new text begin (e) Except as otherwise provided, nothing in this section shall limit or prevent
recovery of medical assistance.
new text end

Subd. 14.

Implementation.

deleted text begin (a) If federal law is amended or a federal waiver is
granted to permit implementation of this section, the commissioner, in consultation with
the commissioner of commerce, may alter the requirements of subdivisions 10 and 11,
and may establish additional requirements for approved policies in order to conform with
federal law or waiver authority. In establishing these requirements, the commissioner shall
seek to maximize purchase of qualifying policies by Minnesota residents while controlling
medical assistance costs.
deleted text end

deleted text begin (b) The commissioner is authorized to suspend implementation of this section
until the next session of the legislature if the commissioner, in consultation with the
commissioner of commerce, determines that the federal legislation or federal waiver
authorizing a partnership program in Minnesota is likely to impose substantial unforeseen
costs on the state budget.
deleted text end

deleted text begin (c) The commissioner must take action under paragraph (a) or (b) within 45 days of
final federal action authorizing a partnership policy in Minnesota.
deleted text end

deleted text begin (d) The commissioner must notify the appropriate legislative committees of
action taken under this subdivision within 50 days of final federal action authorizing a
partnership policy in Minnesota.
deleted text end

deleted text begin (e) The commissioner must publish a notice in the State Register of implementation
decisions made under this subdivision as soon as practicable. deleted text end new text begin The commissioner shall
submit a state plan amendment to the federal government to implement the long-term care
partnership program in accordance with this section.
new text end

new text begin Subd. 15. new text end

new text begin Limitation on liens. new text end

new text begin (a) An individual's interest in real property shall not
be subject to a medical assistance lien or a notice of potential claim while it is protected
under subdivision 9, to the extent it is protected.
new text end

new text begin (b) Medical assistance liens or liens arising under notices of potential claims against
an individual's interests in real property in their estate that are designated as protected
under subdivision 13, paragraph (b), shall be released to the extent of the dollar value
of the protection applied to the interest.
new text end

new text begin (c) If an interest in real property is protected from a lien for recovery of medical
assistance paid on behalf of the individual under paragraph (a) or (b), no such lien for
recovery of medical assistance paid on behalf of that individual shall be filed against the
protected interest in real property after it is distributed to the individual's heirs or devisees.
new text end

new text begin Subd. 16. new text end

new text begin Burden of proof. new text end

new text begin Any individual or the personal representative of the
individual's estate who asserts that an asset is a disregarded or protected asset under
this section in connection with any determination of eligibility for benefits under the
medical assistance program or any appeal, case, controversy, or other proceedings, shall
have the initial burden of:
new text end

new text begin (1) documenting and proving by convincing evidence that the asset or source of
funds for the asset in question was designated as disregarded or protected;
new text end

new text begin (2) tracing the asset and the proceeds of the asset from that time forward; and
new text end

new text begin (3) documenting that the asset or proceeds of the asset remained disregarded or
protected at all relevant times.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 29.

new text begin [256B.0594] PAYMENT OF BENEFITS FROM AN ANNUITY.
new text end

new text begin When payment becomes due under an annuity that names the department a
remainder beneficiary as described in section 256B.056, subdivision 11, the issuer shall
request and the department shall, within 45 days after receipt of the request, provide a
written statement of the total amount of the medical assistance paid. Upon timely receipt
of the written statement of the amount of medical assistance paid, the issuer shall pay the
department an amount equal to the lesser of the amount due the department under the
annuity or the total amount of medical assistance paid on behalf of the individual or the
individual's spouse. Any amounts remaining after the issuer's payment to the department
shall be payable according to the terms of the annuity or similar financial instrument. The
county agency or the department shall provide the issuer with the name, address, and
telephone number of a unit within the department the issuer can contact to comply with this
section. The requirements of section 72A.201, subdivision 4, clause (3), shall not apply to
payments made under this section until the issuer has received final payment information
from the department, if the issuer has notified the beneficiary of the requirements of this
section at the time it initially requests payment information from the department.
new text end

Sec. 30.

Minnesota Statutes 2004, section 256B.0595, subdivision 1, is amended to
read:

Subdivision 1.

Prohibited transfers.

(a) For transfers of assets made on or before
August 10, 1993, if a person or the person's spouse has given away, sold, or disposed of,
for less than fair market value, any asset or interest therein, except assets other than the
homestead that are excluded under the supplemental security program, within 30 months
before or any time after the date of institutionalization if the person has been determined
eligible for medical assistance, or within 30 months before or any time after the date of the
first approved application for medical assistance if the person has not yet been determined
eligible for medical assistance, the person is ineligible for long-term care services for the
period of time determined under subdivision 2.

(b) Effective for transfers made after August 10, 1993, a person, a person's spouse,
or any person, court, or administrative body with legal authority to act in place of, on
behalf of, at the direction of, or upon the request of the person or person's spouse, may not
give away, sell, or dispose of, for less than fair market value, any asset or interest therein,
except assets other than the homestead that are excluded under the supplemental security
income program, for the purpose of establishing or maintaining medical assistance
eligibility. This applies to all transfers, including those made by a community spouse
after the month in which the institutionalized spouse is determined eligible for medical
assistance. For purposes of determining eligibility for long-term care services, any transfer
of such assets within 36 months before or any time after an institutionalized person applies
for medical assistance, or 36 months before or any time after a medical assistance recipient
becomes institutionalized, for less than fair market value may be considered. Any such
transfer is presumed to have been made for the purpose of establishing or maintaining
medical assistance eligibility and the person is ineligible for long-term care services for
the period of time determined under subdivision 2, unless the person furnishes convincing
evidence to establish that the transaction was exclusively for another purpose, or unless
the transfer is permitted under subdivision 3 or 4. deleted text begin Notwithstanding the provisions of this
paragraph, deleted text end In the case of payments from a trust or portions of a trust that are considered
transfers of assets under federal law, new text begin or in the case of any other disposal of assets made on
or after February 8, 2006, new text end any transfers made within 60 months before or any time after an
institutionalized person applies for medical assistance and within 60 months before or any
time after a medical assistance recipient becomes institutionalized, may be considered.

(c) This section applies to transfers, for less than fair market value, of income
or assets, including assets that are considered income in the month received, such as
inheritances, court settlements, and retroactive benefit payments or income to which the
person or the person's spouse is entitled but does not receive due to action by the person,
the person's spouse, or any person, court, or administrative body with legal authority
to act in place of, on behalf of, at the direction of, or upon the request of the person or
the person's spouse.

(d) This section applies to payments for care or personal services provided by a
relative, unless the compensation was stipulated in a notarized, written agreement which
was in existence when the service was performed, the care or services directly benefited
the person, and the payments made represented reasonable compensation for the care
or services provided. A notarized written agreement is not required if payment for the
services was made within 60 days after the service was provided.

(e) This section applies to the portion of any asset or interest that a person, a person's
spouse, or any person, court, or administrative body with legal authority to act in place of,
on behalf of, at the direction of, or upon the request of the person or the person's spouse,
transfers to any annuity that exceeds the value of the benefit likely to be returned to the
person or spouse while alive, based on estimated life expectancy using the life expectancy
tables employed by the supplemental security income program to determine the value
of an agreement for services for life. The commissioner may adopt rules reducing life
expectancies based on the need for long-term care. This section applies to an annuity
described in this paragraph purchased on or after March 1, 2002, that:

(1) is not purchased from an insurance company or financial institution that is
subject to licensing or regulation by the Minnesota Department of Commerce or a similar
regulatory agency of another state;

(2) does not pay out principal and interest in equal monthly installments; or

(3) does not begin payment at the earliest possible date after annuitization.

new text begin (f) Effective for transactions, including the purchase of an annuity, occurring on or
after February 8, 2006, the purchase of an annuity by or on behalf of an individual who
has applied for or is receiving long-term care services or the individual's spouse shall be
treated as the disposal of an asset for less than fair market value unless:
new text end

new text begin (1) the department is named as the remainder beneficiary in first position for an
amount equal to at least the total amount of medical assistance paid on behalf of the
individual or the individual's spouse; or the department is named as the remainder
beneficiary in second position for an amount equal to at least the total amount of medical
assistance paid on behalf of the individual or the individual's spouse after the individual's
community spouse or minor or disabled child and is named as the remainder beneficiary in
the first position if the community spouse or a representative of the minor or disabled child
disposes of the remainder for less than fair market value. Any subsequent change to the
designation of the department as a remainder beneficiary shall result in the annuity being
treated as a disposal of assets for less than fair market value. The amount of such transfer
shall be the maximum amount the individual or the individual's spouse could receive from
the annuity or similar financial instrument. Any change in the amount of the income or
principal being withdrawn from the annuity or other similar financial instrument at the
time of the most recent disclosure shall be deemed to be a transfer of assets for less than
fair market value unless the individual or the individual's spouse demonstrates that the
transaction was for fair market value; and
new text end

new text begin (2) the purchase of an annuity by or on behalf of an individual applying for or
receiving long-term care services shall be treated as a disposal of assets for less than fair
market value unless it is:
new text end

new text begin (i) an annuity described in subsection (b) or (q) of section 408 of the Internal
Revenue Code of 1986; or
new text end

new text begin (ii) purchased with proceeds from:
new text end

new text begin (A) an account or trust described in subsection (a), (c), or (p) of section 408 of the
Internal Revenue Code;
new text end

new text begin (B) a simplified employee pension within the meaning of section 408(k) of the
Internal Revenue Code; or
new text end

new text begin (C) a Roth IRA described in section 408A of the Internal Revenue Code; or
new text end

new text begin (iii) an annuity that is irrevocable and nonassignable; is actuarially sound as
determined in accordance with actuarial publications of the Office of the Chief Actuary of
the Social Security Administration; and provides for payments in equal amounts during
the term of the annuity, with no deferral and no balloon payments made.
new text end

deleted text begin (f) deleted text end new text begin (g) new text end For purposes of this section, long-term care services include services in a
nursing facility, services that are eligible for payment according to section 256B.0625,
subdivision 2, because they are provided in a swing bed, intermediate care facility for
persons with mental retardation, and home and community-based services provided
pursuant to sections 256B.0915, 256B.092, and 256B.49. For purposes of this subdivision
and subdivisions 2, 3, and 4, "institutionalized person" includes a person who is an
inpatient in a nursing facility or in a swing bed, or intermediate care facility for persons
with mental retardation or who is receiving home and community-based services under
sections 256B.0915, 256B.092, and 256B.49.

new text begin (h) This section applies to funds used to purchase a promissory note, loan, or
mortgage unless the note, loan, or mortgage:
new text end

new text begin (1) has a repayment term that is actuarially sound;
new text end

new text begin (2) provides for payments to be made in equal amounts during the term of the loan,
with no deferral and no balloon payments made; and
new text end

new text begin (3) prohibits the cancellation of the balance upon the death of the lender.
new text end

new text begin In the case of a promissory note, loan, or mortgage that does not meet an exception
in clauses (1) to (3), the value of such note, loan, or mortgage shall be the outstanding
balance due as of the date of the individual's application for long-term care services.
new text end

new text begin (i) This section applies to the purchase of a life estate interest in another individual's
home unless the purchaser resides in the home for a period of at least one year after the
date of purchase.
new text end

Sec. 31.

Minnesota Statutes 2005 Supplement, section 256B.0595, subdivision 2,
is amended to read:

Subd. 2.

Period of ineligibility.

(a) For any uncompensated transfer occurring on or
before August 10, 1993, the number of months of ineligibility for long-term care services
shall be the lesser of 30 months, or the uncompensated transfer amount divided by the
average medical assistance rate for nursing facility services in the state in effect on the
date of application. The amount used to calculate the average medical assistance payment
rate shall be adjusted each July 1 to reflect payment rates for the previous calendar year.
The period of ineligibility begins with the month in which the assets were transferred.
If the transfer was not reported to the local agency at the time of application, and the
applicant received long-term care services during what would have been the period of
ineligibility if the transfer had been reported, a cause of action exists against the transferee
for the cost of long-term care services provided during the period of ineligibility, or for the
uncompensated amount of the transfer, whichever is less. The action may be brought by
the state or the local agency responsible for providing medical assistance under chapter
256G. The uncompensated transfer amount is the fair market value of the asset at the time
it was given away, sold, or disposed of, less the amount of compensation received.

(b) For uncompensated transfers made after August 10, 1993, the number of months
of ineligibility for long-term care services shall be the total uncompensated value of the
resources transferred divided by the average medical assistance rate for nursing facility
services in the state in effect on the date of application. The amount used to calculate the
average medical assistance payment rate shall be adjusted each July 1 to reflect payment
rates for the previous calendar year. The period of ineligibility begins with the first day
of the month after the month in which the assets were transferred except that if one or
more uncompensated transfers are made during a period of ineligibility, the total assets
transferred during the ineligibility period shall be combined and a penalty period calculated
to begin on the first day of the month after the month in which the first uncompensated
transfer was made. If the transfer was reported to the local agency after the date that
advance notice of a period of ineligibility that affects the next month could be provided to
the recipient and the recipient received medical assistance services or the transfer was not
reported to the local agency, and the applicant or recipient received medical assistance
services during what would have been the period of ineligibility if the transfer had been
reported, a cause of action exists against the transferee for the cost of medical assistance
services provided during the period of ineligibility, or for the uncompensated amount of
the transfer, whichever is less. The action may be brought by the state or the local agency
responsible for providing medical assistance under chapter 256G. The uncompensated
transfer amount is the fair market value of the asset at the time it was given away, sold, or
disposed of, less the amount of compensation received. Effective for transfers made on or
after March 1, 1996, involving persons who apply for medical assistance on or after April
13, 1996, no cause of action exists for a transfer unless:

(1) the transferee knew or should have known that the transfer was being made by a
person who was a resident of a long-term care facility or was receiving that level of care in
the community at the time of the transfer;

(2) the transferee knew or should have known that the transfer was being made to
assist the person to qualify for or retain medical assistance eligibility; or

(3) the transferee actively solicited the transfer with intent to assist the person to
qualify for or retain eligibility for medical assistance.

(c) new text begin For uncompensated transfers made on or after February 8, 2006, the period of
ineligibility begins on the first day of the month in which advance notice can be given
following the month in which assets have been transferred for less than fair market value,
or the date on which the individual is eligible for medical assistance under the Medicaid
state plan and would otherwise be receiving long-term care services based on an approved
application for such care but for the application of the penalty period, whichever is later,
and which does not occur during any other period of ineligibility.
new text end

new text begin (d) new text end If a calculation of a penalty period results in a partial month, payments for
long-term care services shall be reduced in an amount equal to the fraction deleted text begin , deleted text end new text begin . new text end deleted text begin except that in
calculating the value of uncompensated transfers, if the total value of all uncompensated
transfers made in a month not included in an existing penalty period does not exceed $200,
then such transfers shall be disregarded for each month prior to the month of application
for or during receipt of medical assistance.
deleted text end

new text begin (e) In the case of multiple fractional transfers of assets in more than one month for
less than fair market value on or after February 8, 2006, the period of ineligibility is
calculated by treating the total, cumulative, uncompensated value of all assets transferred
during all months on or after February 8, 2006, as one transfer.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin Amendments to this section are effective for applications on
or after July 1, 2006, and for renewals and reports of transfers on or after July 1, 2006.
new text end

Sec. 32.

Minnesota Statutes 2004, section 256B.0595, subdivision 3, is amended to
read:

Subd. 3.

Homestead exception to transfer prohibition.

(a) An institutionalized
person is not ineligible for long-term care services due to a transfer of assets for less than
fair market value if the asset transferred was a homestead and:

(1) title to the homestead was transferred to the individual's new text begin :
new text end

(i) spouse;

(ii) child who is under age 21;

(iii) blind or permanently and totally disabled child as defined in the supplemental
security income program;

(iv) sibling who has equity interest in the home and who was residing in the home
for a period of at least one year immediately before the date of the individual's admission
to the facility; or

(v) son or daughter who was residing in the individual's home for a period of at least
two years immediately before the date of the individual's admission to the facility, and who
provided care to the individual that, as certified by the individual's attending physician,
permitted the individual to reside at home rather than in an institution or facility;

(2) a satisfactory showing is made that the individual intended to dispose of the
homestead at fair market value or for other valuable consideration; or

(3) the local agency grants a waiver of a penalty resulting from a transfer for less
than fair market value because denial of eligibility would cause undue hardship for the
individual, based on imminent threat to the individual's health and well-being. Whenever
an applicant or recipient is denied eligibility because of a transfer for less than fair market
value, the local agency shall notify the applicant or recipient that the applicant or recipient
may request a waiver of the penalty if the denial of eligibility will cause undue hardship.
new text begin With the written consent of the individual or the personal representative of the individual,
a long-term care facility in which an individual is residing may file an undue hardship
waiver request, on behalf of the individual who is denied eligibility for long-term care
services on or after July 1, 2006, due to a period of ineligibility resulting from a transfer on
or after February 8, 2006. new text end In evaluating a waiver, the local agency shall take into account
whether the individual was the victim of financial exploitation, whether the individual has
made reasonable efforts to recover the transferred property or resource, and other factors
relevant to a determination of hardship. If the local agency does not approve a hardship
waiver, the local agency shall issue a written notice to the individual stating the reasons
for the denial and the process for appealing the local agency's decision.

(b) When a waiver is granted under paragraph (a), clause (3), a cause of action exists
against the person to whom the homestead was transferred for that portion of long-term
care services granted within:

(1) 30 months of a transfer made on or before August 10, 1993;

(2) 60 months if the homestead was transferred after August 10, 1993, to a trust or
portion of a trust that is considered a transfer of assets under federal law; deleted text begin or
deleted text end

(3) 36 months if transferred in any other manner after August 10, 1993, new text begin but prior
to February 8, 2006; or
new text end

new text begin (4) 60 months if the homestead was transferred on or after February 8, 2006,
new text end

or the amount of the uncompensated transfer, whichever is less, together with the
costs incurred due to the action. The action shall be brought by the state unless the
state delegates this responsibility to the local agency responsible for providing medical
assistance under chapter 256G.

Sec. 33.

Minnesota Statutes 2004, section 256B.0595, subdivision 4, is amended to
read:

Subd. 4.

Other exceptions to transfer prohibition.

An institutionalized person
who has made, or whose spouse has made a transfer prohibited by subdivision 1, is not
ineligible for long-term care services if one of the following conditions applies:

(1) the assets were transferred to the individual's spouse or to another for the sole
benefit of the spouse; or

(2) the institutionalized spouse, prior to being institutionalized, transferred assets
to a spouse, provided that the spouse to whom the assets were transferred does not then
transfer those assets to another person for less than fair market value. (At the time when
one spouse is institutionalized, assets must be allocated between the spouses as provided
under section 256B.059); or

(3) the assets were transferred to the individual's child who is blind or permanently
and totally disabled as determined in the supplemental security income program; or

(4) a satisfactory showing is made that the individual intended to dispose of the
assets either at fair market value or for other valuable consideration; or

(5) the local agency determines that denial of eligibility for long-term care services
would work an undue hardship and grants a waiver of a penalty resulting from a transfer
for less than fair market value based on an imminent threat to the individual's health
and well-being. Whenever an applicant or recipient is denied eligibility because of a
transfer for less than fair market value, the local agency shall notify the applicant or
recipient that the applicant or recipient may request a waiver of the penalty if the denial of
eligibility will cause undue hardship. new text begin With the written consent of the individual or the
personal representative of the individual, a long-term care facility in which an individual
is residing may file an undue hardship waiver request, on behalf of the individual who
is denied eligibility for long-term care services on or after July 1, 2006, due to a period
of ineligibility resulting from a transfer on or after February 8, 2006. new text end In evaluating a
waiver, the local agency shall take into account whether the individual was the victim of
financial exploitation, whether the individual has made reasonable efforts to recover the
transferred property or resource, new text begin whether the individual has taken any action to prevent
the designation of the department as a remainder beneficiary on an annuity as described
in section 256B.056, subdivision 11, new text end and other factors relevant to a determination of
hardship. If the local agency does not approve a hardship waiver, the local agency shall
issue a written notice to the individual stating the reasons for the denial and the process for
appealing the local agency's decision. When a waiver is granted, a cause of action exists
against the person to whom the assets were transferred for that portion of long-term care
services granted within:

(i) 30 months of a transfer made on or before August 10, 1993;

(ii) 60 months of a transfer if the assets were transferred after August 30, 1993, to a
trust or portion of a trust that is considered a transfer of assets under federal law; deleted text begin or
deleted text end

(iii) 36 months of a transfer if transferred in any other manner after August 10, 1993, new text begin
but prior to February 8, 2006; or
new text end

new text begin (iv) 60 months of any transfer made on or after February 8, 2006,
new text end

or the amount of the uncompensated transfer, whichever is less, together with the
costs incurred due to the action. The action shall be brought by the state unless the
state delegates this responsibility to the local agency responsible for providing medical
assistance under this chapter; or

(6) for transfers occurring after August 10, 1993, the assets were transferred by
the person or person's spouse: (i) into a trust established for the sole benefit of a son or
daughter of any age who is blind or disabled as defined by the Supplemental Security
Income program; or (ii) into a trust established for the sole benefit of an individual who is
under 65 years of age who is disabled as defined by the Supplemental Security Income
program.

"For the sole benefit of" has the meaning found in section 256B.059, subdivision 1.

Sec. 34.

Minnesota Statutes 2005 Supplement, section 256B.06, subdivision 4, is
amended to read:

Subd. 4.

Citizenship requirements.

(a) Eligibility for medical assistance is limited
to citizens of the United States, qualified noncitizens as defined in this subdivision, and
other persons residing lawfully in the United States. new text begin Citizens or nationals of the United
States must cooperate in obtaining satisfactory documentary evidence of citizenship or
nationality according to the requirements of the federal Deficit Reduction Act of 2005,
Public Law 109-171.
new text end

(b) "Qualified noncitizen" means a person who meets one of the following
immigration criteria:

(1) admitted for lawful permanent residence according to United States Code, title 8;

(2) admitted to the United States as a refugee according to United States Code,
title 8, section 1157;

(3) granted asylum according to United States Code, title 8, section 1158;

(4) granted withholding of deportation according to United States Code, title 8,
section 1253(h);

(5) paroled for a period of at least one year according to United States Code, title 8,
section 1182(d)(5);

(6) granted conditional entrant status according to United States Code, title 8,
section 1153(a)(7);

(7) determined to be a battered noncitizen by the United States Attorney General
according to the Illegal Immigration Reform and Immigrant Responsibility Act of 1996,
title V of the Omnibus Consolidated Appropriations Bill, Public Law 104-200;

(8) is a child of a noncitizen determined to be a battered noncitizen by the United
States Attorney General according to the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996, title V, of the Omnibus Consolidated Appropriations Bill,
Public Law 104-200; or

(9) determined to be a Cuban or Haitian entrant as defined in section 501(e) of Public
Law 96-422, the Refugee Education Assistance Act of 1980.

(c) All qualified noncitizens who were residing in the United States before August
22, 1996, who otherwise meet the eligibility requirements of this chapter, are eligible for
medical assistance with federal financial participation.

(d) All qualified noncitizens who entered the United States on or after August 22,
1996, and who otherwise meet the eligibility requirements of this chapter, are eligible for
medical assistance with federal financial participation through November 30, 1996.

Beginning December 1, 1996, qualified noncitizens who entered the United States
on or after August 22, 1996, and who otherwise meet the eligibility requirements of this
chapter are eligible for medical assistance with federal participation for five years if they
meet one of the following criteria:

(i) refugees admitted to the United States according to United States Code, title 8,
section 1157;

(ii) persons granted asylum according to United States Code, title 8, section 1158;

(iii) persons granted withholding of deportation according to United States Code,
title 8, section 1253(h);

(iv) veterans of the United States armed forces with an honorable discharge for
a reason other than noncitizen status, their spouses and unmarried minor dependent
children; or

(v) persons on active duty in the United States armed forces, other than for training,
their spouses and unmarried minor dependent children.

Beginning December 1, 1996, qualified noncitizens who do not meet one of the
criteria in items (i) to (v) are eligible for medical assistance without federal financial
participation as described in paragraph (j).

(e) Noncitizens who are not qualified noncitizens as defined in paragraph (b),
who are lawfully residing in the United States and who otherwise meet the eligibility
requirements of this chapter, are eligible for medical assistance under clauses (1) to (3).
These individuals must cooperate with the Immigration and Naturalization Service to
pursue any applicable immigration status, including citizenship, that would qualify them
for medical assistance with federal financial participation.

(1) Persons who were medical assistance recipients on August 22, 1996, are eligible
for medical assistance with federal financial participation through December 31, 1996.

(2) Beginning January 1, 1997, persons described in clause (1) are eligible for
medical assistance without federal financial participation as described in paragraph (j).

(3) Beginning December 1, 1996, persons residing in the United States prior to
August 22, 1996, who were not receiving medical assistance and persons who arrived on
or after August 22, 1996, are eligible for medical assistance without federal financial
participation as described in paragraph (j).

(f) Nonimmigrants who otherwise meet the eligibility requirements of this chapter
are eligible for the benefits as provided in paragraphs (g) to (i). For purposes of this
subdivision, a "nonimmigrant" is a person in one of the classes listed in United States
Code, title 8, section 1101(a)(15).

(g) Payment shall also be made for care and services that are furnished to noncitizens,
regardless of immigration status, who otherwise meet the eligibility requirements of
this chapter, if such care and services are necessary for the treatment of an emergency
medical condition, except for organ transplants and related care and services and routine
prenatal care.

(h) For purposes of this subdivision, the term "emergency medical condition" means
a medical condition that meets the requirements of United States Code, title 42, section
1396b(v).

(i) Pregnant noncitizens who are undocumented, nonimmigrants, or eligible for
medical assistance as described in paragraph (j), and who are not covered by a group
health plan or health insurance coverage according to Code of Federal Regulations, title
42, section 457.310, and who otherwise meet the eligibility requirements of this chapter,
are eligible for medical assistance through the period of pregnancy, including labor and
delivery, to the extent federal funds are available under title XXI of the Social Security
Act, and the state children's health insurance program, followed by 60 days postpartum
without federal financial participation.

(j) Qualified noncitizens as described in paragraph (d), and all other noncitizens
lawfully residing in the United States as described in paragraph (e), who are ineligible
for medical assistance with federal financial participation and who otherwise meet the
eligibility requirements of chapter 256B and of this paragraph, are eligible for medical
assistance without federal financial participation. Qualified noncitizens as described
in paragraph (d) are only eligible for medical assistance without federal financial
participation for five years from their date of entry into the United States.

(k) Beginning October 1, 2003, persons who are receiving care and rehabilitation
services from a nonprofit center established to serve victims of torture and are otherwise
ineligible for medical assistance under this chapter are eligible for medical assistance
without federal financial participation. These individuals are eligible only for the period
during which they are receiving services from the center. Individuals eligible under this
paragraph shall not be required to participate in prepaid medical assistance.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 35.

Minnesota Statutes 2005 Supplement, section 256D.03, subdivision 3, is
amended to read:

Subd. 3.

General assistance medical care; eligibility.

(a) General assistance
medical care may be paid for any person who is not eligible for medical assistance under
chapter 256B, including eligibility for medical assistance based on a spenddown of excess
income according to section 256B.056, subdivision 5, or MinnesotaCare as defined in
paragraph (b), except as provided in paragraph (c), and:

(1) who is receiving assistance under section 256D.05, except for families with
children who are eligible under Minnesota family investment program (MFIP), or who is
having a payment made on the person's behalf under sections 256I.01 to 256I.06; or

(2) who is a resident of Minnesota; and

(i) who has gross countable income not in excess of 75 percent of the federal poverty
guidelines for the family size, using a six-month budget period and whose equity in assets
is not in excess of $1,000 per assistance unit. Exempt assets, the reduction of excess
assets, and the waiver of excess assets must conform to the medical assistance program in
section 256B.056, subdivision 3, with the following exception: the maximum amount of
undistributed funds in a trust that could be distributed to or on behalf of the beneficiary by
the trustee, assuming the full exercise of the trustee's discretion under the terms of the
trust, must be applied toward the asset maximum;

(ii) who has gross countable income above 75 percent of the federal poverty
guidelines but not in excess of 175 percent of the federal poverty guidelines for the
family size, using a six-month budget period, whose equity in assets is not in excess
of the limits in section 256B.056, subdivision 3c, and who applies during an inpatient
hospitalization; or

(iii) the commissioner shall adjust the income standards under this section each July
1 by the annual update of the federal poverty guidelines following publication by the
United States Department of Health and Human Services.

(b) Effective for applications and renewals processed on or after September 1, 2006,
general assistance medical care may not be paid for applicants or recipients who are adults
with dependent children under 21 whose gross family income is equal to or less than 275
percent of the federal poverty guidelines who are not described in paragraph (e).

(c) Effective for applications and renewals processed on or after September 1, 2006,
general assistance medical care may be paid for applicants and recipients who meet all
eligibility requirements of paragraph (a), clause (2), item (i), for a temporary period
beginning the date of application. Immediately following approval of general assistance
medical care, enrollees shall be enrolled in MinnesotaCare under section 256L.04,
subdivision 7, with covered services as provided in section 256L.03 for the rest of the
six-month eligibility period, until their six-month renewal.

(d) To be eligible for general assistance medical care following enrollment in
MinnesotaCare as required by paragraph (c), an individual must complete a new
application.

(e) Applicants and recipients eligible under paragraph (a), clause (1) deleted text begin , or deleted text end new text begin ; new text end who have
applied for and are awaiting a determination of blindness or disability by the state medical
review team or a determination of eligibility for Supplemental Security Income or Social
Security Disability Insurance by the Social Security Administration deleted text begin , or deleted text end new text begin ; new text end who fail to meet
the requirements of section 256L.09, subdivision 2, are exempt from the MinnesotaCare
enrollment requirements of this subdivision.

(f) For applications received on or after October 1, 2003, eligibility may begin no
earlier than the date of application. For individuals eligible under paragraph (a), clause
(2), item (i), a redetermination of eligibility must occur every 12 months. Individuals are
eligible under paragraph (a), clause (2), item (ii), only during inpatient hospitalization but
may reapply if there is a subsequent period of inpatient hospitalization.

(g) Beginning September 1, 2006, Minnesota health care program applications and
renewals completed by recipients and applicants who are persons described in paragraph
(c) and submitted to the county agency shall be determined for MinnesotaCare eligibility
by the county agency. If all other eligibility requirements of this subdivision are met,
eligibility for general assistance medical care shall be available in any month during which
MinnesotaCare enrollment is pending. Upon notification of eligibility for MinnesotaCare,
notice of termination for eligibility for general assistance medical care shall be sent to
an applicant or recipient. If all other eligibility requirements of this subdivision are
met, eligibility for general assistance medical care shall be available until enrollment in
MinnesotaCare subject to the provisions of paragraphs (c), (e), and (f).

(h) The date of an initial Minnesota health care program application necessary to
begin a determination of eligibility shall be the date the applicant has provided a name,
address, and Social Security number, signed and dated, to the county agency or the
Department of Human Services. If the applicant is unable to provide a name, address,
Social Security number, and signature when health care is delivered due to a medical
condition or disability, a health care provider may act on an applicant's behalf to establish
the date of an initial Minnesota health care program application by providing the county
agency or Department of Human Services with provider identification and a temporary
unique identifier for the applicant. The applicant must complete the remainder of the
application and provide necessary verification before eligibility can be determined. The
county agency must assist the applicant in obtaining verification if necessary.

(i) County agencies are authorized to use all automated databases containing
information regarding recipients' or applicants' income in order to determine eligibility
for general assistance medical care or MinnesotaCare. Such use shall be considered
sufficient in order to determine eligibility and premium payments by the county agency.

(j) General assistance medical care is not available for a person in a correctional
facility unless the person is detained by law for less than one year in a county correctional
or detention facility as a person accused or convicted of a crime, or admitted as an
inpatient to a hospital on a criminal hold order, and the person is a recipient of general
assistance medical care at the time the person is detained by law or admitted on a criminal
hold order and as long as the person continues to meet other eligibility requirements
of this subdivision.

(k) General assistance medical care is not available for applicants or recipients who
do not cooperate with the county agency to meet the requirements of medical assistance.

(l) In determining the amount of assets of an individual eligible under paragraph
(a), clause (2), item (i), there shall be included any asset or interest in an asset, including
an asset excluded under paragraph (a), that was given away, sold, or disposed of for
less than fair market value within the 60 months preceding application for general
assistance medical care or during the period of eligibility. Any transfer described in this
paragraph shall be presumed to have been for the purpose of establishing eligibility for
general assistance medical care, unless the individual furnishes convincing evidence to
establish that the transaction was exclusively for another purpose. For purposes of this
paragraph, the value of the asset or interest shall be the fair market value at the time it
was given away, sold, or disposed of, less the amount of compensation received. For any
uncompensated transfer, the number of months of ineligibility, including partial months,
shall be calculated by dividing the uncompensated transfer amount by the average monthly
per person payment made by the medical assistance program to skilled nursing facilities
for the previous calendar year. The individual shall remain ineligible until this fixed period
has expired. The period of ineligibility may exceed 30 months, and a reapplication for
benefits after 30 months from the date of the transfer shall not result in eligibility unless
and until the period of ineligibility has expired. The period of ineligibility begins in the
month the transfer was reported to the county agency, or if the transfer was not reported,
the month in which the county agency discovered the transfer, whichever comes first. For
applicants, the period of ineligibility begins on the date of the first approved application.

(m) When determining eligibility for any state benefits under this subdivision,
the income and resources of all noncitizens shall be deemed to include their sponsor's
income and resources as defined in the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, title IV, Public Law 104-193, sections 421 and 422, and
subsequently set out in federal rules.

(n) Undocumented noncitizens and nonimmigrants are ineligible for general
assistance medical care. For purposes of this subdivision, a nonimmigrant is an individual
in one or more of the classes listed in United States Code, title 8, section 1101(a)(15), and
an undocumented noncitizen is an individual who resides in the United States without the
approval or acquiescence of the Immigration and Naturalization Service.

(o) Notwithstanding any other provision of law, a noncitizen who is ineligible for
medical assistance due to the deeming of a sponsor's income and resources, is ineligible
for general assistance medical care.

(p) Effective July 1, 2003, general assistance medical care emergency services end.

new text begin (q) Citizens or nationals of the United States must cooperate in obtaining satisfactory
documentary evidence of citizenship or nationality according to the requirements of the
federal Deficit Reduction Act of 2005, Public Law 109-171.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 36.

Minnesota Statutes 2004, section 256L.04, subdivision 10, is amended to read:

Subd. 10.

Citizenship requirements.

Eligibility for MinnesotaCare is limited
to citizens new text begin or nationals new text end of the United States, qualified noncitizens, and other persons
residing lawfully in the United States as described in section 256B.06, subdivision 4,
paragraphs (a) to (e) and (j). Undocumented noncitizens and nonimmigrants are ineligible
for MinnesotaCare. For purposes of this subdivision, a nonimmigrant is an individual in
one or more of the classes listed in United States Code, title 8, section 1101(a)(15), and
an undocumented noncitizen is an individual who resides in the United States without
the approval or acquiescence of the Immigration and Naturalization Service. new text begin Citizens
or nationals of the United States must cooperate in obtaining satisfactory documentary
evidence of citizenship or nationality according to the requirements of the federal Deficit
Reduction Act of 2005, Public Law 109-171.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006.
new text end

Sec. 37. new text begin DESIGNATION OF ASSETS AS CONTINGENTLY EXEMPT UNDER
LONG-TERM CARE PARTNERSHIP PROGRAM.
new text end

new text begin The commissioner of human services shall develop and present to the legislature
by December 15, 2006, a plan and draft legislation to allow individuals participating in
the long-term care partnership program established under Minnesota Statutes, section
256B.0571, to designate, at the time of initial application for medical assistance, assets
as contingently exempt. The full fair market value of assets designated as contingently
exempt must not exceed a percentage, specified by the commissioner, of the full fair market
value of assets designated as protected under Minnesota Statutes, section 256B.0571,
subdivision 9. The commissioner may specify different percentages for different categories
of protected assets. Assets designated as contingently exempt shall be disregarded for
purposes of determining eligibility for payment of long-term care services. If the dollar
amount of benefits utilized under a partnership policy is greater than the full fair market
value of all assets protected due to a decrease in the value of the protected assets, the plan
and draft legislation must allow the individual or the personal representative to designate
assets that are contingently exempt as protected, up to the amount of the decrease in value
of the protected assets. The plan and draft legislation must provide that any contingently
exempt asset that is not designated as protected be subject to recovery.
new text end

Sec. 38. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2005 Supplement, section 256B.0571, subdivisions 2, 5, and
11, new text end new text begin are repealed.
new text end

ARTICLE 2

CHILDREN AND FAMILIES FEDERAL COMPLIANCE

Section 1.

Minnesota Statutes 2004, section 256J.021, is amended to read:

256J.021 SEPARATE STATE PROGRAM FOR USE OF STATE MONEY.

deleted text begin Beginning deleted text end new text begin (a) Until new text end October 1, deleted text begin 2001, and each year thereafter deleted text end new text begin 2006 new text end , the
commissioner of human services must treat MFIP expenditures made to or on behalf of
any minor child under section 256J.02, subdivision 2, clause (1), who is a resident of
this state under section 256J.12, and who is part of a two-parent eligible household as
expenditures under a separately funded state program and report those expenditures to the
federal Department of Health and Human Services as separate state program expenditures
under Code of Federal Regulations, title 45, section 263.5.

new text begin (b) Beginning October 1, 2006, the commissioner of human services must treat
MFIP expenditures made to or on behalf of any minor child under section 256J.02,
subdivision 2, clause (1), who is a resident of this state under section 256J.12, and who
is part of a two-parent eligible household, as expenditures under a separately funded
state program. These expenditures shall not count toward the state's maintenance of
effort (MOE) requirements under the federal Temporary Assistance to Needy Families
(TANF) program except if counting certain families would allow the commissioner to
avoid a federal penalty. Families receiving assistance under this section must comply with
all applicable requirements in this chapter.
new text end

Sec. 2.

Minnesota Statutes 2004, section 256J.626, subdivision 2, is amended to read:

Subd. 2.

Allowable expenditures.

(a) The commissioner must restrict expenditures
under the consolidated fund to benefits and services allowed under title IV-A of the federal
Social Security Act. Allowable expenditures under the consolidated fund may include, but
are not limited to:

(1) short-term, nonrecurring shelter and utility needs that are excluded from the
definition of assistance under Code of Federal Regulations, title 45, section 260.31, for
families who meet the residency requirement in section 256J.12, subdivisions 1 and 1a.
Payments under this subdivision are not considered TANF cash assistance and are not
counted towards the 60-month time limit;

(2) transportation needed to obtain or retain employment or to participate in other
approved work activities;

(3) direct and administrative costs of staff to deliver employment services for MFIP
or the diversionary work program, to administer financial assistance, and to provide
specialized services intended to assist hard-to-employ participants to transition to work;

(4) costs of education and training including functional work literacy and English as
a second language;

(5) cost of work supports including tools, clothing, boots, and other work-related
expenses;

(6) county administrative expenses as defined in Code of Federal Regulations, title
45, section 260(b);

(7) services to parenting and pregnant teens;

(8) supported work;

(9) wage subsidies;

(10) child care needed for MFIP or diversionary work program participants to
participate in social services;

(11) child care to ensure that families leaving MFIP or diversionary work program
will continue to receive child care assistance from the time the family no longer qualifies
for transition year child care until an opening occurs under the basic sliding fee child
care program; and

(12) services to help noncustodial parents who live in Minnesota and have minor
children receiving MFIP or DWP assistance, but do not live in the same household as the
child, obtain or retain employment.

(b) Administrative costs that are not matched with county funds as provided in
subdivision 8 may not exceed 7.5 percent of a county's or 15 percent of a tribe's allocation
under this section. The commissioner shall define administrative costs for purposes of
this subdivision.

new text begin (c) The commissioner may waive the cap on administrative costs for a county or tribe
that elects to provide an approved supported employment, unpaid work, or community
work experience program for a major segment of the county's or tribe's MFIP population.
The county or tribe must apply for the waiver on forms provided by the commissioner. In
no case shall total administrative costs exceed the TANF limits.
new text end

Sec. 3.

Minnesota Statutes 2004, section 518.551, subdivision 7, is amended to read:

Subd. 7.

Fees deleted text begin and cost recovery fees deleted text end for IV-D services.

(a) When a recipient of
IV-D services is no longer receiving assistance under the state's title IV-A, IV-E foster
care, medical assistance, or MinnesotaCare programs, the public authority responsible
for child support enforcement must notify the recipient, within five working days of the
notification of ineligibility, that IV-D services will be continued unless the public authority
is notified to the contrary by the recipient. The notice must include the implications
of continuing to receive IV-D services, including the available services and fees, cost
recovery fees, and distribution policies relating to fees.

(b) An application fee of $25 shall be paid by the person who applies for child
support and maintenance collection services, except persons who are receiving public
assistance as defined in section 256.741 and deleted text begin , if enacted, deleted text end the diversionary work program
under section 256J.95, persons who transfer from public assistance to nonpublic assistance
status, and minor parents and parents enrolled in a public secondary school, area learning
center, or alternative learning program approved by the commissioner of education.

new text begin (c) In the case of an individual who has never received assistance under a state
program funded under Title IV-A of the Social Security Act and for whom the public
authority has collected at least $500 of support, the public authority must impose an
annual federal collections fee of $25 for each case in which services are furnished. This
fee must be retained by the public authority from support collected on behalf of the
individual, but not from the first $500 collected.
new text end

deleted text begin (c) deleted text end new text begin (d) new text end When the public authority provides full IV-D services to an obligee who
has applied for those services, upon written notice to the obligee, the public authority
must charge a cost recovery fee of one percent of the amount collected. This fee must
be deducted from the amount of the child support and maintenance collected and not
assigned under section 256.741 before disbursement to the obligee. This fee does not
apply to an obligee who:

(1) is currently receiving assistance under the state's title IV-A, IV-E foster care,
medical assistance, or MinnesotaCare programs; or

(2) has received assistance under the state's title IV-A or IV-E foster care programs,
until the person has not received this assistance for 24 consecutive months.

deleted text begin (d) deleted text end new text begin (e) new text end When the public authority provides full IV-D services to an obligor who has
applied for such services, upon written notice to the obligor, the public authority must
charge a cost recovery fee of one percent of the monthly court-ordered child support and
maintenance obligation. The fee may be collected through income withholding, as well
as by any other enforcement remedy available to the public authority responsible for
child support enforcement.

deleted text begin (e) deleted text end new text begin (f) new text end Fees assessed by state and federal tax agencies for collection of overdue
support owed to or on behalf of a person not receiving public assistance must be imposed
on the person for whom these services are provided. The public authority upon written
notice to the obligee shall assess a fee of $25 to the person not receiving public assistance
for each successful federal tax interception. The fee must be withheld prior to the release
of the funds received from each interception and deposited in the general fund.

deleted text begin (f) deleted text end new text begin (g) Federal collections fees collected under paragraph (c) and new text end cost recovery fees
collected under paragraphs deleted text begin (c) and deleted text end (d) new text begin and (e) new text end shall be considered child support program
income according to Code of Federal Regulations, title 45, section 304.50, and shall
be deposited in the deleted text begin cost recovery fee deleted text end new text begin special revenue fund new text end account established under
paragraph deleted text begin (h) deleted text end new text begin (i) new text end . The commissioner of human services must elect to recover costs based
on either actual or standardized costs.

deleted text begin (g) deleted text end new text begin (h) new text end The limitations of this subdivision on the assessment of fees shall not apply
to the extent inconsistent with the requirements of federal law for receiving funds for the
programs under Title IV-A and Title IV-D of the Social Security Act, United States Code,
title 42, sections 601 to 613 and United States Code, title 42, sections 651 to 662.

deleted text begin (h) deleted text end new text begin (i) new text end The commissioner of human services is authorized to establish a special
revenue fund account to receive deleted text begin child support deleted text end new text begin the federal collections fees collected under
paragraph (c) and new text end cost recovery fees new text begin collected under paragraphs (d) and (e) new text end . A portion of
the nonfederal share of these fees may be retained for expenditures necessary to administer
the deleted text begin fee deleted text end new text begin fees new text end and must be transferred to the child support system special revenue account.
The remaining nonfederal share of the new text begin federal collections fees and new text end cost recovery deleted text begin fee deleted text end new text begin fees new text end
must be retained by the commissioner and dedicated to the child support general fund
county performance-based grant account authorized under sections 256.979 and 256.9791.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective October 1, 2006, or later, if the
commissioner determines that a later implementation will not result in federal financial
penalties.
new text end

ARTICLE 3

APPROPRIATIONS AND RELATED PROVISIONS

Section 1. new text begin SUPPLEMENTAL APPROPRIATIONS.
new text end

new text begin The appropriations in this article are added to or, if shown in parentheses, subtracted
from the appropriations enacted into law by the legislature in 2005, or other specified law,
to the named agencies and for the specified programs or activities. The sums shown are
appropriated from the general fund, or another named fund, to be available for the fiscal
years indicated: 2006 is the fiscal year ending June 30, 2006; 2007 is the fiscal year
ending June 30, 2007; and the biennium is fiscal years 2006 and 2007. Supplementary
appropriations and reductions to appropriations for the fiscal year ending June 30, 2006,
are effective the day following final enactment.
new text end

			new text begin APPROPRIATIONS new text end
			new text begin Available for the Year new text end
			new text begin Ending June 30 new text end
				new text begin 2006 new text end		new text begin 2007 new text end

Sec. 2. new text begin COMMISSIONER OF HUMAN SERVICES new text end

new text begin Subdivision 1. new text end new text begin Total Appropriation new text end

new text begin $ new text end

new text begin -0- new text end

new text begin $ new text end

new text begin 1,291,000 new text end

new text begin Summary by Fund new text end
new text begin General new text end	new text begin -0- new text end	new text begin (429,000) new text end
new text begin Health Care Access new text end	new text begin -0- new text end	new text begin 1,720,000 new text end

new text begin Subd. 2. new text end new text begin Children and Economic Assistance Management new text end

new text begin General new text end	new text begin -0- new text end	new text begin 8,000 new text end
new text begin Children and Economic Assistance Operations new text end	new text begin -0- new text end	new text begin 8,000 new text end

new text begin CHILDREN AND ECONOMIC
ASSISTANCE OPERATIONS BASE
ADJUSTMENT. The general fund base for
children and economic assistance operations
shall be decreased by $8,000 in fiscal year
2008 and $8,000 in fiscal year 2009.
new text end

new text begin Subd. 3. new text end new text begin Health Care Grants new text end

new text begin General new text end	new text begin -0- new text end	new text begin (325,000) new text end
new text begin Medical Assistance Basic Health Care - Elderly Disabled new text end
new text begin General new text end	new text begin -0- new text end	new text begin (325,000) new text end

new text begin Subd. 4. new text end new text begin Health Care Management new text end

new text begin Summary by Fund new text end
new text begin General new text end	new text begin -0- new text end	new text begin 1,384,000 new text end
new text begin Health Care Access new text end	new text begin -0- new text end	new text begin 1,720,000 new text end

new text begin (a) Health Care Administration new text end
new text begin General new text end	new text begin -0- new text end	new text begin 1,303,000 new text end

new text begin HEALTH CARE ADMINISTRATION
BASE ADJUSTMENT. The general fund
base for health care administration shall be
decreased by $119,000 in fiscal year 2008
and decreased by $666,000 in fiscal year
2009.
new text end

new text begin (b) Health Care Operations new text end
new text begin General new text end	new text begin -0- new text end	new text begin 81,000 new text end
new text begin Health Care Access new text end	new text begin -0- new text end	new text begin 1,720,000 new text end

new text begin new text begin HEALTH CARE OPERATIONS BASE
ADJUSTMENT. new text end The general fund base for
health care operations shall be decreased by
$57,000 in fiscal year 2008 and increased by
$13,000 in fiscal year 2009.
new text end

new text begin HEALTH CARE OPERATIONS BASE
ADJUSTMENT. The health care access
fund base for health care operations shall be
decreased by $1,085,000 in fiscal year 2008
and $1,085,000 in fiscal year 2009.
new text end

new text begin Subd. 5. new text end new text begin Continuing Care Grants new text end

new text begin Summary by Fund new text end
new text begin General new text end	new text begin -0- new text end	new text begin (1,589,000) new text end
new text begin (a) Medical Assistance Long-Term Care Facilities new text end
new text begin General new text end	new text begin -0- new text end	new text begin (1,275,000) new text end
new text begin (b) Medical Assistance Long-Term Care Waivers new text end
new text begin General new text end	new text begin -0- new text end	new text begin (414,000) new text end
new text begin (c) Adult and Aging Services Grants new text end
new text begin General new text end	new text begin -0- new text end	new text begin 100,000 new text end

new text begin AGING AND ADULT SERVICES
GRANTS FOR MEDICARE PART D.
$100,000 in fiscal year 2007 is appropriated
from the general fund to the commissioner of
human services for grants awarded through
the Minnesota Board on Aging to area
Agencies on Aging to provide information
and enrollment assistance for the Medicare
Part D program.
new text end

new text begin MEDICARE PART D INFORMATION
AND ASSISTANCE REIMBURSEMENT.
Federal administrative reimbursement
obtained from information and assistance
services provided by the Senior Linkage or
Disability Linkage lines to people who are
identified as eligible for medical assistance
shall be appropriated to the commissioner
for this activity.
new text end

new text begin AGING AND ADULT SERVICES
GRANTS BASE ADJUSTMENT. The
general fund base for aging and adult services
grants is decreased by $100,000 in fiscal
year 2008 and $100,000 in fiscal year 2009
for information and assistance grants to
area Agencies on Aging for assisting with
Medicare Part D.
new text end

new text begin Subd. 6. new text end new text begin Continuing Care Management new text end

new text begin General new text end

new text begin -0- new text end

new text begin 93,000 new text end

new text begin CONTINUING CARE MANAGEMENT
BASE ADJUSTMENT. The general fund
base for continuing care management shall
be decreased by $10,000 in fiscal year 2008
and fiscal year 2009.
new text end

Sec. 3. new text begin EMPLOYMENT AND ECONOMIC DEVELOPMENT new text end

new text begin General new text end

new text begin $-0- new text end

new text begin $900,000 new text end

new text begin BIOTECH PARTNERSHIP. (a)
Notwithstanding Minnesota Statutes, section
295.581, in fiscal year 2007, $900,000 is
appropriated from the general fund to the
commissioner of employment and economic
development for the direct and indirect
expenses of the collaborative research
partnership between the University of
Minnesota and the Mayo Foundation for
research in biotechnology and medical
genomics. This is a onetime appropriation.
new text end

new text begin (b) An annual report on the expenditure
of this appropriation must be submitted
to the governor and the chairs of the
senate Higher Education Budget Division,
the house of representatives Higher
Education Finance Committee, the senate
Environment, Agriculture, and Economic
Development Budget Division, and
the house of representatives Jobs and
Economic Opportunity Policy and Finance
Committee by June 30 of each fiscal year
until the appropriation is expended. This
appropriation is available until expended.
new text end

Sec. 4.

Minnesota Statutes 2004, section 256B.76, is amended to read:

256B.76 PHYSICIAN AND DENTAL REIMBURSEMENT.

(a) Effective for services rendered on or after October 1, 1992, the commissioner
shall make payments for physician services as follows:

(1) payment for level one Centers for Medicare and Medicaid Services' common
procedural coding system codes titled "office and other outpatient services," "preventive
medicine new and established patient," "delivery, antepartum, and postpartum care,"
"critical care," cesarean delivery and pharmacologic management provided to psychiatric
patients, and level three codes for enhanced services for prenatal high risk, shall be paid
at the lower of (i) submitted charges, or (ii) 25 percent above the rate in effect on June
30, 1992. If the rate on any procedure code within these categories is different than the
rate that would have been paid under the methodology in section 256B.74, subdivision 2,
then the larger rate shall be paid;

(2) payments for all other services shall be paid at the lower of (i) submitted charges,
or (ii) 15.4 percent above the rate in effect on June 30, 1992;

(3) all physician rates shall be converted from the 50th percentile of 1982 to the 50th
percentile of 1989, less the percent in aggregate necessary to equal the above increases
except that payment rates for home health agency services shall be the rates in effect
on September 30, 1992;

(4) effective for services rendered on or after January 1, 2000, payment rates for
physician and professional services shall be increased by three percent over the rates in
effect on December 31, 1999, except for home health agency and family planning agency
services; and

(5) the increases in clause (4) shall be implemented January 1, 2000, for managed
care.

(b) Effective for services rendered on or after October 1, 1992, the commissioner
shall make payments for dental services as follows:

(1) dental services shall be paid at the lower of (i) submitted charges, or (ii) 25
percent above the rate in effect on June 30, 1992;

(2) dental rates shall be converted from the 50th percentile of 1982 to the 50th
percentile of 1989, less the percent in aggregate necessary to equal the above increases;

(3) effective for services rendered on or after January 1, 2000, payment rates for
dental services shall be increased by three percent over the rates in effect on December
31, 1999;

(4) the commissioner shall award grants to community clinics or other nonprofit
community organizations, political subdivisions, professional associations, or other
organizations that demonstrate the ability to provide dental services effectively to public
program recipients. Grants may be used to fund the costs related to coordinating access for
recipients, developing and implementing patient care criteria, upgrading or establishing
new facilities, acquiring furnishings or equipment, recruiting new providers, or other
development costs that will improve access to dental care in a region. In awarding grants,
the commissioner shall give priority to applicants that plan to serve areas of the state in
which the number of dental providers is not currently sufficient to meet the needs of
recipients of public programs or uninsured individuals. The commissioner shall consider
the following in awarding the grants:

(i) potential to successfully increase access to an underserved population;

(ii) the ability to raise matching funds;

(iii) the long-term viability of the project to improve access beyond the period
of initial funding;

(iv) the efficiency in the use of the funding; and

(v) the experience of the proposers in providing services to the target population.

The commissioner shall monitor the grants and may terminate a grant if the grantee
does not increase dental access for public program recipients. The commissioner shall
consider grants for the following:

(i) implementation of new programs or continued expansion of current access
programs that have demonstrated success in providing dental services in underserved
areas;

(ii) a pilot program for utilizing hygienists outside of a traditional dental office to
provide dental hygiene services; and

(iii) a program that organizes a network of volunteer dentists, establishes a system to
refer eligible individuals to volunteer dentists, and through that network provides donated
dental care services to public program recipients or uninsured individuals;

(5) beginning October 1, 1999, the payment for tooth sealants and fluoride treatments
shall be the lower of (i) submitted charge, or (ii) 80 percent of median 1997 charges;

(6) the increases listed in clauses (3) and (5) shall be implemented January 1, 2000,
for managed care; and

(7) effective for services provided on or after January 1, 2002, payment for
diagnostic examinations and dental x-rays provided to children under age 21 shall be the
lower of (i) the submitted charge, or (ii) 85 percent of median 1999 charges.

(c) Effective for dental services rendered on or after January 1, 2002, the
commissioner may, within the limits of available appropriation, increase reimbursements
to dentists and dental clinics deemed by the commissioner to be critical access dental
providers. Reimbursement to a critical access dental provider may be increased by not
more than 50 percent above the reimbursement rate that would otherwise be paid to
the provider. Payments to health plan companies shall be adjusted to reflect increased
reimbursements to critical access dental providers as approved by the commissioner.
In determining which dentists and dental clinics shall be deemed critical access dental
providers, the commissioner shall review:

(1) the utilization rate in the service area in which the dentist or dental clinic operates
for dental services to patients covered by medical assistance, general assistance medical
care, or MinnesotaCare as their primary source of coverage;

(2) the level of services provided by the dentist or dental clinic to patients covered
by medical assistance, general assistance medical care, or MinnesotaCare as their primary
source of coverage; and

(3) whether the level of services provided by the dentist or dental clinic is critical to
maintaining adequate levels of patient access within the service area.

In the absence of a critical access dental provider in a service area, the commissioner may
designate a dentist or dental clinic as a critical access dental provider if the dentist or
dental clinic is willing to provide care to patients covered by medical assistance, general
assistance medical care, or MinnesotaCare at a level which significantly increases access
to dental care in the service area.

new text begin The commissioner shall annually establish a reimbursement schedule for critical
access dental providers and provider-specific limits on total reimbursement received
under the reimbursement schedule, and shall notify each critical access dental provider
of the schedule and limit.
new text end

(d) An entity that operates both a Medicare certified comprehensive outpatient
rehabilitation facility and a facility which was certified prior to January 1, 1993, that is
licensed under Minnesota Rules, parts 9570.2000 to 9570.3600, and for whom at least 33
percent of the clients receiving rehabilitation services in the most recent calendar year are
medical assistance recipients, shall be reimbursed by the commissioner for rehabilitation
services at rates that are 38 percent greater than the maximum reimbursement rate
allowed under paragraph (a), clause (2), when those services are (1) provided within the
comprehensive outpatient rehabilitation facility and (2) provided to residents of nursing
facilities owned by the entity.

(e) Effective for services rendered on or after January 1, 2007, the commissioner
shall make payments for physician and professional services based on the Medicare
relative value units (RVUs). This change shall be budget neutral and the cost of
implementing RVUs will be incorporated in the established conversion factor.

Sec. 5. new text begin PHARMACY PAYMENT REFORM ADVISORY COMMITTEE.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, the following words, terms,
and phrases have the following meanings:
new text end

new text begin (a) "Department" means the Department of Human Services.
new text end

new text begin (b) "Commissioner" means the commissioner of the Department of Human Services.
new text end

new text begin (c) "Cost of dispensing" includes, but is not limited to, operational and overhead
costs; professional counseling as required under the Omnibus Budget Reconciliation Act
of 1990, excluding medication management services under Minnesota Statutes, section
256B.0625, subdivision 13h; salaries; and other associated administrative costs, as well
as a reasonable return on investment. In addition, cost of dispensing includes expenses
transferred by wholesale drug distributors to pharmacies as a result of the wholesale drug
distributor tax under Minnesota Statutes, sections 295.52 to 295.582.
new text end

new text begin (d) "Additional costs" include, but are not limited to, costs relating to coordination of
benefits, bad debt, uncollected co-pays, payment lag times, and high rate of rejected claims.
new text end

new text begin (e) "Advisory committee" means the Pharmacy Payment Reform Advisory
Committee established by this section.
new text end

new text begin Subd. 2. new text end

new text begin Advisory committee. new text end

new text begin The Pharmacy Payment Reform Advisory
Committee is established under the direction of the commissioner of human services.
The commissioner, after receiving recommendations from the Minnesota Pharmacists
Association, the Minnesota Retailers Association, the Minnesota Hospital Association,
and the Minnesota Wholesale Druggists Association, shall convene a pharmacy payment
reform advisory committee to advise the commissioner and make recommendations to the
legislature on implementation of pharmacy reforms contained in title VI, chapter IV, of
the Deficit Reduction Act of 2005. The committee shall be comprised of three licensed
pharmacists representing both independent and chain pharmacy entities, one of whom
must have expertise in pharmacoeconomics, two individuals representing hospitals with
outpatient pharmacies, and two individuals with expertise in wholesale drug distribution.
The committee shall be staffed by an employee of the department who shall serve as an ex
officio nonvoting member of the committee. The department's pharmacy program manager
shall also serve as an ex officio, nonvoting member of the committee. The committee is
governed by Minnesota Statutes, section 15.059, except that committee members do not
receive compensation or reimbursement for expenses. The advisory committee members
shall serve a two-year term and the advisory committee will expire on January 31, 2008.
new text end

new text begin Subd. 3. new text end

new text begin Cost of dispensing study. new text end

new text begin The department shall conduct a prescription
drug cost of dispensing study to determine the average cost of dispensing Medicaid
prescriptions in Minnesota. The department shall contract with an independent third
party in the state that has experience conducting business cost allocation studies, such as
an academic institution, to conduct a prescription drug cost of dispensing study. If no
independent third-party entity exists in the state, the department may contract with an
out-of-state entity. The cost of dispensing study shall be completed by an independent
third party no later than October 1, 2006, and reported to the department and the advisory
committee upon completion.
new text end

new text begin Subd. 4. new text end

new text begin Content of study. new text end

new text begin The study shall determine the cost of dispensing
the average prescription and any additional costs that might be incurred for dispensing
Medicaid prescriptions. The study shall include the current level of dispensing fees paid
to providers and an estimate of revenues required to adequately adjust reimbursement
to cover the cost to pharmacies.
new text end

new text begin Subd. 5. new text end

new text begin Methodology of study and publishing requirement. new text end

new text begin The independent
third-party entity performing the cost of dispensing research shall submit to the advisory
committee the entity's proposed research methodology and shall publish the collected data
to allow other independent researchers to validate the study results. The data shall be
published in a manner that does not identify the source of the data.
new text end

new text begin Subd. 6. new text end

new text begin Recommendations. new text end

new text begin The advisory committee shall use the information
from the cost of dispensing study and make recommendations to the commissioner on
implementation of pharmacy reforms contained in title VI, chapter IV, of the Deficit
Reduction Act of 2005. The commissioner shall report the findings of the study and
the recommendations of the advisory committee to the legislature by January 15, 2007.
The department shall conduct a cost of dispensing study every three years following the
initial report. The commissioner, in consultation with the advisory committee, shall make
recommendations to the legislature on how to adequately adjust reimbursement rates to
pharmacies to cover the costs of dispensing and additional costs to pharmacies. Reports
shall include the current level of dispensing fees paid to providers and an estimate of
revenues required to adequately adjust reimbursement to ensure that:
new text end

new text begin (1) reimbursement is sufficient to enlist an adequate number of participating
pharmacy providers so that pharmacy services are as available for Medicaid recipients
under the program as for the state's general population;
new text end

new text begin (2) Medicaid dispensing fees are adequate to reimburse pharmacy providers for the
costs of dispensing prescriptions under the Medicaid program;
new text end

new text begin (3) Medicaid pharmacy reimbursement for multiple-source drugs included on the
federal upper reimbursement limit is set at the level established by the federal government
under United States Code, title 42, section 1396r-8(e)(5);
new text end

new text begin (4) the combined Medicaid program reimbursement for prescription drug product
and the dispensing fee provides a return adequate to provide a reasonable profit for the
participating pharmacy; and
new text end

new text begin (5) the new payment system does not create disincentives for pharmacists to
dispense generic drugs.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end