SF 3476

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; allowing medical assistance applicants to retain
certain life insurance policies if proceeds from these policies will be shared with
the state; proposing coding for new law in Minnesota Statutes, chapter 256B.

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

Section 1.

new text begin [256B.0565] LIFE INSURANCE POLICIES.
new text end

new text begin Subdivision 1. new text end

new text begin Option to retain policies. new text end

new text begin (a) The commissioner may allow
applicants for medical assistance under this chapter, with respect to whom there could
be an actual or potential claim for recovery of medical assistance under section 256B.15,
the option of retaining their permanent life insurance policies as provided under this
section. Permanent life insurance policies retained by applicants under this section shall
be excluded assets for purposes of determining an applicant's initial and continuing
eligibility for medical assistance.
new text end

new text begin (b) The cash surrender value of life insurance policies that applicants retain under
this section shall not be an asset for purposes of determining and setting off any of the
community spouse's allowances under section 256B.059.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following definitions
apply.
new text end

new text begin (b) "Permanent life insurance policy," "life insurance policy," "policy," or similar
terms mean a nonvariable life insurance policy for which all of the following apply:
new text end

new text begin (1) the applicant is the sole owner of the policy;
new text end

new text begin (2) the applicant is the insured life under the policy;
new text end

new text begin (3) the contestability period has expired;
new text end

new text begin (4) the policy is unencumbered;
new text end

new text begin (5) all of the premiums and other sums due and owing to the insurer under the terms
of the policy have been paid in full or there is sufficient cash value to pay all premiums
and other charges due the insurer under the terms of the policy until the policy is paid in
full; and
new text end

new text begin (6) the applicant has the full and complete right to designate or change the
designation of beneficiaries under the policy and to do all things necessary to comply with
this section, and to do so without the consent or approval of any other person.
new text end

new text begin (c) "Insurer" means the issuer of the permanent life insurance policy or the issuer's
successors and assigns.
new text end

new text begin Subd. 3. new text end

new text begin Agreement with commissioner. new text end

new text begin (a) An applicant who wants to retain a
policy under this section must:
new text end

new text begin (1) enter into an irrevocable written agreement with the commissioner to designate
the commissioner as a beneficiary under the policy to the extent provided for in subdivision
5 and to do all things, take all actions, and sign all documents necessary to comply with
the requirements of this section; and
new text end

new text begin (2) execute and file with the insurer all of the forms and documents necessary to:
new text end

new text begin (i) irrevocably designate the commissioner as the primary beneficiary under the
policy upon the death of the applicant to the extent provided for in this section;
new text end

new text begin (ii) irrevocably waive the applicant's right to cash-in, sell, assign, transfer, encumber,
or borrow against the policy or to use it as collateral or security for any purpose except
as otherwise provided for in this section;
new text end

new text begin (iii) direct the insurer to send the commissioner a copy of all notices it sends to the
owner of the policy that the policy will lapse, at the same time and in the same manner as
the policy requires the insurer to give such notices to the owner of the policy; and
new text end

new text begin (iv) direct the insurer to comply with paragraph (d).
new text end

new text begin (b) The agreement with the commissioner must be irrevocable and shall remain in
effect throughout the remainder of the applicant's life, regardless of whether the applicant
remains eligible for or enrolled in the medical assistance program after the date of the
agreement.
new text end

new text begin (c) The agreement must expressly provide that the applicant shall retain the right
to designate or change beneficiaries under the policy, other than the commissioner, with
respect to the portion of the death benefit not payable to the commissioner under this
section and the applicant's written agreement with the commissioner.
new text end

new text begin (d) The agreement must expressly provide that the applicant shall instruct the
insurer to pay all future premiums and other amounts due to the insurer under the terms
of the policy from the cash value of the policy, or to provide the applicant and the
commissioner with written notice that the cash value of the policy is not sufficient to do
so. This paragraph does not prohibit the insurer from applying payments received from
the beneficiary or any other person toward payment of premiums and other amounts
due to the insurer.
new text end

new text begin (e) The commissioner shall prepare a form of agreement for use under this section.
This form must contain contents and make requirements as the commissioner deems
necessary or appropriate, consistent with this section.
new text end

new text begin Subd. 4. new text end

new text begin Procedure. new text end

new text begin (a) The applicant shall provide the county social services
agency with a full and complete copy of each of the policies the applicant wishes to retain
under this section, including a full and complete current designation of all beneficiaries
under the policies. The applicant shall execute a separate agreement with the commissioner
in triplicate for each policy. The applicant shall retain one copy. The county agency shall
retain one copy of the executed agreement in the applicant's file. The applicant shall send
the third copy of the executed agreement to the insurer, together with all of the documents
necessary to satisfy the requirements of this section, including the address of the county.
new text end

new text begin (b) The insurer shall make changes with regard to the policy provided for in this
section and the agreement, and shall notify the applicant and the county agency that the
insurer has done so or that the insurer is unable to do so. If the insurer does not provide
the county with notice that it has made all of the changes to the policy required by the
agreement and this section, the county agency shall require the applicant to cash in the
policy and apply the proceeds it receives according to this chapter.
new text end

new text begin (c) The county agency shall provide the insurer with the name, address, and
telephone number of an individual the insurer can contact upon the death of the applicant,
in order to request a written statement of the total amount of medical assistance paid for
the applicant which could be recovered under section 256B.15.
new text end

new text begin Subd. 5. new text end

new text begin State's share of death benefit. new text end

new text begin (a) Upon the death of the applicant, the
insurer shall pay the applicant's beneficiaries one-half of all amounts payable under the
terms of the permanent life insurance policy. The insurer shall also pay the applicant's
beneficiaries, at a later date, any amount owed the beneficiaries under paragraph (c). If a
beneficiary is the applicant's estate, any policy proceeds received by that beneficiary under
this paragraph and paragraph (c) are not subject to estate recovery under section 256B.15.
new text end

new text begin (b) Upon the death of the applicant, the insurer shall request a written statement of
the total amount of medical assistance paid for the applicant which could be recovered
under section 256B.15. The commissioner shall provide the written statement to the
insurer within 30 days after receipt of the request. If the commissioner fails to provide
a written statement within the 30-day period, all policy proceeds revert to named
beneficiaries other than the commissioner.
new text end

new text begin (c) Upon timely receipt of the written statement of the amount of medical assistance
paid requested under paragraph (b), the insurer shall pay the commissioner the lesser of
one-half of all amounts payable under the terms of the permanent life insurance policy or
the total amount of medical assistance paid for the applicant which could be recovered
under section 256B.15, whichever is less. If the amount of medical assistance paid for
the applicant is less than one-half of all amounts payable under the terms of the policy,
the insurer shall pay the difference between those two amounts to the other beneficiaries
under the policy according to the terms of the policy. Payments made under this paragraph
are exempt from section 72A.201, subdivision 4, clause (3).
new text end

new text begin (d) For purposes of this section and United States Code, title 42, section 1396p, a
recipient shall be deemed to have an interest under the laws of this state in the policies
the recipient retains under this section and the amounts payable under those policies to
the extent of the amounts payable to the commissioner under this subdivision. These
policies and amounts, to the extent described in the preceding sentence, shall be part
of the recipient??a??a??s estate solely for the purposes of United States Code, title 42, section
1396p, and recovery of medical assistance as provided for by federal law and the laws
of this state and shall be payable directly to the commissioner for that purpose, and shall
not be subject to payment of any of the recipient??a??a??s debts, charges, or obligations at law,
in equity, or otherwise.
new text end

new text begin Subd. 6. new text end

new text begin Federal waivers and approval. new text end

new text begin The commissioner shall seek any federal
waivers and approvals necessary to implement this section.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2006, or upon receipt of any
necessary federal waivers and approvals, whichever is later.
new text end