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304.15-726
Life settlement contracts for payments directly to long-term care
services providers -- Administrative regulations.
(1)
(2)
(3)
For purposes of this section:
(a) "Long-term care services" means:
1.
Home health care;
2.
Assisted living;
3.
Nursing home care; and
4.
Any other service or support deemed a long-term care service pursuant
to administrative regulations promulgated by the Department for
Medicaid Services; and
(b) "Recipient" means the recipient of the long-term care services that are being
paid for from the proceeds of the life settlement contract entered into pursuant
to this section.
The owner of a life insurance policy with a face value in excess of ten thousand
dollars ($10,000) may enter into a life settlement contract pursuant to KRS 304.15700 to 304.15-720, in exchange for payments directly to a long-term care services
provider as of the effective date of the life settlement contract in accordance with
this section.
(a) All proceeds of the life settlement contract entered into pursuant to this
section shall:
1.
Not be subject to any statute or administrative regulation relating to
minimum payments for a life settlement which conflict with the
provisions of this section; and
2.
Be held in an irrevocable state or federally insured account for the
benefit of the recipient of the long-term care services and administered
in accordance with this section.
(b) The type of long-term care services payable from the irrevocable account shall
be chosen only by the recipient of the services. Any attempt by any person to
require the use of a long-term care services provider to obtain long-term care
services pursuant to this section is prohibited and shall constitute an unfair or
deceptive act or practice in violation of KRS 304.12-010.
(c) In addition to the requirements in KRS 304.15-700 to 304.15-720, any life
settlement contract entered into pursuant to this section shall include the
following:
1.
A provision in the contract that five percent (5%) of the face amount of
the life insurance policy, not to exceed seven thousand five hundred
dollars ($7,500), or five thousand dollars ($5,000), whichever is greater,
may be reserved and if reserved shall be payable to the owner's estate or
a named beneficiary of the irrevocable account upon the death of the
insured under the policy that is the subject of the life settlement contract
for final expenses; and
2.
The balance of proceeds of the life settlement contract that are unpaid at
(4)
(5)
the death of the owner shall be paid to the owner's estate or a named
beneficiary of the irrevocable account.
(d) Any life settlement provider entering into a life settlement contract pursuant to
this section shall maintain one (1) of the following:
1.
A surety bond executed and issued by an insurer authorized to issue
bonds in this state in the amount of five hundred thousand dollars
($500,000). Any surety bond issued shall be in favor of this state and
shall specifically authorize recovery by the commissioner on behalf of
any person in this state who sustained damages as the result of erroneous
acts, failure to act, conviction of fraud, or conviction of unfair practices
by the life settlement provider; or
2.
A policy of errors and omissions insurance covering legal liability
resulting from erroneous acts or failure to act in their capacity as a life
settlement provider in the sum of no less than five hundred thousand
dollars ($500,000) per occurrence and in the aggregate.
(e) For purposes of this section, in addition to any requirements of KRS 304.15700 to 304.15-720:
1.
Life settlement contract forms entered into pursuant to this section shall
be filed and approved by the department; and
2.
Advertising and marketing materials used by a life settlement provider
pursuant to this section shall be filed with the department.
(f) Any claim against a life settlement provider from an owner of a policy, the
owner's estate, any beneficiary, or any other person with respect to the life
settlement contract shall not exceed the face amount of the policy, less the
proceeds paid under the life settlement contract, the total amount of premiums
paid subsequent to entering into the life settlement contract, and any other
reasonable costs or expenses associated with the acquisition or maintenance of
the policy that is the subject of a life settlement contract. Any payment of a
claim by a life settlement provider shall be made from the funds established
pursuant to paragraph (a)2. of this subsection.
(g) The department shall conduct periodic market examinations of each life
settlement provider regarding the life settlement contracts entered into
pursuant to this section in accordance with KRS 304.15-705.
Nothing in this section shall be the exclusive method for a life insurance policy to
be excluded as a resource or asset in determining the applicant's or recipient's
eligibility for Medicaid.
The commissioner may promulgate administrative regulations to implement this
section.
Effective: July 15, 2014
History: Created 2014 Ky. Acts ch. 60, sec. 1, effective July 15, 2014.
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