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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
304.15-700 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 the death of the owner shall be paid to the owner's estate
(4)
(5)
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
304.15-700 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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