Directs the department of financial assistance to establish a public awareness program on the availability of long term health care insurance, the financing thereof and the provision of tax credits for premiums paid therefor; accelerates payment of death benefits and special surrender values upon receipt of the insured of end of life or palliative care.
TITLE OF BILL: An act to amend the insurance law, in relation to establishing a public awareness program on the availability of long term health care insurance and the tax credits therefor, and accelerating payment of death benefits or a special surrender value pursuant to a life insurance policy upon receipt of end of life or palliative care
PURPOSE OR GENERAL IDEA OF BILL: The purpose of this bill is to expand upon the provisions of Chapter 563 of the Laws of 2010, which expanded the types of end of life care that can be financed by an accelerated death benefit rider attached to a life insurance policy to include persons who have resided in a nursing home for three months or more. This bill expands such end of life care that can be financed by a life insurance accelerated death benefit to include end of life care provided for by a long term home health care provider, hospice or adult day care services or palliative care. Such long term care would need to have been provided for at least three months or more, with the expectation that such beneficiary will continue to require such services until death.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Adds Insurance Law section 342 to allow for the establishment of a coordinated public awareness program to encourage individuals to purchase life insurance and long term care (LTC) insurance. Such awareness program shall be a collaborative effort between the Departments of Health, Financial Services, and Taxation & Finance, and the Office of the Aging.
Section 2: Amends Insurance Law section 1113(a) to expand the types of long term care (LTC) and end of life care that can be financed by an accelerated death benefit payable from an individual's life insurance. This accelerated death benefit would need to be purchased as an additional rider attached to a life insurance contract. This authorization for a new rider was done by expanding the definition of life insurance.
Section 3: Amends Insurance Law section 3201(11) to add life insurance policies that have a trigger for payment of benefit upon the recipient receiving end of life care or palliative care via long term health care, hospice or adult day care services, or other services as one of the types of policies that the Department of Financial Services must approve the policy form for before and insurer can begin to sell such policy riders to the general public.
Section 4: Amends Insurance Law section 3230(f) to add the payment of an accelerated payment of a death benefit or special surrender value upon the insured requiring end of life care as provided for in Insurance Law section 1113. Such end of life care must. be provided for at least 3 months or more, with the expectation that such insured will continue to require such services until death.
JUSTIFICATION: As the general population becomes older, more and more individuals are looking for affordable ways to pay for the financing of their nursing home and long term care needs. While there are
available policies that provide payment for long term care, more products should be authorized under New York law so that consumers will have more types of insurance coverage available to meet their specific needs or the needs of their family.
In addition, encouraging more individuals to finance their own long term care, will help to curtail future expenditures from the State's Medicaid program, which currently finances the lion's share of the provision of long term care in this State. This bill is a further extension of new laws such as Chapter 563 of the Laws of 2010 which are geared towards encouraging individuals to finance their own long term care and nursing home care as we all get older.
PRIOR LEGISLATIVE HISTORY: New Bill.
FISCAL IMPLICATIONS: It is the intent of this bill to encourage the increased use of life insurance to help finance end of life care. This, in turn, should help to decrease State Medicaid expenditures that are currently used to finance end of life care.
EFFECTIVE DATE: This act shall take effect on January 1st of the year next succeeding its date of enactment.
STATE OF NEW YORK ________________________________________________________________________ 6672 IN SENATE February 26, 2014 ___________Introduced by Sen. KLEIN -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to establishing a public awareness program on the availability of long term health care insur- ance and the tax credits therefor, and accelerating payment of death benefits or a special surrender value pursuant to a life insurance policy upon receipt of end of life or palliative care THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The insurance law is amended by adding a new section 342 to read as follows: S 342. PUBLIC AWARENESS TO FINANCE LONG TERM CARE. THE DEPARTMENT, DEPARTMENT OF HEALTH, OFFICE FOR THE AGING AND DEPARTMENT OF TAXATION AND FINANCE MAY JOINTLY ESTABLISH AND CONDUCT A PUBLIC AWARENESS PROGRAM ON THE AVAILABILITY AND COVERAGE PROVIDED BY LIFE INSURANCE AND HEALTH INSURANCE PLANS FOR LONG TERM CARE, AND THE PROVISIONS OF VARIOUS TAX CREDITS THEREFOR. S 2. Paragraph 1 of subsection (a) of section 1113 of the insurance law, as amended by chapter 563 of the laws of 2010, is amended to read as follows: (1) "Life Insurance," means every insurance upon the lives of human beings, and every insurance appertaining thereto, including the granting of endowment benefits, additional benefits in the event of death by accident, additional benefits to safeguard the contract from lapse, accelerated payments of part or all of the death benefit or a special surrender value upon (A) diagnosis of terminal illness defined as a life expectancy of twelve months or less, (B) diagnosis of a medical condi- tion requiring extraordinary medical care or treatment regardless of life expectancy, (C) certification by a licensed health care practition- er of any condition which requires continuous care for the remainder of the insured's life in an eligible facility or at home when the insured is chronically ill as defined by Section 7702(B) of the Internal Revenue Code and regulations thereunder, provided the accelerated payments qual- ify under Section 101(g)(3) of the Internal Revenue Code and all otherEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14174-01-4 S. 6672 2
applicable sections of federal law in order to maintain favorable tax treatment, (D) certification by a licensed health care practitioner that the insured is chronically ill as defined by Section 7702 (B) of the Internal Revenue Code and regulations thereunder, provided the acceler- ated payments qualify under Section 101(g)(3) of the Internal Revenue Code and all other applicable sections of federal law in order to main- tain favorable tax treatment and the insurer that issues such policy is a qualified long term care insurance carrier under Section 4980c of the Internal Revenue Code or provide a special surrender value, upon total and permanent disability of the insured, and optional modes of settle- ment of proceeds,
[or](E) the insured's having been a resident of a nursing home, as defined in section twenty-eight hundred one of the public health law, for a period of three months or more, with an expec- tation that such insured will remain a resident of a nursing home until death, OR (F) THE INSURED'S HAVING BEEN THE RECIPIENT, FOR A PERIOD OF THREE MONTHS OR MORE, OF LONG TERM HOME HEALTH CARE, HOSPICE OR ADULT DAY CARE SERVICES, OR OTHER SERVICES, WHICH PROVIDE END OF LIFE OR PALLIATIVE CARE TO THE INSURED, WITH THE EXPECTATION THAT SUCH INSURED WILL CONTINUE TO REQUIRE SUCH SERVICES UNTIL DEATH. "Life insurance" also includes additional benefits to safeguard the contract against lapse in the event of unemployment of the insured or in the event the insured is a resident of a nursing home. Amounts paid the insurer for life insurance and proceeds applied under optional modes of settlement or under dividend options may be allocated by the insurer to one or more separate accounts pursuant to section four thousand two hundred forty of this chapter. S 3. Subparagraph (A) of paragraph 11 of subsection (c) of section 3201 of the insurance law, as amended by chapter 563 of the laws of 2010, is amended to read as follows: (A) The superintendent shall not approve a life insurance policy which provides for accelerated payment of death benefits or special surrender values pursuant to subparagraph (B), (C), (D) [or], (E) OR (F) of para- graph one of subsection (a) of section one thousand one hundred thirteen of this chapter unless it also provides for such accelerated payments or special surrender values pursuant to subparagraph (A) of paragraph one of subsection (a) of such section. S 4. Subsection (f) of section 3230 of the insurance law, as amended by chapter 563 of the laws of 2010, is amended to read as follows: (f) This section shall apply to all life insurance policies or policy riders or provisions thereof that provide for accelerated payment of death benefits or a special surrender value pursuant to subparagraph (A), (B), (C) [or], (E) OR (F) of paragraph one of subsection (a) of section one thousand one hundred thirteen of this chapter. S 5. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law and shall apply to policies or contracts issued, renewed, modified, altered, or amended on or after such date.