An Act To Increase the Use of Long-term Care Insurance
Maine Legislature, Session 126, LD 1092
Committee: Health and Human Services
Sponsors: CRAVEN, GRAHAM, ALFOND, GOODALL, HASKELL, LACHOWICZ, VALENTINO, GATTINE, LAJOIE
Amends: 22 MRSA §3174-W

Legislative Document 
No. 1092 
S.P. 374 
In Senate, March 19, 2013 
An Act To Increase the Use of Long-term Care Insurance 
Reference to the Committee on Health and Human Services suggested and ordered printed. 
DAREK M. GRANT 
Secretary of the Senate 
Presented by Senator CRAVEN of Androscoggin. 
Cosponsored by Representative GRAHAM of North Yarmouth and 
Senators: President ALFOND of Cumberland, GOODALL of Sagadahoc, HASKELL of 
Cumberland, LACHOWICZ of Kennebec, VALENTINO of York, Representatives: GATTINE 
of Westbrook, LAJOIE of Lewiston. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  22 MRSA §3174-WW is enacted to read: 
§3174-WW.  Alternative Long-term Care Benefits Program 
There is established within the department the Alternative Long-term Care Benefits 
Program, referred to in this section as "the program," to provide alternatives for persons 
to insure the costs of their own long-term care and to alleviate some of the costs of long-
term care being paid by MaineCare.  The department shall administer the program as a 
part of MaineCare. 
1.  Eligibility.  A person is eligible for the program if the person owns a life 
insurance policy with any face amount in excess of $10,000 and that person enters into a 
settlement contract pursuant to Title 24-A, chapter 85 in exchange for payments directly 
to a provider of long-term care benefits for the owner of the policy from proceeds of the 
settlement contract in accordance with this section.  In order to qualify for benefits under 
the program, a person must be eligible under this section and meet the other criteria 
required for long-term care benefits under the MaineCare program as provided in this 
chapter and in rules adopted by the department. 
2.  Benefits.  The benefits of the program include coverage for long-term care 
services under MaineCare after the person participating in the program has used the 
available proceeds from the applicable settlement contract. 
3.  Disregard.  In addition to assets disregarded or exempt under MaineCare program 
rules, in determining eligibility for MaineCare and the amount of MaineCare benefits and 
in estate recovery pursuant to section 14, subsection 2-I, the program must disregard the 
value of a life insurance policy as defined in Title 24-A, section 6802-A, subsection 7 that 
is in force and owned by an eligible person if the applicant or recipient enters into a 
settlement contract in accordance with this section.  As used in this subsection, "value" 
means the value received pursuant to the settlement contract. 
4.  Requirements for settlement contract.  In addition to any requirements in Title 
24-A, chapter 85, any settlement contract entered into in accordance with this section 
must meet the following requirements. 
A.  The lesser of 5% of the face amount of the life insurance policy and $5,000 must 
be reserved as a death benefit payable to the policy owner's estate or beneficiary. 
B.  The balance of payments required under the settlement contract unpaid at the 
death of the policy owner must be paid to the policy owner's estate or a named 
beneficiary. 
C.  The settlement contract must include a schedule evidencing the total amount 
payable to the policy owner under the settlement contract. 
D.  All proceeds of the settlement contract must be held in an irrevocable federally 
insured deposit account in a financial institution authorized to do business in this 
State pursuant to Title 9-B. 
E.  Notwithstanding the provisions of Title 24-A, section 6810, subsection 1, the 
proceeds of a settlement contract entered into pursuant to this section must be greater 
than the cash surrender value or accelerated death benefit in the life insurance policy 
available at the time the contract is executed by all parties. 
F.  Notwithstanding any other provision of law, a claim from a policy owner, the 
policy owner's estate, a beneficiary or any other person with respect to the settlement 
contract may not exceed the face amount of the life insurance policy, less the 
proceeds paid under the settlement contract and the total amount of premiums paid 
subsequent to entering into the settlement contract.  A payment of a claim by a 
settlement provider must be made from any bond, insurance or deposits maintained 
pursuant to paragraph I. 
G.  For purposes of this section, for a life insurance policy that is the subject of a 
settlement contract that has been in force for 5 years or more, the provisions of Title 
24-A, section 6818 do not apply. 
H.  For purposes of this section, all advertisements of the settlement provider related 
to the program must be filed with the Department of Professional and Financial 
Regulation, Bureau of Insurance. 
I.  A settlement provider entering into a settlement contract pursuant to this section 
must maintain one of the following or any combination thereof in the amount of 
$500,000: 
(1)  A surety bond executed and issued by an insurer authorized to issue surety 
bonds in this State;  
(2)  A policy of errors and omissions insurance; and 
(3)  A deposit of cash, certificates of deposit or securities. 
5.  Disclosures.  In cooperation with the Department of Professional and Financial 
Regulation, Bureau of Insurance, the department shall provide, as part of the application 
for MaineCare benefits or in a separate document to be signed by an applicant, the 
disclosures required by Title 24-A, section 6808-A. 
6.  Other laws.  Eligibility for the program does not preclude enforcement of laws 
regarding recovery of MaineCare benefits incorrectly paid or 3rd-party liability claims by 
the department.  The provisions of this section do not enlarge or otherwise modify 
medical assistance benefits under the MaineCare program.  The provisions of section 14, 
subsection 2-I, paragraph A, subparagraph (3) do not apply to assets disregarded under 
the program. 
7.  Rulemaking.  The department, after consultation with the Superintendent of 
Insurance within the Department of Professional and Financial Regulation, shall adopt 
rules to implement this section.  Rules adopted pursuant to this subsection are routine 
technical rules as defined in Title 5, chapter 375, subchapter 2-A. 
SUMMARY 
This bill establishes an alternative long-term care benefit program for those persons 
that qualify for long-term benefits under the MaineCare program. The bill allows persons 
otherwise eligible for long-term care benefits under MaineCare that own life insurance 
policies with face amounts exceeding $10,000 to enter into life settlement contracts in 
exchange for direct payments to a health care provider for long-term care benefits.  The 
bill prohibits the Department of Health and Human Services from considering the value 
of the life settlement contract as an asset or resource in determining eligibility for 
MaineCare.  The bill also establishes the conditions under which a life settlement contract 
may be used, requires certain disclosures to be made to MaineCare applicants and 
authorizes the Department of Health and Human Services to adopt rules after consultation 
with the Department of Professional and Financial Regulation, Bureau of Insurance.