House File 736 - Introduced HOUSE FILE BY COMMITTEE ON COMMERCE, REGULATION AND LABOR (SUCCESSOR TO HF 353) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act relating to asset disregard under the medical assistance 2 program for the purchase of a certified long=term care 3 insurance policy, providing for a repeal, providing a 4 contingent effective date, and providing an appropriation. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 1389HV 81 7 pf/pj/5 PAG LIN 1 1 Section 1. NEW SECTION. 249J.1 DEFINITIONS. 1 2 As used in this chapter, unless the context otherwise 1 3 requires: 1 4 1. "Certified long=term care insurance policy" means a 1 5 long=term care insurance contract that is issued by an insurer 1 6 or other person who complies with section 249J.4. 1 7 2. "Long=term care facility" means a facility licensed 1 8 under chapter 135C or an assisted living program certified 1 9 under chapter 231C. 1 10 3. "Long=term care insurance" means long=term care 1 11 insurance as defined in section 514G.4 and regulated in 1 12 section 514G.7. 1 13 4. "Qualified long=term care services" means qualified 1 14 long=term care services as defined in section 7702B(c) of the 1 15 Internal Revenue Code. 1 16 Sec. 2. NEW SECTION. 249J.2 IOWA LONG=TERM CARE ASSET 1 17 DISREGARD INCENTIVE PROGRAM == ESTABLISHMENT AND 1 18 ADMINISTRATION. 1 19 1. The Iowa long=term care asset disregard incentive 1 20 program is established to do all of the following: 1 21 a. Provide incentives for individuals to insure against 1 22 the costs of providing for their long=term care needs. 1 23 b. Provide a mechanism for individuals to qualify for 1 24 coverage of the costs of their long=term care needs under the 1 25 medical assistance program without first being required to 1 26 substantially exhaust all their resources. 1 27 c. Assist in developing methods for increasing access to 1 28 and the affordability of long=term care insurance. 1 29 d. Alleviate the financial burden on the state's medical 1 30 assistance program by encouraging the pursuit of private 1 31 initiatives. 1 32 2. The insurance division of the department of commerce 1 33 shall administer the program in cooperation with the division 1 34 responsible for medical services within the department of 1 35 human services. Each agency shall take appropriate action to 2 1 maintain the waiver granted by the centers for Medicare and 2 2 Medicaid services of the United States department of health 2 3 and human services under 42 U.S.C. } 1396 relating to 2 4 providing medical assistance under chapter 249A, in effect 2 5 prior to the effective date of this Act. 2 6 Sec. 3. NEW SECTION. 249J.3 ELIGIBILITY. 2 7 An individual who is the beneficiary of a certified long= 2 8 term care insurance policy approved by the insurance division 2 9 is eligible for assistance under the medical assistance 2 10 program using the asset disregard provisions pursuant to 2 11 section 249J.5. 2 12 Sec. 4. NEW SECTION. 249J.4 INSURER REQUIREMENTS. 2 13 1. An insurer or other person who wishes to issue a 2 14 certified long=term care insurance policy meeting the 2 15 requirements of this chapter shall, at a minimum, offer to 2 16 each policyholder or prospective policyholder a policy that 2 17 provides both of the following: 2 18 a. Facility coverage, including but not limited to long= 2 19 term care facility coverage. 2 20 b. Nonfacility coverage, including but not limited to home 2 21 and community=based care coverage. 2 22 2. An insurer or other person who complies with subsection 2 23 1 may also elect to offer a certified long=term care insurance 2 24 policy that provides only facility coverage. 2 25 Sec. 5. NEW SECTION. 249J.5 ASSET DISREGARD ADJUSTMENT. 2 26 1. As used in this section, "asset disregard" means a one 2 27 dollar increase in the amount of assets an individual who 2 28 purchases a certified long=term care insurance policy and 2 29 meets the requirements of section 249J.3 may retain under 2 30 section 249A.35 for each one dollar of benefit paid out under 2 31 the individual's certified long=term care insurance policy for 2 32 qualified long=term care services if the policy meets all of 2 33 the following criteria: 2 34 a. If purchased prior to January 1, 2005, provides 2 35 benefits in an amount equal to at least one hundred thirty 3 1 thousand dollars as computed on January 1, 2005. 3 2 b. If purchased on or after January 1, 2005, provides 3 3 benefits in an amount equal to at least one hundred thirty 3 4 thousand dollars as computed on January 1, 2005, compounded 3 5 annually by at least five percent, or an amount equal to at 3 6 least the minimum face amount specified by the commissioner of 3 7 insurance pursuant to subsection 3, whichever amount is 3 8 greater. 3 9 c. Includes a provision under which the total amount of 3 10 the benefit increases by at least five percent, compounded 3 11 annually. 3 12 2. When the division responsible for medical services 3 13 within the department of human services determines whether an 3 14 individual is eligible for medical assistance under chapter 3 15 249A, the division shall make an asset disregard adjustment 3 16 for any individual who meets the requirements of section 3 17 249J.3. The asset disregard shall be available after benefits 3 18 of the certified long=term care insurance policy have been 3 19 applied to the cost of qualified long=term care services as 3 20 required under this chapter. 3 21 3. Beginning September 1, 2006, or one year after the 3 22 effective date of this Act, whichever is later, the 3 23 commissioner of insurance shall issue a bulletin annually on 3 24 that date, declaring the minimum face amount for policies to 3 25 qualify for the Iowa long=term care asset disregard incentive 3 26 program for the following calendar year. In making this 3 27 determination, the commissioner shall consult with the 3 28 division responsible for collecting data on average nursing 3 29 home costs in Iowa. Additionally, in making this 3 30 determination, the commissioner shall consider the current 3 31 average daily cost for three years of nursing home care and 3 32 other relevant information. 3 33 Sec. 6. NEW SECTION. 249J.6 APPLICATION OF ASSET 3 34 DISREGARD TO DETERMINATION OF INDIVIDUAL'S ASSETS. 3 35 A public program administered by the state that provides 4 1 long=term care services and bases eligibility upon the amount 4 2 of the individual's assets shall apply the asset disregard 4 3 under section 249J.5 in determining the amount of the 4 4 individual's assets. 4 5 Sec. 7. NEW SECTION. 249J.7 PRIOR PROGRAM == 4 6 DISCONTINUATION OF PROGRAM. 4 7 1. If the Iowa long=term care asset disregard incentive 4 8 program is discontinued, an individual who is covered by a 4 9 certified long=term care insurance policy prior to the date 4 10 the program is discontinued is eligible to continue to receive 4 11 an asset disregard as defined under section 249J.5. 4 12 2. An individual who is covered by a long=term care 4 13 insurance policy under the long=term care asset preservation 4 14 program established pursuant to chapter 249G, Code 2005, on or 4 15 before the effective date of this Act, is eligible to continue 4 16 to receive the asset adjustment as defined under that chapter. 4 17 3. The insurance division shall adopt rules to provide an 4 18 asset disregard to individuals who are covered by a long=term 4 19 care insurance policy prior to the effective date of this Act, 4 20 consistent with the Iowa long=term care asset disregard 4 21 incentive program. 4 22 Sec. 8. NEW SECTION. 249J.8 RECIPROCAL AGREEMENTS TO 4 23 EXTEND ASSET DISREGARD. 4 24 The division responsible for medical services within the 4 25 department of human services may enter into reciprocal 4 26 agreements with other states to extend the asset disregard 4 27 under section 249J.5 to Iowa residents who had purchased or 4 28 were covered by certified long=term care insurance policies in 4 29 other states. 4 30 Sec. 9. NEW SECTION. 249J.9 RULES. 4 31 The department of human services and the insurance division 4 32 of the department of commerce shall adopt rules pursuant to 4 33 chapter 17A as necessary to administer this chapter. The 4 34 insurance division shall consult with representatives of the 4 35 insurance industry in adopting such rules. This delegation of 5 1 rulemaking authority shall be construed narrowly. 5 2 Sec. 10. NEW SECTION. 249A.35 PURCHASE OF CERTIFIED 5 3 LONG=TERM CARE INSURANCE POLICY == COMPUTATION UNDER MEDICAL 5 4 ASSISTANCE PROGRAM. 5 5 A computation for the purposes of determining eligibility 5 6 under this chapter concerning an individual who has purchased 5 7 a certified long=term care insurance policy under chapter 249J 5 8 shall include consideration of the asset disregard provided in 5 9 section 249J.5. 5 10 Sec. 11. Chapter 249G, Code 2005, is repealed. 5 11 Sec. 12. MEDICAID STATE PLAN WAIVERS. 5 12 1. The department shall amend the medical assistance state 5 13 plan to provide that all amounts paid for qualified long=term 5 14 care services under a certified long=term care insurance 5 15 policy shall be considered in determining the amount of the 5 16 asset disregard. 5 17 2. The department of human services shall seek approval of 5 18 a state plan amendment or make application to the United 5 19 States department of health and human services for any waivers 5 20 necessary to implement chapter 249J, as enacted in this Act. 5 21 Sec. 13. CONTINGENT EFFECTIVE DATE == IOWA LONG=TERM CARE 5 22 ASSET DISREGARD INCENTIVE PROGRAM. 5 23 1. This Act shall not take effect until both of the 5 24 following conditions are met: 5 25 a. Funding is specifically appropriated to the insurance 5 26 division of the department of commerce for the purpose of the 5 27 Iowa long=term care asset disregard incentive program. The 5 28 insurance division shall notify the Code editor if such 5 29 appropriation is made. 5 30 b. All necessary Medicaid state plan amendments and 5 31 waivers are approved by the United States department of health 5 32 and human services. The department of human services shall 5 33 notify the Code editor if such approval is received. 5 34 2. If the requirements of subsection 1 are met, the 5 35 program shall begin no sooner than six months following the 6 1 date that both requirements are met. 6 2 Sec. 14. APPROPRIATION. There is appropriated from the 6 3 general fund of the state to the division of insurance of the 6 4 department of commerce for the fiscal year beginning July 1, 6 5 2005, and ending June 30, 2006, the following amount, or so 6 6 much thereof as is necessary, to establish an educational 6 7 program to inform Iowans regarding the Iowa long=term care 6 8 asset disregard incentive program and for up to the following 6 9 full=time equivalent positions: 6 10 .................................................. $ 300,000 6 11 ............................................... FTEs 2.00 6 12 EXPLANATION 6 13 This bill establishes an Iowa long=term care asset 6 14 disregard incentive program to provide incentives for 6 15 individuals to insure against the costs of their long=term 6 16 care needs, provide a mechanism for individuals to qualify for 6 17 coverage of the costs of their long=term care needs under the 6 18 medical assistance program without first being required to 6 19 substantially exhaust all their resources, increase access to 6 20 and the affordability of long=term care insurance, and 6 21 alleviate the financial burden on the state's medical 6 22 assistance program by encouraging the pursuit of private 6 23 initiatives. The bill directs the insurance division of the 6 24 department of commerce to administer the program in 6 25 cooperation with the division responsible for medical services 6 26 within the department of human services. The bill directs the 6 27 department of human services and the division of insurance to 6 28 each take appropriate action to maintain the waiver granted by 6 29 the centers for Medicare and Medicaid services of the United 6 30 States department of health and human services under 42 U.S.C. 6 31 } 1396 relating to providing assistance under Code chapter 6 32 249A, in effect prior to the effective date of the bill. 6 33 The bill requires insurers who wish to issue certified 6 34 long=term care insurance policies that meet the requirements 6 35 of the bill to offer, at a minimum, a policy that provides 7 1 both facility coverage and nonfacility coverage. If the 7 2 insurer provides both types of coverage, the insurer may also 7 3 offer a policy that provides only facility coverage. 7 4 Under the bill, an individual who purchases or is covered 7 5 by a certified long=term care insurance policy would be 7 6 allowed an asset disregard under the medical assistance 7 7 program. The asset disregard is a $1 increase in the amount 7 8 of assets the individual may retain under the medical 7 9 assistance program for each $1 of benefits paid out under the 7 10 individual's certified long=term care insurance policy for 7 11 qualified long=term care services if the benefits meet minimum 7 12 amounts established in the bill. 7 13 The bill also provides that beginning September 1, 2006, or 7 14 one year after the effective date of the bill, whichever is 7 15 later, the commissioner of insurance is to issue a bulletin on 7 16 September 1 of each year, declaring the minimum face amount 7 17 for policies to qualify for the asset disregard program for 7 18 the following calendar year. In making this determination, 7 19 the commissioner is to consult with the division responsible 7 20 for collecting data on average nursing home costs in Iowa. 7 21 Additionally, in making this determination, the commissioner 7 22 is to consider the current average daily cost for three years 7 23 of nursing home care and other relevant information. 7 24 The bill provides that if the Iowa long=term care asset 7 25 disregard incentive program is discontinued, an individual who 7 26 purchased or is covered under a certified long=term care 7 27 insurance policy prior to the date the program is discontinued 7 28 is eligible to continue to receive an asset disregard under 7 29 the bill. The bill allows an individual participating in the 7 30 asset preservation program existing on the effective date of 7 31 the bill to continue to receive that asset adjustment and 7 32 directs the department to adopt rules to allow an individual 7 33 who purchased long=term care insurance prior to the effective 7 34 date of the bill to receive an asset disregard incentive. The 7 35 bill allows for reciprocal agreements to extend the asset 8 1 disregard program to Iowa residents who have purchased or are 8 2 covered under certified long=term care insurance policies in 8 3 other states. 8 4 The bill authorizes the department of human services and 8 5 the insurance division to adopt rules to administer this new 8 6 Code chapter, but this authority is to be construed narrowly. 8 7 The insurance division is directed to consult with 8 8 representatives of the insurance industry in adopting such 8 9 rules. 8 10 The bill directs the department of human services to amend 8 11 the medical assistance state plan to allow for disregard of 8 12 all amounts paid out under a certified long=term care 8 13 insurance policy and to seek approval of a state plan 8 14 amendment or any waiver necessary from the federal government 8 15 to implement the bill. 8 16 The bill repeals Code chapter 249G, the current long=term 8 17 care asset preservation program. 8 18 The bill provides that the long=term care asset disregard 8 19 incentive program and other provisions of the bill take effect 8 20 only if funds are specifically appropriated to the insurance 8 21 division for that purpose, only if the necessary Medicaid 8 22 state plan amendment and waiver are approved, and then no 8 23 sooner than six months after both of those requirements are 8 24 met. 8 25 The bill appropriates $300,000 from the general fund of the 8 26 state to the division of insurance of the department of 8 27 commerce for the fiscal year beginning July 1, 2005, and 8 28 ending June 30, 2006, to establish an educational program to 8 29 inform Iowans regarding the Iowa long=term care asset 8 30 disregard incentive program and for up to two full=time 8 31 equivalent positions. 8 32 LSB 1389HV 81 8 33 pf:nh/pj/5