HB 2383 and SB 1321

Testimony before the Texas House Committee on Long Term Care

Tuesday, March 26, 2013

Presented by

My name is Chris Orestis and I am the CEO of Life Care Funding.  Our company was founded five years ago with the mission to help seniors and their families extend their ability to pay for their choice of long term care by converting a life insurance policy into a Long Term Care Benefit Plan.  Too many seniors that own a life insurance policy, and have paid premiums for years, will abandon their policy as they begin preparing for long term care.  The issue is that they either can no longer afford the premium payments. or they are on a Medicaid spend-down path and the policy will be considered an asset that will count against their eligibility.

Life Care Funding provides an alternative option to lapse or surrender of an in-force life insurance policy.   In HB 2383 and SB 1321, this “Private Option” allows a life insurance policy owner the ability to convert a life insurance policy into a Long Term Care Benefit Plan instead of abandoning their policy to qualify for Medicaid.  This conversion option extends the time a person remains private pay and delays their entry onto Medicaid.  The policy transaction is specifically designed to conform to the secondary market regulations that govern life settlement/viaticals, and the Benefit is administered specifically to be a Medicaid qualified spend-down of the asset proceeds.  By obtaining the fair market value for the life policy, and then at the direction of the policy owner putting the funds into an irrevocable bank account which can only be administered third-party to pay for Medicaid/Medicare qualified long term care services; the Long Term Care Benefit Plan is a regulated and Medicaid qualified financial vehicle to help cover the costs of long term care.

There are three clear winners with “Private Market” Policy Conversions:

1. The policy owner and their family win because they are able to obtain the fair market value for their life insurance policy and use the proceeds in a Medicaid qualified spend-down to extend the time they are private pay before going onto government assistance.  This financial independence allows a senior to choose the form and setting of long term care they want which gives them choice, dignity and quality of life; and this provides peace of mind and financial relief to the entire family.
2. The provider of long term care services wins because they are operating under extremely thin margins and any private pay dollars they can receive for their services translates to higher quality services for everyone under their care.
3. The state of Texas’ Medicaid program and the tax payers all win because the longer a person can remain private pay before becoming Medicaid eligible translates into critical budget/tax savings.