Invoice Permitting Seniors To Use Life Insurance coverage Proceeds For LTC Prices Launched In Congress

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By Chris Orestis

H.R. 7203, launched by U.S. Rep. Kenny Marchant (R-TX) and U.S. Rep. Brian Higgins (D-NY) would allow seniors, no matter their well being standing, to make use of life insurance coverage insurance policies they already personal to fund a variety of well being care prices, together with long-term care bills and long-term care insurance coverage premiums.

By preserving seniors off Medicaid for his or her long-term care, the laws has the potential to avoid wasting taxpayers as a lot as $2 billion over the subsequent 9 years, in keeping with the Alliance for Senior Well being Care Financing, and it provides seniors entry to property that may enhance the standard of life of their closing years. Supporters of H.R. 7203 consider it has widespread, bipartisan help as an answer to the rising value of senior care within the nation that cuts the prices of a large taxpayer-financed authorities program. The invoice has been referred to the Home Methods and Means Committee on which Marchant and Higgins serve.

The idea of utilizing life insurance coverage proceeds to fund a tax-free account solely for use for post-retirement well being and long-term care prices was created by GWG Life Govt Vice President Chris Orestis in 2010. It grew to become the LifeCare Xchange®, the GWG Life product that has choices for seniors, one in every of which supplies these with continual sickness or a terminal situation the flexibility to alternate a life insurance coverage coverage for a tax-free profit plan paying for residing bills and long-term care. It was endorsed in 2017 as a part of the Nationwide Affiliation of Insurance coverage Commissioners (NAIC) white paper “Non-public Market Choices for Financing Lengthy-Time period Care.”

“I’m thrilled to see the idea now we have pioneered being put into laws,” mentioned GWG Life Govt Vice President Chris Orestis. “Seniors who’ve felt that they had no selection however to lapse a life insurance coverage coverage to qualify for Medicaid now have an choice that may enhance their lives of their closing years. This is a crucial step towards discovering options to the long-term care disaster this nation faces.”

H.R. 7203 would take the LifeCare Xchange one step additional and provides seniors the fitting to put aside cash obtained from life insurance coverage insurance policies tax-free earlier than they want it, permitting seniors to plan for long-term care and never have to attend to money of their insurance policies when they’re ailing.

This invoice would authorize utilizing the proceeds of a life settlement—the sale of a life insurance coverage coverage for a market worth return—to be rolled over, tax-free, into accounts devoted to permitted well being care bills. Beneath the proposed laws, distributions from the accounts wouldn’t be taxed if used for permitted bills. Distributions for unauthorized functions could be topic to each revenue taxes and penalties. Any undistributed quantities within the accounts, together with funding earnings, wouldn’t be taxed through the lifetime of the account holder or their partner.

The 2017 Nationwide Affiliation of Insurance coverage Commissioners white paper recognized life settlements as “one choice seniors may use to generate assets to pay for his or her long-term care wants.”

“Policyowners who promote their insurance policies obtain a lump sum fee that’s usually 4 or extra instances better than in the event that they lapsed or surrendered their coverage, in keeping with authorities and college research,” the report discovered.

Chris Orestis is govt vp of GWG Life.

 

 

 

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