New Medicaid Laws and the Life Settlement Industry

In a move that could save its Medicaid program millions of dollars, Texas recently enacted new legislation called the “Medicaid Life Settlement Law” that encourages seniors to sell their life insurance policies to pay for their custodial health care costs. The new Texas law allows individuals to enter the Medicaid program provided they  use the proceeds obtained from a life settlement for long term care expenses.   Similar bills are pending in several other states including California, Florida,  New Jersey and New York.  If passed, the modifications to the Medicaid rules should breathe new life into the life settlement industry, which has suffered in the last few years, both from a lack of capital and a lack of age appropriate sellers.

Policyholders benefit from these revised Medicaid laws and the new legislation legitimizes an industry that has often been criticized as being morbid and macabre.  A life settlement can provide much needed financial resources for seniors facing the daunting expenses of long-term care and allow them to choose their own care provider, while preserving dwindling state coffers.  The legislation also offers relief for families dealing with escalating nursing home costs.