[News] H.R. 5958 Bipartisan Senior Health Planning Account Act

H.R.5958: Bipartisan Senior Health Planning Account Act

What would the passing of H.R. 5958 mean for Life Settlements?

This Act would, if passed into Law, allow Life Settlement funds to be put into a tax-free Account and used for healthcare expenses. It would encourage the sale of policies before they lapse which 9 out of 10 policies do today.

How can I get involved?

Getting involved is easy. Contact the representatives: Sponsor Rep. Bryan D. Higgins (D-NY-26) and Co-Sponsor Rep W. Gregory Steube (R -FL-17) are listed in the Resources section below should you want to contact either or both. Their sites allow easy tracking of the Act as it makes its way through the law-making process.

How does this change Life Settlements from the current state of affairs in 2020?

As it stands today, the only policy sale that is tax-free is the Viatical Settlement which requires medical certification of probable death within 24 or fewer months. A feature of some life insurance policies is the Accelerated Death Benefit, which is also tax-free but requires a lifespan estimate of 6 or 12 months depending on the carrier. This is a loan from the carrier collateralized by the death benefit, and premiums are still payable. These terminally ill options were created by the passage of HIPAA, the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191.

Note: There is an “Exception for business-related policies” that may nullify the tax-exemption for such policies.