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By 
March 04, 2020 at 07:09 PM
The Life Insurance Settlement Association (LISA) is working to build support for H.R. 5958, a new U.S. House bill that could help people use the proceeds from the sale of life insurance policies to pay health care expenses.
Under the provisions of H.R. 5958, a consumer who sold an in-force policy and put the money in a senior health planning account could spend the money on “qualified health care expenses” without paying federal income taxes on the proceeds from the life insurance policy sale.
Resources
- The H.R. 5958 Congress.gov page is available here.
- An article about Tax Cuts and Jobs Act of 2017 life policy sale reporting guidelines is available here.
The Internal Revenue Service would use Internal Revenue Code Section 213(d) to decide what expenses counted as qualified health care expenses, according to the bill text. The IRS now uses that section to determine whether the holder of a flexible spending account can use FSA money to pay for a particular product or service.
A consumer who spent some of the cash from the life insurance policy sale on ordinary living expenses would have to include that portion of the policy sale proceeds in table income, according to the bill text.
H.R. 5958, the “Senior Health Planning Account Act” bill, was introduced by Rep. Brian Higgins, D-N.Y., and Rep. Gregory Steube, R-Fla.
The bill is similar to H.R. 7203, a bill Higgins and Rep. Kenny Marchant, R-Texas, introduced in the House during the 115th Congress.
