Magazine article Workforce

HIPAA Extends Benefits to the Terminally and Chronically Ill

Magazine article Workforce

HIPAA Extends Benefits to the Terminally and Chronically Ill

Article excerpt

In the September 1997 issue of WORKFORCE, Editorat-Large Gillian Flynn writes about Fox Inc. and the steps taken by the company to ensure its employees are well-tended in times of illness, death and other unexpected crises. The following is a summation of the Health Insurance Portability and Accountability Act which involves terminally and chronically ill employees.

As of 1997, the Health Insurance Portability and Accountability Act (HIPAA) offers terminally and chronically ill individuals two ways to use their group life insurance on a tax-free basis to help pay expenses during their illness.

They can:

1. Elect to receive all or a portion of the benefit that would otherwise be paid on their death-often called an accelerated death benefit-provided the employer has added that feature to the insurance contract.

2. Sell or assign all or part of their regular death benefit to a viatical settlement provider, if assignments for value are allowed.

Viatical settlement providers are entities that purchase or take assignment of life insurance benefits on the lives of the terminally or chronically ill individuals. Providers must be state licensed, or for states that don't require licensing, must meet requirements of the National Association of Insurance Commissioners.

Benefits Tax Treatment for the Terminally Ill

Amounts a terminally ill individual receives as an accelerated death benefit or a viatical settlement will be excludable from gross income. There are no restrictions on how terminally ill individuals may use these payments. …

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