BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 220| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 220 Author: Price (D) Amended: As introduced Vote: 21 SENATE INSURANCE COMMITTEE : 8-0, 4/27/11 AYES: Calderon, Gaines, Anderson, Corbett, Lieu, Lowenthal, Price, Wyland NO VOTE RECORDED: Correa SUBJECT : Life insurance: group policies: dependent children SOURCE : Author DIGEST : This bill authorizes dependent children to be eligible for coverage under group life insurance policies up to age 26. ANALYSIS : Existing law: 1. Employee group life insurance is an authorized form of group life insurance and must conform to certain statutory conditions. (California Insurance Code ÝCIC] Section 10202.) While the amount of insurance issued must be based upon some plan that will preclude individual selection (CIC Section 10203.4(a)) the plan participants can elect to extend the coverage to insure the dependents of any insured employee who so elects (CIC Section 10204(a)). CONTINUED SB 220 Page 2 2. For purposes of this election, current law limits the age of eligible dependents to all unmarried children from "birth through 20 years of age" or "through 24 years of age" if the dependent child is attending an educational institution. This bill, with respect to eligibility for group life insurance under California law, increases the dependent child eligibility age to "until 26 years of age" so group life insurance can be offered on terms which are comparable to those made for dependent children under the federal Patient Protection and Affordable Care Act of 2010. Under the Federal health care reform legislation signed into law last year, and also under California law, dependent children up to age 26 can remain on their parent's policy. This bill conforms the eligibility rules for sales of group life insurance under California law to the new age standard. Comments According to the author, this bill conforms the age for dependent coverage eligibility from 20 or 24 for college students to 26 and maintains protections for older dependents with intellectual or developmental disabilities. This bill expands access to life insurance coverage, provide young people with support they currently are unlikely to have and parents with the assurance that in the event of catastrophe, some of their expenses can be paid down by effective life insurance . Finally, the author states this bill also provides group insurance companies that currently allow for dependent coverage the opportunity to effectively inform consumers of their products. Prior/Related Legislation SB 1088 (Price), Chapter 660, Statutes of 2010, which prohibited, with specified exceptions, the limiting age for dependents covered by health plan contracts and health insurance policies from being less than 26 years of age CONTINUED SB 220 Page 3 beginning on or after September 23, 2010, and prohibits health plan contracts and health insurance policies from being required to cover a child of a child receiving dependent coverage. SB 122 (Price), 2011-12 Session, which proposes to clarify SB 1088 (Price), Chapter 660, Statutes of 2010, with respect to the complying with Federal Health Reform and leaving further expanded coverage, in the near term to others. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/4/11) Association of California Life and health Insurance Companies California Association of health Underwriters National Association of Insurance and Financial Advisors ARGUMENTS IN SUPPORT : The author indicates group life insurance policy holders, agents and companies believe that the increased age requirement with health care insurance deserves parity. The Association of California Life and Health Insurance Companies (ACLHIC) is in support, stating "Many ACLHIC member companies offering group life insurance coverage continue to receive requests from current and prospective group policyholders wanting to expand the offer of group life insurance to employees' dependents in line with the changes established under the federal Patient Protection and Affordable Care Act (PPACA) of 2010. PPACA considers a dependent child to be from birth to age 26 whether or not living with the parent, financially dependent on the parent, and regardless of marital status." ACLHIC also states "SB 220 expands the definition of "dependent" for group life eligibility to more closely mirror the definition in PPACA and allow for coverage up to age 26. While the offer of dependent coverage is required under health insurance law, it is optional under group life insurance law. This bill would allow insurers to offer CONTINUED SB 220 Page 4 this expanded coverage benefit to employers at a time when many California businesses are reducing benefits." JJA:kc 5/4/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED