BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                   SB 220|
          |Office of Senate Floor Analyses   |                         |
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                                 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)).
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          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 

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          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 

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          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

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