BILL ANALYSIS �
AB 373
Page 1
ASSEMBLY THIRD READING
AB 373 (Mullin)
As Amended March 19, 2013
Majority vote
PUBLIC EMPLOYEES 5-2 APPROPRIATIONS 12-5
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|Ayes:|Bonta, Jones-Sawyer, |Ayes:|Gatto, Bocanegra, |
| |Mullin, Rendon, | |Bradford, |
| |Wieckowski | | Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Holden, Pan, Quirk, |
| | | |Ammiano |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Allen, Harkey |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Requires the Board of Administration (Board) of the
California Public Employees' Retirement System (CalPERS) to
expand eligibility for the Long-Term Care (LTC) Program to
include adult children and domestic partners of active or
retired California public employees, except as prohibited by the
Internal Revenue Code, and allows the Board to expand
eligibility for the program to all classes of person who meet
certain requirements, as specified, and applicable federal law.
Specifically, this bill :
1)Allows the adult child of any California public employee or
retiree eligible to participate in the CalPERS LTC Program.
The adult child must be at least 18 years of age.
2)Allows same-sex spouses and domestic partners, if permitted
under the Internal Revenue Code and applicable law, to
participate in the CalPERS LTC Program.
3)Allows the CalPERS Board to expand eligibility to any other
person permitted under applicable law governing federally
qualified state long-term care plans.
EXISTING LAW :
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1)Establishes in CalPERS a program that offers long-term care
insurance coverage to all California public employees, their
spouses, parents, parents-in-law, and siblings.
2)Requires employees to pay the full cost of premiums for the
CalPERS long-term care insurance plan.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, negligible fiscal impact to CalPERS.
COMMENTS : The CalPERS LTC Program was established in 1995, and
has over 148,000 members and approximately $3.8 billion in LTC
Fund assets. It is a voluntary, self-funded, not-for-profit
program funded entirely by policyholder premiums and investment
earnings. The Program is a tax-qualified plan under federal law
and member benefits are exempt from federal taxation.
The CalPERS LTC Program is open to active California public
employees and retirees of the all California public retirement
systems, their spouses, parents, siblings, and spouses' parents.
There are currently three policy categories:
1)LTC1: Long-Term care policies issued 1995-2002.
2)LTC2: Long Term care policies issued 2003-2004.
3)LTC3: Long-Term care policies issued 2005-2008.
Current policies include comprehensive and facility-only
coverage with lifetime, six-year and three-year policies - with
and without inflation protection - and there are also two-year
and one-year Partnership policies with inflation protection.
The CalPERS Board recently approved the following actions
regarding its LTC Program:
1)Approved the benefit design and pricing for a new policy
product - LTC4. The focus of LTC4 is to promote independence
and a greater ability for CalPERS policyholders to remain
safely at home as long as possible, and to create a
competitive product.
2)Allow for a continuous open application for the CalPERS LTC
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Program, which is to begin December 2013. Accepting
applications on a continuous basis allows CalPERS to remain
competitive in the market and available to its eligible
population whenever they wish to pursue this type of
insurance.
3)Extend eligibility to adult children and other qualified
persons by amending the LTC Act, allowing CalPERS to be more
consistent with Internal Revenue Code provisions applicable to
federally qualified State long-term care plans.
According to the author, expanding eligibility requirements to
adult children and other qualified persons would provide the
following benefits for the CalPERS LTC Program:
1)Better aligns the CalPERS LTC Program eligibility requirements
with the Internal Revenue Code provisions applicable to
state-maintained long-term care plans.
2)Demonstrates the sustainability of the LTC Program and
CalPERS' commitment to provide a viable voluntary insurance
benefit for eligible policyholders.
3)Potentially increases the solvency and sustainability of the
LTC Fund by bringing in more premium dollars into the Fund and
by adding new and younger policyholders into the Program.
4)Improves the LTC Program risk pool and provides an opportunity
to bring in additional lives with appropriate underwriting,
lowering the risk to the pool.
AB 44 (Connelly), Chapter 9, Statutes of 1991, enacted the
CalPERS LTC Program. The legislation authorized CalPERS to make
plans available to active and retired members, their spouses,
and parents by January 1, 1992, and specified that the enrollee
must pay the entire cost to enroll in the plan.
SB 857 (Hughes), Chapter 1144, Statutes of 1993, extended
enrollment eligibility in the CalPERS LTC Program to members and
retirees of the California State Teachers' Retirement System,
their spouses and their parents.
SB 860 (Alquist), Chapter 850, Statutes of 1995, extended
eligibility in the CalPERS LTC Program to active and retired
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members of the Legislators' Retirement System, the Judges'
Retirement System and members of the Assembly and the Senate.
AB 824 (Cohn), Chapter 185, Statutes of 2001, allowed siblings,
at least 18 year of age, of eligible active and retired public
employees to enroll in the CalPERS LTC Program.
Analysis Prepared by : Karon Green / P.E., R. & S.S. / (916)
319-3957
FN: 0000219