BILL ANALYSIS �
SENATE PUBLIC EMPLOYMENT & RETIREMENT BILL NO: AB 373
Jim Beall, Chair HEARING DATE: June 10, 2013
AB 373 (Mullin) as amended 3/19/13 FISCAL: YES
PUBLIC EMPLOYEES: LONG-TERM CARE ELIGIBILTY
HISTORY :
Sponsor: California Public Employees' Retirement System
(CalPERS)
Other legislation: AB 1908 (Cohn),
Chapter 871, Statutes of 2002
AB 824 (Cohn),
Chapter 185, Statutes of 2001
ASSEMBLY VOTES :
PER & SS 5-2 4/10/13
Appropriations 12-5 4/17/13
Assembly Floor 48-26 4/25/13
SUMMARY :
AB 373 would expand enrollment eligibility criteria for the
CalPERS Long-Term Care (LTC) program to include, subject to
federal law, the adult children and domestic partners of
CalPERS members and annuitants. This bill would also provide
the CalPERS Board authority to expand eligibility to all
classes of persons who meet specified requirements, including
applicable federal law that governs eligibility for a
federally qualified state long-term care plan.
BACKGROUND AND ANALYSIS :
1) Existing law :
a) authorizes the California Public Employees' Retirement
System (CalPERS) to offer, on a voluntary basis,
long-term care insurance coverage to all California
public employees, their spouses, parents, parents-in-law
and siblings.
Glenn A. Miles
Date: May 29, 2013 Page
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b) requires program participants to pay the full cost of
premiums for the CalPERS long-term care insurance plan.
2) This bill :
a) expands the classes of persons eligible to enroll in
the LTC program to include the adult children and
domestic partners of California public employees.
b) defines, for purposes of the LTC program, adult
children, domestic partners, and spouses, respectively,
as: 1) children who are at least 18 years of age; 2)
adults in a domestic partnership as defined under
California law; and 3) parties in a marital relationship
as recognized under federal law.
c) provides authority to the Board to further expand
enrollment eligibility for the LTC program to all classes
of person who meet criteria established under state and
federal law governing eligibility for federally qualified
state long-term care plans.
d) clarifies that eligibility criteria are subject to
federal law governing the federal tax exempt
qualification of the LTC program.
FISCAL:
According to the Assembly Appropriations Committee, AB 373
would result in negligible fiscal impact to CalPERS.
COMMENTS :
1) Eligibility of Domestic Partners and Same-sex Spouses
Currently, federal law governing the tax qualification of
state operated LTC plans does not recognize domestic partners
or same-sex spouses as persons eligible to enroll in the LTC
program. However, upon a change in federal law, domestic
partners and same-sex spouses would automatically become
eligible to enroll in the CalPERS LTC program under this
bill's provisions.
Glenn A. Miles
Date: May 29, 2013 Page
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2) LTC Program Premium Issue
The LTC program has experienced significant premium increases
due to several factors including prior mispricing of risk
during the program's start-up phase, higher benefit
utilization by participants than anticipated, higher price
inflation for benefits provided, lower investment return due
to the financial crisis, and, most recently, a reallocation
of the LTC fund portfolio to more conservative assets with a
lower expected investment return.
According to CalPERS, AB 373 is part of CalPERS'
Stabilization and Open Application Period Project (SOAPP), a
multi-part strategy to stabilize and sustain the LTC program
by redesigning the LTC benefit structure, improving the
underwriting criteria, reopening the LTC program to new
enrollments, and attracting new and younger participants into
the LTC insurance pool to lower the pool's risk overall.
3) Arguments in Support :
According to the sponsor, by "expanding eligibility to add
additional and possibly younger policy holders to the risk
pool, [AB 373] will help improve the sustainability of this
Program."
"[The bill] would add adult children to the list of those
eligible for the CalPERS Long-term Care Program. It would
also expand eligibility to other individuals that may be
permitted to participate in a federally qualified State
maintained long-term care plan in the future, such as
same-sex spouses and registered domestic partners."
Furthermore, the sponsor notes that the LTC program "?is a
voluntary, self-funded program that is entirely funded by
member premiums and is not an employer-paid benefit. After
recent Board actions to stabilize the CalPERS Long-term Care
Program and reopen enrollment to new participants, expanding
eligibility to add additional and possibly younger policy
holders to the risk pool, will help improve the
sustainability of this Program."
4) SUPPORT :
Glenn A. Miles
Date: May 29, 2013 Page
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California Public Employees' Retirement System Board of
Administration (CalPERS), Sponsor
American Federation of State, County and Municipal
Employees (AFSCME), ALF-CIO
California School Employees Association (CSEA)
California Medical Association (CMA)
5) OPPOSITION :
None to date
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Glenn A. Miles
Date: May 29, 2013 Page
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