BILL ANALYSIS �
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THIRD READING
Bill No: AB 373
Author: Mullin (D)
Amended: 3/19/13 in Assembly
Vote: 21
SENATE PUBLIC EMPLOYMENT & RETIREMENT COMM. : 4-0, 6/10/13
AYES: Beall, Block, Gaines, Yee
NO VOTE RECORDED: Walters
SENATE APPROPRIATIONS COMMITTEE : 7-0, 6/24/13
AYES: De Le�n, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 48-26, 4/25/13 - See last page for vote
SUBJECT : Public Employees Long-Term Care Act
SOURCE : California Public Employees Retirement System Board
of
Administration
DIGEST : This bill expands enrollment eligibility criteria for
the California Public Employees Retirement System (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 also provides 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.
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AB 373
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ANALYSIS :
Existing law:
1.Authorizes 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.
2.Requires program participants to pay the full cost of premiums
for the CalPERS LTC insurance plan.
This bill:
1.Expands the classes of persons eligible to enroll in the LTC
program to include the adult children and domestic partners of
California public employees.
2.Defines, for purposes of the LTC program, adult children,
domestic partners, and spouses, respectively, as: (a)
children who are at least 18 years of age; (b) adults in a
domestic partnership as defined under California law; and (c)
parties in a marital relationship as recognized under federal
law.
3.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.
4.Clarifies that eligibility criteria are subject to federal law
governing the federal tax exempt qualification of the LTC
program.
Comments
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, according to the Senate Public Employment and
Retirement Committee analysis, 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
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provisions.
LTC Program Premium Issue . According to the Senate Public
Employment and Retirement Committee analysis, 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, this bill is part of CalPERS'
Stabilization and Open Application Period Project, 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 overall risk.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Minor administrative costs to CalPERS (Special Fund).
There are no state costs associated with administrative expenses
as plan participants pay a surcharge to the third-party
administrator to manage the program.
SUPPORT : (Verified 6/24/13)
California Public Employees' Retirement System Board of
Administration (source)
American Federation of State, County and Municipal Employees,
ALF-CIO
California School Employees Association
California Medical Association
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."
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"[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."
ASSEMBLY FLOOR : 48-26, 4/25/13
AYES: Achadjian, Alejo, Ammiano, Atkins, Bloom, Blumenfield,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Cooley, Daly, Dickinson, Eggman, Fong,
Fox, Frazier, Garcia, Gatto, Gomez, Gordon, Hall, Roger
Hern�ndez, Holden, Jones-Sawyer, Medina, Mitchell, Mullin,
Muratsuchi, Pan, Perea, V. Manuel P�rez, Quirk, Rendon,
Skinner, Stone, Ting, Torres, Weber, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Allen, Bigelow, Ch�vez, Conway, Dahle, Donnelly, Beth
Gaines, Gorell, Grove, Hagman, Harkey, Jones, Levine, Linder,
Logue, Maienschein, Mansoor, Melendez, Morrell, Nestande,
Olsen, Patterson, Quirk-Silva, Wagner, Waldron, Wilk
NO VOTE RECORDED: Chesbro, Gray, Lowenthal, Nazarian, Salas,
Vacancy
JL:nl 6/25/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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