BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 402
                                                                  Page  1

          Date of Hearing:   April 24, 2013

                           ASSEMBLY COMMITTEE ON INSURANCE
                                Henry T. Perea, Chair
                 AB 402 (Ammiano) - As Introduced:  February 15, 2013
           
          SUBJECT  :   Disability Income Insurance: Mental Health Parity

           SUMMARY  :   Requires disability income insurance policies to  
          cover disability caused by severe mental illness.  Specifically,  
           this bill :  

          1)Defines severe mental illness as:

               a)     Schizophrenia
               b)     Schizoaffective Disorder
               c)     Bipolar Disorder
               d)     Major Depressive Disorders
               e)     Panic Disorder
               f)     Obsessive-compulsive Disorder
               g)     Pervasive developmental disorder or autism
               h)     Anorexia Nervosa
               i)     Bulimia Nervosa

          2)Requires every disability income insurance policy issued,  
            amended, or renewed on or after January 1, 2014 provide  
            coverage for disability resulting from severe mental illness.

           EXISTING LAW  :

          1)Provides disability benefits to participants in the State  
            Disability Insurance (SDI) program when they are disabled by  
            mental illness.

          2)Requires health insurers and health care service plans to  
            provide coverage for the diagnosis and treatment of severe  
            mental illness and the severe emotional disturbance of a child  
            on the same terms as a physical illness.

          3)Defines severe mental illness for the health insurers and  
            health care service plans to include:

               a)     Schizophrenia
               b)     Schizoaffective Disorder
               c)     Bipolar Disorder








                                                                  AB 402
                                                                  Page  2

               d)     Major Depressive Disorders
               e)     Panic Disorder
               f)     Obsessive-compulsive Disorder
               g)     Pervasive developmental disorder or autism
               h)     Anorexia Nervosa
               i)     Bulimia Nervosa

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           1)Purpose  .  According to the author, approximately 1.2 million  
            adults live with serious mental illness. Most of these adults  
            continue to work right through their mental illness utilizing  
            sick days on occasion when symptoms are severe. Occasionally,  
            employees may need a longer period of time to adequately  
            recover from a severe mental illness or transition onto a new  
            medication. California State Disability Insurance can pay for  
            a portion of an employee's salary but many rely on short term  
            disability income insurance to make up the remaining lost  
            wages and allow an injured person to continue paying their  
            bills. When these policies exclude coverage for mental illness  
            or injury, families are left with choosing to work against  
            their Doctor's orders or bearing unmanageable financial  
            burdens.

           2)Disability Income Insurance  .  Disability income insurance pays  
            supplemental income benefits for a short period of time when  
            the insured is injured or sick.  These policies may be  
            purchased by individuals or can be offered as an employee  
            benefit.  Many employees or individuals have the option to  
            purchase a short term disability income plan, some employers  
            offer short term disability insurance as an employment  
            benefit.  Policies vary in regards to exclusions for severe  
            mental illness.  

           3)Mental Health Parity  .  Since 2000, California law has required  
            health care service plans and health insurers to provide  
            coverage for the diagnosis and treatment of severe mental  
            illnesses and the serious emotional disturbances of a child  
            under the same terms and conditions applied to other medical  
            conditions.  For covered conditions, health plans may not  
            limit benefits and or impose share-of-cost requirements that  
            render mental health benefits less comprehensive than physical  
            health benefits.  








                                                                  AB 402
                                                                  Page  3


           4)Policy Approval Delay  .  The bill has the effect of requiring  
            every insurer offering disability income insurance to revise  
            their policy and submit it to the Department of Insurance  
            (department) for review and approval prior to offering that  
            policy in the market.  It is common for the department to take  
            years to review and approve revised policies.  Accordingly,  
            the author may wish to consider delaying implementation of  
            this bill to allow insurers time to have their revised  
            policies reviewed and approved by the department.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Psychological Association

           Opposition 
           
          None received
           
          Analysis Prepared by  :    Paul Riches / INS. / (916) 319-2086