BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 402
Author: Ammiano (D), et al.
Amended: 6/27/13 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE : 7-2, 6/26/13
AYES: Calderon, Gaines, Corbett, Correa, Lieu, Roth, Torres
NOES: Knight, Nielsen
ASSEMBLY FLOOR : 57-12, 5/2/13 - See last page for vote
SUBJECT : Disability income insurance
SOURCE : Author
DIGEST : This bill requires every policy, that is of a
short-term limited duration of two years or less, of disability
income insurance that is issued, amended, or reviewed on or
after July1, 2014, and that provides disability income benefits,
to provide coverage for disability caused by severe mental
illnesses, as defined.
ANALYSIS : Existing law defines "disability income insurance"
as insurance against loss of occupational earning capacity
arising from injury, sickness, or disablement.
This bill:
1.Requires every disability income insurance policy issued,
amended, or renewed on or after July 1, 2014, that is of a
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short-term limited duration of two years or less, to provide
coverage for disability resulting from severe mental illness.
2.Defines "severe mental illness" to include:
A. Schizophrenia.
B. Schizoaffective disorder.
C. Bipolar disorder (manic-depressive illness).
D. Major depressive disorders, including postpartum
depression.
E. Panic disorder.
F. Obsessive-compulsive disorder.
G. Pervasive developmental disorder or autism.
H. Anorexia nervosa.
I. Bulimia nervosa.
Background
Disability Income Insurance . Disability income insurance
provides benefits on account of the insured's inability, as a
result of covered accident or sickness, to perform certain
activities as defined in the policy. Occupational policies
cover the duties of a particular occupation; non-occupational
policies indemnify the insured against a disability which
prevents the insured from performing the work of any occupation.
(Erreca v. West. States Life Ins. Co. (1942) 19 Cal.2d 388,
393.) Disability policies may also be described as long or
short-term. Short-term policies may pay benefits for less than
a year but typically no more than two. Long-term policies pay
benefits for a much longer period and may pay for up to a
defined period (up to five years), up to an age (such as age
65), for the remainder of the insured's life, etc. Disability
income policies may be purchased as a member of a group (like
those provided by the employer) or individually.
Permissible exclusions from coverage . Disability income
policies must be submitted to the Insurance Commissioner for
review. The Commissioner may disapprove the policy for a
variety of reasons, including if the policy is "economically
unsound" for the consumer. Current regulations deem disability
policies of "real economic value" despite exclusions for "mental
or emotional disorders or functional nervous disorders." In
practice, policies vary in regard to exclusions for severe
mental illness.
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Mental health parity in health coverage . AB 88 (Thomson,
Chapter 534, Statutes of 1999) required health care service plan
contracts and health insurance policies to provide coverage for
severe mental illnesses. The definition of "severe mental
illness" in this bill is borrowed from AB 88, except that AB 88
specifically provides that the category of "major depressive
disorders" specifically includes postpartum depression.
No new criminal penalties . Concerns were raised that a
violation of the provisions of this bill might be read as a
violation of Insurance Code Section 10401 (making "any
discrimination between insureds of the same class in any manner
whatsoever with relation to such insurance" a misdemeanor). The
Senate Insurance Committee staff has confirmed with the
Department of Insurance that this bill does not create a new
crime.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/27/13)
Arc and United Cerebral Palsy California Collaboration
California Communities United Institute
California Pan-Ethnic Health Network
California Psychological Association
Mental Health America of California
National Association of Social Workers, CA Chapter
ARGUMENTS IN SUPPORT : The author states that, according to
the 2010 United States Census, 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 to keep the employee's income whole,
many rely on short term disability income insurance to make up
the remaining lost wages and allow an injured person to continue
paying mortgage, rent, tuition and car payments, as well as help
cover expenses for food, child care and utilities. When these
policies exclude coverage for mental illness or injury, these
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families are left with the decision of working against their
doctor's orders and placing employers and fellow employees at
risk or facing often unmanageable financial burdens.
ASSEMBLY FLOOR : 57-12, 5/2/13
AYES: Achadjian, Ammiano, Bigelow, Bloom, Blumenfield,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Cooley, Daly,
Dickinson, Eggman, Fong, Frazier, Garcia, Gatto, Gomez,
Gordon, Gray, Hagman, Roger Hernández, Holden, Jones-Sawyer,
Levine, Linder, Lowenthal, Maienschein, Medina, Mitchell,
Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Perea, V.
Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Torres, Weber, Wieckowski, Wilk, Yamada
NOES: Allen, Dahle, Donnelly, Beth Gaines, Grove, Logue,
Mansoor, Melendez, Morrell, Patterson, Wagner, Waldron
NO VOTE RECORDED: Alejo, Atkins, Conway, Fox, Gorell, Hall,
Harkey, Jones, Williams, John A. Pérez, Vacancy
AL:ej 6/27/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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