BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2366|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: AB 2366
Author: Dababneh (D), et al.
Amended: 8/19/16 in Senate
Vote: 21
SENATE INSURANCE COMMITTEE: 8-0, 6/22/16
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Hernandez,
Mitchell, Wieckowski
NO VOTE RECORDED: Liu
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 78-0, 5/12/16 (Consent) - See last page for
vote
SUBJECT: Long-term care insurance
SOURCE: Association of California Life and Health Insurance
Companies
DIGEST: This bill exempts new benefits that are not material
from requirement that long-term care insurance (LTCI) carrier
offer new benefits to holders of existing policies.
Senate Floor Amendments of 8/19/16 (1) eliminate a blanket
exception for the special life insurance policies and (2) limit
the language describing what is not considered "material" to
only new benefits.
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Page 2
ANALYSIS:
Existing law:
1) Provides for the regulation of LTCI and life insurance by the
California Department of Insurance (CDI) and prescribes various
requirements and conditions governing those products.
2) Requires LTCI carriers to offer new policies, benefits, or
benefit eligibility criteria to existing policyholders as either
a replacement policy or a rider on the existing policy
("mandatory offer").
This bill:
1) Clarifies that the mandatory offer must be made within 12
months from when the new policy series is made available in
this state.
2) Limits the mandatory offer to only those new benefits that
are material in nature and exempts benefits that are "minor
in nature" including changes to elimination periods, benefit
periods, and benefit amounts.
Background
LTCI policies are sold with the expectation that they will not
be needed until decades later. However, the rapid evolution of
care options makes it difficult for insurers and consumers to
predict what services will be offered and available that far in
the future. For example, many early products only covered
nursing home care and those policies did not cover home care and
assisted living facilities when those services became available.
To address that problem, in part, insurers must make a
mandatory offer of new benefits to existing policyholders as a
replacement policy or rider. This provides the policyholder an
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Page 3
opportunity to update the policy. However, concerns have been
raised that consumers may be confused when offered an "upgrade"
that involves insignificant or inappropriate benefits given the
coverage already purchased. This bill exempts from the
mandatory offer new benefits that are not material or are minor
in nature and deems changes to elimination periods, benefit
periods, and benefit amounts to be minor in nature.
Recent amendments removed opposition by the Department of
Insurance.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified8/22/16)
Association of California Life and Health Insurance Companies
(source)
American Council of Life Insurers
National Association of Insurance and Financial Advisors -
California
OPPOSITION: (Verified8/22/16)
California Advocates for Nursing Home Reform
ARGUMENTS IN SUPPORT: The Association of California Life and
Health Insurance Companies explains that this bill offers a
simple solution to help ensure that insurance consumers are
offered the latest innovative insurance products, see that
existing policyholders only get offered updates that make sense
for the products they have, and simply protect consumers from
being forced to review options that might not be in their best
interest.
ARGUMENTS IN OPPOSITION:California Advocates for Nursing Home
Reform argues that changes to elimination and benefit periods
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Page 4
and benefit amounts are substantive, not minor in nature.
ASSEMBLY FLOOR: 78-0, 5/12/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon,
Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper,
Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,
Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger
Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,
Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,
Wilk, Williams, Wood, Rendon
NO VOTE RECORDED: Burke, Jones-Sawyer
Prepared by:Hugh Slayden / INS. / (916) 651-4110
8/22/16 23:02:26
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