BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2366|
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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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          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  







                                                                    AB 2366 
                                                                    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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