BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2366| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. AB 2366 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 AB 2366 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 **** END ****