Amended in Assembly June 16, 2015

Amended in Senate April 30, 2015

Senate Bill No. 575

Introduced by Senator Liu

February 26, 2015

An act to add Section 10235.36 to the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 575, as amended, Liu. Long-term care insurance.

Existing law provides for the regulation of long-term care insurance by the Insurance Commissioner. Existing law prohibits an insurer from delivering or issuing for delivery a long-term care policy unless the insurer offers at the time of application an option to purchase a shortened benefit period nonforfeiture benefit. Under existing law, the commissioner may require the administration by an insurer of the contingent benefit upon lapse as a condition of approval or acknowledgment of a rate adjustment for a block of business for which the contingent benefit upon lapse is not otherwise available. Under existing law, the insurer is required to notify policyholders and certificate holders of the contingent benefit upon lapse when required by the commissioner, as specified.

This bill, when a shortened benefit period nonforfeiture benefit or begin delete the end delete contingent benefit upon lapse is conferred, would require the insurer to annually notify the policyholder or certificate holder and, if elected, at least one individual designated by the policyholder or certificate holder of begin delete (1) end delete begin insert (A) end insert the availability of the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse, begin delete (2) that the insured may request a statement of the current value of the benefit at any time, end delete begin insert (B) the dollar amount of the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse calculated 30 days prior to the date of the annual notice, end insert and begin delete (3) end delete begin insert (C) end insert the name, address, and telephone number of the insurer for questions about the benefit. The bill would also require the insurer to mail to and receive from each policyholder or certificate holder a form that allows the policyholder or certificate holder to submit one of the following: (1) a written designation of the name, address, and telephone number of at least one person, in addition to the policyholder or certificate holder who is to receive the annual notice described above, (2) a confirmation that the policyholder or certificate holder designates the same person previously designated to receive that notice, or (3) a waiver signed and dated by the policyholder or certificate holder electing not to designate additional persons to receive the annual notice.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 10235.36 is added to the Insurance Code,
to read:

10235.36.  

(a) When a shortened benefit period nonforfeiture
benefit, as described in Section 10235.30, or a contingent benefit
upon lapse, as described in Section 10235.35, is conferred, the
insurer shall mail to and receive from each policyholder or
certificate holder an election form which allows the policyholder
or certificate holder to elect one of the following:

(1) A written designation listing the name, address, and
telephone number of at least one individual, in addition to the
policyholder or certificate holder, who is to receive the annual
notice as described in subdivision (c).

(2) A confirmation that the policyholder or certificate holder
designates the same person previously designated in Section
10235.40 to receive the annual notice as described in subdivision
(c).

(3) A waiver signed and dated by the policyholder or certificate
holder electing not to designate additional persons to receive the
annual notice as described in subdivision (c). The required waiver
shall read as follows:

“I understand that I have the right to designate at least one person
other than myself to receive annual notification related to the
begin delete [shortened benefit period nonforfeiture benefit or contingent benefit
upon lapse, as applicable] end delete begin insert benefit end insert retained under this long-term
care insurance policy. I elect not to designate any person other
than myself to receive the notice.

________________________________________________   ___________

Signature of Policyholder or Certificate Holder    Date”

(b) The insurer shall notify all holders of a shortened benefit
period nonforfeiture benefit or a contingent benefit upon begin delete lapse, at
least once every two years, or end delete begin insert lapse end insert at the time of the annual notice
as described in subdivision (c), of the right to change the election
described in subdivision (a).

(c) At the time a shortened benefit period nonforfeiture benefit
or contingent benefit upon lapse is conferred and annually
thereafter the insurer shall notify all holders of the benefit and, if
elected, at least one individual designated pursuant to paragraph
(1) or (2) of subdivision (a) by first-class United States mail,
postage prepaid, of all of the following:

(1) The availability of the shortened benefit period nonforfeiture
benefit or contingent benefit upon lapse.

begin delete

(2) That he or she may request a statement of the current value
of the benefit at any time.

end delete begin insert

(2) The dollar amount of the shortened benefit period
nonforfeiture benefit or contingent benefit upon lapse calculated
30 days prior to the date of the annual notice. The notice shall
state that the amount may have been reduced if benefits were paid
in the period subsequent to the date on which that amount was
calculated.

end insert

(3) The name, address, and telephone number of the insurer for
questions about the shortened benefit period nonforfeiture benefit
or contingent benefit upon lapse.

begin insert

(d) For individuals who hold contingent benefits upon lapse as
of the effective date of this section, the insurer shall send the
election form required in subdivision (a) by July 1, 2016.

end insert begin delete

(d)

end delete

begin insert ( end insert begin insert e) end insert  If, upon proper mailing by the insurer, the policyholder or
certificate holder fails to return the election form described in
subdivision begin delete (a), end delete begin insert (a) within 90 days, end insert the failure will be deemed a
waiver as provided in paragraph (3) of subdivision (a).