Amended in Assembly July 13, 2015

Amended in Assembly June 29, 2015

Amended in Assembly June 16, 2015

Amended in Senate April 30, 2015

Senate BillNo. 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 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 (a) the availability of the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse, (b) the dollar amount of the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse calculatedbegin insert up toend insert 60 days prior to the date of the annual notice, and (c) 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:

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SECTION 1.  

Section 10235.36 is added to the Insurance Code,
2to read:

3

10235.36.  

(a) When a shortened benefit period nonforfeiture
4benefit, as described in Section 10235.30, or a contingent benefit
5upon lapse, as described in Section 10235.35, is conferred, the
6insurer shall mail to and receive from each policyholder or
7certificate holder an election form which allows the policyholder
8or certificate holder to elect one of the following:

9(1) A written designation listing the name, address, and
10telephone number of at least one individual, in addition to the
11policyholder or certificate holder, who is to receive the annual
12notice as described in subdivision (c).

13(2) A confirmation that the policyholder or certificate holder
14designates the same person previously designated in Section
1510235.40 to receive the annual notice as described in subdivision
16(c).

17(3) A waiver signed and dated by the policyholder or certificate
18holder electing not to designate additional persons to receive the
19annual notice as described in subdivision (c). The required waiver
20shall read as follows:


P3    2“I understand that I have the right to designate at least one person
3other than myself to receive annual notification related to the
4 benefit retained under this long-term care insurance policy. I elect
5not to designate any person other than myself to receive the notice.

6________________________________________________   ___________

7Signature of Policyholder or Certificate Holder    Date”


9(b) The insurer shall notify all holders of a shortened benefit
10period nonforfeiture benefit or a contingent benefit upon lapse at
11the time of the annual notice as described in subdivision (c), of
12the right to change the election described in subdivision (a).

13(c) At the time a shortened benefit period nonforfeiture benefit
14or contingent benefit upon lapse is conferred and annually
15thereafter the insurer shall notify all holders of the benefit and, if
16elected, at least one individual designated pursuant to paragraph
17(1) or (2) of subdivision (a) by first-class United States mail,
18postage prepaid, of all of the following:

19(1) The availability of the shortened benefit period nonforfeiture
20benefit or contingent benefit upon lapse.

21(2) The dollar amount of the shortened benefit period
22nonforfeiture benefit or contingent benefit upon lapse calculated
23begin insert up to end insert 60 days prior to the date of the annual notice. The notice
24shall state that the amount may have been reduced if benefits were
25 paid in the period subsequent to the date on which that amount
26was calculated.

27(3) The name, address, and telephone number of the insurer for
28questions about the shortened benefit period nonforfeiture benefit
29or contingent benefit upon lapse.

30(d) For individuals who hold contingent benefits upon lapse as
31of the effective date of this section, the insurer shall send the
32election form required in subdivision (a) by July 1, 2016.

33(e) If, upon proper mailing by the insurer, the policyholder or
34certificate holder fails to return the election form described in
35subdivision (a) within 90 days, the failure will be deemed a waiver
36 as provided in paragraph (3) of subdivision (a).



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