Amended in Senate April 4, 2016

Senate Bill No. 1091

Introduced by Senator Liu

February 17, 2016

An act to begin delete amend Sections 10231.2 and 10235.9 of end delete begin insert add Sections 10231.3, 10233.8, and 10235.9a to end insert the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL’S DIGEST

SB 1091, as amended, Liu. Long-term care insurance.

Under existing law, the Department of Insurance, headed by the Insurance Commissioner, licenses and regulates insurers. Existing law divides insurance into various classes, including long-term care insurance, which includes an insurance policy, certificate, or rider advertised, marketed, offered, solicited, or designed to provide coverage for diagnostic, preventative, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital. begin insert Existing law defines “policy” for these purposes. end insert

begin delete

This bill would, among other things, provide that long-term care insurance also includes disability income coverage that provides benefits that may commence after the insured has reached Social Security’s normal retirement age and family expense disability insurance policies, riders, endorsements, or amendments that provide coverage for disabled persons during periods of institutional care, as specified. The bill would provide that long-term care insurance does not include a policy, rider, endorsement, or amendment that provides benefits triggered by activities of daily living, and that complies with specified requirements, including that it not be advertised, marketed, offered, or designed as long-term care insurance or as providing coverage for long-term care services.

end delete begin insert

This bill would, among other things, define “alternate plan of care” as a policy, rider, endorsement, or amendment containing a provision that allows benefits for long-term care services that are not specifically defined as a covered service under the policy. The bill would prohibit an insurer from designating, advertising, marketing, offering, or soliciting a policy as “family-friendly,” “catastrophic,” “deferred,” “short-term,” or “standardized,” unless the respective policy contains specified provisions.

end insert

Existing law requires an insurer to report annually by June 30 begin insert to the department end insert the total number of claims denied by each class of business in the state, as specified, and to provide a policyholder or certificate holder whose claim is denied written notice of the reasons for denial, as specified. begin insert Existing law requires the department to provide that information to the public upon request. end insert

begin insert end insert

This bill would require an insurer to begin delete adopt and implement reasonable standards for the prompt investigation and processing of claims. The bill would require an insurer to end delete report information begin insert to the department end insert regarding denial of requests for treatment under an alternate plan of care, and to provide a policyholder or certificate holder written notice of denial of begin delete those requests, as described above regarding denial of insurance claims. end delete begin insert a request for treatment under an alternate plan of care. The bill would require the department to provide that information to the public upon request. end insert

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

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

SECTION 1.  

The Legislature finds and declares both of the
following:

(a) Long-term care insurance is a vital lifeline for many of
California’s aging population.

(b) Ensuring that the insurance available to consumers is fair
and accessible is begin delete important to values and end delete begin insert essential to our aging
community’s end insert quality of life.

SEC. 2.  

It is the intent of the Legislature to ensure that
insurance products provide appropriate benefits that fit consumers’
needs.

begin delete

SEC. 3.  

Section 10231.2 of the Insurance Code is amended to
read:

10231.2.  

(a) “Long-term care insurance” includes any
insurance policy, certificate, or rider advertised, marketed, offered,
solicited, or designed to provide coverage for diagnostic,
preventive, therapeutic, rehabilitative, maintenance, or personal
care services that are provided in a setting other than an acute care
unit of a hospital. Long-term care insurance includes all products
containing any of the following benefit types:

(1) Coverage for institutional care, including care in a nursing
home, convalescent facility, extended care facility, custodial care
facility, skilled nursing facility, or personal care home.

(2) Home care coverage, including home health care, personal
care, homemaker services, hospice, or respite care.

(3) Community-based coverage, including adult day care,
hospice, or respite care.

(4) Disability income coverage that provides benefits that may
commence after the insured has reached Social Security’s normal
retirement age.

(5) Family expense disability insurance policies, riders,
endorsements, or amendments that provide coverage for disabled
persons during periods of institutional care, unless the benefits are
designed to cover expenses not related to the institutional care.

(b) (1) Long-term care insurance includes disability based
long-term care policies, but does not include insurance designed
primarily to provide Medicare supplement or major medical
expense coverage.

(2) Long-term care insurance does not include an insurance
policy rider, endorsement, or amendment that provides benefits
triggered by activities of daily living, as defined in paragraph (2)
of subdivision (a) of Section 10232.8, and that complies with both
of the following:

(A) The benefits are not dependent on, or vary in amount based
on, the receipt of long-term care services.

(B) The coverage is not advertised, marketed, offered, or
designed as long-term care insurance or as providing coverage for
long-term care services.

(c) Long-term care policies, certificates, and riders shall be
regulated under this chapter. The commissioner shall review and
approve individual and group policies, certificates, riders, and
outlines of coverage. Other applicable laws and regulations shall
also apply to long-term care insurance insofar as they do not
conflict with the provisions in this chapter. Long-term care benefits
designed to provide coverage of 12 months or more that are
contained in or amended to Medicare supplement or other disability
policies and certificates shall be regulated under this chapter.

end delete begin delete

SEC. 4.  

Section 10235.9 of the Insurance Code is amended to
read:

10235.9.  

(a) An insurer shall adopt and implement reasonable
standards for promptly investigating and processing claims.

(b) Every insurer shall report to the department by June 30 of
each year all of the following information:

(1) The total number of claims denied by each class of business
in the state and the number of these claims denied for failure to
meet the waiting period or because of a preexisting condition as
of the end of the preceding calendar year.

(2) The number of requests from insureds for treatment to be
provided under an alternate plan of care, any reason used by the
insurer to deny those requests, and the number of requests denied
for each reason.

(c) The insurer shall provide every policyholder or certificate
holder whose claim is denied, or whose request for treatment under
an alternate plan of care has been denied, a written notice within
40 days of the date of denial of the reasons for the denial and all
information directly related to the denial. Insurers shall annually
report to the department the number of denied claims.

(d) The department shall make available to the public, upon
request, the denial rate of claims by insurer pursuant to subdivision
(b).

end delete

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 10231.3 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10231.3. end insert   

An “alternate plan of care” means a policy, rider,
endorsement, or amendment containing a provision that allows
benefits for long-term care services that are not specifically defined
as a covered service under the policy.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 10233.8 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10233.8. end insert   

(a) An insurer shall not designate, advertise, market,
offer, or solicit a policy as “family-friendly” unless the policy
provides both of the following:

(1) A coordination benefit as described in paragraph (1) of
subdivision (b) of Section 22005.1 of the Welfare and Institutions
Code.

(2) One or both of the following benefits:

(A) Permits family members to provide the care covered under
the policy and provides caregiver training.

(B) Provides one or both of the following benefits:

(i) Credit for unused benefits granted to another insured in the
same family.

(ii) An annuity or death benefit assignable to the caregiver or
that covers legal services related to the care of a person, including
the preparation of a power of attorney, a health care power of
attorney or advance directive, or legal representation in a
conservatorship proceeding involving the person.

(b) An insurer shall not designate, advertise, market, offer, or
solicit a policy as a “catastrophic policy” unless the insured
retains substantial risk before the insured becomes eligible to
receive benefits.

(c) An insurer shall not designate, advertise, market, offer, or
solicit a policy as a “deferred policy” unless the policy provides
coverage only after the insured reaches an age specified in the
policy.

(d) An insurer shall not designate, advertise, market, offer, or
solicit a policy as a “short-term policy” unless the policy provides
benefits designed to last for a time period of less than one year.

(e) An insurer shall not designate, advertise, market, offer, or
solicit a policy as a “standardized policy” unless the policy meets
standardized benefit levels and other criteria as determined by the
commissioner.

end insert

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 10235.9a is added to the end insert begin insert Insurance Code end insert begin insert , end insert
immediately following Section 10235.9 begin insert , to read: end insert

begin insert

begin insert 10235.9a. end insert   

(a) An insurer shall provide a policyholder or
certificate holder, whose request for treatment under an alternate
plan of care has been denied, a written notice within 40 days of
the date of the denial, including the reasons for the denial and all
information directly related to the denial.

(b) An insurer shall report to the department by June 30 of each
year, together with the information required pursuant to Section
10235.9, the number of requests from insureds for treatment to be
provided under an alternate plan of care, any reason used by the
insurer to deny those requests, and the number of requests denied
for each of those reasons.

(c) The department shall make available to the public, upon
request, the information obtained pursuant to subdivision (b).

end insert