Amended in Assembly June 15, 2016

Amended in Senate April 19, 2016

Amended in Senate April 4, 2016

Senate Bill No. 1091

Introduced by Senator Liu

February 17, 2016

An act to add Sections begin delete 10231.3, 10233.8, and end delete begin insert 10231.3 and end insert 10235.9a to 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, preventive, therapeutic, rehabilitative, maintenance, or personal care services that are provided in a setting other than an acute care unit of a hospital. Existing law defines “policy” for these purposes.

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

begin delete

Existing law requires an insurer to report annually by June 30 to the department 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. Existing law requires the department to provide that information to the public upon request.

end delete begin delete

This bill would require an insurer to report information to the department 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 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 delete begin insert

The bill would authorize, for policies issued on or after January 1, 2017, the insured or an insurer to propose an alternate plan of care. The bill would prohibit the maximum benefit available under the contract from being changed based on an insured utilizing an alternate plan of care but would authorize the maximum benefit to be reduced by any approved alternate plan of care costs. The bill would also require an insurer to provide a written explanation to the policyholder or certificate holder as to the specific reason an agreement cannot be reached for policies or certificates that contain an alternate plan of care provision, as specified.

end insert

Vote: majority. Appropriation: no. Fiscal committee:  begin delete yes end delete begin insert no end insert . 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 essential to our aging community’s quality of
life.

SEC. 2.  

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

SEC. 3.  

Section 10231.3 is added to the Insurance Code, to
read:

10231.3.  

begin insert

(a) For the purposes of this section, the following
terms apply:

end insert

begin insert (1) end insert begin insert   end insert An “alternate plan of care” means a plan of care authorized
by a provision in a policy, rider, endorsement, or amendment that
allows benefits for long-term care services that are not specifically
defined as a covered service under the policy.

begin insert

(2) “Licensed health care practitioner” means a physician,
registered nurse, licensed social worker, or other individual whom
the United States Secretary of the Treasury may prescribe by
regulation.

end insert begin insert

(3) “Plan of care” means a written description of the insured’s
needs and a specification of the type, frequency, and providers of
all formal and informal long-term care services required by the
insured and the cost, if any.

end insert begin insert

(b) An alternate plan of care may be proposed by the insured
or the insurer. Adoption, amendment, or replacement of an
alternate plan of care shall be agreed to by the insured, the insurer,
and a licensed health care practitioner. Consent or agreement to
an alternate plan of care shall be free and mutual.

end insert begin insert

(c) The maximum benefit available under the contract shall not
change based on an insured utilizing an alternate plan of care,
but that benefit will be reduced by any alternate plan of care costs
that are approved. Nothing in this section shall prohibit an insurer
from requiring that an alternate plan of care be a cost-effective
alternative.

end insert begin insert

(d) Nothing in this section shall be construed to require an
insurer to include a provision authorizing an alternate plan of
care.

end insert begin insert

(e) This section shall apply to policies issued on or after January
1, 2017.

end insert

begin delete

SEC. 4.  

Section 10233.8 is added to the Insurance Code, to
read:

10233.8.  

(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 “short-term policy” unless the policy provides
benefits designed to last for a time period of less than one year.

(d) 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 delete

begin delete SEC. 5. end delete

begin insert SEC. 4. end insert   

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

begin delete

10235.9a.  

(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 delete begin insert

begin insert 10235.9a. end insert   

For policies or certificates issued on or after January
1, 2017, that contain an alternate plan of care provision pursuant
to Section 10231.3, if an insurer and insured cannot agree on the
terms of an alternate plan of care, the insurer shall provide a
written explanation to the policyholder or certificate holder as to
the specific reason or reasons why the agreement cannot be
reached.

end insert