BILL ANALYSIS                                                                                                                                                                                                    

                                                                    SB 1384  

                                                                    Page  1

          Date of Hearing:  August 3, 2016


                               Lorena Gonzalez, Chair

          SB 1384  
          (Liu) - As Amended August 1, 2016

          |Policy       |Aging and Long Term Care       |Vote:|6 - 0        |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |             |Insurance                      |     |13 - 0       |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill revises the requirements for insurance policies  
          available through the California Partnership for Long-Term Care  
          (Partnership), establishes a temporary task force to implement  
          reforms, and allows for a new home- and community-based  
          services-only policy type to be sold through the Partnership.  

          It also repurposes, on a temporary basis until January 1, 2019,  


                                                                    SB 1384  

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          revenues from participating Partnership plans in order to  
          provide resources to staff the task force and facilitate review  
          of policies by the California Department of Insurance (CDI).  

          FISCAL EFFECT:

          1)Costs to the Department of Health Care Services (DHCS) of  
            $110,000 annually for calendar years 2017 and 2018 to staff  
            the task force and coordinate efforts to reform the program  
            and further its goals (Partnership plan revenues as allowed  
            through this bill/ potentially GF if resources are  
            insufficient).  This bill repurposes revenues earmarked from  
            outreach activities for the bill's purposes, and thus the net  
            cost increase is expected to be $50,000.

          2)Costs to the CDI of about $40,000 for the first two years, and  
            $10,000 annually ongoing (Insurance Fund). 


          1)Purpose.  This bill intends to reform the long-term care (LTC)  
            insurance offerings available through the Partnership, with an  
            eye toward making the policies affordable for middle-income  
            Californians.  Availability of affordable options for LTC  
            insurance benefits both consumers, who can access coverage for  
            their LTC needs without spending down their assets until they  
            are impoverished and qualify for Medi-Cal, and the state,  
            which is protected against paying for LTC needs of the  

          2)Background.  In order to access LTC through Medi-Cal, people  
            generally must have very few assets.  Since LTC is quite  


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            expensive, a person without LTC insurance who has significant  
            LTC needs may spend down their assets until they are Medi-Cal  
            eligible. Federally required "estate recovery" rules also make  
            a person's estate subject to recovery after death-essentially,  
            the estate will be indebted to the state for LTC spending on  
            behalf of the decedent. 

            Partnership policies offer middle-income consumers an  
            alternative to the Medi-Cal spend-down requirements, and  
            enable them to preserve a substantial portion of their assets  
            if their LTC insurance coverage runs out and they end up on  
            Medi-Cal.  For every dollar of benefit received under a  
            Partnership policy, a dollar is disregarded for the purposes  
            of determining Medi-Cal eligibility, and an equivalent value  
            in assets is protected from Medi-Cal's estate recovery  
            program.  This means that an insured would be able to enroll  
            in Medi-Cal and keep some assets that he or she would normally  
            either have had to "spend down" or would be seized by Medi-Cal  
            upon death.  This Partnership benefit rewards middle-income  
            consumers who prepare for a catastrophic disability by  
            preserving a portion of their estate and provides for a higher  
            quality of life while they or their spouses are on Medi-Cal.

            The Partnership is jointly administered by the California  
            Department of Insurance (CDI) and the Department of Health  
            Care Services (DHCS).  CDI reviews and approves policies in  
            accordance with the Insurance Code. DHCS promulgates minimum  
            standards for policies and certifies that the policies meet  
            program requirements pursuant to the Welfare and Institutions  


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            This bill addresses complaints that requirements for  
            Partnership policies discourage the offering of new, more  
            affordable products, by providing additional flexibility to  
            offer home and community-based services coverage, as well as  
            requiring plans with a lower inflation adjustment to be  
            offered (which improves affordability).

          Analysis Prepared by:Lisa Murawski / APPR. / (916)