BILL ANALYSIS Ó
SB 1384
Page 1
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1384
(Liu) - As Amended August 1, 2016
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|Policy |Aging and Long Term Care |Vote:|6 - 0 |
|Committee: | | | |
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| |Insurance | |13 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
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).
COMMENTS:
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
insured.
2)Background. In order to access LTC through Medi-Cal, people
generally must have very few assets. Since LTC is quite
SB 1384
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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
Code.
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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)
319-2081