BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1384|
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UNFINISHED BUSINESS
Bill No: SB 1384
Author: Liu (D)
Amended: 8/18/16
Vote: 21
SENATE INSURANCE COMMITTEE: 8-0, 4/13/16
AYES: Roth, Gaines, Berryhill, Glazer, Hall, Liu, Mitchell,
Wieckowski
NO VOTE RECORDED: Hernandez
SENATE HEALTH COMMITTEE: 8-0, 4/20/16
AYES: Hernandez, Nguyen, Hall, Mitchell, Monning, Pan, Roth,
Wolk
NO VOTE RECORDED: Nielsen
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/27/16
AYES: Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen
SENATE FLOOR: 39-0, 5/31/16
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Stone,
Vidak, Wieckowski, Wolk
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR: 80-0, 8/24/16 - See last page for vote
SUBJECT: California Partnership for Long-Term Care Program
SOURCE: Author
SB 1384
Page 2
DIGEST: This bill makes changes to the certification standards
and policy design options for long-term care insurance (LTCI)
policies certified by the California Partnership for Long-term
Care Program ("Partnership") and establishes a task force to
consider further reforms.
Assembly Amendments (1) eliminate the provisions that would have
moved program to the Department of Aging; (2) add provisions
establishing a task force, until January 1, 2019, and
authorizing the program to use an existing assessment to
administer the task force, implement task force recommendations,
and facilitate policy certification and approval; (3) explicitly
authorize policies covering home and community-based services
only that would be available through the Partnership; and (4)
recast the provisions requiring inflation protection.
ANALYSIS:
Existing law:
1)Provides for the regulation of LTCI by the California
Department of Insurance (CDI) and prescribes various
requirements and conditions governing the delivery of
individual or group LTCI in the state.
2)Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which low
income individuals are eligible for long-term care services.
3)Requires the DHCS to claim against the estate of a deceased
Medi-Cal beneficiary an amount equal to the payments for
medical and long-term care services received up to the value
of the estate ("estate recovery").
SB 1384
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4)Establishes the Partnership within DHCS to link private LTCI
with Medi-Cal and In-Home Supportive Services (IHSS) program
eligibility requirements and Medi-Cal estate recovery.
5)Disregards an equivalent value of qualified benefits received
under a certified Partnership policy for the purposes of
determining eligibility in the Medi-Cal or IHSS programs and
in determining the amount subject estate recovery (the benefit
is referred to as "asset protection").
6)Authorizes DHCS to establish, by adopting emergency
regulations, the minimum level of coverage required for
certification including the amount and types of services that
a policy must cover. Existing regulations require all
policies to include nursing home coverage and a minimum 5%
annual compound inflation escalator.
7)Establishes an annual assessment administered by the
Partnership of a minimum of $20,000 per year paid by
organizations that issue Partnership-certified policies to be
used for common education and marketing expenses for reaching
the target population.
This bill:
1)Requires Partnership policies to offer a lower-cost inflation
protection at the time of application in addition to a minimum
5% compound inflation escalator currently required and
requires that applicants be provided a graph that illustrates
the impact on premium and benefits for each option.
2)Requires the Partnership to certify home-care only policies
and requires those policies to cover electronic or other
devices used for remote monitoring of the insured.
SB 1384
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3)Establishes a new category of LTCI that may be offered through
the Partnership called "Home and Community-Based Services
Only" polies that cover home care and residential care, but
not nursing home care.
4)Establishes, until January 1, 2019, a task force to provide
advice and assistance in implementing reforms to the
Partnership.
5)Authorizes, but does not require, the Partnership to use the
funds, until January 1, 2019, to administer the task force,
implement task force recommendations, and facilitate policy
certification and approval.
Background
According to the author, almost 20% of California's population
will be age 65 and older by 2030. Of those, 70% will require
some form of long term care services and supports. Only 8% of
seniors have purchased LTCI. Without private pay options, an
increasing number of individuals will rely on public options and
may be forced to spend down their assets in order to qualify for
nursing home coverage provided by Medi-Cal.
The Partnership is the state program designed to help
middle-income consumers purchase meaningful private long-term
care coverage. The Partnership certifies LTCI policies that
provide special eligibility criteria and asset protection if
policyholders must enroll in Medi-Cal for nursing home care.
But the Partnership only offers policies with very rich benefits
that are unaffordable to the target market. This bill requires
the Partnership to offer a lower-cost inflation protection
option and new policy design options.
SB 1384
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Industry experts and consumer advocates question whether
long-term care insurance, including policies offered through the
Partnership, need more fundamental reform in addition to the
options offered in this bill. Several public policy think
tanks, consumer groups, and other industry-related interest
organizations have offered a variety of proposals to reform LTCI
policy designs and the market generally. In order to establish
a single, authoritative forum to consider these and other
proposals, this bill also establishes a task force until 2019.
Existing law creates an annual assessment for participating
issuers in an amount of $20,000 or more per year for educational
and marketing expenses. SB 1384 authorizes, but not require,
the program to also use those funds, for administration of the
task force and implementation of task force recommendations
until January 2019. Repurposed funds under this provision would
be limited to uses consistent with the statutory purpose of the
program and only after satisfying existing legal obligations
established by applicable regulations.
To take advantage of the new standards and options, insurers
will have to file new applications for certification by the
Partnership and approval by CDI. The bill permits, but not
require, the Partnership to also use the educational/marketing
fund to facilitate applications in order to expedite the
availability of new products.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, this bill
results in costs to the 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. This bill
repurposes revenues earmarked from outreach activities for the
bill's purposes, and thus the net cost increase is expected to
SB 1384
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be $50,000. The bill also results in costs to the CDI of about
$40,000 for the first two years, and $10,000 annually ongoing
(Insurance Fund).
SUPPORT: (Verified 8/24/16)
American Association for Long-term Care Insurance
American Council of Life Insurers
California Health Advocates
California Life and Health Insurance Companies
California Long-Term Care Insurance Services
California State Retirees
National Association of Insurance and Financial Advisors
OPPOSITION: (Verified8/24/16)
California Advocates for Nursing Home Reform
ARGUMENTS IN SUPPORT: California State Retirees support the
bill because it will protect against loss of benefits due to
inflation and provide lower-priced policy options for seniors.
ARGUMENTS IN OPPOSITION: California Advocates for Nursing
Home Reform opposes the bill because it has concerns about the
marketing practices of the Partnership program as administered
by DHCS.
ASSEMBLY FLOOR: 80-0, 8/24/16
AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,
Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,
Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley,
Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth
Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,
O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez,
SB 1384
Page 7
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
Prepared by:Hugh Slayden / INS. / (916) 651-4110
8/26/16 16:04:36
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