BILL NUMBER: AB 2110 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 13, 2010
INTRODUCED BY Assembly Member De La Torre
FEBRUARY 18, 2010
An act to amend Sections 10291.5 and 10350.3 of
add Section 10355 to the Insurance Code, relating to
disability insurance health care coverage
.
LEGISLATIVE COUNSEL'S DIGEST
AB 2110, as amended, De La Torre. Disability
Health insurance: premium payments: grace periods.
Existing law provides for the regulation of disability insurers by
the Department of Insurance and requires disability insurance
policies to include a provision setting forth a grace period for
making premium payments. Under existing law, the grace period must
equal no less than 7 days for weekly premium policies, no less than
10 days for monthly premium policies, and no less than 31 days for
all other policies. Existing law prohibits the Insurance Commissioner
from approving a policy for issuance or delivery, and authorizes the
commissioner to withdraw approval of the policy, if it fails to meet
these requirements.
This bill would extend the minimum grace period for
policies, other than weekly premium policies, to
require health insurance policies issued, amended, or
renewed on or after January 1, 2011, to provide a grace period of
50 days and would require insurers to provide notice of
this grace period upon issuance, amendment, or renewal of a policy
.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 10355 is added to the
Insurance Code , to read:
10355. (a) For purposes of this section, "health insurance" has
the same meaning set forth in subdivision (b) of Section 106.
(b) Notwithstanding paragraph (12) of subdivision (b) of Section
10291.5 or Section 10350.3, a health insurance policy issued,
amended, or renewed on or after January 1, 2011, shall provide a
grace period of 50 days for the payment of each premium falling due
after the first premium, during which grace period the policy shall
continue in force.
(c) Upon issuance, amendment, or renewal of a health insurance
policy on or after January 1, 2011, the insurer shall provide a
notice to the insured of the grace period described in subdivision
(b).
(d) Nothing in this section shall limit the right of a health
insurer to recover unpaid premiums from an insured consistent with
state and federal law.
SECTION 1. Section 10291.5 of the Insurance
Code is amended to read:
10291.5. (a) The purpose of this section is to achieve both of
the following:
(1) Prevent, with respect to disability insurance, fraud, unfair
trade practices, and insurance economically unsound to the insured.
(2) Ensure that the language of all insurance policies can be
readily understood and interpreted.
(b) The commissioner shall not approve a disability policy for
issuance or delivery in this state in any of the following
circumstances:
(1) If the commissioner finds that it contains any provision, or
has any label, description of its contents, title, heading, backing,
or other indication of its provisions that is unintelligible,
uncertain, ambiguous, or abstruse, or likely to mislead a person to
whom the policy is offered, delivered or issued.
(2) If it contains any provision for payment at a rate, or in an
amount (other than the product of rate times the periods for which
payments are promised) for loss caused by particular event or events
(as distinguished from character of physical injury or illness of the
insured) more than triple the lowest rate, or amount, promised in
the policy for the same loss caused by any other event or events
(loss caused by sickness, loss caused by accident, and different
degrees of disability each being considered, for the purpose of this
paragraph, a different loss); or if it contains any provision for
payment for any confining loss of time at a rate more than six times
the least rate payable for any partial loss of time or more than
twice the least rate payable for any nonconfining total loss of time;
or if it contains any provision for payment for any nonconfining
total loss of time at a rate more than three times the least rate
payable for any partial loss of time.
(3) If it contains any provision for payment for disability caused
by particular event or events (as distinguished from character of
physical injury or illness of the insured) payable for a term more
than twice the least term of payment provided by the policy for the
same degree of disability caused by any other event or events; or if
it contains any benefit for total nonconfining disability payable for
lifetime or for more than 12 months and any benefit for partial
disability, unless the benefit for partial disability is payable for
at least three months; or if it contains any benefit for total
confining disability payable for lifetime or for more than 12 months,
unless it also contains benefit for total nonconfining disability
caused by the same event or events payable for at least three months,
and, if it also contains any benefit for partial disability, unless
the benefit for partial disability is payable for at least three
months. The provisions of this paragraph shall apply separately to
accident benefits and to sickness benefits.
(4) (A) If it contains provision or provisions which would have
the effect, upon any termination of the policy, of reducing or ending
the liability as the insurer would have, but for the termination,
for loss of time resulting from accident occurring while the policy
is in force or for loss of time commencing while the policy is in
force and resulting from sickness contracted while the policy is in
force or for other losses resulting from accident occurring or
sickness contracted while the policy is in force, and also contains
provision or provisions reserving to the insurer the right to cancel
or refuse to renew the policy, unless it also contains other
provision or provisions the effect of which is that termination of
the policy as the result of the exercise by the insurer of any such
right shall not reduce or end the liability with respect to the
hereinafter specified losses as the insurer would have had under the
policy, including its other limitations, conditions, reductions, and
restrictions, had the policy not been so terminated.
(B) The specified losses referred to in subparagraph (A) are:
(i) Loss of time that commences while the policy is in force and
results from sickness contracted while the policy is in force.
(ii) Loss of time that commences within 20 days following and
results from accident occurring while the policy is in force.
(iii) Losses that result from accident occurring or sickness
contracted while the policy is in force and arise out of the care or
treatment of illness or injury and that occur within 90 days from the
termination of the policy or during a period of continuous
compensable loss or losses, which period commences prior to the end
of those 90 days.
(iv) Losses other than those specified in clause (i), (ii), or
(iii) of this paragraph that result from accident occurring or
sickness contracted while the policy is in force and that occur
within 90 days following the accident or the contraction of the
sickness.
(5) If by any caption, label, title, or description of contents
the policy states, implies, or infers without reasonable
qualification that it provides loss of time indemnity for lifetime,
or for any period of more than two years, if the loss of time
indemnity is made payable only when house confined or only under
special contingencies not applicable to other total loss of time
indemnity.
(6) If it contains any benefit for total confining disability
payable only upon condition that the confinement be of an abnormally
restricted nature unless the caption of the part containing that
benefit is accurately descriptive of the nature of the confinement
required and unless, if the policy has a description of contents,
label, or title, at least one of them contain reference to the nature
of the confinement required.
(7) (A) If, irrespective of the premium charged therefor, any
benefit of the policy is, or the benefits of the policy as a whole
are, not sufficient to be of real economic value to the insured.
(B) In determining whether benefits are of real economic value to
the insured, the commissioner shall not differentiate between
insureds of the same or similar economic or occupational classes and
shall give due consideration to all of the following:
(i) The right of insurers to exercise sound underwriting judgment
in the selection and amounts of risks.
(ii) Amount of benefit, length of time of benefit, nature or
extent of benefit, or any combination of those factors.
(iii) The relative value in purchasing power of the benefit or
benefits.
(iv) Differences in insurance issued on an industrial or other
special basis.
(C) To be of real economic value, it shall not be necessary that a
benefit or benefits cover the full amount of a loss that might be
suffered by reason of the occurrence of a hazard or event insured
against.
(8) If it substitutes a specified indemnity upon the occurrence of
accidental death for any benefit of the policy, other than a
specified indemnity for dismemberment, which would accrue prior to
the time of that death, or if it contains any provision that has the
effect, other than at the election of the insured exercisable within
not less than 20 days in the case of benefits specifically limited to
the loss by removal of one or more fingers or one or more toes or
within not less than 90 days in all other cases, of doing any of the
following:
(A) Of substituting, upon the occurrence of the loss of both
hands, both feet, one hand and one foot, the sight of both eyes or
the sight of one eye and the loss of one hand or one foot, some
specified indemnity for any or all benefits under the policy unless
the indemnity so specified is equal to or greater than the total of
the benefit or benefits for which the specified indemnity is
substituted and which, assuming in all cases that the insured would
continue to live, could possibly accrue within four years from the
date of the dismemberment under all other provisions of the policy
applicable to the particular event or events (as distinguished from
character of physical injury or illness) causing the dismemberment.
(B) Of substituting, upon the occurrence of any other
dismemberment some specified indemnity for any or all benefits under
the policy unless the indemnity so specified is equal to or greater
than one-fourth of the total of the benefit or benefits for which the
specified indemnity is substituted and which, assuming in all cases
that the insured would continue to live, could possibly accrue within
four years from the date of the dismemberment under all other
provisions of the policy applicable to the particular event or events
(as distinguished from character of physical injury or illness)
causing the dismemberment.
(C) Of substituting a specified indemnity upon the occurrence of
any dismemberment for any benefit of the policy which would accrue
prior to the time of dismemberment.
As used in this section, loss of a hand shall be severance at or
above the wrist joint, loss of a foot shall be severance at or above
the ankle joint, loss of an eye shall be the irrecoverable loss of
the entire sight thereof, loss of a finger shall mean at least one
entire phalanx thereof and loss of a toe the entire toe.
(9) If it contains provision, other than as provided in Section
10369.3, reducing any original benefit more than 50 percent on
account of age of the insured.
(10) If the insuring clause or clauses contain no reference to the
exceptions, limitations, and reductions (if any) or no specific
reference to, or brief statement of, each abnormally restrictive
exception, limitation, or reduction.
(11) If it contains benefit or benefits for loss or losses from
specified diseases only unless:
(A) All of the diseases so specified in each provision granting
the benefits fall within some general classification based upon the
following:
(i) The part or system of the human body principally subject to
those diseases.
(ii) The similarity in nature or cause of those diseases.
(iii) In case of diseases of an unusually serious nature and
protracted course of treatment, the common characteristics of those
diseases with respect to severity of affliction and cost of
treatment.
(B) The policy is entitled and each provision granting the
benefits is separately captioned in clearly understandable words so
as to accurately describe the classification of diseases covered and
expressly point out, when that is the case, that not all diseases of
the classification are covered.
(12) If it does not contain provision for a grace period for the
payment of each premium falling due after the first premium, during
which grace period the policy shall continue in force, of at least
seven days for policies providing for weekly payment of premium and
at least 50 days for all other policies.
(13) If it fails to conform in any respect with any law of this
state.
(c) The commissioner shall not approve a disability policy
covering hospital, medical, or surgical expenses unless the
commissioner finds that the application conforms to both of the
following requirements:
(1) All applications for disability insurance covering hospital,
medical, or surgical expenses, except those that are guaranteed
issue, which include questions relating to medical conditions, shall
contain clear and unambiguous questions designed to ascertain the
health condition or history of the applicant.
(2) The application questions designed to ascertain the health
condition or history of the applicant shall be based on medical
information that is reasonable and necessary for medical underwriting
purposes. The application shall include a prominently displayed
notice that states:
"California law prohibits an HIV test from being required or used
by health insurance companies as a condition of obtaining health
insurance coverage."
(d) Nothing in this section authorizes the commissioner to
establish or require a single or standard application form for
application questions.
(e) The commissioner may, from time to time as conditions warrant,
after notice and hearing, promulgate such reasonable rules and
regulations, and amendments and additions thereto, as are necessary
or convenient, to establish, in advance of the submission of
policies, the standard or standards conforming to subdivision (b), by
which he or she shall disapprove or withdraw approval of any
disability policy.
In promulgating any such rule or regulation, the commissioner
shall give consideration to the criteria herein established and to
the desirability of approving for use in policies in this state
uniform provisions, nationwide or otherwise, and is hereby granted
the authority to consult with insurance authorities of any other
state and their representatives individually or by way of convention
or committee, to seek agreement upon those provisions.
Any such rule or regulation shall be promulgated in accordance
with the procedure provided in Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(f) The commissioner may withdraw approval of filing of any policy
or other document or matter required to be approved by the
commissioner, or filed with him or her, by this chapter when the
commissioner would be authorized to disapprove or refuse filing of
the same if originally submitted at the time of the action of
withdrawal.
That withdrawal shall be in writing and shall specify reasons. An
insurer adversely affected by the withdrawal may, within a period of
30 days following mailing or delivery of the writing containing the
withdrawal, by written request, secure a hearing to determine whether
the withdrawal should be annulled, modified, or confirmed. Unless,
at any time, it is mutually agreed to the contrary, a hearing shall
be granted and commenced within 30 days following filing of the
request and shall proceed with reasonable dispatch to determination.
Unless the commissioner in writing in the withdrawal, or subsequent
thereto, grants an extension, the withdrawal shall, in the absence of
a request for a hearing, be effective, prospectively and not
retroactively, on the 91st day following the mailing or delivery of
the withdrawal, and, if request for the hearing is filed, on the 91st
day following mailing or delivery of written notice of the
commissioner's determination.
(g) No proceeding under this section is subject to Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code.
(h) Except as provided in subdivision (k), any action taken by the
commissioner under this section is subject to review by the courts
of this state and proceedings on review shall be in accordance with
the Code of Civil Procedure.
Notwithstanding any other provision of law to the contrary,
petition for that review may be filed at any time before the
effective date of the action taken by the commissioner. No action of
the commissioner shall become effective before the expiration of 20
days after written notice and a copy thereof are mailed or delivered
to the person adversely affected, and any action so submitted for
review shall not become effective for a further period of 15 days
after the filing of the petition in court. The court may stay the
effectiveness thereof for a longer period.
(i) This section shall be liberally construed to effectuate the
purpose and intentions herein stated; but shall not be construed to
grant the commissioner power to fix or regulate rates for disability
insurance or prescribe a standard form of disability policy, except
that the commissioner shall prescribe a standard supplementary
disclosure form for presentation with all disability insurance
policies, pursuant to Section 10603.
(j) This section shall be effective on and after July 1, 1950, as
to all policies thereafter submitted and on and after January 1,
1951, the commissioner may withdraw approval pursuant to subdivision
(d) of any policy thereafter issued or delivered in this state
irrespective of when its form may have been submitted or approved,
and prior to those dates the provisions of law in effect on January
1, 1949, shall apply to those policies.
(k) A policy subject to this section that is issued by an insurer
to an insured on a form approved by the commissioner, and in
accordance with the conditions, if any, contained in the approval, at
a time when that approval is outstanding shall, as between the
insurer and the insured, or any person claiming under the policy, be
conclusively presumed to comply with, and conform to, this section.
SEC. 2. Section 10350.3 of the Insurance Code
is amended to read:
10350.3. A disability policy shall contain a provision that shall
be in one of the two forms set forth in this section. Form A shall
be used in a policy in which the insurer does not reserve the right
to refuse any renewal. Form B shall be used in a policy in which an
insurer reserves the right to refuse any renewal. The clause in
parentheses may only be added if the policy contains a cancellation
provision. In the blank in each form shall be inserted a number: not
less than "7" for weekly premium policies and not less than "50" for
all other policies.
Form A.
Grace Period: A grace period of __ days will be granted for the
payment of each premium falling due after the first premium, during
which grace period the policy shall continue in force (subject to the
right of the insurer to cancel in accordance with the cancellation
provision hereof).
Form B.
Grace Period: Unless not less than five days prior to the premium
due date the insurer has delivered to the insured or has mailed to
his last address as shown by the records of the insurer written
notice of its intention not to renew this policy beyond the period
for which the premium has been accepted, a grace period of __ days
will be granted for the payment of each premium falling due after the
first premium, during which grace period the policy shall continue
in force (subject to the right of the insurer to cancel in accordance
with the cancellation provision hereof).
SEC. 3. The changes made by Sections 1 and 2 of
this act shall only apply to disability insurance policies issued,
amended, or renewed on or after January 1, 2011.