California Senate Bill 1384 has been approved!
We’ll be sharing additional analysis in the next few days, but register now for our California Partnership Continuing Education course and learn how to get back out there and help your clients with their long-term care planning!
Bill No: SB 1384
Author: Liu (D)
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
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.
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”).
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.
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.
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.
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.
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.:Yes Local: 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 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: (Verified 8/24/16)
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, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon
Prepared by:Hugh Slayden / INS. / (916) 651-4110
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