Bill Text: CA SB1046 | 2017-2018 | Regular Session | Amended

California Senate Bill 1046 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Insurance: long-term care.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2018-09-11 - Chaptered by Secretary of State. Chapter 352, Statutes of 2018. [SB1046 Detail]

Download: California-2017-SB1046-Amended.html

Amended IN Assembly June 12, 2018

Amended IN Senate April 12, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill

No. 1046

Introduced by Senator Roth

February 08, 2018

An act to amend Section 10235.50 of the Insurance Code, relating to insurance.

LEGISLATIVE COUNSEL'S DIGEST

SB 1046, as amended, Roth. Insurance: long-term care.

Existing law generally regulates long-term care insurance policies delivered or issued after January 1, 1990. As to these policies, existing law requires a policy or certificate to include a provision that gives the policyholder or certificate holder certain specified rights to reduce coverage and lower ~~premiums .~~ premiums.

This bill would require an insurer, if a reduction in coverage involves the reduction or elimination of an inflation protection provision, to allow the insured to continue the benefit amount in effect at the time of the reduction or elimination. provide that, if a premium increases, a policy holder or certificate holder has a right to retain a policy or certificate while reducing coverage and lowering the premium, and specifies options and information that an insurer would be required to provide under those circumstances. The bill would require an insurer offering a policy or certificate with an inflation protection provision to provide specified options if a policyholder or certificate holder opts to reduce coverage. The bill would provide that the premium for a reduced coverage policy or certificate shall be based on the issue age and underwriting class, as specified, and consistent with the approved rate table. The bill would require an insurer, for a policy issued or delivered after January 1, 2020, to provide specified options to retain a policy or certificate while reducing coverage and lowering the premium.

Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 10235.50 of the Insurance Code is amended to read:

10235.50.
~~Every policy or certificate shall include a provision that gives the policyholder or certificate holder the following rights to reduce coverage and lower premiums:~~
~~(a)A~~

10235.50.

(a) A policy or certificate shall include a provision that gives the policyholder or certificate holder the right, exercisable any time after the first year, to retain a the policy or certificate while ~~lowering the premium in no fewer than the following three ways:~~ reducing coverage and lowering the premium.

(1) The policyholder or certificate holder shall have the option to reduce coverage and lower the premium in the following ways:
~~(1)~~

(A) Reducing the lifetime maximum benefit.

~~(2)Reducing the nursing facility per diem and reducing the home- and community-based service benefits of a home care only policy and of a comprehensive long-term care policy.~~
(B) Reducing the daily, weekly, or monthly benefit amounts.
~~(3)~~

(C) Converting a “comprehensive long-term care” policy or certificate to a “Nursing Facility and Residential Care Facility Only” or a “Home Care Only” policy or certificate, if the insurer issues those policies or certificates for sale in the state.

(D) Reducing or eliminating the benefit adjustments provided by an inflation protection provision.
(2) Paragraph (1) shall apply to a policy issued or delivered on or after January 1, 2020.
(3) The insurer may offer other reduction options in addition to those required by paragraph (1).
(4) For a policy issued or delivered on or after January 1, 2020, the provision shall include a description of the process for requesting and implementing a reduction in coverage. For a policy issued or delivered before January 1, 2020, an insurer shall notify the policyholder or certificate holder of the process to request and implement a reduction in coverage.

(b) (1) The premium for ~~the~~ a policy or certificate that is reduced in coverage ~~will be based on the age of the insured at issue age and the premium rate applicable to the amount of reduced coverage at the original issue date.~~ shall be both of the following:

(c)If the contract in force at the time a reduction in coverage is made provides for benefit adjustments for anticipated increases in the costs of long-term care services, then the reduced nursing facility per diem, lifetime maximum benefit, and daily, weekly, or monthly home care benefits shall be adjusted in the same manner and in the same amount as the contract in force prior to the reduction in coverage.
(A) Based on the issue age and underwriting class used to determine the premium for the coverage currently in force.
(B) Consistent with the policy’s approved rate table.
(2) This subdivision shall apply to any reduction in coverage, regardless of the original policy issue date.
(c) (1) If a policy or certificate contains an inflation protection provision, both of the following shall apply to a reduction in coverage:
(A) If a policyholder or certificate holder chooses to reduce a daily, weekly, monthly, or lifetime benefit amount, then he or she shall be given the option to continue inflation protection benefit adjustments in the same manner and in the same amount as the contract in force before the reduction in coverage.
(B) If a policyholder or certificate holder chooses to reduce or eliminate the benefit adjustments provided by an inflation protection provision, then he or she shall be given the option to continue the daily, weekly, monthly, and lifetime benefit amounts in effect at the time of the reduction.
(2) This subdivision shall apply to any reduction in coverage, regardless of the original policy issue date.

(d) If a policy or certificate is about to lapse, the insurer shall provide written notice to the insured of the options in subdivision (a) to lower the premium by reducing coverage and of the premiums applicable to the reduced coverage options. The insurer may include in the notice additional options to those required in subdivision (a). The notice shall provide the insured at least 30 days in which to elect to reduce coverage and the policy shall be reinstated without underwriting if the insured elects the reduced coverage.

(e) (1) If a premium increases, the ~~insured shall be offered the option to lower premiums and reduce coverage.~~ policyholder or certificate holder shall have the right to retain the policy or certificate while reducing coverage and lowering the premium.

(f)If a reduction in coverage involves the reduction or elimination of an inflation protection provision, the insurer shall allow the insured to continue the benefit amount in effect at the time of the reduction or elimination.
(A) At least one option to reduce coverage shall allow the policyholder or certificate holder to retain the policy for a premium reasonably equivalent to the one that was in effect before the rate increase.
(B) An insurer may offer other reduction options in addition to the option required by paragraph (1).
(C) An insurer’s offer shall include a disclosure stating that all of the reduction options may not be of equal value.
(D) The policyholder or certificate holder of a policy or certificate offered under the California Partnership for Long-Term Care Program shall be offered options to reduce coverage that would maintain certification under the program. The insurer may also offer other reduction options that may result in a loss of partnership status, but the offer shall include a disclosure that identifies the benefit reduction options that may result in a loss of partnership status and explains that loss of partnership status may reduce or eliminate policyholder protections.
(2) This subdivision shall apply to any premium rate increase, regardless of the original policy issue date.