Filed Under:Health Insurance, Disability

California bill would regulate chronic care hybrids

A lawmaker in California is trying to pass a bill that would let insurers sell life insurance-institutional care hybrids that are not life insurance-long-term care hybrids.

Sen. Ron Calderon, D-Montebello, Calif., has introduced Senate Bill 281, a bill that has the backing of the Association of California Life and Health Insurance Companies (ACLHIC).

S.B. 281 would let an insurer sell a life insurance policy with a provision or rider designed in such a way that the policy would pay accelerated death benefits, or "special benefits," when the insured came to need institutional care and was expected to need institutional care for the rest of his or her life.

Today, California allows insurers to sell life insurance policies with chronic-illness accelerated death benefits triggers only if the riders comply with most provisions of the state's long-term care insurance (LTCI) laws, according to a Senate analysis of the bill prepared by Asia Canady.

S.B. 281 would let insurers in California sell a policy with a chronic-illness trigger that fits an accelerated death benefit standard developed by the Interstate Insurance Product Regulation Commission (IIPRC) in 2007, Canady said. That provision refers to an insured developing a condition that usually requires continuous confinement in an institution for the rest of the insured's life.

Members of the Senate Insurance Committee voted 9-0 in April to approve the bill and refer it to the Appropriations Committee. The Appropriations Committee expects to hold a hearing on the bill May 20.

In addition to backing from the ACLHIC, the bill has the backing of the American Council of Life Insurers, the National Association of Insurance Financial Advisors of California, and State Farm Insurance Company.

Committee staffers have suggested amending the bill to prohibit the insurers from conditioning the payment of benefits on the receipt of long-term care or medical services.

Lawmakers also should amend the bill to prohibit an insurer from conditioning periodic payments of benefits on the continued survival or institutional confinement of the insured, Canady said.

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