Print ArticleSACRAMENTO – A bill has been signed into law that will require more transparency when policy holders are dropped from long-term care insurance policies.
Under current law, insurers are required to maintain a record of all policy rescissions except those voluntarily initiated by the insured. The termination of a claim may be considered voluntary when the insurance company offers to refund all premiums paid when the policyholder´s information on the policy application conflicts with their medical records.
Assembly Member Lori Saldaña (D-San Diego), the bill´s author says this loophole provides an incentive for insurers to look for inconsistencies between policy applications and medical records.
"People may make honest mistakes when filling out paperwork," Saldaña said. "This lack of transparency in "voluntary rescissions" could be seen as an opportunity by insurers to pressure consumers to drop their long-term care policies."
Saldaña´s bill deletes the voluntary rescission exception and requires insurers to not only maintain a record of rescissions but also requires them to include the reasons for rescissions, the length of time the policy was in force, and the age and gender of the insured person. The bill would also authorize the Insurance Commissioner to make that information public upon request.
Saldaña said that because women tend to live longer than men do, this might provide reasons for insurance companies to rescind policies or deny coverage. Therefore, the gender criteria will help ensure that rescissions of long-term care are legitimate.
As the baby-boomer generation ages, the number of elderly Americans and the demand for aging services and long-term care is increasing. As a result, long-term care insurance, with more than eight million customers, is one of the many products that appeal to Americans reaching retirement age.
The measure, which received bi-partisan support in both houses of the Legislature, goes into effect on January 1, 200 9.
Under current law, insurers are required to maintain a record of all policy rescissions except those voluntarily initiated by the insured. The termination of a claim may be considered voluntary when the insurance company offers to refund all premiums paid when the policyholder´s information on the policy application conflicts with their medical records.
Assembly Member Lori Saldaña (D-San Diego), the bill´s author says this loophole provides an incentive for insurers to look for inconsistencies between policy applications and medical records.
"People may make honest mistakes when filling out paperwork," Saldaña said. "This lack of transparency in "voluntary rescissions" could be seen as an opportunity by insurers to pressure consumers to drop their long-term care policies."
Saldaña´s bill deletes the voluntary rescission exception and requires insurers to not only maintain a record of rescissions but also requires them to include the reasons for rescissions, the length of time the policy was in force, and the age and gender of the insured person. The bill would also authorize the Insurance Commissioner to make that information public upon request.
Saldaña said that because women tend to live longer than men do, this might provide reasons for insurance companies to rescind policies or deny coverage. Therefore, the gender criteria will help ensure that rescissions of long-term care are legitimate.
As the baby-boomer generation ages, the number of elderly Americans and the demand for aging services and long-term care is increasing. As a result, long-term care insurance, with more than eight million customers, is one of the many products that appeal to Americans reaching retirement age.
The measure, which received bi-partisan support in both houses of the Legislature, goes into effect on January 1, 200 9.
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