Cal. Ins. Code § 10235.50
Implementation
Redline — January 1, 2011 → current.View current text →
Current — January 1, 2023
As of January 1, 2011
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 right, exercisable any time after the first year, to retain a policy or certificate while lowering the premium in no fewer than the following three ways: (1) 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. (3) Converting a “comprehensive long-term care” policy or certificate to a “Nursing Facility Only” or a “Home Care Only” policy or certificate, if the insurer issues those policies or certificates for sale in the state.
(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 the policy or certificate while 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: (A) Reducing the lifetime maximum benefit. (B) Reducing the daily, weekly, or monthly benefit amounts. (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) Subparagraph (D) of 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) The premium for the 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.
(b) (1) The premium for a policy or certificate that is reduced in coverage shall be both of the following: (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) 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.
(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 the policyholder or certificate holder 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 the policyholder or certificate holder 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) In the event 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.
(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) In the event of a premium increase, the insured shall be offered the option to lower premiums and reduce coverage.
(e) If a premium increases, the policyholder or certificate holder shall have the right to retain the policy or certificate while reducing coverage and lowering the premium.
(1) The policyholder or certificate holder shall be offered the option to reduce coverage as provided in subparagraphs (A), (B), and (D) of paragraph (1) of subdivision (a).
(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, as described in subdivision (d) of Section 22005.1 of the Welfare and Institutions Code. The insurer may also offer other reduction options that may result in a loss of partnership status, but shall disclose that the options may result in a loss of partnership status and explain that loss of partnership status may reduce or eliminate policyholder or certificate holder protections.
(2) This subdivision shall apply to any premium rate increase, regardless of the original policy issue date.
Official source: California Legislative Information. Reproduced from public-domain California statutes; confirm against the official source for the current text. Not legal advice.