Wilson OKs Senior Citizen Insurance Bill

In a victory for consumer groups, Gov. Pete Wilson signed legislation this week guaranteeing California’s elderly access to insurance that offers comprehensive coverage for home health care.

The legislation, authored by Sen. Herschel Rosenthal (D-Los Angeles), forces companies to offer consumers a choice of policies when they are writing so-called long-term care coverage.

Under the legislation, senior citizens must be told that they can either buy policies that may be tax deductible but provide fewer benefits, or policies that do not qualify for the deduction but offer more sweeping coverage.

The measure addresses a conflict between state and federal law created by 1996 federal legislation that made certain long-term care policies tax deductible for the consumer and the insurer. But those policies had fewer benefits than the minimum required in California under a 1992 consumer protection law.

Insurance Commissioner Chuck Quackenbush, bowing to requests from insurance companies, issued an emergency directive last year allowing the sale of the federally authorized policies.

Consumer advocates immediately objected, complaining that the directive permitted companies to stop selling the more generous policies required under state law.

The key difference, they contended, was a provision in the higher benefit policy that provided home care for the most common disability afflicting senior citizens--the inability to walk. The new federally authorized policy did not offer benefits for that category of disability.

Advocates also argued that the tax benefit would be of little use to most of the senior citizens who buy long-term care policies. They said the average purchaser was 68 years old and either did not pay taxes or did not itemize deductions.

Two consumer groups sued and won a court order invalidating Quackenbush’s directive on the grounds that he had taken action without soliciting public comment.

After the lawsuit, the commissioner did not approve any new long-term care policies that did not meet the state law requirement.

Quackenbush and the insurance industry supported Rosenthal’s bill because it authorized the sale of both types of policies but required extensive disclosure of the benefits each offered.

Jamie Court, director of Consumers for Quality Care, a Santa Monica-based health care watchdog group, said the disclosure provisions were critical so that consumers would know that one type of policy did not carry a broad array of benefits.

Amy Zajac, legislative liaison for the commissioner, said Quackenbush had urged the governor to sign Rosenthal’s bill.

“We’re pleased because it simply ensures that consumers will have a choice of either a tax-qualified or a non-tax-qualified product,” she said.