CHA Calls for Annual Notification to Beneficiaries with “Banked” Long Term Care Benefits

The Honorable Richard Roth, Chair
Senate Committee on Insurance
State Capitol Room 4034
Sacramento, CA 95814

Re: S.B. 575 (Liu) – Support

Dear Senator Roth:

California Health Advocates writes in strong support of S.B. 575 authored by Senator Liu. This bill will require annual notification of long term care insurance benefits that were “banked” as the result of increased or unaffordable premiums.

California Health Advocates is a not-for-profit organization dedicated to providing quality Medicare and related healthcare coverage information, education and policy advocacy. California Health Advocates supports the work of local Health Insurance Counseling & Advocacy Programs (HICAP) which provide benefits counseling and community education on Medicare and long term care.

Existing law contains several enhancements to the original requirement that insurers allow consumers to give up their long term care insurance policy in return for benefits that are equal to the premiums they’ve already paid.  This consumer protection allows an insured person to retain some amount of long term care insurance benefits when premiums exceed their ability to pay them and is known as “contingent benefit upon lapse.” The insurance company preserves those contingent benefits until needed.  An insured person might make this choice at the time of a large premium increase that boosts the premium beyond their ability to pay, or following the death of a spouse and the loss of that spouse’s income making the existing premium unaffordable.

However, as people age they may forget about this benefit, and family members who often arrange care may not know about it either. There is currently no notification that this benefit exists, or the amount of benefit that is available to pay for care. Annual notification will remind an insured person that they have this benefit, and provide notice to a family that this benefit exists when care is needed.

We strongly urge passage of S.B. 575.



Bonnie Burns
Policy Specialist


The Honorable Senator Carol Liu
Erin Ryan, Principal Consultant, Senate Committee on Insurance

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.