785. (a) All insurers, brokers, agents, and others engaged in the
transaction of insurance owe a prospective insured who is 65 years of
age or older, a duty of honesty, good faith, and fair dealing. This
duty is in addition to any other duty, whether express or implied,
that may exist.
(b) Conduct of an insurer, broker, or agent, or other person
engaged in the transaction of insurance, during the offer and sale of
a policy or certificate previous to the purchase is relevant to any
action alleging a breach of the duty of good faith and fair dealing.
(c) Except where explicitly provided to the contrary, this article
shall not apply to any of the following:
(1) Medicare supplement insurance as defined in subdivision (m) of
Section 10192.4.
(2) Long-term care insurance as defined in Section 10231.2.
(3) Disability coverage provided through the insured's employer or
former employer.
(4) Disability insurance policies or certificates principally
designed to provide coverage for accidents or expenses incurred while
traveling if the premium for the policy or certificate is ten
dollars ($10) or less.
(5) Blanket disability insurance as defined in Section 10270.3.
(6) Credit disability insurance as defined in Section 779.2.
(7) Accidental death insurance.
(8) Until January 1, 2002, disability policies or certificates
that are sold through direct response methods of delivery.
(9) Disability income insurance as defined in subdivision (i) of
Section 799.01.
(d) Provided that the requirements of Section 10296 are met, this
article shall not apply to transportation ticket policies and baggage
insurance policy types allowable for sale by travel agents pursuant
to Section 1753.
786. All disability insurance and life insurance policies and
certificates offered for sale to individuals age 65 or older in
California shall provide an examination period of 30 days after the
receipt of the policy or certificate for purposes of review of the
contract, at which time the applicant may return the contract. The
return shall void the policy or certificate from the beginning, and
the parties shall be in the same position as if no contract had been
issued. All premiums paid and any policy or membership fee shall be
fully refunded to the applicant by the insurer or entity in a timely
manner.
(a) For the purposes of this section a timely manner shall be no
later than 30 days after the insurer or entity issuing the policy or
certificate receives the returned policy or certificate.
(b) If the insurer or entity issuing the policy or certificate
fails to refund all of the premiums paid, in a timely manner, then
the applicant shall receive interest on the paid premium at the legal
rate of interest on judgments as provided in Section 685.010 of the
Code of Civil Procedure. The interest shall be paid from the date the
insurer or entity received the returned policy or certificate.
(c) Each policy or certificate shall have a notice prominently
printed in no less than 10-point uppercase type, on the cover page of
the policy or certificate and the outline of coverage, stating that
the applicant has the right to return the policy or certificate
within 30 days after its receipt via regular mail, and to have the
full premium refunded.
(d) In the event of any conflict between this section and Section
10127.10 with respect to life insurance, the provisions of Section
10127.10 shall prevail.
786.5. (a) All brokers, agents, or other entities offering a
contract of disability insurance to persons 65 years of age or older
in this state shall provide the prospective insured with a full and
accurate written comparison with existing health coverage, and shall
explain the relationship of the proposed coverage to any existing
health benefits provided by Medicare, Medi-Cal, or any other health
benefits available to the applicant. The written comparison shall be
maintained in accordance with Section 10508.5. Disability insurers
marketing through direct response to persons 65 years of age or older
shall include in the application form questions to ascertain whether
the prospective insured is currently 65 years of age or older, and
whether the prospective insured is covered by Medi-Cal or a Medicare
supplement policy. These direct response insurers shall provide the
required comparison as early in the transaction as possible, but not
later than the delivery of the insurance contract.
(b) The commissioner may prescribe a standard comparison form and
an informational brochure that shall be distributed to every
prospective insured at the time insurance is offered for sale by an
agent, broker, or other producer. In the case of a transportation
ticket policy, the informational brochures shall be delivered to the
prospective insured not later than delivery of the insurance
contract. Disability insurers marketing through direct response to
persons 65 years of age or older shall provide the informational
brochure as early in the transaction as possible, but not later than
the delivery of the insurance contract.
(c) The amendments to this section made by Assembly Bill 1178 of
the 2001-02 Regular Session shall become operative January 1, 2002.
787. Any advertisement or other device designed to produce leads
based on a response from a potential insured which is directed
towards persons age 65 or older shall prominently disclose that an
agent may contact the applicant if that is the fact. In addition, an
agent who makes contact with a person as a result of acquiring that
person's name from a lead generating device shall disclose that fact
in the initial contact with the person.
(a) No insurer, agent, broker, solicitor, or other person or other
entity shall solicit persons age 65 and older in this state for the
purchase of disability insurance, life insurance, or annuities
through the use of a true or fictitious name which is deceptive or
misleading with regard to the status, character, or proprietary or
representative capacity of the entity or person, or to the true
purpose of the advertisement.
(b) For the purposes of this section, an advertisement includes
envelopes, stationery, business cards, or other materials designed to
describe and encourage the purchase of a policy or certificate of
disability insurance, life insurance, or an annuity.
(c) Advertisements shall not employ words, letters, initials,
symbols, or other devices which are so similar to those used by
governmental agencies, a nonprofit or charitable institution, senior
organization, or other insurer that they could have the capacity or
tendency to mislead the public. Examples of misleading materials,
include, but are not limited to, those which imply any of the
following:
(1) The advertised coverages are somehow provided by or are
endorsed by any governmental agencies, nonprofit or charitable
institution or senior organizations.
(2) The advertiser is the same as, is connected with, or is
endorsed by governmental agencies, nonprofit or charitable
institutions or senior organizations.
(d) No advertisement may use the name of a state or political
subdivision thereof in a policy name or description.
(e) No advertisement may use any name, service mark, slogan,
symbol, or any device in any manner that implies that the insurer, or
the policy or certificate advertised, or that any agency who may
call upon the consumer in response to the advertisement, is connected
with a governmental agency, such as the Social Security
Administration.
(f) No advertisement may imply that the reader may lose a right,
or privilege, or benefits under federal, state, or local law if he or
she fails to respond to the advertisement.
(g) An insurer, agent, broker, or other entity may not use an
address so as to mislead or deceive as to the true identity,
location, or licensing status of the insurer, agent, broker, or other
entity.
(h) No insurer may use, in the trade name of its insurance policy
or certificate, any terminology or words so similar to the name of a
governmental agency or governmental program as to have the capacity
or the tendency to confuse, deceive, or mislead a prospective
purchaser.
(i) All advertisements used by agents, producers, brokers,
solicitors, or other persons for a policy of an insurer shall have
written approval of the insurer before they may be used.
(j) No insurer, agent, broker, or other entity may solicit a
particular class by use of advertisements which state or imply that
the occupational or other status as members of the class entitles
them to reduced rates on a group or other basis when, in fact, the
policy or certificate being advertised is sold on an individual basis
at regular rates.
(k) In addition to any other prohibition on untrue, deceptive, or
misleading advertisements, no advertisement for an event where
insurance products will be offered for sale may use the terms
"seminar," "class," "informational meeting," or substantially
equivalent terms to characterize the purpose of the public gathering
or event unless it adds the words "and insurance sales presentation"
immediately following those terms in the same type size and font as
those terms.
787.1. (a) The following definitions apply to this section:
(1) "Senior designation" means any degree, title, credential,
certificate, certification, accreditation, or approval, that
expresses or implies that a broker or agent possesses expertise,
training, competence, honesty, or reliability with regard to advising
seniors in particular on finance, insurance, or risk management.
(2) "Use" means utilizing a word, phrase, acronym, or logo, in any
oral or written communication from which a sale of insurance to a
senior may directly or indirectly result, that states or suggests,
alone or in context, that a broker or agent holds a senior
designation.
(b) (1) A broker or agent may not use a senior designation unless
all of the following conditions have been met:
(A) The broker or agent has been granted the right to use the
senior designation by the organization that issues the senior
designation, and the broker or agent is currently authorized by the
organization to use the designation.
(B) The senior designation has been approved by the commissioner
for use by brokers and agents in the sale of insurance to seniors.
(C) The broker or agent has been licensed for at least four years
in any state or United States territory to sell the types of
insurance with which the designation is used.
(2) A broker or agent may not use a senior designation in a manner
that misleads a person as to the significance of the senior
designation. Each time a broker or agent uses a senior designation in
a writing, the writing shall also contain the words "California" or
"CA" next to "Insurance Agent" or "Insurance Broker Agent" and
"License," and these words shall be located immediately prior to the
broker's license number or the agent's license number, in type that
is in the same font and at least the same size as the type used for
the senior designation. The requirements set forth in this
subdivision are in addition to the requirements of Section 1725.5 and
shall apply regardless of whether the broker or agent is an
insurance agent, as defined in Section 1621. For purposes of this
paragraph, "writing" means business cards, written price quotations,
and print advertisements distributed exclusively in this state.
(c) The commissioner shall approve a senior designation only if
the organization that issues the designation satisfies all of the
following requirements with respect to the designation:
(1) The organization has applied for approval on a form prescribed
by the commissioner.
(A) The department may require the filing of any supplementary
documents and declarations it deems necessary to determine whether
the prerequisites for approval have been met.
(B) Before or after approval, an organization shall notify the
department in writing within 45 days following any material change in
information recorded on the application form or in declarations or
documents submitted along with it or in response to a department
request.
(2) The designation is accredited by the National Commission for
Certifying Agencies, or the organization or the designation is
accredited by an agency that is on the United States Department of
Education's list entitled "Accrediting Agencies Recognized for Title
IV Purposes" and it is established to the satisfaction of the
commissioner that the agency is qualified to accredit an organization
or designation involved with financial services provided to seniors.
(3) The organization requires California candidates for the
designation to demonstrate superior expertise in advising seniors in
particular in finance, insurance, or risk management by passing
examinations that are based on applicants with no prior insurance
education or experience completing at least 75 hours of study
covering at least the following topics: aspects of aging, health care
coverage, long-term care insurance, financial planning for
retirement, investments, estate planning, and ethics. Textbooks or
other study materials may use chapter and subchapter titles that
differ from those general topics as long as the essential content is
the same. No part of the examinations, textbooks, or other study
materials may concern techniques on how to increase the amount of
insurance or financial products one sells, nor recommend the selling
of products offered by specific companies.
(d) (1) In determining whether to approve a senior designation for
use in the sale of insurance to seniors, the commissioner shall also
ensure that the organization that issues the senior designation
fulfills the following:
(A) Is exclusively an educational or certification organization,
and is not directly or indirectly, through an affiliate or partner,
involved in selling insurance, nor receives any compensation directly
or indirectly from any sale of insurance, other than the receipt of
charitable gifts by a nonprofit institution.
(B) Maintains standards and procedures for disciplining its
designees for improper or unethical conduct, as established by proven
complaints or by disciplinary action by a government licensing
agency or a quasi-governmental licensing and regulatory organization.
The standards and procedures shall include, at a minimum:
(i) A written procedure to receive, log, and conduct a preliminary
review of complaints alleging improper, illegal, or unethical
conduct.
(ii) Written standards for determining when a complaint warrants
further investigation into the merits of the allegations contained
therein.
(iii) Written standards and procedures to ensure that, once a
complaint is determined to warrant further investigation, the
investigation is diligently conducted.
(iv) Written standards for determining when to file disciplinary
charges based on the results of an investigation.
(v) Written standards and procedures to ensure due process in the
adjudication of disciplinary charges by adjudicators who are fair,
knowledgeable, and otherwise qualified.
(vi) Written standards and procedures for the imposition of
appropriate sanctions, including, when warranted, revocation of the
designation.
(C) Maintains a code of ethics for its California designees
consistent with that of one of the designations recited in Section
1749.4.
(e) (1) A word, phrase, acronym, or logo shall be deemed a senior
designation if it contains the word "senior," "Medicare," "Medi-Cal,"
"retire," "mature," "gerontology," or "elder," or any variation or
synonym of one of these words within several words of the word
"certified," "chartered," "registered," "adviser," "specialist,"
"consultant," "agent," "broker," "insurance," "planner,"
"professional," "enrolled," "accredited," "analyst," or "fellow," or
any variation or synonym of one of these words. A word, phrase,
acronym, or logo may constitute a senior designation if it meets the
definition in paragraph (1) of subdivision (a) regardless of whether
it contains one of the words recited in this subdivision.
(2) A word, phrase, acronym, or logo shall not constitute a senior
designation if it is a job title or description of an employee of a
governmental entity, or of an organization with a contract with that
governmental entity to provide free counseling to seniors.
(3) No exemption exists under this section for use of a senior
designation that constitutes a job title or description or part of a
job title or description, except as provided in paragraph (2).
(4) An advanced academic degree, such as a Ph.D., M.B.A., or M.S.,
may be used without compliance with subdivision (d), if the degree
was awarded by an institution of higher education that has been
accredited by an organization that is on the United States Department
of Education's list entitled "Accrediting Agencies Recognized for
Title IV Purposes."
(f) A violation of subdivision (b) by a broker or agent shall be
grounds for suspension or revocation of the broker's or agent's
license pursuant to Sections 1668 and 1738. Such a violation also
shall be grounds for a cease and desist order and monetary penalty
pursuant to Section 12921.8, as if the broker or agent had acted in a
capacity for which a license was required but not possessed.
(g) Any person who grants to a California resident the right to
use a senior designation that has not been approved by the
commissioner, without reasonably attempting to determine whether
California is one of the designee's residences, shall be subject to a
cease and desist order and monetary penalty pursuant to Section
12921.8, as if the person had acted in a capacity for which a license
was required but not possessed.
(h) The disciplinary and remedial authority recited in this
subdivision shall be in addition to any other disciplinary and
remedial authority included in this code.
(i) Notwithstanding any other provision of this code, the criteria
in Sections 1668 and 1668.5 apply to an organization that issues a
senior designation, and the commissioner may deny or rescind approval
of an organization issuing a senior designation based on that
criteria.
(j) The commissioner shall maintain a list of senior designations
approved pursuant to subdivisions (c), (d), and (e) and shall publish
the current list on the Internet Web site of the Department of
Insurance.
(k) This section shall apply to all types of insurance, including
those listed in paragraphs (1) and (2) of subdivision (c) of Section
785, except those listed in paragraphs (3) to (7), inclusive, and
paragraph (9) of subdivision (c) of Section 785 and subdivision (d)
of Section 785.
(l) The commissioner may, upon receipt of a petition from an
organization, issue written confirmation that a designation issued by
that organization is exempt from the requirement of approval
pursuant to this section. The commissioner may issue confirmation if
the designation, according to its title or curriculum, or in its
actual use, concerns almost exclusively subject matters other than
insurance or financial services sold to seniors in particular.
(m) (1) The commissioner may rescind approval of a designation
whenever there has been a material change in the management or
operation of the organization that issues the designation, or in the
procedures or criteria for issuance of the designation, such that if
the organization were to apply for approval of the designation
subsequent to the change, approval would be denied.
(2) Any rescission of the approval of a designation shall be after
notice and a hearing conducted in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code, as if the approval were a license, and the
commissioner shall have all of the powers granted therein.
788. An insurer, agent, broker, or other person engaged in the
transaction of insurance shall not knowingly recommend for sale, or
sell, disability insurance providing health benefits directly to a
Medi-Cal beneficiary who is age 65 or older. For disability insurance
providing health benefits sold to a person age 65 or older, the
application or other supplemental record signed by the applicant
shall contain a question designed to determine if the applicant is
receiving Medi-Cal benefits.
788.5. No insurer, broker, agent, or other person shall cause an
insured aged 65 years or older to replace a disability insurance
policy or certificate unnecessarily.
(a) No insurer, broker, agent, or other entity within the
jurisdiction of the department shall promote or cause overloading of
disability coverage to persons aged 65 years or older. For purposes
of this section, "overloading" means possession by an insured of
functionally identical coverages that overlap or duplicate benefits
to the extent that a reasonable person would not consider their
ownership to be cost-effective.
(b) It shall be presumed that the sale of disability insurance
that is the subject of this article, sold to a person aged 65 years
or older, is overloading, as defined in subdivision (a), if the
insured is already covered by Medicare Parts A and B as well as one
Medicare supplement policy, certificate, or contract and coverage for
excess charges under Part B.
(c) The application for disability insurance for a person age 65
years or older shall contain a question or questions designed to
elicit information regarding all other existing health and disability
coverage in force by type and company.
788.7. No insurer, broker, agent, or other person shall knowingly
recommend for purchase or sell disability insurance to a person age
65 or older which results in the insured having coverage, for medical
benefits, for more than 100 percent of actual medical expenses.
789. (a) The commissioner shall have the administrative authority
to assess penalties against insurers, brokers, agents, and other
entities engaged in the transaction of insurance or any other person
or entity for violations of this article.
(b) Upon a showing of a violation of this article in any civil
action, a court may also assess the penalties prescribed in this
chapter.
(c) Whenever the commissioner has reasonable cause to believe or
determines after a public hearing that any insurer, agent, broker, or
other person or entity engaged in the transaction of insurance, has
violated this article the commissioner shall make and serve upon the
insurer, broker, agent, or other person or entity a notice of
hearing. The notice shall state the commissioner's intent to assess
the administrative penalties, the time and place of the hearing, and
the conduct, condition or ground upon which the commissioner is
holding the hearing, and assessing the penalties. The hearing shall
occur within 30 days after the notice is served. Within 30 days after
the hearing the commissioner shall issue an order specifying the
amount of the penalties to be paid. The penalties resulting from the
hearing shall be paid to the Insurance Fund.
(d) The powers vested in the commissioner by this section shall be
in addition to any and all powers and remedies vested in the
commissioner by law.
(e) Actions for injunctive relief, penalties specified in Section
789.3, damages, restitution, and all other remedies in law, may be
brought in superior court by the Attorney General, district attorney,
or city attorney on behalf of the people of California. The court
shall award reasonable attorney's fees and court costs to the
prevailing plaintiff who establishes a violation of this article.
789.3. (a) Any broker, agent, or other person or other entity
engaged in the transactions of insurance, other than an insurer, who
violates this article is liable for an administrative penalty of no
less than one thousand dollars ($1,000) for the first violation.
(b) Any broker, agent, other person, or other entity engaged in
the business of insurance, other than an insurer, who engages in
practices prohibited by this article a second or subsequent time or
who commits a knowing violation of this article, is liable for an
administrative penalty of no less than five thousand dollars ($5,000)
and no more than fifty thousand dollars ($50,000) for each
violation.
(c) If the commissioner brings an action against a licensee
pursuant to subdivision (a) or (b) and determines that the licensee
may reasonably be expected to cause significant harm to seniors, the
commissioner may suspend his or her license pending the outcome of
the hearing described in subdivision (c) of Section 789.
(d) Any insurer who violates this article is liable for an
administrative penalty of ten thousand dollars ($10,000) for the
first violation.
(e) Any insurer who violates this article with a frequency as to
indicate a general business practice or commits a knowing violation
of this article, is liable for an administrative penalty of no less
than thirty thousand dollars ($30,000) and no more than three hundred
thousand dollars ($300,000) for each violation.
(f) The commissioner may require rescission of any contract found
to have been marketed, offered, or issued in violation of this
article.
789.5. If any provision of this article or the application thereof
to any person or circumstances is held invalid, that invalidity shall
not affect other provisions or applications of the article which can
be given effect, without the invalid provision or application, and
to this end the provisions of the article are severable.
789.6. (a) Insurance policies or certificates of disability
insurance sold to persons age 65 or older shall return to
policyholders or certificate holders benefits that have a minimum
loss ratio of 60 percent for individual policies and 75 percent for
group policies. The loss ratio shall be on the basis of incurred
claims experience and earned premiums.
(b) The commissioner shall require every entity providing
insurance policies or certificates of disability insurance sold to
persons age 65 or older in this state to maintain detailed experience
data for policies and certificates subject to this section and
require them to make an annual filing with the commissioner
disclosing the loss ratio for each policy form or certificate subject
to this section. The annual filing shall, at a minimum, include
rates, rating schedules, and supporting documentation including
ratios of incurred losses to earned premiums by number of years of
policy duration. That information shall demonstrate that each policy
form or certificate is in compliance with the applicable loss ratio
standards.
(c) The commissioner shall assure that reserves are reasonable and
based on sound actuarial principles with respect to the aggregate
dollar amount of reserves for claims that are incurred but not yet
paid, and for claims that are incurred but not yet reported.
(d) Policy forms or certificates shall be deemed to comply with
the purposes of this section if the expected losses in relation to
premiums over the entire period for which the policy form or
certificate is rated comply with the requirements of this section and
either of the following applies:
(1) For policies or certificates that have been in force for three
years or more, for the most recent year the ratio of incurred losses
to earned premiums is greater than or equal to the minimum loss
ratios established by this section.
(2) For policies or certificates that have been in force for three
years or less, the expected third year loss ratio can be
demonstrated to be greater than or equal to the minimum loss ratio.
(e) If the annual filing or other information received by the
commissioner indicates that the actual loss ratio for a policy or
certificate is less than the minimum loss ratio established by this
section, the commissioner shall require that the insurer or entity
providing the insurance file and implement a corrective plan. This
plan shall include the utilization of premium reductions, dividends,
benefit increases, or any combination of these or other methods so
that the minimum loss ratio can be reasonably expected to be
achieved. Any corrective plan shall be reviewed and approved by the
commissioner prior to implementation.
(f) If, in the opinion of the commissioner, a policy's or
certificate's failure to meet the minimum loss ratio requirements is
due to unusual reserve fluctuations, economic conditions, or other
nonrecurring conditions, the commissioner may exempt the policy or
certificate from the need for a corrective plan for that year. Any
exemption shall be in writing and shall specify the reasons for the
granting of the exemption.
(g) If the insurer or other entity providing disability insurance
to persons 65 years of age or older in this state fails to file and
implement a corrective plan in a timely manner, the commissioner
shall withdraw approval of the policy or certificate according to the
procedures set forth in Section 10293. This remedy is in addition to
any remedy available in that section or under other laws of this
state. Any report, plan, exemption, or other document prepared
pursuant to this section shall be accessible to the public as a
public record.
(h) The commissioner may adopt regulations to implement or
administer this article.
789.7. (a) Sales of disability insurance regulated by this article,
as well as Medicare supplement insurance and long-term care
insurance sold to persons aged 65 years or older, shall be registered
by the insurer with the commissioner. The commissioner shall provide
facilities for the computerized recordkeeping of all registered
policies and certificates. The commissioner shall adopt regulations
to implement and administer registration pursuant to this section.
Regulations shall include, but need not be limited to, a system for
assessing insurers in accordance with each insurer's market share in
order to finance the cost of registration, an appropriate method and
schedule for the filing of data with the commissioner, the content
and format required for each filing in accordance with subdivision
(d), appropriate sanctions for failure to comply with this section or
with regulations promulgated under this section, and criteria for
releasing the registered information to parties outside the
department.
(b) Access to the registered information, including the identity
of policyholders, shall be strictly limited to the department, with
the exception that the Attorney General, a district attorney, or city
attorney may be granted access upon request for the purpose of
investigating or prosecuting suspected unlawful practices or for
purposes of this article. The commissioner may, at his or her
discretion, allow access to the registered information to the Health
Insurance Counseling and Advocacy Program in the Department of Aging.
(c) Access to registered information in a purely statistical
format, which neither identifies nor enables identification of a
particular policyholder, may be released at the discretion of the
commissioner to any party who demonstrates that the information will
be used only for other than commercial purposes.
(d) The content of the filing shall contain no more than the
following information:
(1) Policyholder's Medicare identification number or social
security number. The policyholder's name shall be specifically
excluded from the filing.
(2) A description of the policy as being Medicare supplemental
insurance; long-term care insurance; or disability insurance.
(3) Date of sale.
(4) Date of lapse.
(5) Whether the policy is in force as of the date of the filing.
(6) The policy form number, if applicable.
(7) The name of any insurer, broker, agent, or other person
engaged in the transaction of insurance who was responsible for the
sale of the policy.
789.8. (a) "Elder" for purposes of this section means any person
residing in this state who is 65 years of age or older.
(b) If a life agent offers to sell to an elder any life insurance
or annuity product, the life agent shall advise an elder or elder's
agent in writing that the sale or liquidation of any stock, bond,
IRA, certificate of deposit, mutual fund, annuity, or other asset to
fund the purchase of this product may have tax consequences, early
withdrawal penalties, or other costs or penalties as a result of the
sale or liquidation, and that the elder or elder's agent may wish to
consult independent legal or financial advice before selling or
liquidating any assets and prior to the purchase of any life or
annuity products being solicited, offered for sale, or sold. This
section does not apply to a credit life insurance product as defined
in Section 779.2.
(c) A life agent who offers for sale or sells a financial product
to an elder on the basis of the product's treatment under the
Medi-Cal program may not negligently misrepresent the treatment of
any asset under the statutes and rules and regulations of the
Medi-Cal program, as it pertains to the determination of the elder's
eligibility for any program of public assistance.
(d) A life agent who offers for sale or sells any financial
product on the basis of its treatment under the Medi-Cal program
shall provide, in writing, the following disclosure to the elder or
the elder's agent:
"NOTICE REGARDING STANDARDS FOR MEDI-CAL ELIGIBILITY AND
RECOVERY
If you or your spouse are considering purchasing a financial
product based on its treatment under the Medi-Cal program, read this
important message!
You or your spouse do not have to use up all of your savings
before applying for Medi-Cal.
RECOVERY
An annuity purchased on or after September 1, 2004, shall be
subject to recovery by the state upon the annuitant's death under the
regulations of the Medi-Cal Recovery Program. Income derived from
the annuity must be used to meet the annuitant's share of costs and,
if the annuitant is married, the income derived from the annuity may
impact the minimum monthly maintenance needs of the annuitant's
community spouse. An annuity purchased by a community spouse on or
after September 1, 2004, may also be subject to recovery if that
spouse is the recipient of past or future Medi-Cal benefits.
UNMARRIED RESIDENT
An unmarried resident may be eligible for Medi-Cal benefits if he
or she has less than (insert amount of individual's resource
allowance) in countable resources.
The Medi-Cal recipient is allowed to keep from his or her monthly
income a personal allowance of (insert amount of personal needs
allowance) plus the amount of any health insurance premiums paid. The
remainder of the monthly income is paid to the nursing facility as a
monthly share of cost.
MARRIED RESIDENT
COMMUNITY SPOUSE RESOURCE ALLOWANCE: If one spouse lives in a
nursing facility, and the other spouse does not live in a facility,
the Medi-Cal program will pay some or all of the nursing facility
costs as long as the couple together does not have more than (insert
amount of community countable assets).
MINIMUM MONTHLY MAINTENANCE NEEDS ALLOWANCE: If a spouse is
eligible for Medi-Cal payment of nursing facility costs, the spouse
living at home is allowed to keep a monthly income of at least his or
her individual monthly income or (insert amount of the minimum
monthly maintenance needs allowance), whichever is greater.
FAIR HEARINGS AND COURT ORDERS
Under certain circumstances, an at-home spouse can obtain an order
from an administrative law judge or court that will allow the
at-home spouse to retain additional resources or income. The order
may allow the couple to retain more than (insert amount of community
spouse resource allowance plus individual's resource allowance) in
countable resources. The order also may allow the at-home spouse to
retain more than (insert amount of the monthly maintenance needs
allowance) in monthly income.
REAL AND PERSONAL PROPERTY EXEMPTIONS
Many of your assets may already be exempt. Exempt means that the
assets are not counted when determining eligibility for Medi-Cal.
REAL PROPERTY EXEMPTIONS
ONE PRINCIPAL RESIDENCE: One property used as a home is exempt.
The home will remain exempt in determining eligibility if the
applicant intends to return home someday.
The home also continues to be exempt if the applicant's spouse or
dependent relative continues to live in it.
Money received from the sale of a home can be exempt for up to six
months if the money is going to be used for the purchase of another
home.
REAL PROPERTY USED IN A BUSINESS OR TRADE: Real estate used in a
trade or business is exempt regardless of its equity value and
whether it produces income.
PERSONAL PROPERTY AND OTHER EXEMPT ASSETS
IRAs, KEOGHs, AND OTHER WORK-RELATED PENSION PLANS: These funds
are exempt if the family member whose name it is in does not want
Medi-Cal. If held in the name of a person who wants Medi-Cal and
payments of principal and interest are being received, the balance is
considered unavailable and is not counted. It is not necessary to
annuitize, convert to an annuity, or otherwise change the form of the
assets in order for them to be unavailable.
PERSONAL PROPERTY USED IN A TRADE OR BUSINESS.
ONE MOTOR VEHICLE.
IRREVOCABLE BURIAL TRUSTS OR IRREVOCABLE PREPAID BURIAL CONTRACTS.
THERE MAY BE OTHER ASSETS THAT MAY BE EXEMPT.
This is only a brief description of the Medi-Cal eligibility
rules. For more detailed information, you should call your county
welfare department. Also, you are advised to contact a legal services
program for seniors or an attorney who is not connected with the
sale of this product.
I have read the above notice and have received a copy.
Dated: _______________ Signature: ________________"
The statement required in this subdivision shall be printed in at
least 12-point type, shall be clearly separate from any other
document or writing, and shall be signed by the prospective purchaser
and that person's spouse, and legal representative, if any.
(e) The State Department of Health Services shall update this form
to ensure consistency with state and federal law and make the
disclosure available to agents and brokers through its Internet Web
site.
(f) Nothing in this section allows or is intended to allow the
unlawful practice of law.
(g) Subdivisions (b) and (d) shall become operative on July 1,
2001.
789.9. (a) In addition to any other reasons that a sale of an
individual annuity to a senior may violate any provision of law, an
annuity shall not be sold to a senior in any of the following
circumstances:
(1) The senior's purpose in purchasing the annuity is to affect
Medi-Cal eligibility and either of the following is true:
(A) The purchaser's assets are equal to or less than the community
spouse resource allowance established annually by the State
Department of Health Services pursuant to the Medi-Cal Act (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code).
(B) The senior would otherwise qualify for Medi-Cal.
(2) The senior's purpose in purchasing the annuity is to affect
Medi-Cal eligibility and, after the purchase of the annuity, the
senior or the senior's spouse would not qualify for Medi-Cal.
(b) In the event that a fixed annuity specified in subdivision (a)
is issued to a senior, the issuer shall rescind the contract and
refund to the purchaser all premiums, fees, any interest earned under
the terms of the contract, and costs paid for the annuity. This
remedy shall be in addition to any other remedy that may be
available.
789.10. (a) This section applies to the sale, offering for sale, or
generation of leads for the sale of life insurance, including
annuities, to senior insureds or prospective insureds by any person.
(b) Any person who meets with a senior in the senior's home is
required to deliver a notice in writing to the senior no less than 24
hours prior to that individual's initial meeting in the senior's
home. If the senior has an existing insurance relationship with an
agent and requests a meeting with the agent in the senior's home the
same day, a notice shall be delivered to the senior prior to the
meeting. The notice shall be in substantially the following form,
with the appropriate information inserted, in 14-point type:
"(1) During this visit or a followup visit, you will be given a
sales presentation on the following
785. (a) All insurers, brokers, agents, and others engaged in the
transaction of insurance owe a prospective insured who is 65 years of
age or older, a duty of honesty, good faith, and fair dealing. This
duty is in addition to any other duty, whether express or implied,
that may exist.
(b) Conduct of an insurer, broker, or agent, or other person
engaged in the transaction of insurance, during the offer and sale of
a policy or certificate previous to the purchase is relevant to any
action alleging a breach of the duty of good faith and fair dealing.
(c) Except where explicitly provided to the contrary, this article
shall not apply to any of the following:
(1) Medicare supplement insurance as defined in subdivision (m) of
Section 10192.4.
(2) Long-term care insurance as defined in Section 10231.2.
(3) Disability coverage provided through the insured's employer or
former employer.
(4) Disability insurance policies or certificates principally
designed to provide coverage for accidents or expenses incurred while
traveling if the premium for the policy or certificate is ten
dollars ($10) or less.
(5) Blanket disability insurance as defined in Section 10270.3.
(6) Credit disability insurance as defined in Section 779.2.
(7) Accidental death insurance.
(8) Until January 1, 2002, disability policies or certificates
that are sold through direct response methods of delivery.
(9) Disability income insurance as defined in subdivision (i) of
Section 799.01.
(d) Provided that the requirements of Section 10296 are met, this
article shall not apply to transportation ticket policies and baggage
insurance policy types allowable for sale by travel agents pursuant
to Section 1753.
786. All disability insurance and life insurance policies and
certificates offered for sale to individuals age 65 or older in
California shall provide an examination period of 30 days after the
receipt of the policy or certificate for purposes of review of the
contract, at which time the applicant may return the contract. The
return shall void the policy or certificate from the beginning, and
the parties shall be in the same position as if no contract had been
issued. All premiums paid and any policy or membership fee shall be
fully refunded to the applicant by the insurer or entity in a timely
manner.
(a) For the purposes of this section a timely manner shall be no
later than 30 days after the insurer or entity issuing the policy or
certificate receives the returned policy or certificate.
(b) If the insurer or entity issuing the policy or certificate
fails to refund all of the premiums paid, in a timely manner, then
the applicant shall receive interest on the paid premium at the legal
rate of interest on judgments as provided in Section 685.010 of the
Code of Civil Procedure. The interest shall be paid from the date the
insurer or entity received the returned policy or certificate.
(c) Each policy or certificate shall have a notice prominently
printed in no less than 10-point uppercase type, on the cover page of
the policy or certificate and the outline of coverage, stating that
the applicant has the right to return the policy or certificate
within 30 days after its receipt via regular mail, and to have the
full premium refunded.
(d) In the event of any conflict between this section and Section
10127.10 with respect to life insurance, the provisions of Section
10127.10 shall prevail.
786.5. (a) All brokers, agents, or other entities offering a
contract of disability insurance to persons 65 years of age or older
in this state shall provide the prospective insured with a full and
accurate written comparison with existing health coverage, and shall
explain the relationship of the proposed coverage to any existing
health benefits provided by Medicare, Medi-Cal, or any other health
benefits available to the applicant. The written comparison shall be
maintained in accordance with Section 10508.5. Disability insurers
marketing through direct response to persons 65 years of age or older
shall include in the application form questions to ascertain whether
the prospective insured is currently 65 years of age or older, and
whether the prospective insured is covered by Medi-Cal or a Medicare
supplement policy. These direct response insurers shall provide the
required comparison as early in the transaction as possible, but not
later than the delivery of the insurance contract.
(b) The commissioner may prescribe a standard comparison form and
an informational brochure that shall be distributed to every
prospective insured at the time insurance is offered for sale by an
agent, broker, or other producer. In the case of a transportation
ticket policy, the informational brochures shall be delivered to the
prospective insured not later than delivery of the insurance
contract. Disability insurers marketing through direct response to
persons 65 years of age or older shall provide the informational
brochure as early in the transaction as possible, but not later than
the delivery of the insurance contract.
(c) The amendments to this section made by Assembly Bill 1178 of
the 2001-02 Regular Session shall become operative January 1, 2002.
787. Any advertisement or other device designed to produce leads
based on a response from a potential insured which is directed
towards persons age 65 or older shall prominently disclose that an
agent may contact the applicant if that is the fact. In addition, an
agent who makes contact with a person as a result of acquiring that
person's name from a lead generating device shall disclose that fact
in the initial contact with the person.
(a) No insurer, agent, broker, solicitor, or other person or other
entity shall solicit persons age 65 and older in this state for the
purchase of disability insurance, life insurance, or annuities
through the use of a true or fictitious name which is deceptive or
misleading with regard to the status, character, or proprietary or
representative capacity of the entity or person, or to the true
purpose of the advertisement.
(b) For the purposes of this section, an advertisement includes
envelopes, stationery, business cards, or other materials designed to
describe and encourage the purchase of a policy or certificate of
disability insurance, life insurance, or an annuity.
(c) Advertisements shall not employ words, letters, initials,
symbols, or other devices which are so similar to those used by
governmental agencies, a nonprofit or charitable institution, senior
organization, or other insurer that they could have the capacity or
tendency to mislead the public. Examples of misleading materials,
include, but are not limited to, those which imply any of the
following:
(1) The advertised coverages are somehow provided by or are
endorsed by any governmental agencies, nonprofit or charitable
institution or senior organizations.
(2) The advertiser is the same as, is connected with, or is
endorsed by governmental agencies, nonprofit or charitable
institutions or senior organizations.
(d) No advertisement may use the name of a state or political
subdivision thereof in a policy name or description.
(e) No advertisement may use any name, service mark, slogan,
symbol, or any device in any manner that implies that the insurer, or
the policy or certificate advertised, or that any agency who may
call upon the consumer in response to the advertisement, is connected
with a governmental agency, such as the Social Security
Administration.
(f) No advertisement may imply that the reader may lose a right,
or privilege, or benefits under federal, state, or local law if he or
she fails to respond to the advertisement.
(g) An insurer, agent, broker, or other entity may not use an
address so as to mislead or deceive as to the true identity,
location, or licensing status of the insurer, agent, broker, or other
entity.
(h) No insurer may use, in the trade name of its insurance policy
or certificate, any terminology or words so similar to the name of a
governmental agency or governmental program as to have the capacity
or the tendency to confuse, deceive, or mislead a prospective
purchaser.
(i) All advertisements used by agents, producers, brokers,
solicitors, or other persons for a policy of an insurer shall have
written approval of the insurer before they may be used.
(j) No insurer, agent, broker, or other entity may solicit a
particular class by use of advertisements which state or imply that
the occupational or other status as members of the class entitles
them to reduced rates on a group or other basis when, in fact, the
policy or certificate being advertised is sold on an individual basis
at regular rates.
(k) In addition to any other prohibition on untrue, deceptive, or
misleading advertisements, no advertisement for an event where
insurance products will be offered for sale may use the terms
"seminar," "class," "informational meeting," or substantially
equivalent terms to characterize the purpose of the public gathering
or event unless it adds the words "and insurance sales presentation"
immediately following those terms in the same type size and font as
those terms.
787.1. (a) The following definitions apply to this section:
(1) "Senior designation" means any degree, title, credential,
certificate, certification, accreditation, or approval, that
expresses or implies that a broker or agent possesses expertise,
training, competence, honesty, or reliability with regard to advising
seniors in particular on finance, insurance, or risk management.
(2) "Use" means utilizing a word, phrase, acronym, or logo, in any
oral or written communication from which a sale of insurance to a
senior may directly or indirectly result, that states or suggests,
alone or in context, that a broker or agent holds a senior
designation.
(b) (1) A broker or agent may not use a senior designation unless
all of the following conditions have been met:
(A) The broker or agent has been granted the right to use the
senior designation by the organization that issues the senior
designation, and the broker or agent is currently authorized by the
organization to use the designation.
(B) The senior designation has been approved by the commissioner
for use by brokers and agents in the sale of insurance to seniors.
(C) The broker or agent has been licensed for at least four years
in any state or United States territory to sell the types of
insurance with which the designation is used.
(2) A broker or agent may not use a senior designation in a manner
that misleads a person as to the significance of the senior
designation. Each time a broker or agent uses a senior designation in
a writing, the writing shall also contain the words "California" or
"CA" next to "Insurance Agent" or "Insurance Broker Agent" and
"License," and these words shall be located immediately prior to the
broker's license number or the agent's license number, in type that
is in the same font and at least the same size as the type used for
the senior designation. The requirements set forth in this
subdivision are in addition to the requirements of Section 1725.5 and
shall apply regardless of whether the broker or agent is an
insurance agent, as defined in Section 1621. For purposes of this
paragraph, "writing" means business cards, written price quotations,
and print advertisements distributed exclusively in this state.
(c) The commissioner shall approve a senior designation only if
the organization that issues the designation satisfies all of the
following requirements with respect to the designation:
(1) The organization has applied for approval on a form prescribed
by the commissioner.
(A) The department may require the filing of any supplementary
documents and declarations it deems necessary to determine whether
the prerequisites for approval have been met.
(B) Before or after approval, an organization shall notify the
department in writing within 45 days following any material change in
information recorded on the application form or in declarations or
documents submitted along with it or in response to a department
request.
(2) The designation is accredited by the National Commission for
Certifying Agencies, or the organization or the designation is
accredited by an agency that is on the United States Department of
Education's list entitled "Accrediting Agencies Recognized for Title
IV Purposes" and it is established to the satisfaction of the
commissioner that the agency is qualified to accredit an organization
or designation involved with financial services provided to seniors.
(3) The organization requires California candidates for the
designation to demonstrate superior expertise in advising seniors in
particular in finance, insurance, or risk management by passing
examinations that are based on applicants with no prior insurance
education or experience completing at least 75 hours of study
covering at least the following topics: aspects of aging, health care
coverage, long-term care insurance, financial planning for
retirement, investments, estate planning, and ethics. Textbooks or
other study materials may use chapter and subchapter titles that
differ from those general topics as long as the essential content is
the same. No part of the examinations, textbooks, or other study
materials may concern techniques on how to increase the amount of
insurance or financial products one sells, nor recommend the selling
of products offered by specific companies.
(d) (1) In determining whether to approve a senior designation for
use in the sale of insurance to seniors, the commissioner shall also
ensure that the organization that issues the senior designation
fulfills the following:
(A) Is exclusively an educational or certification organization,
and is not directly or indirectly, through an affiliate or partner,
involved in selling insurance, nor receives any compensation directly
or indirectly from any sale of insurance, other than the receipt of
charitable gifts by a nonprofit institution.
(B) Maintains standards and procedures for disciplining its
designees for improper or unethical conduct, as established by proven
complaints or by disciplinary action by a government licensing
agency or a quasi-governmental licensing and regulatory organization.
The standards and procedures shall include, at a minimum:
(i) A written procedure to receive, log, and conduct a preliminary
review of complaints alleging improper, illegal, or unethical
conduct.
(ii) Written standards for determining when a complaint warrants
further investigation into the merits of the allegations contained
therein.
(iii) Written standards and procedures to ensure that, once a
complaint is determined to warrant further investigation, the
investigation is diligently conducted.
(iv) Written standards for determining when to file disciplinary
charges based on the results of an investigation.
(v) Written standards and procedures to ensure due process in the
adjudication of disciplinary charges by adjudicators who are fair,
knowledgeable, and otherwise qualified.
(vi) Written standards and procedures for the imposition of
appropriate sanctions, including, when warranted, revocation of the
designation.
(C) Maintains a code of ethics for its California designees
consistent with that of one of the designations recited in Section
1749.4.
(e) (1) A word, phrase, acronym, or logo shall be deemed a senior
designation if it contains the word "senior," "Medicare," "Medi-Cal,"
"retire," "mature," "gerontology," or "elder," or any variation or
synonym of one of these words within several words of the word
"certified," "chartered," "registered," "adviser," "specialist,"
"consultant," "agent," "broker," "insurance," "planner,"
"professional," "enrolled," "accredited," "analyst," or "fellow," or
any variation or synonym of one of these words. A word, phrase,
acronym, or logo may constitute a senior designation if it meets the
definition in paragraph (1) of subdivision (a) regardless of whether
it contains one of the words recited in this subdivision.
(2) A word, phrase, acronym, or logo shall not constitute a senior
designation if it is a job title or description of an employee of a
governmental entity, or of an organization with a contract with that
governmental entity to provide free counseling to seniors.
(3) No exemption exists under this section for use of a senior
designation that constitutes a job title or description or part of a
job title or description, except as provided in paragraph (2).
(4) An advanced academic degree, such as a Ph.D., M.B.A., or M.S.,
may be used without compliance with subdivision (d), if the degree
was awarded by an institution of higher education that has been
accredited by an organization that is on the United States Department
of Education's list entitled "Accrediting Agencies Recognized for
Title IV Purposes."
(f) A violation of subdivision (b) by a broker or agent shall be
grounds for suspension or revocation of the broker's or agent's
license pursuant to Sections 1668 and 1738. Such a violation also
shall be grounds for a cease and desist order and monetary penalty
pursuant to Section 12921.8, as if the broker or agent had acted in a
capacity for which a license was required but not possessed.
(g) Any person who grants to a California resident the right to
use a senior designation that has not been approved by the
commissioner, without reasonably attempting to determine whether
California is one of the designee's residences, shall be subject to a
cease and desist order and monetary penalty pursuant to Section
12921.8, as if the person had acted in a capacity for which a license
was required but not possessed.
(h) The disciplinary and remedial authority recited in this
subdivision shall be in addition to any other disciplinary and
remedial authority included in this code.
(i) Notwithstanding any other provision of this code, the criteria
in Sections 1668 and 1668.5 apply to an organization that issues a
senior designation, and the commissioner may deny or rescind approval
of an organization issuing a senior designation based on that
criteria.
(j) The commissioner shall maintain a list of senior designations
approved pursuant to subdivisions (c), (d), and (e) and shall publish
the current list on the Internet Web site of the Department of
Insurance.
(k) This section shall apply to all types of insurance, including
those listed in paragraphs (1) and (2) of subdivision (c) of Section
785, except those listed in paragraphs (3) to (7), inclusive, and
paragraph (9) of subdivision (c) of Section 785 and subdivision (d)
of Section 785.
(l) The commissioner may, upon receipt of a petition from an
organization, issue written confirmation that a designation issued by
that organization is exempt from the requirement of approval
pursuant to this section. The commissioner may issue confirmation if
the designation, according to its title or curriculum, or in its
actual use, concerns almost exclusively subject matters other than
insurance or financial services sold to seniors in particular.
(m) (1) The commissioner may rescind approval of a designation
whenever there has been a material change in the management or
operation of the organization that issues the designation, or in the
procedures or criteria for issuance of the designation, such that if
the organization were to apply for approval of the designation
subsequent to the change, approval would be denied.
(2) Any rescission of the approval of a designation shall be after
notice and a hearing conducted in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code, as if the approval were a license, and the
commissioner shall have all of the powers granted therein.
788. An insurer, agent, broker, or other person engaged in the
transaction of insurance shall not knowingly recommend for sale, or
sell, disability insurance providing health benefits directly to a
Medi-Cal beneficiary who is age 65 or older. For disability insurance
providing health benefits sold to a person age 65 or older, the
application or other supplemental record signed by the applicant
shall contain a question designed to determine if the applicant is
receiving Medi-Cal benefits.
788.5. No insurer, broker, agent, or other person shall cause an
insured aged 65 years or older to replace a disability insurance
policy or certificate unnecessarily.
(a) No insurer, broker, agent, or other entity within the
jurisdiction of the department shall promote or cause overloading of
disability coverage to persons aged 65 years or older. For purposes
of this section, "overloading" means possession by an insured of
functionally identical coverages that overlap or duplicate benefits
to the extent that a reasonable person would not consider their
ownership to be cost-effective.
(b) It shall be presumed that the sale of disability insurance
that is the subject of this article, sold to a person aged 65 years
or older, is overloading, as defined in subdivision (a), if the
insured is already covered by Medicare Parts A and B as well as one
Medicare supplement policy, certificate, or contract and coverage for
excess charges under Part B.
(c) The application for disability insurance for a person age 65
years or older shall contain a question or questions designed to
elicit information regarding all other existing health and disability
coverage in force by type and company.
788.7. No insurer, broker, agent, or other person shall knowingly
recommend for purchase or sell disability insurance to a person age
65 or older which results in the insured having coverage, for medical
benefits, for more than 100 percent of actual medical expenses.
789. (a) The commissioner shall have the administrative authority
to assess penalties against insurers, brokers, agents, and other
entities engaged in the transaction of insurance or any other person
or entity for violations of this article.
(b) Upon a showing of a violation of this article in any civil
action, a court may also assess the penalties prescribed in this
chapter.
(c) Whenever the commissioner has reasonable cause to believe or
determines after a public hearing that any insurer, agent, broker, or
other person or entity engaged in the transaction of insurance, has
violated this article the commissioner shall make and serve upon the
insurer, broker, agent, or other person or entity a notice of
hearing. The notice shall state the commissioner's intent to assess
the administrative penalties, the time and place of the hearing, and
the conduct, condition or ground upon which the commissioner is
holding the hearing, and assessing the penalties. The hearing shall
occur within 30 days after the notice is served. Within 30 days after
the hearing the commissioner shall issue an order specifying the
amount of the penalties to be paid. The penalties resulting from the
hearing shall be paid to the Insurance Fund.
(d) The powers vested in the commissioner by this section shall be
in addition to any and all powers and remedies vested in the
commissioner by law.
(e) Actions for injunctive relief, penalties specified in Section
789.3, damages, restitution, and all other remedies in law, may be
brought in superior court by the Attorney General, district attorney,
or city attorney on behalf of the people of California. The court
shall award reasonable attorney's fees and court costs to the
prevailing plaintiff who establishes a violation of this article.
789.3. (a) Any broker, agent, or other person or other entity
engaged in the transactions of insurance, other than an insurer, who
violates this article is liable for an administrative penalty of no
less than one thousand dollars ($1,000) for the first violation.
(b) Any broker, agent, other person, or other entity engaged in
the business of insurance, other than an insurer, who engages in
practices prohibited by this article a second or subsequent time or
who commits a knowing violation of this article, is liable for an
administrative penalty of no less than five thousand dollars ($5,000)
and no more than fifty thousand dollars ($50,000) for each
violation.
(c) If the commissioner brings an action against a licensee
pursuant to subdivision (a) or (b) and determines that the licensee
may reasonably be expected to cause significant harm to seniors, the
commissioner may suspend his or her license pending the outcome of
the hearing described in subdivision (c) of Section 789.
(d) Any insurer who violates this article is liable for an
administrative penalty of ten thousand dollars ($10,000) for the
first violation.
(e) Any insurer who violates this article with a frequency as to
indicate a general business practice or commits a knowing violation
of this article, is liable for an administrative penalty of no less
than thirty thousand dollars ($30,000) and no more than three hundred
thousand dollars ($300,000) for each violation.
(f) The commissioner may require rescission of any contract found
to have been marketed, offered, or issued in violation of this
article.
789.5. If any provision of this article or the application thereof
to any person or circumstances is held invalid, that invalidity shall
not affect other provisions or applications of the article which can
be given effect, without the invalid provision or application, and
to this end the provisions of the article are severable.
789.6. (a) Insurance policies or certificates of disability
insurance sold to persons age 65 or older shall return to
policyholders or certificate holders benefits that have a minimum
loss ratio of 60 percent for individual policies and 75 percent for
group policies. The loss ratio shall be on the basis of incurred
claims experience and earned premiums.
(b) The commissioner shall require every entity providing
insurance policies or certificates of disability insurance sold to
persons age 65 or older in this state to maintain detailed experience
data for policies and certificates subject to this section and
require them to make an annual filing with the commissioner
disclosing the loss ratio for each policy form or certificate subject
to this section. The annual filing shall, at a minimum, include
rates, rating schedules, and supporting documentation including
ratios of incurred losses to earned premiums by number of years of
policy duration. That information shall demonstrate that each policy
form or certificate is in compliance with the applicable loss ratio
standards.
(c) The commissioner shall assure that reserves are reasonable and
based on sound actuarial principles with respect to the aggregate
dollar amount of reserves for claims that are incurred but not yet
paid, and for claims that are incurred but not yet reported.
(d) Policy forms or certificates shall be deemed to comply with
the purposes of this section if the expected losses in relation to
premiums over the entire period for which the policy form or
certificate is rated comply with the requirements of this section and
either of the following applies:
(1) For policies or certificates that have been in force for three
years or more, for the most recent year the ratio of incurred losses
to earned premiums is greater than or equal to the minimum loss
ratios established by this section.
(2) For policies or certificates that have been in force for three
years or less, the expected third year loss ratio can be
demonstrated to be greater than or equal to the minimum loss ratio.
(e) If the annual filing or other information received by the
commissioner indicates that the actual loss ratio for a policy or
certificate is less than the minimum loss ratio established by this
section, the commissioner shall require that the insurer or entity
providing the insurance file and implement a corrective plan. This
plan shall include the utilization of premium reductions, dividends,
benefit increases, or any combination of these or other methods so
that the minimum loss ratio can be reasonably expected to be
achieved. Any corrective plan shall be reviewed and approved by the
commissioner prior to implementation.
(f) If, in the opinion of the commissioner, a policy's or
certificate's failure to meet the minimum loss ratio requirements is
due to unusual reserve fluctuations, economic conditions, or other
nonrecurring conditions, the commissioner may exempt the policy or
certificate from the need for a corrective plan for that year. Any
exemption shall be in writing and shall specify the reasons for the
granting of the exemption.
(g) If the insurer or other entity providing disability insurance
to persons 65 years of age or older in this state fails to file and
implement a corrective plan in a timely manner, the commissioner
shall withdraw approval of the policy or certificate according to the
procedures set forth in Section 10293. This remedy is in addition to
any remedy available in that section or under other laws of this
state. Any report, plan, exemption, or other document prepared
pursuant to this section shall be accessible to the public as a
public record.
(h) The commissioner may adopt regulations to implement or
administer this article.
789.7. (a) Sales of disability insurance regulated by this article,
as well as Medicare supplement insurance and long-term care
insurance sold to persons aged 65 years or older, shall be registered
by the insurer with the commissioner. The commissioner shall provide
facilities for the computerized recordkeeping of all registered
policies and certificates. The commissioner shall adopt regulations
to implement and administer registration pursuant to this section.
Regulations shall include, but need not be limited to, a system for
assessing insurers in accordance with each insurer's market share in
order to finance the cost of registration, an appropriate method and
schedule for the filing of data with the commissioner, the content
and format required for each filing in accordance with subdivision
(d), appropriate sanctions for failure to comply with this section or
with regulations promulgated under this section, and criteria for
releasing the registered information to parties outside the
department.
(b) Access to the registered information, including the identity
of policyholders, shall be strictly limited to the department, with
the exception that the Attorney General, a district attorney, or city
attorney may be granted access upon request for the purpose of
investigating or prosecuting suspected unlawful practices or for
purposes of this article. The commissioner may, at his or her
discretion, allow access to the registered information to the Health
Insurance Counseling and Advocacy Program in the Department of Aging.
(c) Access to registered information in a purely statistical
format, which neither identifies nor enables identification of a
particular policyholder, may be released at the discretion of the
commissioner to any party who demonstrates that the information will
be used only for other than commercial purposes.
(d) The content of the filing shall contain no more than the
following information:
(1) Policyholder's Medicare identification number or social
security number. The policyholder's name shall be specifically
excluded from the filing.
(2) A description of the policy as being Medicare supplemental
insurance; long-term care insurance; or disability insurance.
(3) Date of sale.
(4) Date of lapse.
(5) Whether the policy is in force as of the date of the filing.
(6) The policy form number, if applicable.
(7) The name of any insurer, broker, agent, or other person
engaged in the transaction of insurance who was responsible for the
sale of the policy.
789.8. (a) "Elder" for purposes of this section means any person
residing in this state who is 65 years of age or older.
(b) If a life agent offers to sell to an elder any life insurance
or annuity product, the life agent shall advise an elder or elder's
agent in writing that the sale or liquidation of any stock, bond,
IRA, certificate of deposit, mutual fund, annuity, or other asset to
fund the purchase of this product may have tax consequences, early
withdrawal penalties, or other costs or penalties as a result of the
sale or liquidation, and that the elder or elder's agent may wish to
consult independent legal or financial advice before selling or
liquidating any assets and prior to the purchase of any life or
annuity products being solicited, offered for sale, or sold. This
section does not apply to a credit life insurance product as defined
in Section 779.2.
(c) A life agent who offers for sale or sells a financial product
to an elder on the basis of the product's treatment under the
Medi-Cal program may not negligently misrepresent the treatment of
any asset under the statutes and rules and regulations of the
Medi-Cal program, as it pertains to the determination of the elder's
eligibility for any program of public assistance.
(d) A life agent who offers for sale or sells any financial
product on the basis of its treatment under the Medi-Cal program
shall provide, in writing, the following disclosure to the elder or
the elder's agent:
"NOTICE REGARDING STANDARDS FOR MEDI-CAL ELIGIBILITY AND
RECOVERY
If you or your spouse are considering purchasing a financial
product based on its treatment under the Medi-Cal program, read this
important message!
You or your spouse do not have to use up all of your savings
before applying for Medi-Cal.
RECOVERY
An annuity purchased on or after September 1, 2004, shall be
subject to recovery by the state upon the annuitant's death under the
regulations of the Medi-Cal Recovery Program. Income derived from
the annuity must be used to meet the annuitant's share of costs and,
if the annuitant is married, the income derived from the annuity may
impact the minimum monthly maintenance needs of the annuitant's
community spouse. An annuity purchased by a community spouse on or
after September 1, 2004, may also be subject to recovery if that
spouse is the recipient of past or future Medi-Cal benefits.
UNMARRIED RESIDENT
An unmarried resident may be eligible for Medi-Cal benefits if he
or she has less than (insert amount of individual's resource
allowance) in countable resources.
The Medi-Cal recipient is allowed to keep from his or her monthly
income a personal allowance of (insert amount of personal needs
allowance) plus the amount of any health insurance premiums paid. The
remainder of the monthly income is paid to the nursing facility as a
monthly share of cost.
MARRIED RESIDENT
COMMUNITY SPOUSE RESOURCE ALLOWANCE: If one spouse lives in a
nursing facility, and the other spouse does not live in a facility,
the Medi-Cal program will pay some or all of the nursing facility
costs as long as the couple together does not have more than (insert
amount of community countable assets).
MINIMUM MONTHLY MAINTENANCE NEEDS ALLOWANCE: If a spouse is
eligible for Medi-Cal payment of nursing facility costs, the spouse
living at home is allowed to keep a monthly income of at least his or
her individual monthly income or (insert amount of the minimum
monthly maintenance needs allowance), whichever is greater.
FAIR HEARINGS AND COURT ORDERS
Under certain circumstances, an at-home spouse can obtain an order
from an administrative law judge or court that will allow the
at-home spouse to retain additional resources or income. The order
may allow the couple to retain more than (insert amount of community
spouse resource allowance plus individual's resource allowance) in
countable resources. The order also may allow the at-home spouse to
retain more than (insert amount of the monthly maintenance needs
allowance) in monthly income.
REAL AND PERSONAL PROPERTY EXEMPTIONS
Many of your assets may already be exempt. Exempt means that the
assets are not counted when determining eligibility for Medi-Cal.
REAL PROPERTY EXEMPTIONS
ONE PRINCIPAL RESIDENCE: One property used as a home is exempt.
The home will remain exempt in determining eligibility if the
applicant intends to return home someday.
The home also continues to be exempt if the applicant's spouse or
dependent relative continues to live in it.
Money received from the sale of a home can be exempt for up to six
months if the money is going to be used for the purchase of another
home.
REAL PROPERTY USED IN A BUSINESS OR TRADE: Real estate used in a
trade or business is exempt regardless of its equity value and
whether it produces income.
PERSONAL PROPERTY AND OTHER EXEMPT ASSETS
IRAs, KEOGHs, AND OTHER WORK-RELATED PENSION PLANS: These funds
are exempt if the family member whose name it is in does not want
Medi-Cal. If held in the name of a person who wants Medi-Cal and
payments of principal and interest are being received, the balance is
considered unavailable and is not counted. It is not necessary to
annuitize, convert to an annuity, or otherwise change the form of the
assets in order for them to be unavailable.
PERSONAL PROPERTY USED IN A TRADE OR BUSINESS.
ONE MOTOR VEHICLE.
IRREVOCABLE BURIAL TRUSTS OR IRREVOCABLE PREPAID BURIAL CONTRACTS.
THERE MAY BE OTHER ASSETS THAT MAY BE EXEMPT.
This is only a brief description of the Medi-Cal eligibility
rules. For more detailed information, you should call your county
welfare department. Also, you are advised to contact a legal services
program for seniors or an attorney who is not connected with the
sale of this product.
I have read the above notice and have received a copy.
Dated: _______________ Signature: ________________"
The statement required in this subdivision shall be printed in at
least 12-point type, shall be clearly separate from any other
document or writing, and shall be signed by the prospective purchaser
and that person's spouse, and legal representative, if any.
(e) The State Department of Health Services shall update this form
to ensure consistency with state and federal law and make the
disclosure available to agents and brokers through its Internet Web
site.
(f) Nothing in this section allows or is intended to allow the
unlawful practice of law.
(g) Subdivisions (b) and (d) shall become operative on July 1,
2001.
789.9. (a) In addition to any other reasons that a sale of an
individual annuity to a senior may violate any provision of law, an
annuity shall not be sold to a senior in any of the following
circumstances:
(1) The senior's purpose in purchasing the annuity is to affect
Medi-Cal eligibility and either of the following is true:
(A) The purchaser's assets are equal to or less than the community
spouse resource allowance established annually by the State
Department of Health Services pursuant to the Medi-Cal Act (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code).
(B) The senior would otherwise qualify for Medi-Cal.
(2) The senior's purpose in purchasing the annuity is to affect
Medi-Cal eligibility and, after the purchase of the annuity, the
senior or the senior's spouse would not qualify for Medi-Cal.
(b) In the event that a fixed annuity specified in subdivision (a)
is issued to a senior, the issuer shall rescind the contract and
refund to the purchaser all premiums, fees, any interest earned under
the terms of the contract, and costs paid for the annuity. This
remedy shall be in addition to any other remedy that may be
available.
789.10. (a) This section applies to the sale, offering for sale, or
generation of leads for the sale of life insurance, including
annuities, to senior insureds or prospective insureds by any person.
(b) Any person who meets with a senior in the senior's home is
required to deliver a notice in writing to the senior no less than 24
hours prior to that individual's initial meeting in the senior's
home. If the senior has an existing insurance relationship with an
agent and requests a meeting with the agent in the senior's home the
same day, a notice shall be delivered to the senior prior to the
meeting. The notice shall be in substantially the following form,
with the appropriate information inserted, in 14-point type:
"(1) During this visit or a followup visit, you will be given a
sales presentation on the following
785. (a) All insurers, brokers, agents, and others engaged in the
transaction of insurance owe a prospective insured who is 65 years of
age or older, a duty of honesty, good faith, and fair dealing. This
duty is in addition to any other duty, whether express or implied,
that may exist.
(b) Conduct of an insurer, broker, or agent, or other person
engaged in the transaction of insurance, during the offer and sale of
a policy or certificate previous to the purchase is relevant to any
action alleging a breach of the duty of good faith and fair dealing.
(c) Except where explicitly provided to the contrary, this article
shall not apply to any of the following:
(1) Medicare supplement insurance as defined in subdivision (m) of
Section 10192.4.
(2) Long-term care insurance as defined in Section 10231.2.
(3) Disability coverage provided through the insured's employer or
former employer.
(4) Disability insurance policies or certificates principally
designed to provide coverage for accidents or expenses incurred while
traveling if the premium for the policy or certificate is ten
dollars ($10) or less.
(5) Blanket disability insurance as defined in Section 10270.3.
(6) Credit disability insurance as defined in Section 779.2.
(7) Accidental death insurance.
(8) Until January 1, 2002, disability policies or certificates
that are sold through direct response methods of delivery.
(9) Disability income insurance as defined in subdivision (i) of
Section 799.01.
(d) Provided that the requirements of Section 10296 are met, this
article shall not apply to transportation ticket policies and baggage
insurance policy types allowable for sale by travel agents pursuant
to Section 1753.
786. All disability insurance and life insurance policies and
certificates offered for sale to individuals age 65 or older in
California shall provide an examination period of 30 days after the
receipt of the policy or certificate for purposes of review of the
contract, at which time the applicant may return the contract. The
return shall void the policy or certificate from the beginning, and
the parties shall be in the same position as if no contract had been
issued. All premiums paid and any policy or membership fee shall be
fully refunded to the applicant by the insurer or entity in a timely
manner.
(a) For the purposes of this section a timely manner shall be no
later than 30 days after the insurer or entity issuing the policy or
certificate receives the returned policy or certificate.
(b) If the insurer or entity issuing the policy or certificate
fails to refund all of the premiums paid, in a timely manner, then
the applicant shall receive interest on the paid premium at the legal
rate of interest on judgments as provided in Section 685.010 of the
Code of Civil Procedure. The interest shall be paid from the date the
insurer or entity received the returned policy or certificate.
(c) Each policy or certificate shall have a notice prominently
printed in no less than 10-point uppercase type, on the cover page of
the policy or certificate and the outline of coverage, stating that
the applicant has the right to return the policy or certificate
within 30 days after its receipt via regular mail, and to have the
full premium refunded.
(d) In the event of any conflict between this section and Section
10127.10 with respect to life insurance, the provisions of Section
10127.10 shall prevail.
786.5. (a) All brokers, agents, or other entities offering a
contract of disability insurance to persons 65 years of age or older
in this state shall provide the prospective insured with a full and
accurate written comparison with existing health coverage, and shall
explain the relationship of the proposed coverage to any existing
health benefits provided by Medicare, Medi-Cal, or any other health
benefits available to the applicant. The written comparison shall be
maintained in accordance with Section 10508.5. Disability insurers
marketing through direct response to persons 65 years of age or older
shall include in the application form questions to ascertain whether
the prospective insured is currently 65 years of age or older, and
whether the prospective insured is covered by Medi-Cal or a Medicare
supplement policy. These direct response insurers shall provide the
required comparison as early in the transaction as possible, but not
later than the delivery of the insurance contract.
(b) The commissioner may prescribe a standard comparison form and
an informational brochure that shall be distributed to every
prospective insured at the time insurance is offered for sale by an
agent, broker, or other producer. In the case of a transportation
ticket policy, the informational brochures shall be delivered to the
prospective insured not later than delivery of the insurance
contract. Disability insurers marketing through direct response to
persons 65 years of age or older shall provide the informational
brochure as early in the transaction as possible, but not later than
the delivery of the insurance contract.
(c) The amendments to this section made by Assembly Bill 1178 of
the 2001-02 Regular Session shall become operative January 1, 2002.
787. Any advertisement or other device designed to produce leads
based on a response from a potential insured which is directed
towards persons age 65 or older shall prominently disclose that an
agent may contact the applicant if that is the fact. In addition, an
agent who makes contact with a person as a result of acquiring that
person's name from a lead generating device shall disclose that fact
in the initial contact with the person.
(a) No insurer, agent, broker, solicitor, or other person or other
entity shall solicit persons age 65 and older in this state for the
purchase of disability insurance, life insurance, or annuities
through the use of a true or fictitious name which is deceptive or
misleading with regard to the status, character, or proprietary or
representative capacity of the entity or person, or to the true
purpose of the advertisement.
(b) For the purposes of this section, an advertisement includes
envelopes, stationery, business cards, or other materials designed to
describe and encourage the purchase of a policy or certificate of
disability insurance, life insurance, or an annuity.
(c) Advertisements shall not employ words, letters, initials,
symbols, or other devices which are so similar to those used by
governmental agencies, a nonprofit or charitable institution, senior
organization, or other insurer that they could have the capacity or
tendency to mislead the public. Examples of misleading materials,
include, but are not limited to, those which imply any of the
following:
(1) The advertised coverages are somehow provided by or are
endorsed by any governmental agencies, nonprofit or charitable
institution or senior organizations.
(2) The advertiser is the same as, is connected with, or is
endorsed by governmental agencies, nonprofit or charitable
institutions or senior organizations.
(d) No advertisement may use the name of a state or political
subdivision thereof in a policy name or description.
(e) No advertisement may use any name, service mark, slogan,
symbol, or any device in any manner that implies that the insurer, or
the policy or certificate advertised, or that any agency who may
call upon the consumer in response to the advertisement, is connected
with a governmental agency, such as the Social Security
Administration.
(f) No advertisement may imply that the reader may lose a right,
or privilege, or benefits under federal, state, or local law if he or
she fails to respond to the advertisement.
(g) An insurer, agent, broker, or other entity may not use an
address so as to mislead or deceive as to the true identity,
location, or licensing status of the insurer, agent, broker, or other
entity.
(h) No insurer may use, in the trade name of its insurance policy
or certificate, any terminology or words so similar to the name of a
governmental agency or governmental program as to have the capacity
or the tendency to confuse, deceive, or mislead a prospective
purchaser.
(i) All advertisements used by agents, producers, brokers,
solicitors, or other persons for a policy of an insurer shall have
written approval of the insurer before they may be used.
(j) No insurer, agent, broker, or other entity may solicit a
particular class by use of advertisements which state or imply that
the occupational or other status as members of the class entitles
them to reduced rates on a group or other basis when, in fact, the
policy or certificate being advertised is sold on an individual basis
at regular rates.
(k) In addition to any other prohibition on untrue, deceptive, or
misleading advertisements, no advertisement for an event where
insurance products will be offered for sale may use the terms
"seminar," "class," "informational meeting," or substantially
equivalent terms to characterize the purpose of the public gathering
or event unless it adds the words "and insurance sales presentation"
immediately following those terms in the same type size and font as
those terms.
787.1. (a) The following definitions apply to this section:
(1) "Senior designation" means any degree, title, credential,
certificate, certification, accreditation, or approval, that
expresses or implies that a broker or agent possesses expertise,
training, competence, honesty, or reliability with regard to advising
seniors in particular on finance, insurance, or risk management.
(2) "Use" means utilizing a word, phrase, acronym, or logo, in any
oral or written communication from which a sale of insurance to a
senior may directly or indirectly result, that states or suggests,
alone or in context, that a broker or agent holds a senior
designation.
(b) (1) A broker or agent may not use a senior designation unless
all of the following conditions have been met:
(A) The broker or agent has been granted the right to use the
senior designation by the organization that issues the senior
designation, and the broker or agent is currently authorized by the
organization to use the designation.
(B) The senior designation has been approved by the commissioner
for use by brokers and agents in the sale of insurance to seniors.
(C) The broker or agent has been licensed for at least four years
in any state or United States territory to sell the types of
insurance with which the designation is used.
(2) A broker or agent may not use a senior designation in a manner
that misleads a person as to the significance of the senior
designation. Each time a broker or agent uses a senior designation in
a writing, the writing shall also contain the words "California" or
"CA" next to "Insurance Agent" or "Insurance Broker Agent" and
"License," and these words shall be located immediately prior to the
broker's license number or the agent's license number, in type that
is in the same font and at least the same size as the type used for
the senior designation. The requirements set forth in this
subdivision are in addition to the requirements of Section 1725.5 and
shall apply regardless of whether the broker or agent is an
insurance agent, as defined in Section 1621. For purposes of this
paragraph, "writing" means business cards, written price quotations,
and print advertisements distributed exclusively in this state.
(c) The commissioner shall approve a senior designation only if
the organization that issues the designation satisfies all of the
following requirements with respect to the designation:
(1) The organization has applied for approval on a form prescribed
by the commissioner.
(A) The department may require the filing of any supplementary
documents and declarations it deems necessary to determine whether
the prerequisites for approval have been met.
(B) Before or after approval, an organization shall notify the
department in writing within 45 days following any material change in
information recorded on the application form or in declarations or
documents submitted along with it or in response to a department
request.
(2) The designation is accredited by the National Commission for
Certifying Agencies, or the organization or the designation is
accredited by an agency that is on the United States Department of
Education's list entitled "Accrediting Agencies Recognized for Title
IV Purposes" and it is established to the satisfaction of the
commissioner that the agency is qualified to accredit an organization
or designation involved with financial services provided to seniors.
(3) The organization requires California candidates for the
designation to demonstrate superior expertise in advising seniors in
particular in finance, insurance, or risk management by passing
examinations that are based on applicants with no prior insurance
education or experience completing at least 75 hours of study
covering at least the following topics: aspects of aging, health care
coverage, long-term care insurance, financial planning for
retirement, investments, estate planning, and ethics. Textbooks or
other study materials may use chapter and subchapter titles that
differ from those general topics as long as the essential content is
the same. No part of the examinations, textbooks, or other study
materials may concern techniques on how to increase the amount of
insurance or financial products one sells, nor recommend the selling
of products offered by specific companies.
(d) (1) In determining whether to approve a senior designation for
use in the sale of insurance to seniors, the commissioner shall also
ensure that the organization that issues the senior designation
fulfills the following:
(A) Is exclusively an educational or certification organization,
and is not directly or indirectly, through an affiliate or partner,
involved in selling insurance, nor receives any compensation directly
or indirectly from any sale of insurance, other than the receipt of
charitable gifts by a nonprofit institution.
(B) Maintains standards and procedures for disciplining its
designees for improper or unethical conduct, as established by proven
complaints or by disciplinary action by a government licensing
agency or a quasi-governmental licensing and regulatory organization.
The standards and procedures shall include, at a minimum:
(i) A written procedure to receive, log, and conduct a preliminary
review of complaints alleging improper, illegal, or unethical
conduct.
(ii) Written standards for determining when a complaint warrants
further investigation into the merits of the allegations contained
therein.
(iii) Written standards and procedures to ensure that, once a
complaint is determined to warrant further investigation, the
investigation is diligently conducted.
(iv) Written standards for determining when to file disciplinary
charges based on the results of an investigation.
(v) Written standards and procedures to ensure due process in the
adjudication of disciplinary charges by adjudicators who are fair,
knowledgeable, and otherwise qualified.
(vi) Written standards and procedures for the imposition of
appropriate sanctions, including, when warranted, revocation of the
designation.
(C) Maintains a code of ethics for its California designees
consistent with that of one of the designations recited in Section
1749.4.
(e) (1) A word, phrase, acronym, or logo shall be deemed a senior
designation if it contains the word "senior," "Medicare," "Medi-Cal,"
"retire," "mature," "gerontology," or "elder," or any variation or
synonym of one of these words within several words of the word
"certified," "chartered," "registered," "adviser," "specialist,"
"consultant," "agent," "broker," "insurance," "planner,"
"professional," "enrolled," "accredited," "analyst," or "fellow," or
any variation or synonym of one of these words. A word, phrase,
acronym, or logo may constitute a senior designation if it meets the
definition in paragraph (1) of subdivision (a) regardless of whether
it contains one of the words recited in this subdivision.
(2) A word, phrase, acronym, or logo shall not constitute a senior
designation if it is a job title or description of an employee of a
governmental entity, or of an organization with a contract with that
governmental entity to provide free counseling to seniors.
(3) No exemption exists under this section for use of a senior
designation that constitutes a job title or description or part of a
job title or description, except as provided in paragraph (2).
(4) An advanced academic degree, such as a Ph.D., M.B.A., or M.S.,
may be used without compliance with subdivision (d), if the degree
was awarded by an institution of higher education that has been
accredited by an organization that is on the United States Department
of Education's list entitled "Accrediting Agencies Recognized for
Title IV Purposes."
(f) A violation of subdivision (b) by a broker or agent shall be
grounds for suspension or revocation of the broker's or agent's
license pursuant to Sections 1668 and 1738. Such a violation also
shall be grounds for a cease and desist order and monetary penalty
pursuant to Section 12921.8, as if the broker or agent had acted in a
capacity for which a license was required but not possessed.
(g) Any person who grants to a California resident the right to
use a senior designation that has not been approved by the
commissioner, without reasonably attempting to determine whether
California is one of the designee's residences, shall be subject to a
cease and desist order and monetary penalty pursuant to Section
12921.8, as if the person had acted in a capacity for which a license
was required but not possessed.
(h) The disciplinary and remedial authority recited in this
subdivision shall be in addition to any other disciplinary and
remedial authority included in this code.
(i) Notwithstanding any other provision of this code, the criteria
in Sections 1668 and 1668.5 apply to an organization that issues a
senior designation, and the commissioner may deny or rescind approval
of an organization issuing a senior designation based on that
criteria.
(j) The commissioner shall maintain a list of senior designations
approved pursuant to subdivisions (c), (d), and (e) and shall publish
the current list on the Internet Web site of the Department of
Insurance.
(k) This section shall apply to all types of insurance, including
those listed in paragraphs (1) and (2) of subdivision (c) of Section
785, except those listed in paragraphs (3) to (7), inclusive, and
paragraph (9) of subdivision (c) of Section 785 and subdivision (d)
of Section 785.
(l) The commissioner may, upon receipt of a petition from an
organization, issue written confirmation that a designation issued by
that organization is exempt from the requirement of approval
pursuant to this section. The commissioner may issue confirmation if
the designation, according to its title or curriculum, or in its
actual use, concerns almost exclusively subject matters other than
insurance or financial services sold to seniors in particular.
(m) (1) The commissioner may rescind approval of a designation
whenever there has been a material change in the management or
operation of the organization that issues the designation, or in the
procedures or criteria for issuance of the designation, such that if
the organization were to apply for approval of the designation
subsequent to the change, approval would be denied.
(2) Any rescission of the approval of a designation shall be after
notice and a hearing conducted in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code, as if the approval were a license, and the
commissioner shall have all of the powers granted therein.
788. An insurer, agent, broker, or other person engaged in the
transaction of insurance shall not knowingly recommend for sale, or
sell, disability insurance providing health benefits directly to a
Medi-Cal beneficiary who is age 65 or older. For disability insurance
providing health benefits sold to a person age 65 or older, the
application or other supplemental record signed by the applicant
shall contain a question designed to determine if the applicant is
receiving Medi-Cal benefits.
788.5. No insurer, broker, agent, or other person shall cause an
insured aged 65 years or older to replace a disability insurance
policy or certificate unnecessarily.
(a) No insurer, broker, agent, or other entity within the
jurisdiction of the department shall promote or cause overloading of
disability coverage to persons aged 65 years or older. For purposes
of this section, "overloading" means possession by an insured of
functionally identical coverages that overlap or duplicate benefits
to the extent that a reasonable person would not consider their
ownership to be cost-effective.
(b) It shall be presumed that the sale of disability insurance
that is the subject of this article, sold to a person aged 65 years
or older, is overloading, as defined in subdivision (a), if the
insured is already covered by Medicare Parts A and B as well as one
Medicare supplement policy, certificate, or contract and coverage for
excess charges under Part B.
(c) The application for disability insurance for a person age 65
years or older shall contain a question or questions designed to
elicit information regarding all other existing health and disability
coverage in force by type and company.
788.7. No insurer, broker, agent, or other person shall knowingly
recommend for purchase or sell disability insurance to a person age
65 or older which results in the insured having coverage, for medical
benefits, for more than 100 percent of actual medical expenses.
789. (a) The commissioner shall have the administrative authority
to assess penalties against insurers, brokers, agents, and other
entities engaged in the transaction of insurance or any other person
or entity for violations of this article.
(b) Upon a showing of a violation of this article in any civil
action, a court may also assess the penalties prescribed in this
chapter.
(c) Whenever the commissioner has reasonable cause to believe or
determines after a public hearing that any insurer, agent, broker, or
other person or entity engaged in the transaction of insurance, has
violated this article the commissioner shall make and serve upon the
insurer, broker, agent, or other person or entity a notice of
hearing. The notice shall state the commissioner's intent to assess
the administrative penalties, the time and place of the hearing, and
the conduct, condition or ground upon which the commissioner is
holding the hearing, and assessing the penalties. The hearing shall
occur within 30 days after the notice is served. Within 30 days after
the hearing the commissioner shall issue an order specifying the
amount of the penalties to be paid. The penalties resulting from the
hearing shall be paid to the Insurance Fund.
(d) The powers vested in the commissioner by this section shall be
in addition to any and all powers and remedies vested in the
commissioner by law.
(e) Actions for injunctive relief, penalties specified in Section
789.3, damages, restitution, and all other remedies in law, may be
brought in superior court by the Attorney General, district attorney,
or city attorney on behalf of the people of California. The court
shall award reasonable attorney's fees and court costs to the
prevailing plaintiff who establishes a violation of this article.
789.3. (a) Any broker, agent, or other person or other entity
engaged in the transactions of insurance, other than an insurer, who
violates this article is liable for an administrative penalty of no
less than one thousand dollars ($1,000) for the first violation.
(b) Any broker, agent, other person, or other entity engaged in
the business of insurance, other than an insurer, who engages in
practices prohibited by this article a second or subsequent time or
who commits a knowing violation of this article, is liable for an
administrative penalty of no less than five thousand dollars ($5,000)
and no more than fifty thousand dollars ($50,000) for each
violation.
(c) If the commissioner brings an action against a licensee
pursuant to subdivision (a) or (b) and determines that the licensee
may reasonably be expected to cause significant harm to seniors, the
commissioner may suspend his or her license pending the outcome of
the hearing described in subdivision (c) of Section 789.
(d) Any insurer who violates this article is liable for an
administrative penalty of ten thousand dollars ($10,000) for the
first violation.
(e) Any insurer who violates this article with a frequency as to
indicate a general business practice or commits a knowing violation
of this article, is liable for an administrative penalty of no less
than thirty thousand dollars ($30,000) and no more than three hundred
thousand dollars ($300,000) for each violation.
(f) The commissioner may require rescission of any contract found
to have been marketed, offered, or issued in violation of this
article.
789.5. If any provision of this article or the application thereof
to any person or circumstances is held invalid, that invalidity shall
not affect other provisions or applications of the article which can
be given effect, without the invalid provision or application, and
to this end the provisions of the article are severable.
789.6. (a) Insurance policies or certificates of disability
insurance sold to persons age 65 or older shall return to
policyholders or certificate holders benefits that have a minimum
loss ratio of 60 percent for individual policies and 75 percent for
group policies. The loss ratio shall be on the basis of incurred
claims experience and earned premiums.
(b) The commissioner shall require every entity providing
insurance policies or certificates of disability insurance sold to
persons age 65 or older in this state to maintain detailed experience
data for policies and certificates subject to this section and
require them to make an annual filing with the commissioner
disclosing the loss ratio for each policy form or certificate subject
to this section. The annual filing shall, at a minimum, include
rates, rating schedules, and supporting documentation including
ratios of incurred losses to earned premiums by number of years of
policy duration. That information shall demonstrate that each policy
form or certificate is in compliance with the applicable loss ratio
standards.
(c) The commissioner shall assure that reserves are reasonable and
based on sound actuarial principles with respect to the aggregate
dollar amount of reserves for claims that are incurred but not yet
paid, and for claims that are incurred but not yet reported.
(d) Policy forms or certificates shall be deemed to comply with
the purposes of this section if the expected losses in relation to
premiums over the entire period for which the policy form or
certificate is rated comply with the requirements of this section and
either of the following applies:
(1) For policies or certificates that have been in force for three
years or more, for the most recent year the ratio of incurred losses
to earned premiums is greater than or equal to the minimum loss
ratios established by this section.
(2) For policies or certificates that have been in force for three
years or less, the expected third year loss ratio can be
demonstrated to be greater than or equal to the minimum loss ratio.
(e) If the annual filing or other information received by the
commissioner indicates that the actual loss ratio for a policy or
certificate is less than the minimum loss ratio established by this
section, the commissioner shall require that the insurer or entity
providing the insurance file and implement a corrective plan. This
plan shall include the utilization of premium reductions, dividends,
benefit increases, or any combination of these or other methods so
that the minimum loss ratio can be reasonably expected to be
achieved. Any corrective plan shall be reviewed and approved by the
commissioner prior to implementation.
(f) If, in the opinion of the commissioner, a policy's or
certificate's failure to meet the minimum loss ratio requirements is
due to unusual reserve fluctuations, economic conditions, or other
nonrecurring conditions, the commissioner may exempt the policy or
certificate from the need for a corrective plan for that year. Any
exemption shall be in writing and shall specify the reasons for the
granting of the exemption.
(g) If the insurer or other entity providing disability insurance
to persons 65 years of age or older in this state fails to file and
implement a corrective plan in a timely manner, the commissioner
shall withdraw approval of the policy or certificate according to the
procedures set forth in Section 10293. This remedy is in addition to
any remedy available in that section or under other laws of this
state. Any report, plan, exemption, or other document prepared
pursuant to this section shall be accessible to the public as a
public record.
(h) The commissioner may adopt regulations to implement or
administer this article.
789.7. (a) Sales of disability insurance regulated by this article,
as well as Medicare supplement insurance and long-term care
insurance sold to persons aged 65 years or older, shall be registered
by the insurer with the commissioner. The commissioner shall provide
facilities for the computerized recordkeeping of all registered
policies and certificates. The commissioner shall adopt regulations
to implement and administer registration pursuant to this section.
Regulations shall include, but need not be limited to, a system for
assessing insurers in accordance with each insurer's market share in
order to finance the cost of registration, an appropriate method and
schedule for the filing of data with the commissioner, the content
and format required for each filing in accordance with subdivision
(d), appropriate sanctions for failure to comply with this section or
with regulations promulgated under this section, and criteria for
releasing the registered information to parties outside the
department.
(b) Access to the registered information, including the identity
of policyholders, shall be strictly limited to the department, with
the exception that the Attorney General, a district attorney, or city
attorney may be granted access upon request for the purpose of
investigating or prosecuting suspected unlawful practices or for
purposes of this article. The commissioner may, at his or her
discretion, allow access to the registered information to the Health
Insurance Counseling and Advocacy Program in the Department of Aging.
(c) Access to registered information in a purely statistical
format, which neither identifies nor enables identification of a
particular policyholder, may be released at the discretion of the
commissioner to any party who demonstrates that the information will
be used only for other than commercial purposes.
(d) The content of the filing shall contain no more than the
following information:
(1) Policyholder's Medicare identification number or social
security number. The policyholder's name shall be specifically
excluded from the filing.
(2) A description of the policy as being Medicare supplemental
insurance; long-term care insurance; or disability insurance.
(3) Date of sale.
(4) Date of lapse.
(5) Whether the policy is in force as of the date of the filing.
(6) The policy form number, if applicable.
(7) The name of any insurer, broker, agent, or other person
engaged in the transaction of insurance who was responsible for the
sale of the policy.
789.8. (a) "Elder" for purposes of this section means any person
residing in this state who is 65 years of age or older.
(b) If a life agent offers to sell to an elder any life insurance
or annuity product, the life agent shall advise an elder or elder's
agent in writing that the sale or liquidation of any stock, bond,
IRA, certificate of deposit, mutual fund, annuity, or other asset to
fund the purchase of this product may have tax consequences, early
withdrawal penalties, or other costs or penalties as a result of the
sale or liquidation, and that the elder or elder's agent may wish to
consult independent legal or financial advice before selling or
liquidating any assets and prior to the purchase of any life or
annuity products being solicited, offered for sale, or sold. This
section does not apply to a credit life insurance product as defined
in Section 779.2.
(c) A life agent who offers for sale or sells a financial product
to an elder on the basis of the product's treatment under the
Medi-Cal program may not negligently misrepresent the treatment of
any asset under the statutes and rules and regulations of the
Medi-Cal program, as it pertains to the determination of the elder's
eligibility for any program of public assistance.
(d) A life agent who offers for sale or sells any financial
product on the basis of its treatment under the Medi-Cal program
shall provide, in writing, the following disclosure to the elder or
the elder's agent:
"NOTICE REGARDING STANDARDS FOR MEDI-CAL ELIGIBILITY AND
RECOVERY
If you or your spouse are considering purchasing a financial
product based on its treatment under the Medi-Cal program, read this
important message!
You or your spouse do not have to use up all of your savings
before applying for Medi-Cal.
RECOVERY
An annuity purchased on or after September 1, 2004, shall be
subject to recovery by the state upon the annuitant's death under the
regulations of the Medi-Cal Recovery Program. Income derived from
the annuity must be used to meet the annuitant's share of costs and,
if the annuitant is married, the income derived from the annuity may
impact the minimum monthly maintenance needs of the annuitant's
community spouse. An annuity purchased by a community spouse on or
after September 1, 2004, may also be subject to recovery if that
spouse is the recipient of past or future Medi-Cal benefits.
UNMARRIED RESIDENT
An unmarried resident may be eligible for Medi-Cal benefits if he
or she has less than (insert amount of individual's resource
allowance) in countable resources.
The Medi-Cal recipient is allowed to keep from his or her monthly
income a personal allowance of (insert amount of personal needs
allowance) plus the amount of any health insurance premiums paid. The
remainder of the monthly income is paid to the nursing facility as a
monthly share of cost.
MARRIED RESIDENT
COMMUNITY SPOUSE RESOURCE ALLOWANCE: If one spouse lives in a
nursing facility, and the other spouse does not live in a facility,
the Medi-Cal program will pay some or all of the nursing facility
costs as long as the couple together does not have more than (insert
amount of community countable assets).
MINIMUM MONTHLY MAINTENANCE NEEDS ALLOWANCE: If a spouse is
eligible for Medi-Cal payment of nursing facility costs, the spouse
living at home is allowed to keep a monthly income of at least his or
her individual monthly income or (insert amount of the minimum
monthly maintenance needs allowance), whichever is greater.
FAIR HEARINGS AND COURT ORDERS
Under certain circumstances, an at-home spouse can obtain an order
from an administrative law judge or court that will allow the
at-home spouse to retain additional resources or income. The order
may allow the couple to retain more than (insert amount of community
spouse resource allowance plus individual's resource allowance) in
countable resources. The order also may allow the at-home spouse to
retain more than (insert amount of the monthly maintenance needs
allowance) in monthly income.
REAL AND PERSONAL PROPERTY EXEMPTIONS
Many of your assets may already be exempt. Exempt means that the
assets are not counted when determining eligibility for Medi-Cal.
REAL PROPERTY EXEMPTIONS
ONE PRINCIPAL RESIDENCE: One property used as a home is exempt.
The home will remain exempt in determining eligibility if the
applicant intends to return home someday.
The home also continues to be exempt if the applicant's spouse or
dependent relative continues to live in it.
Money received from the sale of a home can be exempt for up to six
months if the money is going to be used for the purchase of another
home.
REAL PROPERTY USED IN A BUSINESS OR TRADE: Real estate used in a
trade or business is exempt regardless of its equity value and
whether it produces income.
PERSONAL PROPERTY AND OTHER EXEMPT ASSETS
IRAs, KEOGHs, AND OTHER WORK-RELATED PENSION PLANS: These funds
are exempt if the family member whose name it is in does not want
Medi-Cal. If held in the name of a person who wants Medi-Cal and
payments of principal and interest are being received, the balance is
considered unavailable and is not counted. It is not necessary to
annuitize, convert to an annuity, or otherwise change the form of the
assets in order for them to be unavailable.
PERSONAL PROPERTY USED IN A TRADE OR BUSINESS.
ONE MOTOR VEHICLE.
IRREVOCABLE BURIAL TRUSTS OR IRREVOCABLE PREPAID BURIAL CONTRACTS.
THERE MAY BE OTHER ASSETS THAT MAY BE EXEMPT.
This is only a brief description of the Medi-Cal eligibility
rules. For more detailed information, you should call your county
welfare department. Also, you are advised to contact a legal services
program for seniors or an attorney who is not connected with the
sale of this product.
I have read the above notice and have received a copy.
Dated: _______________ Signature: ________________"
The statement required in this subdivision shall be printed in at
least 12-point type, shall be clearly separate from any other
document or writing, and shall be signed by the prospective purchaser
and that person's spouse, and legal representative, if any.
(e) The State Department of Health Services shall update this form
to ensure consistency with state and federal law and make the
disclosure available to agents and brokers through its Internet Web
site.
(f) Nothing in this section allows or is intended to allow the
unlawful practice of law.
(g) Subdivisions (b) and (d) shall become operative on July 1,
2001.
789.9. (a) In addition to any other reasons that a sale of an
individual annuity to a senior may violate any provision of law, an
annuity shall not be sold to a senior in any of the following
circumstances:
(1) The senior's purpose in purchasing the annuity is to affect
Medi-Cal eligibility and either of the following is true:
(A) The purchaser's assets are equal to or less than the community
spouse resource allowance established annually by the State
Department of Health Services pursuant to the Medi-Cal Act (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code).
(B) The senior would otherwise qualify for Medi-Cal.
(2) The senior's purpose in purchasing the annuity is to affect
Medi-Cal eligibility and, after the purchase of the annuity, the
senior or the senior's spouse would not qualify for Medi-Cal.
(b) In the event that a fixed annuity specified in subdivision (a)
is issued to a senior, the issuer shall rescind the contract and
refund to the purchaser all premiums, fees, any interest earned under
the terms of the contract, and costs paid for the annuity. This
remedy shall be in addition to any other remedy that may be
available.
789.10. (a) This section applies to the sale, offering for sale, or
generation of leads for the sale of life insurance, including
annuities, to senior insureds or prospective insureds by any person.
(b) Any person who meets with a senior in the senior's home is
required to deliver a notice in writing to the senior no less than 24
hours prior to that individual's initial meeting in the senior's
home. If the senior has an existing insurance relationship with an
agent and requests a meeting with the agent in the senior's home the
same day, a notice shall be delivered to the senior prior to the
meeting. The notice shall be in substantially the following form,
with the appropriate information inserted, in 14-point type:
"(1) During this visit or a followup visit, you will be given a
sales presentation on the following
