California Equal Insurance HIV Act Bars Insurers From Declining Applications For Life or Disability Insurance

California Equal Insurance HIV Act Bars Insurers From Declining Applications For Life Or Disability Insurance, But Permits Insurers To Refuse Or Limit Coverage And Charge Different Rates Based On Sound Actuarial Principles Or Experience

Effective January 1, 2023, the California legislature enacted the Equal Insurance HIV Act. See CA Ins. Code § 799.02.  Section 799.02 provides:

(a)        A life or disability income insurer shall not decline an application or an enrollment request for coverage under a policy or certificate for life insurance or disability income insurance based solely on the results of a positive HIV test, regardless of when or at whose direction the test was performed.

(b)        Notwithstanding any other law, this article does not prevent or otherwise restrict a life or disability income insurer from refusing to insure an applicant that is HIV positive, limiting the amount, extent, or kind of coverage for an applicant that is HIV positive, or charging a different rate to an applicant that is HIV positive, if the refusal, limitation, or charge is based on sound actuarial principles and actual or reasonably anticipated experience.

(c)        Transferring an applicant from a simplified, expedited, accelerated, or algorithmic underwriting process to a traditional medical underwriting process, based solely on the results of a positive HIV test, does not constitute a denial of the application or a violation of this section.

(d)        This section applies if coverage is contingent upon medical review for other diseases or medical conditions.

As a precursor to the effective date of Section 799.02, on June 20, 2022, the California Department of Insurance issued a Notice to: “All Life Insurers and All Disability Insurers Transacting Life Insurance or Disability Income Insurance in the State of California, and Other Interested Parties” informing them of the passage of California Insurance Code § 799 et seq. and instructing them to comply. See CA Ins. Notice No. 6-20-2022. The Notice states: “Although the changes to sections 799 through 799.10 do not become effective until January 1, 2023, I encourage insurers to underwrite and provide life insurance and disability income insurance coverage to individuals living with HIV before that date, in accordance with the changes to the statutes. I also encourage insurers to start making any necessary policy form filings with my Department to speed implementation of the revised statutes.” Id.

Given a reasonable interpretation of both the statute and the insurance department notice, insurers were not obligated to follow the statute or the insurance department guidance until January 1, 2023, the date the statute became effective. The statute contains no provision for retroactive application. Prior to January 1, 2023, section 799.02 permitted an insurer to deny an application for insurance based on a positive HIV antibody test confirmed by a second, more reliable test. See CA Ins. Code § 799.02, added by Stats.1988, ch. 1279, § 1, p. 4271.

Even in its new form, however, the statute still allows insurers to refuse or limit coverage, and/or charge different rates to HIV positive applicants, but they may only do so based on sound actuarial principles or reasonably anticipated experience. The question of what constitutes “sound actuarial principles and actual or reasonably anticipated experience” for purposes of denying or limiting coverage and/or charging different rates remains to be flushed out and/or tested within the courts. If you believe your coverage for life or disability insurance was wrongly denied, contact us.