BILL NUMBER: AB 2178 CHAPTERED 09/18/02 CHAPTER 649 FILED WITH SECRETARY OF STATE SEPTEMBER 18, 2002 APPROVED BY GOVERNOR SEPTEMBER 17, 2002 PASSED THE ASSEMBLY AUGUST 30, 2002 PASSED THE SENATE AUGUST 28, 2002 AMENDED IN SENATE AUGUST 26, 2002 AMENDED IN SENATE JUNE 28, 2002 AMENDED IN SENATE JUNE 13, 2002 AMENDED IN ASSEMBLY MAY 24, 2002 AMENDED IN ASSEMBLY APRIL 8, 2002 INTRODUCED BY Assembly Member Goldberg FEBRUARY 20, 2002 An act to add and repeal Section 1357.18 of the Health and Safety Code, and to add and repeal Section 10718.6 of the Insurance Code, relating to health care. LEGISLATIVE COUNSEL'S DIGEST AB 2178, Goldberg. Health care. Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and of disability insurers by the Insurance Commissioner. Existing law regulates plans and insurers that provide access to coverage for small employers and defines the term "small employer" for those purposes. A willful violation of the provisions governing health care service plans is a crime. This bill would provide that an employer subject to a local living wage law or other legislation enacted by a local government that regulates the minimum hourly compensation of employees shall be a small employer for purposes of obtaining coverage under the small employer provisions. The bill would require an employer, effective January 1, 2003, who elects to provide health care coverage to employees subject to a local living wage law to obtain that coverage under the small employer provisions only for covered employees. The bill would repeal these provisions on January 1, 2007. Because a violation of the bill's requirements on health care service plans would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1357.18 is added to the Health and Safety Code, to read: 1357.18. (a) Notwithstanding the provisions of this article, any employer subject to a local living wage law or other legislation enacted by a local government that regulates the minimum hourly compensation of employees, whether mandatory or voluntary, shall be a small employer for purposes of obtaining coverage under this article. This provision applies whether those employees are employed on a part-time or full-time basis. For the purposes of this subdivision, part-time means employment of a permanent employee who works at least 20 hours but no more than 29 hours each week. (b) If an employer described in subdivision (a) elects to provide health care coverage to those employees who are subject to the local living wage law or other local legislation regulating their minimum hourly compensation, the employer shall obtain that coverage under the provisions of this article, subject to all of its requirements. The employer may not obtain coverage under this article for other employees, unless either of the following applies: (1) The employer is a small employer under a provision of this article other than subdivision (a). (2) The employer satisfies both of the following conditions: (A) The employer has within the prior 12 months provided coverage under this article for employees subject to a local living wage law or other local legislation regulating the minimum hourly compensation. (B) The employer has 50 or fewer other employees to whom the employer has not previously offered coverage. (c) Any coverage offered to an employee that qualifies under paragraph (2) of subdivision (b) shall be subject to all of the provisions of this article. (d) A self-employed individual who is subject to a local living wage law or other local legislation regulating his or her minimum hourly compensation shall not be a small employer for purposes of this section. (e) Notwithstanding the provisions of subdivision (b), if an employer provided health care coverage before January 1, 2003, to employees subject to a local living wage law or other local legislation regulating their minimum hourly compensation, the employer is not required to obtain that coverage under this article and is not eligible to obtain coverage under its provisions. (f) This section shall remain in effect only until January 1, 2007, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2007, deletes or extends that date. SEC. 2. Section 10718.6 is added to the Insurance Code, to read: 10718.6. (a) Notwithstanding the provisions of this chapter, any employer subject to a local living wage law or other legislation enacted by a local government that regulates the minimum hourly compensation of employees, whether mandatory or voluntary, shall be a small employer for purposes of obtaining coverage under this chapter. This provision applies whether those employees are employed on a part-time or full-time basis. For the purposes of this subdivision, part-time means employment of a permanent employee who works at least 20 hours but no more than 29 hours each week. (b) If an employer described in subdivision (a) elects to provide health care coverage to those employees who are subject to the local living wage law or other local legislation regulating their minimum hourly compensation, the employer shall obtain that coverage under the provisions of this chapter subject to all of its requirements. The employer may not obtain coverage under this chapter for other employees, unless either of the following applies: (1) The employer is a small employer under a provision of this chapter other than subdivision (a). (2) The employer satisfies both of the following conditions: (A) The employer has within the prior 12 months provided coverage under this article for employees subject to a local living wage law or other local legislation regulating the minimum hourly compensation. (B) The employer has 50 or fewer other employees to whom the employer has not previously offered coverage. (c) Any coverage offered to an employee that qualifies under paragraph (2) of subdivision (b) shall be subject to all of the provisions of this article. (d) A self-employed individual who is subject to a local living wage law or other local legislation regulating his or her minimum hourly compensation shall not be a small employer for purposes of this section. (e) Notwithstanding the provisions of subdivision (b), if an employer provided health care coverage before January 1, 2003, to employees subject to a local living wage law or other local legislation regulating their minimum hourly compensation, the employer is not required to obtain that coverage under this chapter and is not eligible to obtain coverage under its provisions. (f) This section shall remain in effect only until January 1, 2007, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2007, deletes or extends that date. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.