BILL ANALYSIS Ó SENATE JUDICIARY COMMITTEE Senator Noreen Evans, Chair 2011-2012 Regular Session AB 792 (Bonilla) As Amended June 30, 2011 Hearing Date: July 5, 2011 Fiscal: Yes Urgency: No EDO SUBJECT Health Care Coverage: California Health Benefit Exchange DESCRIPTION This bill would require the disclosure of information on health care coverage through the California Health Benefit Exchange (Exchange), under specified circumstances, upon the filing of a petition for dissolution of marriage, nullity of marriage, legal separation, adoption, or an application for unemployment or disability benefits. This bill would require the court or department to provide these individuals with a specified notice of their possible eligibility to enroll in the Exchange. This bill would require health plans, health insurers, and employers, for their insured, employees or dependents who have experienced a death, loss of employment or a reduction in hours, divorce or the loss of dependent status that results in a loss of health insurance, to transfer information to the Exchange, in accordance with all state and federal privacy laws, and to initiate an application for enrollment in the Exchange if the individual consents in writing. This bill would also require the individual who is declining coverage from the Exchange to do so in writing. BACKGROUND In 2010, landmark legislation, the federal Patient Protection and Affordable Care Act (PPACA), was signed in to law by President Obama. Among other things, PPACA requires each state to establish a Health Benefit Exchange by January 1, 2014 which would make health plans available to qualified individuals and employers. The goal of PPACA is ensure that all Americans have (more) AB 792 (Bonilla) Page 2 of ? health insurance coverage. Currently, when a person loses health insurance benefits due to a loss of job or change in familial status, he or she is eligible for the Consolidated Omnibus Budget Reconciliation Act more commonly known as COBRA. COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances. Under COBRA, participants are generally required to pay the entire premium for a temporary period of time (i.e. until they find a new job). COBRA outlines how employees and family members may elect this continued coverage and also requires employers and plans to provide notice of this extended coverage. This bill, sponsored by Health Access California, would, among other things, require courts to give notice to individuals filing a petition for dissolution of marriage or a petition for adoption of their potential eligibility for health insurance coverage through the California Health Benefit Exchange. This bill was heard in the Senate Committee on Health on June 29, 2011 and passed out of that committee on a 5-3 vote. This analysis is limited to the provisions of this bill related to the Family Code which falls within this Committee's jurisdiction. CHANGES TO EXISTING LAW 1.Existing law provides for certain procedural provisions when petitioning the court for dissolution of marriage, nullity of marriage, or legal separation. Existing law provides that certain general provisions be met when filing a petition for adoption of an unmarried child. (Fam. Code Sec. 2020 et seq. and 8600 et seq.) This bill would provide that upon filing a petition for dissolution of marriage, nullity of marriage, or legal separation, on or after January 1, 2013, the court must provide the following notice: "In March of 2010, the federal government passed National Health Care Reform. Because of this, effective January 1, 2014, you may become eligible for reduced-cost comprehensive health care coverage through the California Health Benefit Exchange. To learn more, visit www.healthexchange.ca.gov or call 1- (insert number)." AB 792 (Bonilla) Page 3 of ? 2.Existing law , Cal-COBRA, requires health plans and health insurers that provide coverage to small employers with 2 to 19 eligible employees to offer continuation coverage to a qualified beneficiary upon a qualifying event without evidence of insurability. Existing law requires the qualified beneficiary, upon election, to be able to continue his or her coverage under the group benefit plan. (Health & Saf. Code Sec. 1366.20.) Existing law requires employers, employee associations, or other entities to notify its current and former employees or members and dependents of federal COBRA continuation coverage (which requires continuation coverage be offered to qualified beneficiary experiencing a qualifying event in firms with 20 or more employees) and state law conversion coverage options. (Health & Saf. Code Sec. 1373.6 et. seq.) This bill would require these entities to obtain the written consent of the enrollee to provide the minimum necessary information to the Exchange in the event that the individual or dependent ceases to be enrolled in coverage. This bill prohibits these entities from transferring any information regarding the individual to the Exchange if the individual does not provide his or her consent. This bill provides that consent may be obtained at the time of the qualifying event. This bill would define "qualified beneficiary" to mean "any individual who, on the day before the qualifying event, is an enrollee in a group benefit plan offered by a health care service plan and has a qualifying event, as defined." This bill would define a "qualifying event" to mean any of the following events that would result in a loss of coverage under the group benefit plan to a qualified beneficiary: the death of the covered employee; the termination of employment or reduction in hours of the covered employee's employment; the divorce or legal separation of the covered employee from the covered employee's spouse; the loss of dependent status by a dependent enrolled in the group benefit plan; or with respect to a covered dependent only, the covered employee's entitlement to benefits under Medicare. This bill would require individual health plans and insurers AB 792 (Bonilla) Page 4 of ? to provide to the Exchange information regarding previously covered individuals and any dependents who chose not to renew individual coverage. This bill would require the information provided to include the name or names, most recent address, and any other information that is in the possession of the plan and that the Exchange may require in a manner to be prescribed by the Exchange. This bill requires the information to be provided in a manner consistent with a specified provision of PPACA dealing with procedures for determining eligibility for the Exchange and consistent with other state and federal medical privacy laws. This bill would provide that the person for whom an application has been initiated by the transfer of information shall be given the opportunity to provide informed consent to use the transferred information to commence eligibility determination and complete enrollment as well as the opportunity to correct any transferred information or provide additional information before a final eligibility determination is made. If the individual fails to consent or fails to respond to the opportunity to consent within a reasonable period of time, that failure to consent or to respond timely shall be construed as discontinuing the application. 1.Existing law regulates the distribution of unemployment compensation or disability benefits by the Employment Development Department (EDD). (Umemp. Ins. Code Secs. 1326 et. seq. and 2701 et. seq.) This bill would require EDD to provide notice to individuals filing a new claim for unemployment compensation or disability benefits that an application for health care coverage through the Exchange has been made for them, that they are not required to accept coverage, and that Exchange coverage will be based on their income. This bill would require EDD, on and after January 1, 2014, when an individual, files a new claim for unemployment compensation, to provide to the Exchange the name, address, and any other identifying information that is in the possession of EDD as the Exchange may require, in a manner to be prescribed by the Exchange. This bill would require a notice to be provided, effective January 1, 2013, to individuals that they may be eligible for AB 792 (Bonilla) Page 5 of ? reduced-cost coverage through the Exchange when an individual files a new claim for disability benefits. 2.Existing law establishes the Exchange in state government, and specifies the duties and authority of the Exchange. Existing law requires the Exchange to be governed by a board that includes the Secretary of the Health and Human Services Agency and four members with specified expertise who are appointed by the Governor and the Legislature. (Gov. Code Sec. 100500 et. seq.) This bill would require the Exchange to seek approval from California and Federal Departments of Health and Human Services to transfer the minimum information necessary to initiate an application for enrollment through the Exchange. This bill requires the provision of this information to initiate an application for enrollment in coverage through the Exchange. 3.Existing law provides for several classes of coverage including group plans and individual plans. Existing law allows, until January 1, 2014, health plans and health insurers in the individual market to decline to cover individuals applying for individual health coverage, with specified exceptions, such as a disability insurer that covers hospital, medical, or surgical expenses under an individual health benefit plan may not, with respect to a federally eligible defined individual desiring to enroll in individual health insurance coverage, decline to offer coverage to, or deny enrollment of, the individual or impose any preexisting condition exclusion with respect to the coverage. (Ins. Code Sec. 10785.) This bill would require, on and after January 1, 2014, group health plans, health insurers, employers, employee associations, or other entities otherwise providing hospital, surgical or major medical benefits to its employees or members, to provide notification to employees, members, former employees, dependents, or former dependents that because the individual is no longer enrolled in employer coverage: that an application for coverage through the Exchange has been made; that the individual is not required to accept coverage from the Exchange; and, that if the individual is low income, he or she may qualify for Medi-Cal. AB 792 (Bonilla) Page 6 of ? This bill would require, from January 1, 2012, until December 31, 2013, group health plans, employers, employee associations and other entities providing hospital, medical, surgical or major medical benefits to its employees or members, to provide a notification to qualified beneficiaries to examine their coverage options before declining coverage, that individual policies require a review of an individual's medical history that can result in a higher premium or denial of coverage, and that children under 19 years of age cannot be denied individual coverage based on medical history, but may pay a higher premium depending on medical history. This bill would require employers, employee associations, other entities providing medical benefits, health plans, and health insurers to transfer information to the Exchange in order to initiate an application for enrollment in the Exchange for a former employee or former dependent of an employee consistent with other state and federal medical privacy laws. This bill would require these entities to provide to the Exchange information regarding the former employee and any dependents covered, including the name or names, most recent address, and any other information that is in the possession of the these entities that the Exchange may require, in a manner to be prescribed by the Exchange. This bill would require the information to be provided in a manner consistent with a specified provision of the federal PPACA dealing with procedures for determining Exchange eligibility. This bill would require a disclosure to be provided to such individuals that an application for coverage through the Exchange has been made, that the individual is not required to accept coverage from the Exchange, and that coverage through the Exchange will be based on income. COMMENT 1. Stated need for the bill The author writes: The idea of what this bill attempts to do has not been done in AB 792 (Bonilla) Page 7 of ? the state or in the nation before. This is a completely new idea; however this bill is in line with the current COBRA practice. . . .this bill attempts to address future problems by ensuring seamless transition for individuals who go through life changing situations. In 2014 and thereafter, a component of the federal Affordable Care Act institutes an individual mandate provision, which requires everyone to have insurance. This bill helps ensure that Californians comply with the individual mandate even when they are faced with life changing situations such as filing for unemployment, divorce, adoption, and loss of employment-based coverage. This bill ensures the design of the Exchange and redesign of Medi-Cal take into account the need to serve short-term uninsured as well as provide long-term coverage. ÝThis bill] will ensure Californians are provided notices and that they are pre-enrolled into either the Exchange or Medi-Cal. The sponsor of the bill, Health Access California, writes, "any Californian can become uninsured because of a change in life circumstance, yet state policy does relatively little to help people stay on coverage. Today when somebody loses their job, they get a COBRA notice. Today when someone loses a spouse through divorce or death, they get a COBRA or HIPPA notice. Today when a young adult ages off of their parents' coverage, they don't even get a notice . . . COBRA is not a solution for many people: only 20% of those eligible take COBRA, both because of the cost of coverage and because the precipitating event (loss of job, loss of a spouse) often results in a loss of income." In support of the bill, the California Medical Association (CMA) writes, "CMA physicians support mechanisms to streamline health coverage enrollment for eligible individuals and strongly support expanding coverage to California's uninsured through state-based health insurance exchange that provides competition between plans that offer quality care and access through robust provider networks. After 2014, individuals who lose health coverage due to a difficult life event will still have an obligation to obtain health insurance. ÝThis bill] will make that process easier and help ensure continuity of care during a stressful time in a person's life." Also in support, American Federation of State, County, and AB 792 (Bonilla) Page 8 of ? Municipal Employees (AFSCME) writes, "under health reform, many people will be eligible for subsidized coverage only when they have lost their job, gotten divorced, or faced another change in life that probably resulted in a loss of income. ÝThis bill] will help people enroll in subsidized coverage by providing notice of the availability of coverage and in some instances pre-enrolling them in coverage. This improves federal health reform by helping people stay covered." 2. Bill would require courts to provide notice of potential eligibility for health coverage when filing a petition for dissolution of marriage or adoption Under existing law the court is required to provide certain notifications to individuals filing for dissolution of marriage or a petition for adoption. This bill would also require the courts to provide individuals with notice of their potential eligibility for health coverage under the California Health Benefit Exchange. Due to certain life events, including a loss of job or change in familial status, some people are left without health insurance coverage. Most employer-sponsored health insurance plans give employees the option of covering a spouse or domestic partner. Proof of marriage or registration of domestic partnership is generally required. So, if for example, one spouse is covered by another spouse's employer-sponsored health insurance and the couple decides to file for dissolution of marriage, the non-employee spouse would likely lose his or her coverage. Currently, the spouse losing coverage would be eligible for COBRA. However, COBRA can be cost prohibitive for most individuals. Most health plans are several hundred if not in the thousands of dollars per month. COBRA does not take into consideration the applicant's income, and many of these life changing events include a significant decrease in income. As a result many people do not take advantage of this benefit. In fact, it is estimated that only 20% of those eligible for COBRA actually enroll in COBRA. Also, according to a recent University of California study, "not all workers are eligible for COBRA. Only workers employed by firms with at least 20 employees are eligible under the federal COBRA law, though California has expanded COBRA to smaller businesses with 2 to 19 employees. According to the Commonwealth Fund (2009), 5 percent of current workers would not be eligible for federal COBRA benefits upon loss of their job AB 792 (Bonilla) Page 9 of ? because they work for a small business. Additionally, eligibility for COBRA coverage is time limited, expiring after 18 to 36 months, depending on the qualifying event." (Maximizing Health Care Enrollment through Seamless Coverage for Families in Transition: Current Trends and Policy Implications (March 2011) by Ken Jacobs, Laurel Lucia, Ann O'Leary, and Ann Marie Marciarille.) Additionally, when a person or persons file a petition for adoption, this bill would require the court to give this notice of potential coverage. This is important because when someone is taking a child under their care through adoption, health insurance is an important component of providing for a child. This bill seeks to ensure that all individuals are aware that they may be eligible for health insurance in accordance with the federal PPACA, which requires all Americans to have health insurance coverage beginning January 1, 2014. Support : American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME); California Labor Federation; California Medical Association; California Pan-Ethnic Health Network; California Primary Care Association; California Rural Legal Assistance Foundation; Children NOW; Children's Defense Fund California; Congress of California Seniors; Consumers Union; Contra Costa County Board of Supervisors; Having Our Say; Latino Health Alliance; National Association of Social Workers; PICO California; SEIU California; The 100% Campaign; The Children's Partnership; Unitarian Universalist; Legislative Ministry Action Network, CA; United Nurses Association of California/Union of Health Care Professionals; Western Center on Law and Poverty Opposition : Association of California Life & Health Insurance Companies; California's Association of Health Underwriters HISTORY Source : Health Access California Related Pending Legislation : AB 714 (Atkins) would, among other things, require notification about benefits under California Health Benefit Exchange to individuals who have ceased to be enrolled in various public health programs, including Healthy Families, Access for Infants and Mothers, and the California Major Risk Medical Insurance Program. AB 792 (Bonilla) Page 10 of ? Prior Legislation : AB 1062 (Perez, Chapter 655, Statutes of 2010) established the structures and duties of the California Health Benefit Exchange (Exchange) to comply with the mandate on the states. SB 900 (Alquist, Chapter 659, Statutes of 2010) established the structures and duties of the California Health Benefit Exchange (Exchange) to comply with the mandate on the states. Prior Vote : Senate Committee on Health (Ayes 5, Noes 3) Assembly Floor (Ayes 50, Noes 26) Assembly Committee on Appropriates (Ayes 11, Noes 6) Assembly Committee on Judiciary (Ayes 7, Noes 2) Assembly Committee on Health (Ayes 13, Noes 6) **************