BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 757| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 757 Author: Lieu (D) Amended: 4/28/11 Vote: 21 SENATE HEALTH COMMITTEE : 6-3, 4/27/11 AYES: Hernandez, Alquist, De León, DeSaulnier, Rubio, Wolk NOES: Strickland, Anderson, Blakeslee SENATE JUDICIARY COMMITTEE : 3-2, 5/3/11 AYES: Evans, Corbett, Leno NOES: Harman, Blakeslee SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/16/11 AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg NOES: Emmerson, Runner NO VOTE RECORDED: Walters SUBJECT : Discrimination SOURCE : Equality California DIGEST : This bill requires every group health care service plan contract and every group health insurance certificate marketed, issued, or delivered to a resident of California to provide coverage to the subscriber's registered domestic partner, regardless of the situs of the contract, subscriber, or master group policyholder. ANALYSIS : CONTINUED SB 757 Page 2 Existing law: 1. Provides for the regulation of health care service plans (health plans) by the Department of Managed Health Care. 2. Provides for the regulation of all forms of insurance, including health insurance, by the California Department of Insurance. 3. Provides that every disability insurance policy covering hospital, medical or surgical expenses, that is advertised, issued, or delivered to a California resident, regardless of the location of the contract or master group policyholder, is subject to all requirements in the California Insurance Code, except those policies issued outside California to an employer whose principal place of business and majority of employees are outside California. 4. Requires group health plans, health insurers, and all other forms of insurance that provide dependent coverage to provide coverage for a registered domestic partner that is equal to the coverage provided to a spouse. 5. Provides that any group health plan contract, health insurance policy, or any other insurance policy, shall be deemed to provide coverage for a registered domestic partner that is equal to the coverage provided to a spouse. This bill requires that every policy or certificate for health insurance that is marketed, issued, or delivered to a resident of California, regardless of the situs of the contract or master group policy holder must offer or provide coverage for a registered domestic partner that is equal to the coverage provided to the spouse of an employee, insured, or policyholder. Background Extraterritoriality . Employers located in one state often employ individuals who reside in another state, or have CONTINUED SB 757 Page 3 employees in multiple states. Many such employers purchase a single group health plan or insurance policy covering all of their employees, wherever they are located, which results in such group plans and policies providing coverage to residents of more than one state. In most states, the location of the employer's headquarters dictates which state's insurance regulations apply, not the location of the employee, as is the case with individual insurance products. For example, if an employer is headquartered in New York and has some employees living in New Jersey, New York insurance regulations will apply to the insurance coverage of those employees who live in New Jersey. This is similar to California law. An exception to this rule occurs in states that choose to exercise territorial jurisdiction; these states are known as extraterritorial states. States with extraterritorial laws require health insurers to provide benefits based on the laws of the state where an employee resides, regardless of where the employer is located. There are currently 12 states that exercise territorial jurisdiction of insurance laws for health insurance policies. They include Alaska, Arkansas, Connecticut, Delaware, Indiana, Kansas, Mississippi, Montana, North Carolina, Oklahoma, Utah and Washington. Any other state's group health insurance laws do not apply in these states. This means that a policy issued by a New York-based insurer to a New York employer for an employee residing in Connecticut is subject to Connecticut's insurance regulations and the New York insurer must issue a certificate of insurance that complies with Connecticut insurance law. Comment Existing law, AB 2208 (Kehoe), Chapter 488, Statutes of 2004, establishes the California Insurance Equality Act, which requires all types of insurance, including health insurance, to provide coverage to registered domestic partners equal to that provided to a spouse. This bill, with the words "regardless of the situs of the contract or master policyholder," seeks to clarify that CONTINUED SB 757 Page 4 this parity requirement extends to insurance provided to California residents by employers located out-of-state with out-of-state insurance contracts or policies. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2011-12 2012-13 2013-14 Fund DMHC enforcement unknown, potentially minor to significant Special* * Managed Care Fund SUPPORT : (Verified 5/17/11) Equality California (source) California Association of Marriage and Family Therapists California Communities United Institute ARGUMENTS IN SUPPORT : Equality California, the sponsor of this bill, asserts that employees of out-of-state companies who live in California and are in a domestic partnership are often the victims of discrimination because their employer contracts with an out-of-state insurer that does not provide equal benefits to domestic partners. Because of this practice, domestic partners and employers are often forced to switch insurers to purchase coverage that treats spouses and domestic partners equally. Equality California believes that this bill ensures that such out-of-state insurers must abide by the same nondiscrimination laws that California insurers already do. Writing in support, the California Association of Marriage and Family Therapists (CAMFT) argues that the 2004 California Insurance Equality Act was intended to provide a necessary and consistent standard of nondiscrimination in CONTINUED SB 757 Page 5 insurance by ensuring that insurance companies treat domestic partners in the same manner as spouses in the purchase of insurance. CAMFT believes this bill ensures that out-of-state plans and insurers also adhere to the nondiscrimination laws of California, thereby assuring legislative intent behind the California Insurance Equality Act. CTW:kc 5/17/11 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED