BILL ANALYSIS �
AB 314
Page 1
ASSEMBLY THIRD READING
AB 314 (Pan)
As Amended April 9, 2013
Majority vote
HEALTH 14-5 APPROPRIATIONS 12-5
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|Ayes:|Pan, Ammiano, Atkins, |Ayes:|Gatto, Bocanegra, |
| |Bonilla, Bonta, Chesbro, | |Bradford, |
| |Gomez, | |Ian Calderon, Campos, |
| |Roger Hern�ndez, Rendon, | |Eggman, Gomez, Hall, |
| |Mansoor, Mitchell, | |Holden, Pan, Quirk, |
| |Nazarian, V. Manuel | |Ammiano |
| |P�rez, Wieckowski | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Logue, Maienschein, |Nays:|Harkey, Bigelow, |
| |Nestande, Wagner, Wilk | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Prohibits annual or lifetime benefit limits in a
health plan directly operated by a bona fide public or private
college or university to its students, faculty, staff,
administration, and their respective dependents.
EXISTING LAW :
1)Provides for the regulation of health plans by the Department
of Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene Act), except that a plan
directly operated by a bona fide public or private institution
of higher learning which directly provides health care
services only to its students, faculty, staff, administration,
and their respective dependents is exempt from the Knox-Keene
Act.
2)Requires, to the extent required by federal law, every health
plan and health insurer that issues, sells, renews, or offers
contracts or policies for health care coverage to comply with
the annual and lifetime benefit requirements of the federal
Affordable Care Act (ACA) and any rules or regulations issued
under that law, in addition to any state laws or regulations
that do not prevent the application of those requirements.
AB 314
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3)Defines, pursuant to federal regulations, student health
insurance coverage as a type of individual health insurance
coverage that is a written agreement between an institution of
higher education and a health insurance issuer, and provided
to students enrolled in that institution and their dependents
who meet certain conditions.
4)Requires, pursuant to federal regulations, student health
insurance for policy years beginning on or after January 1,
2014, to comply with the annual dollar limit requirements, as
specified. Phases in the prohibition prior to 2014 by
allowing before 2012 limits no lower than $100,000, and after
2012 but before 2014 limits no lower than $500,000. These
regulations do not apply to self-funded student health plan
arrangements.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, given the limited role for DMHC in enforcing just one
provision of the comprehensive body of law regulating health
plans, this bill's fiscal impact should be minor, probably less
than $100,000. The actual cost depends on the number of plans
falling under the bill's provisions and the extent to which any
enforcement is needed.
COMMENTS : ACA provisions require that group plans with annual
dollar limits set those limits at increasingly higher amounts
until January 1, 2014, when most plans issued or renewed are
banned from having an annual dollar limit on coverage. Annual
or lifetime dollar benefit limits are dollar maximums imposed by
a health plan on the amount of medical services covered for an
enrollee. An insurance company could impose a total lifetime
dollar limit on benefits or limits on specific benefits, or a
combination of the two. After a lifetime limit is reached, the
insurance plan will no longer pay for covered services.
Self-funded student health insurance plans do not have to comply
with ACA provisions, including provisions related to lifetime
and annual dollar limit benefits. According to proposed federal
rules on minimum essential coverage, self-funded plans offered
by institutions of higher education will be designated as
minimum essential coverage for the purposes of the ACA.
Background: Student Health Plans and Benefit Limits . The issue
addressed by this bill has drawn media attention due to
AB 314
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instances of students facing serious illnesses such as cancer
who then discover while undergoing treatment that their
insurance does not fully cover the illness. An estimated 200,000
to 300,000 students across the country are covered by these
health plans. The University of California Student Health
Insurance Plan (UC SHIP) enrolled more than 138,000 UC
undergraduate and graduate students and their dependents in fall
2012. Current benefit caps for UC SHIP include a $400,000
lifetime coverage cap and a $10,000 annual prescription drug
cap. Since 2010, UC SHIP administrators estimate that 11
students surpassed the lifetime benefits cap, and approximately
150 students exceeded the prescription drug benefit cap. When
this bill was heard in the Assembly Health Committee, UC
provided testimony indicating the possibility the cap would be
raised, although it is not clear at this time when an increase,
if it occurs, will be effective.
Analysis Prepared by : Paula Villescaz and Teri Boughton /
HEALTH / (916) 319-2097
FN: 0000233