BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 20
AUTHOR: Hernandez
AMENDED: May 8, 2014
HEARING DATE: May 29, 2014
CONSULTANT: Boughton
SUBJECT : Individual health care coverage: enrollment periods.
SUMMARY : Establishes an annual open enrollment period for
purchasers in the individual health insurance market for the
policy year beginning on January 1, 2015, from November 15, 2014
to February 15, 2015 inclusive. Contains an urgency clause that
will make this bill effective upon enactment.
Existing state law:
1.Requires on or after October 1, 2013, a plan or insurer to
fairly and affirmatively offer, market, and sell all of the
plan's or insurer's health benefit plans that are sold in the
individual market for policy years on or after January 1,
2014, to all individuals and dependents in each service area
in which the plan or insurer provides or arranges for the
provision of health care services.
2.Requires a plan or insurer to limit enrollment in individual
health benefit plans to open enrollment periods and special
enrollment periods, as specified.
3.Requires a plan or insurer to provide an initial open
enrollment period from October 1, 2013 to March 31 2014,
inclusive and annual enrollment periods for policy years
beginning on or after January 1, 2015, from October 15 to
December 7, inclusive, of the preceding year.
4.Establishes a limited open enrollment period beginning on the
date that is 30 calendar days prior to the date the policy
year ends in 2014.
5.Establishes a health benefit exchange pursuant to the
Affordable Care Act (ACA), referred to as Covered California,
where qualified health plans (QHPs) offer health plan
contracts or health insurance policies for individual
purchasers and small businesses (through the Small Business
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Health Options Program or SHOP) categorized in the following
metal tiers: Platinum; Gold; Silver, Bronze; and,
Catastrophic.
6.Establishes enrollment periods for the small group market that
are consistent with the ACA and federal regulations, which
permit a qualified employer to purchase coverage for its small
group at any point during the year. The employer's plan year
must consist of the 12-month period beginning with the
qualified employer's effective date of coverage.
Existing federal regulations
1. Requires an Exchange to provide an initial open
enrollment period and annual open enrollment periods during
which qualified individuals may enroll in a QHP and
enrollees may change QHPs.
2. Authorizes an Exchange to only permit a qualified
individual to enroll in a QHP or an enrollee to change QHPs
during the initial open enrollment period of October 1,
2013 through March 31, 2014, the annual open enrollment
period of November 15, 2014 through February 15, 2015, or a
special enrollment period for which the qualified
individual has been determined eligible.
3. Authorizes an Exchange to allow issuers to provide for a
coverage effective date of January 1, 2014 for plan
selections received after December 23, 2013 and, on or
before January 31, 2014, if a QHP issuer is willing to
accept such enrollments.
4. Requires starting in 2014, the Exchange to provide a
written annual open enrollment notification to each
enrollee no earlier than September 1, and no later than
September 30.
5. Requires for the benefit year beginning on January 1,
2015, the Exchange to ensure coverage is effective January
1, 2015, for QHP selections received by the Exchange on or
before December 15, 2014, February 1, 2015, for QHP
selections received by the Exchange from December 16, 2014
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through January 15, 2015, and March 1, 2015, for QHP
selections received by the Exchange from January 16, 2015
through February 15, 2015.
6. Authorizes the Exchange to automatically enroll
qualified individuals, at such time and in such manner as
the federal Department of Health and Human Services (HHS)
may specify, and subject to the Exchange demonstrating to
HHS that it has good cause to perform such automatic
enrollments.
This bill:
1.Establishes an annual open enrollment period for the policy
year beginning on January 1, 2015, from November 15, 2014 to
February 15, 2015 inclusive.
2.Contains an urgency clause that will make this bill effective
upon enactment.
FISCAL EFFECT :
COMMENTS :
1.Author's statement. According to the author, in order to
comply with the open enrollment date change announced by HHS
and to avoid serious consumer and health insurance carrier
confusion, this bill modifies the open enrollment dates for
the 2015 policy year from those set forth in current law to
November 15, 2014 through February 15, 2015. This bill is also
necessary to ensure that the open enrollment period outside
Covered California remains compatible with open enrollment in
Covered California.
2.ACA and California Implementation. The ACA, enacted on March 23,
2010 and amended on March 30, 2010 represents a major expansion of
U.S. health care coverage through an expansion and simplification
of the Medicaid program and the adoption of major reforms of the
health insurance market. Most transformational are changes to the
small group and individual insurance markets, such as mandating
guaranteed issuance of coverage, eliminating pre-existing
condition exclusions, limiting factors upon which premium rates
can be developed, and authorizing the creation of health benefit
exchanges either at the state or federal level.
California took early steps to establish Covered California, pass
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rate review requirements, establish essential health benefits, and
adopt insurance market reforms to implement aspects of the ACA, in
some cases before federal regulatory guidance was issued or
finalized. An overarching objective in the development of the
California implementing legislation was to ensure, to the extent
possible, that laws applicable to plans and insurers participating
in Covered California were also applied to plans and insurers not
participating in Covered California to keep a level regulatory
playing field. For example, open and special enrollment periods
not only apply to QHPs but also to health plans and insurers not
participating in Covered California. As such, for the individual
market, an initial open enrollment period of October 1, 2013 to
March 31, 2014 and annual open enrollment period of October 15 to
December 7 apply to QHPs and health plans and insurers not
participating in the Exchange. HHS changed the annual open
enrollment period for the 2015 benefit year such that it would
begin on November 15, 2014 and extend through January 15, 2015.
The final rule revised the January 15, 2015 date to February 15,
2015. HHS made these changes to give health insurance carriers
additional time before they would need to set their 2015 rates and
submit their QHPs applications, give states and HHS more time to
prepare for open enrollment, and give consumers more time to shop
for coverage.
3.Related legislation. SB 1446 (DeSaulnier), would authorize a
small employer health plan or health benefit plan (another name
for health insurance policy) in effect on December 31, 2013, that
does not qualify as a grandfathered health plan or health benefit
plan, to avoid compliance with specified provisions of the ACA and
related state law, and, be renewed until January 2015, at which
time compliance with the ACA and state law is required. Contains
an urgency clause that will make this bill effective upon
enactment.
4.Prior legislation.
a. SB X1 2 (Hernandez), Chapter 2, Statutes of 2013 applied
the individual insurance market reforms of the ACA to health
plans regulated by DMHC and updates the small group market
laws for health plans to be consistent with final federal
regulations.
b. AB X1 2 (Pan), Chapter 1, Statutes of 2013 established
health insurance market reforms contained in the ACA specific
to individual purchasers, such as prohibiting insurers from
denying coverage based on pre-existing conditions and makes
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conforming changes to small employer health insurance laws
resulting from final federal regulations.
c. SB 900 (Alquist), Chapter 659, Statutes of 2010, and AB
1602 (Perez), Chapter 655, Statutes of 2010, established the
California Health Benefit Exchange.
d. AB 1180 (Pan), Chapter 441, Statutes of 2013, made
inoperative several provisions in existing law that
implement the health insurance laws of the federal Health
Insurance Portability and Accountability Act of 1996 and
additional provisions that provide former employees
rights to convert their group health insurance coverage
to individual market coverage without medical
underwriting. Established notification requirements
informing individuals affected by AB 1180 of health
insurance available in 2014.
e. SB X1 2 (Hernandez), Chapter 2, Statutes of 2013-14
First Extraordinary Session, and AB X1 2 (Pan), Chapter
1, Statutes of 2013-14 First Extraordinary Session,
conform California law to the ACA as it relates to the
ability to sell and purchase individual health insurance
by prohibiting pre-existing condition exclusions,
establishing modified community rating, requiring the
guaranteed issue and renewal of health insurance, and
ending the practice of carriers conditioning health
insurance on health status, medical condition, claims
experience, genetic information, or other factors. The
bills also update the small group market laws for health
plans to be consistent with final federal regulations.
5.Support. Proponents indicate that this bill would conform the
open enrollment periods in response to an inconsistency
created by a recent change in federal guidance. If left
unchecked, the open enrollment period for off Exchange plans
would be a month before QHPs. This could create confusion for
prospective enrollees, individuals transferring plans, and the
public at large. A consistent enrollment period as provided
in this bill is much more transparent and a level approach to
what can sometimes be a confusing healthcare marketplace. The
California Association of Health Plans believes it is
important to make this change soon so that there is clarity on
the matter for health plans, consumer and state regulators.
Also, it is important to ensure that the open enrollment
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period for Covered California is compatible with open
enrollment in the non-Exchange market. Western Center on Law
and Poverty thinks the federal time frame is important to give
adequate time for open enrollment. Health Access California
states that given the challenges ahead, delaying and extending
the next open enrollment period makes sense.
SUPPORT AND OPPOSITION :
Support: Anthem Blue Cross
Association of California Life & Health Insurance
Companies
California Association of Health Plans
Health Access California
Western Center on Law & Poverty
Oppose:
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