BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1034
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          SENATE THIRD READING
          SB 1034 (Monning)
          As Amended June 26, 2014
          Majority vote

           SENATE VOTE  :35-0  
           
           HEALTH              17-0        APPROPRIATIONS      15-0        
           
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          |Ayes:|Pan, Maienschein,         |Ayes:|Gatto, Bigelow,           |
          |     |Bonilla, Bonta, Chesbro,  |     |Bocanegra, Bradford, Ian  |
          |     |Gomez, Gonzalez,          |     |Calderon, Donnelly,       |
          |     |Roger Hernández,          |     |Eggman, Gomez, Holden,    |
          |     |Lowenthal, Mansoor,       |     |Linder, Pan, Quirk,       |
          |     |Nazarian, Nestande,       |     |Ridley-Thomas, Wagner,    |
          |     |Patterson, Ridley-Thomas, |     |Weber                     |
          |     |Rodriguez, Wagner,        |     |                          |
          |     |Wieckowski                |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY :  Prohibits health plans and health insurance policies  
          in the group market from imposing a waiting or affiliation  
          period.  States legislative intent to:  a) prohibit a group  
          health plan or insurer from imposing a separate waiting or  
          affiliation period in addition to any employer-imposed waiting  
          period; and b) permit a group health plan or insurer to  
          administer a waiting period imposed by a plan sponsor, as  
          specified.

           EXISTING LAW  : 

          1)Establishes the Department of Managed Health Care (DMHC) to  
            regulate health plans and the California Department of  
            Insurance (CDI) to regulate health insurers.

          2)Allows health plans and insurers, as specified, in the group  
            market to apply a waiting period of up to 60 days as a  
            condition of employment if applied equally to all eligible  
            employees and dependents and if consistent with the federal  
            Patient Protection and Affordable Care Act (ACA).  Prohibits a  
            group health maintenance organization from imposing any  
            affiliation period that exceeds 60 days.  During the waiting  
            or affiliation period, which runs concurrently, the plan or  
            insurer is not required to provide health care services and is  








                                                                  SB 1034
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            prohibited from charging a premium to the subscribers or  
            enrollees.

          3)Prohibits a health plan or insurer, as specified, for  
            individual coverage from imposing any waiting or affiliation  
            period.

          4)Under the federal ACA, prohibits a group health plan and a  
            health insurance issuer offering group or individual health  
            insurance coverage from applying any waiting period, as  
            defined, that exceeds 90 days.

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1)Potential first year costs in the range of $100,000 and minor  
            ongoing costs in future years to DMHC to review compliance by  
            health plans and take enforcement actions (Managed Care Fund).

          2)Minor costs to CDI to ensure compliance (Insurance Fund).
          COMMENTS  :  The ACA, among its many reforms, includes a provision  
          which prohibits an otherwise eligible employee or dependent from  
          being required to wait more than 90 days before coverage becomes  
          effective.  According to the author, there have been numerous  
          stakeholder discussions about the interaction between  
          California's existing 60-day waiting period requirement on plans  
          and insurers and the ACA's 90-day waiting period requirement.   
          The author indicates that this bill resolves the confusion  
          caused by the unique interaction with California law and federal  
          regulations.  The author contends that, since the ACA now  
          requires guaranteed issue and no preexisting condition  
          exclusions, there is no reason that health insurance companies  
          should have a waiting period before coverage can go into effect.  
           

          This bill will eliminate the 60-day limit in state law and  
          prohibit group health plans and insurers from imposing any  
          waiting periods.  However, because the state does not regulate  
          benefits that employers provide their employees, the federal  
          90-day limit and its implementing regulations will still apply  
          to employers.  Moreover, this bill includes intent language to  
          ensure that employers may continue to require waiting periods  
          that comply with federal law.

          Health Access California, in support, argues this bill conforms  








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          to federal law with respect to waiting periods for health  
          insurance.  According to Health Access, federal law and guidance  
          provide that employers may impose a waiting period of 90 days on  
          health coverage for employees and dependents, however; the point  
          at which that period begins is subject to convoluted and  
          complicated federal guidance, which the state cannot replicate  
          because state regulation of employer health benefits is  
          preempted by the Employee Retirement Income Security Act of  
          1974.  The California Association of Health Underwriters, the  
          National Association of Insurance and Financial Advisors of  
          California, and the Independent Insurance Agents and Brokers of  
          California, also in support, write that this bill will eliminate  
          confusion between state and federal rules governing health care  
          enrollment periods.  This will allow California employers,  
          similar to all other employers in the country, to follow the  
          ACA's 90-day eligibility waiting periods.

          There is no opposition on file.  


           Analysis Prepared by  :    Ben Russell / HEALTH / (916) 319-2097 


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