BILL ANALYSIS Ó SB 1034 Page 1 SENATE THIRD READING SB 1034 (Monning) As Amended June 26, 2014 Majority vote SENATE VOTE :35-0 HEALTH 17-0 APPROPRIATIONS 15-0 ----------------------------------------------------------------- |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 Page 2 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 SB 1034 Page 3 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 FN: 0004115