BILL ANALYSIS Ó SB 1446 Page 1 Date of Hearing: June 18, 2014 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 1446 (DeSaulnier) - As Amended: May 27, 2014 Policy Committee: HealthVote:18-0 Urgency: Yes State Mandated Local Program: No Reimbursable: No SUMMARY This bill delays until January 1, 2015 the requirement that health plans and policies purchased by small employers comply with specified reforms in the federal Patient Protection and Affordable Care Act (ACA), and includes related changes such as notice requirements. FISCAL EFFECT Potential minor one-time costs to the Department of Insurance and the Department of Managed Health Care to incorporate the bill's requirements into their regulation of health plans and policies (Insurance Fund/Managed Care Fund). COMMENTS 1)Purpose . This bill seeks to conform California state law to a transition policy announced by the federal government, which allows small groups to continue offering non-compliant plans and policies for a period of time, even though the plans do not qualify as "grandfathered plans." This bill is sponsored by the Department of Insurance. 2)Background . The ACA requires plans and policies in the individual and small group markets to comply with numerous market reforms, including the issuance of coverage to anyone who applies, coverage of a certain minimum set of benefits called essential health benefits, and limitations on out-of-pocket costs, among others. State and federal law already exempt grandfathered plans-plans in effect on March 23, 2010 that are substantially the same and have had continuous enrollment-from ACA reforms. SB 1446 Page 2 ACA reforms are generally effective for all other individual and small-group plans issued or renewed on or after January 1, 2014. President Obama announced a transitional policy in November 2013, however, to allow employers to renew non-compliant plans until October 1, 2014 without running afoul of federal law. This policy was later changed to allow employers to renew non-compliant plans until October 1, 2016. Employers are only allowed to make use of this transitional policy to the extent allowed by state law, and California law currently precludes employers from opting to keep non-compliant plans. This bill would allow them to renew these plans until January 1, 2015 and keep them in effect until December 31, 2015. Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081