BILL ANALYSIS Ó
AB 248
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CONCURRENCE IN SENATE AMENDMENTS
AB
248 (Roger Hernández)
As Amended June 29, 2015
Majority vote
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|ASSEMBLY: | |(April 30, |SENATE: |24-15 | (August 24, |
| |51-27 |2015) | | |2015) |
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Original Committee Reference: HEALTH
SUMMARY: Prohibits a health care service plan (plan) or health
insurer (insurer) offering plans or policies in the large group
market from marketing, offering, amending or renewing a large
group plan contract that provides a minimum value of less than
60%.
The Senate amendments specify that the bill applies to
non-grandfathered plans; and, exclude policies that provide
coverage of Medicare services, as well as grandfathered
insurance policies that provide basic health care services, as
defined in the Knox-Keene Health Care Service Plan Act of 1975,
without annual or lifetime benefits.
COMMENTS: According to the author, large employers, unlike
individual and small employers are not required to provide
essential health benefits (EHBs) to their workers, resulting in
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some health insurers selling limited benefit health plans, such
as prevention-only or indemnity insurance to large employers,
primarily those with low-wage workers. The author states that
through a loophole in federal law, these large employers have
financial incentives to offer limited benefit plans, often
referred to as "skinny plans," to their employees, leaving
workers with substandard coverage and vulnerable if they get
sick. The author argues that this bill closes this federal
loophole by ensuring that a limited benefit plan can only be
sold as supplemental insurance. The author concludes by stating
that if our small business community is required to provide
comprehensive insurance to its employees, large employers have
no excuse to not offer the same.
1)Differences in large group coverage. Health coverage for the
large group market (50 or more employees) is subject to
different rules than individual and small group coverage under
the Patient Protection and Affordable Care Act (ACA). For
example, plans and policies sold in the large group market are
not required offer benefit packages that include all EHBs.
Additionally, while individual and small group plans must meet
specified actuarial value requirements, plans and policies
sold in the large group market adhere to minimum value.
Under the ACA, for the purposes of employer and individual
responsibility requirements, employer-sponsored coverage must
have 60% minimum value. However, current law does not
prohibit plans or policies that have less than 60% minimum
value from being sold in the large group market.
2)Minimum essential coverage (MEC). The ACA requires
individuals and their family members to have qualifying health
coverage, known as MEC. Individuals who do not meet
requirements for MEC may be subject to a penalty (currently
the greater of $325 or 2% of income) when filing their federal
income tax return. The ACA provides certain exceptions to MEC
requirements. For example, an individual is exempt from
requirements to maintain MEC when the lowest-price coverage
available would cost more than 9.5% of household income, or if
the individual's employer-sponsored coverage does not meet 60%
minimum value. However, recent federal guidance, reviewed and
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updated by the issued by the Internal Revenue Service on March
27, 2015, states that individuals who enroll an
employer-sponsored may not be eligible for the premium tax
credit even if the plan is unaffordable or fails to provide
minimum value. As such, an individual who accepts
employer-sponsored coverage that does not meet 60% minimum
value may not be eligible for premium tax credits through
Covered California.
3)Employer responsibility requirements. The ACA also imposes a
penalty on employers, with at least 50 full-time employees,
which do not offer qualifying coverage, meaning coverage that
meets 60% minimum value, and which have at least one full-time
employee who qualifies for premium tax credits to purchase
insurance through an exchange. The penalty is $2,000 for each
full-time employee. Additionally, the ACA imposes penalties
on large employers that do offer coverage, but that offer
coverage that does not meet 60% minimum value or that is not
affordable to employees. In this scenario, the penalty is set
at the lesser of $3,000 for each employee receiving a premium
tax credit through an exchange, or $2,000 for each of their
full-time employees (again, excluding the first 30 employees).
Analysis Prepared by:
Kelly Green / HEALTH / (916) 319-2097 FN:
0001245