BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 1305 (Bonta) - Limitations on cost sharing: family coverage ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 25, 2015 |Policy Vote: HEALTH 8 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Brendan McCarthy | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 1305 would require out-of-pocket expenditure limits and deductibles for family health plan or health insurance coverage to include out-of-pocket expenditure limits and deductibles for each individual member of the family that are no more than the amounts allowed for individual coverage. Fiscal Impact: One-time costs of about $440,000 for policy development and adopting regulations and ongoing costs of about $340,000 per year for the Department of Managed Health Care to update policies and respond to public information requests (Managed Care Fund). One-time costs of about $40,000 in 2015-16 and $45,000 in 2016-17 to review plan filings for compliance by the Department of Insurance (Insurance Fund). Ongoing costs are expected to be minor. AB 1305 (Bonta) Page 1 of ? No significant costs to the Medi-Cal program or for health care coverage provided by CalPERS are anticipated. According to the California Health Benefits Review Program, health plans and health insurance policies provided by Medi-Cal and CalPERS are already compliant with the requirements of the bill and therefore would not experience any increased costs. Background: Beginning in 2014, under the federal Patient Protection and Affordable Care Act (Affordable Care Act), total annual out-of-pocket expenditures for health care coverage in the individual, small group, and health benefit exchange markets is limited to roughly $6,000 for an individual and $13,000 for a family. In addition, annual deductibles in the small group market are generally limited to $2,000 for an individual and $4,000 for a family. Under current practice, health plans and health insurance products can include both individual out-of-pocket maximums and deductibles as well as family out-of-pocket maximums and deductibles. For example, a health plan for a family of four could have individual deductibles of $1,500 as well as an aggregated family deductible of $3,000. The family's health plan could require both the individual deductible and the family deductible to be met before the health plan coverage begins. For example, if only one member of the family needed significant medical care, that individual could need to pay for medical services up to $3,000 (the family deductible) before coverage began. Whereas, if that member of the family purchased similar coverage as an individual, he or she may only have to pay $1,500 before coverage began. According to the California Health Benefit Review Program, about 98% of health care coverage in the state is already compliant with the requirements of the bill. There are a small number of high-deductible health plans that have aggregated deductibles or out-of-pocket maximums for family members. Proposed Law: AB 1305 would require out-of-pocket expenditure limits and deductibles for family health plan or health insurance coverage to include out-of-pocket expenditure limits and deductibles for each individual member of the family that are no more than the AB 1305 (Bonta) Page 2 of ? amounts allowed for individual coverage. Implementation of the bill's provisions relating to deductibles in large group coverage would go into effect on July 1, 2016. Related Legislation: AB 339 (Gordon) would restrict outpatient prescription drug cost-sharing, require coverage for specified drugs under certain circumstances, and standardize tiers for prescription drug coverage. That bill will be heard in this committee. SB 639 (Hernandez, Statutes of 2014) codified federal requirements relating to out-of-pocket maximum cost-sharing. Staff Comments: The only costs that may be incurred by a local agency relate to crimes and infractions. Under the California Constitution, such costs are not reimbursable by the state. -- END --