BILL ANALYSIS Ó
AB 1305
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CONCURRENCE IN SENATE AMENDMENTS
AB
1305 (Bonta)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: |78-0 |(June 1, 2015) |SENATE: |40-0 |(September 9, |
| | | | | |2015) |
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Original Committee Reference: HEALTH
SUMMARY: Prohibits, for family coverage, any individual within
a family to have a maximum-out-of-pocket limit or deductible
that is more than the maximum-out-of-pocket limit or deductible
limit for individual coverage under the health plan contract.
The Senate amendments delay implementation of the bill's
requirements regarding individual deductible limits in the large
group market until January1, 2017; correct a cross-reference
with regard to the indexing of small group health plan and
policy deductible amounts; and make other clarifying changes.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill will result in:
1)One-time costs of about $440,000 for policy development and
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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).
2)One-time costs of about $40,000 in 2015-16 and $45,000 in
2016-17 to review plan filing for compliance by the Department
of Insurance (Insurance Fund). Ongoing costs are expected to
be minor.
3)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.
COMMENTS: According to the author, this bill prohibits a health
plan or insurer from imposing a higher deductible and limit on
out-of-pocket costs on an individual simply because the
individual is a member of a family. The author states that some
family plans and policies include deductibles and out-of-pocket
limits for individuals in the plan or policy, so when a family
member gets sick, he or she only has to reach the individual
deductible or cost-sharing limit in order for coverage to
kick-in. However, other plans and insurers do not include these
individual deductibles and out-of-pocket cost limits within a
family plan or policy, which means that families with one member
who has more expensive health care needs would have to pay
thousands of dollars in out-of-pocket costs to reach the family
limits before coverage kicks in. By limiting deductibles and
out-of-pocket limits in family plans to what the consumer would
otherwise pay under individual coverage, this bill ensures
consumers are not unfairly charged for doing what is right by
getting family coverage.
Under current practice, in a family plan, deductibles and
maximum out-of-pocket limits may be structured in two ways.
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Some plans and policies impose an aggregate deductible or
out-of-pocket maximum in family coverage. Under the aggregate
structure, the total family deductible must be paid
out-of-pocket before health insurance starts paying for health
care services incurred by any family member. Take, for example,
a plan or policy that has a $1,500 deductible for individual
coverage, and a $3,000 deductible for a family coverage. Under
this structure of aggregate deductibles, an individual in the
family who falls ill would have to reach the $3,000 deductible
before coverage would start, even though that same individual
would have a $1,500 deductible if they had an individual plan.
In contrast, most family plans and policies, in addition to an
overall family deductible and out-of-pocket limit, embed lower
deductibles and out-of-pocket limits for individuals in the
family plan. Under this structure, one individual in the family
plan has to reach his or her own lower individual deductible or
out-of-pocket limit for coverage to commence, regardless of
whether the larger family deductible is met. Using the same
example in the preceding paragraph, the individual in the family
who falls ill would only have to meet a $1,500 deductible before
his or her coverage kicks in. This bill would require plans and
policies to use this structure of embedded deductibles and
out-of-pocket limits.
Beginning in 2014, the federal Patient Protection and Affordable
Care Act (Affordable Care Act) sets forth limits on the amount
of maximum out-of-pocket cost sharing an individual or family
pays for their health coverage. The federal maximum
out-of-pocket cost limit for 2015 is $6,600 for an individual
plan, and $13,200 for a family plan. Under federal regulations,
an individual's cost-sharing may never exceed the individual
maximum out-of-pocket limit, regardless of whether the
individual is in a family plan. This bill is consistent with
these federal regulations. Additionally, in 2015, the state's
health benefits exchange, Covered California, adopted a standard
benefit design for 2016 which includes similar provisions as
those contained in this bill.
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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, and the only products that
this bill would apply to are a small number of high-deductible
health plans that have aggregated deductibles or out-of-pocket
maximums for family members.
This bill is sponsored by Health Access California, and
supported by consumer groups, advocacy organizations, and labor
unions. Supporters state that this bill will protect
individuals in family coverage who become ill or injured and who
would otherwise face much higher deductibles and out-of-pocket
costs than if they had individual coverage.
No opposition has been received.
Analysis Prepared by:
Kelly Green / HEALTH / (916) 319-2097 FN:
0002295