BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: SB 503
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|AUTHOR: |Hernandez |
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|VERSION: |April 20, 2015 |
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|HEARING DATE: |April 29, 2015 | | |
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|CONSULTANT: |Teri Boughton |
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SUBJECT : Cal-COBRA: disclosures
SUMMARY : Deletes an obsolete warning notice required of health plans
and insurers providing group coverage and replaces it with a
notice providing information about obtaining other health
coverage, including through Medi-Cal or Covered California.
Existing law:
1.Establishes the Department of Managed Health Care (DMHC) to
regulate health plans under the Knox-Keene Health Care
Services Plan Act of 1975 and the California Department of
Insurance (CDI) to regulate health insurers; the California
Health Benefit Exchange (referred to as Covered California) to
compare and make available through selective contracting with
health plans and health insurers, insurance for individual and
small business purchasers as authorized under the Patient
Protection and Affordable Care Act (ACA); and, the Department
of Health Services to administer Medi-Cal, a health care
program for qualified low-income adults, children, and people
with disabilities.
2.Requires every health plan and health insurer disclosure form
to covered employees of group benefit plans that the enrollee
or insured may be entitled to continuation of group coverage
and that additional information regarding eligibility for this
coverage may be found in the plan's or insurer's evidence of
coverage.
3.Requires every disclosure issued, amended, or renewed on and
after July 1, 2006, for a group benefit plan to include the
following notice:
"Please examine your options carefully before declining
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this coverage. You should be aware that companies selling
individual health insurance typically require a review of
your medical history that could result in a higher premium
or you could be denied coverage entirely."
This bill:
1.Requires a disclosure issued, amended, or renewed on or after
July 1, 2016, for a group benefit plan to include the
following notice:
"In addition to your coverage continuation options, you may be
eligible for the following:
a Coverage through the state health insurance
marketplace, also known as Covered California. By
enrolling through Covered California, you may qualify for
lower monthly premiums and lower out-of-pocket costs. Your
family members may also qualify for coverage through
Covered California.
b.Coverage through Medi-Cal. Depending on your income, you
may qualify for low or no-cost coverage through the state
Medicaid program that is known as Medi-Cal.
c.Coverage through an insured spouse. If your spouse has
coverage that extends to family members, you may be
eligible to be added on that benefit plan.
Be aware that there may be a deadline to enroll in
some of these options. To find out more about how to
apply for Covered California and Medi-Cal, visit the
Covered California Internet Web site at
http://www.coveredca.com."
2.Requires a group contract between a group benefit plan and an
employer that is issued, amended or renewed on or after July
1, 2016 to require the employer to give the notice in 1) above
to a qualified beneficiary.
3.Deletes an obsolete warning that companies selling individual
health insurance typically require a review of medical history
that could result in higher premium or denial of coverage.
Reinstates this provision if the ACA requirement to have
health insurance is repealed or amended to no longer apply to
the individual market 12 months after the date of that repeal
SB 503 (Hernandez) Page 3 of ?
or amendment.
4.Makes technical conforming changes to update cross references
brought about by the provisions of this bill.
FISCAL
EFFECT : This bill has not been analyzed by a fiscal committee.
COMMENTS :
1.Author's statement. According to the author, the ACA has
brought about significant transformation in the health
insurance market place providing opportunities for employees
to leave group based coverage without the fear of going
uninsured. Prior to the ACA it was very important that people
be made aware of the challenges obtaining health insurance in
the individual market where medical underwriting and denials
of coverage based on health status were permitted. Those
challenges do not exist today. Consumer notifications need to
be updated to reflect coverage options that are now available.
This bill simply revises consumer notices to inform people
about options for other coverage including through Medi-Cal
and Covered California.
2.COBRA. Federal law that governs continuation coverage for
employees leaving group coverage is called the Consolidated
Omnibus Budget Reconciliation Act (COBRA), which applies to
employers who have more than 20 employees, and requires the
terminated employee to pay 102 percent of the premium in order
to maintain coverage. California law, referred to as
Cal-COBRA, applied to employers that have two to 19 employees,
and required the terminated employee to pay 110 percent of the
premium.
3.ACA. The ACA makes statutory changes affecting the regulation
of and payment for certain types of private health insurance.
As of 2014, individuals are required to maintain health
insurance or pay a penalty, with exceptions for financial
hardship (if health insurance premiums exceed 8 percent of
household adjusted gross income), religion, incarceration, and
immigration status. Several insurance market reforms are also
required, such as prohibitions against health insurers
imposing pre-existing health condition exclusions. These
reforms impose new requirements on states related to the
allocation of insurance risk, prohibit insurers from basing
eligibility for coverage on health status-related factors,
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allow the offering of premium discounts or rewards based on
enrollee participation in wellness programs, impose
nondiscrimination requirements, require insurers to offer
coverage on a guaranteed issue and renewal basis, and
determine premiums based on adjusted community rating (age,
family, geography, and tobacco use). Additionally, states
have been permitted to establish health benefit exchanges
where individuals with income below 400 percent of the federal
poverty level can qualify for credits toward their premium
costs and subsidies toward their cost-sharing for insurance
purchased through an exchange. California has established
Covered California, as a state-based exchange that is
operating as an independent government entity with a
five-member Board of Directors.
4.Tie Back. AB X1 2 (Pan), Chapter 1, Statutes of 2013 and SB
X1 2 (Hernandez), Chapter 2, Statutes of 2013 together
implement ACA health insurance reforms in California in the
individual market, and include tie back provisions requested
by the Brown Administration and health insurers. These ACA
tie back provisions make inoperative in state law some ACA
provisions 12 months after the repeal of the federal
requirement that individuals have health insurance, and
reinstate provisions of law that were protective of consumers
prior to the ACA.
5.Prior legislation. AB 1180 (Pan), Chapter 441, Statutes of
2013, makes inoperative because of the ACA several provisions
in existing law that implement state health insurance laws of
the federal Health Insurance Portability and Accountability
Act of 1996 (HIPAA) and additional provisions that provide
former employees rights to convert their group health
insurance coverage to individual market coverage without
medical underwriting. Establishes notification requirements
informing individuals affected by AB 1180 of health insurance
available in 2014.
AB 2 1X (Pan) and SB 2 1X (Hernandez), establishes health
insurance market reforms contained in the ACA specific to
individual purchasers, such as prohibiting insurers from
denying coverage based on pre-existing conditions; and makes
conforming changes to small employer health insurance laws
resulting from final federal regulations.
SB 961 (Hernandez) of 2012, and AB 1461 (Monning), were
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identical bills that would have reformed California's
individual market similar to the provisions in SBX1 2. SB 961
and AB 1461 were vetoed by Governor Brown.
AB 1083 (Monning), Chapter 854, Statutes of 2012, establishes
reforms in the small group health insurance market to
implement the ACA.
AB 2244 (Feuer), Chapter 656, Statutes of 2010, requires
guaranteed issue of health plan and health insurance products
for children beginning in January 1, 2011.
SB 900 (Alquist), Chapter 659, Statutes of 2010, and AB 1602
(Perez), Chapter 655, Statutes of 2010, establishes the
California Health Benefit Exchange.
6.Support. The Western Center on Law and Poverty supports this
bill. According to Western Center, COBRA is a federal program
allowing employees who leave their jobs to buy into their
former employer coverage. It applies to employers with 20 or
more employees. California has a similar program for
continuation coverage for employers with between 2 and 19
employees - "Cal COBRA." SB 503 would add to the required Cal
COBRA notice information regarding Medi-Cal and Covered
California. We have some suggested changes to simplify the
language and make it more uniform across programs and support
advising consumers of this information so they know all of
their health coverage options. For those who are
income-eligible for Medi-Cal or subsidies in Covered
California, that coverage will likely be more affordable than
buying into Cal COBRA.
7.Amendments requested by Western Center on Law and Poverty.
Coverage through Medi-Cal. Depending on your income, you may
qualify for low or no-cost coverage through the state Medicaid
program that is known as Medi-Cal. Your family members may
also qualify for Medi-Cal.
Coverage through an insured spouse. If your spouse has
coverage that extends to family members, you may be eligible
able to be added on that benefit plan.
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Be aware that there may is be a deadline to enroll in some of
these options Covered California though you can qualify for
Medi-Cal anytime . To find out more about how to apply for
Covered California and Medi-Cal, visit the Covered California
Internet Web site at http://www.coveredca.com ."
SUPPORT AND OPPOSITION :
Support: Health Access California
Western Center on Law and Poverty
Oppose: None received
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