BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 503 (Hernandez) - Cal-COBRA: disclosures
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: May 5, 2015 |Policy Vote: HEALTH 9 - 0 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: Yes |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 18, 2015 |Consultant: Brendan McCarthy |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 503 would delete an obsolete notification
requirement on health plans and health insurers and replace it
with a new notification requirement providing information to
consumers about the availability of health care coverage through
Covered California, Medi-Cal, or through an insured spouse.
Fiscal
Impact:
One-time costs of $20,000 for the Department of Insurance to
review required notices for health insurers (Insurance Fund).
Minor costs for the Department of Managed health care to
review required notices for health plans (Managed Care Fund).
Unknown costs for additional enrollment in Medi-Cal (General
SB 503 (Hernandez) Page 1 of
?
Fund and federal funds). The new notice required under the
bill would provide consumers with information about their
opportunity to receive health care coverage through Covered
California or Medi-Cal if they decline to continue their
employer-sponsored coverage. Giving consumers information
about the availability of Medi-Cal coverage may encourage some
consumers to opt to apply for Medi-Cal, rather than purchasing
continuation coverage from their current insurer or health
plan. The extent to which this will occur is unknown. This
effect may be small, given the significant public awareness of
access to coverage through Covered California and Medi-Cal
following the implementation of the Affordable Care Act and
the imposition of an individual mandate to have health care
coverage. However, even a very small overall increase in
Medi-Cal enrollment would have a significant fiscal impact,
since the cost to provide coverage to an adult in Medi-Cal
ranges from about $1,200 per year to $6,000 per year (General
Fund and federal funds).
Background: Under current federal law, an employee who leaves the group
health care coverage provided by an employer can opt to continue
to receive health care coverage from the same health plan or
insurance policy that was offered by the employer. (For example,
an employee who laid off from a job and does not yet have a new
job that provides health care coverage.) The individual is
required to pay the full cost of such coverage. Under federal
law, this requirement applies to employers with more than 20
employees and the employee is required to pay 102% of the
premium. Under state law, this requirement applies to employers
with 2 to 19 employees and the individual is required to pay
110% of the premium. (These requirements are commonly referred
to as COBRA and Cal-COBRA coverage, respectively.)
Under current law, health insurers and health plans are required
to provide consumers with information regarding their options
for continuing their employer-sponsored health care coverage (at
their own expense). The existing notification includes
information that no longer relevant, due to changes to health
insurance markets made by the Affordable Care Act and related
state legislation.
Prior to the implementation of the Affordable Care Act, health
insurers and health plans could use an individual's medical
SB 503 (Hernandez) Page 2 of
?
history to set premium rates or decline an individual's
application for health care coverage. The Affordable Care Act
prohibits that kind of underwriting, requiring the "guaranteed
issue" of health care coverage in the individual health care
market.
Proposed Law:
SB 503 would delete an obsolete notification requirement on
health plans and health insurers and replace it with a new
notification requirement providing information to consumers
about the availability of health care coverage through Covered
California, Medi-Cal, or through an insured spouse.
Specifically, the bill would delete a requirement that health
plans and health insurers notify individuals that if they
decline to continue their employer sponsored coverage, their
ability to secure new coverage may be limited by their health
status. However, the bill would reinstate that notification
requirement, if a specific provision of the federal Affordable
Care Act prohibiting insurance underwriting by health status is
repealed.
The bill would specify the information on coverage options
through Covered California and Medi-Cal that must be provided to
consumers.
-- END --