BILL ANALYSIS Ó
SB 503
Page 1
SENATE THIRD READING
SB
503 (Hernandez)
As Amended July 16, 2015
Majority vote
SENATE VOTE: 40-0
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Health |19-0 |Bonta, Maienschein, | |
| | |Bonilla, Burke, | |
| | |Chávez, Chiu, Gomez, | |
| | |Gonzalez, Roger | |
| | |Hernández, Lackey, | |
| | |Nazarian, Patterson, | |
| | |Ridley-Thomas, | |
| | |Rodriguez, Santiago, | |
| | |Steinorth, Thurmond, | |
| | |Waldron, Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bloom, Bonta, | |
| | |Calderon, Chang, | |
| | |Nazarian, Eggman, | |
| | |Gallagher, Eduardo | |
SB 503
Page 2
| | |Garcia, Holden, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
------------------------------------------------------------------
SUMMARY: Deletes an obsolete notice included in disclosures of
employee options to continue group coverage under the California
Continuation Benefits Replacement Act (Cal-COBRA), and replaces
it with a notice providing information about obtaining other
health coverage, including Medi-Cal or Covered California.
Specifically, this bill:
1)Requires every evidence of coverage provided for group benefit
plans issued, amended, or renewed on or after July 1, 2016, to
include a notice regarding disclosures about the ability of
covered employees of group benefit plans to continue coverage,
and that they may be eligible for coverage through the state
health insurance marketplace (referred to as Covered
California), Medi-Cal, or through an insured spouse.
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 a warning made obsolete by the Patient Protection and
Affordable Care Act (ACA) regarding the ability of companies
selling individual health insurance to require a review of
medical history that could result in a higher premium or
denial of coverage.
4)Reinstates the obsolete warning if the ACA requirement to have
health insurance is repealed or amended to no longer apply to
the individual market, as specified.
SB 503
Page 3
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill will result in:
1)Minor and absorbable costs to the Department of Managed Health
Care (Managed Care Fund) and the California Department of
Insurance (Insurance Fund) to verify health plan and insurer
compliance.
2)Unknown, potentially significant state costs for increased
Medi-Cal enrollment. Modifying the notice to suggest
individuals losing coverage apply for Medi-Cal or through
Covered California will likely lead to a greater number of
people enrolled in Medi-Cal, at a cost exceeding $150,000 per
year (General Fund/federal funds). Even a very small overall
increase in Medi-Cal enrollment would have a significant
fiscal impact.
Increased utilization due to the receipt of this notice is
likely to be less and less a factor as time goes on, as
individuals grow more accustomed to visiting Covered
California to assess their coverage options outside of
job-based coverage.
COMMENTS: According to the author, this bill is necessary to
relieve employers of the requirement to issue a notice that is
no longer relevant with the health insurance market reforms
brought about by the ACA. The author states that, more helpful
to individuals moving off group health insurance coverage is
information about options for health coverage through Medi-Cal
and Covered California. This bill replaces an obsolete
notification with a notification that informs these individuals
about options for individual coverage that are available today
and where more assistance can be obtained. The author concludes
SB 503
Page 4
by stating that this bill restores the notice if the individual
mandate is repealed.
COBRA is a federal law that applies to employers and group
health plans that cover 20 or more employees. COBRA gives
workers and their families who lose their health benefits upon
specified qualifying events such as voluntary or involuntary job
loss, reduction in work hours, transition between jobs, death,
divorce, and other life events, the right to choose to continue
group health benefits provided by their group health plan for at
least 18 months and up to 36 months. Cal-COBRA is a state law
that is similar to the federal COBRA. Cal-COBRA applies to
employers and group health plans that cover two to 19 employees,
and allows employees to keep their group plan for up to 36
months.
Employees who choose to keep their group coverage under COBRA or
Cal-COBRA are responsible for paying the total premium,
including the employer's share, as well as administrative fees.
Under COBRA, employees pay 102% of the premium, and 110% of the
total premium under Cal-COBRA. According to the federal
Department of Labor, employees should consider all options they
may have to get other health coverage before deciding to use
COBRA as there may be more affordable or more generous coverage
options through other group health plan coverage (such as a
spouse's plan), the health insurance marketplaces (such as
Covered California), or Medicaid.
Supporters state that this bill repeals a notice required by
state law that is no longer applicable now that California has
adopted the insurance market rules under the ACA, and the bill's
provisions requiring notice of the availability of Medi-Cal and
Covered California will make employees losing their employer
coverage aware of potentially more affordable coverage options.
SB 503
Page 5
There is no known opposition to this bill.
Analysis Prepared by:
Kelly Green / HEALTH / (916) 319-2097 FN:
0001668