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premium or denial of coverage. 4)Reinstates the obsolete warning if the ACA requirement to have health insurance is repealed or amended to no longer apply to the individual market, as specified.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