BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 503


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          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    |                    |








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          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Quirk, Rendon, |                    |
          |                |     |Wagner, Weber, Wood   |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
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          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. 








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          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  








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          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.










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          There is no known opposition to this bill.




          Analysis Prepared by:                                             
                          Kelly Green / HEALTH / (916) 319-2097  FN:  
          0001668