BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K Alquist, Chair
BILL NO: AB 23
A
AUTHOR: Jones and Fletcher
B
AMENDED: April 2, 2009
HEARING DATE: April 15, 2009
2
CONSULTANT:
3
Park/
SUBJECT
Cal-COBRA: premium assistance
SUMMARY
Establishes, for purposes of the Cal-COBRA program,
specific notice requirements and enrollment opportunities
for persons eligible for premium assistance under the
American Recovery and Reinvestment Act of 2009 (ARRA).
CHANGES TO EXISTING LAW
Existing federal law:
Existing law, under the federal Consolidated Omnibus Budget
Reconciliation Act (COBRA) of 1985, gives employees, who
work for employers with 20 or more workers, their spouses,
and dependent children the right to continue group health
coverage provided by the employer generally for up to 18
months when they lose their health care benefits after a
qualifying event, as defined, provided the employer
provides group health coverage for current employees.
Qualifying events include circumstances such as voluntary
or involuntary job loss, reduction in the hours worked,
death, divorce, and other life events. Existing law
requires employees, their spouses, and dependent children
(known collectively as qualified beneficiaries) to pay 102
percent of the group rate when electing continuation
coverage under COBRA.
Continued---
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 2
Existing law, under ARRA (Public Law 111-5), provides
premium assistance for health benefits under COBRA and
state COBRA programs (see below) for "assistance eligible
individuals," who are federally defined qualified
beneficiaries who were involuntarily terminated between
September 1, 2008, and December 31, 2009. Existing law
provides that the premium assistance applies to periods of
health coverage beginning on or after February 17, 2009,
and lasts for up to nine months, subject to other
limitations.
Existing law, under ARRA, allows certain qualified
beneficiaries a second opportunity to elect COBRA, if they
had rejected or discontinued COBRA in the past, with
premium assistance. Existing law, under ARRA, allows
certain qualified beneficiaries the right to enroll in
another health benefit plan offered by the employer under
COBRA, under specified circumstances.
Existing state law:
Existing law provides for licensing and regulation of
health care service plans by the Department of Managed
Health Care (DMHC), and provides for regulation of health
insurers by the California Department of Insurance (CDI).
Existing law, under the California Continuation Benefits
Replacement Act, or Cal-COBRA, requires health plans and
insurers that provide coverage under a group benefit plan
to an employer with 2 to19 eligible employees to offer
continuation coverage to a qualified beneficiary (a person
enrolled in the employer's group benefit plan), upon a
qualifying event, without evidence of insurability.
Existing law defines, for purposes of eligibility for
Cal-COBRA, a "qualifying event" as any of the following
events that result in a loss of coverage under the group
benefit plan by a qualified beneficiary: the death of the
covered employee; the termination of employment or
reduction in hours of the covered employee's employment,
except termination for gross misconduct; the divorce or
legal separation of the covered employee from the covered
employee's spouse; the loss of dependent status by a
dependent enrolled in the group benefit plan; and, with
respect to a covered dependent only, the covered employee's
entitlement to benefits under Medicare.
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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Existing law requires health plans and insurers to provide
a disclosure that informs individuals eligible for
Cal-COBRA that failure to make the notification of all
qualifying events to the health plan, insurer, or employer
contracting to perform Cal-COBRA administrative services,
within the 60 days of the qualifying event, will disqualify
the qualified beneficiary from receiving Cal-COBRA
continuation coverage.
Existing law requires a qualified beneficiary electing
Cal-COBRA continuation coverage to pay not more than 110
percent of the applicable rate charged for a covered
employee or, in the case of dependent coverage, not more
than 110 percent of the applicable rate charged to a
similarly situated individual under the group benefit plan.
Existing law requires every group contract between a health
plan or insurer and an employer with 2 to19 eligible
employees to require the employer to notify the plan or
insurer, in writing, of any employee who has had a
qualifying event related to termination of employment or a
reduction in hours of the covered employee within 30 days
of the qualifying event.
Existing law requires health plans and insurers, or the
contracting entities that perform the notice and
administrative services of Cal-COBRA, to provide to the
qualified beneficiary, within 14 days of receiving notice
of a qualifying event, the necessary benefits information,
premium information, enrollment forms, and disclosures to
allow the qualified beneficiary to formally elect Cal-COBRA
coverage.
Existing law requires a qualified beneficiary who wishes to
continue coverage under the group benefit plan to request
the continuation in writing to the health plan or insurer,
or contracting entity, within the 60-day period following
the later of: (1) the date that the enrollee or insured's
coverage under the group benefit plan terminated or will
terminate by reason of a qualifying event; or (2) the date
the enrollee or insured was sent the information necessary
to elect Cal-COBRA coverage.
This bill:
This bill would require health plans and insurers to
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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provide to a qualified beneficiary who has a qualifying
event between September 1, 2008, and December 31, 2009, a
written notice containing information on the availability
of premium assistance under ARRA for Cal-COBRA coverage, to
be sent to the qualified beneficiary's last known address.
The bill would require the notice to include language that
adequately informs a reasonable person of changes in
federal law that provide a new opportunity to elect
Cal-COBRA continuation coverage with a 65 percent premium
subsidy, and to include all of the following:
o The eligibility requirements for premium assistance
in the amount of 65 percent of the premium under ARRA,
and the duration of premium assistance under ARRA;
o A statement that a qualified beneficiary eligible
for premium assistance under ARRA may elect Cal-COBRA
continuation coverage no later than 60 days after the
date of the notice;
o A statement that a qualified beneficiary eligible
for premium assistance under ARRA who had previously
rejected or discontinued Cal-COBRA continuation
coverage has the right to withdraw that rejection and
elect continuation coverage with the premium
assistance;
o The amount of the premium the person will pay. For
qualified beneficiaries who had a qualifying event
between September 1, 2008, and the effective date of
this bill, if a health plan or insurer is unable to
provide the correct premium amount in the notice, the
notice may contain the last known premium amount and
an opportunity for the qualified beneficiary to
request, through a toll-free telephone number, the
correct premium that would apply to the beneficiary;
o Enrollment forms and any other information required
to be included to allow the qualified beneficiary to
elect Cal-COBRA continuation coverage, except that
this information is not to be included in notices sent
to qualified beneficiaries currently enrolled in
Cal-COBRA continuation coverage; and,
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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o A description of the option to enroll in different
coverage, as provided in federal law, which allows a
person to elect a cheaper benefit plan, if the
employer approves of the change, and the benefit plan
is open to other active employees and is not a limited
benefit plan.
This bill would require, with respect to qualified
beneficiaries who had a qualifying event between September
1, 2008, and the effective date of this bill, health plans,
insurers, or their contracting entities, to provide the
notice within 14 days of the effective date of this bill.
The bill would require, with respect to qualified
beneficiaries who had or have a qualifying event between
the day after the effective date of this bill and December
31, 2009, health plans, insurers, or their contracting
entities to provide the notice within the period of time
specified under current law, which is also 14 days.
The bill would create a separate definition for "qualified
beneficiary eligible for premium assistance under ARRA,"
(distinct from the definition of "qualified beneficiary")
as a qualified beneficiary who was or is eligible for
Cal-COBRA coverage as a result of the involuntary
termination of the covered employee's employment from
September 1, 2008, through December 31, 2009; who elects
Cal-COBRA coverage; and, who meets the definition of a
qualified beneficiary under the federal Employee Retirement
Income Security Act of 1974.
This bill would permit a qualified beneficiary eligible for
premium assistance under ARRA to elect Cal-COBRA
continuation coverage no later than 60 days after the date
of the required notice.
The bill would require, for a qualified beneficiary who is
eligible for premium assistance because of an involuntary
termination of a covered employee between September 1,
2008, and February 16, 2009, the Cal-COBRA continuation
coverage to commence on the first day of the month
following the election. For a qualified beneficiary who has
or had a qualifying event between February 17, 2009, and
the effective date of this bill, who elects Cal-COBRA
continuation coverage, the bill would require the effective
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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date of the continuation coverage to be the date of the
qualifying event or the first day of the month following
the election, at the option of the beneficiary, provided
the beneficiary pays the applicable premiums.
The bill would permit a qualified beneficiary eligible for
premium assistance under ARRA to elect to enroll in
different coverage subject to the criteria provided under
ARRA (including if the employer approves of the change, the
benefit plan is open to other active employees, is not a
limited benefit plan, and is a cheaper plan than the one
the qualified beneficiary had coverage under at the time of
the qualifying event).
The bill would permit a qualified beneficiary enrolled in
Cal-COBRA continuation coverage as of February 17, 2009,
who is eligible for premium assistance under ARRA, to
request application of the premium assistance as of March
1, 2009, or later, consistent with ARRA.
For qualified beneficiaries who are eligible for premium
assistance and who elect continuation coverage, this bill
would prohibit health plans or insurers from using the time
period between the qualifying event and the effective date
of Cal-COBRA continuation coverage as a break in coverage
in determining whether to apply a pre-existing condition
exclusion.
The bill would define a health plan or insurer as a person
entitled to reimbursement for the amount of the federal
premium subsidy, when the plan or insurer receives an
election notice from a qualified beneficiary who is
eligible for premium assistance under ARRA.
The bill would prohibit this bill from being construed to
require a health plan to provide the plan's evidence of
coverage as a part of the notice required by this bill.
The bill would permit the Director of the DMHC and the
Insurance Commissioner of CDI to adopt emergency
regulations to implement the Cal-COBRA provisions, and
would require the adoption of these regulations to be
considered by the Office of Administrative Law to be
necessary to avoid serious harm to the public peace,
health, safety, or general welfare. The bill would
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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require, if regulations are adopted, the respective
regulations to be substantially similar and done in
consultation with the other regulator.
The bill would permit the CDI and the DMHC, for purposes of
compliance with the notice requirements of this bill, to
designate a model notice or notices that may be used by
health plans. The bill would allow use of the model notice
or notices without prior approval by the DMHC or CDI, and
would exempt any model notice or notices designated by the
DMHC or CDI from the requirements of the Administrative
Procedure Act.
The bill would state legislative intent that any federal
assistance that is or may become available to qualified
beneficiaries under Cal-COBRA be effectively and promptly
implemented by DMHC and CDI.
FISCAL IMPACT
According to the Assembly Appropriations Committee
analysis, the bill would result in one-time federal funding
of $250 million to $400 million in Cal-COBRA premium
assistance to 60,000 to 100,000 unemployed individuals and
their families. This estimate assumes 10 percent to 20
percent of premium assistance notices will result in new
continuation coverage, in addition to the 10 percent of
individuals who have chosen coverage in the absence of
premium subsidies. The analysis also states that the bill
would result in absorbable workload during 2009 for state
agencies with health coverage and administrative oversight
obligations.
BACKGROUND AND DISCUSSION
According to the authors, this bill would ensure that
Californians, who are laid off or otherwise involuntarily
terminated while working for a small employer, are notified
that they may be eligible for premium assistance through
ARRA to help them pay for and keep their health coverage
through Cal-COBRA. The authors state that AB 23 would
additionally assist those individuals who have lost their
jobs since September 2008, by giving them a second chance
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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to elect coverage under Cal-COBRA with the premium
assistance. The authors point out that California has one
of the highest uninsured rates in the country (a three-year
average of 20.5 percent, compared to 17.4 percent
nationally), and one of the highest unemployment rates,
currently 10.5 percent, in the country.
The authors state that, because most insured Californians
receive coverage through their employment, job loss is the
primary reason people lose health coverage. The authors
believe that by ensuring that Californians, who were laid
off as a result of the current economic downturn, are aware
of their eligibility for premium assistance and have a
second chance to enroll in Cal-COBRA coverage, this bill
will result in fewer uninsured. The authors underscore
this bill is urgently needed to achieve this result.
COBRA versus Cal-COBRA
COBRA, which was enacted in 1985, gives qualified
beneficiaries who have a qualifying event (e.g., voluntary
or involuntary loss of a job, reduction in hours, death of
the covered employee, divorce of the covered employee from
the covered employee's spouse, or the loss of dependent
status by a dependent enrolled in the health plan) the
right to continue their group health coverage through the
employer's health plan generally for up to 18 months. COBRA
applies to employers with at least 20 workers; requires
qualified beneficiaries to pay both the employer and
employee's share of premium and a two percent
administration fee, totaling no more than 102 percent of
the group rate (although disability may extend this cap to
150 percent of the group rate for 11 months after the
initial 18-month period); and is enforced by the federal
Department of Labor.
California's "mini-COBRA" or state COBRA law, called
Cal-COBRA, applies to health plans and insurers offering
small group health coverage to employers with 2 to 19
employees who are not eligible for continuation coverage
under federal COBRA. Premiums in Cal-COBRA cannot exceed
110 percent of the group rate, with specified exceptions,
and is paid entirely by qualified beneficiaries. Cal-COBRA
also applies to individuals who have exhausted their 18
months of continuation coverage under COBRA, and allows a
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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maximum of 36 months of continuation coverage under
Cal-COBRA, or COBRA and Cal-COBRA combined. Cal-COBRA is
enforced by DMHC and CDI.
Federal and state continuation coverage programs differ as
to who may be considered a qualified beneficiary. Qualified
beneficiaries under federal law include the covered
employee, spouse or a dependent child of a covered
employee, who have been covered under the employer's plan
on the day before the qualifying event. (A special rule
applies for children born to or adopted by a covered
employee during a period of COBRA continuation coverage.)
State law defines a qualified beneficiary as any individual
who, on the day before the qualifying event, is an enrollee
in a group benefit plan offered by a health care service
plan or disability insurer and has a qualifying event.
Affordability of COBRA and Cal-COBRA continuation coverage
According to a 2009 Families USA report, for most
individuals and families, the cost of COBRA coverage is
prohibitively high, especially when compared to average
unemployment benefits. A Commonwealth Fund issue brief
released in 2009 found that only nine percent of unemployed
adults bought health insurance under COBRA in 2006. The
same study found that employees pay on average 16 percent
for a single-person plan and 27 percent for a family plan,
as their share of employer-sponsored health coverage, based
on recent employer surveys.
According to data from a 2008 California Employer Health
Benefits Survey, sponsored by the California HealthCare
Foundation, California workers contributed, on average,
$582 or 12 percent of the cost of the $4,906 total annual
average cost of employer-based single coverage and $3,194
or 24 percent of the total annual average cost of $13,427
for employer-based family coverage in 2008. Individuals
buying Cal-COBRA coverage pay the entire cost of coverage
plus an additional 10 percent.
Eligibility for premium assistance and other benefits under
ARRA
Eligibility for the ARRA premium assistance is narrower
than eligibility for COBRA or Cal-COBRA. Under COBRA or
Cal-COBRA, an individual can become eligible because of a
loss of employment, a reduction in hours, the death of the
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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covered employee, the divorce of the covered employee from
the covered employee's spouse, or the loss of dependent
status. By contrast, eligibility for ARRA premium
assistance is limited to individuals and their dependents
who meet the following criteria:
1) Are eligible for COBRA continuation coverage at any
time between September 1, 2008, and December 31, 2009;
2) Elect COBRA coverage; and
3) Are eligible for COBRA as a result of the
employee's involuntary termination between September
1, 2008, and December 31, 2009.
Eligibility for the full amount of premium assistance is
limited to individuals with a modified adjusted gross
income of $125,000 or less ($250,000 for joint filers).
For taxpayers with modified adjusted gross income between
$125,000 and $145,000 (or $250,000 and $290,000 for joint
filers), the amount of the premium reduction that must be
repaid is reduced proportionately, and taxpayers with
modified adjusted gross incomes above those amounts must
repay the amount of premium reduction received.
Under federal law, the premium reduction (65 percent of the
full premium) is reimbursable to the health plan, insurer,
or employer as a credit against certain employment taxes.
The premium assistance for an individual on COBRA or
Cal-COBRA ends upon eligibility for other group coverage
(or Medicare), after nine months, or when the maximum
period of COBRA coverage ends, whichever occurs first.
Individuals who are eligible for other group health
coverage (such as a spouse's plan), or eligible for
Medicare, are not eligible for the premium reduction, and
there is no premium reduction for premiums paid for periods
of coverage prior to February 17, 2009. Individuals paying
reduced COBRA/Cal-COBRA premiums must inform health plans
if they become eligible for coverage under another group
health plan or Medicare.
Federal guidance on ARRA and state mini-COBRA laws
Several questions regarding ARRA's applicability to state
continuation coverage programs and general implementation
questions continue to be addressed through federal guidance
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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and model notices issued by various federal departments.
Recent federal guidance includes the following:
The Internal Revenue Service recently clarified the
definition of "involuntary termination."
Federal guidance from the Department of Health and Human
Services (DHHS) for state mini-COBRA laws indicates the
health insurance issuer providing the coverage to the
group health plan would receive the payroll tax credit
once the individual beneficiary pays the necessary 35
percent of the full premium amount. If the credit amount
is greater than the taxes due, the Secretary of the
Treasury will reimburse the employer, insurer, or plan
for the excess.
The federal Department of Labor has advised that the
special election period opportunity that applies to COBRA
coverage (whereby individuals who were involuntarily
terminated from September 1, 2008, through February 16,
2009, who did not elect COBRA when it was first offered,
or who did elect COBRA but who are no longer enrolled, to
have a new opportunity to elect COBRA coverage under
ARRA, beginning on February 17, 2009, and ending 60 days
after the required notice of premium assistance is
provided) does not apply to beneficiaries in state
continuation coverage programs, but that states may
choose to provide an additional election period.
Federal guidance from the Department of Labor also states
that, under the state programs, the issuer of the group
health plan must provide the notice to qualified
beneficiaries with the information on how to apply for
the premium reduction, and that these notices must be
provided within the time required by state law.
Related legislation
SB 727 (Cox) would require health care service plans and
health insurers to offer continuation coverage to COBRA or
Cal-COBRA eligible persons, if the person is covered by an
employer group plan that is terminated by the employer and
the employer does not provide a successor group benefit
plan to its employees. The bill would require the offered
coverage to be for not less than 18 months from the
termination date and to be offered under the same terms and
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
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conditions as the former group plan, but subject to the
rules governing COBRA coverage, to the extent relevant and
applicable. Referred to the Senate Health Committee and set
to be heard on April 22nd.
SB 796 (Alquist) would delete the requirement that a person
must elect and exhaust COBRA or Cal-COBRA coverage in order
to qualify for access to guaranteed issue individual health
care coverage under the Health Insurance Portability and
Accountability Act. Referred to the Senate Health
Committee.
Previous legislation
SB 719 (Johnston), Chapter 665, Statutes of 1997, enacted
the California Continuation Benefits Replacement Act
(Cal-COBRA) that would require every group health care
service plan contract and group disability insurance
contract or policy providing specified coverage to
employers with 2 to 19 eligible employees to offer
continuation coverage to a qualified beneficiary under the
contract upon a qualifying event without evidence of
insurability.
Arguments in support
The Insurance Commissioner (the sponsor of this measure)
and other supporters write that it is vital that the state
enact this measure as quickly as possible to make sure
employees of small businesses in California have access to
this federal subsidy to maintain their health insurance
through these difficult economic times.
The California Association of Health Underwriters states
that this measure will bring California's version of COBRA
into compliance with the newly enacted federal statute
providing financial assistance for health benefits.
California Hospital Association writes that this measure
will help the recently unemployed maintain a connection
with a primary care provider. The California Labor
Federation states that AB 23 will help the state better
maximize federal economic stimulus assistance and offer
working families help when they need it the most. The
California Medical Association (CMA) writes that the
conforming changes in this bill will go a long way towards
keeping recently unemployed Californians enrolled in
private insurance and will reduce demand for
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 13
already-overburdened state and local health programs.
The Service Employees International Union (SEIU) supports
this measure and makes one suggestion to improve it by
requiring the Employment Development Department to include
notice to those on unemployment insurance or state
disability insurance that they may be eligible for COBRA
subsidies.
Concerns
The Association of California Life and Health Insurance
Companies (ACLHIC) and the California Association of Health
Plans (CAHP) write that their respective associations share
the authors' desire to provide Californians, who are
struggling to keep their health insurance after being
involuntarily terminated by their employer, with the same
federal premium assistance as authorized under federal
COBRA, and have been working with staff and other
stakeholders to enact legislation as quickly as possible.
ACLHIC and CAHP note that adhering to requirements of the
federal program within the constraints of a state program
implemented by health plans and insurance companies, rather
than employers, have raised several implementation issues,
but that many of these issues have been resolved by
authors' amendments. The groups note that one issue that
continues to be a concern is verification of involuntary
termination. The groups state that, to date, the IRS has
not provided any guidance as to whether a health plan or an
insurer can rely on the attestation of a former employee
that he or she was involuntarily terminated within the time
frame of September 1, 2008, and December 31, 2009.
The groups note that, under Cal COBRA, a health plan or
insurer is required to administer the entire program,
including sending notices and providing the 65 percent
premium subsidy that would otherwise be provided by
employers under federal COBRA. The groups highlight that
health plans and insurers are required to pay the 65
percent portion of the premium for an entire quarter before
getting reimbursed by offsetting their employee payroll
tax; but, unlike employers, health plans and insurers are
in no position to know whether an employee's attestation is
correct, other than verification through the employer. The
groups state that they do not wish to contact employers or
require verification, but absent federal guidance that
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 14
confirms that health plans and insurers are able to rely on
the employee's attestation as fact, the groups are
concerned that the IRS would look to them to provide the
verifications or disallow commensurate payroll credits.
In order to address this issue, ACLHIC and CAHP have
requested an amendment to AB 23 that would allow health
plans and insurers to request (and require) verification of
involuntary termination, absent further guidance from the
IRS that such verification is unnecessary; or implicit
authorization from their regulators that notices sent to
potentially qualified beneficiaries may include a
verification form until such time as federal guidance deems
it unnecessary.
PRIOR ACTIONS
Assembly Appropriations:16-0
Assembly Health: 19-0
Assembly Floor: 74-6
COMMENTS
1.Urgency clause and urgency of issue. This bill contains
an urgency clause and would take effect immediately. This
measure is considered urgent because knowledge of the
federal subsidy available for health coverage under
Cal-COBRA may effect whether individuals will elect such
coverage and, by virtue of their election, maintain
access to primary, preventive, and urgently needed health
care services. Maintaining access to health care services
for subsidy-eligible individuals would decrease the level
of uncompensated care associated with the lack of health
coverage.
2.Awaiting federal guidance on involuntary termination
verification issue. According to the authors' staff and
other stakeholders, federal guidance is forthcoming on
the issue of whether employer verification of employee
attestation is necessary where health plans and insurers
assume initial responsibility for the 65 percent subsidy.
However, it is uncertain when such guidance will be
forthcoming.
3.Authors' amendments. The author proposes the following
amendments in response to stakeholder discussions:
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 15
a. Portion of required notice to qualified
beneficiaries that deals with the option to enroll in
different coverage, as allowed by ARRA.
Page 13, lines 8-11:
8 (C) A description of the option to enroll in
different coverage
9 as provided in subparagraph (B) of paragraph (1)
of subdivision
10 (a) of Section 3001 of Title III of Division B
of the American
11 Recovery and Reinvestment Act of 2009 (Public
Law 111-5). ). Such notice shall advise the qualified
beneficiary to contact his or her former employer for
prior approval to choose this option. If the former
employer approves of the employee's proposed switch in
coverage, the employee shall contact directly the
health plan that offers the benefit plan chosen by the
employee.
Page 25, lines 29-32:
29 (C) A description of the option to enroll in
different coverage
30 as provided in subparagraph (B) of paragraph (1)
of subdivision
31 (a) of Section 3001 of Title III of Division B
of the American
32 Recovery and Reinvestment Act of 2009 (Public
Law 111-5). Such notice shall advise the qualified
beneficiary to contact his or her former employer for
prior approval to choose this option. If the former
employer approves of the employee's proposed switch in
coverage, the employee shall contact directly the
insurer that offers the benefit plan chosen by the
employee.
b. Further qualifications regarding evidence of
coverage.
Page 14, lines 8-10:
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 16
8 (5) Nothing in this section shall be
construed to require a health
9 care service plan to provide the plan's evidence
of coverage as a
10 part of the notice required by this subdivision
, and nothing in this section shall require a health
care service plan to amend its existing evidence of
coverage to comply with the changes made to this
section by this act .
Page 26, lines 29-31:
29 (5) (4) Nothing in this section shall be
construed to require an
30 insurer to provide the insurer's evidence of
coverage as a part of
31 the notice required by this subdivision , and
nothing in this section shall require an insurer to
amend its existing evidence of coverage to comply with
the changes made to this section by this act.
c. Striking of language in Insurance Code that implies
that the Department of Insurance has the authority to
approve notices sent by insurers to insureds.
Page 26, lines 21-28:
21 (4) For purposes of compliance with the
notice requirements
22 of this subdivision, the department may
designate a model notice
23 or notices that may be used by plans. Use of the
model notice or
24 notices shall not require prior approval by the
department. Any
25 model notice or notices designated by the
department for purposes
26 of this subdivision shall not be subject to the
Administrative
27 Procedure Act (Chapter 3.5 (commencing with
Section 11340) of
28 Part 1 of Division 3 of Title 2 of the
Government Code).
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 17
4.Clarifying amendments. Staff recommends the following
clarifying amendments.
a. Amendment that clarifies that the notice of the
language has to be written in such a way that a person
can understand the changes in federal law that provide
the opportunity for the Cal-COBRA subsidy.
Page 12, lines, 23-33:
23 (g) (1) A health care service plan shall
provide to a qualified
24 beneficiary who has a qualifying event between
September 1, 2008,
25 and December 31, 2009, inclusive, a written
notice containing
26 information on the availability of premium
assistance under Title
27 III of Division B of the American Recovery and
Reinvestment Act
28 of 2009 (Public Law 111-5). This notice shall be
sent to the
29 qualified beneficiary's last known address. The
notice shall include clear and easily understandable
30 language to inform the qualified beneficiary
that adequately informs a reasonable person of changes
31 in federal law that provide a new opportunity to
elect continuation
32 coverage with a 65-percent premium subsidy and
shall include all
33 of the following:
Page 26, lines 6-15:
6 (g) (1) An insurer shall provide to a
qualified beneficiary who
7 has a qualifying event between September 1,
2008, and December
8 31, 2009, inclusive, a written notice containing
information on the
9 availability of premium assistance under Title
III of Division B of
10 the American Recovery and Reinvestment Act of
2009 (Public Law
11 111-5). This notice shall be sent to the
qualified beneficiary's last
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 18
12 known address. The notice shall include clear
and easily understandable language to inform the
qualified beneficiary that adequately
13 informs a reasonable person of changes in
federal law that provide
14 a new opportunity to elect continuation coverage
with a 65-percent
15 premium subsidy and shall include all of the
following:
b. Amendment that clarifies that not all qualified
beneficiaries eligible for premium assistance going
forward get a second election.
Page 13, lines 24-29:
24 (G) A statement that a qualified beneficiary
eligible for premium
25 assistance under Title III of Division B of the
American Recovery
26 and Reinvestment Act of 2009 (Public Law 111-5)
who had
27 previously rejected or discontinued continuation
coverage, prior to the receipt of the notice
required by subparagraph 2 of paragraph (g), has the
28 right to withdraw that rejection and elect
continuation coverage
29 with the premium assistance.
Page 26, lines 6-11:
6 (G) A statement that a qualified beneficiary
eligible for premium
7 assistance under Title III of Division B of the
American Recovery
8 and Reinvestment Act of 2009 (Public Law 111-5)
who had
9 previously rejected or discontinued continuation
coverage, prior to the receipt of notice required by
subparagraph 2 of paragraph (g), has the
10 right to withdraw that rejection and elect
continuation coverage
11 with the premium assistance.
STAFF ANALYSIS OF ASSEMBLY BILL 23 (Jones and Fletcher)
Page 19
POSITIONS
Support: California Department of Insurance (sponsor)
Adventist Health
American Association of Retired Persons
California Association of Health Underwriters
California Hospital Association
California Labor Federation
California Medical Association
California Nurses Association
California Professional Firefighters
California Society for Clinical Social Work
Consumers Union
Loma Linda University Adventist Health Sciences
Center
Service Employees International Union
Small Business California
Oppose: None received
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