BILL ANALYSIS
AB 23
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 23 (Jones)
As Amended May 4, 2009
2/3 vote. Urgency
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|ASSEMBLY: |74-0 |(April 2, 2009) |SENATE: |35-0 |(May 6, 2009) |
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Original Committee Reference: HEALTH
SUMMARY : Establishes, for purposes of Cal-COBRA, specific
notice requirements and enrollment opportunities for persons
eligible for federal premium assistance that would subsidize 65%
of the cost of Cal-COBRA coverage under the federal American
Recovery and Reinvestment Act of 2009 (ARRA), including allowing
a qualified beneficiary eligible for Cal-COBRA coverage who is
eligible for premium assistance under ARRA to elect Cal-COBRA
continuation coverage no later than 60 days after the date of
the notice required by this bill.
The Senate amendments :
1)Permit a health plan or insurer to request verification of the
involuntary termination of a qualified beneficiary seeking
premium assistance under ARRA from the covered employee's
former employer if the federal government has not issued
guidance or specifically requires such verification.
2)Require a health plan or insurer that requests verification
directly from a covered employee's former employer to do so by
providing a written notice to the employer.
3)Require, for a qualified beneficiary who became eligible for
continuation coverage prior to the effective date of this
bill, the written notice to be sent by mail or facsimile to
the covered employee's former employer within seven business
days from the date the plan receives the qualified
beneficiary's election notice.
4)Require the former employer to furnish to the health plan or
insurer written verification as to whether the covered
employee' s employment was involuntarily terminated within ten
calendar days of receipt of the written notice.
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5)Permit a qualified beneficiary requesting premium assistance
under ARRA to furnish to the health plan or insurer a written
document or other information from the covered employee's
former employer indicating that the covered employee's
employment was involuntarily terminated.
6)Require the document or information in 5) above to be deemed
sufficient by the health plan to establish that the covered
employee's employment was involuntarily terminated for
purposes of ARRA unless the plan makes a reasonable and timely
determination that the documents or information provided by
the qualified beneficiary are legally insufficient to
establish involuntary termination of employment.
7)Require a health plan or insurer that requests verification
but cannot verify involuntary termination of employment within
fourteen business days from the date the employer receives the
verification request, or from the date the plan receives
documentation or other information from the qualified
beneficiary, to either:
a) Provide continuation coverage with the federal premium
assistance to the qualified beneficiary; or,
b) Send the qualified beneficiary a denial letter which
includes notice of his or her right to appeal that
determination under ARRA.
8)Prohibit any person from intentionally delaying verification
of involuntary termination of employment under the provisions
of the bill.
9)Prohibit the provision of information and forms related to the
premium assistance available pursuant to individuals by a
health care service plan prior to the effective date of this
bill from being considered a violation of the Knox-Keene
Health Care Services Act of 1975, provided that the plan
complies with all Cal-COBRA requirements.
10) Revise the notice requirements and the deadline for
notices to be mailed for people who had a qualifying event
that made them Cal-COBRA eligible between September 1, 2008
and the effective date of this bill that were contained in the
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Assembly-approved version of this bill.
AS PASSED BY THE ASSEMBLY , this bill contained substantially the
same provisions as the Senate-approved version of this bill.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to the author, this bill would ensure that
Californians who lose their job while working for a small
employer through a layoff or other involuntarily termination are
notified that they may be eligible for premium assistance
through the federal stimulus bill to help them pay for and keep
their health coverage through Cal-COBRA. Additionally, for
those individuals who lost their jobs going back to September
2008, this bill would give them a second chance to elect
coverage under Cal-COBRA now that premium assistance is
available. The author points out that California has one of the
highest uninsured rates in the country (a three-year average of
20.5%, compared to 17.4% nationally), and one of the highest
unemployment rates (11.2% in March) in the country. Job loss is
the primary reason people lose health coverage because most
insured Californians receive coverage through their employment.
The author argues this bill would ensure 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. The author
states this bill is urgently needed to avoid increasing the
number of Californians without health insurance.
ARRA (Public Law 111-5) provides premium assistance for health
benefits under COBRA, and state mini-COBRA laws such as
Cal-COBRA, for individuals and their dependents that were
involuntarily terminated between September 1, 2008 and December
31, 2009. Instead of paying the entire Cal-COBRA/COBRA premium
amount, eligible individuals would pay 35% of premium, and the
remaining 65% would be reimbursable to the employer or health
plan as a credit against certain payroll taxes. The premium
assistance applies to periods of health coverage beginning on or
after February 17, 2009 and lasts for up to nine months.
Individuals 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
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enrolled (for example, because they were unable to continue
paying the premium), have a new opportunity to elect COBRA
coverage under ARRA. This special election period begins on
February 17, 2009 and ends 60 days after the required notice to
the individual. However, the federal Department of Labor has
advised that this special election opportunity does not apply to
coverage sponsored by employers with less than twenty employees
subject to state law (such as California's Cal-COBRA law). This
bill would implement an additional special election for
Cal-COBRA similar to the election period for federal COBRA.
Federal law also permits qualified beneficiaries eligible for
premium assistance to switch Cal-COBRA health plans, under
certain conditions. In order for the qualified beneficiary to
switch COBRA coverage, the employer must permit switching
coverage, the premium for the other coverage must be less, the
other coverage must be offered to active employees of the
employer, and the different coverage cannot be limited coverage
(such as coverage that provides only dental, vision, or
counseling). This bill would authorize this option for
Cal-COBRA beneficiaries under the same terms as the federal law.
According to a survey done on behalf of the California
HealthCare Foundation, 18.6% of employers with three to nineteen
employees offer a choice of different plans (e.g., a health
maintenance organization (HMO) and a preferred provider
organization (PPO) product, and 24.2% of firms offer a choice of
carrier.
The Senate amendments permit health plans and insurers to
request verification of involuntary termination of a person
seeking premium assistance if the federal government has not
provided guidance on the topic, or if the federal government
specifically requires verification. The Senate amendments also
require employers to respond to a verification request within
ten calendar days.
This measure is sponsored by Insurance Commissioner Steve
Poizner and supported by the Department of Managed Health Care,
the California Medical Association, the California Labor
Federation, AARP, and the California Hospital Association among
others, who argue this bill will ensure Californians are able to
take full advantage of federal premium assistance made available
by ARRA.
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Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
FN: 0000594