BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 838|
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THIRD READING
Bill No: SB 838
Author: Strickland (R), et al
Amended: 4/6/10
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 9-0, 3/24/10
AYES: Alquist, Strickland, Aanestad, Cedillo, Cox, Leno,
Negrete McLeod, Pavley, Romero
SENATE APPROPRIATIONS COMMITTEE : 10-0, 4/12/10
AYES: Kehoe, Cox, Alquist, Corbett, Denham, Leno, Price,
Wolk, Wyland, Yee
NO VOTE RECORDED: Walters
SUBJECT : Cal-COBRA: premium assistance
SOURCE : Author
DIGEST : This bill extends the state law requirements
placed on health plans and health insurers offering
Cal-COBRA coverage to notify qualified beneficiaries of
their potential eligibility for federal premium assistance,
and to allow them to enroll in coverage in conformance with
federal law.
ANALYSIS : Existing law, the federal Consolidated Omnibus
Budget Reconciliation Act (COBRA) of 1985 (Public Law
99-272), gives employees who work for employers with 20 or
more workers, their spouses, and dependent children the
right to continue employer-sponsored group health coverage
CONTINUED
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(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 job loss, a reduction in the hours worked, death,
and divorce. 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.
Existing federal law establishes premium assistance for
health benefits under COBRA and state mini-COBRA programs
(which apply to health plans selling to small employers not
covered by federal COBRA) for "assistance eligible
individuals." The federal premium assistance covers 65
percent of the costs of the COBRA coverage. Generally,
individuals eligible for the premium assistance
("assistance eligible individuals") are defined in federal
law as individuals who:
1. Were "involuntarily terminated" between September 1,
2008, and March 31, 2010; or,
2. Had a reduction in hours resulting in a loss of health
coverage on and after September 1, 2008 and were then
subsequently "involuntarily terminated" between March 2,
2010 and March 31, 2010.
Existing law makes available premium assistance for periods
of health coverage beginning on or after February 17, 2009.
Premium assistance lasts for up to 15 months, subject to
other limitations.
Existing state law requires health plans and insurers that
provide coverage under a group benefit plan to an employer
with 2-19 eligible employees to offer continuation coverage
to a qualified beneficiary (QB), upon a qualifying event,
without evidence of insurability. This body of law is
known as Cal-COBRA.
Existing state law defines, for purposes of eligibility for
Cal-COBRA, a "qualifying event" as any of the following
events that would result in a loss of group coverage by a
QB if the person did not elect Cal-COBRA coverage:
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1. The death of the covered employee;
2. The termination of employment or reduction in hours of
the covered employee's employment, except that
termination for gross misconduct does not constitute a
qualifying event;
3. The divorce or legal separation of the covered employee
from the covered employee's spouse;
4. The loss of dependent status by a dependent enrolled in
the group benefit plan; and,
5. With respect to a covered dependent only, the covered
employee's entitlement to benefits under Medicare.
Existing state law requires Cal-COBRA health plans and
health insurers to provide notice to QBs eligible for
premium assistance pursuant to the federal American
Recovery and Reinvestment Act of 2009 (ARRA) of the
availability of that assistance. This notice goes to QBs
who were involuntarily terminated between September 1, 2008
and December 31, 2009. Existing state law also authorized
individuals who were involuntarily terminated dating back
to September 1, 2008 and are therefore eligible for premium
assistance under ARRA, an additional opportunity to enroll
in Cal-COBRA coverage. QBs eligible for premium assistance
can elect Cal-COBRA coverage no later than 60 days after
the date of the notice of the availability of premium
assistance. Existing law authorizes the health insurance
state regulators (the Department of Managed Health Care and
the California Department of Insurance), in consultation
with each other, to adopt emergency regulations in the
event that any federal assistance is or becomes available
to qualified beneficiaries under Cal-COBRA. These
provisions of law were enacted by AB 23 (Jones and
Fletcher), Chapter 3, Statutes of 2009, which took effect
as an urgency statute.
This bill broadens the definition of a "qualified
beneficiary eligible for premium assistance" in Cal-COBRA
to include individuals involuntarily terminated between
September 1, 2008 and February 28, 2010, instead of
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September 1, 2008 to December 31, 2009 in existing law.
This bill requires health plans and insurers to provide to
QBs with qualifying events between January 1, 2010 and
February 28, 2010 a written notice on the availability of
premium assistance. Under current state law, this notice
is required to be provided to QBs with a qualifying event
between September 1, 2008 and December 31, 2009. The
notice must contain information that meets existing state
law requirements, such as the amount of the premium the
person will pay and the eligibility requirements for
premium assistance. A QB receiving this notice, consistent
with current law, could elect Cal-COBRA coverage no later
than 60 days after the date of the notice.
This bill requires health plans and insurers to provide QBs
with written notice of the extension of premium assistance.
This bill would also allow the Department of Managed
Health Care (DMHC) to designate a model notice or notices.
This bill exempts the model notice or notices designated by
DMHC from the rulemaking provisions of the Administrative
Procedure Act.
This bill also allows individuals whose Cal-COBRA premium
assistance ended in 2009 to be able to pay premiums
retroactively and maintain Cal-COBRA coverage, through
reference to the first federal extension of premium
assistance in federal law. Current Cal-COBRA makes
individuals who fail to submit a timely or correct premium
payment, or who fail to satisfy other terms and conditions
of the plan contract, ineligible for Cal-COBRA continuation
coverage.
This bill states legislative intent to enact legislation
that would implement federal legislation, such as a
specific section of the Jobs for Main Street Act, 2010 (HR
2847), that makes changes to the premium assistance made
available under ARRA.
The federal Consolidated Omnibus Budget Reconciliation Act
of 1985, commonly called COBRA, gives workers and their
dependents who have a qualifying event (such as the loss of
a job or a reduction in hours, death of the covered
employee, divorce of the covered employee from the covered
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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. If the employer continues to offer a group
health plan, the employee and his/her family can retain
their group health coverage by paying the full premium at
group rates, which are capped at 102 percent for COBRA and
110 percent for Cal-COBRA. COBRA applies to employers
providing group health coverage who have at least 20
employees. Individuals experiencing a qualifying event
generally have 60 days to elect COBRA/Cal-COBRA coverage.
California's "mini-COBRA" law, Cal-COBRA, applies to health
plans and insurers offering small group health coverage to
employers with 2-19 employees who are not eligible for
continuation coverage under federal COBRA.
Prior to ARRA, premium assistance was not available to
individuals electing COBRA or Cal-COBRA coverage.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
DIR oversight $0 up to $40-$64$0 up to
$241-$383 $0 up to $241-$383
Special
(Labor Enforcement and Compliance Fund)
SUPPORT : (Verified 4/12/10)
California Hospital Association
California Medical Association
ARGUMENTS IN SUPPORT : The California Medical Association
writes in support that this bill makes conforming changes
to Cal-COBRA to help Californians take advantage of an
extension in premium subsidies available through recent
federal legislation.
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CTW:nl 4/13/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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