BILL ANALYSIS
SB 1088
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Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1088 (Price) - As Amended: August 2, 2010
Policy Committee: Health Vote:13-6
Urgency: State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill conforms state law to requirements of federal health
reform, the Patient Protection and Affordable Care Act
(PL-111-148).This bill prohibits the limiting age of dependent
health coverage from being less than 26 years of age, with
specified exceptions. The limiting age determines when children
are no longer considered dependents for the purposes of health
coverage. Under federal law the extension of dependent coverage
is effective for plan years on or after September 23, 2010.
Specifically, this bill:
1)Establishes parameters related to grandfathered health plans.
Grandfathered plans are exempt from some requirements of
federal health reform.
2)Establishes notice requirements for health plans and insurers
about the offer of dependent coverage.
3)Clarifies that nothing in this legislation requires a plan or
insurer to cover a dependent child.
FISCAL EFFECT
Annual increased costs of $85 million GF to CalPERS to provide
the employer share of health premium costs to 29,000 young
adults gaining access to health coverage through the increase in
the limiting age established by this bill. For CalPERS these
requirements become effective January 1, 2011. Cost impacts
associated with this bill would accrue in the absence of this
bill, as federal requirements would take effect without state
law changes. This bill provides clarification for implementation
for employers, health plans, and families.
SB 1088
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COMMENTS
1)Rationale . This bill conforms state law to federal health
reform requirements related to an increase in the age young
adults continue to qualify for health coverage via their
parents' employer-based health insurance. Under current state
law, young adults meeting specified eligibility criteria are
able to remain on their parents' health plan until their 23rd
birthday. According to national estimates, 2.4 million young
adults will access coverage through the mechanism established
by the expansion of dependent health coverage, 75% of whom
will have been previously uninsured. Recent amendments clarify
circumstances related to young adults that previously lost or
were denied dependent health coverage.
2)Dependent Health Coverage . Most individual and group health
coverage policies set a limiting age for coverage of dependent
children. The limiting age determines when children are no
longer considered dependents for the purposes of health
coverage. The age is often set at 19. However, contracts also
often allow a young person who is enrolled full-time in
college to remain on the policy as a dependent until age 23.
In addition, California statute establishes an exception to
the limiting age for those dependents who are incapable of
self-sustaining employment by reason of a physically or
mentally disabling injury, illness, or condition and who
remain chiefly dependent on the policyholder for support and
maintenance. This bill extends the limiting age for health
coverage until a dependent's 26th birthday without the
requirements such as disability or school enrollment.
3)California's Uninsured . California has a large proportion of
uninsured residents. In 2009, 25% of the population lacked
health insurance for some or all of the year. The number of
the uninsured has increased significantly over the past few
years due to drops in employer-based coverage. Young adults
ages 19 to 29 generally account for between 20% and 30% of the
uninsured. In addition to being a significant share of
individuals lacking health insurance, young adults ages 21 to
24 have a likelihood of 40% of being uninsured. This bill
increases the number of young adults with access to health
coverage and will reduce the rate of the uninsured statewide.
SB 1088
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4)Related Legislation . AB 1602 (J. Perez), pending in the
Senate, enacts a series of changes related to health reform
including establishing the California Health Benefits Exchange
and allowing young adults to stay on their parents' health
coverage until age 26.
AB 29 (Price), in 2009, prohibited the limiting age of dependent
health plan and insurance coverage from being less than 27
years of age. AB 29 was held on the Suspense File of this
committee.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081