BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2733
                                                                  Page  1

          Date of Hearing:   April 9, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

             AB 2733 (Insurance Committee) - As Introduced:  February 25,  
                                        2014 

          Policy Committee:                               
          InsuranceVote:12-0

          Urgency:     Yes                  State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill repeals the sunset clause on the small business  
          third-party administrator (SBTPA) program for voluntary  
          disability programs, and declares the bill an urgency measure.

           FISCAL EFFECT  

          Minor costs to the Employment Development Department to continue  
          oversight of the SBTPA.  Businesses who wish to establish their  
          own plans pay voluntary regulatory fees of 14% of the Disability  
          Insurance State Plan contribution rate for Employment  
          Development Department (EDD) oversight of the program and  
          approval of voluntary plans.

          If the SBTPA is not extended, employers would likely participate  
          directly in the SDI program instead, resulting in increased  
          state administrative and benefit costs to the SDI program. 

           COMMENTS  

           1)Purpose  .  The SBTPA program has enabled small businesses to  
            participate in enhanced disability insurance programs that,  
            prior to creation of the program in 2010, were unavailable to  
            small businesses' employees due to administrative burden of  
            required EDD approval.  The program was created in 2010, with  
            a sunset clause to enable an evaluation of whether or not the  
            program would operate as intended.  Although the program has  
            not been formally evaluated, according to Applied  
            Underwriters, the sponsor of this bill, it has proven to be a  
            sound way to deliver enhanced benefits to a class of employee  








                                                                  AB 2733
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            previously excluded from benefitting from prior law.  

           2)Urgency  . This bill states, "in order to amend Section 3254.1  
            of the Unemployment Insurance Code before it is repealed, it  
            is necessary that this bill go into immediate effect."  Under  
            current law, provisions authorizing the SBTPA program are  
            repealed as of December 31, 2014. This bill eliminates the  
            sunset date on the program, allowing it to continue operating.

           3)Prior Legislation  .  AB 2778 (Committee on Insurance), Statutes  
            2010, Chapter 399, established the SBTPA program.

           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081