BILL ANALYSIS �
SB 1034
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Date of Hearing: June 10, 2014
ASSEMBLY COMMITTEE ON HEALTH
Richard Pan, Chair
SB 1034 (Monning) - As Amended: April 21, 2014
SENATE VOTE : 35-0
SUBJECT : Health care coverage: waiting periods.
SUMMARY : Prohibits health plans and health insurance policies
in the group market from imposing a waiting or affiliation
period. States legislative intent to: 1) prohibit a group
health plan or insurer from imposing a separate waiting or
affiliation period in addition to any employer-imposed waiting
period; and 2) permit a group health plan or insurer to
administer a waiting period imposed by a plan sponsor, as
specified.
EXISTING LAW :
1)Establishes the Department of Managed Health Care (DMHC) to
regulate health plans and the California Department of
Insurance (CDI) to regulate health insurers.
2)Allows health plans and insurers, as specified, in the group
market to apply a waiting period of up to 60 days as a
condition of employment if applied equally to all eligible
employees and dependents and if consistent with the federal
Patient Protection and Affordable Care Act (ACA). Prohibits a
group health maintenance organization from imposing any
affiliation period that exceeds 60 days. During the waiting
or affiliation period, which runs concurrently, the plan or
insurer is not required to provide health care services and is
prohibited from charging a premium to the subscribers or
enrollees.
3)Prohibits a health plan or insurer, as specified, for
individual coverage from imposing any waiting or affiliation
period.
4)Under the federal ACA, prohibits a group health plan and a
health insurance issuer offering group or individual health
insurance coverage from applying any waiting period, as
defined, that exceeds 90 days.
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FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill would have costs of about $120,000 in
2014-15, $70,000 in 2015-16, and about $30,000 per year
thereafter for DMHC to review compliance by health plans and
take enforcement actions (Managed Care Fund), and minor costs
for CDI to review health insurer filings to ensure compliance
(Insurance Fund).
COMMENTS :
1)PURPOSE OF THIS BILL . The ACA, among its many reforms,
includes a provision which prohibits an otherwise eligible
employee or dependent from being required to wait more than 90
days before coverage becomes effective. According to the
author, there have been numerous stakeholder discussions about
the interaction between California's existing 60 day waiting
period requirement on plans and insurers and the ACA's 90-day
waiting period requirement. The author indicates that this
bill resolves the confusion caused by the unique interaction
with California law and federal regulations. The author
contends that, since the ACA now requires guaranteed issue and
no preexisting condition exclusions, there is no reason that
health insurance companies should have a waiting period before
coverage can go into effect.
2)BACKGROUND . The 90-day limitation under the ACA applies to
health plans and insurers in the individual and group market
for plan years beginning on or after January 1, 2014. Prior
to 2012, California law contained provisions that allowed for
waiting periods up to 60 days for plans and insurers (or up to
six months for pre-existing conditions). In 2012, AB 1083
(Monning), Chapter 852, Statutes of 2012, made a number of
changes to state laws governing small group health insurance
to largely conform state law to provisions in the ACA. AB
1083 kept the state's 60-day limit on waiting periods (while
eliminating pre-existing condition waiting periods), as the
60-day limit was considered to provide greater protections
than the federal 90-day limit.
This bill will eliminate the 60-day limit in state law and
prohibit group health plans and insurers from imposing any
waiting periods. However, because the state does not regulate
benefits that employers provide their employees, the federal
90-day limit and its implementing regulations will still apply
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to employers. Moreover, this bill includes intent language to
ensure that employers may continue to require waiting periods
that comply with federal law.
3)SUPPORT . Health Access California, in support, argues this
bill conforms to federal law with respect to waiting periods
for health insurance. According to Health Access, federal law
and guidance provide that employers may impose a waiting
period of 90 days on health coverage for employees and
dependents, however; the point at which that period begins is
subject to convoluted and complicated federal guidance, which
the state cannot replicate because state regulation of
employer health benefits is preempted by the Employee
Retirement Income Security Act of 1974. Health Access
sponsored AB 1083 and hopes this bill will eliminate
confusion. The Congress of California Seniors supports this
bill because it would ban unnecessary waiting periods for
health insurance coverage. The American Federation of State,
County and Municipal Employees supports this bill indicating
that health care is a basic right and should not be subject to
delays.
The California Association of Health Underwriters, the National
Association of Insurance and Financial Advisors of California,
and the Independent Insurance Agents and Brokers of
California, also in support, write that this bill will
eliminate confusion between state and federal rules governing
health care enrollment periods. This will allow California
employers, similar to all other employers in the country, to
follow the ACA's 90-day eligibility waiting periods.
4)RELATED LEGISLATION . SB 959 (Ed Hernandez) contains numerous
clean up provisions to health insurance reform and other ACA
implementation bills previously enacted. SB 959 is pending
hearing in this Committee.
5)PREVIOUS LEGISLATION . AB 1083 amends California's small group
health insurance laws to enact the relevant ACA provisions,
such as eliminating pre-existing condition requirements and
establishing premium rating factors based only on age, family
size, and geographic regions. Among its many provisions, AB
1083 permits health plans and insurers to require a waiting
period of no longer than 60 days.
REGISTERED SUPPORT / OPPOSITION :
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Support
American Cancer Society Cancer Action Network
American Federation of State, County and Municipal Employees,
AFL-CIO
Association of Life and Health Insurance Companies
Bay Area Council
BayBio
California Association of Health Underwriters
California Chamber of Commerce
California Farm Bureau Federation
California Hospital Association
California Manufacturers and Technology Association
California Optometric Association
California Retailers Association
Congress of California Seniors
Health Access California
Independent Insurance Agents and Brokers of California
Los Angeles Area Chamber of Commerce
National Association of Insurance and Financial Advisors of
California
National Federation of Independent Business
Opposition
None on file.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097