BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  SB 1034
                                                                  Page  1

          Date of Hearing:   June 18, 2014

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                   SB 1034 (Monning) - As Amended:  April 21, 2014 

          Policy Committee:                             HealthVote:17-0

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

           SUMMARY  

          This bill prohibits group health plans and policies from  
          imposing waiting periods before coverage is effective, and makes  
          related conforming changes.

           FISCAL EFFECT  

          1)Potential first year costs in the range of $100,000 and minor  
            ongoing costs in future years to the Department of Managed  
            Health Care to review compliance by health plans and take  
            enforcement actions (Managed Care Fund).

          2)Minor costs to the Department of Insurance to ensure  
            compliance (Insurance Fund).

           COMMENTS  

           1)Purpose  .  According to the author, this bill resolves  
            confusion caused by the interaction between California law and  
            federal regulations with respect to waiting periods allowed in  
            employer-provided group plans. The author also indicates that  
            reforms included in the federal Patient Protection and  
            Affordable Care Act (ACA), including guaranteed issuance of  
            plans and prohibition of exclusions based on preexisting  
            conditions, obviate any need for health plans to impose  
            waiting periods before activating health coverage.  

           2)Impact of this Bill  . This bill prohibits waiting periods from  
            health plan and policy contracts, meaning plans will no longer  
            be allowed to impose waiting periods for coverage.  Prior to  
            January 1, 2014 and numerous ACA insurance market reforms,  
            waiting periods were used with respect to individual coverage  








                                                                  SB 1034
                                                                  Page  2

            to address adverse risk selection and preexisting conditions.   
            Employers also may impose waiting periods before initiating  
            coverage. The ACA includes a provision that prohibits an  
            otherwise eligible employee or dependent from being required  
            to wait more than 90 days before coverage becomes effective.   
            With respect to employer-provided coverage, if state law is  
            silent with respect to waiting periods as contemplated in this  
            bill, federal regulations will govern an employer's imposition  
            of waiting periods. 

           3)Support  . There is general agreement among a number of groups,  
            including those representing consumers, health insurance  
            companies, providers, businesses, and brokers/agents, that  
            this bill makes clarifying and sensible changes that respond  
            to insurance market provisions of ACA .  The bill has no  
            opposition.  
           Analysis Prepared by  :    Lisa Murawski / APPR. / (916) 319-2081