BILL ANALYSIS �
SB 1034
Page 1
SENATE THIRD READING
SB 1034 (Monning)
As Amended June 26, 2014
Majority vote
SENATE VOTE :35-0
HEALTH 17-0 APPROPRIATIONS 15-0
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|Ayes:|Pan, Maienschein, |Ayes:|Gatto, Bigelow, |
| |Bonilla, Bonta, Chesbro, | |Bocanegra, Bradford, Ian |
| |Gomez, Gonzalez, | |Calderon, Donnelly, |
| |Roger Hern�ndez, | |Eggman, Gomez, Holden, |
| |Lowenthal, Mansoor, | |Linder, Pan, Quirk, |
| |Nazarian, Nestande, | |Ridley-Thomas, Wagner, |
| |Patterson, Ridley-Thomas, | |Weber |
| |Rodriguez, Wagner, | | |
| |Wieckowski | | |
| | | | |
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SUMMARY : Prohibits health plans and health insurance policies
in the group market from imposing a waiting or affiliation
period. States legislative intent to: a) prohibit a group
health plan or insurer from imposing a separate waiting or
affiliation period in addition to any employer-imposed waiting
period; and b) 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
SB 1034
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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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Potential first year costs in the range of $100,000 and minor
ongoing costs in future years to DMHC to review compliance by
health plans and take enforcement actions (Managed Care Fund).
2)Minor costs to CDI to ensure compliance (Insurance Fund).
COMMENTS : 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.
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
to employers. Moreover, this bill includes intent language to
ensure that employers may continue to require waiting periods
that comply with federal law.
Health Access California, in support, argues this bill conforms
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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. 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.
There is no opposition on file.
Analysis Prepared by : Ben Russell / HEALTH / (916) 319-2097
FN: 0004115