1-877-752-4737

CAHU’s Soft Oppose to SB 908 and the Possibility of Support If It Is Amended

by John Hansen

SB 908 was written by State Senator, Dr. Ed Hernandez. This bill has some ramifications for those covered by health insurance in California. The California Association of Health Underwriters (CAHU) recommends a light oppose unless the bill is amended.

This bill would create certain cost sharing changes that could have negative ramifications especially for small businesses. The bill would permit an insured who received an “excessive increase” mid-year to get a Special Enrollment Period.

How could a group get a mid-year rate increase?

One agent asked, “How could this happen? Our groups only get a rate increase once a year at their Open Enrollment.” Broyles responded, “If a group was sold a plan that later was determined to be unreasonably priced by the Department of Insurance, this would create a Special Enrollment Period” for that particular group if this legislation passes.

SB 908 Presents Problems for Small Businesses in Its Current Form

The bill presents problems for businesses with California group health insurance. It gives the option to groups to change plans mid-year. However, if a group has a 125 cafeteria plan, this could change the tax deductibility status. Juli Broyles said, “If we can get small group excluded, it would be better.” Otherwise, some small businesses could end up losing their ERISA tax deductible status.

Also, this could be a real hassle for business owners, who might have to file new enrollment papers and go through a lot of red tape. Broyles says, “If we’re going to do this, it should only be for individual. Also, the agent should get notice of the ‘excessive increases,’ too.”

The Bill May Be Amended

The office of Ed Hernandez said that they’re trying to work these issues out in the bill. Out of respect for Hernandez, Broyles asked the agents present at the CAHU Capitol Summit 2016 not to bring up this bill with state congressmen at this time. She said not to talk about SB 908 because that could be disruptive to Hernandez. She added that agents should look out for possible updates to SB 908 in the near future.

Ed Hernandez, an optometrist by trade, has been a friend of the California Association of Health Underwriters (CAHU). He believes in profit in health care. Broyles said, “Dr. Ed Hernandez is a good representative for the quality of bills that leave his committee. He is always accessible to us. We want to respect his wishes.”