Column 56


CAHU, the California Association of Health Underwriters has reported that SB 1446 (DeSaulnier) has been signed by Governor Edmund G. "Jerry" Brown, Jr.  This legislation is designed to provide some small employers with non-grandfathered health insurance policies in effect as of December 31, 2013, the option to renew their existing coverage for one year, rather than be required to move to new coverage by the end of 2014.


The new law provides employers with 50 or fewer employees the ability to renew their small group health care policy as it is now.  The plan must have been in effect as of December 31, 2013, and still in force at the time SB 1446 was signed into law (July 7, 2014).


Plans that meet this definition are now referred to as "grandmothered" plans. This law will permit these grandmothered plans to continue to renew until January 1, 2015 and those policies to remain in force until December 31, 2015. This change moves state law closer to recent federal policy changes allowing for a longer transition period to ACA-compliant policies.


 This extension will be of direct help to some small California employers who opted to early renew their health coverage in 2013. Absent this law,  these employers would have faced the cancellation of their existing employee health insurance coverage at the end of 2014 and be forced to transition into the new ACA compliant plans.  SB 1446 is an urgency measure that provides the new law goes into immediate effect when signed by Governor.


It is  important to understand that this only applies if the small business had not already purchased an ACA-compliant policy by 7/7/2014. Grandfathered plans (those in force prior to March 23, 2010) are not impacted by SB 1446. There are very few grandfathered plans in the North State.

As an aside, one can't help but wonder what the next familial title will be: great grandfathered, auntied, or how about Tutu which is Hawaiian for Grandmother?  I am delighted to be called Tutu, but no sure I want that for adjective for my health plan!


The small employer group policies affected by SB 1446 must still include many ACA and state-based mandated benefits such as preventative healthcare coverage without co-pays or deductibles, no lifetime caps on benefits, maternity care, coverage for autism and the elimination of gender discrimination in setting premiums.


The new law also requires insurers who offer these plans for renewal to provide notice to the group contract holder regarding the option to renew that states as follows:


"New health care coverage options are available in California. You currently have health care coverage that is not required to comply with many new laws. A new health benefit plan may be more affordable and/or offer more comprehensive benefits. New plans may also have limits on deductibles and out-of-pocket costs, while your existing plan may have no such limits.


Small employers will have the option to remain with current coverage for one more year or switch to new coverage that complies with the new laws, depending on the action of the insurer. 


As of this writing, we do not know what the cost will be to continue these plans. h  We know one cost savings feature will apparently be that if an employer continues current coverage, there will be no requirement for pediatric dental coverage.  Further we do not know how the insurers will handle small groups that have renewed in 2014 prior to passage of the law. 


As we have said since the beginning of this column: "Nothing is so constant as change". It will be important to consult with a qualified broker as the situation unfolds.  The broker should have full understanding of both the individual and small group markets to adequately serve the small group market.  



Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies at press deadline.  Please submit questions to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .