California’s Million Dollar Babies – New 2012 Laws are a One-Two Punch to Employers and Insurers

In 2010, my relative Suzie (I am using this alias to protect the innocent), who works for a company with 12 employees had a child. Her employer offered all of the employees health insurance benefits. When Suzie had the child and was enjoying her leave under CaliforniaaEUR(TM)s Pregnancy Disability Leave Law, her health insurance was no longer paid by her employer. Thus, while Suzie had no income, as she waited more than 4 weeks to receive her first disability check and was starting to receive hospital bills, she was required to pay over $600 per month to continue her health benefits.
In an effort to protect women like Suzie, California Governor Jerry Brown signed into law SB 299, AB 592, SB 222, and AB 210. These laws ensure that, as of January 1, 2012, all pregnant women maintain their health insurance benefits while on pregnancy-related leaves if they work for an employer with 5 or more employees who provides health insurance benefits.
While the new laws impact both large and small employers in California, it appears that smaller employers (those with between 5 and 50 employees) may be hit the hardest by unexpected additional health care expenses.
The following is a brief summary of the new laws to take effect in 2012:
January 1, 2012 aEUR" Small and Large Employers Mandated to Offer More Coverage
As of January 1, 2012, SB 299 and AB 592 will require that all employers with 5 or more employees are mandated to provide pregnant employees the same level of insurance benefits during their pregnancy-related leaves as they were provided prior to taking leave. Employers can always offer more leave or greater benefits, but under these new additions to the law, in no event may an employer maintain health benefits for less than the four-month period required by FEHA.
While these changes may not initially appear to be significant, particularly to employers with 50 or more employees (who are covered under the Family and Medical Leave Act (aEURoeFMLAaEUR?)), the changes may prove to be fairly expansive and costly for small and large employers alike.
Large employers who are covered under FMLA should still pay attention because these new pregnancy disability leave laws apply to all employees, regardless of tenure with the employer. Therefore, a pregnant employee could have just started working with your company and already qualify for up to four months of leave and health insurance benefits during that leave. This is more expansive than employer obligations under FMLA, which require an employee to complete at least one year of employment and 1,250 hours of work within that year to be eligible for the benefit.
July 1, 2012 aEUR" Insurance for Maternity Services is Mandatory
Signed at the same time as SB 299/AB 592, SB 222 and AB 210 amend the California Insurance Code to mandate that all individual health insurance policies must provide coverage for maternity services for all insureds covered under the policy. Under the previous system, only insurance companies who provided maternity coverage were required to provide unrestricted in-patient hospital benefits. With the passage of the new laws, maternity coverage must be included in the health insurance policies.
Employers Must Update Their Employee Information
With the passage of these laws, employers will need to update their employee handbooks and postings. If you would like to discuss how any of the recent pregnancy related legislation may impact your business in the coming year, please contact us at either the South Pasadena or Orange offices. In addition to providing counsel on these issues, we are also available to provide seminars to your companyaEUR(TM)s HR Professionals so they can better prepare your company for changes in the regulatory landscape.
Please contact Tomas A. Guterres, Esq, - (626) 243-1100 or Robert R. Walker, Esq. - (626) 243-1100 for additional information.
Nothing contained within this article should be considered the rendering of legal advice. Consult an attorney on the specifics of any legal matter, because facts and circumstances will vary from case to case.

Meet The Experts

    Enter name of Insurance Company and press GO button.