Existing law, the Robert F. Kennedy Farm Workers Medical Plan, is a nonprofit voluntary employees beneficiary association, organized under federal law, that provides payments for health care and other benefits to its members. Existing law, until January 1, 2031, requires the State Department of Health Care Services to annually reimburse the plan up to $3,000,000 per year for claim payments that exceed $70,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016.

This bill would require the department to annually reimburse the Robert F. Kennedy Farm Workers Medical Plan up to $3,000,000 per year for claim payments that exceed $50,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care.

Existing law, the Robert F. Kennedy Farm Workers Medical Plan, is a nonprofit voluntary employees beneficiary association, organized under federal law, that provides payments for health care and other benefits to its members. Existing law, until January 1, 2031, requires the State Department of Health Care Services to annually reimburse the plan up to $3,000,000 per year for claim payments that exceed $70,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016.

This bill would require the department to annually reimburse the Robert F. Kennedy Farm Workers Medical Plan up to $3,000,000 per year for claim payments that exceed $50,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care.

Existing law, the Robert F. Kennedy Farm Workers Medical Plan, is a nonprofit voluntary employees beneficiary association, organized under federal law, that provides payments for health care and other benefits to its members. Existing law, until January 1, 2031, requires the State Department of Health Care Services to annually reimburse the plan up to $3,000,000 per year for claim payments that exceed $70,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016.

This bill would require the department to annually reimburse the Robert F. Kennedy Farm Workers Medical Plan up to $3,000,000 per year for claim payments that exceed $50,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care.

 THIRD READING  

Bill No: AB 499

Author: Ortega (D)

Introduced: 2/10/25

Vote: 21

SENATE HEALTH COMMITTEE: 9-0, 6/25/25

AYES: Menjivar, Durazo, Gonzalez, Limón, Padilla, Richardson, Rubio, Weber Pierson, Wiener

NO VOTE RECORDED: Valladares, Grove

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/29/25

AYES: Caballero, Cabaldon, Grayson, Richardson, Wahab

NOES: Seyarto, Dahle

ASSEMBLY FLOOR: 65-1, 6/2/25 - See last page for vote

SUBJECT: Robert F. Kennedy Farm Workers Medical Plan

SOURCE: United Farm Workers

DIGEST: This bill lowers the limit on the costs the Robert F. Kennedy Farm Workers Medical Plan must cover for an eligible employee or dependent for a single episode of care to $50,000 (from $70,000) before the Department of Health Care Services (DHCS) will cover costs above that dollar threshold not to exceed $3 million per year in total reimbursement by DHCS.

ANALYSIS:

Existing law:

1. Establishes the Medi-Cal program, administered by DHCS, under which low-income individuals are eligible for comprehensive medical coverage with no cost-sharing, vision, dental and long-term care. Children under age 21 also receive Early and Periodic Screening, Diagnostic, and Treatment services, which includes therapeutic behavioral health, substance use disorder services and many other services without cost-sharing. [Welfare and Institutions Code (WIC) §14000, et seq.]
2. Requires DHCS to annually reimburse the Robert F. Kennedy Farm Workers Medical Plan (plan) for claim payments that exceed $70,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016. Prohibits the reimbursement from exceeding $3 million per year. Sunsets this program on January 1, 2031. [HSC §100235]
3. Requires the plan to submit completed data, verified by an independent certified public accountant, for claims paid by the plan for services during the preceding year, as specified, and requires DHCS to analyze that data to determine the aggregate amount of claims that exceed $70,000 paid by the plan. [HSC §100235]
4. Requires DHCS to reimburse the plan no later than 60 days after the claims data is received. [Health and Safety Code (HSC) §100235]

This bill: Lowers the limit on the costs the plan must cover for an eligible employee or dependent for a single episode of care to $50,000.

Comments

Author’s statement. According to the author, the plan provides healthcare to over 6,000 California farmworkers and their families funded by employer and employee contributions. The overwhelming majority of farmworkers enrolled in the plan are immigrants who are not eligible for Covered California. This bill will help the plan continue. The California Endowment estimates the plan saves the state’s Medi-Cal annual budget $11.2 million and allows these 6,000 Californians to maintain their health coverage. This bill does not increase the current $3 million cap.

Background

Self-Insurance. In a self-funded or self-insured health plan, an employer funds the cost of all health services covered by the plan. Many employers hire an administrator to handle claims payments but the employer is responsible for funding these payments. Self-funded employer plans, generally, are not subject to state insurance laws, but are subject to several federal regulations. Employers who set up self-funded health plans are responsible for payment of all covered health claims, whether routine or catastrophic. Employers may buy “stop-loss” insurance to help cover high cost claims, but employers are responsible for payment of all claims until they reach the “stop-loss” level. The plan is a joint labor-management health plan for farmworkers organized under the 1947 Taft-Hartley Act. A Taft-Hartley trust is a type of pension or benefit plan typically sponsored by a labor union and a group of employers to provide benefits to employees who are covered by a collective bargaining agreement. In the case of the plan, the UFW and contributing employers deliver “basic medical care at an affordable cost.” The plan is a self-funded/self-insured plan that is subject to a collective bargaining agreement between the UFW and agricultural employers, supporting over 6,000 Californians, including approximate 2,000 children.

SB 145 (Pan, Chapter 712, Statutes of 2015) requires DHCS to annually reimburse the plan for claim payments that exceed $70,000. It was thought that the state would theoretically spend less money as the stop-loss insurer than on paying the plan the cost to buy stop-loss insurance. Additionally, the case was made by the plan that the state would save on Medi-Cal costs if plan enrollees remained in the plan instead of Medi-Cal. At that time, those costs were estimated to be $6.6 million. However, existing law does not prevent a person otherwise eligible for Medi-Cal from enrolling in Medi-Cal. Medi-Cal acts as the secondary payer of coverage or payer of last resort, covering any Medi-Cal benefits not covered by the plan if necessary, after the primary coverage pays for services covered by the plan. DHCS indicates that for each plan year, RFK submits claim files for their members where a single episode of care has exceeded $70,000. After these submissions are verified by an independent certified public accountant, DHCS reviews the files to confirm they meet the criteria defined in the statute, calculates the amount in excess of $70,000 for each eligible employee or dependent, and reimburses RFK that amount, up to $3 million annually. DHCS indicates that the plan operates on a policy year that is September 1 through August 31, but that DHCS reimbursements are made each fiscal year. In 2021-22 RFK reimbursement totaled $2,210,658.82, and in 2022-23 totaled $1.7 million, while prior plan years reached the full $3,000,000 reimbursement maximum. DHCS receives information only for certain RFK members, which is a small subset of the entire RFK membership. For the 2022-23 reimbursement, DHCS received data for 24 members, six of whom were enrolled in Medi-Cal managed care. For the 2023-24 policy year the plan reimbursement was $1,051,014.53. There were 16 claimants and a total of 2,960 individual claim lines submitted. Seven of the 16 claimants were enrolled in Medi-Cal during the timeframe of the claims.

Medi-Cal “savings.” According to background information provided by the author, the California Endowment analyzed state general fund costs if the plan ceased to exist, and determined that year one state costs for Medi-Cal to cover eligible members would be $12.9 million and year two state costs would be $11.2 million. This is based on May 2022 Medi-Cal Local Assistance Estimates and County Organized Health System managed care rates for Central California Alliance for Health (Monterey County). The analysis assumes all ages will be eligible for Medi-Cal, regardless of immigration status,

Unique farmworker coverage issues. According to the 2022 Farmworker Health Study (FWHS), in order to access health care farmworkers have to be able to afford the care and health care must be readily available in a manner that meets their needs. Farm work is seasonal and means farmworkers will travel to regions where there is work. Many of the regions they work in are medically underserved. In some seasons there is no work. Fifty percent of farmworkers do not have health insurance in the months when they are not working. Thirty-nine percent reported needing an interpreter for medical treatment and 90% received this assistance. However, the rates tend to be lower for specialty and emergency care. The survey found that farmworker women had pregnancies that were low-weight, pre-term, and with birth defects at twice the rate as the general population. California farmworkers have lower rates of chronic health conditions but the FWHS describes research that shows because of the physical demands of farm work, those in poor health leave the workforce. There are also concerns about applying for health coverage because of changing public charge rules that could impact citizenship.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No.

According to the Senate Appropriations Committee, unknown increased General Fund expenditures, potentially hundreds of thousands, due to additional and/or higher state reimbursements for claim payments.

SUPPORT: (Verified 8/29/25)

United Farm Workers (source)

California Medical Association

California Pan-Ethnic Health Network

Robert F. Kennedy Medical Plan

OPPOSITION: (Verified 8/29/25)

None received

ARGUMENTS IN SUPPORT: Sponsor, UFW, and the plan write that with recent changes in California law there is reasonable expectation that the number of farmworkers covered by the UFW collective bargaining agreements will grow. The proponents write that growth will increase the current annual $11 million state Medi-Cal savings that the plan generates. The California Pan-Ethnic Health Network (CPEHN) writes about 96% of the plan’s budget goes directly to providing benefits to its beneficiaries and their dependents. CPEHN believes by any standards, administrative costs of 4% are extremely low, and based on the California Endowment estimates that if the plan no longer provides coverage to California farmworkers, the state Medi-Cal program would be responsible for an additional $11.2 million annually to pick up coverage for those workers.

ASSEMBLY FLOOR: 65-1, 6/2/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Connolly, Davies, Elhawary, Fong, Gabriel, Garcia, Gipson, Jeff Gonzalez, Mark González, Haney, Harabedian, Hart, Irwin, Jackson, Kalra, Krell, Lee, Lowenthal, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NOES: DeMaio

NO VOTE RECORDED: Castillo, Chen, Dixon, Ellis, Flora, Gallagher, Hadwick, Hoover, Lackey, Macedo, Sanchez, Ta, Tangipa

Prepared by: Teri Boughton / HEALTH / (916) 651-4111

8/29/25 20:38:58

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2025 - 2026 Regular Session

AB 499 (Ortega) - Robert F. Kennedy Farm Workers Medical Plan

Bill Summary:

AB 499 would revise state reimbursements to the Robert F. Kennedy Farm Workers Medical Plan (RFK Plan) for claim payments.

Fiscal Impact:

Unknown increased General Fund expenditures, potentially hundreds of thousands, due to additional and/or higher state reimbursements for claim payments.

Background:

The RFK Plan is a joint labor-management health plan for farmworkers organized under the federal Taft-Hartley Act. A Taft-Hartley trust is a type of pension or benefit plan typically sponsored by a labor union and a group of employers to provide benefits to employees who are covered by a collective bargaining agreement. The RFK Plan is a self-funded/self-insured plan that is subject to a collective bargaining agreement between the United Farm Workers (UFW) and agricultural employers. In a self-funded or self-insured health plan, an employer funds the cost of all health services covered by the plan. Employers who set up self-funded health plans are responsible for payment of all covered health claims, whether routine or catastrophic. In the case of the RFK Plan, the UFW and contributing employers deliver “basic medical care at an affordable cost.”

Current law requires DHCS to annually reimburse the RFK Plan for claim payments that exceed $70,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016. Current law prohibits the reimbursement from exceeding $3 million per year and sunsets this program on January 1, 2031.

Proposed Law:

AB 499 would require DHCS to annually reimburse the RFK plan for claim payments that exceed $50,000, instead of $70,000.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Caroline Menjivar, Chair

BILL NO: AB 499

SUBJECT: Robert F. Kennedy Farm Workers Medical Plan

SUMMARY:

Lowers the limit on the costs the Robert F. Kennedy Farm Workers Medical Plan must cover for an eligible employee or dependent for a single episode of care to $50,000 (from $70,000) before the Department of Health Care Services (DHCS) will cover costs above that dollar threshold not to exceed $3 million per year in total reimbursement by DHCS.

Existing law:

1. Establishes the Medi-Cal program, administered by DHCS, under which low-income individuals are eligible for comprehensive medical coverage with no cost-sharing, vision, dental and long-term care. Children under age 21 also receive Early and Periodic Screening, Diagnostic, and Treatment services, which includes therapeutic behavioral health, substance use disorder services and many other services without cost-sharing. [WIC §14000, et seq.]
2. Requires DHCS to annually reimburse the Robert F. Kennedy Farm Workers Medical Plan (plan) for claim payments that exceed $70,000 made by the plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016. Prohibits the reimbursement from exceeding $3 million per year. Sunsets this program on January 1, 2031. [HSC §100235]
3. Requires the plan to submit completed data, verified by an independent certified public accountant, for claims paid by the plan for services during the preceding year, as specified, and requires DHCS to analyze that data to determine the aggregate amount of claims that exceed $70,000 paid by the plan. [HSC §100235]
4. Requires DHCS to reimburse the plan no later than 60 days after the claims data is received. [HSC §100235]

This bill: Lowers the limit on the costs the plan must cover for an eligible employee or dependent for a single episode of care to $50,000.

FISCAL EFFECT:

According to the Assembly Appropriations Committee, DHCS did not estimate a cost for this bill. Information provided by the sponsor, the United Farm Workers (UFW), shows that lowering the minimum claim payment to $50,000 would increase the total reimbursement due to the plan in some years. The additional required reimbursements in recent plan years would have been over $380,000 in plan year (PY) 2023-24, $503,000 in PY 2022-23, and $544,000 in PY 2021-22. However, in the 2020-21 and 2019-20 plan years, reimbursements reached the $3 million cap, so DHCS reimbursements to the plan would have been the same even if the minimum had been lower. Thus, this bill is likely to result in increased General Fund costs in the hundreds of thousands of dollars in some years.

COMMENTS:

1. Author’s statement. According to the author, the plan provides healthcare to over 6,000 California farmworkers and their families funded by employer and employee contributions. The overwhelming majority of farmworkers enrolled in the plan are immigrants who are not eligible for Covered California. This bill will help the plan continue. The California Endowment estimates the plan saves the state’s Medi-Cal annual budget $11.2 million and allows these 6,000 Californians to maintain their health coverage. This bill does not increase the current $3 million cap.
   
2. Self-Insurance. In a self-funded or self-insured health plan, an employer funds the cost of all health services covered by the plan. Many employers hire an administrator to handle claims payments but the employer is responsible for funding these payments. Self-funded employer plans, generally, are not subject to state insurance laws, but are subject to several federal regulations. Employers who set up self-funded health plans are responsible for payment of all covered health claims, whether routine or catastrophic. Employers may buy “stop-loss” insurance to help cover high cost claims, but employers are responsible for payment of all claims until they reach the “stop-loss” level.
3. Taft-Hartley trust. The plan is a joint labor-management health plan for farmworkers organized under the 1947 Taft-Hartley Act. A Taft-Hartley trust is a type of pension or benefit plan typically sponsored by a labor union and a group of employers to provide benefits to employees who are covered by a collective bargaining agreement. In the case of the plan, the UFW and contributing employers deliver “basic medical care at an affordable cost.” The plan is a self-funded/self-insured plan that is subject to a collective bargaining agreement between the UFW and agricultural employers, supporting over 6,000 Californians, including approximate 2,000 children. Taft-Hartley trusts are subject to oversight by the federal Pension Benefit Guaranty Corporation (PBGC), which oversees and insures multiemployer pension plans. If a Taft-Hartley trust becomes insolvent, the PBGC will step in to pay benefits to the beneficiaries. The PBGC has a number of tools at its disposal to help ensure that Taft-Hartley trusts remain solvent. As a self-funded plan, the plan pays claims on behalf of employees and dependents for health care services and does not use state regulated health insurance carriers. Therefore, state required benefits, timely access, or network adequacy requirements do not apply to plan enrollees.
4. State as stop-loss insurer. Prior to the passage of the federal Affordable Care Act (ACA), which among several other health insurance reforms, eliminates the application of annual and life-time limits by health insurers and employee welfare benefit plans, the plan had an annual benefit limit of $70,000 (meaning after the plan paid for $70,000 of health care claims, the employee or dependent would no longer be covered by the plan for the year). Since the ACA prevented the plan from having this annual limit, the plan had to change the benefit structure to comply and was given a one-year waiver from the federal government. The plan decided to seek out stop-loss insurance to provide protection against catastrophic or unpredictable losses to the plan for any claims over $70,000. The 2014-15 California Budget included a $3.2 million appropriation to the plan to purchase stop-loss insurance for claims over $70,000. The 2015-16 Budget appropriated an additional $2.5 million for the same purpose. According to the plan, after a year of claims experience, claims above $70,000 were summed at $1.4 million. SB 145 (Pan, Chapter 712, Statutes of 2015) requires DHCS to annually reimburse the plan for claim payments that exceed $70,000. It was thought that the state would theoretically spend less money as the stop-loss insurer than on paying the plan the cost to buy stop-loss insurance. Additionally, the case was made by the plan that the state would save on Medi-Cal costs if plan enrollees remained in the plan instead of Medi-Cal. At that time, those costs were estimated to be $6.6 million. However, existing law does not prevent a person otherwise eligible for Medi-Cal from enrolling in Medi-Cal. Medi-Cal acts as the secondary payer of coverage or payer of last resort, covering any Medi-Cal benefits not covered by the plan if necessary, after the primary coverage pays for services covered by the plan. DHCS indicates that for each plan year, RFK submits claim files for their members where a single episode of care has exceeded $70,000. After these submissions are verified by an independent certified public accountant, DHCS reviews the files to confirm they meet the criteria defined in the statute, calculates the amount in excess of $70,000 for each eligible employee or dependent, and reimburses RFK that amount, up to $3 million annually. DHCS indicates that the plan operates on a policy year that is September 1 through August 31, but that DHCS reimbursements are made each fiscal year. In 2021-22 RFK reimbursement totaled $2,210,658.82, and in 2022-23 totaled $1.7 million, while prior plan years reached the full $3,000,000 reimbursement maximum. DHCS receives information only for certain RFK members, which is a small subset of the entire RFK membership. For the 2022-23 reimbursement, DHCS received data for 24 members, six of whom were enrolled in Medi-Cal managed care. For the 2023-24 policy year the plan reimbursement was $1,051,014.53. There were 16 claimants and a total of 2,960 individual claim lines submitted. Seven of the 16 claimants were enrolled in Medi-Cal during the timeframe of the claims.
   
5. Medi-Cal “savings.” According to background information provided by the author, the California Endowment analyzed state general fund costs if the plan ceased to exist, and determined that year one state costs for Medi-Cal to cover eligible members would be $12.9 million and year two state costs would be $11.2 million. This is based on May 2022 Medi-Cal Local Assistance Estimates and County Organized Health System managed care rates for Central California Alliance for Health (Monterey County). The analysis assumes all ages will be eligible for Medi-Cal, regardless of immigration status, and the following:

70% of adults are in families with children;

60% of adults are under 109% federal poverty level (FPL);

70% of children are under 138% FPL;

25% of children are between 138% and 250% FPL;

5% of children are over 250% FPL;

60% of adults have legal status;

40% of adults undocumented; and,

100% of children have legal status.

Average monthly participants:

1. Farmworker Health Study. The 2022 Farmworker Health Study (FWHS) survey was funded by the California Department of Public Health and conducted by researchers at UC Merced. The FWHS sample consisted of 1,242 participants across five major California regions, with a profile very similar to that of the broader farmworker population. The FWHS sample was largely Latino (99%), foreign-born (91%), and low-income. Some relevant findings are below:
   
   1. 49% reported being without health insurance at some point in the previous 12 months;
   2. 41% of those with insurance had Medi-Cal or Medi-Cal with another type of insurance plan;
   3. The percentage with only employer insurance was 7.3%;
   4. For those without health insurance, the most commonly cited reasons were they were not eligible for Medi-Cal or that it was too expensive;
   5. For those with children, 74% reported having insurance coverage for their children and 26% did not have coverage for their children;
   6. 78% reported having a usual source of care, with 58% reporting they visit a Community Health Center or a Migrant Clinic and 29% saw a doctor in a clinic;
   7. 23% reported delaying medical care at some point in the previous 12 months; and,
   8. For those who reported delaying care, 66.3% cited cost or lack of insurance as a significant barrier. Approximately half (47%) of those who delayed seeking care eventually received care for their treatment, meaning that the others have never received what they perceived as needed care.
      
2. Unique farmworker coverage issues. According to FWHS, in order to access health care farmworkers have to be able to afford the care and health care must be readily available in a manner that meets their needs. Farm work is seasonal and means farmworkers will travel to regions where there is work. Many of the regions they work in are medically underserved. In some seasons there is no work. Fifty percent of farmworkers do not have health insurance in the months when they are not working. Thirty-nine percent reported needing an interpreter for medical treatment and 90% received this assistance. However, the rates tend to be lower for specialty and emergency care. The survey found that farmworker women had pregnancies that were low-weight, pre-term, and with birth defects at twice the rate as the general population. California farmworkers have lower rates of chronic health conditions but the FWHS describes research that shows because of the physical demands of farm work, those in poor health leave the workforce. There are also concerns about applying for health coverage because of changing public charge rules that could impact citizenship.
   
3. California budget. Currently, as of January 2024, California provides state funded Medi-Cal for individuals regardless of immigration status for individuals who are ages 26 through 49 years old who qualify based on income. Californians under 26 years of age, or over 50 years of age, have also been eligible for full Medi-Cal. To address a budget shortfall, the Governor proposed in May to freeze state-only full scope Medi-Cal coverage for otherwise eligible undocumented adults ages 19 and over effective January 1, 2026. Beginning January 1, 2027, the Governor proposed to charge individuals with unsatisfactory immigration status for individuals ages 19 and over and not pregnant $100 per month in premiums to remain on the program. The Governor also proposed to eliminate long-term care benefits for this population. The Legislature’s budget which was approved in June 2025 modifies the Governor’s Medi-Cal enrollment freeze proposal specifying that there is no “age out,” and establishing a six month re-enrollment grace period for those who fall off the rolls. Additionally the Legislature’s proposal, modifies the Governor’s proposal by lowering the premiums to $30 per month, and limiting the age range from 19 through 59, starting July 1, 2027.
   
4. Prior legislation. AB 494 (Arambula, Chapter 333, Statutes of 2023) extends the sunset to January 1, 2031 for state reimbursement to the plan to assist with single episode of care claim costs that exceed $70,000.

AB 2183 (Stone, Chapter 673, Statutes of 2022) provides that, as an alternative to a polling place election, a labor organization may be certified as the exclusive bargaining representative of a bargaining unit of agricultural employees through either a labor peace election (labor compact) or a non-labor peace election until January 1, 2028.

SB 145 (Pan, Chapter 712, Statutes of 2015) requires DHCS to annually reimburse the plan for claim payments that exceed $70,000.

1. Support. Sponsor, UFW, and the plan write that with recent changes in California law there is reasonable expectation that the number of farmworkers covered by the UFW collective bargaining agreements will grow. The proponents write that growth will increase the current annual $11 million state Medi-Cal savings that the plan generates. The California Pan-Ethnic Health Network (CPEHN) writes about 96% of the plan’s budget goes directly to providing benefits to its beneficiaries and their dependents. CPEHN believes by any standards, administrative costs of 4% are extremely low, and based on the California Endowment estimates that if the plan no longer provides coverage to California farmworkers, the state Medi-Cal program would be responsible for an additional $11.2 million annually to pick up coverage for those workers.
   

SUPPORT AND OPPOSITION:

Support: United Farm Workers (sponsor)

California Medical Association

California Pan-Ethnic Health Network

Robert F. Kennedy Medical Plan

Oppose: None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 499

Author:(Ortega)

As Introduced Ver:February 10, 2025

Majority vote

SUMMARY

Decreases, from $70,000 to $50,000, the minimum claim payment that the Department of Health Care Services (DHCS) is required to reimburse to the Robert F. Kennedy Farm Workers Medical Plan (RFK Plan) for a single episode of care on behalf of an eligible employee or dependent. Maintains the annual reimbursement cap of $3,000,000 from DHCS to the RFK Plan.

Major Provisions

COMMENTS

California's regulation of health insurance. The business of health insurance in California is subject to a complex patchwork of federal and state regulations. Different rules apply depending on whether insurance coverage is purchased directly by individuals or on behalf of a group, as in job-based health insurance. There are essentially three relevant regulatory frameworks for health insurance and they are the Department of Managed Health Care, the California Department of Insurance, and, for regulation of self-insured employee health benefit plans, the federal Department of Labor.

The federal Employee Retirement Income Security Act (ERISA) prohibits states from enforcing state laws relating to private sector employee benefit plans established by employers or other sponsors in order to provide health coverage. In general, ERISA requirements for employee health benefit plans are less far-reaching than the state regulations that apply to insurance carriers. Since self-insured employee benefit plans are subject only to ERISA, consumers covered by self-insured plans can have fewer consumer protections than those covered through fully insured plans that are required to comply with California's consumer protection laws.

An arrangement established pursuant to a collective bargaining agreement may be a single employer or multiemployer plan. A Taft-Hartley trust is a multiemployer plan that, in addition to being established or maintained under or pursuant to one or more collective bargaining agreements, also meets criteria outlined in the Labor-Management Relations Act of 1947 (referred to as the Taft-Hartley Act). Plans established or maintained under or pursuant to collective bargaining agreements may be governed by both the Taft-Hartley Act and ERISA. The RFK Plan is a self-funded, self-insured Taft-Hartley Plan that is subject to a collective bargaining agreement between the United Farm Workers (UFW) and multiple agricultural employers.

Stop Loss Insurance and Affordable Care Act (ACA) requirements. The ACA sets forth standards for employer-sponsored health coverage, including a prohibition on annual and lifetime benefit limits. The RFK Plan had previously imposed annual limits on benefits at $70,000. The purpose of the limit was to protect the financial solvency of the plan against high claims costs that exceeded $70,000. In light of the ACA's prohibition on annual limits, the RFK Plan is no longer allowed to keep the $70,000 limit in place. According to UFW, the RFK Plan obtained a federal waiver allowing it to keep the $70,000 limit in place until 2014. Additionally, the RFK Plan worked with both union and employer partners to increase employer and employee contributions to the RFK Plan within the maximum allowable limits for grandfathered Taft-Hartley plans to mitigate the financial risk associated with high cost claims.

According to the California Health Care Foundation, many self-insured employers buy stop-loss insurance to reduce their risk of paying unexpectedly large medical claims. The Health Care Administrators Association defines stop-loss insurance (also known as excess insurance) as a product that provides protection against catastrophic or unpredictable losses. It is purchased by employers who have decided to self-fund their employee benefit plans, but do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles. There are two types of self-funded insurance: i) specific Stop-Loss is the form of excess risk coverage that provides protection for the employer against a high claim on any one individual; and, ii) aggregate Stop-Loss which provides a ceiling on the dollar amount of eligible expenses that an employer would pay, in total, during a contract period. The carrier reimburses the employer after the end of the contract period for aggregate claims.

At the expiration of the RFK Plan's waiver, the 2014-2015 state Budget included a $3.2 million (special fund) appropriation to the RFK Plan for the purchase of stop-loss insurance for any claims over the amount of $70,000. Another one-time appropriation of $2.5 million was included in the 2015-2016 Budget for the same purpose. According to the Assembly Budget Subcommittee #1, at that time, the RFK Plan argued that there would be off-setting savings in the Medi-Cal program. These arguments were based on an assumption that the RFK Plan would not be financially viable and dissolve without financial assistance to purchase stop-loss insurance. If the RFK Plan ceased to exist, the RFK Plan's consultants assumed 50% of its members would be eligible for Medi-Cal at a state cost of $4.7 million. Also at that time, the RFK Plan argued that some of its employees would be uninsured. Rather than continuing the appropriation of state funds to the RFK Plan for the purchase of stop-loss insurance, SB 145 (Pan), Chapter 712, Statutes of 2015, required the state, acting like a stop-loss insurer, to reimburse the RFK Plan for single claims that exceed $70,000 for an enrollee up to a total of $3 million.

In support of this bill, UFW again provided updated information and analyzed state General Fund costs. This analysis included the assumption that all ages would be eligible for Medi-Cal regardless of immigration status. According to the UFW, the California Endowment estimated the following using the current RFK Plan enrollment and 2022 Medi-Cal rates: Year one State costs for Medi-Cal to cover eligible members would be $12.9 million; and, Year two State costs for Medi-Cal to cover eligible members would be $11.2 million. The analysis included the following demographic assumptions:

1. 70% of adults are in families with children;
2. 60% of adults are under 109% of the federal poverty level (FPL);
3. 70% of children are under 138% FPL;
4. 25% of children are between 138% and 250% FPL;
5. 5% of children are over 250% FPL;
6. 60% of adults have legal status;
7. 40% of adults undocumented; and,
8. 100% of children have legal status.

According to the Author

The RFK Plan provides healthcare to over 6,000 California farm workers and their families funded by employer and employee contributions. The author continues that the overwhelming majority of farm workers enrolled in the RFK Plan are immigrants who are not eligible for Covered California. The author argues that this bill will help prevent the insolvency of the RFK Plan. The author continues that the California Endowment estimates the RFK Plan reduces the state's Medi-Cal cost by $11.2 million and allows these 6,000 Californians to maintain their health coverage. The author concludes that this bill does not raise the state's $3 million cap on its commitment to the RFK Plan.

Arguments in Support

UFW, the sponsor of this bill, states that this bill will help keep the RFK Plan solvent by adjusting the state reimbursement trigger while still maintaining the existing $3,000,000 annual cap. UFW continues that they and contributing employers deliver basic medical care to farm workers and their families at an affordable cost. The RFK plan is subject to collective bargaining agreements between UFW and agricultural employers, supporting over 6,000 Californians, including approximately 2,000 children. UFW argues that with recent changes in California law, there is a reasonable expectation that the number of farm workers covered by UFW collective bargaining agreements will grow. UFW concludes that this growth will increase the current annual $11 million state Medi-Cal savings that the RFK Plan generates.

Arguments in Opposition

None.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, DHCS did not estimate a cost for this bill. Information provided by the sponsor, UFW, shows that lowering the minimum claim payment to $50,000 would increase the total reimbursement due to the RFK Plan in some years. The additional required reimbursements in recent plan years would have been over $380,000 in plan year (PY) 2023-24, $503,000 in PY 2022-23, and $544,000 in PY 2021-22. However, in the 2020-21 and 2019-20 plan years, reimbursements reached the $3 million cap, so DHCS reimbursements to the RFK Plan would have been the same even if the minimum had been lower. Thus, this bill is likely to result in increased General Fund costs in the hundreds of thousands of dollars in some years.

VOTES

ASM HEALTH: 12-0-3

YES: Bonta, Addis, Aguiar-Curry, Arambula, Carrillo, Mark González, Krell, Patel, Celeste Rodriguez, Schiavo, Sharp-Collins, Stefani

ABS, ABST OR NV: Chen, Flora, Sanchez

ASM APPROPRIATIONS: 12-0-3

YES: Wicks, Arambula, Calderon, Caloza, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache, Tangipa

ABS, ABST OR NV: Sanchez, Dixon, Ta

UPDATED

VERSION: February 10, 2025

CONSULTANT: Riana King / HEALTH / (916) 319-2097 FN: 0000684

Date of Hearing: April 9, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 499

Author:(Ortega) – As Introduced Ver:February 10, 2025

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

SUMMARY:

This bill decreases, from $70,000 to $50,000, the minimum claim payment that the Department of Health Care Services (DHCS) must reimburse to the Robert F. Kennedy Farm Workers Medical Plan (RFK Plan) for a single episode of care on behalf of an eligible employee or dependent. The bill maintains the existing annual reimbursement cap of $3 million for all claims combined.

FISCAL EFFECT:

DHCS did not estimate a cost for this bill. Information provided by the sponsor, the United Farm Workers (UFW), shows that lowering the minimum claim payment to $50,000 would increase the total reimbursement due to the RFK Plan in some years. The additional required reimbursements in recent plan years would have been over $380,000 in plan year (PY) 2023-24, $503,000 in PY 2022-23, and $544,000 in PY 2021-22. However, in the 2020-21 and 2019-20 plan years, reimbursements reached the $3 million cap, so DHCS reimbursements to the RFK Plan would have been the same even if the minimum had been lower. Thus, this bill is likely to result in increased General Fund costs in the hundreds of thousands of dollars in some years.

COMMENTS:

1. Purpose. According to the author:

The [RFK Plan is] funded by employer and employee contributions …and provides healthcare to over 6,000 California farm workers and their families. The overwhelming majority of farm workers enrolled in the [RFK Plan] are immigrants who are not eligible for Covered California. AB 499 will help prevent the insolvency of the [RFK Plan]. The California Endowment estimates the [RFK Plan] reduces the state’s Medi-Cal cost by $11.2 million.

1. Background. The RFK Plan is a self-insured health insurance plan that is subject to a collective bargaining agreement between UFW and multiple agricultural employers, and meets criteria outlined in the federal Labor-Management Relations Act of 1947 (known as the Taft-Hartley Act). The RFK Plan imposed an annual limit on benefits of $70,000 for an individual to protect the financial solvency of the plan against high claims costs. Subsequently, the federal Patient Protection and Affordable Care Act (ACA) of 2010 prohibited annual limits. According to UFW, the RFK Plan obtained a federal waiver to allow it to keep the $70,000 limit in place until 2014.
   
   At the expiration of the RFK Plan’s waiver, the Legislature appropriated $3.2 million in the 2014-15 state budget and $2.5 million in the 2015-16 state budget for any claims over the amount of $70,000. SB 145 (Pan), Chapter 712, Statutes of 2015, required the state to act as a stop-loss insurer and reimburse the RFK Plan for single claims that exceed $70,000 for an enrollee, up to a total of $3 million per year.

California Endowment Study. According to the UFW, the California Endowment estimated costs of moving RFK Plan enrollees to Medi-Cal. Using the current RFK Plan enrollment and 2022 Medi-Cal rates: year 1 state Medi-Cal costs to cover eligible members would be $12.9 million and year 2 state would be $11.2 million (General Fund, federal funds).

1. Related and Prior Legislation. AB 4 (Arambula), of the current legislative session, requires the California Health Benefit Exchange, upon appropriation by the Legislature, to administer a program to allow persons otherwise unable to obtain coverage by reason of immigration status to enroll in health insurance coverage in a manner as substantially similar to other Californians. AB 4 is pending in the Assembly Committee on Health.

The RFK Plan has been extended and funded through various legislation over the past ten years, as noted in the Background, above.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: March 25, 2025

ASSEMBLY COMMITTEE ON HEALTH

Mia Bonta, Chair

ABPCA Bill Id:AB 499

Author:(Ortega) – As Introduced Ver:February 10, 2025

SUBJECT: Robert F. Kennedy Farm Workers Medical Plan.

SUMMARY: Decreases, from $70,000 to $50,000, the minimum claim payment that the Department of Health Care Services (DHCS) is required to reimburse to the Robert F. Kennedy Farm Workers Medical Plan (RFK Plan) for a single episode of care on behalf of an eligible employee or dependent. Maintains the annual reimbursement cap of $3,000,000 from DHCS to the RFK Plan.

EXISTING FEDERAL LAW:

1. Establishes the Employee Retirement Income Security Act of 1974 (ERISA), which sets minimum standards for most voluntarily established pension and health plans in the private industry to provide protection for individuals in these plans. ERISA prevents states from regulating employer health benefits directly, but does allow states to regulate health insurance purchased by employers. [29 United States Code 1001, et seq.]
2. Prohibits, under the Patient Protection and Affordable Care Act (ACA), health plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits. [Code of Federal Regulations § 2590.715-2711]

EXISTING STATE LAW:

1. Establishes the Medi-Cal Program, administered by DHCS, to provide comprehensive health benefits to low-income individuals who meet specified eligibility criteria. [Welfare and Institutions Code (WIC) § 14000 et seq.]
2. Requires DHCS to annually reimburse the RFK Plan for claim payments that exceed $70,000 made by the RFK Plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016. Prohibits this reimbursement from exceeding $3 million per year. [Health and Safety Code (HSC) § 100235]
3. Requires the RFK Plan to submit to DHCS completed data, verified by an independent certified public accountant, for claims paid by the RFK Plan for services during the preceding year from September 1 to August 31, inclusive, and to seek reimbursement from DHCS, commencing after September 1, 2017, and annually thereafter. [HSC § 100235(b)]
4. Requires DHCS to analyze the data in 3) above to determine the aggregate amount of claims that exceed $70,000 paid by the RFK Plan on behalf of an eligible employee or dependent for any single episode of care, if DHCS receives claims data from the plan pursuant to 3) above. [HSC § 100235(c)]
5. Requires DHCS to reimburse the RFK Plan the amount determined pursuant to 4) above, up to the amount of $3 million per year no later than 60 days after DHCS receives claims data submitted by the RFK Plan. [HSC § 100235(c)(2)]
6. Sunsets 2) to 5) above, on January 1, 2031. [HSC § 100235(d)]

FISCAL EFFECT: Unknown. This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, the RFK Plan provides healthcare to over 6,000 California farm workers and their families funded by employer and employee contributions. The author continues that the overwhelming majority of farm workers enrolled in the RFK Plan are immigrants who are not eligible for Covered California. The author argues that this bill will help prevent the insolvency of the RFK Plan. The author continues that the California Endowment estimates the RFK Plan reduces the state’s Medi-Cal cost by $11.2 million and allows these 6,000 Californians to maintain their health coverage. The author concludes that this bill does not raise the state’s $3 million cap on its commitment to the RFK Plan.
2. BACKGROUND.
   1. California’s regulation of health insurance. The business of health insurance in California is subject to a complex patchwork of federal and state regulations. Different rules apply depending on whether insurance coverage is purchased directly by individuals or on behalf of a group, as in job-based health insurance. There are essentially three relevant regulatory frameworks for health insurance and they are the Department of Managed Health Care, the California Department of Insurance, and, for regulation of self-insured employee health benefit plans, the federal Department of Labor.

ERISA prohibits states from enforcing state laws relating to private sector employee benefit plans established by employers or other sponsors in order to provide health coverage. In general, ERISA requirements for employee health benefit plans are less far-reaching than the state regulations that apply to insurance carriers. Since self-insured employee benefit plans are subject only to ERISA, consumers covered by self-insured plans can have fewer consumer protections than those covered through fully insured plans that are required to comply with California’s consumer protection laws.

An arrangement established pursuant to a collective bargaining agreement may be a single employer or multiemployer plan. A Taft-Hartley trust is a multiemployer plan that, in addition to being established or maintained under or pursuant to one or more collective bargaining agreements, also meets criteria outlined in the Labor-Management Relations Act of 1947 (referred to as the Taft-Hartley Act). Plans established or maintained under or pursuant to collective bargaining agreements may be governed by both the Taft-Hartley Act and ERISA. The RFK Plan is a self-funded, self-insured Taft-Hartley Plan that is subject to a collective bargaining agreement between the United Farm Workers (UFW) and multiple agricultural employers.

• 1. Stop Loss Insurance and ACA requirements. The ACA sets forth standards for employer-sponsored health coverage, including a prohibition on annual and lifetime benefit limits. The RFK Plan had previously imposed annual limits on benefits at $70,000. The purpose of the limit was to protect the financial solvency of the plan against high claims costs that exceeded $70,000. In light of the ACA's prohibition on annual limits, the RFK Plan is no longer allowed to keep the $70,000 limit in place. According to UFW, the RFK Plan obtained a federal waiver allowing it to keep the $70,000 limit in place until 2014. Additionally, the RFK Plan worked with both union and employer partners to increase employer and employee contributions to the RFK Plan within the maximum allowable limits for grandfathered Taft-Hartley plans to mitigate the financial risk associated with high cost claims.

According to the California Health Care Foundation, many self-insured employers buy stop-loss insurance to reduce their risk of paying unexpectedly large medical claims. The Health Care Administrators Association defines stop-loss insurance (also known as excess insurance) as a product that provides protection against catastrophic or unpredictable losses. It is purchased by employers who have decided to self-fund their employee benefit plans, but do not want to assume 100% of the liability for losses arising from the plans. Under a stop-loss policy, the insurance company becomes liable for losses that exceed certain limits called deductibles. There are two types of self-funded insurance: i) specific Stop-Loss is the form of excess risk coverage that provides protection for the employer against a high claim on any one individual; and, ii) aggregate Stop-Loss which provides a ceiling on the dollar amount of eligible expenses that an employer would pay, in total, during a contract period. The carrier reimburses the employer after the end of the contract period for aggregate claims.

At the expiration of the RFK Plan’s waiver, the 2014-2015 state Budget included a $3.2 million (special fund) appropriation to the RFK Plan for the purchase of stop-loss insurance for any claims over the amount of $70,000. Another one-time appropriation of $2.5 million was included in the 2015-2016 Budget for the same purpose. According to the Assembly Budget Subcommittee #1, at that time, the RFK Plan argued that there would be off-setting savings in the Medi-Cal program. These arguments were based on an assumption that the RFK Plan would not be financially viable and dissolve without financial assistance to purchase stop-loss insurance. If the RFK Plan ceased to exist, the RFK Plan's consultants assumed 50% of its members would be eligible for Medi-Cal at a state cost of $4.7 million. Also at that time, the RFK Plan argued that some of its employees would be uninsured. Rather than continuing the appropriation of state funds to the RFK Plan for the purchase of stop-loss insurance, SB 145 (Pan), Chapter 712, Statutes of 2015, required the state, acting like a stop-loss insurer, to reimburse the RFK Plan for single claims that exceed $70,000 for an enrollee up to a total of $3 million.

In support of this bill, UFW again provided updated information and analyzed state General Fund costs. This analysis included the assumption that all ages would be eligible for Medi-Cal regardless of immigration status. According to the UFW, the California Endowment estimated the following using the current RFK Plan enrollment and 2022 Medi-Cal rates: Year 1 State costs for Medi-Cal to cover eligible members would be $12.9 million; and, Year 2 State costs for Medi-Cal to cover eligible members would be $11.2 million. The analysis included the following demographic assumptions:

• • • 1. 70% of adults are in families with children;
      2. 60% of adults are under 109% of the federal poverty level (FPL);
      3. 70% of children are under 138% FPL;
      4. 25% percent of children are between 138% and 250% FPL;
      5. 5% of children are over 250% FPL;
      6. 60% of adults have legal status;
      7. 40% of adults undocumented; and,
      8. 100% of children have legal status.

1. SUPPORT. UFW, the sponsor of this bill, states that this bill will help keep the RFK Plan solvent by adjusting the state reimbursement trigger while still maintaining the existing $3,000,000 annual cap. UFW continues that they and contributing employers deliver basic medical care to farm workers and their families at an affordable cost. The RFK plan is subject to collective bargaining agreements between UFW and agricultural employers, supporting over 6,000 Californians, including approximately 2,000 children. UFW argues that with recent changes in California law, there is a reasonable expectation that the number of farm workers covered by UFW collective bargaining agreements will grow. UFW concludes that this growth will increase the current annual $11 million state Medi-Cal savings that the RFK Plan generates.
2. RELATED LEGISLATION.
   1. AB 4 (Arambula) would require the California Health Benefit Exchange (the Exchange or Covered California), upon appropriation by the Legislature, to administer a program to allow persons otherwise unable to obtain coverage by reason of immigration status to enroll in health insurance coverage in a manner as substantially similar to other Californians as feasible. AB 4 would delete provisions in existing law requiring the Exchange to submit a federal waiver to allow individuals, who are otherwise ineligible due to their immigration status, to purchase coverage on the Exchange. AB 4 is currently pending in the Assembly Committee on Health.
3. PREVIOUS LEGISLATION.
   1. AB 494 (Arambula), Chapter 333, Statutes of 2023, maintains the maximum reimbursement amount (up to $3 million) from DHCS to the RFK Plan for claim payments that exceed $70,000 made by the RFK Plan on behalf of an eligible employee or dependent for a single episode of care. AB 494 also extends the sunset of this program to January 1, 2031.
   2. SB 184 (Committee on Budget and Fiscal Review) Chapter 47, Statutes of 2022, extends Medi-Cal eligibility for the full scope of Medi-Cal benefits to an individual who is 26 to 49 years of age, inclusive, and who does not have satisfactory immigrant status if they are otherwise eligible for those benefits.
   3. AB 2530 (Wood), Chapter 695, Statutes of 2022, requires the Exchange, upon appropriation by the Legislature, to administer a financial assistance program to help Californians obtain and maintain health benefits through the Exchange if the individual loses employer health care coverage as a result of a labor dispute, beginning July 1, 2023.
   4. SB 840 (Mitchell), Chapter 29, Statutes of 2018, extends to January 1, 2026, state reimbursement for RFK Plan claims.
   5. SB 145 (Pan), Chapter 712, Statutes of 2015 requires, until January 1, 2021, DHCS to annually reimburse the RFK Plan up to $3 million per year for claim payments that exceed $70,000 made by the RFK Plan on behalf of an eligible employee or dependent for a single episode of care on or after September 1, 2016.
   6. SB 75 (Committee on Budget and Fiscal Review), Chapter 18, Statutes of 2015, requires DHCS to allocate $2.5 million in one-time funds from the Major Risk Medical Insurance Fund to the RFK Medical Plan for purposes of purchasing stop-loss insurance.
   7. SB 870 (Committee on Budget and Fiscal Review), Chapter 40, Statutes of 2014, provides $3.2 million in one-time funds from the Major Risk Medical Insurance Fund to the RFK Medical Plan for purposes of purchasing stop-loss insurance.
   8. SB 161 (Ed Hernandez), Chapter 414, Statutes of 2013, establishes regulatory requirements for stop-loss insurance for small employers, including on or after January 1, 2016, setting an individual attachment point of $40,000 or greater and an aggregate attachment point of the greater of $5,000 times the total number of group members, 120% of expected claims, or $40,000; and, exempts small employer stop-loss insurance issued prior to September 1, 2013, from these attachment point requirements.

REGISTERED SUPPORT / OPPOSITION:

Support

United Farm Workers (sponsor)

Robert F. Kennedy Medical Plan

Opposition

None on file.

Analysis Prepared by: Riana King / HEALTH / (916) 319-2097