Bill Text: CA AB1521 | 2009-2010 | Regular Session | Amended
Bill Title: Health care coverage: solicitation.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Engrossed - Dead) 2009-08-27 - In committee: Held under submission. [AB1521 Detail]
Download: California-2009-AB1521-Amended.html
BILL NUMBER: AB 1521 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 15, 2009
AMENDED IN SENATE JUNE 23, 2009
AMENDED IN ASSEMBLY APRIL 29, 2009
AMENDED IN ASSEMBLY APRIL 16, 2009
INTRODUCED BY Assembly Member Jones
FEBRUARY 27, 2009
An act to add Section 1359.1 to the Health and Safety Code, and to
add Section 10119.4 to the Insurance Code, relating to health care
coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 1521, as amended, Jones. Health care coverage: solicitation.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law also provides for the
regulation of health insurers by the Department of Insurance.
Existing law regulates the solicitation of health care service plan
products and health insurance. Existing law prohibits a plan or
insurer from entering into an agreement with an agent, broker, or
solicitor that provides for or results in the compensation paid to
the agent, broker, or solicitor for the sale of a health care service
plan contract or health insurance policy to a small employer or an
individual to be varied because of specified characteristics of the
small employer or individual.
This bill would prohibit a plan or insurer from entering into an
agreement with a solicitor, as specified and including an
agent or broker among others , that provides for
or results in the compensation paid to the solicitor for the sale or
offer of, or application for, an individual health care service plan
contract or individual health insurance policy to be varied because
of the health status, claims experience, industry, or occupation of
the individual and provide for specified compensation rates
, but would authoriz e the plan or insurer
to establish standardized or tiered compensation for a solicitor, as
specified. The bill would also specify the compensation rate for a
solicitor at the time of renewal of an individual contract or policy
or transfer to another individual contract or policy with the same
plan or insurer . The bill would require a plan or insurer, or
person or entity representing a plan or insurer, at the time of an
individual's application to change to a different individual health
care service plan contract or individual health insurance policy, to
notify the individual that application for a different contract or
policy may result in an offer, an offer for a higher premium, or
denial of coverage for that different contract or policy.
Because a willful violation of the bill's requirements relative to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1359.1 is added to the Health and Safety Code,
to read:
1359.1. (a) A plan shall not, directly or indirectly, enter into
any contract, agreement, or arrangement with a solicitor that
provides for or results in the compensation paid to the solicitor for
the sale or offer of, or application for, an individual health care
service plan contract to be varied because of the health status,
claims experience, industry, or occupation of the individual.
However, a health plan may establish solicitor payment
rates that have the effect of either standardizing commissions or
providing a lower solicitor compensation level for the sale or offer
of, or application for, coverage of an individual with a higher risk
profile than the compensation solicitors receive for an individual
with a lower risk profile, provided that the commission or
compensation does not directly or indirectly create an incentive
based on the health status, claims experience, industry, or
occupation of the individual. A plan may establish
solicitor payment rates that have the effect of standardizing or
tiering compensation for the sale or offer of, or application for,
coverage of an individual, provided that the standardized or tiered
compensation does not directly or indirectly create an incentive for
the solicitor to recommend, offer, or sell based on the health
status, claims experience, industry, or occupation of the individual,
or any combination thereof.
(b) At the time of renewal of an individual health care
service plan contract or the transfer to another individual
health care service plan contract with the same plan, a
plan shall base compensation for the solicitor on the health
at the renewal rate for the health care service
plan contract in which the individual will be enrolled after renewal
of the current contract or transfer to another contract with the
same health plan. This subdivision shall also
apply to a subsidiary or affiliate of the health
plan.
(c) Unless an individual is applying for transfer to a different
health care service plan contract pursuant to Section
1389.5, the health plan, or any solicitor
representing the health plan, shall notify an
individual applying to change individual health care service
plan contracts that the application may result in a review of
the applicant's medical history that could result in an offer, an
offer for a higher premium, or denial of coverage entirely for the
different plan health care service plan
contrac t being applied for. The notice required
pursuant to this section shall be provided at the time of an
individual's application to change to a different individual health
care service plan contract.
(d) The solicitor shall identify the specific health plan or
health plans the solicitor is offering.
(e) For purposes of this section, "solicitor" shall have the same
meaning as provided in subdivision (m) of Section 1345 and shall
include an agent, broker, solicitor, solicitor firm, or any other
entity that engages in solicitation as defined in subdivision (l) of
Section 1345.
SEC. 2. Section 10119.4 is added to the Insurance Code, to read:
10119.4. (a) A health insurer shall not, directly or indirectly,
enter into any contract, agreement, or arrangement with an agent,
broker, solicitor, or any other entity engaging in the sale or offer
of, or application for, individual health insurance that provides for
or results in the compensation paid to the agent, broker, solicitor,
or other entity for the sale of a health insurance policy to be
varied because of the health status, claims experience, industry, or
occupation of the individual.
However, a health insurer may establish payment rates for
agents, brokers, solicitors, or the other entities that have the
effect of either standardizing commissions or providing a lower
compensation level for the sale or offer of, or application for,
coverage of an individual with a higher risk profile than the
compensation the agents, brokers, solicitors, or other entities
receive for an individual with a lower risk profile, provided that
the commission or compensation does not directly or indirectly create
an incentive based on the health status, claims experience,
industry, or occupation of the individual. A health
insurer may establish payment rates for the agent, broker, solicitor,
or other entity that have the effect of standardizing or tiering
compensation for the sale or offer of, or application for, individual
health insurance, provided that the standardized or tiered
compensation does not directly or indirectly create an incentive for
the agent, broker, solicitor, or other entity to recommend, offer, or
sell based on the health status, claims experience, industry, or
occupation of the individual, or any combination thereof.
(b) At the time of renewal of an individual health insurance
policy or the transfer to another individual health insurance policy
with the same insurer, an insurer shall base compensation for the
agent, broker, solicitor, or other entity on
, as specified in subdivision (a), at the renewal rate
for the health insurance policy under which the individual will
be covered after renewal of the current policy or after transfer to
another policy with the same insurer. This subdivision shall also
apply to a subsidiary or affiliate of that insurer.
(c) Unless an individual is applying for transfer to a different
health insurance policy pursuant to Section 10119.1, the health
insurer, or any agent, broker, solicitor, or other entity
representing the health insurer, shall notify an individual applying
to change to a different individual health insurance policy that the
application may result in a review of the applicant's medical history
that could result in an offer, an offer for a higher premium, or
denial of coverage entirely for the different plan
policy being applied for. The notice required pursuant to
this section shall be provided at the time of an individual's
application to change to a different individual health insurance
policy.
(d) The agent, broker, solicitor, or other entity shall identify
the specific insurer or insurers the agent, broker, solicitor, or
other entity is offering.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
