Bill Text: CA AB1521 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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

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BILL NUMBER: AB 1521	AMENDED
	BILL TEXT

	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  , 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 f 
 or specified compensation rates  .  The bill would
also prohibit a plan or insurer from entering into an agreement with
a solicitor that provides for or results in a different percentage of
premium or compensation level paid to the solicitor if the
solicitor, at the time of renewal of an individual or group contract,
submits an application that results in the offer or purchase of
coverage for a different health plan contract or health insurance
policy with the same health plan or health insurer instead of renewal
of the individual or group's existing plan contract or insurance
policy.  The bill  also  would require a
plan or insurer, or  solicitor   person or
entity  representing a plan or insurer, at the time of 
renewal 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.  The bill would prohibit an
application for a different benefit design from changing the terms
and conditions of the individual plan currently held by the applicant
and would require a solicitor to identify the specific plans or
insurers that the solicitor is offering. 
   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  , offer, or application of   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.  This
subdivision does not apply to a compensation arrangement paid to a
solicitor on the basis of a percentage of premium, provided that the
compensation level shall not vary because of the health status,
claims experience, industry, or occupation of the individual.
 
   (b) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in a different percentage of premium or compensation
level paid to the solicitor if, at the time of renewal of an
individual or group plan contract, the solicitor submits an
application that results in the offer or purchase of coverage for a
different health plan contract with the same health care service plan
instead of renewal of the individual or group's existing health plan
contract. 
    (c)     At the time of
renewal of an individual health care service plan contract, the
health plan, or any solicitor representing the health plan, shall
notify the individual that application for a different individual
health plan contract may result in a review of the applicant's
medical history that could result in an offer, an offer for higher
premium, or denial of coverage entirely for the different plan being
applied for. An application for a different benefit plan design shall
not change the terms and conditions of the individual health plan
currently held by the applicant.   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.
 
   (b) At the time of renewal of an individual health plan contract
or the transfer to another individual health plan contract with the
same plan, a plan shall base compensation for the solicitor on the
health 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 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 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 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 
, offer   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.  This subdivision does not
apply to a compensation arrangement that provides compensation to an
agent on the basis of a percentage of premium, provided that the
compensation level shall not vary because of the health status,
claims experience, industry, or occupation of the individual.
 
   (b) A health insurer shall not, directly or indirectly, enter into
any contract, agreement, or arrangement with an agent, broker,
solicitor, or any other entity that provides for or results in a
different percentage of premium or compensation level paid to the
agent, broker, solicitor or other entity if, at the time of renewal
of an individual or group health insurance policy, the agent, broker,
solicitor, or other entity submits an application that results in
the offer or purchase of coverage for a different health insurance
policy with the same health insurer instead of renewal of the
individual or group's existing health insurance policy. 
    (c)     At the time of
renewal of an individual health insurance policy, the health insurer,
or any agent, broker, solicitor, or any other entity representing
the health insurer, shall notify the individual that application for
a different individual health insurance policy 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 being applied for. An application for a different
benefit plan design shall not change the terms and conditions of the
individual health plan contract currently held by the applicant.
  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.  
   (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 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 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,  or solicitor  
solicitor,  or other entity shall identify the specific insurer
or insurers the agent, broker,  or solicitor  
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.