Bill Text: CA AB2434 | 2023-2024 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Health care coverage: multiple employer welfare arrangements.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2024-09-22 - Chaptered by Secretary of State - Chapter 398, Statutes of 2024. [AB2434 Detail]
Download: California-2023-AB2434-Amended.html
Bill Title: Health care coverage: multiple employer welfare arrangements.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2024-09-22 - Chaptered by Secretary of State - Chapter 398, Statutes of 2024. [AB2434 Detail]
Download: California-2023-AB2434-Amended.html
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Amended
IN
Assembly
April 18, 2024 |
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Amended
IN
Assembly
March 11, 2024 |
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Assembly Bill
No. 2434
| Introduced by Assembly Member Grayson (Coauthor: Assembly Member Blanca Rubio) (Coauthor: Senator Allen) |
February 13, 2024 |
An act to amend Section 1357.503 add and repeal Section 1357.505 of the Health and Safety Code, and to amend Section 10753.05 add and repeal Section 10753.05.4 of the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 2434, as amended, Grayson.
Health care coverage: multiple employer welfare arrangements.
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 provides for the regulation of health insurers by the Department of Insurance.
Existing federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA), authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Existing law authorizes an association of employers to offer a large group health care service plan contract or large group health insurance policy, consistent with ERISA, if certain requirements are met. Until January 1, 2026, existing law also authorizes an association
of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association is headquartered in this state, was established before March 23, 2010, and is the sponsor of a MEWA, and that the contract or policy includes coverage of employees of an association member in the biomedical industry.
This bill would authorize an association of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a MEWA, and that the contract or policy includes coverage of employees of an association member in the engineering, surveying, or design industry.
The bill would require an association and MEWA to annually file evidence of ongoing compliance with those requirements in a manner specified by the departments. This bill would require the departments, on or before June 30, 2028, to provide the health policy committees of the Legislature the most recent filings and would require the departments to recommend to the Legislature whether those MEWAs should remain operative based on that compliance. The bill, on or after June 1, 2025, would prohibit a plan or insurer from marketing, issuing, amending, renewing, or delivering large employer coverage to an association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the Department of Managed Health Care and the Department of Insurance to issue
guidance to health care service plans and health insurers regarding these requirements, as specified. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.
This bill would repeal these provisions on January 1, 2029.
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.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 1357.505 is added to the Health and Safety Code, to read:1357.505.
(a) Notwithstanding Section 1357.503, an association of employers may offer a large group health care service plan contract to small group employer members of the association, consistent with the Employee Retirement Income Security Act of 1974 (Public Law 93-406) (ERISA), as amended (29 U.S.C. Sec. 1001 et seq.), if all of the following requirements are met:(1) The association was established prior to January 1, 1966, has been in continuous existence since that date, and is a bona fide association or group of employers that may act as an employer under Section 3(5) of ERISA (29 U.S.C. Sec. 1002(5)). The association is the sponsor of a multiple employer welfare arrangement (MEWA), as defined under Section 3(40) of ERISA (29 U.S.C. Sec.
1002(40)).
(2) The MEWA is fully insured as described in Section 514 of ERISA (29 U.S.C. Sec. 1144) and is in full compliance with all applicable state and federal laws.
(3) The MEWA has offered a large group health care service plan contract since January 1, 2012, in connection with an employee welfare benefit plan under Section 3(1) of ERISA (29 U.S.C. Sec. 1002(1)).
(4) The large group health care service plan contract offers to employees a level of coverage having an actuarial value equivalent to, or greater than, the platinum level of coverage pursuant to Section 1367.009 available through the California Health Benefit Exchange established pursuant to Section 100500 of the Government Code and provides coverage for essential health benefits consistent with Section 1367.005 and any rules or regulations pursuant
to that section.
(5) The large group health care service plan contract includes coverage of common law employees, and their dependents, who are employed by an association member in the engineering, surveying, or design industry and whose employer has operations in California.
(6) The large group health care service plan offers only fully insured benefits through an insurance contract with a health care service plan licensed by the Department of Managed Health Care.
(7) Association members purchasing health coverage have a minimum of two full-time common law employees and are current employer members of the association sponsoring the MEWA. Employer members of the association subsidize employee premiums by at least 51 percent.
(8) The association is an
organization with business and organizational purposes unrelated to the provision of health care benefits and existed prior to the establishment of the MEWA offering the employee welfare benefit plan.
(9) The participating member employers have a commonality of interests from being in the same industry, unrelated to the provision of health care benefits.
(10) Membership in the association is open solely to employers, and the participating member employers, either directly or indirectly, exercise control over the employee welfare benefit plan, the MEWA, and the large group health care service plan contract, both in form and substance.
(11) The large group health care service plan contract is treated as a single-risk-rated contract that is guaranteed issued and renewable for member employers, as well as their
employees and dependents. An employee or dependent is not charged premium rates based on health status and is not excluded from coverage based upon any preexisting condition. Employee and dependent eligibility are not directly or indirectly based on health status or claims of any person. An employer otherwise eligible is not excluded from participating in a MEWA, or offering or renewing the large group health care service plan contract, based on the health status or claims of any employee or dependent.
(12) The MEWA at all times covers at least 101 employees.
(13) The association and the MEWA file applications for registration with the department on or before June 1, 2025.
(A) An association and MEWA that timely register with the department prior to June 1, 2025, and that are found to be in compliance with this
subdivision, shall annually file evidence of ongoing compliance with this subdivision with the department, in a form and manner set forth by the department.
(B) Except as provided in paragraph (3) of subdivision (b), an association and MEWA that do not meet the requirements of subparagraph (A) shall be subject to the restrictions provided in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1357.503.
(C) An association and MEWA that have registered with the department and fail to show ongoing compliance in their annual filing shall be subject to the restrictions in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1357.503.
(D) By June 30, 2028, the department shall provide the health policy committees of the Legislature the most recent filings made pursuant to subparagraph (A) and
shall provide a recommendation to the Legislature as to whether any MEWAs that have registered with the department pursuant to this paragraph should cease to be operative or whether they should remain operative based on compliance with this subdivision.
(E) The filings and recommendations to be submitted pursuant to subparagraph (D) shall be submitted in compliance with Section 9795 of the Government Code.
(b) (1) On or after June 1, 2025, a health care service plan shall not market, issue, amend, renew, or deliver large employer health care service plan coverage to any association or MEWA that provides any benefit to a resident in this state unless the association and MEWA have registered with the department and are found to be in compliance with the requirements set forth in subdivision (a), or unless the association and MEWA
filed applications for registration pursuant to subdivision (a) and the applications are pending before the department. The department shall have the authority to determine compliance with the requirements set forth in subdivision (a).
(2) The department may issue guidance to health care service plans, associations, and MEWAs regarding registration and compliance with subdivision (a). The guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(3) Subdivision (a) does not apply to, or in any way affect, a self-funded or partially self-funded multiple employer welfare arrangement subject to Article 4.7 (commencing with Section 742.20) of Chapter 1 of Part 2 of Division 1 of the Insurance Code.
(c) This
section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 2.
Section 10753.05.4 is added to the Insurance Code, to read:10753.05.4.
(a) Notwithstanding Section 10753.05, an association of employers may offer a large group health care insurance policy to small group employer members of the association, consistent with the Employee Retirement Income Security Act of 1974 (Public Law 93-406) (ERISA), as amended (29 U.S.C. Sec. 1001 et seq.), if all of the following requirements are met:(1) The association was established prior to January 1, 1966, has been in continuous existence since that date, and is a bona fide association or group of employers that may act as an employer under Section 3(5) of ERISA (29 U.S.C. Sec. 1002(5)). The association is the sponsor of a multiple employer welfare arrangement (MEWA), as defined under Section 3(40) of ERISA (29 U.S.C. Sec.
1002(40)).
(2) The MEWA is fully insured as described in Section 514 of ERISA (29 U.S.C. Sec. 1144) and is in full compliance with all applicable state and federal laws.
(3) The MEWA has offered a large group health insurance policy since January 1, 2012, in connection with an employee welfare benefit plan under Section 3(1) of ERISA (29 U.S.C. Sec. 1002(1)).
(4) The large group health insurance policy offers to employees a level of coverage having an actuarial value equivalent to, or greater than, the platinum level of coverage pursuant to Section 10112.295, available through the California Health Benefit Exchange established pursuant to Section 100500 of the Government Code and provides coverage for essential health benefits consistent with Section 10112.27 and any rules or regulations pursuant to that section.
(5) The large group health insurance policy includes coverage of common law employees, and their dependents, who are employed by an association member in the engineering, surveying, or design industry and whose employer has operations in California.
(6) The large group health insurer offers only fully insured benefits through an insurance contract with a health insurer licensed by the department.
(7) Association members purchasing health coverage have a minimum of two full-time common law employees and are current employer members of the association sponsoring the MEWA. Employer members of the association subsidize employee premiums by at least 51 percent.
(8) The association is an organization with business and organizational purposes unrelated to the
provision of health care benefits and existed prior to the establishment of the MEWA offering the employee welfare benefit plan.
(9) The participating member employers have a commonality of interests from being in the same industry, unrelated to the provision of health care benefits.
(10) Membership in the association is open solely to employers, and the participating member employers, either directly or indirectly, exercise control over the employee welfare benefit plan, the MEWA, and the large group health insurance policy, both in form and substance.
(11) The large group health insurance policy is treated as a single-risk-rated contract that is guaranteed issued and renewable for member employers, as well as their employees and dependents. An employee or dependent is not charged premium rates based on the health
status and is not excluded from coverage based upon any preexisting condition. Employee and dependent eligibility are not directly or indirectly based on health status or claims of any person. An employer otherwise eligible is not excluded from participating in a MEWA, or offering or renewing the large group health insurance policy, based on the health status or claims of any employee or dependent.
(12) The MEWA at all times covers at least 101 employees.
(13) The association and the MEWA file applications for registration with the department on or before June 1, 2025.
(A) An association and MEWA that timely register with the department prior to June 1, 2025, and that are found to be in compliance with this subdivision, shall annually file evidence of ongoing compliance with this subdivision with the department, in a
form and manner set forth by the department.
(B) Except as provided in paragraph (3) of subdivision (b), an association and MEWA that do not meet the requirements of subparagraph (A) shall be subject to the restrictions provided in subparagraph (A) of paragraph (8) of subdivision (b) of Section 10753.05.
(C) An association and MEWA that have registered with the department and fail to show ongoing compliance in their annual filing shall be subject to the restrictions in subparagraph (A) of paragraph (8) of subdivision (b) of Section 10753.05.
(D) By June 30, 2028, the department shall provide the health policy committees of the Legislature the most recent filings made pursuant to subparagraph (A) and shall provide a recommendation to the Legislature as to whether any MEWAs that have registered with the department
pursuant to this paragraph should cease to be operative or whether they should remain operative based on compliance with this subdivision.
(E) The filings and recommendations to be submitted pursuant to subparagraph (D) shall be submitted in compliance with Section 9795 of the Government Code.
(b) (1) On or after June 1, 2025, a health insurer shall not market, issue, amend, renew, or deliver large employer health insurance coverage to any association or MEWA that provides any benefit to a resident in this state unless the association and MEWA have registered with the department and are found to be in compliance with the requirements set forth in subdivision (a), or unless the association and MEWA filed applications for registration pursuant to subdivision (a) and the applications are pending before the department. The department
shall have the authority to determine compliance with the requirements set forth in subdivision (a).
(2) The department may issue guidance to health insurers, associations, and MEWAs regarding registration and compliance with subdivision (a). The guidance shall not be subject to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(3) Subdivision (a) does not apply to, or in any way affect, a self-funded or partially self-funded multiple employer welfare arrangement subject to Article 4.7 (commencing with Section 742.20) of Chapter 1 of Part 2 of Division 1.
(c) This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
