Bill Text: CA SB175 | 2019-2020 | Regular Session | Amended

California Senate Bill 175 (Prior Session Legislation)

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

Bill Title: Health care coverage.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2020-06-18 - Referred to Com. on HEALTH. [SB175 Detail]

Download: California-2019-SB175-Amended.html

Amended IN Senate April 03, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill

No. 175

Introduced by Senator Pan

January 28, 2019

An act to amend Section 100520 of, and to add Title 24 (commencing with Section 100700) to to, the Government Code, to amend Section 1399.849 of, and to add Section 1345.5 to, the Health and Safety Code, to amend Section 10965.3 of, and to add Section 10112.45 to, the Insurance Code, and to amend Sections 19254, 19291, 19521, and 19533 of, to add Section 19548.8 to, and to add Part 32 (commencing with Section 61000) to Division 2 of of, the Revenue and Taxation Code, relating to ~~healthcare coverage.~~ health care coverage, and making an appropriation therefor.

LEGISLATIVE COUNSEL'S DIGEST

SB 175, as amended, Pan. ~~Healthcare~~ Health care coverage: minimum essential coverage.

Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services and under which ~~healthcare~~ health care services are provided to ~~qualified,~~ qualified low-income persons. The Medi-Cal program is, in part, governed and funded by federal Medicaid ~~Program~~ program provisions. Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and health insurers by the Department of Insurance. Existing law establishes the California Health Benefit Exchange (Exchange), also known as Covered California, for the purpose of facilitating the purchase of qualified health plans by qualified individuals and qualified small employers. Existing law establishes the California Health Trust Fund and continuously appropriates moneys in the fund for these purposes.

Existing federal law, the Patient Protection and Affordable Care Act (PPACA), enacts various ~~healthcare~~ health care coverage market reforms as of January 1, 2014. PPACA generally requires ~~individuals,~~ an individual, and any dependents of the individual, to maintain minimum essential coverage, as defined, and, if an individual fails to maintain minimum essential coverage, PPACA imposes on the individual taxpayer a penalty. This provision is referred to as the individual mandate.

This bill would require a California resident to ensure that the resident, and any dependent of the resident, is covered under minimum essential coverage for each month beginning after 2019. The bill would impose a penalty for the failure to maintain minimum essential coverage. The bill would require the Exchange to determine the penalty, if any, for a resident and would require the Franchise Tax Board to collect the penalty. The bill would require the Exchange to determine whether to grant a certification that a resident is exempt from the requirement to maintain minimum essential coverage, the penalty, or both, and would require the Exchange to notify the resident and the Franchise Tax Board of its determination.
The bill would also establish the Health Care Coverage Penalty Fund, into which moneys collected from the above-described penalty would be deposited. Subject to an appropriation by the Legislature, the bill would require that moneys in the fund be used to improve the affordability of healthcare coverage for Californians.
This bill would create the Minimum Essential Coverage Individual Mandate to require a California resident to ensure that the resident, and any dependent of the resident, is covered under minimum essential coverage, as defined, for each month beginning on January 1, 2020, except as specified. The bill would require the Exchange to grant exemptions from the mandate for reason of hardship or religious conscience, and would require the Exchange to establish a process for determining eligibility for an exemption. The bill would impose the Individual Shared Responsibility Penalty for the failure to maintain minimum essential coverage, as determined and collected by the Franchise Tax Board, in collaboration with the Exchange, as specified. The bill would require the Franchise Tax Board to provide specified information to the Exchange regarding individuals who do not maintain minimum essential coverage, and would require the Exchange to conduct annual outreach and enrollment efforts with those individuals. The bill would require an applicable entity, as defined, that provides minimum essential coverage to an individual to file specified returns to the Franchise Tax Board regarding that coverage, as prescribed.
The bill would also expand the purposes of the California Health Trust Fund to include the Exchange’s operational costs of the Minimum Essential Coverage Individual Mandate and the Affordable Care Access Plus Program. By expanding the purposes of a continuously appropriated fund, the bill would make an appropriation.
This bill would become operative only if SB 65 of the 2019–20 Regular Session is enacted and takes effect on or before January 1, 2020.

Vote: MAJORITY Appropriation: NOYES Fiscal Committee: YES Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 100520 of the Government Code is amended to read:

100520.

(a) The California Health Trust Fund is hereby created in the State Treasury for the purpose of this ~~title.~~ title, Title 24 (commencing with Section 100700), and Title 25 (commencing with Section 100800). Notwithstanding Section 13340, all moneys in the fund shall be continuously appropriated without regard to fiscal year for the purposes of this ~~title.~~ title, Title 24 (commencing with Section 100700), and Title 25 (commencing with Section 100800). Any moneys in the fund that are unexpended or unencumbered at the end of a fiscal year may be carried forward to the next succeeding fiscal year.

(b) Notwithstanding any other provision of law, moneys deposited in the fund shall not be loaned to, or borrowed by, any other special fund or the General Fund, or a county general fund or any other county fund.

(d) The board or staff of the Exchange shall not utilize any funds intended for the administrative and operational expenses of the Exchange for staff retreats, promotional giveaways, excessive executive compensation, or promotion of federal or state legislative or regulatory modifications.

(e) Notwithstanding Section 16305.7, all interest earned on the moneys that have been deposited into the fund shall be retained in the fund and used for purposes consistent with the fund.

(f) Effective January 1, 2016, if at the end of any fiscal year, the fund has unencumbered funds in an amount that equals or is more than the board approved operating budget of the Exchange for the next fiscal year, the board shall reduce the charges imposed under subdivision (n) of Section 100503 during the following fiscal year in an amount that will reduce any surplus funds of the Exchange to an amount that is equal to the agency’s operating budget for the next fiscal year.

(g) Notwithstanding subdivision (a), moneys in the fund shall not be used to fund the minimum essential coverage individual mandate pursuant to Title 24 (commencing with Section 100700) or the financial assistance program authorized pursuant to Title 25 (commencing with Section 100800), except for the Exchange’s operational costs necessary to administer the individual mandate and financial assistance program.
(h) The Legislature finds and declares that the Exchange’s operations of the programs in Title 24 (commencing with Section 100700) and Title 25 (commencing with Section 100800) are necessary and directly related to furthering the Exchange’s purposes pursuant to this title and the federal act.

SECTION 1.SEC. 2.

Title 24 (commencing with Section 100700) is added to the Government Code, to read:

TITLE 24. California Healthcare Health Care Coverage Shared Responsibility Act

100700.
~~(a)A California resident shall, for each month beginning after 2019, ensure that the resident, and any dependent of the resident, is covered under minimum essential coverage for that month.~~
~~(b)A penalty shall be imposed for failure to meet the requirement described in subdivision (a).~~
(c)It is the intent of the Legislature to follow a methodology similar to that outlined in Section 5000A of Title 26 of the United States Code, as in effect on December 15, 2017, for purposes of determining exemptions to the requirement described in subdivision (a) and the calculation and collection of the penalty described in subdivision (b).
~~(d)The Exchange shall determine the penalty, if any, for a resident, and the Franchise Tax Board shall collect the penalty.~~

100700.
The Legislature finds and declares all of the following:
(a) The individual mandate imposed by this title, and the penalty imposed by Part 32 (commencing with Section 61000) of the Revenue and Taxation Code, are necessary to protect the compelling state interests of:
(1) Protecting the health and welfare of the state’s residents.
(2) Ensuring access to affordable health care coverage in this state.
(3) Ensuring a stable and well-functioning health insurance market in this state.
(b) There is compelling evidence that, without an effective mandate on individuals to secure health coverage, there would be substantial instability in health insurance markets, including higher prices and the possibility of areas without any insurance available.
(c) Ensuring the health of insurance markets is a responsibility reserved for states under the federal McCarran-Ferguson Act (15 U.S.C. Sec. 1011 et seq.) and other federal law.

100701.
(a) A California resident, as defined in Section 17014 of the Revenue and Taxation Code, shall, for each month beginning on January 1, 2020, ensure that the resident, and any dependent of the resident, is covered under minimum essential coverage for that month.
(b) The following individuals shall be exempt from the requirement described in subdivision (a):
(1) An individual for any month if the individual has in effect a certificate of exemption for hardship or religious conscience issued by the Exchange under Section 100703 for that month.
(2) An individual for any month if the individual is incarcerated for that month.
(3) An individual for any month if the individual is not a citizen or national of the United States or is not lawfully present in the United States for that month.
(4) An individual who is a member of an Indian tribe, as defined in Section 45A(c)(6) of the Internal Revenue Code of 1986, during the month.
(5) An individual for any month if that month occurs during a period described in subparagraph (A) or (B) of Section 911(d)(1) of the Internal Revenue Code of 1986 that is applicable to the individual.
(6) An individual for any month if that individual is a bona fide resident of a possession of the United States, as determined under Section 937(a) of the Internal Revenue Code of 1986, for that month.
(7) An individual for any month if that individual is a bona fide resident of another state for that month.
(8) An individual for any month who is enrolled in limited or restricted scope coverage administered by the Medi-Cal program or other health care coverage programs administered by the State Department of Health Care Services for that month.
(c) A penalty shall be imposed for failure to meet the requirement described in subdivision (a).
(d) The requirements described in subdivisions (a) and (c) shall be referred to as the Minimum Essential Coverage Individual Mandate.

100702.

For the purposes of this title, the following definitions shall apply:

(a) “Exchange” means the California Health Benefit Exchange, also known as Covered California, established pursuant to Title 22 (commencing with Section 100500).

(b) “Minimum essential coverage” has the same meaning as ~~that term is defined in Section 5000A(f) of Title 26 of the United States Code.~~ defined in Section 1345.5 of the Health and Safety Code and Section 10112.45 of the Insurance Code.

100704.100703.

(a) (1) The Exchange shall ~~determine~~ establish a process for determining whether or not to grant a certification that a resident is entitled to an exemption from the requirement to maintain minimum essential coverage pursuant to subdivision (a) of Section 100700, the penalty imposed pursuant to subdivision ~~(b)~~ (c) of Section 100700, or both, by reason or of religious conscience or hardship.

(2) The Exchange shall grant an exemption for reason of hardship from the Minimum Essential Coverage Individual Mandate established in Section 100701 for a given month upon determining that a resident has suffered a hardship with respect to the capability to obtain coverage from a qualified health plan for that month.
(3) The Exchange shall grant an exemption for reason of religious conscience from the Minimum Essential Coverage Individual Mandate established in Section 100701 for a given month upon determining that a resident for that month is either of the following:
(A) A member of a recognized religious sect or division thereof, as described in Section 1402(g)(1) of the Internal Revenue Code of 1986, and is an adherent of established tenets or teachings of that sect or division.
(B) A member of a religious sect or division thereof that is not described in Section 1402(g)(1) of the Internal Revenue Code of 1986, who relies solely on a religious method of healing for whom the acceptance of medical health services would be inconsistent with the religious beliefs of the individual, and who includes an attestation that the individual has not received medical health services during the preceding taxable year. For purposes of this paragraph, the term “medical health services” does not include routine dental, vision, and hearing services, midwifery services, vaccinations, necessary medical services provided to children, services required by law or by a third party, and other services as the Secretary of United States Department of Health and Human Services may provide in implementing Section 1311(d)(4)(H) of the federal Patient Protection and Affordable Care Act. An individual who claims this exemption, but received medical care during the tax year, is liable for the cost of the care, as well as the penalty imposed pursuant to subdivision (c) of Section 100701.

(b) The Exchange shall notify the resident and the Franchise Tax ~~board~~ Board of a certification granted pursuant to subdivision (a) in a time and manner as the Exchange, in consultation with the Franchise Tax Board, ~~prescribes.~~ determines is feasible and prompt. The Exchange may contract with a third party or another entity, including a state or federal agency, to administer this section.

100706.
~~(a)The Health Care Coverage Penalty Fund is hereby created in the State Treasury.~~
~~(b)Moneys collected from the penalty assessed pursuant to Part 32 (commencing with Section 61000) of Division 2 of the Revenue and Taxation Code shall be deposited into the fund.~~
~~(c)Subject to an appropriation by the Legislature, moneys in the fund shall be used to improve the affordability of healthcare coverage for Californians.~~

100704.
(a) The Exchange shall annually conduct outreach and enrollment efforts to residents who indicated on their individual income tax returns that they were not compliant with Section 100701 for the preceding taxable year.
(b) For purposes of the efforts required by subdivision (a), the Franchise Tax Board shall provide the Exchange with individual income tax return information, as authorized by Section 19548.8 of the Revenue and Taxation Code, in a form and manner determined by the Franchise Tax Board, in consultation with the Exchange.

100705.
(a) The Exchange shall, in consultation with the Franchise Tax Board, promulgate rules and regulations to implement this title.
(b) Until January 1, 2022, any rules and regulations necessary to implement this title may be adopted as emergency regulations in accordance with the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2). The adoption of emergency regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare. Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2, including subdivisions (e) and (h) of Section 11346.1, an emergency regulation adopted pursuant to this section shall be repealed by operation of law unless the adoption, amendment, or repeal of the regulation is promulgated by the board pursuant to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 within five years of the initial adoption of the emergency regulation. An emergency regulation adopted pursuant to this section shall be discussed by the board during at least one properly noticed board meeting before the board meeting at which the board adopts the regulation. Notwithstanding subdivision (h) of Section 11346.1, until January 1, 2027, the Office of Administrative Law may approve more than two readoptions of an emergency regulation adopted pursuant to this section.

SEC. 2.Part 32 (commencing with Section 61000) is added to Division 2 of the Revenue and Taxation Code, to read:
32.Minimum Essential Coverage Penalty Collection
61000.
(a)(1)The penalty determined by the California Health Benefit Exchange pursuant to Title 24 (commencing with Section 100700) of the Government Code shall be paid upon notice and demand by the Franchise Tax Board, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under Chapter 4 (commencing with Section 19001) of Part 10.2.
(2)Notwithstanding any other law, in the case of any failure by a taxpayer to timely pay the penalty described in paragraph (1), the taxpayer shall not be subject to any criminal prosecution or criminal penalty with respect to that failure.
(3)Notwithstanding any other law, the Franchise Tax Board shall not file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty described in paragraph (1), or levy on that property with respect to that failure.
(b)The Franchise Tax Board shall revise the returns required to be filed pursuant to Article 1 (commencing with Section 18501) of Chapter 2 of Part 10.2 to include a line for the penalty assessed pursuant to this section.
~~(c)Moneys collected from the penalty assessed pursuant to this section shall be deposited into the Health Care Coverage Penalty Fund created pursuant to Section 100706 of the Government Code.~~

SEC. 3.

Section 1345.5 is added to the Health and Safety Code, to read:

1345.5.
(a) “Minimum essential coverage” means any of the following:
(1) Coverage under any of the following government-sponsored programs:
(A) The Medicare program under Part A or Part C of Title XVIII of the federal Social Security Act.
(B) The Medi-Cal program, including the Medi-Cal Access Program and Medi-Cal for Pregnant Women.
(C) Medical coverage under Chapter 55 of Title 10 of the United States Code, including coverage under the TRICARE program.
(D) A health care program under Chapter 17 or Chapter 18 of Title 38 of the United States Code.
(E) A health plan under Section 2504(e) of Title 22 of the United States Code, relating to Peace Corps volunteers.
(F) The Nonappropriated Fund health benefits program of the Department of Defense, established under Section 349 of the National Defense Authorization Act for Fiscal Year 1995.
(G) Refugee Medical Assistance, supported by the Administration for Children and Families, which is authorized under Section 412(e)(7)(A) of the immigration and Nationality Act.
(H) A successor program to one of the above programs, as determined by the Exchange.
(2) The University of California Student Health Insurance Plan and the University of California Voluntary Dependent Plan.
(3) Coverage under an eligible employer-sponsored plan, including grandfathered plans and policies. “Eligible employer-sponsored plan” means, with respect to an employee, a group health plan offered by an employer to the employee, including a governmental plan within the meaning of Section 2791(d)(8) of the federal Public Health Service Act (42 U.S.C. Sec. 201 et seq.) or any other plan, group health care service plan contract, or group health insurance policy offered in the small or large group market within the state.
(4) Coverage under an individual health care service plan contract or individual health insurance policy, including grandfathered contracts and policies, or student health coverage that meets all the requirements of Title I of the Affordable Care Act pertaining to nongrandfathered, individual health insurance coverage.
(5) Any other health benefits coverage similar in form and substance to the benefits described in this subdivision that is determined by the department to constitute minimum essential coverage pursuant to this section.
(b) “Minimum essential coverage” does not include health coverage that consists of coverage of excepted benefits as follows if the benefits are provided under a separate policy, certificate, or contract:
(1) Coverage of the following excepted benefits:
(A) Coverage only for accident or disability income insurance, or a combination of the two.
(B) Coverage issued as a supplement to liability insurance.
(C) Liability insurance, including general liability insurance and automobile liability insurance.
(D) Workers’ compensation or similar insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for onsite medical clinics.
(H) Other similar health coverage, under which benefits for medical care are secondary or incidental to other health benefits.
(2) Coverage of the following excepted benefits, if offered separately:
(A) Limited-scope dental or vision benefits, or benefits limited to any other single specialized area of health care.
(B) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof.
(C) Other similar, limited benefits.
(3) Coverage of the following excepted if offered as independent, noncoordinated benefits.
(A) Coverage only for a specified disease or illness.
(B) Hospital indemnity or other fixed indemnity insurance.
(4) Coverage of the following excepted benefits if offered as a separate health care policy:
(A) Medicare supplemental health insurance, as defined under Section 1395ss(g)(1) of Title 42 of the United States Code.
(B) Coverage supplemental to the coverage provided under Chapter 55 (commencing with Section 1071) of Title 10 of the United States Code.
(c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of a director’s letter without taking regulatory action.

SEC. 4.

Section 1399.849 of the Health and Safety Code is amended to read:

1399.849.

(a) (1) On and after October 1, 2013, a plan shall fairly and affirmatively offer, market, and sell all of the plan’s health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in each service area in which the plan provides or arranges for the provision of health care services. A plan shall limit enrollment in individual health benefit plans to open enrollment periods, annual enrollment periods, and special enrollment periods as provided in subdivisions (c) and (d).

(2) A plan shall allow the subscriber of an individual health benefit plan to add a dependent to the subscriber’s plan at the option of the subscriber, consistent with the open enrollment, annual enrollment, and special enrollment period requirements in this section.

(b) An individual health benefit plan issued, amended, or renewed on or after January 1, 2014, shall not impose any preexisting condition provision upon any individual.

(c) (1) With respect to individual health benefit plans offered outside of the Exchange, a plan shall provide an initial open enrollment period from October 1, 2013, to March 31, 2014, inclusive, an annual enrollment period for the policy year beginning on January 1, 2015, from November 15, 2014, to February 15, 2015, inclusive, annual enrollment periods for policy years beginning on or after January 1, 2016, to December 31, 2018, inclusive, from November 1, of the preceding calendar year, to January 31 of the benefit year, inclusive, and annual enrollment periods for policy years beginning on or after January 1, 2019, from October 15, of the preceding calendar year, to January 15 of the benefit year, inclusive.

(2) With respect to individual health benefit plans offered through the Exchange, a plan shall provide an annual enrollment period for the policy years beginning on January 1, 2016, to December 31, 2018, inclusive, from November 1, of the preceding calendar year, to January 31 of the benefit year, inclusive, and annual enrollment periods for policy years beginning on or after January 1, 2019, from November 1 to December 15 of the preceding calendar year, inclusive.

(3) With respect to individual health benefit plans offered through the Exchange, for policy years beginning on or after January 1, 2019, a plan shall provide a special enrollment period for all individuals selecting an individual health benefit plan through the Exchange from October 15 to October 31 of the preceding calendar year, inclusive, and from December 16, of the preceding calendar year, to January 15 of the benefit year, inclusive. An application for a health benefit plan submitted during these two special enrollment periods shall be treated the same as an application submitted during the annual open enrollment period. The effective date of coverage for plan selections made between October 15 and October 31, inclusive, shall be January 1 of the benefit year, and for plan selections made from December 16 to January 15, inclusive, shall be no later than February 1 of the benefit year.

(4) Pursuant to Section 147.104(b)(2) of Title 45 of the Code of Federal Regulations, for individuals enrolled in noncalendar year individual health plan contracts, a plan shall also provide a limited open enrollment period beginning on the date that is 30 calendar days prior to the date the policy year ends in 2014.

(d) (1) Subject to paragraph (2), commencing January 1, 2014, a plan shall allow an individual to enroll in or change individual health benefit plans as a result of the following triggering events:

(A) ~~He or she or his or her~~ The individual or the individual’s dependent loses minimum essential coverage. For purposes of this paragraph, the following definitions shall apply:

(i) “Minimum essential coverage” has the same meaning as that term is defined in Section 1345.5 or subsection (f) of Section 5000A of the Internal Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not limited to, loss of that coverage due to the circumstances described in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the Code of Federal Regulations and the circumstances described in Section 1163 of Title 29 of the United States Code. “Loss of minimum essential coverage” also includes loss of that coverage for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include loss of that coverage due to the individual’s failure to pay premiums on a timely basis or situations allowing for a rescission, subject to clause (ii) and Sections 1389.7 and 1389.21.

(B) ~~He or she~~ The individual gains a dependent or becomes a dependent.

(C) ~~He or she~~ The individual is mandated to be covered as a dependent pursuant to a valid state or federal court order.

(D) ~~He or she~~ The individual has been released from incarceration.

(E) ~~His or her~~ The individual’s health coverage issuer substantially violated a material provision of the health coverage contract.

(F) ~~He or she~~ The individual gains access to new health benefit plans as a result of a permanent move.

(G) ~~He or she~~ The individual was receiving services from a contracting provider under another health benefit plan, as defined in Section 1399.845 of this code or Section 10965 of the Insurance Code, for one of the conditions described in subdivision (c) of Section 1373.96 of this code and that provider is no longer participating in the health benefit plan.

(H) ~~He or she~~ The individual demonstrates to the Exchange, with respect to health benefit plans offered through the Exchange, or to the department, with respect to health benefit plans offered outside the Exchange, that ~~he or she~~ the individual did not enroll in a health benefit plan during the immediately preceding enrollment period available to the individual because ~~he or she~~ the individual was misinformed that ~~he or she~~ the individual was covered under minimum essential coverage.

(I) ~~He or she~~ The individual is a member of the reserve forces of the United States military returning from active duty or a member of the California National Guard returning from active duty service under Title 32 of the United States Code.

(J) With respect to individual health benefit plans offered through the Exchange, in addition to the triggering events listed in this paragraph, any other events listed in Section 155.420(d) of Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered outside the Exchange, an individual shall have 60 days from the date of a triggering event identified in paragraph (1) to apply for coverage from a health care service plan subject to this section. With respect to individual health benefit plans offered through the Exchange, an individual shall have 60 days from the date of a triggering event identified in paragraph (1) to select a plan offered through the Exchange, unless a longer period is provided in Part 155 (commencing with Section 155.10) of Subchapter B of Subtitle A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered through the Exchange, the effective date of coverage required pursuant to this section shall be consistent with the dates specified in Section 155.410 or 155.420 of Title 45 of the Code of Federal Regulations, as applicable. A dependent who is a registered domestic partner pursuant to Section 297 of the Family Code shall have the same effective date of coverage as a spouse.

(f) With respect to individual health benefit plans offered outside the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form for a plan contract, the health care service plan shall, within 30 days, notify the individual of the individual’s actual premium charges for that plan established in accordance with Section 1399.855. The individual shall have 30 days in which to exercise the right to buy coverage at the quoted premium charges.

(2) With respect to an individual health benefit plan for which an individual applies during the initial open enrollment period described in paragraph (1) of subdivision (c), when the subscriber submits a premium payment, based on the quoted premium charges, and that payment is delivered or postmarked, whichever occurs earlier, by December 15, 2013, coverage under the individual health benefit plan shall become effective no later than January 1, 2014. When that payment is delivered or postmarked within the first 15 days of any subsequent month, coverage shall become effective no later than the first day of the following month. When that payment is delivered or postmarked between December 16, 2013, to December 31, 2013, inclusive, or after the 15th day of any subsequent month, coverage shall become effective no later than the first day of the second month following delivery or postmark of the payment.

(3) With respect to an individual health benefit plan for which an individual applies during the annual open enrollment period described in paragraph (1) of subdivision (c), when the individual submits a premium payment, based on the quoted premium charges, and that payment is delivered or postmarked, whichever occurs later, by December 15 of the preceding calendar year, coverage shall become effective on January 1 of the benefit year. When that payment is delivered or postmarked within the first 15 days of any subsequent month, coverage shall become effective no later than the first day of the following month. When that payment is delivered or postmarked between December 16 to December 31, inclusive, or after the 15th day of any subsequent month, coverage shall become effective no later than the first day of the second month following delivery or postmark of the payment.

(4) With respect to an individual health benefit plan for which an individual applies during a special enrollment period described in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based on the quoted premium charges, and that payment is delivered or postmarked, whichever occurs earlier, within the first 15 days of the month, coverage under the plan shall become effective no later than the first day of the following month. When the premium payment is neither delivered nor postmarked until after the 15th day of the month, coverage shall become effective no later than the first day of the second month following delivery or postmark of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth, adoption, or placement for adoption, the coverage shall be effective on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage or becoming a registered domestic partner or in the case where a qualified individual loses minimum essential coverage, the coverage effective date shall be the first day of the month following the date the plan receives the request for special enrollment.

(g) (1) A health care service plan shall not establish rules for eligibility, including continued eligibility, of any individual to enroll under the terms of an individual health benefit plan based on any of the following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any federal regulations, rules, or guidance issued pursuant to Section 2705 of the federal Public Health Service Act (Public Law 78-410).

(2) Notwithstanding Section 1389.1, a health care service plan shall not require an individual applicant or ~~his or her~~ the applicant’s dependent to fill out a health assessment or medical questionnaire prior to enrollment under an individual health benefit plan. A health care service plan shall not acquire or request information that relates to a health status-related factor from the applicant or ~~his or her~~ the applicant’s dependent or any other source prior to enrollment of the individual.

(h) (1) A health care service plan shall consider as a single risk pool for rating purposes in the individual market the claims experience of all insureds and all enrollees in all nongrandfathered individual health benefit plans offered by that health care service plan in this state, whether offered as health care service plan contracts or individual health insurance policies, including those insureds and enrollees who enroll in individual coverage through the Exchange and insureds and enrollees who enroll in individual coverage outside of the Exchange. Student health insurance coverage, as that coverage is defined in Section 147.145(a) of Title 45 of the Code of Federal Regulations, shall not be included in a health care service plan’s single risk pool for individual coverage.

(2) Each calendar year, a health care service plan shall establish an index rate for the individual market in the state based on the total combined claims costs for providing essential health benefits, as defined pursuant to Section 1302 of PPACA, within the single risk pool required under paragraph (1). The index rate shall be adjusted on a marketwide basis based on the total expected marketwide payments and charges under the risk adjustment program established for the state pursuant to Section 1343 of PPACA and Exchange user fees, as described in subdivision (d) of Section 156.80 of Title 45 of the Code of Federal Regulations. The premium rate for all of the health benefit plans in the individual market within the single risk pool required under paragraph (1) shall use the applicable marketwide adjusted index rate, subject only to the adjustments permitted under paragraph (3).

(3) A health care service plan may vary premium rates for a particular health benefit plan from its index rate based only on the following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health benefit plan.

(B) The health benefit plan’s provider network, delivery system characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are in addition to the essential health benefits, as defined pursuant to Section 1302 of PPACA and Section 1367.005. These additional benefits shall be pooled with similar benefits within the single risk pool required under paragraph (1) and the claims experience from those benefits shall be utilized to determine rate variations for plans that offer those benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection (e) of Section 1302 of PPACA, the expected impact of the specific eligibility categories for those plans.

(E) Administrative costs, excluding user fees required by the Exchange.

(i) This section shall only apply with respect to individual health benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to a grandfathered health plan.

(k) If Section 5000A of the Internal Revenue Code, as added by Section 1501 of PPACA, is repealed or amended to no longer apply to the individual market, as defined in Section 2791 of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-91), subdivisions (a), (b), and (g) shall become inoperative 12 months after that repeal or amendment.

SEC. 5.

Section 10112.45 is added to the Insurance Code, to read:

10112.45.
(a) “Minimum essential coverage” means any of the following:
(1) Coverage under any of the following government-sponsored programs:
(A) The Medicare program under Part A or Part C of Title XVIII of the federal Social Security Act.
(B) The Medi-Cal program, including the Medi-Cal Access Program and Medi-Cal for Pregnant Women.
(C) Medical coverage under Chapter 55 of Title 10 of the United States Code, including coverage under the TRICARE program.
(D) A health care program under Chapter 17 or Chapter 18 of Title 38 of the United States Code.
(E) A health plan under Section 2504(e) of Title 22 of the United States Code, relating to Peace Corps volunteers.
(F) The Nonappropriated Fund health benefits program of the Department of Defense, established under Section 349 of the National Defense Authorization Act for Fiscal Year 1995.
(G) Refugee Medical Assistance, supported by the Administration for Children and Families, which is authorized under Section 412(e)(7)(A) of the Immigration and Nationality Act.
(H) A successor program to one of the above programs, as determined by the Exchange.
(2) The University of California Student Health Insurance Plan and the University of California Voluntary Dependent Plan.
(3) Coverage under an eligible employer-sponsored plan, including grandfathered plans and policies. “Eligible employer-sponsored plan” means, with respect to an employee, a group health plan offered by an employer to the employee, including a governmental plan within the meaning of Section 2791(d)(8) of the federal Public Health Service Act (42 U.S.C. Sec. 201 et seq.) or any other plan, group health care service plan contract, or group health insurance policy offered in the small or large group market within the state.
(4) Coverage under an individual health care service plan contract or individual health insurance policy, including grandfathered contracts and policies, or student health coverage that meets all the requirements of Title I of the Affordable Care Act pertaining to nongrandfathered, individual health insurance coverage.
(5) Any other health benefits coverage similar in form and substance to the benefits described in this subdivision that is determined by the department to constitute minimum essential coverage pursuant to this section.
(b) “Minimum essential coverage” does not include health coverage that consists of coverage of excepted benefits as follows if the benefits are provided under a separate policy, certificate, or contract:
(1) Coverage of the following excepted benefits:
(A) Coverage only for accident or disability income insurance, or a combination of the two.
(B) Coverage issued as a supplement to liability insurance.
(C) Liability insurance, including general liability insurance and automobile liability insurance.
(D) Workers’ compensation or similar insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for onsite medical clinics.
(H) Other similar health coverage, under which benefits for medical care are secondary or incidental to other health benefits.
(2) Coverage of the following excepted benefits, if offered separately:
(A) Limited-scope dental or vision benefits, or benefits limited to any other single specialized area of health care.
(B) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof.
(C) Other similar, limited benefits.
(3) Coverage of the following excepted if offered as independent, noncoordinated benefits.
(A) Coverage only for a specified disease or illness.
(B) Hospital indemnity or other fixed indemnity insurance.
(4) Coverage of the following excepted benefits if offered as a separate health care policy:
(A) Medicare supplemental health insurance, as defined under Section 1395ss(g)(1) of Title 42 of the United States Code.
(B) Coverage supplemental to the coverage provided under Chapter 55 (commencing with Section 1071) of Title 10 of the United States Code.
(c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of guidance or instructions without taking regulatory action.

SEC. 6.

Section 10965.3 of the Insurance Code is amended to read:

10965.3.

(a) (1) On and after October 1, 2013, a health insurer shall fairly and affirmatively offer, market, and sell all of the insurer’s health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in each service area in which the insurer provides or arranges for the provision of health care services. A health insurer shall limit enrollment in individual health benefit plans to open enrollment periods, annual enrollment periods, and special enrollment periods as provided in subdivisions (c) and (d).

(2) A health insurer shall allow the policyholder of an individual health benefit plan to add a dependent to the policyholder’s health benefit plan at the option of the policyholder, consistent with the open enrollment, annual enrollment, and special enrollment period requirements in this section.

(b) An individual health benefit plan issued, amended, or renewed on or after January 1, 2014, shall not impose any preexisting condition provision upon any individual.

(c) (1) With respect to individual health benefit plans offered outside of the Exchange, a health insurer shall provide an initial open enrollment period from October 1, 2013, to March 31, 2014, inclusive, an annual enrollment period for the policy year beginning on January 1, 2015, from November 15, 2014, to February 15, 2015, inclusive, annual enrollment periods for policy years beginning on or after January 1, 2016, to December 31, 2018, inclusive, from November 1, of the preceding calendar year, to January 31 of the benefit year, inclusive, and annual enrollment periods for policy years beginning on or after January 1, 2019, from October 15 of the preceding calendar year, to January 15 of the benefit year, inclusive.

(2) With respect to individual health benefit plans offered through the Exchange, a health insurer shall provide an annual enrollment period for the policy years beginning on January 1, 2016, to December 31, 2018, inclusive, from November 1, of the preceding calendar year, to January 31 of the benefit year, inclusive, and annual enrollment periods for policy years beginning on or after January 1, 2019, from November 1 to December 15 of the preceding calendar year, inclusive.

(3) With respect to individual health benefit plans offered through the Exchange, for policy years beginning on or after January 1, 2019, a health insurer shall provide a special enrollment period for all individuals selecting an individual health benefit plan through the Exchange from October 15 to October 31 of the preceding calendar year, inclusive, and from December 16, of the preceding calendar year, to January 15 of the benefit year, inclusive. An application for a health benefit plan submitted during these two special enrollment periods shall be treated the same as an application submitted during the annual open enrollment period. The effective date of coverage for plan selections made between October 15 and October 31, inclusive, shall be January 1 of the benefit year, and for plan selections made from December 16 to January 15, inclusive, shall be no later than February 1 of the benefit year.

(4) Pursuant to Section 147.104(b)(2) of Title 45 of the Code of Federal Regulations, for individuals enrolled in noncalendar year individual health plan contracts, a health insurer shall also provide a limited open enrollment period beginning on the date that is 30 calendar days prior to the date the policy year ends in 2014.

(d) (1) Subject to paragraph (2), commencing January 1, 2014, a health insurer shall allow an individual to enroll in or change individual health benefit plans as a result of the following triggering events:

(A) ~~He or she or his or her~~ The individual or the individual’s dependent loses minimum essential coverage. For purposes of this paragraph, both of the following definitions shall apply:

(i) “Minimum essential coverage” has the same meaning as that term is defined in Section 10112.45 or subsection (f) of Section 5000A of the Internal Revenue Code (26 U.S.C. Sec. 5000A).

(B) ~~He or she~~ The individual gains a dependent or becomes a dependent.

(C) ~~He or she~~ The individual is mandated to be covered as a dependent pursuant to a valid state or federal court order.

(D) ~~He or she~~ The individual has been released from incarceration.

(E) ~~His or her~~ The individual’s health coverage issuer substantially violated a material provision of the health coverage contract.

(F) ~~He or she~~ The individual gains access to new health benefit plans as a result of a permanent move.

(G) ~~He or she~~ The individual was receiving services from a contracting provider under another health benefit plan, as defined in Section 10965 of this code or Section 1399.845 of the Health and Safety Code, for one of the conditions described in subdivision (a) of Section 10133.56 of this code and that provider is no longer participating in the health benefit plan.

(f) With respect to an individual health benefit plan offered outside the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form for a plan, the insurer shall, within 30 days, notify the individual of the individual’s actual premium charges for that plan established in accordance with Section 10965.9. The individual shall have 30 days in which to exercise the right to buy coverage at the quoted premium charges.

(2) With respect to an individual health benefit plan for which an individual applies during the initial open enrollment period described in paragraph (1) of subdivision (c), when the policyholder submits a premium payment, based on the quoted premium charges, and that payment is delivered or postmarked, whichever occurs earlier, by December 15, 2013, coverage under the individual health benefit plan shall become effective no later than January 1, 2014. When that payment is delivered or postmarked within the first 15 days of any subsequent month, coverage shall become effective no later than the first day of the following month. When that payment is delivered or postmarked between December 16, 2013, to December 31, 2013, inclusive, or after the 15th day of any subsequent month, coverage shall become effective no later than the first day of the second month following delivery or postmark of the payment.

(4) With respect to an individual health benefit plan for which an individual applies during a special enrollment period described in subdivision (d), the following provisions shall apply:

(B) Notwithstanding subparagraph (A), in the case of a birth, adoption, or placement for adoption, the coverage shall be effective on the date of birth, adoption, or placement for adoption.

(g) (1) A health insurer shall not establish rules for eligibility, including continued eligibility, of any individual to enroll under the terms of an individual health benefit plan based on any of the following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any federal regulations, rules, or guidance issued pursuant to Section 2705 of the federal Public Health Service Act (Public Law 78-410).

(2) Notwithstanding subdivision (c) of Section 10291.5, a health insurer shall not require an individual applicant or ~~his or her~~ the applicant’s dependent to fill out a health assessment or medical questionnaire prior to enrollment under an individual health benefit plan. A health insurer shall not acquire or request information that relates to a health status-related factor from the applicant or ~~his or her~~ the applicant’s dependent or any other source prior to enrollment of the individual.

(h) (1) A health insurer shall consider as a single risk pool for rating purposes in the individual market the claims experience of all insureds and enrollees in all nongrandfathered individual health benefit plans offered by that insurer in this state, whether offered as health care service plan contracts or individual health insurance policies, including those insureds and enrollees who enroll in individual coverage through the Exchange and insureds and enrollees who enroll in individual coverage outside the Exchange. Student health insurance coverage, as such coverage is defined in Section 147.145(a) of Title 45 of the Code of Federal Regulations, shall not be included in a health insurer’s single risk pool for individual coverage.

(2) Each calendar year, a health insurer shall establish an index rate for the individual market in the state based on the total combined claims costs for providing essential health benefits, as defined pursuant to Section 1302 of PPACA, within the single risk pool required under paragraph (1). The index rate shall be adjusted on a marketwide basis based on the total expected marketwide payments and charges under the risk adjustment program established for the state pursuant to Section 1343 of PPACA and Exchange user fees, as described in subdivision (d) of Section 156.80 of Title 45 of the Code of Federal Regulations. The premium rate for all of the health benefit plans in the individual market within the single risk pool required under paragraph (1) shall use the applicable marketwide adjusted index rate, subject only to the adjustments permitted under paragraph (3).

(3) A health insurer may vary premium rates for a particular health benefit plan from its index rate based only on the following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health benefit plan.

(B) The health benefit plan’s provider network, delivery system characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are in addition to the essential health benefits, as defined pursuant to Section 1302 of PPACA and Section 10112.27. These additional benefits shall be pooled with similar benefits within the single risk pool required under paragraph (1) and the claims experience from those benefits shall be utilized to determine rate variations for plans that offer those benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection (e) of Section 1302 of PPACA, the expected impact of the specific eligibility categories for those plans.

(E) Administrative costs, excluding any user fees required by the Exchange.

(i) This section shall only apply with respect to individual health benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to a grandfathered health plan.

SEC. 7.

Section 19254 of the Revenue and Taxation Code is amended to read:

19254.

(a) (1) If any person, other than an organization exempt from taxation under Section 23701, fails to pay any amount of tax, penalty, addition to tax, interest, or other liability imposed and delinquent under Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), Part 32 (commencing with Section 61000), or this part, a collection cost recovery fee shall be imposed if the Franchise Tax Board has mailed notice to that person for payment that advises that continued failure to pay the amount due may result in collection action, including the imposition of a collection cost recovery fee. The collection cost recovery fee shall be in the amount of:

(A) In the case of an individual, partnership, limited liability company classified as a partnership for California income tax purposes, or fiduciary, eighty-eight dollars ($88) or an amount as adjusted under subdivision (b).

(B) In the case of a corporation or limited liability company classified as a corporation for California income tax purposes, one hundred sixty-six dollars ($166) or an amount as adjusted under subdivision (b).

(2) If any person, other than an organization exempt from taxation under Section 23701, fails or refuses to make and file a tax return required by Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, within 25 days after formal legal demand to file the tax return is mailed to that person by the Franchise Tax Board, the Franchise Tax Board shall impose a filing enforcement cost recovery fee in the amount of:

(A) In the case of an individual, partnership, limited liability company classified as a partnership for California income tax purposes, or fiduciary, fifty-one dollars ($51) or an amount as adjusted under subdivision (b).

(B) In the case of a corporation or limited liability company classified as a corporation for California income tax purposes, one hundred nineteen dollars ($119) or an amount as adjusted under subdivision (b).

(b) For fees imposed under this section during the fiscal year 1993–94 and fiscal years thereafter, the amount of those fees shall be set to reflect actual costs and shall be specified in the annual Budget Act.

(d) The amounts provided by this section are obligations imposed by this part and may be collected in any manner provided under this part for the collection of a tax.

(e) Subdivision (a) is operative with respect to the notices for payment or formal legal demands to file, either of which is mailed on or after September 15, 1992.

(f) The Franchise Tax Board shall determine the total amount of the cost recovery fees collected or accrued through June 30, 1993, and shall notify the Controller of that amount. The Controller shall transfer that amount to the Franchise Tax Board, and that amount is hereby appropriated to the board for the 1992–93 fiscal year for reimbursement of its collection and filing enforcement efforts.

SEC. 8.

Section 19291 of the Revenue and Taxation Code is amended to read:

19291.

(a) The Franchise Tax Board may enter into an agreement to collect any delinquent tax debt due to the Internal Revenue Service or any other state imposing an income tax or tax measured by income if, pursuant to Section 19377.5, the Internal Revenue Service or that state has entered into an agreement to collect delinquent tax debts due the Franchise Tax Board.

(b) Upon written notice to the debtor from the Franchise Tax Board, any amount referred to the Franchise Tax Board under subdivision (a) shall be treated as final and due and payable to the State of California, and shall be collected from the debtor by the Franchise Tax Board in any manner authorized under the law for collection of a delinquent income tax liability, including, but not limited to, the recording of a notice of state tax lien under Article 2 (commencing with Section 7170) of Chapter 14 of Division 7 of Title 1 of the Government Code, and the issuance of an order and levy under Article 4 (commencing with Section 706.070) of Chapter 5 of Division 2 of Title 9 of Part 2 of the Code of Civil Procedure in the manner provided for earnings withholding orders for taxes.

(c) Part 10 (commencing with Section 17001), this part, Part 10.7 (commencing with Section 21001), and Part 11 (commencing with Section 23001) shall apply to amounts referred under this section in the same manner and with the same force and effect and to the full extent as if the language of those laws had been incorporated in full into this section, except to the extent that any provision is either inconsistent with this section or is not relevant to this section.

(d) The activities required to implement and administer this section shall not interfere with the primary mission of the Franchise Tax Board to administer Part 10 (commencing with Section 17001) and Part 11 (commencing with Section 23001).

(e) In no event shall a collection under this section be construed as a payment of income taxes imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section ~~23001).~~ 23001), or as a payment of a penalty imposed under Part 32 (commencing with Section 61000).

SEC. 9.

Section 19521 of the Revenue and Taxation Code is amended to read:

19521.

(a) The rate established under this section (referred to in other code sections as “the adjusted annual rate”) shall be determined in accordance with Section 6621 of the Internal Revenue Code, except that:

(1) (A) For taxpayers other than corporations, the overpayment rate specified in Section 6621(a)(1) of the Internal Revenue Code shall be modified to be equal to the underpayment rate determined under Section 6621(a)(2) of the Internal Revenue Code.

(B) In the case of any corporation, for purposes of determining interest on overpayments for periods beginning before July 1, 2002, the overpayment rate specified in Section 6621(a)(1) of the Internal Revenue Code shall be modified to be equal to the underpayment rate determined under Section 6621(a)(2) of the Internal Revenue Code.

(C) In the case of any corporation, for purposes of determining interest on overpayments for periods beginning on or after July 1, 2002, the overpayment rate specified in Section 6621(a)(1) of the Internal Revenue Code shall be modified to be the lesser of 5 percent or the bond equivalent rate of 13-week United States Treasury bills, determined as follows:

(i) The bond equivalent rate of 13-week United States Treasury bills established at the first auction held during the month of January shall be utilized in determining the appropriate rate for the following July 1 to December 31, inclusive. Any such rate shall be rounded to the nearest full percent (or, if a multiple of one-half of 1 percent, that rate shall be increased to the next highest full percent).

(ii) The bond equivalent rate of 13-week United States Treasury bills established at the first auction held during the month of July shall be utilized in determining the appropriate rate for the following January 1 to June 30, inclusive. Any such rate shall be rounded to the nearest full percent (or, if a multiple of one-half of 1 percent, that rate shall be increased to the next highest full percent).

(2) The determination specified in Section 6621(b) of the Internal Revenue Code shall be modified to be determined semiannually as follows:

(A) The rate for January shall apply during the following July through December, and

(B) The rate for July shall apply during the following January through June.

(b) (1) For purposes of this part, Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), Part 32 (commencing with Section 61000), and any other provision of law referencing this method of computation, in computing the amount of any interest required to be paid by the state or by the taxpayer, or any other amount determined by reference to that amount of interest, that interest and that amount shall be compounded daily.

(2) Paragraph (1) shall not apply for purposes of computing the amount of any addition to tax under Section 19136 or 19142.

(c) Section 6621(c) of the Internal Revenue Code, relating to increase in underpayment rate for large corporate underpayments, is modified as follows:

(1) The applicable date shall be the 30th day after the earlier of either of the following:

(A) The date on which the proposed deficiency assessment is issued.

(B) The date on which the notice and demand is sent.

(2) This subdivision shall apply for purposes of determining interest for periods after December 31, 1991.

(3) Section 6621(c)(2)(B)(iii) of the Internal Revenue Code shall apply for purposes of determining interest for periods after December 31, 1998.

(d) Section 6621(d) of the Internal Revenue Code, relating to the elimination of interest on overlapping periods of tax overpayments and underpayments, shall not apply.

SEC. 10.

Section 19533 of the Revenue and Taxation Code is amended to read:

19533.

(a) In the event the debtor has more than one debt being collected by the Franchise Tax Board and the amount collected by the Franchise Tax Board is insufficient to satisfy the total amount owing, the amount collected shall be applied in the following priority:

(1) Payment of any taxes, additions to tax, penalties, interest, fees, or other amounts due and payable under Part 7.5 (commencing with Section 13201), Part 10 (commencing with Section 17001), Part 11 (commencing with Section 23001), or this part, and amounts authorized to be collected under Section 19722.

(2) Payment of delinquencies collected under Section 10878.

(3) Payment of any amounts due that are referred for collection under Article 5.5 (commencing with Section 19280) of Chapter 5.

(4) Payment of any delinquencies referred for collection under Article 7 (commencing with Section 19291) of Chapter 5.

(5) Payment of any penalty due and payable under Part 32 (commencing with Section 61000).

(b) Notwithstanding the payment priority established by this section, voluntary payments designated by the taxpayer as payment for a personal income tax liability or as a payment on amounts authorized to be collected under Section 19722, shall not be applied pursuant to this priority, but shall instead be applied as designated.

SEC. 11.

Section 19548.8 is added to the Revenue and Taxation Code, to read:

19548.8.
(a) (1) The Franchise Tax Board shall disclose to the California Health Benefit Exchange individual income tax return information described in paragraph (2) in the records of the Franchise Tax Board, through information sharing agreements or data interfaces, for purposes of providing the notification required under Section 100704 of the Government Code.
(2) Individual income tax return information that may be disclosed to the California Health Benefit Exchange pursuant to this section is limited to the following information from the individual income tax return of a taxpayer who fails to report minimum essential coverage, as required by Section 100701 of the Government Code:
(A) Taxpayer name or, in the case of taxpayers filing a joint return, the names of both spouses or domestic partners.
(B) Full mailing address listed on the return.
(C) Number and age of household dependents.
(D) Gross income.
(E) Number of months the applicable individual, as defined in Section 61000, or the applicable subscriber and applicable dependents, as defined in Section 61000, were covered by minimum essential coverage.
(F) The amount of the penalty paid or owed by a taxpayer.
(G) Whether the taxpayer claimed an exemption from the Minimum Essential Coverage Individual Mandate established pursuant to Title 24 (commencing with Section 100700) of the Government Code and the Individual Shared Responsibility Penalty assessed pursuant to Part 32 (commencing with Section 61000), and which exemption or exemptions were claimed.
(b) The Franchise Tax Board may require reimbursement from the California Health Benefit Exchange for costs incurred in providing the information specified in this section.

SEC. 12.

Part 32 (commencing with Section 61000) is added to Division 2 of the Revenue and Taxation Code, to read:

PART 32. Individual Shared Responsibility Penalty
61000.
For the purposes of this part, the following definitions shall apply:
(a) “Applicable entity” means the following:
(1) A plan sponsor of employment-based group health plan coverage.
(2) The State Department of Health Care Services and county welfare departments with respect to coverage under a state program.
(3) The Exchange with respect to individual plans on the Exchange.
(4) A health care service plan or health insurer licensed or otherwise authorized to offer health coverage with respect to coverage it provides that is not described in paragraph (1) or (2).
(5) Any other provider of minimum essential coverage, including the University of California, with respect to coverage under a student health insurance program.
(b) “Applicable dependent” means a dependent, as defined in Section 17056, who is also an applicable individual.
(c) “Applicable individual” means, with respect to any month, an individual who is a California resident, as defined in Section 17014 of the Revenue and Taxation Code, other than an individual described in subdivision (b) of Section 100701 of the Government Code.
(d) “Applicable subscriber” means an applicable individual, with an applicable dependent or applicable dependents, who is generally eligible to enroll an applicable dependent for health care coverage purposes, including, but not limited to, an applicable individual whose employment status, or status as the head of household, parent, spouse, domestic partner, or other status, makes the applicable individual eligible to enroll applicable dependents for health care coverage purposes.
(e) “Exchange” means the California Health Benefit Exchange, also known as Covered California, established pursuant to Title 22 (commencing with Section 100500).
(f) “Family size” means the applicable individual and any applicable dependents for the taxable year.
(g) “Household income” means, with respect to a taxpayer for a taxable year, an amount equal to the sum of the modified adjusted gross income of the taxpayer, plus the aggregate modified adjusted gross incomes of all other individuals who were taken into account in determining the taxpayer’s family size under subdivision (f) and were required to file a tax return pursuant to Section 17041 for the taxable year.
(h) “Modified adjusted gross income” means adjusted gross income, as defined in Section 17072, increased by all of the following:
(1) The amount of interest received or accrued by the taxpayer during the taxable year that is exempt from tax, unless the interest is exempt from tax under the United States Constitution or the California Constitution.
(2) Social security benefits within the meaning of Section 86(d) of the Internal Revenue Code, but not included in gross income under Section 86 of the Internal Revenue Code.
(3) Foreign-earned income, foreign housing exclusion, or foreign housing deduction under Section 911 of the Internal Revenue Code.
(i) “Qualified health plan” has the same meaning as defined in Section 1301 of the federal Patient Protection and Affordable Care Act (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152).
(j) “Premium assistance” means the amount of credit allowable under Section 36B of the Internal Revenue Code of 1986 and any premium assistance subsidies administered pursuant to Title 25 (commencing with Section 100800) of the Government Code.
61005.
(a) The Legislature finds and declares both of the following:
(1) The reporting requirement provided for in this section is necessary for the successful implementation of the penalty imposed by Section 61010. In particular, this requirement provides the only widespread source of third-party reporting to help applicable individuals and the Franchise Tax Board verify whether an applicable individual maintains minimum essential coverage. There is compelling evidence that third-party reporting is crucial for ensuring compliance with those tax provisions.
(2) The reporting requirement in this section has been narrowly tailored to support compliance with the penalty imposed by Section 61010, while imposing only an incidental burden on reporting entities. In particular, the information required to be reported under this section is limited to the information already required to be reported under a similar federal reporting requirement under Section 6055 of the Internal Revenue Code of 1986. In addition, this section provides that its reporting requirement may be satisfied by providing the same information that is currently reported under that federal requirement.
(b) For purposes of administering the penalty imposed by this part on applicable individuals who fail to maintain minimum essential coverage as required by Title 24 of the Government Code, an applicable entity that provides minimum essential coverage to an individual during a calendar year shall, at the time the Franchise Tax Board prescribes, make a return to the Franchise Tax Board in the form and manner described in subdivision (c) or (d) on or before March 31 of the year following the calendar year for which the return is required.
(c) Except as provided in subdivision (d), an applicable entity shall make a return that complies with all of the following:
(1) Is in the form as the Franchise Tax Board prescribes.
(2) Contains the name, address, and taxpayer identification number of the applicable individual and the name and taxpayer identification number of each other applicable dependent who receives coverage under the policy.
(3) Contains the dates during which the applicable individual was covered under minimum essential coverage during the calendar year.
(4) Contains any other information as the Franchise Tax Board may require.
(d) Notwithstanding the requirements of subdivision (c), a return complies with the requirements of this section if it includes the information contained in a return described in Section 6055 of the Internal Revenue Code of 1986, as that section is in effect on December 15, 2017.
(e) Except as provided in subdivision (g), an applicable entity required to make a return under subdivision (b) shall provide to each individual whose name is required to be set forth in the return a written statement in the form and manner described in subdivision (f) on or before January 31 of the year following the calendar year for which the return is required under subdivision (b).
(f) Except as provided in subdivision (g), an applicable entity shall make a written statement showing both of the following:
(1) The name and address of the person required to make the return and the telephone number of the contact information for that person.
(2) The information required to be shown on the return with respect to that applicable individual.
(g) Notwithstanding the requirements of subdivisions (e) and (f), the requirements of this section may be satisfied by a written statement provided to an individual under Section 6055 of the Internal Revenue Code of 1986, as that section is in effect and interpreted on December 15, 2017.
(h) In the case of coverage provided by an applicable entity that is a governmental unit or an agency or instrumentality of that unit, the officer or employee who enters into the agreement to provide the coverage, or the person appropriately designated for purposes of this section, shall be responsible for the returns and statements required by this section.
(i) An applicable entity may contract with third-party service providers, including insurance carriers, to provide the returns and statements required by this section.
(j) A penalty shall be imposed on an applicable entity that fails to make a return as required by subdivision (b) in an amount of fifty dollars ($50) per applicable individual covered by the applicable entity for a taxable year in which the failure occurs.
61010.
(a) If an applicable individual fails to meet the requirements of Section 100701 of the Government Code for one or more months, then, except as provided in Section 61020, there is imposed a penalty on the applicable individual with respect to that failure in the amount determined under Section 61015. This penalty shall be referred to as the Individual Shared Responsibility Penalty.
(b) A penalty imposed by this section with respect to any month shall be included with an applicable individual’s return under Chapter 2 (commencing with Section 18501) of Part 10.2 for the taxable year that includes that month.
(c) If an applicable individual with respect to whom a penalty is imposed pursuant to this section for any month is an applicable dependent of an applicable subscriber for the applicable subscriber’s taxable year, including that month, the applicable subscriber shall be solely liable for the penalty of the applicable dependent.
(d) If an applicable individual with respect to whom a penalty is imposed pursuant to this section for any month files a joint return for the taxable year, including that month, that applicable individual and the spouse or domestic partner of the applicable individual shall be jointly and severally liable for the penalty imposed.
61015.
(a) The amount of the Individual Shared Responsibility Penalty imposed on an applicable individual for a taxable year with respect to the failures described in Section 61010 shall be equal to the lesser of either of the following amounts:
(1) The sum of the monthly penalty amounts determined under subdivision (b) for months in the taxable year during which one or more of the failures described in Section 61010 occurred.
(2) An amount equal to one-twelfth of the state average premium for qualified health plans that have a bronze level of coverage for the applicable family size involved, and are offered through the Exchange for plan years beginning in the calendar year with or within which the taxable year ends, multiplied by the number of months in which a failure described in Section 61010 occurred.
(b) For purposes of subdivision (a), the monthly penalty amount with respect to an applicable individual for any month during which a failure described in Section 61010 occurred is an amount equal to one-twelfth of the greater of either of the following amounts:
(1) An amount equal to the lesser of either of the following:
(A) The sum of the applicable dollar amounts for all applicable individuals with respect to whom the failure occurred during the month.
(B) Three hundred percent of the applicable dollar amount determined for the calendar year during which the taxable year ends.
(2) An amount equal to 2.5 percent of the excess of the applicable individual’s household income for the taxable year over the amount of gross income that would trigger the applicable individual’s requirement to file a state income tax return under Section 18501, also referred to as the applicable filing threshold, for the taxable year.
(c) For purposes of subdivisions (a) and (b):
(1) Except as provided in paragraphs (2) and (3), the applicable dollar amount is six hundred ninety-five dollars ($695).
(2) If an applicable individual has not attained 18 years of age as of the beginning of a month, the applicable dollar amount with respect to that individual for that month shall be equal to one-half of the applicable dollar amount as provided in paragraph (1).
(d) In the case of a calendar year beginning after 2019, the applicable dollar amount shall be recomputed as follows:
(1) No later than August 1 of each year, the Department of Industrial Relations shall annually transmit to the Franchise Tax Board the percentage change in the California Consumer Price Index for all items from June of the prior calendar year to June of the current calendar year, inclusive.
(2) The Franchise Tax Board shall do both of the following:
(A) Compute an inflation adjustment factor by adding 100 percent to the percentage change figure that is transmitted pursuant to paragraph (1) and dividing the result by 100.
(B) Multiply six hundred ninety-five dollars ($695) by the amount of the inflation adjustment factor determined in subparagraph (A) and round off the resulting amount to the nearest one dollar ($1). If the amount of an increase under this subparagraph is not a multiple of fifty dollars ($50), that increase shall be rounded down to the next multiple of fifty dollars ($50).
(e) For taxable years during which the Franchise Tax Board determines that a federal shared responsibility penalty applies, the Individual Shared Responsibility Penalty shall be reduced, but not below zero, by the amount of the federal penalty imposed on the applicable individual for each month of the taxable year during which the Individual Shared Responsibility Penalty is imposed.
61020.
An Individual Shared Responsibility Penalty shall not be imposed on an applicable individual for a month in which any of the following circumstances apply:
(a) If the applicable individual’s required contribution, determined on an annual basis, for coverage for the month exceeds 8.3 percent of that individual’s household income for the taxable year.
(1) For purposes of applying this subdivision, the taxpayer’s household income shall be increased by any exclusion from gross income for any portion of the required contribution made through a salary reduction arrangement.
(2) For purposes of this subdivision, the term “required contribution” means either of the following:
(A) In the case of an applicable individual eligible to purchase minimum essential coverage consisting of coverage through an eligible employer-sponsored plan, the portion of the annual premium that would be paid by the applicable individual, without regard to whether paid through salary reduction or otherwise, for self-only coverage.
(B) In the case of an applicable individual eligible only to purchase minimum essential coverage in the individual market, the annual premium for the lowest cost bronze plan available in the individual market through the Exchange in the rating area in which the individual resides, reduced by any premium assistance for the taxable year determined as if the applicable individual was covered by a qualified health plan offered through the Exchange for the entire taxable year.
(3) For purposes of subparagraph (A) of paragraph (2), if an applicable individual is eligible for minimum essential coverage through an employer by reason of a relationship to an employee, the determination under paragraph (1) shall be made by reference to the portion of the premium required to be paid by the employee for family coverage.
(4) In the case of plan years beginning in any calendar year after 2019, this subdivision shall be applied by substituting for “8.3 percent” the percentage the United States Secretary of Health and Human Services determines reflects the excess of the rate of premium growth between the preceding calendar year and 2018 over the rate of income growth for that period. If the United States Secretary of Health and Human Services fails to determine this percentage for a calendar year, the Exchange shall determine the percentage.
(b) If the applicable individual’s household income for the taxable year containing the month is less than the amount of adjusted gross income specified in paragraph (1) or (2) of subdivision (a) of Section 18501 for that taxable year.
(c) If the applicable individual’s gross income for the taxable year containing the month is less than the amount specified in paragraph (3) of subdivision (a) of Section 18501.
(d) If the last day of the month occurred during a period in which the applicable individual did not maintain minimum essential coverage for a continuous period of three months or less.
(1) The length of a continuous period shall be determined without regard to the calendar years in which months in that period occur.
(2) If a continuous period is greater than the period allowed under this subdivision, an exception shall not be provided under this subdivision for any month in the period.
(3) If there is more than one continuous period described in this subdivision covering months in a calendar year, the exception provided by this subdivision shall only apply to months in the first of those periods.
(4) The Franchise Tax Board may prescribe rules for the collection of the penalty imposed by this section in cases where continuous periods include months in more than one taxable year.
61025.
(a) The Franchise Tax Board’s civil authority and procedures for purposes of compliance with notice and other due process requirements imposed by law to collect income taxes shall be applicable to the collection of the Individual Shared Responsibility Penalty.
(b) The Individual Shared Responsibility Penalty shall be paid upon notice and demand by the Franchise Tax Board, and shall be assessed and collected pursuant to Part 10.2 (commencing with Section 18401), except as follows:
(1) If an applicable individual fails to timely pay the Individual Shared Responsibility Penalty, the applicable individual shall not be subject to a criminal prosecution or penalty with respect to that failure.
(2) The Franchise Tax Board shall not file a notice of lien with respect to any real property of an applicable individual by reason of any failure to pay the Individual Shared Responsibility Penalty, or levy any real property with respect to that failure.
(3) For the purpose of collecting the Individual Shared Responsibility Penalty, Article 1 (commencing with Section 19201) of Chapter 5 of Part 10.2 shall not apply.
(c) The Franchise Tax Board shall integrate enforcement of the Individual Shared Responsibility Penalty into existing activities, protocols, and procedures, including audits, enforcement actions, and taxpayer education efforts.
61030.
(a) The Franchise Tax Board may, in consultation with the Exchange, adopt regulations that are necessary and appropriate to implement this part.
(b) It is the intent of the Legislature that, in construing this section, the regulations promulgated by the United States Secretary of the Treasury under Section 5000A of the Internal Revenue Code, notwithstanding the specified date in paragraph (1) of subdivision (a) of Section 17024.5, shall apply to the extent that those regulations do not conflict with this part or regulations promulgated by the Franchise Tax Board pursuant to subdivision (a) in consultation with the Exchange.
(c) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) shall not apply to any standard, criterion, procedure, determination, rule, notice, guideline, or any other guidance established or issued by the Franchise Tax Board pursuant to this part.
61035.
Moneys collected from the Individual Shared Responsibility Penalty shall be deposited into the General Fund.
61040.
The provisions of this part are severable. If any provision of this part or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 13.

This act shall become operative only if Senate Bill 65 of the 2019–20 Regular Session is enacted and takes effect on or before January 1, 2020.

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Bill Text: CA SB175 | 2019-2020 | Regular Session | Amended

California Senate Bill 175 (Prior Session Legislation)

LEGISLATIVE COUNSEL'S DIGEST

Digest Key

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

100520.

SECTION 1.SEC. 2.

TITLE 24. California Healthcare Health Care Coverage Shared Responsibility Act

100700.

100701.

100702.

100704.100703.

100704.

100705.

SEC. 3.

1345.5.

SEC. 4.

1399.849.

SEC. 5.

10112.45.

SEC. 6.

10965.3.

SEC. 7.

19254.

SEC. 8.

19291.

SEC. 9.

19521.

SEC. 10.

19533.

SEC. 11.

19548.8.

SEC. 12.

PART 32. Individual Shared Responsibility Penalty

61000.

61005.

61010.

61015.

61020.

61025.

61030.

61035.

61040.

SEC. 13.

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