Bill Text: CA SBX12 | 2013-2014 | Regular Session | Chaptered
Bill Title: Health care coverage.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Passed) 2013-05-09 - Chaptered by Secretary of State. Chapter 2, Statutes of 2013-14 First Extraordinary Session. [SBX12 Detail]
Download: California-2013-SBX12-Chaptered.html
BILL NUMBER: SBX1 2 CHAPTERED
BILL TEXT
CHAPTER 2
FILED WITH SECRETARY OF STATE MAY 9, 2013
APPROVED BY GOVERNOR MAY 9, 2013
PASSED THE SENATE APRIL 29, 2013
PASSED THE ASSEMBLY APRIL 25, 2013
AMENDED IN ASSEMBLY APRIL 1, 2013
AMENDED IN ASSEMBLY MARCH 21, 2013
AMENDED IN ASSEMBLY MARCH 7, 2013
INTRODUCED BY Senator Hernandez
(Principal coauthor: Senator Monning)
JANUARY 28, 2013
An act to amend Sections 1357.51, 1357.500, 1357.503, 1357.504,
1357.509, 1357.512, 1363, 1389.5, and 1399.829 of, to amend the
heading of Article 11.7 (commencing with Section 1399.825) of Chapter
2.2 of Division 2 of, to amend and add Sections 1389.4 and 1389.7
of, to add Sections 1348.96 and 1399.836 to, to add Article 11.8
(commencing with Section 1399.845) to Chapter 2.2 of Division 2 of,
and to repeal Section 1399.816 of, the Health and Safety Code,
relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 2, Hernandez. Health care coverage.
(1) Existing federal law, the federal Patient Protection and
Affordable Care Act (PPACA), enacts various health care coverage
market reforms that take effect January 1, 2014. Among other things,
PPACA requires each health insurance issuer that offers health
insurance coverage in the individual or group market in a state to
accept every employer and individual in the state that applies for
that coverage and to renew that coverage at the option of the plan
sponsor or the individual. PPACA prohibits a group health plan and a
health insurance issuer offering group or individual health insurance
coverage from imposing any preexisting condition exclusion with
respect to that plan or coverage. PPACA allows the premium rate
charged by a health insurance issuer offering small group or
individual coverage to vary only by rating area, age, tobacco use,
and whether the coverage is for an individual or family and prohibits
discrimination against individuals based on health status, as
specified. PPACA requires an issuer to consider all enrollees in its
individual market plans to be part of a single risk pool and to
consider all enrollees in its small group market plans to be part of
a single risk pool, as specified. PPACA also requires each state to,
by January 1, 2014, establish an American Health Benefit Exchange
that facilitates the purchase of qualified health plans by qualified
individuals and qualified small employers, as specified.
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 requires plans offering
coverage in the individual market to offer coverage for a child
subject to specified requirements. Existing law establishes the
California Health Benefit Exchange (Exchange) to facilitate the
purchase of qualified health plans through the Exchange by qualified
individuals and qualified small employers by January 1, 2014.
This bill would require a health care service plan, on and after
October 1, 2013, to 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, as specified, but would require
plans to limit enrollment in individual health benefit plans to
specified open enrollment and special enrollment periods. The bill
would prohibit these health care service plans from imposing any
preexisting condition exclusion upon any individual and from
conditioning the issuance or offering of individual health benefit
plans on any health status-related factor, as specified. The bill
would require a health care service plan to consider the claims
experience of all enrollees of its nongrandfathered individual health
benefit plans offered in the state to be part of a single risk pool,
as specified, would require the plan to establish a specified index
rate for that market, and would authorize the plan to vary premiums
from the index rate based only on specified factors. The bill would
authorize plans to use only age, geographic region, and family size
for purposes of establishing rates for individual health benefit
plans, as specified. The bill would require plans to provide
specified information regarding the Exchange to applicants for and
subscribers of individual health benefit plans offered outside the
Exchange. The bill would prohibit a plan from advertising or
marketing an individual grandfathered health plan for the purpose of
enrolling a dependent of the subscriber in the plan and would also
require plans to annually issue a specified notice to subscribers
enrolled in a grandfathered plan. The bill would authorize the
director to require a plan to discontinue offering individual plan
contracts if the director determines the plan does not have
sufficient financial viability or organizational capacity, as
specified. The bill would make certain of these provisions
inoperative if, and 12 months after, specified provisions of PPACA
are repealed or amended, as specified.
Existing law requires health care service plans to guarantee issue
their small employer health benefit plans, as specified. With
respect to nongrandfathered small employer health benefit plans for
plan years on or after January 1, 2014, among other things, existing
law provides certain exceptions from the guarantee issue requirement,
allows the premium for small employer health benefit plans to vary
only by age, geographic region, and family size, as specified, and
requires plans to provide special enrollment periods and coverage
effective dates consistent with the individual nongrandfathered
market in the state. Existing law provides that these provisions
shall be inoperative if specified provisions of PPACA are repealed.
This bill would modify the small employer special enrollment
periods and coverage effective dates for purposes of consistency with
the individual market reforms described above. The bill would also
modify the exceptions from the guarantee issue requirement and the
manner in which a plan determines premium rates for a small employer
health benefit plan, as specified. The bill would also require a plan
to consider the claims experience of all enrollees of its
nongrandfathered small employer health benefit plans offered in this
state to be part of a single risk pool, as specified, would require
the plan to establish a specified index rate for that market, and
would authorize the plan to vary premiums from the index rate based
only on specified factors. The bill would make certain of these
provisions inoperative, as specified, if, and 12 months after,
specified provisions of PPACA are repealed.
Because a willful violation of these requirements with respect to
health care service plans would be a crime, the bill would impose a
state-mandated local program.
(2) PPACA requires a state or the United States Secretary of
Health and Human Services to implement a risk adjustment program for
the 2014 benefit year and every benefit year thereafter, under which
a charge is assessed on low actuarial risk plans and a payment is
made to high actuarial risk plans, as specified. If a state that
elects to operate an American Health Benefit Exchange elects not to
administer this risk adjustment program, the secretary will operate
the program and issuers will be required to submit data for purposes
of the program to the secretary.
This bill would require that any data submitted by health care
service plans to the secretary for purposes of the risk adjustment
program also be submitted to the Department of Managed Health Care in
the same format. The bill would require the department to use that
data for specified purposes.
(3) PPACA requires health insurance issuers to provide a summary
of benefits and coverage explanation pursuant to specified standards
to applicants and enrollees or policyholders.
Existing law requires health care service plans to use disclosure
forms that contain specified information regarding the contracts
issued by the plan, including the benefits and coverage of the
contract, and the exceptions, reductions, and limitations that apply
to the contract. Existing law requires health care service plans that
offer individual or small group coverage to also provide a uniform
health plan benefits and coverage matrix containing the plan's major
provisions, as specified.
This bill would require that certain health care service plan
contracts satisfy these requirements by providing a uniform summary
of benefits and coverage required by federal law.
(4) This bill would become operative only if AB 2 of the 2013-14
First Extraordinary Session is enacted and becomes effective.
(5) 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.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1348.96 is added to the Health and Safety Code,
to read:
1348.96. Any data submitted by a health care service plan to the
United States Secretary of Health and Human Services, or his or her
designee, for purposes of the risk adjustment program described in
Section 1343 of the federal Patient Protection and Affordable Care
Act (42 U.S.C. Sec. 18063) shall be concurrently submitted to the
department in the same format. The department shall use the
information to monitor federal implementation of risk adjustment in
the state and to ensure that health care service plans are in
compliance with federal requirements related to risk adjustment.
SEC. 2. Section 1357.51 of the Health and Safety Code, as added by
Chapter 852 of the Statutes of 2012, is amended to read:
1357.51. (a) A health benefit plan for group coverage shall not
impose any preexisting condition provision or waivered condition
provision upon any enrollee.
(b) (1) A nongrandfathered health benefit plan for individual
coverage shall not impose any preexisting condition provision or
waivered condition provision upon any enrollee.
(2) A grandfathered health benefit plan for individual coverage
shall not exclude coverage on the basis of a waivered condition
provision or preexisting condition provision for a period greater
than 12 months following the enrollee's effective date of coverage,
nor limit or exclude coverage for a specific enrollee by type of
illness, treatment, medical condition, or accident, except for
satisfaction of a preexisting condition provision or waivered
condition provision pursuant to this article. Waivered condition
provisions or preexisting condition provisions contained in
individual grandfathered health benefit plans may relate only to
conditions for which medical advice, diagnosis, care, or treatment,
including use of prescription drugs, was recommended or received from
a licensed health practitioner during the 12 months immediately
preceding the effective date of coverage.
(3) 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 Public
Health Service Act (42 U.S.C. Sec. 300gg-4), paragraph (1) shall
become inoperative 12 months after the date of that repeal or
amendment and thereafter paragraph (2) shall apply also to
nongrandfathered health benefit plans for individual coverage.
(c) (1) A health benefit plan for group coverage may apply a
waiting period of up to 60 days as a condition of employment if
applied equally to all eligible employees and dependents and if
consistent with PPACA. A health benefit plan for group coverage
through a health maintenance organization, as defined in Section 2791
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-3
(e)), shall not impose any affiliation period that exceeds 60 days. A
waiting or affiliation period shall not be based on a preexisting
condition of an employee or dependent, the health status of an
employee or dependent, or any other factor listed in Section 1357.52.
An affiliation period shall run concurrently with a waiting period.
During the waiting or affiliation period, the plan is not required to
provide health care services and no premium shall be charged to the
subscriber or enrollees.
(2) A health benefit plan for individual coverage shall not impose
any waiting or affiliation period.
(d) In determining whether a preexisting condition provision, a
waivered condition provision, or a waiting or affiliation period
applies to an enrollee, a plan shall credit the time the enrollee was
covered under creditable coverage, provided that the enrollee
becomes eligible for coverage under the succeeding plan contract
within 62 days of termination of prior coverage, exclusive of any
waiting or affiliation period, and applies for coverage under the
succeeding plan within the applicable enrollment period. A plan shall
also credit any time that an eligible employee must wait before
enrolling in the plan, including any postenrollment or
employer-imposed waiting or affiliation period.
However, if a person's employment has ended, the availability of
health coverage offered through employment or sponsored by an
employer has terminated, or an employer's contribution toward health
coverage has terminated, a plan shall credit the time the person was
covered under creditable coverage if the person becomes eligible for
health coverage offered through employment or sponsored by an
employer within 180 days, exclusive of any waiting or affiliation
period, and applies for coverage under the succeeding plan contract
within the applicable enrollment period.
(e) An individual's period of creditable coverage shall be
certified pursuant to Section 2704(e) of Title XXVII of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-3(e)).
SEC. 3. Section 1357.500 of the Health and Safety Code is amended
to read:
1357.500. As used in this article, the following definitions
shall apply:
(a) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
(b) "Dependent" means the spouse or registered domestic partner,
or child, of an eligible employee, subject to applicable terms of the
health care service plan contract covering the employee, and
includes dependents of guaranteed association members if the
association elects to include dependents under its health coverage at
the same time it determines its membership composition pursuant to
subdivision (m).
(c) "Eligible employee" means either of the following:
(1) Any permanent employee who is actively engaged on a full-time
basis in the conduct of the business of the small employer with a
normal workweek of an average of 30 hours per week over the course of
a month, at the small employer's regular places of business, who has
met any statutorily authorized applicable waiting period
requirements. The term includes sole proprietors or partners of a
partnership, if they are actively engaged on a full-time basis in the
small employer's business and included as employees under a health
care service plan contract of a small employer, but does not include
employees who work on a part-time, temporary, or substitute basis. It
includes any eligible employee, as defined in this paragraph, who
obtains coverage through a guaranteed association. Employees of
employers purchasing through a guaranteed association shall be deemed
to be eligible employees if they would otherwise meet the definition
except for the number of persons employed by the employer. Permanent
employees who work at least 20 hours but not more than 29 hours are
deemed to be eligible employees if all four of the following apply:
(A) They otherwise meet the definition of an eligible employee
except for the number of hours worked.
(B) The employer offers the employees health coverage under a
health benefit plan.
(C) All similarly situated individuals are offered coverage under
the health benefit plan.
(D) The employee must have worked at least 20 hours per normal
workweek for at least 50 percent of the weeks in the previous
calendar quarter. The health care service plan may request any
necessary information to document the hours and time period in
question, including, but not limited to, payroll records and employee
wage and tax filings.
(2) Any member of a guaranteed association as defined in
subdivision (m).
(d) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(e) "In force business" means an existing health benefit plan
contract issued by the plan to a small employer.
(f) "Late enrollee" means an eligible employee or dependent who
has declined enrollment in a health benefit plan offered by a small
employer at the time of the initial enrollment period provided under
the terms of the health benefit plan consistent with the periods
provided pursuant to Section 1357.503 and who subsequently requests
enrollment in a health benefit plan of that small employer, except
where the employee or dependent qualifies for a special enrollment
period provided pursuant to Section 1357.503. It also means any
member of an association that is a guaranteed association as well as
any other person eligible to purchase through the guaranteed
association when that person has failed to purchase coverage during
the initial enrollment period provided under the terms of the
guaranteed association's plan contract consistent with the periods
provided pursuant to Section 1357.503 and who subsequently requests
enrollment in the plan, except where that member or person qualifies
for a special enrollment period provided pursuant to Section
1357.503.
(g) "New business" means a health care service plan contract
issued to a small employer that is not the plan's in force business.
(h) "Preexisting condition provision" means a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the enrollee's effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage. No health care
service plan shall limit or exclude coverage for any individual based
on a preexisting condition whether or not any medical advice,
diagnosis, care, or treatment was recommended or received before that
date.
(i) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program that is
written or administered by a disability insurer, health care service
plan, fraternal benefits society, self-insured employer plan, or any
other entity, in this state or elsewhere, and that arranges or
provides medical, hospital, and surgical coverage not designed to
supplement other private or governmental plans. The term includes
continuation or conversion coverage but does not include accident
only, credit, coverage for onsite medical clinics, disability income,
Medicare supplement, long-term care, dental, vision, coverage issued
as a supplement to liability insurance, insurance arising out of a
workers' compensation or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(2) The Medicare program pursuant to Title XVIII of the federal
Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(8) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the Public Health Service Act,
as amended by Public Law 104-191, the Health Insurance Portability
and Accountability Act of 1996.
(9) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C. Sec. 2504(e)).
(10) Any other creditable coverage as defined by subsection (c) of
Section 2704 of Title XXVII of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-3(c)).
(j) "Rating period" means the period for which premium rates
established by a plan are in effect and shall be no less than 12
months from the date of issuance or renewal of the plan contract.
(k) (1) "Small employer" means any of the following:
(A) For plan years commencing on or after January 1, 2014, and on
or before December 31, 2015, any person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 50,
eligible employees, the majority of whom were employed within this
state, that was not formed primarily for purposes of buying health
care service plan contracts, and in which a bona fide
employer-employee relationship exists. For plan years commencing on
or after January 1, 2016, any person, firm, proprietary or nonprofit
corporation, partnership, public agency, or association that is
actively engaged in business or service, that, on at least 50 percent
of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 100,
eligible employees, the majority of whom were employed within this
state, that was not formed primarily for purposes of buying health
care service plan contracts, and in which a bona fide
employer-employee relationship exists. In determining whether to
apply the calendar quarter or calendar year test, a health care
service plan shall use the test that ensures eligibility if only one
test would establish eligibility. In determining the number of
eligible employees, companies that are affiliated companies and that
are eligible to file a combined tax return for purposes of state
taxation shall be considered one employer. Subsequent to the issuance
of a health care service plan contract to a small employer pursuant
to this article, and for the purpose of determining eligibility, the
size of a small employer shall be determined annually. Except as
otherwise specifically provided in this article, provisions of this
article that apply to a small employer shall continue to apply until
the plan contract anniversary following the date the employer no
longer meets the requirements of this definition. It includes any
small employer as defined in this paragraph who purchases coverage
through a guaranteed association, and any employer purchasing
coverage for employees through a guaranteed association. This
subparagraph shall be implemented to the extent consistent with
PPACA, except that the minimum requirement of one employee shall be
implemented only to the extent required by PPACA.
(B) Any guaranteed association, as defined in subdivision (l),
that purchases health coverage for members of the association.
(2) For plan years commencing on or after January 1, 2014, the
definition of an employer, for purposes of determining whether an
employer with one employee shall include sole proprietors, certain
owners of "S" corporations, or other individuals, shall be consistent
with Section 1304 of PPACA.
(l) "Guaranteed association" means a nonprofit organization
comprised of a group of individuals or employers who associate based
solely on participation in a specified profession or industry,
accepting for membership any individual or employer meeting its
membership criteria, and that (1) includes one or more small
employers as defined in subparagraph (A) of paragraph (1) of
subdivision (k), (2) does not condition membership directly or
indirectly on the health or claims history of any person, (3) uses
membership dues solely for and in consideration of the membership and
membership benefits, except that the amount of the dues shall not
depend on whether the member applies for or purchases insurance
offered to the association, (4) is organized and maintained in good
faith for purposes unrelated to insurance, (5) has been in active
existence on January 1, 1992, and for at least five years prior to
that date, (6) has included health insurance as a membership benefit
for at least five years prior to January 1, 1992, (7) has a
constitution and bylaws, or other analogous governing documents that
provide for election of the governing board of the association by its
members, (8) offers any plan contract that is purchased to all
individual members and employer members in this state, (9) includes
any member choosing to enroll in the plan contracts offered to the
association provided that the member has agreed to make the required
premium payments, and (10) covers at least 1,000 persons with the
health care service plan with which it contracts. The requirement of
1,000 persons may be met if component chapters of a statewide
association contracting separately with the same carrier cover at
least 1,000 persons in the aggregate.
This subdivision applies regardless of whether a contract issued
by a plan is with an association, or a trust formed for or sponsored
by an association, to administer benefits for association members.
For purposes of this subdivision, an association formed by a
merger of two or more associations after January 1, 1992, and
otherwise meeting the criteria of this subdivision shall be deemed to
have been in active existence on January 1, 1992, if its predecessor
organizations had been in active existence on January 1, 1992, and
for at least five years prior to that date and otherwise met the
criteria of this subdivision.
(m) "Members of a guaranteed association" means any individual or
employer meeting the association's membership criteria if that person
is a member of the association and chooses to purchase health
coverage through the association. At the association's discretion, it
also may include employees of association members, association
staff, retired members, retired employees of members, and surviving
spouses and dependents of deceased members. However, if an
association chooses to include these persons as members of the
guaranteed association, the association shall make that election in
advance of purchasing a plan contract. Health care service plans may
require an association to adhere to the membership composition it
selects for up to 12 months.
(n) "Affiliation period" means a period that, under the terms of
the health care service plan contract, must expire before health care
services under the contract become effective.
(o) "Grandfathered health plan" has the meaning set forth in
Section 1251 of PPACA.
(p) "Nongrandfathered small employer health care service plan
contract" means a small employer health care service plan contract
that is not a grandfathered health plan.
(q) "Plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
(r) "PPACA" means 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), and
any rules, regulations, or guidance issued thereunder.
(s) "Small employer health care service plan contract" means a
health care service plan contract issued to a small employer.
(t) "Waiting period" means a period that is required to pass with
respect to an employee before the employee is eligible to be covered
for benefits under the terms of the contract.
(u) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
(v) "Family" means the subscriber and his or her dependent or
dependents.
SEC. 4. Section 1357.503 of the Health and Safety Code is amended
to read:
1357.503. (a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan's
small employer health care service plan contracts for plan years on
or after January 1, 2014, to all small employers in each service area
in which the plan provides or arranges for the provision of health
care services.
(2) On and after October 1, 2013, a plan shall make available to
each small employer all small employer health care service plan
contracts that the plan offers and sells to small employers or to
associations that include small employers in this state for plan
years on or after January 1, 2014. Health coverage through an
association that is not related to employment shall be considered
individual coverage pursuant to Section 144.102(c) of Title 45 of the
Code of Federal Regulations.
(3) A plan that offers qualified health plans through the Exchange
shall be deemed to be in compliance with paragraphs (1) and (2) with
respect to small employer health care service plan contracts offered
through the Exchange in those geographic regions in which the plan
offers plan contracts through the Exchange.
(b) A plan shall provide enrollment periods consistent with PPACA
and described in Section 155.725 of Title 45 of the Code of Federal
Regulations. Commencing January 1, 2014, a plan shall provide special
enrollment periods consistent with the special enrollment periods
described in Section 1399.849, to the extent permitted by PPACA,
except for the triggering events identified in paragraphs (d)(3) and
(d)(6) of Section 155.420 of Title 45 of the Code of Federal
Regulations with respect to plan contracts offered through the
Exchange.
(c) No plan or solicitor shall induce or otherwise encourage a
small employer to separate or otherwise exclude an eligible employee
from a health care service plan contract that is provided in
connection with employee's employment or membership in a guaranteed
association.
(d) Every plan shall file with the director the reasonable
employee participation requirements and employer contribution
requirements that will be applied in offering its plan contracts.
Participation requirements shall be applied uniformly among all small
employer groups, except that a plan may vary application of minimum
employee participation requirements by the size of the small employer
group and whether the employer contributes 100 percent of the
eligible employee's premium. Employer contribution requirements shall
not vary by employer size. A health care service plan shall not
establish a participation requirement that (1) requires a person who
meets the definition of a dependent in Section 1357.500 to enroll as
a dependent if he or she is otherwise eligible for coverage and
wishes to enroll as an eligible employee and (2) allows a plan to
reject an otherwise eligible small employer because of the number of
persons that waive coverage due to coverage through another employer.
Members of an association eligible for health coverage under
subdivision (m) of Section 1357.500, but not electing any health
coverage through the association, shall not be counted as eligible
employees for purposes of determining whether the guaranteed
association meets a plan's reasonable participation standards.
(e) The plan shall not reject an application from a small employer
for a small employer health care service plan contract if all of the
following conditions are met:
(1) The small employer offers health benefits to 100 percent of
its eligible employees. Employees who waive coverage on the grounds
that they have other group coverage shall not be counted as eligible
employees.
(2) The small employer agrees to make the required premium
payments.
(3) The small employer agrees to inform the small employer's
employees of the availability of coverage and the provision that
those not electing coverage must wait until the next open enrollment
or a special enrollment period to obtain coverage through the group
if they later decide they would like to have coverage.
(4) The employees and their dependents who are to be covered by
the plan contract work or reside in the service area in which the
plan provides or otherwise arranges for the provision of health care
services.
(f) No plan or solicitor shall, directly or indirectly, engage in
the following activities:
(1) Encourage or direct small employers to refrain from filing an
application for coverage with a plan because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan's approved
service area.
(2) Encourage or direct small employers to seek coverage from
another plan because of the health status, claims experience,
industry, occupation of the small employer, or geographic location
provided that it is within the plan's approved service area.
(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs or discriminate based on an individual's
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions.
(g) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor for the sale
of a health care service plan contract to be varied because of the
health status, claims experience, industry, occupation, or geographic
location of the small employer. This subdivision does not apply to a
compensation arrangement that provides compensation to a solicitor
on the basis of percentage of premium, provided that the percentage
shall not vary because of the health status, claims experience,
industry, occupation, or geographic area of the small employer.
(h) (1) A policy or contract that covers a small employer, as
defined in Section 1304(b) of PPACA and in Section 1357.500, shall
not establish rules for eligibility, including continued eligibility,
of an individual, or dependent of an individual, to enroll under the
terms of the policy or contract based on any of the following health
status-related factors:
(A) Health status.
(B) Medical condition, including physical and mental illnesses.
(C) Claims experience.
(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.
(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an eligible employee or dependent to fill out a
health assessment or medical questionnaire prior to enrollment under
a small employer health care service plan contract. 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
dependent or any other source prior to enrollment of the individual.
(i) (1) A health care service plan shall consider as a
single risk pool for rating purposes in the small employer market the
claims experience of all enrollees in all nongrandfathered small
employer health benefit plans offered by the health care service plan
in this state, whether offered as health care service plan contracts
or health insurance policies, including those insureds and enrollees
who enroll in coverage through the Exchange and insureds and
enrollees covered by the health care service plan outside of the
Exchange.
(2) Each calendar year, a health care service plan shall establish
an index rate for the small employer market in the state based on
the total combined claims costs for providing essential health
benefits, as defined pursuant to Section 1302 of PPACA and Section
1367.005, 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 and reinsurance programs established for the state
pursuant to Sections 1343 and 1341 of PPACA. The premium rate for all
of the health care service plan's nongrandfathered small employer
health care service plan contracts shall use the applicable index
rate, as adjusted for total expected marketwide payments and charges
under the risk adjustment and reinsurance programs established for
the state pursuant to Sections 1343 and 1341 of PPACA, subject only
to the adjustments permitted under paragraph (3).
(3) A health care service plan may vary premium rates for a
particular nongrandfathered small employer health care service plan
contract from its index rate based only on the following actuarially
justified plan-specific factors:
(A) The actuarial value and cost-sharing design of the plan
contract.
(B) The plan contract's provider network, delivery system
characteristics, and utilization management practices.
(C) The benefits provided under the plan contract that are in
addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. 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 plan contracts 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.
(j) A plan shall comply with the requirements of Section 1374.3.
(k) (1) Except as provided in paragraph (2), if Section 2702 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg-1), as
added by Section 1201 of PPACA, is repealed, this section shall
become inoperative 12 months after the repeal date, in which case
health care service plans subject to this section shall instead be
governed by Section 1357.03 to the extent permitted by federal law,
and all references in this article to this section shall instead
refer to Section 1357.03 except for purposes of paragraph (2).
(2) Subdivision (b) shall remain operative with respect to health
care service plan contracts offered through the Exchange.
SEC. 5. Section 1357.504 of the Health and Safety Code is amended
to read:
1357.504. (a) With respect to small employer health care service
plan contracts offered outside the Exchange, after a small employer
submits a completed application form for a plan contract, the health
care service plan shall, within 30 days, notify the employer of the
employer's actual premium charges for that plan contract established
in accordance with Section 1357.512. The employer shall have 30 days
in which to exercise the right to buy coverage at the quoted premium
charges.
(b) Except as provided in subdivision (c), when a small employer
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
contract shall become effective no later than the first day of the
following month. When that payment is neither delivered nor
postmarked until after the 15th day of a month, coverage shall become
effective no later than the first day of the second month following
delivery or postmark of the payment.
(c) (1) With respect to a small employer health care service plan
contract offered through the Exchange, a plan shall apply coverage
effective dates consistent with those required under Section 155.720
of Title 45 of the Code of Federal Regulations and paragraph (2) of
subdivision (e) of Section 1399.849.
(2) With respect to a small employer health care service plan
contract offered outside the Exchange for which an individual applies
during a special enrollment period described in subdivision (b) of
Section 1357.503, the following provisions shall apply:
(A) Coverage under the plan contract shall become effective no
later than the first day of the first calendar month beginning after
the date the plan receives the request for special enrollment.
(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, coverage under the plan contract
shall become effective on the date of birth, adoption, or placement
for adoption.
(d) During the first 30 days after the effective date of the plan
contract, the small employer shall have the option of changing
coverage to a different plan contract offered by the same health care
service plan. If a small employer notifies the plan of the change
within the first 15 days of a month, coverage under the new plan
contract shall become effective no later than the first day of the
following month. If a small employer notifies the plan of the change
after the 15th day of a month, coverage under the new plan contract
shall become effective no later than the first day of the second
month following notification.
(e) All eligible employees and dependents listed on a small
employer's completed application shall be covered on the effective
date of the health benefit plan.
SEC. 6. Section 1357.509 of the Health and Safety Code is amended
to read:
1357.509. (a) To the extent permitted by PPACA, a plan shall not
be required to offer a health care service plan contract or accept
applications for the contract pursuant to this article in the case of
any of the following:
(1) To a small employer, if the eligible employees and dependents
who are to be covered by the plan contract do not live, work, or
reside within a plan's approved service areas.
(2) (A) Within a specific service area or portion of a service
area, if a plan reasonably anticipates and demonstrates to the
satisfaction of the director all of the following:
(i) It will not have sufficient health care delivery resources to
ensure that health care services will be available and accessible to
the eligible employee and dependents of the employee because of its
obligations to existing enrollees.
(ii) It is applying this subparagraph uniformly to all employers
without regard to the claims experience of those employers, and their
employees and dependents, or any health status-related factor
relating to those employees and dependents.
(iii) The action is not unreasonable or clearly inconsistent with
the intent of this chapter.
(B) A plan that cannot offer a health care service plan contract
to small employers because it is lacking in sufficient health care
delivery resources within a service area or a portion of a service
area pursuant to subparagraph (A) may not offer a contract in the
area in which the plan is not offering coverage to small employers to
new employer groups until the later of the following dates:
(i) The 181st day after the date that coverage is denied pursuant
to this paragraph.
(ii) The date the plan notifies the director that it has the
ability to deliver services to small employer groups, and certifies
to the director that from the date of the notice it will enroll all
small employer groups requesting coverage in that area from the plan.
(C) Subparagraph (B) shall not limit the plan's ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.
(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to the requirements of
this section.
(b) (1) A health care service plan may decline to offer a health
care service plan contract to a small employer if the plan
demonstrates to the satisfaction of the director both of the
following:
(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, the director shall consider, but not
be limited to, the plan's compliance with the requirements of
Section 1367, Article 6 (commencing with Section 1375), and the rules
adopted thereunder.
(B) It is applying this paragraph uniformly to all employers
without regard to the claims experience of those employers and their
employees and dependents or any health status-related factor relating
to those employees and dependents.
(2) A plan that denies coverage to a small employer under
paragraph (1) shall not offer coverage in the group market before the
later of the following dates:
(A) The 181st day after the date that coverage is denied pursuant
to paragraph (1).
(B) The date the plan demonstrates to the satisfaction of the
director that the plan has sufficient financial reserves necessary to
underwrite additional coverage.
(3) Paragraph (2) shall not limit the plan's ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.
(4) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to the requirements of
this section.
(c) Nothing in this article shall be construed to limit the
director's authority to develop and implement a plan of
rehabilitation for a health care service plan whose financial
viability or organizational and administrative capacity has become
impaired, to the extent permitted by PPACA.
SEC. 7. Section 1357.512 of the Health and Safety Code is amended
to read:
1357.512. (a) The premium rate for a small employer health care
service plan contract issued, amended, or renewed on or after January
1, 2014, shall vary with respect to the particular coverage involved
only by the following:
(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the Centers for Medicare and Medicaid Services
pursuant to Section 2701(a)(3) of the federal Public Health Service
Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall be
determined using the individual's age as of the date of the contract
issuance or renewal, as applicable, and shall not vary by more than
three to one for like individuals of different age who are 21 years
of age or older as described in federal regulations adopted pursuant
to Section 2701(a)(3) of the federal Public Health Service Act (42
U.S.C. Sec. 300gg(a)(3)).
(2) (A) Geographic region. The geographic regions for purposes of
rating shall be the following:
(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen,
Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter,
Tehama, Trinity, Tuolumne, and Yuba.
(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.
(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.
(iv) Region 4 shall consist of the City and County of San
Francisco.
(v) Region 5 shall consist of the County of Contra Costa.
(vi) Region 6 shall consist of the County of Alameda.
(vii) Region 7 shall consist of the County of Santa Clara.
(viii) Region 8 shall consist of the County of San Mateo.
(ix) Region 9 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.
(x) Region 10 shall consist of the Counties of Mariposa, Merced,
San Joaquin, Stanislaus, and Tulare.
(xi) Region 11 shall consist of the Counties of Fresno, Kings, and
Madera.
(xii) Region 12 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.
(xiii) Region 13 shall consist of the Counties of Imperial, Inyo,
and Mono.
(xiv) Region 14 shall consist of the County of Kern.
(xv) Region 15 shall consist of the ZIP Codes in the County of Los
Angeles starting with 906 to 912, inclusive, 915, 917, 918, and 935.
(xvi) Region 16 shall consist of the ZIP Codes in the County of
Los Angeles other than those identified in clause (xv).
(xvii) Region 17 shall consist of the Counties of Riverside and
San Bernardino.
(xviii) Region 18 shall consist of the County of Orange.
(xix) Region 19 shall consist of the County of San Diego.
(B) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review the
geographic rating regions specified in this paragraph and the impacts
of those regions on the health care coverage market in California,
and submit a report to the appropriate policy committees of the
Legislature. The requirement for submitting a report under this
subparagraph is inoperative June 1, 2021, pursuant to Section 10231.5
of the Government Code.
(3) Whether the contract covers an individual or family, as
described in PPACA.
(b) The rate for a health care service plan contract subject to
this section shall not vary by any factor not described in this
section.
(c) The total premium charged to a small employer pursuant to this
section shall be determined by summing the premiums of covered
employees and dependents in accordance with Section 147.102(c)(1) of
Title 45 of the Code of Federal Regulations.
(d) The rating period for rates subject to this section shall be
no less than 12 months from the date of issuance or renewal of the
plan contract.
(e) If Section 2701 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg), as added by Section 1201 of PPACA, is repealed,
this section shall become inoperative 12 months after the repeal
date, in which case rates for health care service plan contracts
subject to this section shall instead be subject to Section 1357.12,
to the extent permitted by federal law, and all references to this
section shall be deemed to be references to Section 1357.12.
SEC. 8. Section 1363 of the Health and Safety Code is amended to
read:
1363. (a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding the
benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner. The
director may require that the materials be presented in a reasonably
uniform manner so as to facilitate comparisons between plan contracts
of the same or other types of plans. Nothing contained in this
chapter shall preclude the director from permitting the disclosure
form to be included with the evidence of coverage or plan contract.
The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:
(1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.
(2) The exceptions, reductions, and limitations that apply to the
plan.
(3) The full premium cost of the plan.
(4) Any copayment, coinsurance, or deductible requirements that
may be incurred by the member or the member's family in obtaining
coverage under the plan.
(5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to change
premiums.
(6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:
(A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.
(ii) States, with respect to individual plan contracts, small
group plan contracts, and any other group plan contracts for which
health care services are not negotiated, that the applicant has a
right to view the evidence of coverage prior to enrollment, and, if
the evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.
(B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that individuals
with special health care needs should read carefully those sections
that apply to them.
(C) Includes the plan's telephone number or numbers that may be
used by an applicant to receive additional information about the
benefits of the plan or a statement where the telephone number or
numbers are located in the disclosure form.
(D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the disclosure
form shall state where the health plan benefits and coverage matrix
is located.
(E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.
(7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.
(8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.
(9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.
(10) If the plan utilizes arbitration to settle disputes, a
statement of that fact.
(11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.
(12) A description of any limitations on the patient's choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.
(13) General authorization requirements for referral by a primary
care physician to a specialty care physician or a nonphysician health
care practitioner.
(14) Conditions and procedures for disenrollment.
(15) A description as to how an enrollee may request continuity of
care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.
(16) Information concerning the right of an enrollee to request an
independent review in accordance with Article 5.55 (commencing with
Section 1374.30).
(17) A notice as required by Section 1364.5.
(b) (1) As of July 1, 1999, the director shall require each plan
offering a contract to an individual or small group to provide with
the disclosure form for individual and small group plan contracts a
uniform health plan benefits and coverage matrix containing the plan'
s major provisions in order to facilitate comparisons between plan
contracts. The uniform matrix shall include the following category
descriptions together with the corresponding copayments and
limitations in the following sequence:
(A) Deductibles.
(B) Lifetime maximums.
(C) Professional services.
(D) Outpatient services.
(E) Hospitalization services.
(F) Emergency health coverage.
(G) Ambulance services.
(H) Prescription drug coverage.
(I) Durable medical equipment.
(J) Mental health services.
(K) Chemical dependency services.
(L) Home health services.
(M) Other.
(2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:
THIS MATRIX IS INTENDED TO BE USED TO HELP YOU COMPARE COVERAGE
BENEFITS AND IS A SUMMARY ONLY. THE EVIDENCE OF COVERAGE AND PLAN
CONTRACT SHOULD BE CONSULTED FOR A DETAILED DESCRIPTION OF COVERAGE
BENEFITS AND LIMITATIONS.
(3) (A) A health care service plan contract subject to Section
2715 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-15), shall satisfy the requirements of this subdivision by
providing the uniform summary of benefits and coverage required under
Section 2715 of the federal Public Health Service Act (42 U.S.C.
Sec. 300gg-15) and any rules or regulations issued thereunder. A
health care service plan that issues the uniform summary of benefits
referenced in this paragraph shall do both of the following:
(i) Ensure that all applicable benefit disclosure requirements
specified in this chapter and in Title 28 of the California Code of
Regulations are met in other health plan documents provided to
enrollees under the provisions of this chapter.
(ii) Consistent with applicable law, advise applicants and
enrollees, in a prominent place in the plan documents referenced in
subdivision (a), that enrollees are not financially responsible in
payment of emergency care services, in any amount that the health
care service plan is obligated to pay, beyond the enrollee's
copayments, coinsurance, and deductibles as provided in the enrollee'
s health care service plan contract.
(B) Subdivision (c) shall not apply to a health care service plan
contract subject to subparagraph (A).
(c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.
(d) All plans, solicitors, and representatives of a plan shall,
when presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with a
properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.
(e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.
(f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.
(g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in the
group contract that may be less favorable to subscribers or
enrollees.
(h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the plan
shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals and
with groups of the same or similar size for the plan's preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.
(i) Subdivision (b) shall not apply to any coverage provided by a
plan for the Medi-Cal program or the Medicare program pursuant to
Title XVIII and Title XIX of the Social Security Act.
SEC. 9. Section 1389.4 of the Health and Safety Code is amended to
read:
1389.4. (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall ensure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan solicitors
or solicitor firms, provided that those materials include the
information required to be submitted by this section.
(d) Commencing January 1, 2011, the director shall post on the
department's Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific information
about rating and underwriting criteria and practices in the
individual market and information about the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700)
of Division 2 of the Insurance Code) and
the federal temporary high risk pool
established pursuant to Part 6.6 (commencing with Section 12739.5) of
Division 2 of the Insurance Code. The director shall develop the
information for the Internet Web site in consultation with the
Department of Insurance to enhance the consistency of information
provided to consumers. Information about individual health coverage
shall also include the following notification:
"Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.
(g) (1) This section shall become inoperative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.
(2) 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-4), this section
shall become operative 12 months after the date of that repeal or
amendment.
SEC. 10. Section 1389.4 is added to the Health and Safety Code, to
read:
1389.4. (a) A full service health care service plan that renews
individual grandfathered health benefit plans shall be subject to
this section.
(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to dependents applying for an individual
grandfathered health plan and sets the rate for that coverage. These
guidelines, policies, or procedures shall ensure that the plan rating
and underwriting criteria comply with Sections 1365.5 and 1389.1 and
all other applicable provisions of state and federal law.
(c) On or before the June 1 next following the operative date of
this section, and annually thereafter, every health care service plan
shall file with the department a general description of the
criteria, policies, procedures, or guidelines the plan uses for
rating and underwriting decisions related to individual grandfathered
health plans, which means automatic declinable health conditions,
health conditions that may lead to a coverage decline, height and
weight standards, health history, health care utilization, lifestyle,
or behavior that might result in a decline for coverage or severely
limit the plan products for which they would be eligible. A plan may
comply with this section by submitting to the department underwriting
materials or resource guides provided to plan solicitors or
solicitor firms, provided that those materials include the
information required to be submitted by this section.
(d) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
(e) For purposes of this section, the following definitions shall
apply:
(1) "PPACA" means 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), and
any rules, regulations, or guidance issued pursuant to that law.
(2) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(f) (1) This section shall become operative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.
(2) 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-4), this section
shall become inoperative 12 months after the date of that repeal or
amendment.
SEC. 11. Section 1389.5 of the Health and Safety Code is amended
to read:
1389.5. (a) This section shall apply to a health care service
plan that provides coverage under an individual plan contract that is
issued, amended, delivered, or renewed on or after January 1, 2007.
(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.
"Without medical underwriting" means that the health care service
plan shall not decline to offer coverage to, or deny enrollment of,
the individual or impose any preexisting condition exclusion on the
individual who transfers to another individual plan contract pursuant
to this section.
(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make the
ranking available upon request. The plan shall update the ranking
whenever a new benefit design for individual purchasers is approved.
(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this
section, at a minimum, when the plan changes the enrollee's premium
rate. Posting this information on the plan's Internet Web site shall
not constitute notice for purposes of this subdivision. The notice
shall adequately inform enrollees of the transfer rights provided
under this section, including information on the process to obtain
details about the individual plan contracts available to that
enrollee and advising that the enrollee may be unable to return to
his or her current individual plan contract if the enrollee transfers
to another individual plan contract.
(e) The requirements of this section shall not apply to the
following:
(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an individual
health benefit plan contract offered pursuant to Section 1366.35.
(2) An individual offered conversion coverage pursuant to Section
1373.6.
(3) Individual coverage under a specialized health care service
plan contract.
(4) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Division 9 of Part 3 of
the Welfare and Institutions Code.
(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code.
(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division 2 of
the Insurance Code.
(f) It is the intent of the Legislature that individuals shall
have more choice in their health coverage when health care service
plans guarantee the right of an individual to transfer to another
product based on the plan's own ranking system. The Legislature does
not intend for the department to review or verify the plan's ranking
for actuarial or other purposes.
(g) (1) This section shall become inoperative January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14 First
Extraordinary Session, whichever date is later.
(2) 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-4), this section
shall become operative 12 months after the date of that repeal or
amendment.
SEC. 12. Section 1389.7 of the Health and Safety Code is amended
to read:
1389.7. (a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered under an individual plan contract that was rescinded,
a new individual plan contract, without medical underwriting, that
provides equal benefits. A health care service plan may also permit
an individual, who was covered under an individual plan contract that
was rescinded, to remain covered under that individual plan
contract, with a revised premium rate that reflects the number of
persons remaining on the plan contract.
(b) "Without medical underwriting" means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.
(c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons covered
on the new individual plan contract.
(d) Notwithstanding subdivisions (a) and (b), if an individual was
subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.
(e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to coverage
provided under this section.
(f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.
(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
(h) (1) This section shall become inoperative on January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.
(2) 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-4), this section
shall become operative 12 months after the date of that repeal or
amendment.
SEC. 13. Section 1389.7 is added to the Health and Safety Code, to
read:
1389.7. (a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered by the plan under an individual plan contract that
was rescinded, a new individual plan contract that provides the most
equivalent benefits.
(b) A health care service plan that offers, issues, or renews
individual plan contracts inside or outside the California Health
Benefit Exchange may also permit an individual, who was covered by
the plan under an individual plan contract that was rescinded, to
remain covered under that individual plan contract, with a revised
premium rate that reflects the number of persons remaining on the
individual plan contract consistent with Section 1399.855.
(c) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to coverage
provided under this section.
(d) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract under subdivision (a), and this
contract shall be effective as of the effective date of the original
plan contract and there shall be no lapse in coverage.
(e) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
(f) This section shall apply notwithstanding subdivision (a) or
(d) of Section 1399.849.
(g) (1) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14 First
Extraordinary Session, whichever date is later.
(2) 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-4), this section
shall become inoperative 12 months after the date of that repeal or
amendment.
SEC. 14. Section 1399.816 of the Health and Safety Code is
repealed.
SEC. 15. The heading of Article 11.7 (commencing with Section
1399.825) of Chapter 2.2 of Division 2 of the Health and Safety Code
is amended to read:
Article 11.7. Child Access to Health Care Coverage
SEC. 16. Section 1399.829 of the Health and Safety Code is amended
to read:
1399.829. (a) A health care service plan may use the following
characteristics of an eligible child for purposes of establishing the
rate of the plan contract for that child, where consistent with
federal regulations under PPACA: age, geographic region, and family
composition, plus the health care service plan contract selected by
the child or the responsible party for the child.
(b) From the effective date of this article to December 31, 2013,
inclusive, rates for a child applying for coverage shall be subject
to the following limitations:
(1) During any open enrollment period or for late enrollees, the
rate for any child due to health status shall not be more than two
times the standard risk rate for a child.
(2) The rate for a child shall be subject to a 20-percent
surcharge above the highest allowable rate on a child applying for
coverage who is not a late enrollee and who failed to maintain
coverage with any health care service plan or health insurer for the
90-day period prior to the date of the child's application. The
surcharge shall apply for the 12-month period following the effective
date of the child's coverage.
(3) If expressly permitted under PPACA and any rules, regulations,
or guidance issued pursuant to that act, a health care service plan
may rate a child based on health status during any period other than
an open enrollment period if the child is not a late enrollee.
(4) If expressly permitted under PPACA and any rules, regulations,
or guidance issued pursuant to that act, a health care service plan
may condition an offer or acceptance of coverage on any preexisting
condition or other health status-related factor for a period other
than an open enrollment period and for a child who is not a late
enrollee.
(c) For any individual health care service plan contract issued,
sold, or renewed prior to December 31, 2013, the health plan shall
provide to a child or responsible party for a child a notice that
states the following:
"Please consider your options carefully before failing to maintain
or renewing coverage for a child for whom you are responsible. If
you attempt to obtain new individual coverage for that child, the
premium for the same coverage may be higher than the premium you pay
now."
(d) A child who applied for coverage between September 23, 2010,
and the end of the initial open enrollment period shall be deemed to
have maintained coverage during that period.
(e) Effective January 1, 2014, except for individual grandfathered
health plan coverage, the rate for any child shall be identical to
the standard risk rate.
(f) Health care service plans shall not require documentation from
applicants relating to their coverage history.
(g) (1) On and after the operative date of the act adding this
subdivision, and until January 1, 2014, a health care service plan
shall provide the model notice, as provided in paragraph (3), to all
applicants for coverage under this article and to all enrollees, or
the responsible party for an enrollee, renewing coverage under this
article that contains the following information:
(A) Information about the open enrollment period provided under
Section 1399.849.
(B) An explanation that obtaining coverage during the open
enrollment period described in Section 1399.849 will not affect the
effective dates of coverage for coverage purchased pursuant to this
article unless the applicant cancels that coverage.
(C) An explanation that coverage purchased pursuant to this
article shall be effective as required under subdivision (d) of
Section 1399.826 and that such coverage shall not prevent an
applicant from obtaining new coverage during the open enrollment
period described in Section 1399.849.
(D) Information about the Medi-Cal program, information about the
Healthy Families Program if the Healthy Families Program is accepting
enrollment, and information about subsidies available through the
California Health Benefit Exchange.
(2) The notice described in paragraph (1) shall be in plain
language and 14-point type.
(3) The department shall adopt a uniform model notice to be used
by health care service plans in order to comply with this
subdivision, and shall consult with the Department of Insurance in
adopting that uniform model notice. Use of the model notice shall not
require prior approval of the department. The model notice adopted
by the department for purposes of this section 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).
SEC. 17. Section 1399.836 is added to the Health and Safety Code,
to read:
1399.836. (a) This article shall become inoperative on January 1,
2014, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.
(b) 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-4), this article
shall become operative 12 months after the date of that repeal or
amendment.
SEC. 18. Article 11.8 (commencing with Section 1399.845) is added
to Chapter 2.2 of Division 2 of the Health and Safety Code, to read:
Article 11.8. Individual Access to Health Care Coverage
1399.845. For purposes of this article, the following definitions
shall apply:
(a) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
(b) "Dependent" means the spouse or registered domestic partner,
or child, of an individual, subject to applicable terms of the health
benefit plan.
(c) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(d) "Family" means the subscriber and his or her dependent or
dependents.
(e) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(f) "Health benefit plan" means any individual or group health
care service plan contract that provides medical, hospital, and
surgical benefits. The term does not include a specialized health
care service plan contract, a health care service plan contract
provided in the Medi-Cal program (Chapter 7 (commencing with Section
14000) of Part 3 of Division 9 of the Welfare and Institutions Code),
the Healthy Families Program (Part 6.2 (commencing with Section
12693) of Division 2 of the Insurance Code), the Access for Infants
and Mothers Program (Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code), or the program under Part 6.4
(commencing with Section 12699.50) of Division 2 of the Insurance
Code, or Medicare supplement coverage, to the extent consistent with
PPACA.
(g) "Policy year" means the period from January 1 to December 31,
inclusive.
(h) "PPACA" means 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), and
any rules, regulations, or guidance issued pursuant to that law.
(i) "Preexisting condition provision" means a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the enrollee's effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage.
(j) "Rating period" means the calendar year for which premium
rates are in effect pursuant to subdivision (d) of Section 1399.855.
(k) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
1399.847. Except as provided in Sections 1399.858 and 1399.861,
the provisions of this article shall only apply with respect to
nongrandfathered individual health benefit plans offered by a health
care service plan, and shall apply in addition to the other
provisions of this chapter and the rules adopted thereunder.
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 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) A plan shall provide an initial open enrollment period
from October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for plan years on or after January 1, 2015, from
October 15 to December 7, inclusive, of the preceding calendar year.
(2) 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 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 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 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 gains a dependent or becomes a dependent.
(C) He or she is mandated to be covered as a dependent pursuant to
a valid state or federal court order.
(D) He or she has been released from incarceration.
(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.
(F) He or she gains access to new health benefit plans as a result
of a permanent move.
(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845 or
Section 10965 of the Insurance Code, for one of the conditions
described in subdivision (c) of Section 1373.96 and that provider is
no longer participating in the health benefit plan.
(H) He or she 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 did not enroll in a health benefit plan during the
immediately preceding enrollment period available to the individual
because he or she was misinformed that he or she was covered under
minimum essential coverage.
(I) He or she 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 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, and 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 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,
coverage shall become effective as of the following January 1. 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 and 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.
(C) Claims experience.
(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.
(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her 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
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 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 and reinsurance programs
established for the state pursuant to Sections 1343 and 1341 of
PPACA. The premium rate for all of the health care service plan's
health benefit plans in the individual market shall use the
applicable index rate, as adjusted for total expected marketwide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and 1341
of PPACA, 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 an individual health benefit
plan that is 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-4), subdivisions (a),
(b), and (g) shall become inoperative 12 months after that repeal or
amendment.
1399.851. (a) Commencing October 1, 2013, a health care service
plan or solicitor shall not, directly or indirectly, engage in the
following activities:
(1) Encourage or direct an individual to refrain from filing an
application for individual coverage with a plan because of the health
status, claims experience, industry, occupation, or geographic
location, provided that the location is within the plan's approved
service area, of the individual.
(2) Encourage or direct an individual to seek individual coverage
from another plan or health insurer or the California Health Benefit
Exchange because of the health status, claims experience, industry,
occupation, or geographic location, provided that the location is
within the plan's approved service area, of the individual.
(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs or discriminate based on an individual's
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions.
(b) Commencing October 1, 2013, a health care service plan shall
not, directly or indirectly, enter into any contract, agreement, or
arrangement with a solicitor that provides for or results in the
compensation paid to a solicitor for the sale of an individual health
benefit plan to be varied because of the health status, claims
experience, industry, occupation, or geographic location of the
individual. This subdivision does not apply to a compensation
arrangement that provides compensation to a solicitor on the basis of
percentage of premium, provided that the percentage shall not vary
because of the health status, claims experience, industry,
occupation, or geographic area of the individual.
(c) This section shall only apply with respect to individual
health benefit plans for policy years on or after January 1, 2014.
1399.853. (a) An individual health benefit plan shall be
renewable at the option of the enrollee except as permitted to be
canceled, rescinded, or not renewed pursuant to Section 1365 and
Section 155.430(b) of Title 45 of the Code of Federal Regulations.
(b) Any plan that ceases to offer for sale new individual health
benefit plans pursuant to Section 1365 shall continue to be governed
by this article with respect to business conducted under this
article.
1399.855. (a) With respect to individual health benefit plans for
policy years on or after January 1, 2014, a health care service plan
may use only the following characteristics of an individual, and any
dependent thereof, for purposes of establishing the rate of the
individual health benefit plan covering the individual and the
eligible dependents thereof, along with the health benefit plan
selected by the individual:
(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the federal Centers for Medicare and Medicaid
Services pursuant to Section 2701(a)(3) of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall be
determined using the individual's age as of the date of the health
benefit plan contract issuance or renewal, as applicable, and shall
not vary by more than three to one for like individuals of different
age who are 21 years of age or older as described in federal
regulations adopted pursuant to Section 2701(a)(3) of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg(a)(3)).
(2) (A) Geographic region. The geographic regions for purposes of
rating shall be the following:
(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen,
Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter,
Tehama, Trinity, Tuolumne, and Yuba.
(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.
(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.
(iv) Region 4 shall consist of the City and County of San
Francisco.
(v) Region 5 shall consist of the County of Contra Costa.
(vi) Region 6 shall consist of the County of Alameda.
(vii) Region 7 shall consist of the County of Santa Clara.
(viii) Region 8 shall consist of the County of San Mateo.
(ix) Region 9 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.
(x) Region 10 shall consist of the Counties of Mariposa, Merced,
San Joaquin, Stanislaus, and Tulare.
(xi) Region 11 shall consist of the Counties of Fresno, Kings, and
Madera.
(xii) Region 12 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.
(xiii) Region 13 shall consist of the Counties of Imperial, Inyo,
and Mono.
(xiv) Region 14 shall consist of the County of Kern.
(xv) Region 15 shall consist of the ZIP Codes in the County of Los
Angeles starting with 906 to 912, inclusive, 915, 917, 918, and 935.
(xvi) Region 16 shall consist of the ZIP Codes in the County of
Los Angeles other than those identified in clause (xv).
(xvii) Region 17 shall consist of the Counties of Riverside and
San Bernardino.
(xviii) Region 18 shall consist of the County of Orange.
(xix) Region 19 shall consist of the County of San Diego.
(B) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review the
geographic rating regions specified in this paragraph and the impacts
of those regions on the health care coverage market in California,
and make a report to the appropriate policy committees of the
Legislature.
(3) Whether the plan covers an individual or family, as described
in PPACA.
(b) The rate for a health benefit plan subject to this section
shall not vary by any factor not described in this section.
(c) With respect to family coverage under an individual health
benefit plan, the rating variation permitted under paragraph (1) of
subdivision (a) shall be applied based on the portion of the premium
attributable to each family member covered under the plan. The total
premium for family coverage shall be determined by summing the
premiums for each individual family member. In determining the total
premium for family members, premiums for no more than the three
oldest family members who are under 21 years of age shall be taken
into account.
(d) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.
(e) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
(f) The requirement for submitting a report imposed under
subparagraph (B) of paragraph (2) of subdivision (a) is inoperative
on June 1, 2021, pursuant to Section 10231.5 of the Government Code.
(g) 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-4), this section
shall become inoperative 12 months after the date of that repeal or
amendment.
1399.857. (a) A health care service plan shall not be required to
offer an individual health benefit plan or accept applications for
the plan pursuant to Section 1399.849 in the case of any of the
following:
(1) To an individual who does not live or reside within the plan's
approved service areas.
(2) (A) Within a specific service area or portion of a service
area, if the plan reasonably anticipates and demonstrates to the
satisfaction of the director both of the following:
(i) It will not have sufficient health care delivery resources to
ensure that health care services will be available and accessible to
the individual because of its obligations to existing enrollees.
(ii) It is applying this subparagraph uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.
(B) A health care service plan that cannot offer an individual
health benefit plan to individuals because it is lacking in
sufficient health care delivery resources within a service area or a
portion of a service area pursuant to subparagraph (A) shall not
offer a health benefit plan in that area to individuals until the
later of the following dates:
(i) The 181st day after the date coverage is denied pursuant to
this paragraph.
(ii) The date the plan notifies the director that it has the
ability to deliver services to individuals, and certifies to the
director that from the date of the notice it will enroll all
individuals requesting coverage in that area from the plan.
(C) Subparagraph (B) shall not limit the plan's ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.
(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to this section.
(b) (1) A health care service plan may decline to offer an
individual health benefit plan to an individual if the plan
demonstrates to the satisfaction of the director both of the
following:
(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, the director shall consider, but not
be limited to, the plan's compliance with the requirements of
Section 1367, Article 6 (commencing with Section 1375), and the rules
adopted thereunder.
(B) It is applying this subdivision uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.
(2) A plan that denies coverage to an individual under paragraph
(1) shall not offer coverage before the later of the following dates:
(A) The 181st day after the date that coverage is denied pursuant
to this subdivision.
(B) The date the plan demonstrates to the satisfaction of the
director that the plan has sufficient financial reserves necessary to
underwrite additional coverage.
(3) Paragraph (2) shall not limit the plan's ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.
(4) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to this section.
(c) Nothing in this article shall be construed to limit the
director's authority to develop and implement a plan of
rehabilitation for a health care service plan whose financial
viability or organizational and administrative capacity has become
impaired, to the extent permitted by PPACA.
(d) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
1399.858. The director may require a plan to discontinue the
offering of contracts or acceptance of applications from any
individual, or responsible party for an individual, upon a
determination by the director that the plan does not have sufficient
financial viability, or organizational and administrative capacity to
ensure the delivery of health care services to its enrollees. In
determining whether the conditions of this section have been met, the
director shall consider, but not be limited to, the plan's
compliance with the requirements of Section 1367, Article 6
(commencing with Section 1375), and the rules adopted thereunder.
1399.859. (a) A health care service plan that receives an
application for an individual health benefit plan outside the
Exchange during the initial open enrollment period, an annual
enrollment period, or a special enrollment period described in
Section 1399.849 shall inform the applicant that he or she may be
eligible for lower cost coverage through the Exchange and shall
inform the applicant of the applicable enrollment period provided
through the Exchange described in Section 1399.849.
(b) On or before October 1, 2013, and annually every October 1
thereafter, a health care service plan shall issue a notice to a
subscriber enrolled in an individual health benefit plan offered
outside the Exchange. The notice shall inform the subscriber that he
or she may be eligible for lower cost coverage through the Exchange
and shall inform the subscriber of the applicable open enrollment
period provided through the Exchange described in Section 1399.849.
(c) This section shall not apply where the individual health
benefit plan described in subdivision (a) or (b) is a grandfathered
health plan.
1399.861. (a) On or before October 1, 2013, and annually every
October 1 thereafter, a health care service plan shall issue the
following notice to all subscribers enrolled in an individual health
benefit plan that is a grandfathered health plan:
New improved health insurance options are available in California.
You currently have health insurance that is not required to follow
many of the new laws. For example, your plan may not provide
preventive health services without you having to pay any cost sharing
(copayments or coinsurance). Also, your current plan may be allowed
to increase your rates based on your health status while new plans
and policies cannot. You have the option to remain in your current
plan or switch to a new plan. Under the new rules, a health plan
cannot deny your application based on any health conditions you may
have. For more information about your options, please contact Covered
California at ____, the Office of Patient Advocate at ____, your
plan representative or insurance agent, or an entity paid by Covered
California to assist with health coverage enrollment such as a
navigator or an assister.
(b) Commencing October 1, 2013, a health care service plan shall
include the notice described in subdivision (a) in any renewal
material of the individual grandfathered health plan and in any
application for dependent coverage under the individual grandfathered
health plan.
(c) A health care service plan shall not advertise or market an
individual health benefit plan that is a grandfathered health plan
for purposes of enrolling a dependent of a subscriber into the plan
for policy years on or after January 1, 2014. Nothing in this
subdivision shall be construed to prohibit an individual enrolled in
an individual grandfathered health plan from adding a dependent to
that plan to the extent permitted by PPACA.
1399.862. Except as otherwise provided in this article, this
article shall only be implemented to the extent that it meets or
exceeds the requirements set forth in PPACA.
1399.863. (a) The department may adopt emergency regulations
implementing this article no later than December 31, 2014. The
department may readopt any emergency regulation authorized by this
section that is the same as or substantially equivalent to an
emergency regulation previously adopted under this section.
(b) The initial adoption of emergency regulations implementing
this article and the one readoption of emergency regulations
authorized by this section shall be deemed an emergency and necessary
for the immediate preservation of the public peace, health, safety,
or general welfare. Initial emergency regulations and the one
readoption of emergency regulations authorized by this section shall
be exempt from review by the Office of Administrative Law. The
initial emergency regulations and the one readoption of emergency
regulations authorized by this section shall be submitted to the
Office of Administrative Law for filing with the Secretary of State
and each shall remain in effect for no more than one year, by which
time final regulations may be adopted. The department shall consult
with the Insurance Commissioner prior to adopting any regulations
pursuant to this section for the specific purpose of ensuring, to the
extent practical, that there is consistency of regulations
applicable to entities regulated by the department and those
regulated by the Insurance Commissioner.
SEC. 19. This act shall become operative only if Assembly Bill 2
of the 2013-14 First Extraordinary Session is enacted and becomes
effective.
SEC. 20. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
