BILL NUMBER: AB 254 CHAPTERED
BILL TEXT
CHAPTER 64
FILED WITH SECRETARY OF STATE JUNE 24, 2004
APPROVED BY GOVERNOR JUNE 23, 2004
PASSED THE ASSEMBLY JUNE 17, 2004
PASSED THE SENATE JUNE 14, 2004
AMENDED IN SENATE MARCH 24, 2004
AMENDED IN ASSEMBLY SEPTEMBER 3, 2003
INTRODUCED BY Assembly Member Montanez
(Coauthors: Assembly Members Bates, Diaz, Dymally, Lieber, and
Lowenthal)
(Coauthors: Senators Florez, Kuehl, Margett, and Romero)
FEBRUARY 4, 2003
An act to amend Section 1373.621 of the Health and Safety Code,
and to amend Section 10116.5 of the Insurance Code, relating to
health.
LEGISLATIVE COUNSEL'S DIGEST
AB 254, Montanez. Health care coverage.
Existing law requires any health care service plan contract or
disability insurance policy issued, amended, delivered, or renewed in
California on or after January 1, 1999, that provides certain
benefits under an employer-sponsored group plan for an employer
subject to COBRA continuation coverage or under an employer group for
which the plan or insurer is required to offer Cal-COBRA
continuation coverage, to offer specified health coverage to former
employees who were 60 years old or older on the date of employment
termination and to meet certain other requirements. The coverage
applies to the spouses and former spouses of employees or former
employees, as specified.
This bill would make these requirements applicable only to an
individual who meets the eligibility requirements for continuation
coverage prior to January 1, 2005.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1373.621 of the Health and Safety Code is
amended to read:
1373.621. (a) Except for a specialized health care service plan,
every health care service plan contract that is issued, amended,
delivered, or renewed in this state on or after January 1, 1999, that
provides hospital, medical, or surgical expense coverage under an
employer-sponsored group plan for an employer subject to COBRA, as
defined in subdivision (e), or an employer group for which the plan
is required to offer Cal-COBRA coverage, as defined in subdivision
(f), including a carrier providing replacement coverage under Section
1399.63, shall further offer the former employee the opportunity to
continue benefits as required under subdivision (b), and shall
further offer the former spouse of an employee or former employee the
opportunity to continue benefits as required under subdivision (c).
(b) (1) In the event a former employee who worked for the employer
for at least five years prior to the date of termination of
employment and who is 60 years of age or older on the date employment
ends is entitled to and so elects to continue benefits under COBRA
or Cal-COBRA for himself or herself and for any spouse, the employee
or spouse may further continue benefits beyond the date coverage
under COBRA or Cal-COBRA ends, as set forth in paragraph (2). Except
as otherwise specified, continuation coverage shall be under the
same benefit terms and conditions as if the continuation coverage
under COBRA or Cal-COBRA had remained in force. For the employee or
spouse, continuation coverage following the end of COBRA or Cal-COBRA
is subject to payment of premiums to the health care service plan.
Individuals ineligible for COBRA or Cal-COBRA, or who are eligible
but have not elected or exhausted continuation coverage under federal
COBRA or Cal-COBRA, are not entitled to continuation coverage under
this section. Premiums for continuation coverage under this section
shall be billed by, and remitted to, the health care service plan in
accordance with subdivision (d). Failure to pay the requisite
premiums may result in termination of the continuation coverage in
accordance with the applicable provisions in the plan's group
subscriber agreement with the former employer.
(2) The employer shall notify the former employee or spouse or
both, or the former spouse of the employee or former employee, of the
availability of the continuation benefits under this section in
accordance with Section 2800.2 of the Labor Code. To continue health
care coverage pursuant to this section, the individual shall elect
to do so by notifying the plan in writing within 30 calendar days
prior to the date continuation coverage under COBRA or Cal-COBRA is
scheduled to end. Every health care service plan and specialized
health care service plan shall provide to the employer replacing a
health care service plan contract issued by the plan, or to the
employer's agent or broker representative, within 15 days of any
written request, information in possession of the plan reasonably
required to administer the requirements of Section 2800.2 of the
Labor Code.
(3) The continuation coverage shall end automatically on the
earlier of (A) the date the individual reaches age 65, (B) the date
the individual is covered under any group health plan not maintained
by the employer or any other health plan, regardless of whether that
coverage is less valuable, (C) the date the individual becomes
entitled to Medicare under Title XVIII of the Social Security Act,
(D) for a spouse, five years from the date on which continuation
coverage under COBRA or Cal-COBRA was scheduled to end for the
spouse, or (E) the date on which the employer terminates its group
subscriber agreement with the health care service plan and ceases to
provide coverage for any active employees through that plan, in which
case the health care service plan shall notify the former employee
or spouse or both of the right to a conversion plan in accordance
with Section 1373.6.
(c) (1) If a former spouse of an employee or former employee was
covered as a qualified beneficiary under COBRA or Cal-COBRA, the
former spouse may further continue benefits beyond the date coverage
under COBRA or Cal-COBRA ends, as set forth in paragraph (2) of
subdivision (b). Except as otherwise specified in this section,
continuation coverage shall be under the same benefit terms and
conditions as if the continuation coverage under COBRA or Cal-COBRA
had remained in force. Continuation coverage following the end of
COBRA or Cal-COBRA is subject to payment of premiums to the health
care service plan. Premiums for continuation coverage under this
section shall be billed by, and remitted to, the health care service
plan in accordance with subdivision (d). Failure to pay the
requisite premiums may result in termination of the continuation
coverage in accordance with the applicable provisions in the plan's
group subscriber agreement with the employer or former employer.
(2) The continuation coverage for the former spouse shall end
automatically on the earlier of (A) the date the individual reaches
65 years of age, (B) the date the individual is covered under any
group health plan not maintained by the employer or any other health
plan, regardless of whether that coverage is less valuable, (C) the
date the individual becomes entitled to Medicare under Title XVIII of
the Social Security Act, (D) five years from the date on which
continuation coverage under COBRA or Cal-COBRA was scheduled to end
for the former spouse, or (E) the date on which the employer or
former employer terminates its group subscriber agreement with the
health care service plan and ceases to provide coverage for any
active employees through that plan, in which case the health care
service plan shall notify the former spouse of the right to a
conversion plan in accordance with Section 1373.6.
(d) (1) If the premium charged to the employer for a specific
employee or dependent eligible under this section is adjusted for the
age of the specific employee, or eligible dependent, on other than a
composite basis, the rate for continuation coverage under this
section shall not exceed 102 percent of the premium charged by the
plan to the employer for an employee of the same age as the former
employee electing continuation coverage in the case of an individual
who was eligible for COBRA, and 110 percent in the case of an
individual who was eligible for Cal-COBRA. If the coverage continued
is that of a former spouse, the premium charged shall not exceed 102
percent of the premium charged by the plan to the employer for an
employee of the same age as the former spouse selecting continuation
coverage in the case of an individual who was eligible for COBRA, and
110 percent in the case of an individual who was eligible for
Cal-COBRA.
(2) If the premium charged to the employer for a specific employee
or dependent eligible under this section is not adjusted for age of
the specific employee, or eligible dependent, then the rate for
continuation coverage under this section shall not exceed 213 percent
of the applicable current group rate. For purposes of this section,
the "applicable current group rate" means the total premiums charged
by the health care service plan for coverage for the group, divided
by the relevant number of covered persons.
(3) However, in computing the premiums charged to the specific
employer group, the health care service plan shall not include
consideration of the specific medical care expenditures for
beneficiaries receiving continuation coverage pursuant to this
section.
(e) For purposes of this section, "COBRA" means Section 4980B of
Title 26 of the United States Code, Section 1161 et seq. of Title 29
of the United States Code, and Section 300bb of Title 42 of the
United States Code, as added by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (Public Law 99-272), and as amended.
(f) For purposes of this section, "Cal-COBRA" means the
continuation coverage that must be offered pursuant to Article 4.5
(commencing with Section 1366.20), or Article 1.7 (commencing with
Section 10128.50) of Chapter 1 of Part 2 of Division 2 of the
Insurance Code.
(g) For the purposes of this section, "former spouse" means either
an individual who is divorced from an employee or former employee or
an individual who was married to an employee or former employee at
the time of the death of the employee or former employee.
(h) Every plan evidence of coverage that is issued, amended, or
renewed after July 1, 1999, shall contain a description of the
provisions and eligibility requirements for the continuation coverage
offered pursuant to this section.
(i) This section shall take effect on January 1, 1999.
(j) This section does not apply to any individual who is not
eligible for its continuation coverage prior to January 1, 2005.
SEC. 2. Section 10116.5 of the Insurance Code is amended to read:
10116.5. (a) Every policy of disability insurance that is issued,
amended, delivered, or renewed in this state on or after January 1,
1999, that provides hospital, medical, or surgical expense coverage
under an employer-sponsored group plan for an employer subject to
COBRA, as defined in subdivision (e), or an employer group for which
the disability insurer is required to offer Cal-COBRA coverage, as
defined in subdivision (f), including a carrier providing replacement
coverage under Section 10128.3, shall further offer the former
employee the opportunity to continue benefits as required under
subdivision (b), and shall further offer the former spouse of an
employee or former employee the opportunity to continue benefits as
required under subdivision (c).
(b) (1) If a former employee worked for the employer for at least
five years prior to the date of termination of employment and is 60
years of age or older on the date employment ends is entitled to and
so elects to continue benefits under COBRA or Cal-COBRA for himself
or herself and for any spouse, the employee or spouse may further
continue benefits beyond the date coverage under COBRA or Cal-COBRA
ends, as set forth in paragraph (2). Except as otherwise specified
in this section, continuation coverage shall be under the same
benefit terms and conditions as if the continuation coverage under
COBRA or Cal-COBRA had remained in force. For the employee or
spouse, continuation coverage following the end of COBRA or Cal-COBRA
is subject to payment of premiums to the insurer. Individuals
ineligible for COBRA or Cal-COBRA or who are eligible but have not
elected or exhausted continuation coverage under federal COBRA or
Cal-COBRA are not entitled to continuation coverage under this
section. Premiums for continuation coverage under this section shall
be billed by, and remitted to, the insurer in accordance with
subdivision (d). Failure to pay the requisite premiums may result in
termination of the continuation coverage in accordance with the
applicable provisions in the insurer's group contract with the
employer.
(2) The employer shall notify the former employee or spouse or
both, or the former spouse of the employee or former employee, of the
availability of the continuation benefits under this section in
accordance with Section 2800.2 of the Labor Code. To continue health
care coverage pursuant to this section, the individual shall elect
to do so by notifying the insurer in writing within 30 calendar days
prior to the date continuation coverage under COBRA or Cal-COBRA is
scheduled to end. Every disability insurer shall provide to the
employer replacing a group benefit plan policy issued by the insurer,
or to the employer's agent or broker representative, within 15 days
of any written request, information in possession of the insurer
reasonably required to administer the requirements of Section 2800.2
of the Labor Code.
(3) The continuation coverage shall end automatically on the
earlier of (A) the date the individual reaches age 65, (B) the date
the individual is covered under any group health plan not maintained
by the employer or any other insurer or health care service plan,
regardless of whether that coverage is less valuable, (C) the date
the individual becomes entitled to Medicare under Title XVIII of the
Social Security Act, (D) for a spouse, five years from the date on
which continuation coverage under COBRA or Cal-COBRA was scheduled to
end for the spouse, or (E) the date on which the employer terminates
its group contract with the insurer and ceases to provide coverage
for any active employees through that insurer, in which case the
insurer shall notify the former employee or spouse, or both, of the
right to a conversion policy.
(c) (1) If a former spouse of an employee or former employee was
covered as a qualified beneficiary under COBRA or Cal-COBRA, the
former spouse may further continue benefits beyond the date coverage
under COBRA or Cal-COBRA ends, as set forth in paragraph (2) of
subdivision (b). Except as otherwise specified in this section,
continuation coverage shall be under the same benefit terms and
conditions as if the continuation coverage under COBRA or Cal-COBRA
had remained in force. Continuation coverage following the end of
COBRA or Cal-COBRA is subject to payment of premiums to the insurer.
Premiums for continuation coverage under this section shall be
billed by, and remitted to, the insurer in accordance with
subdivision (d). Failure to pay the requisite premiums may result in
termination of the continuation coverage in accordance with the
applicable provisions in the insurer's group contract with the
employer or former employer.
(2) The continuation coverage for the former spouse shall end
automatically on the earlier of (A) the date the individual reaches
65 years of age, (B) the date the individual is covered under any
group health plan not maintained by the employer or any other health
care service plan or insurer, regardless of whether that coverage is
less valuable, (C) the date the individual becomes entitled to
Medicare under Title XVIII of the Social Security Act, (D) five years
from the date on which continuation coverage under COBRA or
Cal-COBRA was scheduled to end for the former spouse, or (E) the date
on which the employer or former employer terminates its group
contract with the insurer and ceases to provide coverage for any
active employees through that insurer, in which case the insurer
shall notify the former spouse of the right to a conversion policy.
(d) (1) If the premium charged to the employer for a specific
employee or dependent eligible under this section is adjusted for the
age of the specific employee, or eligible dependent, on other than a
composite basis, the rate for continuation coverage under this
section shall not exceed 102 percent of the premium charged by the
insurer to the employer for an employee of the same age as the former
employee electing continuation coverage in the case of an individual
who was eligible for COBRA, and 110 percent in the case of an
individual who was eligible for Cal-COBRA. If the coverage continued
is that of a former spouse, the premium charged shall not exceed 102
percent of the premium charged by the plan to the employer for an
employee of the same age as the former spouse selecting continuation
coverage in the case of an individual who was eligible for COBRA, and
110 percent in the case of an individual who was eligible for
Cal-COBRA.
(2) If the premium charged to the employer for a specific employee
or dependent eligible under this section is not adjusted for age of
the specific employee, or eligible dependent, then the rate for
continuation coverage under this section shall not exceed 213 percent
of the applicable current group rate. For purposes of this section,
the "applicable current group rate" means the total premiums charged
by the insurer for coverage for the group, divided by the relevant
number of covered persons.
(3) However, in computing the premiums charged to the specific
employer group, the insurer shall not include consideration of the
specific medical care expenditures for beneficiaries receiving
continuation coverage pursuant to this section.
(e) For purposes of this section, "COBRA" means Section 4980B of
Title 26, Section 1161 and following of Title 29, and Section 300bb
of Title 42 of the United States Code, as added by the Consolidated
Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272), and as
amended.
(f) For purposes of this section, "Cal-COBRA" means the
continuation coverage that must be offered pursuant to Article 1.7
(commencing with Section 10128.50), or Article 4.5 (commencing with
Section 1366.20) of Chapter 2.2 of Division 2 of the Health and
Safety Code.
(g) For the purposes of this section, "former spouse" means either
an individual who is divorced from an employee or former employee or
an individual who was married to an employee or former employee at
the time of the death of the employee or former employee.
(h) Every group benefit plan evidence of coverage that is issued,
amended, or renewed after January 1, 1999, shall contain a
description of the provisions and eligibility requirements for the
continuation coverage offered pursuant to this section.
(i) This section shall take effect on January 1, 1999.
(j) This section does not apply to any individual who is not
eligible for its continuation coverage prior to January 1, 2005.