BILL NUMBER: AB 2569	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 2, 2008
	AMENDED IN SENATE  JUNE 18, 2008
	AMENDED IN ASSEMBLY  APRIL 8, 2008

INTRODUCED BY   Assembly Member De Leon

                        FEBRUARY 22, 2008

    An act to add Sections 1389.35 and 1389.36 to the Health
and Safety Code, and to add Sections 10384.5 and 10384.6 
 An act to add Sections 1389.7 and 1389.8 to the Health and
Safety Code, and to add Sections 10119.2 and 10119.3  to the
Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2569, as amended, De Leon. Health care coverage: rescission.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance.
Existing law prohibits a plan or insurer from rescinding, canceling,
or limiting a health plan contract or health insurance policy due to
the plan's or insurer's failure to complete medical underwriting and
resolve all reasonable questions arising from written information on
or with an application before issuing a contract or policy. 
Existing law requires a health care service plan and individual
benefit plans issued, amended, renewed, or delivered on or after
January 1, 2007, to permit an individual who has been covered for at
least 18 months to transfer, without   medical underwriting,
as defined, to any other individual plan contract or individual
health benefit plan, as defined, that provides equal or lesser
benefits, as specified. 
   This bill would  , except as provided,  
specifically  require a  health care service  plan or
 health  insurer to  offer to issue a new contract
or policy, without medical underwriting and irrespective of health
status, to family members who were covered under a contract or policy
that was rescinded   permit an individual, who was
covered under an individual plan contract or individual health
benefit plan that was rescinded, other than the individual whose
information led to the rescission, to transfer, within 60 days,
without medical underwriting, as defined, to any other individual
plan contract or individual health benefit plan offered by that same
health care services plan or health insurer that provides equal or
lesser benefits, as specified. The bill would also authorize a health
care service plan or health insurer to permit these individuals to
remain covered under that individual plan contract or individual
health benefit plan, with a specified revised premium rate  .
The bill would also require an agent, broker, or solicitor assisting
an applicant with an application to make a specified attestation on
the written application under penalty of perjury.
   Because a willful violation of the bill's provisions relative to
health care service plans would be a crime and because the bill
expands the crime of perjury, the bill would impose a state-mandated
local program.
   The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
   
  SECTION 1.    Section 1389.35 is added to the
Health and Safety Code, to read:
   1389.35.  Notwithstanding any other provision of law, to protect
other family members against a lapse in coverage, every health care
service plan shall offer to issue a new individual plan contract,
without medical underwriting and irrespective of health status, to
the persons who were covered under an individual plan contract that
was rescinded, except the person or persons whose information in the
application for coverage and related communications led to the
rescission. This coverage shall be requested within 30 days after the
plan contract was rescinded, and the applicable dues or premiums
shall be paid within the time required by the health care service
plan. The new plan contract shall be effective as of the effective
date of the rescission of the prior plan contract so that there is no
lapse in coverage. The health care service plan shall offer to issue
a plan contract that at that time is currently being marketed to
individuals by the health care service plan that most closely
resembles, in terms of benefits, the plan contract that was
rescinded. The health care service plan may charge for the new plan
contract in accordance with its then current rating practices.

   SECTION 1.    Section 1389.7 is added to the 
 Health and Safety Code   , to read:  
   1389.7.  (a) Notwithstanding any other provision of law, every
health care service plan that provides coverage under an individual
plan contract shall permit an individual, who was covered under an
individual plan contract that was rescinded, 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. 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. The plan shall provide a
30-day notice prior to a change in the premium rate, pursuant to the
notice requirements under Article 5.5 (commencing with Section
1374.20).
   (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 transfers to another individual plan
contract pursuant to this section.
   (c) The plan shall establish, for the purposes of subdivision (a),
a ranking of the individual plan contracts it offers to individual
purchasers and notify these purchasers that the ranking is available
on its Internet Web site or make the ranking available upon request.
The plan shall also provide notice of any change in the premium rate
of new or revised coverage pursuant to subdivision (a).
   (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 rescinds the individual plan
contract. 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.
   (e) The plan shall provide 60 days for enrollees to transfer to
another individual plan contract and this contract shall be effective
as of the effective date of the rescission of the prior plan
contract so that there is no lapse in coverage.
   (f) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission. 
  SEC. 2.  Section  1389.36   1389.8  is
added to the Health and Safety Code, to read:
    1389.36.   1389.8.   (a)
Notwithstanding any other provision of law, an agent, broker,
solicitor, solicitor firm, or representative who assists an applicant
in submitting an application to a health care service plan has the
duty to  answer   assist the applicant in
providing answers to  health questions accurately and
completely.
   (b) An agent, broker, solicitor, solicitor firm, or representative
who assists an applicant in submitting an application to a health
care service plan shall attest on the written application under
penalty of perjury, to both of the following:
   (1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
   (2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation. 
  SEC. 3.    Section 10384.5 is added to the
Insurance Code, to read:
   10384.5.  Notwithstanding any other provision of law, to protect
other family members against a lapse in coverage, every health
insurer shall offer to issue a new individual health insurance
policy, without medical underwriting and irrespective of health
status, to the persons who were covered under an individual policy
that was rescinded, except the person or persons whose information in
the application for coverage and related communications led to the
rescission. This coverage shall be requested within 30 days after the
policy was rescinded, and the applicable dues or premiums shall be
paid within the time required by the health insurer. The new policy
shall be effective as of the effective date of the rescission of the
prior policy so that there is no lapse in coverage. The health
insurer shall offer to issue a health insurance policy that at that
time is currently being marketed to individuals by the health insurer
that most closely resembles, in terms of benefits, the policy that
was rescinded. The health insurer may charge for the new policy in
accordance with its then current rating practices. 
   SEC. 3.    Section 10119.2 is added to the  
Insurance Code   , to read:  
   10119.2.  (a) Notwithstanding any other provision of law, every
health insurer that provides health insurance under an individual
health benefit plan, as defined in subdivision (a) of Section
10198.6, shall permit an individual, who was covered under an
individual health benefit plan that was rescinded, to transfer,
without medical underwriting, to any other individual health benefit
plan offered by that same health insurer that provides equal or
lesser benefits, as determined by the insurer. A health insurer may
also permit an individual, who was covered under an individual health
benefit plan that was rescinded, to remain covered under that
individual health benefit plan, with a revised premium rate that
reflects the number of persons remaining on the health benefit plan.
The health insurer shall provide a 30-day notice prior to a change in
premium rate, pursuant to the notice requirements under Article 2
(commencing with Section 10129).
   (b) "Without medical underwriting" means that the health insurer
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 health benefit plan
pursuant to this section.
   (c) The insurer shall establish, for the purposes of subdivision
(a), a ranking of the individual health benefit plans it offers to
individual purchasers and notify these purchasers that the ranking is
available on its Internet Web site or make the ranking available
upon request. The health insurer shall also provide notice of any
change in the premium rate of new or revised coverage pursuant to
subdivision (a).
   (d) The insurer shall notify in writing all insureds of the right
to transfer to another individual health benefit plan pursuant to
this section, at a minimum, when the insurer rescinds the individual
health benefit plan. The notice shall adequately inform insureds of
the transfer rights provided under this section, including
information on the process to obtain details about the individual
health benefit plans available to that insured.
   (e) The insurer shall provide 60 days for insureds to transfer to
another individual health benefit plan and this plan shall be
effective as of the effective date of the rescission of the prior
individual health benefit plan so that there is no lapse in coverage.

   (f) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission. 
  SEC. 4.  Section  10384.6   10119.3  is
added to the Insurance Code, to read:
    10384.6.   10119.3.   (a)
Notwithstanding any other provision of law, an agent or broker who
assists an applicant in submitting an application to a health insurer
has the duty to  answer   assist the applicant
in providing answers to  health questions accurately and
completely.
   (b) An agent or broker who assists an applicant in submitting an
application to a health insurer shall attest on the written
application under penalty of perjury, to both of the following:
   (1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
   (2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
  SEC. 5.  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.