BILL NUMBER: AB 23	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 19, 2009
	AMENDED IN ASSEMBLY  FEBRUARY 23, 2009

INTRODUCED BY   Assembly  Member   Jones
  Members   Jones   and Fletcher 

    (   Principal coauthor:   Senator 
 Alquist   ) 

                        DECEMBER 1, 2008

    An act to amend Section 14011.16 of, to amend and repeal
Section 14005.25 of, and to repeal Section 14011.18 of, the Welfare
and Institutions Code, relating to Medi-Cal.   An act to
amend Sections 1366.20, 1366.21, 1366.22, 1366.24, and 1366.25 of
the Health and Safety Code, and to amend Sections 10128.50, 10128.51,
10128.52, 10128.54, and 10128.55 of the Insurance Code, relating to
health care coverage. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 23, as amended, Jones.  Medi-Cal: continuous
eligibility.   Cal-COBRA: premium assistance.  

   Existing federal law, the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA), requires group health plans
providing coverage to employers of 20 or more employees to provide
former employees with continuation of benefits, as specified.
Existing federal law, the American Recovery and Reinvestment Act of
2009, provides specified premium assistance under COBRA and state
programs that provide comparable continuation coverage for certain
assistance eligible individuals, as defined.  

   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 that act a crime. Existing law also provides for
regulation of health insurers by the Department of Insurance.
Existing law, the California Continuation Benefits Replacement Act
(Cal-COBRA), requires health care service plans and health insurers
providing group coverage to employers of 2 to 19 employees to offer
continuation of that coverage for a specified period of time to
persons who become ineligible for that coverage, as specified.
   This bill would require health care service plans and health
insurers, among others, to provide notice of the availability of
premium assistance under the federal American Recovery and
Reinvestment Act of 2009 to individuals eligible for that assistance,
as specified, and would make other conforming changes to allow those
individuals to receive Cal-COBRA coverage with that premium
assistance. The bill would authorize the Director of Managed Health
Care and the Insurance Commissioner to adopt emergency regulations in
the event that any federal assistance is or becomes available to
persons eligible for Cal-COBRA.
   Because a willful violation of these requirements would be a
crime, 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.  
   Existing law establishes the Medi-Cal program, administered by the
State Department of Health Care Services, under which basic health
care services are provided to qualified low-income persons. The
Medi-Cal program is partially governed and funded under federal
Medicaid provisions.  
   Existing law, until January 1, 2012, requires the department,
subject to the availability of federal financial participation, to
exercise a federal option to expand continuous eligibility to
children 19 years of age and younger for 6 months, after which date
the continuous eligibility period shall be from the date of a
determination of eligibility to the earlier of either the end of a
12-month period following the eligibility determination or the date
the child exceeds 19 years of age.  
   This bill would eliminate the provisions limiting continuous
eligibility to 6 months, would make those provisions that become
operative on January 1, 2012, applicable commencing January 1, 2010,
and would make conforming changes. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no   yes  .


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 1366.20 of the  
Health and Safety Code   is amended to read: 
   1366.20.  (a)  This article shall be known as the California
Continuation Benefits Replacement Act, or "Cal-COBRA."
   (b)  It is the intent of the Legislature that continued access to
health insurance coverage is provided to employees, and their
dependents, of employers with 2 to 19 eligible employees who are not
currently offered continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985.
    (c) It is the intent of the Legislature that any federal
assistance that is or may become available to qualified beneficiaries
under this article be effectively and promptly implemented by the
department. 
    (d) The director may adopt emergency regulations to implement
this article in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code by
making a finding of emergency and demonstrating the need for
immediate action in the event that any federal assistance is or
becomes available to qualified beneficiaries under this article. The
adoption of these regulations shall be considered by the Office of
Administrative Law to be necessary to avoid serious harm to the
public peace, health, safety, or general welfare. 
   SEC. 2.    Section 1366.21 of the   Health
and Safety Code   is amended to read: 
   1366.21.  The definitions contained in this section govern the
construction of this article.
   (a)  "Continuation coverage" means extended coverage under the
group benefit plan in which an eligible employee or eligible
dependent is currently enrolled, or, in the case of a termination of
the group benefit plan or an employer open enrollment period,
extended coverage under the group benefit plan currently offered by
the employer.
   (b)  "Group benefit plan" means any health care service plan
contract provided pursuant to Article 3.1 (commencing with Section
1357) to an employer with 2 to 19 eligible employees, as defined in
Section 1357, as well as a specialized health care service plan
contract provided to an employer with 2 to 19 eligible employees, as
defined in Section 1357.
   (c)  "Qualified beneficiary" means any individual who, on the day
before the qualifying event, is an enrollee in a group benefit plan
offered by a health care service plan pursuant to Article 3.1
(commencing with Section 1357) and has a qualifying event, as defined
in subdivision (d).  For purposes of eligibility for the premium
assistance under paragraph (1) of subdivision (a) of Section 3001 of
Title III of Division B of the American Recovery and Reinvestment
Act of 2009 (Public Law 111-5), a "qualified beneficiary" also
includes any individual who was or is eligible for continuation
coverage as a result of the involuntary termination of the covered
employee's employment during the period that begins with September 1,
2008, and ends with December 31, 2009, elects continuation coverage,
and meets the definition of "qualified beneficiary" set forth in
paragraph (3) of Section 1167 of Title 29 of the United  
States Code, as used in subparagraph (E) of paragraph (1) of
subdivision (a) of Section 3001 of Title III of Division B of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5).

   (d)  "Qualifying event" means any of the following events that,
but for the election of continuation coverage under this article,
would result in a loss of coverage under the group benefit plan to a
qualified beneficiary:
   (1)  The death of the covered employee.
   (2)  The termination of employment or reduction in hours of the
covered employee's employment, except that termination for gross
misconduct does not constitute a qualifying event.
   (3)  The divorce or legal separation of the covered employee from
the covered employee's spouse.
   (4)  The loss of dependent status by a dependent enrolled in the
group benefit plan.
   (5)  With respect to a covered dependent only, the covered
employee's entitlement to benefits under Title XVIII of the United
States Social Security Act (Medicare).
   (e)  "Employer" means any employer that meets the definition of
"small employer" as set forth in Section 1357 and (1) employed 2 to
19 eligible employees on at least 50 percent of its working days
during the preceding calendar year, or, if the employer was not in
business during any part of the preceding calendar year, employed 2
to 19 eligible employees on at least 50 percent of its working days
during the preceding calendar quarter, (2) has contracted for health
care coverage through a group benefit plan offered by a health care
service plan, and (3) is not subject to Section 4980B of the United
States Internal Revenue Code or Chapter 18 of the Employee Retirement
Income Security Act, 29 U.S.C. Section 1161 et seq.
   (f)  "Core coverage" means coverage of basic health care services,
as defined in subdivision (b) of Section 1345, and other hospital,
medical, or surgical benefits provided by the group benefit plan that
a qualified beneficiary was receiving immediately prior to the
qualifying event, other than noncore coverage.
   (g)  "Noncore coverage" means coverage for vision and dental care.

   SEC. 3.    Section 1366.22 of the   Health
and Safety Code  is amended to read: 
   1366.22.  The continuation coverage requirements of this article
do not apply to the following individuals:
   (a) Individuals who are entitled to Medicare benefits or become
entitled to Medicare benefits pursuant to Title XVIII of the United
States Social Security Act, as amended or superseded. Entitlement to
Medicare Part A only constitutes entitlement to benefits under
Medicare.
   (b) Individuals who have other hospital, medical, or surgical
coverage or who are covered or become covered under another group
benefit plan, including a self-insured employee welfare benefit plan,
that provides coverage for individuals and that does not impose any
exclusion or limitation with respect to any preexisting condition of
the individual, other than a preexisting condition limitation or
exclusion that does not apply to or is satisfied by the qualified
beneficiary pursuant to Sections 1357 and 1357.06. A group conversion
option under any group benefit plan shall not be considered as an
arrangement under which an individual is or becomes covered.
   (c) Individuals who are covered, become covered, or are eligible
for federal COBRA coverage pursuant to Section 4980B of the United
States Internal Revenue Code or Chapter 18 of the Employee Retirement
Income Security Act, 29 U.S.C. Section 1161 et seq.
   (d) Individuals who are covered, become covered, or are eligible
for coverage pursuant to Chapter 6A of the Public Health Service Act,
42 U.S.C. Section 300bb-1 et seq.
   (e) Qualified beneficiaries who fail to meet the requirements of
subdivision (b) of Section 1366.24 regarding notification of a
qualifying event or election of continuation coverage within the
specified time limits  ,   except as provided in
subdivision (g) of Section 1366.24  .
   (f) Qualified beneficiaries who fail to submit the correct premium
amount required by subdivision (b) of Section 1366.24 and Section
1366.26, in accordance with the terms and conditions of the plan
contract, or fail to satisfy other terms and conditions of the plan
contract.
   SEC. 4.    Section 1366.24 of the   Health
and Safety Code   is amended to read: 
   1366.24.  (a) Every health care service plan evidence of coverage,
provided for group benefit plans subject to this article, that is
issued, amended, or renewed on or after January 1, 1999, shall
disclose to covered employees of group benefit plans subject to this
article the ability to continue coverage pursuant to this article, as
required by this section.
   (b) This disclosure shall state that all enrollees who are
eligible to be qualified beneficiaries, as defined in subdivision (c)
of Section 1366.21, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the health
care service plan, or the employer if the employer contracts to
perform the administrative services as provided for in Section
1366.25, of all qualifying events as specified in paragraphs (1),
(3), (4), and (5) of subdivision (d) of Section 1366.21 within 60
days of the date of the qualifying event. This disclosure shall
inform enrollees that failure to make the notification to the health
care service plan, or to the employer when under contract to provide
the administrative services, within the required 60 days will
disqualify the qualified beneficiary from receiving continuation
coverage pursuant to this article. The disclosure shall further state
that a qualified beneficiary who wishes to continue coverage under
the group benefit plan pursuant to this article must request the
continuation in writing and deliver the written request, by
first-class mail, or other reliable means of delivery, including
personal delivery, express mail, or private courier company, to the
health care service plan, or to the employer if the plan has
contracted with the employer for administrative services pursuant to
subdivision (d) of Section 1366.25, within the 60-day period
following the later of (1) the date that the enrollee's coverage
under the group benefit plan terminated or will terminate by reason
of a qualifying event, or (2) the date the enrollee was sent notice
pursuant to subdivision (e) of Section 1366.25 of the ability to
continue coverage under the group benefit plan. The disclosure
required by this section shall also state that a qualified
beneficiary electing continuation shall pay to the health care
service plan, in accordance with the terms and conditions of the plan
contract, which shall be set forth in the notice to the qualified
beneficiary pursuant to subdivision (d) of Section 1366.25, the
amount of the required premium payment, as set forth in Section
1366.26. The disclosure shall further require that the qualified
beneficiary's first premium payment required to establish premium
payment be delivered by first-class mail, certified mail, or other
reliable means of delivery, including personal delivery, express
mail, or private courier company, to the health care service plan, or
to the employer if the employer has contracted with the plan to
perform the administrative services pursuant to subdivision (d) of
Section 1366.25, within 45 days of the date the qualified beneficiary
provided written notice to the health care service plan or the
employer, if the employer has contracted to perform the
administrative services, of the election to continue coverage in
order for coverage to be continued under this article. This
disclosure shall also state that the first premium payment must equal
an amount sufficient to pay any required premiums and all premiums
due, and that failure to submit the correct premium amount within the
45-day period will disqualify the qualified beneficiary from
receiving continuation coverage pursuant to this article.
   (c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to subdivision
(b) of Section 1366.27 may continue their coverage for the balance of
the period that the qualified beneficiary would have remained
covered under the prior group benefit plan, including the
requirements for election and payment. The disclosure shall clearly
state that continuation coverage shall terminate if the qualified
beneficiary fails to comply with the requirements pertaining to
enrollment in, and payment of premiums to, the new group benefit plan
within 30 days of receiving notice of the termination of the prior
group benefit plan.
   (d) Prior to August 1, 1998, every health care service plan shall
provide to all covered employees of employers subject to this article
a written notice containing the disclosures required by this
section, or shall provide to all covered employees of employers
subject to this section a new or amended evidence of coverage that
includes the disclosures required by this section. Any specialized
health care service plan that, in the ordinary course of business,
maintains only the addresses of employer group purchasers of benefits
and does not maintain addresses of covered employees, may comply
with the notice requirements of this section through the provision of
the notices to its employer group purchasers of benefits.
   (e) Every plan disclosure form issued, amended, or renewed on and
after January 1, 1999, for a group benefit plan subject to this
article shall provide a notice that, under state law, an enrollee may
be entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found in
the plan's evidence of coverage.
   (f) Every disclosure issued, amended, or renewed on and after July
1, 2006, for a group benefit plan subject to this article shall
include the following notice:


   "Please examine your options carefully before declining this
coverage. 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."



    (g) Notwithstanding subdivision (b), a qualified beneficiary
may notify the health care service plan, or the employer if the plan
has contracted with the employer for administrative services pursuant
to subdivision (d) of Section 1366.25, of the qualified beneficiary'
s election to continue coverage no later than 60 days after receipt
of the notice required under subdivision (g) of Section 1366.25 if
the qualified beneficiary meets all of the following requirements:

    (1) Receives a notice pursuant to subdivision (g) of Section
1366.25. 
    (2) Became eligible for continuation coverage prior to the
effective date of this subdivision. 
    (3) Is eligible for premium assistance under paragraph (1) of
subdivision (a) of Section 3001 of Title III of Division B of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5).

    (4) Failed to notify the health care service plan, or the
employer if the plan has contracted with the employer for
administrative services pursuant to subdivision (d) of Section
1366.25, within the 60-day period following the later of the
following: 
    (A) The date that the enrollee's coverage under the group
benefit plan terminated or will terminate by reason of a qualifying
event. 
    (B) The date the enrollee was sent notice pursuant to
subdivision (e) of Section 1366.25 of the ability to continue
coverage under the group benefit plan. 
    (h) With respect to a qualified beneficiary who elects to
continue coverage pursuant to subdivision (g), the period beginning
on the date of the qualifying event and ending on the effective date
of the continuation coverage shall be disregarded for purposes of
calculating a break in coverage in determining whether a preexisting
condition provision applies under subdivision (c) of Section 1357.06
or subdivision (e) of Section 1357.51. 
   SEC. 5.    Section 1366.25 of the   Health
and Safety Code   is amended to read: 
   1366.25.  (a)  Every group contract between a health care service
plan and an employer subject to this article that is issued, amended,
or renewed on or after July 1, 1998, shall require the employer to
notify the plan, in writing, of any employee who has had a qualifying
event, as defined in paragraph (2) of subdivision (d) of Section
1366.21, within 30 days of the qualifying event. The group contract
shall also require the employer to notify the plan, in writing,
within 30 days of the date, when the employer becomes subject to
Section 4980B of the United States Internal Revenue Code or Chapter
18 of the Employee Retirement Income Security Act, 29 U.S.C. Sec.
1161 et seq.
   (b) Every group contract between a plan and an employer subject to
this article that is issued, amended, or renewed on or after July 1,
1998, shall require the employer to notify qualified beneficiaries
currently receiving continuation coverage, whose continuation
coverage will terminate under one group benefit plan prior to the end
of the period the qualified beneficiary would have remained covered,
as specified in Section 1366.27, of the qualified beneficiary's
ability to continue coverage under a new group benefit plan for the
balance of the period the qualified beneficiary would have remained
covered under the prior group benefit plan. This notice shall be
provided either 30 days prior to the termination or when all enrolled
employees are notified, whichever is later.
   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 notification requirements of this subdivision and
subdivision (c).
   (c) Notwithstanding subdivision (a), the group contract between
the health care service plan and the employer shall require the
employer to notify the successor plan in writing of the qualified
beneficiaries currently receiving continuation coverage so that the
successor plan, or contracting employer or administrator, may provide
those qualified beneficiaries with the necessary premium
information, enrollment forms, and instructions consistent with the
disclosure required by subdivision (c) of Section 1366.24 and
subdivision (e) of this section to allow the qualified beneficiary to
continue coverage. This information shall be sent to all qualified
beneficiaries who are enrolled in the plan and those qualified
beneficiaries who have been notified, pursuant to Section 1366.24, of
their ability to continue their coverage and may still elect
coverage within the specified 60-day period. This information shall
be sent to the qualified beneficiary's last known address, as
provided to the employer by the health care service plan or
disability insurer currently providing continuation coverage to the
qualified beneficiary. The successor plan shall not be obligated to
provide this information to qualified beneficiaries if the employer
or prior plan or insurer fails to comply with this section.
   (d) A health care service plan may contract with an employer, or
an administrator, to perform the administrative obligations of the
plan as required by this article, including required notifications
and collecting and forwarding premiums to the health care service
plan. Except for the requirements of subdivisions (a), (b), and (c),
this subdivision shall not be construed to permit a plan to require
an employer to perform the administrative obligations of the plan as
required by this article as a condition of the issuance or renewal of
coverage.
   (e) Every health care service plan, or employer or administrator
that contracts to perform the notice and administrative services
pursuant to this section, shall, within 14 days of receiving a notice
of a qualifying event, provide to the qualified beneficiary the
necessary benefits information, premium information, enrollment
forms, and disclosures consistent with the notice requirements
contained in subdivisions (b) and (c) of Section 1366.24 to allow the
qualified beneficiary to formally elect continuation coverage. This
information shall be sent to the qualified beneficiary's last known
address.
   (f) Every health care service plan, or employer or administrator
that contracts to perform the notice and administrative services
pursuant to this section, shall, during the 180-day period ending on
the date that continuation coverage is terminated pursuant to
paragraphs (1), (3), and (5) of subdivision (a) of Section 1366.27,
notify a qualified beneficiary who has elected continuation coverage
pursuant to this article of the date that his or her coverage will
terminate, and shall notify the qualified beneficiary of any
conversion coverage available to that qualified beneficiary. This
requirement shall not apply when the continuation coverage is
terminated because the group contract between the plan and the
employer is being terminated.
    (g) For every qualified beneficiary eligible for premium
assistance under paragraph (1) of subdivision (a) of Section 3001 of
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5), every health care service plan, or
employer or administrator that contracts to perform the notice and
administrative services pursuant to this section, shall provide
notice to the qualified beneficiary of the qualified beneficiary's
ability to elect continuation coverage no later than 60 days after
receipt of that notice. This notice shall be provided within 14 days
of the effective date of this subdivision and shall inform the
qualified beneficiary of the availability of premium assistance in
the amount of 65 percent of the premium under subdivision (a) of
Section 3001 of Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5), and the duration of the
premium assistance as provided by paragraph (2) of subdivision (a) of
Section 3001 of Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5). The notice shall use
language that adequately informs a reasonable person that changes in
federal law permit employees involuntarily terminated between
September 1, 2008, and December 31, 2009, to qualify for a 65 percent
subsidy of Cal-COBRA premiums for up to nine months, and that any
eligible employee who had previously rejected Cal-COBRA has the right
under California law to withdraw that rejection and accept the
coverage with the new subsidy. The notice shall also provide the
qualified beneficiary with all necessary premium information,
enrollment forms, and disclosures consistent with the notice
requirements contained in subdivisions (b) and (c) of Section 1366.24
to allow the qualified beneficiary to formally elect continuation
coverage. This information shall be sent to the qualified beneficiary'
s last known address. 
    (h) A health care service plan that receives an election
notice from a qualified beneficiary eligible for premium assistance
under paragraph (1) of subdivision (a) of Section 3001 of Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5) shall be considered a person entitled to
reimbursement, as defined in Section 6432(b)(3) of the Internal
Revenue Code, as amended by paragraph (12) of subdivision (a) of
Section 3001 of Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5). 
   SEC. 6.    Section 10128.50 of the  
Insurance Code   is amended to read: 
   10128.50.  (a) This article shall be known as the California
Continuation Benefits Replacement Act, or "Cal-COBRA."
   (b) It is the intent of the Legislature that continued access to
health insurance coverage is provided to employees, and their
dependents, of employers with 2 to 19 eligible employees who are not
currently offered continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1985. 
   (c) It is the intent of the Legislature that any federal
assistance that is or may become available to qualified beneficiaries
under this article be effectively and promptly implemented by the
department.  
   (d) The commissioner may adopt emergency regulations to implement
this article in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code by
making a finding of emergency and demonstrating the need for
immediate action in the event that any federal assistance is or
becomes available to qualified beneficiaries under this article. The
adoption of these regulations shall be considered by the Office of
Administrative Law to be necessary to avoid serious harm to the
public peace, health, safety, or general welfare. 
   SEC. 7.    Section 10128.51 of the  
Insurance Code   is amended to read: 
   10128.51.  (a) "Continuation coverage" means extended coverage
under the group benefit plan under which an eligible employee or
eligible dependent is currently covered, or, in the case of a
termination of the group benefit plan or an employer open enrollment
period, extended coverage under the group benefit plan currently
offered by the employer.
   (b) "Group benefit plan" has the same meaning as "health benefit
plan" defined in Section 10700, including group policies of
vision-only and dental-only coverage, provided pursuant to Chapter 8
(commencing with Section 10700) to an employer with 2 to 19 eligible
employees, as defined in Section 10700.
   (c) "Qualified beneficiary" means any individual who, on the day
before the qualifying event, is covered under a group benefit plan
offered by a disability insurer pursuant to Article 1 (commencing
with Section 10700) of Chapter 8, and has a qualifying event, as
defined in subdivision (d).  For purposes of eligibility for the
premium assistance under paragraph (1) of subdivision (a) of Section
3001 of Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5), a "qualified beneficiary"
also includes any individual who was or is eligible for continuation
coverage as a result of the involuntary termination of the covered
employee's employment during the period that begins with September 1,
2008, and ends with December 31,
       2009, elects continuation coverage, and meets the definition
of "qualified beneficiary" set forth in paragraph (3) of Section 1167
of Title 29 of the United States Code, as used in subparagraph (E)
of paragraph (1) of subdivis   ion (a) of Section 3001 of
Title III of Division B of the American Recovery and  
Reinvestment Act of 2009 (Public Law 111-5). 
   (d) "Qualifying event" means any of the following events that, but
for the election of continuation coverage under this article, would
result in a loss of coverage under the group benefit plan to a
qualified beneficiary:
   (1) The death of the covered employee.
   (2) The termination of employment or reduction in hours of the
covered employee's employment, except that termination for gross
misconduct does not constitute a qualifying event.
   (3) The divorce or legal separation of the covered employee from
the covered employee's spouse.
   (4) The loss of dependent status by a dependent enrolled in the
group benefit plan.
   (5) With respect to a covered dependent only, the covered employee'
s entitlement to benefits under Title XVIII of the United States
Social Security Act (Medicare).
   (e) "Employer" means any employer that meets the definition of
"small employer" as set forth in Section 10700 and (1) employed 2 to
19 eligible employees on at least 50 percent of its working days
during the preceding calendar year, or, if the employer was not in
business during any part of the preceding calendar year, employed 2
to 19 eligible employees on at least 50 percent of its working days
during the preceding calendar quarter, (2) has contracted for health
care coverage through a group benefit plan offered by a disability
insurer, and (3) is not subject to Section 4980B of the United States
Internal Revenue Code or Chapter 18 of the Employee Retirement
Income Security Act, 29 U.S.C. Section 1161 et seq.
   (f) "Core coverage" means coverage for hospital, medical, or
surgical benefits provided under the group benefit plan that a
qualified beneficiary was receiving immediately prior to the
qualifying event, other than noncore coverage.
   (g) "Noncore coverage" means coverage for vision and dental care.
   SEC. 8.    Section 10128.52 of the  
Insurance Code   is amended to read: 
   10128.52.  The continuation coverage requirements of this article
do not apply to the following individuals:
   (a) Individuals who are entitled to Medicare benefits or become
entitled to Medicare benefits pursuant to Title XVIII of the United
States Social Security Act, as amended or superseded. Entitlement to
Medicare Part A only constitutes entitlement to benefits under
Medicare.
   (b) Individuals who have other hospital, medical, or surgical
coverage, or who are covered or become covered under another group
benefit plan, including a self-insured employee welfare benefit plan,
that provides coverage for individuals and that does not impose any
exclusion or limitation with respect to any preexisting condition of
the individual, other than a preexisting condition limitation or
exclusion that does not apply to or is satisfied by the qualified
beneficiary pursuant to Sections 10198.6 and 10198.7. A group
conversion option under any group benefit plan shall not be
considered as an arrangement under which an individual is or becomes
covered.
   (c) Individuals who are covered, become covered, or are eligible
for federal COBRA coverage pursuant to Section 4980B of the United
States Internal Revenue Code or Chapter 18 of the Employee Retirement
Income Security Act, 29 U.S.C. Section 1161 et seq.
   (d) Individuals who are covered, become covered, or are eligible
for coverage pursuant to Chapter 6A of the Public Health Service Act,
42 U.S.C. Section 300bb-1 et seq.
   (e) Qualified beneficiaries who fail to meet the requirements of
subdivision (b) of Section 10128.55 regarding notification of a
qualifying event or election of continuation coverage within the
specified time limits  ,   except as provided in
subdivision (g) of Section 10128.54  .
   (f) Qualified beneficiaries who fail to submit the correct premium
amount required by subdivision (b) of Section 10128.55 and Section
10128.57, in accordance with the terms and conditions of the policy
or contract, or fail to satisfy other terms and conditions of the
policy or contract.
   SEC. 9.    Section 10128.54 of the  
Insurance Code   is amended to read: 
   10128.54.  (a) Every insurer's evidence of coverage for group
benefit plans subject to this article, that is issued, amended, or
renewed on or after January 1, 1999, shall disclose to covered
employees of group benefit plans subject to this article the ability
to continue coverage pursuant to this article, as required by this
section.
   (b) This disclosure shall state that all insureds who are eligible
to be qualified beneficiaries, as defined in subdivision (c) of
Section 10128.51, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the
insurer, or the employer if the employer contracts to perform the
administrative services as provided for in Section 10128.55, of all
qualifying events as specified in paragraphs (1), (3), (4), and (5)
of subdivision (d) of Section 10128.51 within 60 days of the date of
the qualifying event. This disclosure shall inform insureds that
failure to make the notification to the insurer, or to the employer
when under contract to provide the administrative services, within
the required 60 days will disqualify the qualified beneficiary from
receiving continuation coverage pursuant to this article. The
disclosure shall further state that a qualified beneficiary who
wishes to continue coverage under the group benefit plan pursuant to
this article must request the continuation in writing and deliver the
written request, by first-class mail, or other reliable means of
delivery, including personal delivery, express mail, or private
courier company, to the disability insurer, or to the employer if the
plan has contracted with the employer for administrative services
pursuant to subdivision (d) of Section 10128.55, within the 60-day
period following the later of (1) the date that the insured's
coverage under the group benefit plan terminated or will terminate by
reason of a qualifying event, or (2) the date the insured was sent
notice pursuant to subdivision (e) of Section 10128.55 of the ability
to continue coverage under the group benefit plan. The disclosure
required by this section shall also state that a qualified
beneficiary electing continuation shall pay to the disability
insurer, in accordance with the terms and conditions of the policy or
contract, which shall be set forth in the notice to the qualified
beneficiary pursuant to subdivision (d) of Section 10128.55, the
amount of the required premium payment, as set forth in Section
10128.56. The disclosure shall further require that the qualified
beneficiary's first premium payment required to establish premium
payment be delivered by first-class mail, certified mail, or other
reliable means of delivery, including personal delivery, express
mail, or private courier company, to the disability insurer, or to
the employer if the employer has contracted with the insurer to
perform the administrative services pursuant to subdivision (d) of
Section 10128.55, within 45 days of the date the qualified
beneficiary provided written notice to the insurer or the employer,
if the employer has contracted to perform the administrative
services, of the election to continue coverage in order for coverage
to be continued under this article. This disclosure shall also state
that the first premium payment must equal an amount sufficient to pay
all required premiums and all premiums due, and that failure to
submit the correct premium amount within the 45-day period will
disqualify the qualified beneficiary from receiving continuation
coverage pursuant to this article.
   (c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to Section
10128.57 may continue their coverage for the balance of the period
that the qualified beneficiary would have remained covered under the
prior group benefit plan, including the requirements for election and
payment. The disclosure shall clearly state that continuation
coverage shall terminate if the qualified beneficiary fails to comply
with the requirements pertaining to enrollment in, and payment of
premiums to, the new group benefit plan within 30 days of receiving
notice of the termination of the prior group benefit plan.
   (d) Prior to August 1, 1998, every insurer shall provide to all
covered employees of employers subject to this article written notice
containing the disclosures required by this section, or shall
provide to all covered employees of employers subject to this article
a new or amended evidence of coverage that includes the disclosures
required by this section. Any insurer that, in the ordinary course of
business, maintains only the addresses of employer group purchasers
of benefits, and does not maintain addresses of covered employees,
may comply with the notice requirements of this section through the
provision of the notices to its employer group purchases of benefits.

   (e) Every disclosure form issued, amended, or renewed on and after
January 1, 1999, for a group benefit plan subject to this article
shall provide a notice that, under state law, an insured may be
entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found in
the evidence of coverage.
   (f) Every disclosure form issued, amended, or renewed on and after
July 1, 2006, for a group benefit plan subject to this article shall
include the following notice:

   "Please examine your options carefully before declining this
coverage. 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."

   (g) Notwithstanding subdivision (b), a qualified beneficiary may
notify the insurer, or the employer if the plan has contracted with
the employer for administrative services pursuant to subdivision (d)
of Section 10128.55, of the qualified beneficiary's election to
continue coverage no later than 60 days after receipt of the notice
required under subdivision (g) of Section 10128.55 if the qualified
beneficiary meets all of the following requirements:  
   (1) Receives a notice pursuant to subdivision (g) of Section
10128.55.  
   (2) Became eligible for continuation coverage prior to the
effective date of this subdivision.  
   (3) Is eligible for premium assistance under paragraph (1) of
subdivision (a) of Section 3001 of Title III of Division B of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5).
 
   (4) Failed to notify the insurer, or the employer if the plan has
contracted with the employer for administrative services pursuant to
subdivision (d) of Section 10128.55, within the 60-day period
following the later of the following: 
   (A) The date that the insured's coverage under the group benefit
plan terminated or will terminate by reason of a qualifying event.
 
   (B) The date the insured was sent notice pursuant to subdivision
(e) of Section 10128.55 of the ability to continue coverage under the
group benefit plan.  
   (h) With respect to a qualified beneficiary who elects to continue
coverage pursuant to subdivision (g), the period beginning on the
date of the qualifying event and ending on the effective date of the
continuation coverage shall be disregarded for purposes of
calculating a break in coverage in determining whether a preexisting
condition provision applies under subdivision (e) of Section 10198.7
or subdivision (c) of Section 10708. 
   SEC. 10.    Section 10128.55 of the  
Insurance Code   is amended to read: 
   10128.55.  (a) Every group benefit plan contract between a
disability insurer and an employer subject to this article that is
issued, amended, or renewed on or after July 1, 1998, shall require
the employer to notify the insurer in writing of any employee who has
had a qualifying event, as defined in paragraph (2) of subdivision
(d) of Section 10128.51, within 30 days of the qualifying event. The
group contract shall also require the employer to notify the insurer,
in writing, within 30 days of the date when the employer becomes
subject to Section 4980B of the United States Internal Revenue Code
or Chapter 18 of the Employee Retirement Income Security Act, 29
U.S.C. Sec. 1161 et seq.
   (b) Every group benefit plan contract between a disability insurer
and an employer subject to this article that is issued, amended, or
renewed after July 1, 1998, shall require the employer to notify
qualified beneficiaries currently receiving continuation coverage,
whose continuation coverage will terminate under one group benefit
plan prior to the end of the period the qualified beneficiary would
have remained covered, as specified in Section 10128.57, of the
qualified beneficiary's ability to continue coverage under a new
group benefit plan for the balance of the period the qualified
beneficiary would have remained covered under the prior group benefit
plan. This notice shall be provided either 30 days prior to the
termination or when all enrolled employees are notified, whichever is
later.
   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 notification requirements of this subdivision and
subdivision (c).
   (c) Notwithstanding subdivision (a), the group benefit plan
contract between the insurer and the employer shall require the
employer to notify the successor plan in writing of the qualified
beneficiaries currently receiving continuation coverage so that the
successor plan, or contracting employer or administrator, may provide
those qualified beneficiaries with the necessary premium
information, enrollment forms, and instructions consistent with the
disclosure required by subdivision (c) of Section 10128.54 and
subdivision (e) of this section to allow the qualified beneficiary to
continue coverage. This information shall be sent to all qualified
beneficiaries who are enrolled in the group benefit plan and those
qualified beneficiaries who have been notified, pursuant to Section
10128.54 of their ability to continue their coverage and may still
elect coverage within the specified 60-day period. This information
shall be sent to the qualified beneficiary's last known address, as
provided to the employer by the health care service plan or,
disability insurer currently providing continuation coverage to the
qualified beneficiary. The successor insurer shall not be obligated
to provide this information to qualified beneficiaries if the
employer or prior insurer or health care service plan fails to comply
with this section.
   (d) A disability insurer may contract with an employer, or an
administrator, to perform the administrative obligations of the plan
as required by this article, including required notifications and
collecting and forwarding premiums to the insurer. Except for the
requirements of subdivisions (a), (b), and (c), this subdivision
shall not be construed to permit an insurer to require an employer to
perform the administrative obligations of the insurer as required by
this article as a condition of the issuance or renewal of coverage.
   (e) Every insurer, or employer or administrator that contracts to
perform the notice and administrative services pursuant to this
section, shall, within 14 days of receiving a notice of a qualifying
event, provide to the qualified beneficiary the necessary premium
information, enrollment forms, and disclosures consistent with the
notice requirements contained in subdivisions (b) and (c) of Section
10128.54 to allow the qualified beneficiary to formally elect
continuation coverage. This information shall be sent to the
qualified beneficiary's last known address.
   (f) Every insurer,  or  employer or administrator that
contracts to perform the notice and administrative services pursuant
to this section  ,  shall, during the 180-day period ending
on the date that continuation coverage is terminated pursuant to
paragraphs (1), (3), and (5) of subdivision (a) of Section 10128.57,
notify a qualified beneficiary who has elected continuation coverage
pursuant to this article of the date that his or her coverage will
terminate, and shall notify the qualified beneficiary of any
conversion coverage available to that qualified beneficiary. This
requirement shall not apply when the continuation coverage is
terminated because the group contract between the insurer and the
employer is being terminated. 
   (g) For every qualified beneficiary eligible for premium
assistance under paragraph (1) of subdivision (a) of Section 3001 of
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5), every insurer, or employer or
administrator that contracts to perform the notice and administrative
services pursuant to this section, shall provide notice to the
qualified beneficiary of the qualified beneficiary's ability to elect
continuation coverage no later than 60 days after receipt of that
notice. This notice shall be provided within 14 days of the effective
date of this subdivision and shall inform the qualified beneficiary
of the availability of premium assistance in the amount of 65 percent
of the premium under subdivision (a) of Section 3001 of Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5), and the duration of the premium assistance as
provided by paragraph (2) of subdivision (a) of Section 3001 of Title
III of Division B of the American Recovery and Reinvestment Act of
2009 (Public Law 111-5). The notice shall use language that
adequately informs a reasonable person that changes in federal law
permit employees involuntarily terminated between September 1, 2008,
and December 31, 2009, to qualify for a 65 percent subsidy of
Cal-COBRA premiums for up to nine months, and that any eligible
employee who had previously rejected Cal-COBRA has the right under
California law to withdraw that rejection and accept the coverage
with the new subsidy. The notice shall also provide the qualified
beneficiary with all necessary premium information, enrollment forms,
and disclosures consistent with the notice requirements contained in
subdivisions (b) and (c) of Section 10128.54 to allow the qualified
beneficiary to formally elect continuation coverage. This information
shall be sent to the qualified beneficiary's last known address.
 
   (h) An insurer that receives an election notice from a qualified
beneficiary eligible for premium assistance under paragraph (1) of
subdivision (a) of Section 3001 of Title III of Division B of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5)
shall be considered a person entitled to reimbursement, as defined in
Section 6432(b)(3) of the Internal Revenue Code, as amended by
paragraph (12) of subdivision (a) of Section 3001 of Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5). 
   SEC. 11.    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.  
  SECTION 1.    Section 14005.25 of the Welfare and
Institutions Code, as amended by Section 27 of Chapter 758 of the
Statutes of 2008, is amended to read:
   14005.25.  (a) To the extent federal financial participation is
available, the department shall exercise the option under Section
1902(e)(12) of the federal Social Security Act (42 U.S.C. Sec. 1396a
(e)(12)) to extend continuous eligibility to children 19 years of age
and younger. A child shall remain eligible pursuant to this
subdivision from the date of a determination of eligibility for
Medi-Cal benefits until the earlier of either:
   (1) The end of a 12-month period following the eligibility
determination.
   (2) The date the individual exceeds the age of 19 years.
   (b) This section shall be implemented only if, and to the extent
that, federal financial participation is available.
   (c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall, without taking regulatory action, implement this
section by means of all county letters or similar instructions.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code. 

  SEC. 2.    Section 14005.25 of the Welfare and
Institutions Code, as added by Section 28 of Chapter 758 of the
Statutes of 2008, is repealed.  
  SEC. 3.    Section 14011.16 of the Welfare and
Institutions Code is amended to read:
   14011.16.  (a) Commencing August 1, 2003, the department shall
implement a requirement for beneficiaries to file semiannual status
reports as part of the department's procedures to ensure that
beneficiaries make timely and accurate reports of any change in
circumstance that may affect their eligibility. The department shall
develop a simplified form to be used for this purpose. The department
shall explore the feasibility of using a form that allows a
beneficiary who has not had any changes to so indicate by checking a
box and signing and returning the form.
   (b) Beneficiaries who have been granted continuous eligibility
under Section 14005.25 shall not be required to submit semiannual
status reports. To the extent federal financial participation is
available, all children under 19 years of age shall be exempt from
the requirement to submit semiannual status reports.
   (c) Beneficiaries whose eligibility is based on a determination of
disability or on their status as aged or blind shall be exempt from
the semiannual status report requirement described in subdivision
(a). The department may exempt other groups from the semiannual
status report requirement as necessary for simplicity of
administration.
   (d) When a beneficiary has completed, signed, and filed a
semiannual status report that indicated a change in circumstance,
eligibility shall be redetermined.
   (e) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of all county
letters or similar instructions without taking regulatory action.
Thereafter, the department shall adopt regulations in accordance with
the requirements of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.
   (f) This section shall be implemented only if and to the extent
federal financial participation is available.  
  SEC. 4.    Section 14011.18 of the Welfare and
Institutions Code is repealed.