BILL NUMBER: AB 23 CHAPTERED
BILL TEXT
CHAPTER 3
FILED WITH SECRETARY OF STATE MAY 12, 2009
APPROVED BY GOVERNOR MAY 12, 2009
PASSED THE SENATE MAY 6, 2009
PASSED THE ASSEMBLY MAY 11, 2009
AMENDED IN SENATE MAY 4, 2009
AMENDED IN SENATE APRIL 23, 2009
AMENDED IN ASSEMBLY APRIL 2, 2009
AMENDED IN ASSEMBLY MARCH 19, 2009
AMENDED IN ASSEMBLY FEBRUARY 23, 2009
INTRODUCED BY Assembly Members Jones and Fletcher
(Principal coauthor: Senator Alquist)
(Coauthor: Assembly Member Salas)
(Coauthor: Senator Maldonado)
DECEMBER 1, 2008
An act to amend Sections 1366.20, 1366.21, 1366.22, and 1366.25 of
the Health and Safety Code, and to amend Sections 10128.50,
10128.51, 10128.52, and 10128.55 of the Insurance Code, relating to
health care coverage, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 23, Jones. 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
certain qualified beneficiaries, as specified.
This bill would require health care service plans and health
insurers to provide notice of the availability of premium assistance
under the federal American Recovery and Reinvestment Act of 2009 to
qualified beneficiaries who may be eligible for that assistance, as
specified, and would require the notice to include certain
information and to be sent within specified periods of time. The bill
would allow a qualified beneficiary eligible for the federal premium
assistance to elect Cal-COBRA coverage within a certain period of
time and would allow individuals enrolled in Cal-COBRA coverage as of
February 17, 2009, to request application of the federal premium
assistance, as specified. The bill would authorize the Director of
the Department 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,
as specified. The bill would enact other related provisions.
Because a willful violation of these requirements by a health care
service plan 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.
This bill would declare that it is to take effect immediately as
an urgency statute.
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, in consultation with the Insurance 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. Any regulations adopted pursuant to this
subdivision shall be substantially similar to those adopted by the
Insurance Commissioner under subdivision (d) of Section 10128.50 of
the Insurance Code.
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) (1) "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).
(2) "Qualified beneficiary eligible for premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5)" means a qualified beneficiary, as
defined in paragraph (1), who (A) 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, (B) elects continuation
coverage, and (C) 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) or
any subsequent rules or regulations issued pursuant to that law.
(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 or subdivision (h) of Section
1366.25 regarding notification of a qualifying event or election of
continuation coverage within the specified time limits.
(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 1366.25 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) (1) A health care service plan shall provide to a qualified
beneficiary who has a qualifying event between September 1, 2008, and
December 31, 2009, inclusive, a written notice containing
information on the availability of premium assistance under Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5). This notice shall be sent to the qualified
beneficiary's last known address. The notice shall include clear and
easily understandable language to inform the qualified beneficiary
that changes in federal law provide a new opportunity to elect
continuation coverage with a 65-percent premium subsidy and shall
include all of the following:
(A) The amount of the premium the person will pay. For qualified
beneficiaries who had a qualifying event between September 1, 2008,
and the effective date of this subdivision, inclusive, if a health
care service plan is unable to provide the correct premium amount in
the notice, the notice may contain the last known premium amount and
an opportunity for the qualified beneficiary to request, through a
toll-free telephone number, the correct premium that would apply to
the beneficiary.
(B) Enrollment forms and any other information required to be
included pursuant to subdivision (e) to allow the qualified
beneficiary to elect continuation coverage. This information shall
not be included in notices sent to qualified beneficiaries currently
enrolled in continuation coverage.
(C) A description of the option to enroll in different coverage as
provided in subparagraph (B) 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). This description shall
advise the qualified beneficiary to contact the covered employee's
former employer for prior approval to choose this option.
(D) The eligibility requirements for premium assistance in the
amount of 65 percent of the premium under Section 3001 of Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(E) The duration of premium assistance available under Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(F) A statement that a qualified beneficiary eligible for premium
assistance under Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5) may elect continuation
coverage no later than 60 days of the date of the notice.
(G) A statement that a qualified beneficiary eligible for premium
assistance under Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5) who rejected or
discontinued continuation coverage prior to receiving the notice
required by this subdivision has the right to withdraw that rejection
and elect continuation coverage with the premium assistance.
(H) A statement that reads as follows:
IF YOU ARE HAVING ANY DIFFICULTIES READING OR UNDERSTANDING THIS
NOTICE, PLEASE CONTACT [name of health plan] at [insert appropriate
telephone number].
(2) With respect to qualified beneficiaries who had a qualifying
event between September 1, 2008, and the effective date of this
subdivision, inclusive, the notice described in this subdivision
shall be provided within the later of 14 calendar days of the
effective date of this subdivision or seven business days after the
date the plan receives notice of the qualifying event.
(3) With respect to qualified beneficiaries who had or have a
qualifying event between the day after the effective date of this
subdivision, and December 31, 2009, inclusive, the notice described
in this subdivision shall be provided within the period of time
specified in subdivision (e).
(4) For purposes of compliance with the notice requirements of
this subdivision, the department may designate a model notice or
notices that may be used by health care service plans. Use of the
model notice or notices shall not require prior approval by the
department. Any model notice or notices designated by the department
for purposes of this subdivision 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).
(5) Nothing in this section shall be construed to require a health
care service plan to provide the plan's evidence of coverage as a
part of the notice required by this subdivision, and nothing in this
section shall be construed to require a health care service plan to
amend its existing evidence of coverage to comply with the changes
made to this section by the act amending this section during the
first year of the 2009-10 Regular Session.
(h) (1) Notwithstanding any other provision of law, a qualified
beneficiary eligible for premium assistance under Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5) may elect continuation coverage no later than 60
days after the date of the notice required by subdivision (g).
(2) For a qualified beneficiary who elects to continue coverage
pursuant to paragraph (1), 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.
(3) For a qualified beneficiary who had a qualifying event between
September 1, 2008, and February 16, 2009, inclusive, and who elects
continuation coverage pursuant to paragraph (1), the continuation
coverage shall commence on the first day of the month following the
election.
(4) For a qualified beneficiary who had a qualifying event between
February 17, 2009, and the effective date of this subdivision,
inclusive, and who elects continuation coverage pursuant to paragraph
(1), the effective date of the continuation coverage shall be either
of the following, at the option of the beneficiary, provided that
the beneficiary pays the applicable premiums:
(A) The date of the qualifying event.
(B) The first day of the month following the election.
(i) Notwithstanding any other provision of law, a qualified
beneficiary eligible for premium assistance under Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5) may elect to enroll in different coverage subject
to the criteria provided under subparagraph (B) 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).
(j) A qualified beneficiary enrolled in continuation coverage as
of February 17, 2009, who is eligible for premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5) may request application of the premium
assistance as of March 1, 2009, or later, consistent with Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(k) A health care service plan that receives an election notice
from a qualified beneficiary eligible for premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5), pursuant to subdivision (h), 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).
(l) (1) For purposes of compliance with Title III of Division B of
the American Recovery and Reinvestment Act of 2009 (Public Law
111-5), in the absence of guidance from, or if specifically required
for state-only continuation coverage by, the United States Department
of Labor, the Internal Revenue Service, or the Centers for Medicare
and Medicaid Services, a health care service plan may request
verification of the involuntary termination of a covered employee's
employment from the covered employee's former employer or the
qualified beneficiary seeking premium assistance under Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(2) A health care service plan that requests verification pursuant
to paragraph (1) directly from a covered employee's former employer
shall do so by providing a written notice to the employer. This
written notice shall be sent by mail or facsimile to the covered
employee's former employer within seven business days from the date
the plan receives the qualified beneficiary's election notice
pursuant to subdivision (h). Within 10 calendar days of receipt of
written notice required by this paragraph, the former employer shall
furnish to the health care service plan written verification as to
whether the covered employee's employment was involuntarily
terminated.
(3) A qualified beneficiary requesting premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5) may furnish to the health care service
plan a written document or other information from the covered
employee's former employer indicating that the covered employee's
employment was involuntarily terminated. This document or information
shall be deemed sufficient by the health care service plan to
establish that the covered employee's employment was involuntarily
terminated for purposes of Title III of Division B of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5), unless the
plan makes a reasonable and timely determination that the documents
or information provided by the qualified beneficiary are legally
insufficient to establish involuntary termination of employment.
(4) If a health care service plan requests verification pursuant
to this subdivision and cannot verify involuntary termination of
employment within 14 business days from the date the employer
receives the verification request or from the date the plan receives
documentation or other information from the qualified beneficiary
pursuant to paragraph (3), the health care service plan shall either
provide continuation coverage with the federal premium assistance to
the qualified beneficiary or send the qualified beneficiary a denial
letter which shall include notice of his or her right to appeal that
determination pursuant to Title III of Division B of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5).
(5) No person shall intentionally delay verification of
involuntary termination of employment under this subdivision.
(m) The provision of information and forms related to the premium
assistance available pursuant to Title III of Division B of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5) to
individuals by a health care service plan prior to the effective date
of this subdivision shall not be considered a violation of this
chapter provided that the plan complies with all of the requirements
of this article.
SEC. 5. 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, in consultation with the Director of the
Department of Managed Health Care, 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. Any
regulations adopted pursuant to this subdivision shall be
substantially similar to those adopted by the Director of the
Department of Managed Health Care under subdivision (d) of Section
1366.20 of the Health and Safety Code.
SEC. 6. 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) (1) "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).
(2) "Qualified beneficiary eligible for premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5)" means a qualified beneficiary, as
defined in paragraph (1), who (A) 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, (B) elects continuation coverage, and (C) 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) or any subsequent rules or regulations
issued pursuant to that law.
(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. 7. 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 10128.54 or subdivision (h) of Section
10128.55 regarding notification of a qualifying event or election of
continuation coverage within the specified time limits.
(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. 8. 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) (1) An insurer shall provide to a qualified beneficiary who
has a qualifying event between September 1, 2008, and December 31,
2009, inclusive, a written notice containing information on the
availability of premium assistance under Title III of Division B of
the American Recovery and Reinvestment Act of 2009 (Public Law
111-5). This notice shall be sent to the qualified beneficiary's last
known address. The notice shall include clear and easily
understandable language to inform the qualified beneficiary that
changes in federal law provide a new opportunity to elect
continuation coverage with a 65-percent premium subsidy and shall
include all of the following:
(A) The amount of the premium the person will pay. For qualified
beneficiaries who had a qualifying event between September 1, 2008,
and the effective date of this subdivision, inclusive, if an insurer
is unable to provide the correct premium amount in the notice, the
notice may contain the last known premium amount and an opportunity
for the qualified beneficiary to request, through a toll-free
telephone number, the correct premium that would apply to the
beneficiary.
(B) Enrollment forms and any other information required to be
included pursuant to subdivision (e) to allow the qualified
beneficiary to elect continuation coverage. This information shall
not be included in notices sent to qualified beneficiaries currently
enrolled in continuation coverage.
(C) A description of the option to enroll in different coverage as
provided in subparagraph (B) 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). This description shall
advise the qualified beneficiary to contact the covered employee's
former employer for prior approval to choose this option.
(D) The eligibility requirements for premium assistance in the
amount of 65 percent of the premium under Section 3001 of Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(E) The duration of premium assistance available under Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(F) A statement that a qualified beneficiary eligible for premium
assistance under Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5) may elect continuation
coverage no later than 60 days of the date of the notice.
(G) A statement that a qualified beneficiary eligible for premium
assistance under Title III of Division B of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5) who rejected or
discontinued continuation coverage prior to receiving the notice
required by this subdivision has the right to withdraw that rejection
and elect continuation coverage with the premium assistance.
(H) A statement that reads as follows:
IF YOU ARE HAVING ANY DIFFICULTIES READING OR UNDERSTANDING THIS
NOTICE, PLEASE CONTACT [name of insurer] at [insert appropriate
telephone number].
(2) With respect to qualified beneficiaries who had a qualifying
event between September 1, 2008, and the effective date of this
subdivision, inclusive, the notice described in this subdivision
shall be provided within the later of 14 calendar days of the
effective date of this subdivision or seven business days after the
date the insurer receives notice of the qualifying event.
(3) With respect to qualified beneficiaries who had or have a
qualifying event between the day after the effective date of this
subdivision, and December 31, 2009, inclusive, the notice described
in this subdivision shall be provided within the period of time
specified in subdivision (e).
(4) Nothing in this section shall be construed to require an
insurer to provide the insurer's evidence of coverage as a part of
the notice required by this subdivision, and nothing in this section
shall be construed require an insurer to amend its existing evidence
of coverage to comply with the changes made to this section by the
act amending this section during the first year of the 2009-10
Regular Session.
(h) (1) Notwithstanding any other provision of law, a qualified
beneficiary eligible for premium assistance under Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5) may elect continuation coverage no later than 60
days after the date of the notice required by subdivision (g).
(2) For a qualified beneficiary who elects to continue coverage
pursuant to paragraph (1), 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.
(3) For a qualified beneficiary who had a qualifying event between
September 1, 2008, and February 16, 2009, inclusive, and who elects
continuation coverage pursuant to paragraph (1), the continuation
coverage shall commence on the first day of the month following the
election.
(4) For a qualified beneficiary who had a qualifying event between
February 17, 2009, and the effective date of this subdivision,
inclusive, and who elects continuation coverage pursuant to paragraph
(1), the effective date of the continuation coverage shall be either
of the following, at the option of the beneficiary, provided that
the beneficiary pays the applicable premiums:
(A) The date of the qualifying event.
(B) The first day of the month following the election.
(i) Notwithstanding any other provision of law, a qualified
beneficiary eligible for premium assistance under Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5) may elect to enroll in different coverage subject
to the criteria provided under subparagraph (B) 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).
(j) A qualified beneficiary enrolled in continuation coverage as
of February 17, 2009, who is eligible for premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5) may request application of the premium
assistance as of March 1, 2009, or later, consistent with Title III
of Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5).
(k) An insurer that receives an election notice from a qualified
beneficiary eligible for premium assistance under Title III of
Division B of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5), pursuant to subdivision (h), 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).
(l) (1) For purposes of compliance with Title III of Division B of
the American Recovery and Reinvestment Act of 2009 (Public Law
111-5), in the absence of guidance from, or if specifically required
for state-only continuation coverage by, the United States Department
of Labor, the Internal Revenue Service, or the Centers for Medicare
and Medicaid Services, an insurer may request verification of the
involuntary termination of a covered employee's employment from the
covered employee's former employer or the qualified beneficiary
seeking premium assistance under Title III of Division B of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5).
(2) An insurer that requests verification pursuant to paragraph
(1) directly from a covered employee's former employer shall do so by
providing a written notice to the employer. This written notice
shall be sent by mail or facsimile to the covered employee's former
employer within seven business days from the date the insurer
receives the qualified beneficiary's election notice pursuant to
subdivision (h). Within 10 calendar days of receipt of written notice
required by this paragraph, the former employer shall furnish to the
insurer written verification as to whether the covered employee's
employment was involuntarily terminated.
(3) A qualified beneficiary requesting premium assistance under
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5) may furnish to the insurer a written
document or other information from the covered employee's former
employer indicating that the covered employee's employment was
involuntarily terminated. This document or information shall be
deemed sufficient by the insurer to establish that the covered
employee's employment was involuntarily terminated for purposes of
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5), unless the insurer makes a reasonable
and timely determination that the documents or information provided
by the qualified beneficiary are legally insufficient to establish
involuntary termination of employment.
(4) If an insurer requests verification pursuant to this
subdivision and cannot verify involuntary termination of employment
within 14 business days from the date the employer receives the
verification request or from date the insurer receives documentation
or other information from the qualified beneficiary pursuant to
paragraph (3), the insurer shall either provide continuation coverage
with the federal premium assistance to the qualified beneficiary or
send the qualified beneficiary a denial letter which shall include
notice of his or her right to appeal that determination pursuant to
Title III of Division B of the American Recovery and Reinvestment Act
of 2009 (Public Law 111-5).
(5) No person shall intentionally delay verification of
involuntary termination of employment under this subdivision.
SEC. 9. 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.
SEC. 10. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to make federal funds available at the earliest possible
time to address the state's pressing need for federally subsidized
health care coverage premiums for individuals who have lost group
health care coverage due to a qualifying event and may be eligible
for state continuation coverage under Cal-COBRA and in order to help
carry out the powers of the Department of Insurance and the
Department of Managed Health Care to protect the interests of the
public and carry out the intent of the Legislature to encourage the
availability of health care coverage to the public without gaps in
coverage when possible, it is necessary that this act take effect
immediately.