BILL NUMBER: AB 1083 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 10, 2011
AMENDED IN ASSEMBLY MARCH 29, 2011
INTRODUCED BY Assembly Member Monning
(Principal coauthor: Assembly Member Feuer)
FEBRUARY 18, 2011
An act to amend Sections 1357, 1357.03, 1357.05, 1357.06, 1357.07,
1357.12, and 1357.14 of, and to amend, repeal, and add
Sections 1357.15, 1357.50, 1357.51, and 1357.52 of, and to
add Section 1357.18 to, the Health and Safety Code, and to
amend Sections 10700, 10705, 10706, 10707, 10708, 10709, 10714, and
10716 of, and to amend, repeal, and add Sections 10198.6,
10198.7, 10198.9, and 10717 of, and to add Section 10718.8
to, the Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 1083, as amended, Monning. Health care coverage.
Existing law, the federal Patient Protection and Affordable Care
Act, imposes various requirements, some of which take effect on
January 1, 2014, on states, health plans, employers, and individuals
regarding health care coverage. Pursuant to the requirements of that
act, existing state law establishes the California Health Benefit
Exchange for the purpose of, among other things, making available
qualified health plans to qualified individuals and employers, as
specified.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the regulation of health care service plans by the
Department of Managed Health Care and makes a willful violation of
the act a crime. Existing law provides for the regulation of health
carriers by the Department of Insurance. Existing law provides for
the regulation of health care service plans and health carriers that
offer plan contracts or health benefit plans, respectively, to small
employers with regard to eligible employees, as defined. Existing law
prohibits a plan or solicitor or a carrier or agent or broker from
encouraging or directing small employers to seek coverage from
another plan or carrier or the Voluntary Alliance Uniting Employers
Purchasing Program. Existing law also regulates provisions related to
preexisting conditions and late enrollees, as defined.
For purposes of that coverage, this bill would change the
definitions and criteria related to eligible employees and rating
periods, and, on and after January 1, 2014, risk adjustment factors,
age categories, and health status-related factors, as specified. The
bill would change the definition of small employers on or after
January 1, 2014, and would change the definition again on or
after January 1, 2017 , as specified .
The bill would require employer contribution requirements to be
consistent with the federal Patient Protection and Affordable Care
Act. With regard to the sale of plan contracts or health benefit
plans, the bill would prohibit specified persons or entities from
encouraging or directing small employers to seek coverage from
another plan or the voluntary purchasing pool established under the
California Health Benefit Exchange. The bill would prohibit certain
contracts between plans and solicitors, or between carriers and
agents or brokers, with regard to the California Health Benefit
Exchange. The bill would make other conforming changes to implement
the federal act with regard to preexisting conditions, to become
effective January 1, 2014, and would make other changes to
preexisting condition provisions, notices, and provisions related to
late enrollees. The bill would also impose certain
limitations on wellness programs if offered by a plan or carrier to
small employers pursuant to a health care service plan contract or
health benefit plan, as specified, and would require those wellness
programs to be approved by the Department of Managed Health Care or
the Department of Insurance, respectively.
Because a willful violation of the bill's provisions relative to
health care service plans 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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1357 of the Health and Safety Code is amended
to read:
1357. As used in this article:
(a) "Dependent" means the spouse or child of an eligible employee,
subject to applicable terms of the health care plan contract
covering the employee, and includes dependents of guaranteed
association members if the association elects to include dependents
under its health coverage at the same time it determines its
membership composition pursuant to subdivision (o).
(b) "Eligible employee" means either of the following:
(1) Any permanent employee who is actively engaged on a full-time
basis in the conduct of the business of the small employer with a
normal workweek of an average of 30 hours per week over
the course of a month, at the small employer's regular places of
business, who has met any statutorily authorized applicable waiting
period requirements. The term includes sole proprietors or partners
of a partnership, if they are actively engaged on a full-time basis
in the small employer's business and included as employees under a
health care plan contract of a small employer, but does not include
employees who work on a part-time, temporary, or substitute basis. It
includes any eligible employee, as defined in this paragraph, who
obtains coverage through a guaranteed association. Employees of
employers purchasing through a guaranteed association shall be deemed
to be eligible employees if they would otherwise meet the definition
except for the number of persons employed by the employer. Permanent
employees who work at least 10 hours but not more than 29 hours are
deemed to be eligible employees if all four of the following apply:
(A) They otherwise meet the definition of an eligible employee
except for the number of hours worked.
(B) The employer offers the employees health coverage under a
health benefit plan.
(C) All similarly situated individuals are offered coverage under
the health benefit plan.
(D) The employee must have worked at least 10 hours per normal
workweek for at least 50 percent of the weeks in the previous
calendar quarter. The health care service plan may request any
necessary information to document the hours and time period in
question, including, but not limited to, payroll records and employee
wage and tax filings.
(2) Any member of a guaranteed association as defined in
subdivision (o).
(c) "In force business" means an existing health benefit plan
contract issued by the plan to a small employer.
(d) "Late enrollee" means an eligible employee or dependent who
has declined enrollment in a health benefit plan offered by a small
employer at the time of the initial enrollment period provided under
the terms of the health benefit plan and who subsequently requests
enrollment in a health benefit plan of that small employer, provided
that the initial enrollment period shall be a period of at least 30
days. It also means any member of an association that is a guaranteed
association as well as any other person eligible to purchase through
the guaranteed association when that person has failed to purchase
coverage during the initial enrollment period provided under the
terms of the guaranteed association's plan contract and who
subsequently requests enrollment in the plan, provided that the
initial enrollment period shall be a period of at least 30 days.
However, an eligible employee, any other person eligible for coverage
through a guaranteed association pursuant to subdivision (o), or an
eligible dependent shall not be considered a late enrollee if any of
the following is applicable:
(1) The individual meets all of the following requirements:
(A) He or she was covered under another employer health benefit
plan, the Healthy Families Program, the Access for Infants and
Mothers (AIM) Program, the Medi-Cal program, or the California Health
Benefit Exchange at the time the individual was eligible to enroll.
(B) He or she certified at the time of the initial enrollment that
coverage under another employer health benefit plan, the Healthy
Families Program, the AIM Program, the Medi-Cal program, or the
California Health Benefit Exchange was the reason for declining
enrollment, provided that, if the individual was covered under
another employer health plan, the individual was given the
opportunity to make the certification required by this subdivision
and was notified that failure to do so could result in later
treatment as a late enrollee.
(C) He or she has lost or will lose coverage under another
employer health benefit plan as a result of termination of employment
of the individual or of a person through whom the individual was
covered as a dependent, change in employment status of the individual
or of a person through whom the individual was covered as a
dependent, termination of the other plan's coverage, cessation of an
employer's contribution toward an employee or dependent's coverage,
death of the person through whom the individual was covered as a
dependent, legal separation, or divorce; or he or she has lost or
will lose coverage under the Healthy Families Program, the AIM
Program, the Medi-Cal program, or the California Health Benefit
Exchange.
(D) He or she requests enrollment within 30 days after termination
of coverage or employer contribution toward coverage provided under
another employer health benefit plan, or requests enrollment within
60 days after termination of Medi-Cal program coverage, AIM Program
coverage, Healthy Families Program coverage, or coverage through the
California Health Benefit Exchange.
(2) The employer offers multiple health benefit plans and the
employee elects a different plan during an open enrollment period.
(3) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee's health benefit plan.
(4) (A) In the case of an eligible employee, as defined in
paragraph (1) of subdivision (b), the plan cannot produce a written
statement from the employer stating that the individual or the person
through whom the individual was eligible to be covered as a
dependent, prior to declining coverage, was provided with, and
signed, acknowledgment of an explicit written notice in boldface type
specifying that failure to elect coverage during the initial
enrollment period permits the plan to impose, at the time of the
individual's later decision to elect coverage, an exclusion from
coverage for a period of 12 months as well as a six-month preexisting
condition exclusion, unless the individual meets the criteria
specified in paragraph (1), (2), or (3).
(B) In the case of an association member who did not purchase
coverage through a guaranteed association, the plan cannot produce a
written statement from the association stating that the association
sent a written notice in boldface type to all potentially eligible
association members at their last known address prior to the initial
enrollment period informing members that failure to elect coverage
during the initial enrollment period permits the plan to impose, at
the time of the member's later decision to elect coverage, an
exclusion from coverage for a period of 12 months as well as a
six-month preexisting condition exclusion unless the member can
demonstrate that he or she meets the requirements of subparagraphs
(A), (C), and (D) of paragraph (1) or meets the requirements of
paragraph (2) or (3).
(C) In the case of an employer or person who is not a member of an
association, was eligible to purchase coverage through a guaranteed
association, and did not do so, and would not be eligible to purchase
guaranteed coverage unless purchased through a guaranteed
association, the employer or person can demonstrate that he or she
meets the requirements of subparagraphs (A), (C), and (D) of
paragraph (1), or meets the requirements of paragraph (2) or (3), or
that he or she recently had a change in status that would make him or
her eligible and that application for enrollment was made within 30
days of the change.
(5) The individual is an employee or dependent who meets the
criteria described in paragraph (1) and was under a COBRA
continuation provision and the coverage under that provision has been
exhausted. For purposes of this section, the definition of "COBRA"
set forth in subdivision (e) of Section 1373.621 shall apply.
(6) The individual is a dependent of an enrolled eligible employee
who has lost or will lose his or her coverage under the Healthy
Families Program, the AIM Program, the Medi-Cal program, or the
California Health Benefit Exchange, and requests enrollment within 60
days after termination of that coverage.
(7) The individual is an eligible employee who previously declined
coverage under an employer health benefit plan and who has
subsequently acquired a dependent who would be eligible for coverage
as a dependent of the employee through marriage, birth, adoption, or
placement for adoption, and who enrolls for coverage under that
employer health benefit plan on his or her behalf and on behalf of
his or her dependent within 30 days following the date of marriage,
birth, adoption, or placement for adoption, in which case the
effective date of coverage shall be the first day of the month
following the date the completed request for enrollment is received
in the case of marriage, or the date of birth, or the date of
adoption or placement for adoption, whichever applies. Notice of the
special enrollment rights contained in this paragraph shall be
provided by the employer to an employee at or before the time the
employee is offered an opportunity to enroll in plan coverage.
(8) The individual is an eligible employee who has declined
coverage for himself or herself or his or her dependents during a
previous enrollment period because his or her dependents were covered
by another employer health benefit plan at the time of the previous
enrollment period. That individual may enroll himself or herself or
his or her dependents for plan coverage during a special open
enrollment opportunity if his or her dependents have lost or will
lose coverage under that other employer health benefit plan. The
special open enrollment opportunity shall be requested by the
employee not more than 30 days after the date that the other health
coverage is exhausted or terminated. Upon enrollment, coverage shall
be effective not later than the first day of the first calendar month
beginning after the date the request for enrollment is received.
Notice of the special enrollment rights contained in this paragraph
shall be provided by the employer to an employee at or before the
time the employee is offered an opportunity to enroll in plan
coverage.
(e) "New business" means a health care service plan contract
issued to a small employer that is not the plan's in force business.
(f) (1) Until January 1, 2014, "preexisting condition provision"
means a contract provision that excludes coverage for charges or
expenses incurred during a specified period following the employee's
effective date of coverage, as to a condition for which medical
advice, diagnosis, care, or treatment was recommended or received
during a specified period immediately preceding the effective date of
coverage.
(2) On and after January 1, 2014, no health care service plan
shall limit or exclude coverage for any individual based on a
preexisting condition whether or not any medical advice, diagnosis,
care, or treatment was recommended or received before that date.
(g) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program that is
written or administered by a disability insurer, health care service
plan, fraternal benefits society, self-insured employer plan, or any
other entity, in this state or elsewhere, and that arranges or
provides medical, hospital, and surgical coverage not designed to
supplement other private or governmental plans. The term includes
continuation or conversion coverage but does not include accident
only, credit, coverage for onsite medical clinics, disability income,
Medicare supplement, long-term care, dental, vision, coverage issued
as a supplement to liability insurance, insurance arising out of a
workers' compensation or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(2) The Medicare Program pursuant to Title XVIII of the federal
Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the Public Health Service Act,
as amended by Public Law 104-191, the Health Insurance Portability
and Accountability Act of 1996.
(10) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C. Sec. 2504(e)).
(11) Any other creditable coverage as defined by subdivision (c)
of Section 2701 of Title XXVII of the federal Public Health Service
Act (42 U.S.C. Sec. 300gg(c)).
(h) "Rating period" means the period for which premium rates
established by a plan are in effect and shall be no less than 12
months.
(i) "Risk adjusted employee risk rate" means the rate determined
for an eligible employee of a small employer in a particular risk
category after applying the risk adjustment factor.
(j) "Risk adjustment factor" means the percentage adjustment to be
applied equally to each standard employee risk rate for a particular
small employer, based upon any expected deviations from standard
cost of services. This factor may not be more than 120 percent or
less than 80 percent until July 1, 1996. Effective July 1, 1996, this
factor may not be more than 110 percent or less than 90 percent.
Effective January 1, 2014, the risk adjustment factor shall be zero.
(k) "Risk category" means the following characteristics of an
eligible employee: age, geographic region, and family composition of
the employee, plus the health benefit plan selected by the small
employer.
(1) No more than the following age categories may be used in
determining premium rates:
Under 30
30-39
40-49
50-54
55-59
60-64
65 and over
However, for the 65 and over age category, separate premium rates
may be specified depending upon whether coverage under the plan
contract will be primary or secondary to benefits provided by the
Medicare Program pursuant to Title XVIII of the federal Social
Security Act (42 U.S.C. Sec. 1395 et seq.). Effective January 1,
2014, the rate for age shall not vary by more than three to one for
adults.
(2) Small employer health care service plans shall base rates to
small employers using no more than the following family size
categories:
(A) Single.
(B) Married couple.
(C) One adult and child or children.
(D) Married couple and child or children.
(3) (A) In determining rates for small employers, a plan that
operates statewide shall use no more than nine geographic regions in
the state, have no region smaller than an area in which the first
three digits of all its ZIP Codes are in common within a county, and
divide no county into more than two regions. Plans shall be deemed to
be operating statewide if their coverage area includes 90 percent or
more of the state's population. Geographic regions established
pursuant to this section shall, as a group, cover the entire state,
and the area encompassed in a geographic region shall be separate and
distinct from areas encompassed in other geographic regions.
Geographic regions may be noncontiguous.
(B) (i) In determining rates for small employers, a plan that does
not operate statewide shall use no more than the number of
geographic regions in the state that is determined by the following
formula: the population, as determined in the last federal census, of
all counties that are included in their entirety in a plan's service
area divided by the total population of the state, as determined in
the last federal census, multiplied by nine. The resulting number
shall be rounded to the nearest whole integer. No region may be
smaller than an area in which the first three digits of all its ZIP
Codes are in common within a county and no county may be divided into
more than two regions. The area encompassed in a geographic region
shall be separate and distinct from areas encompassed in other
geographic regions. Geographic regions may be noncontiguous. No plan
shall have less than one geographic area.
(ii) If the formula in clause (i) results in a plan that operates
in more than one county having only one geographic region, then the
formula in clause (i) shall not apply and the plan may have two
geographic regions, provided that no county is divided into more than
one region.
Nothing in this section shall be construed to require a plan to
establish a new service area or to offer health coverage on a
statewide basis, outside of the plan's existing service area.
(l) "Small employer" means any of the following:
(1) Until January 1, 2017 2014 , any
person, firm, proprietary or nonprofit corporation, partnership,
public agency, or association that is actively engaged in business or
service, that, on at least 50 percent of its working days during the
preceding calendar quarter or preceding calendar year, employed at
least two, but no more than 50, eligible employees, the majority of
whom were employed within this state, that was not formed primarily
for purposes of buying health care service plan contracts, and in
which a bona fide employer-employee relationship exists. On or
after January 1, 2014, and until December 31, 2016, any person,
firm, proprietary or nonprofit corporation, partnership, public
agency, or association that is actively engaged in business or
service, that, on at least 50 percent of its working days during the
preceding calendar quarter or preceding calendar year,
employed at least one, but no more than 50, eligible employees, the
majority of whom were employed within this state, that was not formed
primarily for purposes of buying health care service plan contracts,
and in which a bona fide employer-employee relationship exists.
On or after January 1, 2017, any person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than
100, eligible employees, the majority of whom were employed within
this state, that was not formed primarily for purposes of buying
health care service plan contracts, and in which a bona fide
employer-employee relationship exists. In determining whether to
apply the calendar quarter or calendar year test, a health care
service plan shall use the test that ensures eligibility if only one
test would establish eligibility. In determining the number of
eligible employees, companies that are affiliated companies and that
are eligible to file a combined tax return for purposes of state
taxation shall be considered one employer. Subsequent to the issuance
of a health care service plan contract to a small employer pursuant
to this article, and for the purpose of determining eligibility, the
size of a small employer shall be determined annually. Except as
otherwise specifically provided in this article, provisions of this
article that apply to a small employer shall continue to apply until
the plan contract anniversary following the date the employer no
longer meets the requirements of this definition. It includes any
small employer as defined in this paragraph who purchases coverage
through a guaranteed association, and any employer purchasing
coverage for employees through a guaranteed association.
(2) Any guaranteed association, as defined in subdivision (n),
that purchases health coverage for members of the association.
(3) On or after January 1, 2014, a self-employed individual who
obtains at least 50 percent of annual income from self-employment as
demonstrated through personal income tax filings for the current or
prior year. To the extent permitted under the federal Patient
Protection and Affordable Care Act (Public Law 111-148) and any
rules, regulations, or guidance issued consistent with that law, a
self-employed individual whose modified annual gross income is
anticipated to be less than 400 percent of the federal poverty level
may at his or her discretion seek to enroll as an individual rather
than a small employer through the California Health Benefit Exchange.
(m) "Standard employee risk rate" means the rate applicable to an
eligible employee in a particular risk category in a small employer
group.
(n) "Guaranteed association" means a nonprofit organization
comprised of a group of individuals or employers who associate based
solely on participation in a specified profession or industry,
accepting for membership any individual or employer meeting its
membership criteria, and that (1) includes one or more small
employers as defined in paragraph (1) of subdivision (l), (2) does
not condition membership directly or indirectly on the health or
claims history of any person, (3) uses membership dues solely for and
in consideration of the membership and membership benefits, except
that the amount of the dues shall not depend on whether the member
applies for or purchases insurance offered to the association, (4) is
organized and maintained in good faith for purposes unrelated to
insurance, (5) has been in active existence on January 1, 1992, and
for at least five years prior to that date, (6) has included health
insurance as a membership benefit for at least five years prior to
January 1, 1992, (7) has a constitution and bylaws, or other
analogous governing documents that provide for election of the
governing board of the association by its members, (8) offers any
plan contract that is purchased to all individual members and
employer members in this state, (9) includes any member choosing to
enroll in the plan contracts offered to the association provided that
the member has agreed to make the required premium payments, and
(10) covers at least 1,000 persons with the health care service plan
with which it contracts. The requirement of 1,000 persons may be met
if component chapters of a statewide association contracting
separately with the same carrier cover at least 1,000 persons in the
aggregate.
This subdivision applies regardless of whether a contract issued
by a plan is with an association, or a trust formed for or sponsored
by an association, to administer benefits for association members.
For purposes of this subdivision, an association formed by a
merger of two or more associations after January 1, 1992, and
otherwise meeting the criteria of this subdivision shall be deemed to
have been in active existence on January 1, 1992, if its predecessor
organizations had been in active existence on January 1, 1992, and
for at least five years prior to that date and otherwise met the
criteria of this subdivision.
(o) "Members of a guaranteed association" means any individual or
employer meeting the association's membership criteria if that person
is a member of the association and chooses to purchase health
coverage through the association. At the association's discretion, it
also may include employees of association members, association
staff, retired members, retired employees of members, and surviving
spouses and dependents of deceased members. However, if an
association chooses to include these persons as members of the
guaranteed association, the association shall make that election in
advance of purchasing a plan contract. Health care service plans may
require an association to adhere to the membership composition it
selects for up to 12 months.
(p) "Affiliation period" means a period that, under the terms of
the health care service plan contract, must expire before health care
services under the contract become effective.
(q) "Wellness incentive" or "wellness program" means a program of
health promotion or disease prevention that is designed to promote
health or prevent disease and that meets the standards of Section
1357.18.
SEC. 2. Section 1357.03 of the Health and Safety Code is amended
to read:
1357.03. (a) (1) Upon the effective date of this article, a plan
shall fairly and affirmatively offer, market, and sell all of the
plan's health care service plan contracts that are sold to small
employers or to associations that include small employers to all
small employers in each service area in which the plan provides or
arranges for the provision of health care services.
(2) Each plan shall make available to each small employer all
small employer health care service plan contracts that the plan
offers and sells to small employers or to associations that include
small employers in this state.
(3) No plan or solicitor shall induce or otherwise encourage a
small employer to separate or otherwise exclude an eligible employee
from a health care service plan contract that is provided in
connection with the employee's employment or membership in a
guaranteed association.
(4) A plan contracting to participate in the voluntary purchasing
pool for small employers offered through the California Health
Benefit Exchange shall be deemed in compliance with the requirements
of paragraph (1) for a contract offered through the California Health
Benefit Exchange in those geographic regions in which plans
participate in the California Health Benefit Exchange.
(5) (A) A plan shall be deemed to meet the requirements of
paragraphs (1) and (2) with respect to a plan contract that qualifies
as a grandfathered health plan under Section 1251 of PPACA if all of
the following requirements are met:
(i) The plan offers to renew the plan contract, unless the plan
withdraws the plan contract from the small employer market pursuant
to subdivision (e) of Section
1357.11.
(ii) The plan provides appropriate notice of the grandfathered
status of the contract in any materials provided to an enrollee of
the contract describing the benefits provided under the contract, as
required under PPACA.
(iii) The plan makes no changes to the benefits covered under the
plan contract other than those required by a state or federal law,
regulation, rule, or guidance and those permitted to be made to a
grandfathered health plan under PPACA.
(B) For purposes of this paragraph, "PPACA" means the federal
Patient Protection and Affordable Care Act (Public Law 111-148), as
amended by the federal Health Care and Education Reconciliation Act
of 2010 (Public Law 111-152), and any rules, regulations, or guidance
issued thereunder. For purposes of this paragraph, a "grandfathered
health plan" shall have the meaning set forth in Section 1251 of
PPACA.
(b) Every plan shall file with the director the reasonable
employee participation requirements and employer contribution
requirements that will be applied in offering its plan contracts.
Participation requirements shall be applied uniformly among all small
employer groups, except that a plan may vary application of minimum
employee participation requirements by the size of the small employer
group and whether the employer contributes 100 percent of the
eligible employee's premium. Employer contribution requirements shall
not vary by employer size. Employer contribution requirements shall
be consistent with the federal Patient Protection and Affordable Care
Act (Public Law 111-148). A health care service plan shall not
establish a participation requirement that (1) requires a person who
meets the definition of a dependent in subdivision (a) of Section
1357 to enroll as a dependent if he or she is otherwise eligible for
coverage and wishes to enroll as an eligible employee and (2) allows
a plan to reject an otherwise eligible small employer because of the
number of persons that waive coverage due to coverage through another
employer. Members of an association eligible for health coverage
under subdivision (o) of Section 1357, but not electing any health
coverage through the association, shall not be counted as eligible
employees for purposes of determining whether the guaranteed
association meets a plan's reasonable participation standards.
(c) The plan shall not reject an application from a small employer
for a health care service plan contract if all of the following are
met:
(1) The small employer, as defined by paragraph (1) of subdivision
( l ) of Section 1357, offers health benefits to 100
percent of its eligible employees, as defined by paragraph (1) of
subdivision (b) of Section 1357. Employees who waive coverage on the
grounds that they have other group coverage shall not be counted as
eligible employees.
(2) The small employer agrees to make the required premium
payments.
(3) The small employer agrees to inform the small employers'
employees of the availability of coverage and the provision that
those not electing coverage must wait one year to obtain coverage
through the group if they later decide they would like to have
coverage.
(4) The employees and their dependents who are to be covered by
the plan contract work or reside in the service area in which the
plan provides or otherwise arranges for the provision of health care
services.
(d) No plan or solicitor shall, directly or indirectly, engage in
the following activities:
(1) Encourage or direct small employers to refrain from filing an
application for coverage with a plan because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan's approved
service area.
(2) Encourage or direct small employers to seek coverage from
another plan or the voluntary purchasing pool established under the
California Health Benefit Exchange because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan's approved
service area.
(e) (1) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor for the sale
of a health care service plan contract to be varied because of the
health status, claims experience, industry, occupation, or geographic
location of the small employer. This subdivision does not apply to a
compensation arrangement that provides compensation to a solicitor
on the basis of percentage of premium, provided that the percentage
shall not vary because of the health status, claims experience,
industry, occupation, or geographic area of the small employer.
(2) Effective January 1, 2014, a plan shall not, directly or
indirectly, enter into any contract, agreement, or arrangement with a
solicitor that provides for or results in the compensation paid to a
solicitor for the sale of a health care service plan contract to be
varied based on whether the small employer obtains coverage through
the California Health Benefit Exchange or directly from the health
care service plan.
(f) A policy or contract that covers one or more employees shall
not establish rules for eligibility, including continued eligibility,
of an individual, or dependent of an individual, to enroll under the
terms of the plan based on any of the following health
status-related factors:
(1) Health status.
(2) Medical condition, including physical and mental illnesses.
(3) Claims experience.
(4) Receipt of health care.
(5) Medical history.
(6) Genetic information.
(7) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(8) Disability.
(9) Any other health status-related factor as determined by the
department.
(g) A plan shall comply with the requirements of Section 1374.3.
SEC. 3. Section 1357.05 of the Health and Safety Code is amended
to read:
1357.05. (a) Until January 1, 2014, except in the case of a late
enrollee, or for satisfaction of a preexisting condition clause in
the case of initial coverage of an eligible employee, a plan may not
exclude any eligible employee or dependent who would otherwise be
entitled to health care services on the basis of an actual or
expected health condition of that employee or dependent. No plan
contract may limit or exclude coverage for a specific eligible
employee or dependent by type of illness, treatment, medical
condition, or accident, except for preexisting conditions as
permitted by Section 1357.06.
(b) On or after January 1, 2014, a plan may not exclude any
eligible employee or dependent who would otherwise be entitled to
health care services on the basis of an actual or expected health
condition of that employee or dependent. No plan contract may limit
or exclude coverage for a specific eligible employee or dependent by
type of illness, treatment, medical condition, or accident, except
for preexisting conditions as permitted by Section 1357.06.
SEC. 4. Section 1357.06 of the Health and Safety Code is amended
to read:
1357.06. (a) (1) Until January 1, 2014, preexisting condition
provisions of a plan contract shall not exclude coverage for a period
beyond six months following the individual's effective date of
coverage and may only relate to conditions for which medical advice,
diagnosis, care, or treatment, including prescription drugs, was
recommended or received from a licensed health practitioner during
the six months immediately preceding the effective date of coverage.
(2) Notwithstanding paragraph (1), a plan contract offered to a
small employer shall not impose any preexisting condition provision
upon any child under 19 years of age.
(3) On or after January 1, 2014, preexisting condition provisions
of a plan contract shall not exclude coverage following the
individual's effective date of coverage for a condition based on the
fact that the condition was present before the date of enrollment of
the coverage, whether or not any medical advice, diagnosis, care, or
treatment was recommended or received before that date.
(b) (1) Until January 1, 2014, a plan that does not utilize a
preexisting condition provision may impose a waiting or affiliation
period, not to exceed 60 days, before the coverage issued subject to
this article shall become effective. During the waiting or
affiliation period no premiums shall be charged to the enrollee or
the subscriber.
(2) On or after January 1, 2014, no waiting or affiliation period
based on a preexisting condition, health
status, or any other factor prohibited under subdivision (f) of
Section 1357.03 shall be imposed.
(c) Until January 1, 2014, in determining whether a preexisting
condition provision or a waiting or affiliation period applies to any
person, a plan shall credit the time the person was covered under
creditable coverage, provided the person becomes eligible for
coverage under the succeeding plan contract within 62 days of
termination of prior coverage, exclusive of any waiting or
affiliation period, and applies for coverage with the succeeding plan
contract within the applicable enrollment period. A plan shall also
credit any time an eligible employee must wait before enrolling in
the plan, including any affiliation or employer-imposed waiting or
affiliation period. However, if a person's employment has ended, the
availability of health coverage offered through employment or
sponsored by an employer has terminated, or an employer's
contribution toward health coverage has terminated, a plan shall
credit the time the person was covered under creditable coverage if
the person becomes eligible for health coverage offered through
employment or sponsored by an employer within 180 days, exclusive of
any waiting or affiliation period, and applies for coverage under the
succeeding plan contract within the applicable enrollment period.
(d) Until January 1, 2014, in addition to the preexisting
condition exclusions authorized by subdivision (a) and the waiting or
affiliation period authorized by subdivision (b), health plans
providing coverage to a guaranteed association may impose on
employers or individuals purchasing coverage who would not be
eligible for guaranteed coverage if they were not purchasing through
the association a waiting or affiliation period, not to exceed 60
days, before the coverage issued subject to this article shall become
effective. During the waiting or affiliation period, no premiums
shall be charged to the enrollee or the subscriber.
(e) An individual's period of creditable coverage shall be
certified pursuant to subdivision (e) of Section 2701 of Title XXVII
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(e)).
(f) A health care service plan issuing group coverage may not
impose a preexisting condition exclusion to a condition relating to
benefits for pregnancy or maternity care.
SEC. 5. Section 1357.07 of the Health and Safety Code is amended
to read:
1357.07. (a) Until January 1, 2014, no plan contract may exclude
late enrollees from coverage for more than 12 months from the date of
the late enrollees application for coverage. No premium shall be
charged to the late enrollee until the exclusion period has ended.
(b) On or after January 1, 2014, no plan contract may exclude a
late enrollee from coverage for more than 90 days from the date of
the late enrollee's application for coverage. No premium shall be
charged to the late enrollee until the exclusion period has ended.
SEC. 6. Section 1357.12 of the Health and Safety Code is amended
to read:
1357.12. Premiums for contracts offered or delivered by plans on
or after the effective date of this article shall be subject to the
following requirements:
(a) (1) The premium for new business shall be determined for an
eligible employee in a particular risk category after applying a risk
adjustment factor to the plan's standard employee risk rates. The
risk adjusted employee risk rate may not be more than 120 percent or
less than 80 percent of the plan's applicable standard employee risk
rate until July 1, 1996. Effective July 1, 1996, this factor may not
be more than 110 percent or less than 90 percent. Effective January
1, 2014, the risk adjustment factor shall be zero.
(2) The premium charged a small employer for new business shall be
equal to the sum of the risk adjusted employee risk rates.
(3) The standard employee risk rates applied to a small employer
for new business shall be in effect for no less than 12 months.
(b) (1) The premium for in force business shall be determined for
an eligible employee in a particular risk category after applying a
risk adjustment factor to the plan's standard employee risk rates.
The risk adjusted employee risk rates may not be more than 120
percent or less than 80 percent of the plan's applicable standard
employee risk rate until July 1, 1996. Effective July 1, 1996, this
factor may not be more than 110 percent or less than 90 percent. The
factor effective July 1, 1996, shall apply to in force business at
the earlier of either the time of renewal or July 1, 1997. Until
January 1, 2014, the risk adjustment factor applied to a small
employer may not increase by more than 10 percentage points from the
risk adjustment factor applied in the prior rating period. Effective
January 1, 2014, the risk adjustment factor shall be zero. The risk
adjustment factor for a small employer may not be modified more
frequently than every 12 months.
(2) The premium charged a small employer for in force business
shall be equal to the sum of the risk adjusted employee risk rates.
The standard employee risk rates shall be in effect for no less than
six months.
(3) For a contract that a plan has discontinued offering, the risk
adjustment factor applied to the standard employee risk rates for
the first rating period of the new contract that the small employer
elects to purchase shall be no greater than the risk adjustment
factor applied in the prior rating period to the discontinued
contract. However, the risk adjusted employee risk rate may not be
more than 120 percent or less than 80 percent of the plan's
applicable standard employee risk rate until July 1, 1996. Effective
July 1, 1996, this factor may not be more than 110 percent or less
than 90 percent. The factor effective July 1, 1996, shall apply to in
force business at the earlier of either the time of renewal or July
1, 1997. Effective January 1, 2014, the risk adjustment factor shall
be zero. The risk adjustment factor for a small employer may not be
modified more frequently than every 12 months.
(c) (1) For any small employer, a plan may, with the consent of
the small employer, establish composite employee and dependent rates
for either new business or renewal of in force business. The
composite rates shall be determined as the average of the risk
adjusted employee risk rates for the small employer, as determined in
accordance with the requirements of subdivisions (a) and (b). The
sum of the composite rates so determined shall be equal to the sum of
the risk adjusted employee risk rates for the small employer.
(2) The composite rates shall be used for all employees and
dependents covered throughout a rating period of no less than six
months nor more than 12 months, except that a plan may reserve the
right to redetermine the composite rates if the enrollment under the
contract changes by more than a specified percentage during the
rating period. Any redetermination of the composite rates shall be
based on the same risk adjusted employee risk rates used to determine
the initial composite rates for the rating period. If a plan
reserves the right to redetermine the rates and the enrollment
changes more than the specified percentage, the plan shall
redetermine the composite rates if the redetermined rates would
result in a lower premium for the small employer. A plan reserving
the right to redetermine the composite rates based upon a change in
enrollment shall use the same specified percentage to measure that
change with respect to all small employers electing composite rates.
SEC. 7. Section 1357.14 of the Health and Safety Code is amended
to read:
1357.14. In connection with the offering for sale of any plan
contract to a small employer, each plan shall make a reasonable
disclosure, as part of its solicitation and sales materials, of the
following:
(a) Until January 1, 2014, the extent to which premium rates for a
specified small employer are established or adjusted in part based
upon the actual or expected variation in service costs or actual or
expected variation in health condition of the employees and
dependents of the small employer.
(b) The provisions concerning the plan's right to change premium
rates and the factors other than provision of services experience
that affect changes in premium rates.
(c) Provisions relating to the guaranteed issue and renewal of
contracts.
(d) Until January 1, 2014, provisions relating to the effect of
any preexisting condition provision.
(e) Provisions relating to the small employer's right to apply for
any contract written, issued, or administered by the plan at the
time of application for a new health care service plan contract, or
at the time of renewal of a health care service plan contract.
(f) The availability, upon request, of a listing of all the plan's
contracts and benefit plan designs offered to small employers,
including the rates for each contract.
(g) At the time it offers a contract to a small employer, each
plan shall provide the small employer with a statement of all of its
plan contracts offered to small employers, including the rates for
each plan contract, in the service area in which the employer's
employees and eligible dependents who are to be covered by the plan
contract work or reside. For purposes of this subdivision, plans that
are affiliated plans or that are eligible to file a consolidated
income tax return shall be treated as one health plan.
(h) Each plan shall do all of the following:
(1) Prepare a brochure that summarizes all of its plan contracts
offered to small employers and to make this summary available to any
small employer and to solicitors upon request. The summary shall
include for each contract information on benefits provided, a generic
description of the manner in which services are provided, such as
how access to providers is limited, benefit limitations, required
copayments and deductibles, standard employee risk rates, and, until
January 1, 2014, an explanation of the manner in which creditable
coverage is calculated if a preexisting condition or affiliation
period is imposed. The summary shall also include a phone number that
can be called for more detailed benefit information. Plans are
required to keep the information contained in the brochure accurate
and up to date and, upon updating the brochure, send copies to
solicitors and solicitor firms with whom the plan contracts to
solicit enrollments or subscriptions.
(2) For each contract, prepare a more detailed evidence of
coverage and make it available to small employers, solicitors, and
solicitor firms upon request. The evidence of coverage shall contain
all information that a prudent buyer would need to be aware of in
making contract selections.
(3) Provide to small employers and solicitors, upon request, for
any given small employer the sum of the standard employee risk rates
and the sum of the risk adjusted employee risk rates. When requesting
this information, small employers, solicitors, and solicitor firms
shall provide the plan with the information the plan needs to
determine the small employer's risk adjusted employee risk rate.
(4) Provide copies of the current summary brochure to all
solicitors and solicitor firms contracting with the plan to solicit
enrollments or subscriptions from small employers.
For purposes of this subdivision, plans that are affiliated plans
or that are eligible to file a consolidated income tax return shall
be treated as one health plan.
(i) Every solicitor or solicitor firm contracting with one or more
plans to solicit enrollments or subscriptions from small employers
shall do all of the following:
(1) When providing information on contracts to a small employer
but making no specific recommendations on particular plan contracts:
(A) Advise the small employer of the plan's obligation to sell to
any small employer any plan contract it offers to small employers and
provide them, upon request, with the actual rates that would be
charged to that employer for a given contract.
(B) Notify the small employer that the solicitor or solicitor firm
will procure rate and benefit information for the small employer on
any plan contract offered by a plan whose contract the solicitor
sells.
(C) Notify the small employer that upon request the solicitor or
solicitor firm will provide the small employer with the summary
brochure required under paragraph (1) of subdivision (h) for any plan
contract offered by a plan with whom the solicitor or solicitor firm
has contracted with to solicit enrollments or subscriptions.
(D) Notify the small employer of the availability of coverage
through the California Health Benefit Exchange.
(2) When recommending a particular benefit plan design or designs,
advise the small employer that, upon request, the agent will provide
the small employer with the brochure required by paragraph (1) of
subdivision (h) containing the benefit plan design or designs being
recommended by the agent or broker.
(3) Prior to filing an application for a small employer for a
particular contract:
(A) For each of the plan contracts offered by the plan whose
contract the solicitor or solicitor firm is offering, provide the
small employer with the benefit summary required in paragraph (1) of
subdivision (h) and the sum of the standard employee risk rates for
that particular employer.
(B) Notify the small employer that, upon request, the solicitor or
solicitor firm will provide the small employer with an evidence of
coverage brochure for each contract the plan offers.
(C) Until January 1, 2014, notify the small employer that
, from July 1, 1993, to July 1, 1996, actual rates may be 20 percent
higher or lower than the sum of the standard employee risk rates,
and from July 1, 1996, and thereafter, actual rates may be
10 percent higher or lower than the sum of the standard employee risk
rates, depending on how the plan assesses the risk of the small
employer's group. On or after January 1, 2013, notify the
small employer that, effective July 1, 2013, the actual rates shall
be the same for all small employers.
(D) Until January 1, 2014, notify the small employer that, upon
request, the solicitor or solicitor firm will submit information to
the plan to ascertain the small employer's sum of the risk adjusted
employee risk rate for any contract the plan offers. On or after
January 1, 2014, notify the small employer of the employee rate
effective January 1, 2014.
(E) Obtain a signed statement from the small employer
acknowledging that the small employer has received the disclosures
required by this section.
SEC. 8. Section 1357.15 of the Health and Safety Code is amended
to read:
1357.15. (a) At least 60 business
calendar days prior to renewing or amending a plan contract
subject to this article which will be in force on the operative date
of this article, a plan shall file a notice of material modification
with the director in accordance with the provisions of Section 1352.
The notice of material modification shall include a statement
certifying that the plan is in compliance with subdivision (j) of
Section 1357 and Section 1357.12. For rates in effect until January
1, 2014, the certified statement shall set forth the standard
employee risk rate for each risk category and the highest and lowest
risk adjustment factors that will be used in setting the rates at
which the contract will be renewed or amended. Any action by the
director, as permitted under Section 1352, to disapprove, suspend, or
postpone the plan's use of a plan contract shall be in writing,
specifying the reasons that the plan contract does not comply with
the requirements of this chapter.
(b) At least 60 business calendar
days prior to offering a plan contract subject to this article, all
plans shall file a notice of material modification with the director
in accordance with the provisions of Section 1352. The notice of
material modification shall include a statement certifying that the
plan is in compliance with subdivision (j) of Section 1357 and
Section 1357.12. For rates in effect until January 1, 2014, the
certified statement shall set forth the standard employee risk rate
for each risk category and the highest and lowest risk adjustment
factors that will be used in setting the rates at which the contract
will be offered. Plans that will be offering to a small employer plan
contracts approved by the director prior to the effective date of
this article shall file a notice of material modification in
accordance with this subdivision. Any action by the director, as
permitted under Section 1352, to disapprove, suspend, or postpone the
plan's use of a plan contract shall be in writing, specifying the
reasons that the plan contract does not comply with the requirements
of this chapter.
(c) Prior to making any changes in the risk categories ,
risk adjustment factors, or standard employee risk rates
filed with the director pursuant to subdivision (a) or (b), the plan
shall file as an amendment a statement setting forth the changes and
certifying that the plan is in compliance with subdivision (j) of
Section 1357 and Section 1357.12. A plan may commence offering plan
contracts utilizing the changed risk categories set forth in the
certified statement on the 31st day from the date of the filing, or
at an earlier time determined by the director, unless the director
disapproves the amendment by written notice, stating the reasons
therefor. If only the standard employee risk rate is being changed,
and not the risk categories or risk adjustment factors
, a plan may commence offering plan contracts utilizing the
changed standard employee risk rate upon filing the certified
statement unless the director disapproves the amendment by written
notice.
(d) Periodic changes to the standard employee risk rate that a
plan proposes to implement over the course of up to 12 consecutive
months may be filed in conjunction with the certified statement filed
under subdivision (a), (b), or (c).
(e) Each plan shall
maintain at its principal place of business all of the information
required to be filed with the director pursuant to this section.
(f) Each plan shall make available to the director, on request,
the risk adjustment factor used in determining the rate for any
particular small employer.
(g) Nothing in this section shall be construed to limit the
director's authority to enforce the rating practices set forth in
this article.
(h) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 9. Section 1357.15 is added to the Health and Safety Code, to
read:
1357.15. (a) At least 60 business days prior
to renewing or amending a plan contract subject to this article which
will be in force on the operative date of this article, a plan shall
file a notice of material modification with the director in
accordance with the provisions of Section 1352. The notice of
material modification shall include a statement certifying that the
plan is in compliance with subdivision (j) of Section 1357 and
Section 1357.12. Any action by the director, as permitted under
Section 1352, to disapprove, suspend, or postpone the plan's use of a
plan contract shall be in writing, specifying the reasons that the
plan contract does not comply with the requirements of this chapter.
(b) At least 60 business days prior to offering
a plan contract subject to this article, all plans shall file a
notice of material modification with the director in accordance with
the provisions of Section 1352. The notice of material modification
shall include a statement certifying that the plan is in compliance
with subdivision (j) of Section 1357 and Section 1357.12. Plans that
will be offering to a small employer plan contracts approved by the
director prior to the effective date of this article shall file a
notice of material modification in accordance with this subdivision.
Any action by the director, as permitted under Section 1352, to
disapprove, suspend, or postpone the plan's use of a plan contract
shall be in writing, specifying the reasons that the plan contract
does not comply with the requirements of this chapter.
(c) Prior to making any changes in the risk categories ,
risk adjustment factors, or standard employee risk rates
filed with the director pursuant to subdivision (a) or (b), the plan
shall file as an amendment a statement setting forth the changes and
certifying that the plan is in compliance with subdivision (j) of
Section 1357 and Section 1357.12. A plan may commence offering plan
contracts utilizing the changed risk categories set forth in the
certified statement on the 31st day from the date of the filing, or
at an earlier time determined by the director, unless the director
disapproves the amendment by written notice, stating the reasons
therefor. If only the standard employee risk rate is being changed,
and not the risk categories or risk adjustment factors
, a plan may commence offering plan contracts utilizing the
changed standard employee risk rate upon filing the certified
statement unless the director disapproves the amendment by written
notice.
(d) Each plan shall maintain at its principal place of business
all of the information required to be filed with the director
pursuant to this section.
(e) Nothing in this section shall be construed to limit the
director's authority to enforce the rating practices set forth in
this article.
(f) This section shall become operative on January 1, 2014.
SEC. 10. Section 1357.18 is added to the Health
and Safety Code, to read:
1357.18. On or after January 1, 2012, if a health care service
plan offers a wellness program pursuant to a health care service
contract issued pursuant to this article, the wellness program shall
meet the following requirements:
(a) A rebate, discount, or other incentive offered under the
wellness program will not result in a variation in the premium of
greater than 1.2 to one and is not offered for copayments,
deductibles, or any other out-of-pocket costs for basic health care
services, as defined in subdivision (b) of Section 1345, or
prescription drug benefits, as described in this article.
(b) The wellness program meets the following standards:
(1) Is demonstrated by scientific evidence to improve health
outcomes as documented by peer-reviewed scientific evidence involving
multiple studies over time as demonstrated by the plan to the
department.
(2) Has approval of the department on an experimental basis as
part of the scientific research or a clinical trial that is conducted
by a recognized academic institution for a period not to exceed 24
months and that is expected to lead to the publication of
peer-reviewed scientific evidence.
(3) Is not based on an individual satisfying a standard that is
related to a health status factor, including the following:
(A) Health status.
(B) Medical condition, including both physical and mental
illnesses.
(C) Claims experience.
(D) Receipt of health care.
(E) Medical history.
(F) Genetic information.
(G) Evidence of insurability.
(H) Disability.
(I) Any other health status-related factor determined by guidance
issued pursuant to the federal Patient Protection and Affordable Care
Act (Public Law 111-148) or by the department through regulations.
(4) Is not related to or statistically correlated with any of the
following:
(A) Medical history, risk factors, or health status indicators of
any kind.
(B) Genetic predisposition.
(C) Age.
(D) Race or ethnicity.
(5) Does not make the cost of coverage exceed that provided under
the federal Patient Protection and Affordable Care Act (Public Law
111-148).
(6) Does not violate any of the following:
(A) The federal Americans with Disabilities Act.
(B) The federal Genetic Information Nondiscrimination Act.
(C) The federal Age Discrimination in Employment Act.
(D) The federal Civil Rights Act of 1964 or the Unruh Civil Rights
Act if the program would result in or cause disparate treatment on
the basis of race, gender, or national origin.
SEC. 11. SEC. 10. Section 1357.50 of
the Health and Safety Code is amended to read:
1357.50. For purposes of this article:
(a) "Health benefit plan" means any individual or group insurance
policy or health care service plan contract that provides medical,
hospital, and surgical benefits. The term does not include accident
only, credit, disability income, coverage of Medicare services
pursuant to contracts with the United States government, Medicare
supplement, long-term care insurance, dental, vision, coverage issued
as a supplement to liability insurance, insurance arising out of a
workers' compensation or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(b) "Late enrollee" means an eligible employee or dependent who
has declined health coverage under a health benefit plan offered
through employment or sponsored by an employer at the time of the
initial enrollment period provided under the terms of the health
benefit plan, and who subsequently requests enrollment in a health
benefit plan of that employer, provided that the initial enrollment
period shall be a period of at least 30 days. However, an eligible
employee or dependent shall not be considered a late enrollee if any
of the following is applicable:
(1) The individual meets all of the following requirements:
(A) The individual was covered under another employer health
benefit plan, the Healthy Families Program, the Access for Infants
and Mothers (AIM) Program, or the Medi-Cal program, at the time the
individual was eligible to enroll.
(B) The individual certified, at the time of the initial
enrollment, that coverage under another employer health benefit plan,
the Healthy Families Program, the AIM Program, or the Medi-Cal
program was the reason for declining enrollment provided that, if the
individual was covered under another employer health benefit plan,
the individual was given the opportunity to make the certification
required by this subdivision and was notified that failure to do so
could result in later treatment as a late enrollee.
(C) The individual has lost or will lose coverage under another
employer health benefit plan as a result of termination of employment
of the individual or of a person through whom the individual was
covered as a dependent, change in employment status of the individual
or of a person through whom the individual was covered as a
dependent, termination of the other plan's coverage, cessation of an
employer's contribution toward an employee or dependent's coverage,
death of a person through whom the individual was covered as a
dependent, legal separation, or divorce; or the individual has lost
or will lose coverage under the Healthy Families Program, the AIM
Program, or the Medi-Cal program.
(D) The individual requests enrollment within 30 days after
termination of coverage, or cessation of employer contribution toward
coverage provided under another employer health benefit plan, or
requests enrollment within 60 days after termination of Medi-Cal
program coverage, AIM Program coverage, or Healthy Families Program
coverage.
(2) The individual is employed by an employer that offers multiple
health benefit plans and the individual elects a different plan
during an open enrollment period.
(3) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee's health benefit plan. The
health benefit plan shall enroll a dependent child within 30 days
after receipt of a court order or request from the district attorney,
either parent or the person having custody of the child as defined
in Section 3751.5 of the Family Code, the employer, or the group
administrator. In the case of children who are eligible for Medicaid,
the State Department of Health Care Services may also make the
request.
(4) The plan cannot produce a written statement from the employer
stating that, prior to declining coverage, the individual or the
person through whom the individual was eligible to be covered as a
dependent was provided with, and signed acknowledgment of, explicit
written notice in boldface type specifying that failure to elect
coverage during the initial enrollment period permits the plan to
impose, at the time of the individual's later decision to elect
coverage, an exclusion from coverage for a period of 12 months as
well as a six-month preexisting condition exclusion, unless the
individual meets the criteria specified in paragraph (1), (2), or
(3).
(5) The individual is an employee or dependent who meets the
criteria described in paragraph (1) and was under a COBRA
continuation provision, and the coverage under that provision has
been exhausted. For purposes of this section, the definition of
"COBRA" set forth in subdivision (e) of Section 1373.621 shall apply.
(6) The individual is a dependent of an enrolled eligible employee
who has lost or will lose his or her coverage under the Healthy
Families Program, the AIM Program, or the Medi-Cal program, and
requests enrollment within 60 days of termination of that coverage.
(7) The individual is an eligible employee who previously declined
coverage under an employer health benefit plan and who has
subsequently acquired a dependent who would be eligible for coverage
as a dependent of the employee through marriage, birth, adoption, or
placement for adoption, and who enrolls for coverage under that
employer health benefit plan on his or her behalf, and on behalf of
his or her dependent within 30 days following the date of marriage,
birth, adoption, or placement for adoption, in which case the
effective date of coverage shall be the first day of the month
following the date the completed request for enrollment is received
in the case of marriage, or the date of birth, or the date of
adoption or placement for adoption, whichever applies. Notice of the
special enrollment rights contained in this paragraph shall be
provided by the employer to an employee at or before the time the
employee is offered an opportunity to enroll in plan coverage.
(8) The individual is an eligible employee who has declined
coverage for himself or herself or his or her dependents during a
previous enrollment period because his or her dependents were covered
by another employer health benefit plan at the time of the previous
enrollment period. That individual may enroll himself or herself or
his or her dependents for plan coverage during a special open
enrollment opportunity if his or her dependents have lost or will
lose coverage under that other employer health benefit plan. The
special open enrollment opportunity shall be requested by the
employee not more than 30 days after the date that the other health
coverage is exhausted or terminated. Upon enrollment, coverage shall
be effective not later than the first day of the first calendar month
beginning after the date the request for enrollment is received.
Notice of the special enrollment rights contained in this paragraph
shall be provided by the employer to an employee at or before the
time the employee is offered an opportunity to enroll in plan
coverage.
(c) Until January 1, 2014, "preexisting condition provision" means
a contract provision that excludes coverage for charges or expenses
incurred during a specified period following the enrollee's effective
date of coverage, as to a condition for which medical advice,
diagnosis, care, or treatment was recommended or received during a
specified period immediately preceding the effective date of
coverage.
(d) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program that is
written or administered by a disability insurance company, nonprofit
hospital service plan, health care service plan, fraternal benefits
society, self-insured employer plan, or any other entity, in this
state or elsewhere, and that arranges or provides medical, hospital,
and surgical coverage not designed to supplement other private or
governmental plans. The term includes continuation or conversion
coverage but does not include accident only, credit, coverage for
onsite medical clinics, disability income, Medicare supplement,
long-term care insurance, dental, vision, coverage issued as a
supplement to liability insurance, insurance arising out of a workers'
compensation or similar law, automobile medical payment insurance,
or insurance under which benefits are payable with or without regard
to fault and that is statutorily required to be contained in any
liability insurance policy or equivalent self-insurance.
(2) The Medicare Program pursuant to Title XVIII of the federal
Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the Public Health Service Act,
as amended by Public Law 104-191, the Health Insurance Portability
and Accountability Act of 1996.
(10) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C. Sec. 2504(e)).
(11) Any other creditable coverage as defined by subdivision (c)
of Section 2701 of Title XXVII of the federal Public Health Service
Act (42 U.S.C. Sec. 300gg(c)).
(e) "Waivered condition" means a contract provision that excludes
coverage for charges or expenses incurred during a specified period
of time for one or more specific, identified, medical conditions.
(f) "Affiliation period" means a period that, under the terms of
the health benefit plan, must expire before health care services
under the plan become effective.
(g) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 12. SEC. 11. Section 1357.50 is
added to the Health and Safety Code, to read:
1357.50. For purposes of this article:
(a) "Health benefit plan" means any individual or group insurance
policy or health care service plan contract that provides essential
health benefits as defined consistent with Section 1302 of the
federal Patient Protection and Affordable Care Act (Public Law
111-148). The term does not include accident only, credit, disability
income, coverage of Medicare services pursuant to contracts with the
United States government, Medicare supplement, long-term care
insurance, dental, vision, coverage issued as a supplement to
liability insurance, insurance arising out of a workers' compensation
or similar law, automobile medical payment insurance, or insurance
under which benefits are payable with or without regard to fault and
that is statutorily required to be contained in any liability
insurance policy or equivalent self-insurance. The term does not
include a grandfathered plan as defined in Section 1251 of the
federal Patient Protection and Affordable Care Act (Public Law
111-148).
(b) "Late enrollee" means an eligible employee or dependent who
has declined health coverage under a health benefit plan offered
through employment or sponsored by an employer at the time of the
initial enrollment period provided under the terms of the health
benefit plan, and who subsequently requests enrollment in a health
benefit plan of that employer, provided that the initial enrollment
period shall be a period of at least 30 days. However, an eligible
employee or dependent shall not be considered a late enrollee if any
of the following is applicable:
(1) The individual meets all of the following requirements:
(A) The individual was covered under another employer health
benefit plan, the Healthy Families Program, the Access for Infants
and Mothers (AIM) Program, the Medi-Cal program, or the California
Health Benefit Exchange, at the time the individual was eligible to
enroll.
(B) The individual certified, at the time of the initial
enrollment, that coverage under another employer health benefit plan,
the Healthy Families Program, the AIM Program, the Medi-Cal program,
or the California Health Benefit Exchange was the reason for
declining enrollment provided that, if the individual was covered
under another employer health benefit plan, the individual was given
the opportunity to make the certification required by this
subdivision and was notified that failure to do so could result in
later treatment as a late enrollee.
(C) The individual has lost or will lose coverage under another
employer health benefit plan as a result of termination of employment
of the individual or of a person through whom the individual was
covered as a dependent, change in employment status of the individual
or of a person through whom the individual was covered as a
dependent, termination of the other plan's coverage, cessation of an
employer's contribution toward an employee or dependent's coverage,
death of a person through whom the individual was covered as a
dependent, legal separation, or divorce; or the individual has lost
or will lose coverage under the Healthy Families Program, the AIM
Program, the Medi-Cal program, or the California Health Benefit
Exchange.
(D) The individual requests enrollment within 30 days after
termination of coverage, or cessation of employer contribution toward
coverage provided under another employer health benefit plan, or
requests enrollment within 60 days after termination of Medi-Cal
program coverage, AIM Program coverage, Healthy Families Program
coverage, or coverage through the California Health Benefit Exchange.
(2) The individual is employed by an employer that offers multiple
health benefit plans and the individual elects a different plan
during an open enrollment period.
(3) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee's health benefit plan. The
health benefit plan shall enroll a dependent child within 30 days
after receipt of a court order or request from the district attorney,
either parent or the person having custody of the child as defined
in Section 3751.5 of the Family Code, the employer, or the group
administrator. In the case of children who are eligible for Medicaid,
the State Department of Health Care Services may also make the
request.
(4) The plan cannot produce a written statement from the employer
stating that, prior to declining coverage, the individual or the
person through whom the individual was eligible to be covered as a
dependent was provided with, and signed acknowledgment of, explicit
written notice in boldface type specifying that failure to elect
coverage during the initial enrollment period permits the plan to
impose, at the time of the individual's later decision to elect
coverage, an exclusion from coverage for a period of 12 months as
well as a six-month preexisting condition exclusion, unless the
individual meets the criteria specified in paragraph (1), (2), or
(3).
(5) The individual is an employee or dependent who meets the
criteria described in paragraph (1) and was under a COBRA
continuation provision, and the coverage under that provision has
been exhausted. For purposes of this section, the definition of
"COBRA" set forth in subdivision (e) of Section 1373.621 shall apply.
(6) The individual is a dependent of an enrolled eligible employee
who has lost or will lose his or her coverage under the Healthy
Families Program, the AIM Program, the Medi-Cal program, or the
California Health Benefit Exchange, and requests enrollment within 60
days of termination of that coverage.
(7) The individual is an eligible employee who previously declined
coverage under an employer health benefit plan and who has
subsequently acquired a dependent who would be eligible for coverage
as a dependent of the employee through marriage, birth, adoption, or
placement for adoption, and who enrolls for coverage under that
employer health benefit plan on his or her behalf, and on behalf of
his or her dependent within 30 days following the date of marriage,
birth, adoption, or placement for adoption, in which case the
effective date of coverage shall be the first day of the month
following the date the completed request for enrollment is received
in the case of marriage, or the date of birth, or the date of
adoption or placement for adoption, whichever applies. Notice of the
special enrollment rights contained in this paragraph shall be
provided by the employer to an employee at or before the time the
employee is offered an opportunity to enroll in plan coverage.
(8) The individual is an eligible employee who has declined
coverage for himself or herself or his or her dependents during a
previous enrollment period because his or her dependents were covered
by another employer health benefit plan at the time of the previous
enrollment period. That individual may enroll himself or herself or
his or her dependents for plan coverage during a special open
enrollment opportunity if his or her dependents have lost or will
lose coverage under that other employer health benefit plan. The
special open enrollment opportunity shall be requested by the
employee not more than 30 days after the date that the other health
coverage is exhausted or terminated. Upon enrollment, coverage shall
be effective not later than the first day of the first calendar month
beginning after the date the request for enrollment is received.
Notice of the special enrollment rights contained in this paragraph
shall be provided by the employer to an employee at or before the
time the employee is offered an opportunity to enroll in plan
coverage.
(c) On or after January 1, 2014, a plan contract shall not
establish any preexisting condition exclusion or limitation for any
individual or dependent of an individual, whether or not any medical
advice, diagnosis, care, or treatment was recommended or received
before that date. A preexisting condition exclusion includes any
limitation or exclusion of benefits, including a denial of coverage,
applicable to an individual as a result of information relating to an
individual's health status before the individual's effective date of
coverage under a group health plan, or group or individual health
insurance coverage, such as a condition identified as a result of a
preenrollment questionnaire or physical examination given to the
individual, or review of medical records relating to the
preenrollment period.
(d) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program that is
written or administered by a disability insurance company, nonprofit
hospital service plan, health care service plan, fraternal benefits
society, self-insured employer plan, or any other entity, in this
state or elsewhere, and that arranges or provides medical, hospital,
and surgical coverage not designed to supplement other private or
governmental plans. The term includes continuation or conversion
coverage but does not include accident only, credit, coverage for
onsite medical clinics, disability income, Medicare supplement,
long-term care insurance, dental, vision, coverage issued as a
supplement to liability insurance, insurance arising out of a workers'
compensation or similar law, automobile medical payment insurance,
or insurance under which benefits are payable with or without regard
to fault and that is statutorily required to be contained in any
liability insurance policy or equivalent self-insurance.
(2)
The Medicare Program pursuant to Title XVIII of the federal Social
Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the Public Health Service Act,
as amended by Public Law 104-191, the Health Insurance Portability
and Accountability Act of 1996.
(10) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C. Sec. 2504(e)).
(11) Any other creditable coverage as defined by subdivision (c)
of Section 2701 of Title XXVII of the federal Public Health Service
Act (42 U.S.C. Sec. 300gg(c)).
(e) This section shall become operative on January 1, 2014.
SEC. 13. SEC. 12. Section 1357.51 of
the Health and Safety Code is amended to read:
1357.51. (a) Until January 1, 2014, no plan contract that covers
three or more enrollees shall exclude coverage for any individual on
the basis of a preexisting condition provision for a period greater
than six months following the individual's effective date of
coverage. Preexisting condition provisions contained in plan
contracts may relate only to conditions for which medical advice,
diagnosis, care, or treatment, including use of prescription drugs,
was recommended or received from a licensed health practitioner
during the six months immediately preceding the effective date of
coverage.
(b) Until January 1, 2014, no plan contract that covers one or two
individuals shall exclude coverage on the basis of a preexisting
condition provision for a period greater than 12 months following the
individual's effective date of coverage, nor shall the plan limit or
exclude coverage for a specific enrollee by type of illness,
treatment, medical condition, or accident, except for satisfaction of
a preexisting condition clause pursuant to this article. Preexisting
condition provisions contained in plan contracts may relate only to
conditions for which medical advice, diagnosis, care, or treatment,
including use of prescription drugs, was recommended or received from
a licensed health practitioner during the 12 months immediately
preceding the effective date of coverage.
(c) (1) Notwithstanding subdivision (a), a plan contract for group
coverage shall not impose any preexisting condition provision upon
any child under 19 years of age.
(2) Notwithstanding subdivision (b), a plan contract for
individual coverage that is not a grandfathered health plan within
the meaning of Section 1251 of the federal Patient Protection and
Affordable Care Act (Public Law 111-148) shall not impose any
preexisting condition provision upon any child under 19 years of age.
(d) Until January 1, 2014, a plan that does not utilize a
preexisting condition provision may impose a waiting or affiliation
period not to exceed 60 days, before the coverage issued subject to
this article shall become effective. During the waiting or
affiliation period, the plan is not required to provide health care
services and no premium shall be charged to the subscriber or
enrollee.
(e) Until January 1, 2014, a plan that does not utilize a
preexisting condition provision in plan contracts that cover one or
two individuals may impose a contract provision excluding coverage
for waivered conditions. No plan may exclude coverage on the basis of
a waivered condition for a period greater than 12 months following
the individual's effective date of coverage. A waivered condition
provision contained in plan contracts may relate only to conditions
for which medical advice, diagnosis, care, or treatment, including
use of prescription drugs, was recommended or received from a
licensed health practitioner during the 12 months immediately
preceding the effective date of coverage.
(f) Until January 1, 2014, in determining whether a preexisting
condition provision, a waivered condition provision, or a waiting or
affiliation period applies to any enrollee, a plan shall credit the
time the enrollee was covered under creditable coverage, provided
that the enrollee becomes eligible for coverage under the succeeding
plan contract within 62 days of termination of prior coverage,
exclusive of any waiting or affiliation period, and applies for
coverage under the succeeding plan within the applicable enrollment
period. A plan shall also credit any time that an eligible employee
must wait before enrolling in the plan, including any postenrollment
or employer-imposed waiting or affiliation period.
However, if a person's employment has ended, the availability of
health coverage offered through employment or sponsored by an
employer has terminated, or an employer's contribution toward health
coverage has terminated, a plan shall credit the time the person was
covered under creditable coverage if the person becomes eligible for
health coverage offered through employment or sponsored by an
employer within 180 days, exclusive of any waiting or affiliation
period, and applies for coverage under the succeeding plan contract
within the applicable enrollment period.
(g) Until January 1, 2014, no plan shall exclude late enrollees
from coverage for more than 12 months from the date of the late
enrollee's application for coverage. No plan shall require any
premium or other periodic charge to be paid by or on behalf of a late
enrollee during the period of exclusion from coverage permitted by
this subdivision.
(h) A health care service plan issuing group coverage may not
impose a preexisting condition exclusion upon a condition relating to
benefits for pregnancy or maternity care.
(i) An individual's period of creditable coverage shall be
certified pursuant to subsection (e) of Section 2701 of Title XXVII
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(e)).
(j) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 14. SEC. 13. Section 1357.51 is
added to the Health and Safety Code, to read:
1357.51. (a) No plan contract that covers one or more enrollees
shall exclude coverage for any individual on the basis of a
preexisting condition.
(b) (1) A plan contract for group coverage shall not impose any
preexisting condition provision upon any individual.
(2) A plan contract for individual coverage that is not a
grandfathered health plan within the meaning of Section 1251 of the
federal Patient Protection and Affordable Care Act (Public Law
111-148) shall not impose any preexisting condition provision upon
any individual.
(c) A plan may impose a 90-day waiting period from the date of the
late enrollee's application for coverage.
(d) A health care service plan issuing group coverage may not
impose a preexisting condition exclusion based on health
status-related factors, including, but not limited to, the following:
(1) Health status.
(2) Medical condition, including both physical and mental
illnesses.
(3) Claims experience.
(4) Receipt of medical care.
(5) Medical history.
(6) Genetic information.
(7) Evidence of insurability, including conditions arising from
domestic violence.
(8) Disability.
(9) Any other health status-related factor determined appropriate
by the federal government.
(10) Any other health status-related factor determined appropriate
by the director.
(e) An individual's period of creditable coverage shall be
certified pursuant to subsection (e) of Section 2701 of Title XXVII
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(e)).
(f) This section shall become operative on January 1, 2014.
SEC. 15. SEC. 14. Section 1357.52 of
the Health and Safety Code is amended to read:
1357.52. (a) Until January 1, 2014, except in the case of a late
enrollee, or for satisfaction of a preexisting condition clause in
the case of initial coverage of an eligible employee, a plan may not
exclude any eligible employee or dependent who would otherwise be
entitled to health care services on the basis of any of the
following: the health status, the medical condition, including both
physical and mental illnesses, the claims experience, the medical
history, the genetic information, or the disability or evidence of
insurability including conditions arising out of acts of domestic
violence of that employee or dependent. No plan contract may limit or
exclude coverage for a specific eligible employee or dependent by
type of illness, treatment, medical condition, or accident, except
for preexisting conditions as permitted by Section 1357.06.
(b) On or after January 1, 2014, a plan may not exclude any
eligible employee or dependent who would otherwise by entitled to
health care services on the basis of any of the following: the health
status, the medical condition, including both physical and mental
illnesses, the claims experience, the medical history, the genetic
information, or the disability or evidence of insurability, including
conditions arising out of acts of domestic violence, of that
employee or dependent. No plan contract may limit or exclude coverage
for a specific eligible employee or dependent by type of illness,
treatment, medical condition, or accident.
(c) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 16. SEC. 15. Section 1357.52 is
added to the Health and Safety Code, to read:
1357.52. A plan may not exclude any eligible employee or
dependent who would otherwise be entitled to health care services on
the basis of any of the following: the health status, the medical
condition, including both physical and mental illnesses, the claims
experience, the medical history, the genetic information, or the
disability or evidence of insurability including conditions arising
out of acts of domestic violence of that employee or dependent. No
plan contract may limit or exclude coverage for a specific eligible
employee or dependent by type of illness, treatment, medical
condition, or accident.
This section shall become operative on January 1, 2014.
SEC. 17. SEC. 16. Section 10198.6 of
the Insurance Code is amended to read:
10198.6. For purposes of this article:
(a) "Health benefit plan" means any group or individual policy or
contract that provides medical, hospital, or surgical benefits. The
term does not include accident only, credit, disability income,
coverage of Medicare services pursuant to contracts with the United
States government, Medicare supplement, long-term care insurance,
dental, vision, coverage issued as a supplement to liability
insurance, insurance arising out of a workers' compensation or
similar law, automobile medical payment insurance, or insurance under
which benefits are payable with or without regard to fault and that
is statutorily required to be contained in any liability insurance
policy or equivalent self-insurance.
(b) "Late enrollee" means an eligible employee or dependent who
has declined health coverage under a health benefit plan offered
through employment or sponsored by an employer at the time of the
initial enrollment period provided under the terms of the health
benefit plan, and who subsequently requests enrollment in a health
benefit plan of that employer, provided that the initial enrollment
period shall be a period of at least 30 days. However, an eligible
employee or dependent shall not be considered a late enrollee if any
of the following is applicable:
(1) The individual meets all of the following requirements:
(A) The individual was covered under another employer health
benefit plan, the Healthy Families Program, the Access for Infants
and Mothers (AIM) Program, or the Medi-Cal program, at the time the
individual was eligible to enroll.
(B) The individual certified, at the time of the initial
enrollment, that coverage under another employer health benefit plan,
the Healthy Families Program, the AIM Program, or the Medi-Cal
program was the reason for declining enrollment provided that, if the
individual was covered under another employer health benefit plan,
the individual was given the opportunity to make the certification
required by this subdivision and was notified that failure to do so
could result in later treatment as a late enrollee.
(C) The individual has lost or will lose coverage under another
employer health benefit plan as a result of termination of employment
of the individual or of a person through whom the individual was
covered as a dependent, change in employment status of the individual
or of a person through whom the individual was covered as a
dependent, termination of the other plan's coverage, cessation of an
employer's contribution toward an employee or dependent's coverage,
death of a person through whom the individual was covered as a
dependent, legal separation, or divorce; or the individual has lost
or will lose coverage under the Healthy Families Program, the AIM
Program, or the Medi-Cal program.
(D) The individual requests enrollment within 30 days after
termination of coverage, or cessation of employer contribution toward
coverage provided under another employer health benefit plan, or
requests enrollment within 60 days after termination of Medi-Cal
program coverage, AIM Program coverage, or Healthy Families Program
coverage.
(2) The individual is employed by an employer that offers multiple
health benefit plans and the individual elects a different plan
during an open enrollment period.
(3) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee's health benefit plan.
(4) The carrier cannot produce a written statement from the
employer stating that, prior to declining coverage, the individual or
the person through whom the individual was eligible to be covered as
a dependent was provided with, and signed acknowledgment of,
explicit written notice in boldface type specifying that failure to
elect coverage during the initial enrollment period permits the
carrier to impose, at the time of the individual's later decision to
elect coverage, an exclusion from coverage for a period of 12 months
as well as a six-month preexisting condition exclusion, unless the
individual meets the criteria specified in paragraph (1), (2), or
(3).
(5) The individual is an employee or dependent who meets the
criteria described in paragraph (1) and was under a COBRA
continuation provision and the coverage under that provision has been
exhausted. For purposes of this section, the definition of "COBRA"
set forth in subdivision (e) of Section 10116.5 shall apply.
(6) The individual is a dependent of an enrolled eligible employee
who has lost or will lose his or her coverage under the Healthy
Families Program, the AIM Program, or the Medi-Cal program, and
requests enrollment within 60 days of termination of that coverage.
(c) Until January 1, 2014, "preexisting condition provision" means
a policy provision that excludes coverage for charges or expenses
incurred during a specified period following the insured's effective
date of coverage, as to a condition for which medical advice,
diagnosis, care, or treatment was recommended or received during a
specified period immediately preceding the effective date of
coverage.
(d) "Creditable coverage" means:
(1) Any individual or group policy, contract or program, that is
written or administered by a disability insurance company, health
care service plan, fraternal benefits society, self-insured employer
plan, or any other entity, in this state or elsewhere, and that
arranges or provides medical, hospital, and surgical coverage not
designed to supplement other private or governmental plans. The term
includes continuation or conversion coverage but does not include
accident only, credit, coverage for onsite medical clinics,
disability income, Medicare supplement, long-term care insurance,
dental, vision, coverage issued as a supplement to liability
insurance, insurance arising out of a workers' compensation or
similar law, automobile medical payment insurance, or insurance under
which benefits are payable with or without regard to fault and that
is statutorily required to be contained in any liability insurance
policy or equivalent self-insurance.
(2) The federal Medicare Program pursuant to Title XVIII of the
federal Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the federal Public Health
Service Act, as amended by Public Law 104-191, the federal Health
Insurance Portability and Accountability Act of 1996.
(10) A health benefit plan under Section 5(e) of the federal Peace
Corps Act (22 U.S.C. Sec. 2504(e)).
(11) Any other creditable coverage as defined by subsection (c) of
Section 2701 of Title XXVII of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg(c)).
(e) "Affiliation period" means a period that, under the terms of
the health benefit plan, must expire before health care services
under the plan become effective.
(f) "Waivered condition" means a contract provision that excludes
coverage for charges or expenses incurred during a specified period
of time for one or more specific, identified, medical conditions.
(g) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 18. SEC. 17. Section 10198.6 is
added to the Insurance Code, to read:
10198.6. For purposes of this article:
(a) "Health benefit plan" means any group or individual policy or
contract that provides essential health benefits as defined
consistent with Section 1302 of the federal Patient Protection and
Affordable Care Act (Public Law 111-148). The term does not include
accident only, credit, disability income, coverage of Medicare
services pursuant to contracts with the United States government,
Medicare supplement, long-term care insurance, dental, vision,
coverage issued as a supplement to liability insurance, insurance
arising out of a workers' compensation or similar law, automobile
medical payment insurance, or insurance under which benefits are
payable with or without regard to fault and that is statutorily
required to be contained in any liability insurance policy or
equivalent self-insurance.
(b) "Late enrollee" means an eligible employee or dependent who
has declined health coverage under a health benefit plan offered
through employment or sponsored by an employer at the time of the
initial enrollment period provided under the terms of the health
benefit plan, and who subsequently requests enrollment in a health
benefit plan of that employer, provided that the initial enrollment
period shall be a period of at least 30 days. However, an eligible
employee or dependent shall not be considered a late enrollee if any
of the following is applicable:
(1) The individual meets all of the following requirements:
(A) The individual was covered under another employer health
benefit plan, the Healthy Families Program, the Access for Infants
and Mothers (AIM) Program, the Medi-Cal program, or the California
Health Benefit Exchange, at the time the individual was eligible to
enroll.
(B) The individual certified, at the time of the initial
enrollment, that coverage under another employer health benefit plan,
the Healthy Families Program, the AIM Program, the Medi-Cal program,
or the California Health Benefit Exchange was the reason for
declining enrollment provided that, if the individual was covered
under another employer health benefit plan, the individual was given
the opportunity to make the certification required by this
subdivision and was notified that failure to do so could result in
later treatment as a late enrollee.
(C) The individual has lost or will lose coverage under another
employer health benefit plan as a result of termination of employment
of the individual or of a person through whom the individual was
covered as a dependent, change in employment status of the individual
or of a person through whom the individual was covered as a
dependent, termination of the other plan's coverage, cessation of an
employer's contribution toward an employee or dependent's coverage,
death of a person through whom the individual was covered as a
dependent, legal separation, or divorce; or the individual has lost
or will lose coverage under the Healthy Families Program, the AIM
Program, the Medi-Cal program, or the California Health Benefit
Exchange.
(D) The individual requests enrollment within 30 days after
termination of coverage, or cessation of employer contribution toward
coverage provided under another employer health benefit plan, or
requests enrollment within 60 days after termination of Medi-Cal
program coverage, AIM Program coverage, Healthy Families Program
coverage, or coverage through the California Health Benefit Exchange.
(2) The individual is employed by an employer that offers multiple
health benefit plans and the individual elects a different plan
during an open enrollment period.
(3) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee's health benefit plan.
(4) The carrier cannot produce a written statement from the
employer stating that, prior to declining coverage, the individual or
the person through whom the individual was eligible to be covered as
a dependent was provided with, and signed acknowledgment of,
explicit written notice in boldface type specifying that failure to
elect coverage during the initial enrollment period permits the
carrier to impose, at the time of the individual's later decision to
elect coverage, an exclusion from coverage for a period of 12 months
as well as a six-month preexisting condition exclusion, unless the
individual meets the criteria specified in paragraph (1), (2), or
(3).
(5) The individual is an employee or dependent who meets the
criteria described in paragraph (1) and was under a COBRA
continuation provision and the coverage under that provision has been
exhausted. For purposes of this section, the definition of "COBRA"
set forth in subdivision (e) of Section 10116.5 shall apply.
(6) The individual is a dependent of an enrolled eligible employee
who has lost or will lose his or her coverage under the Healthy
Families Program, the AIM Program, the Medi-Cal program, or the
California Health Benefit Exchange, and requests enrollment within 60
days of termination of that coverage.
(c) On or after January 1, 2014, a policy shall not establish any
preexisting condition exclusion or limitation for any individual or
dependent of an individual, whether or not any medical advice,
diagnosis, care, or treatment was recommended or received before that
date. A preexisting condition exclusion includes any limitation or
exclusion of benefits, including a denial of coverage, applicable to
an individual as a result of information relating to an individual's
health status before the individual's effective date of coverage
under a group health plan, or group or individual health insurance
coverage, such as a condition identified as a result of a
preenrollment questionnaire or physical examination given to the
individual, or review of medical records relating to the
preenrollment period.
(d) "Creditable coverage" means:
(1) Any individual or group policy, contract or program, that is
written or administered by a disability insurance company, health
care service plan, fraternal benefits society, self-insured employer
plan, or any other entity, in this state or elsewhere, and that
arranges or provides medical, hospital, and surgical coverage not
designed to supplement other private or governmental plans. The term
includes continuation or conversion coverage but does not include
accident only, credit, coverage for onsite medical clinics,
disability income, Medicare supplement, long-term care insurance,
dental, vision, coverage issued as a supplement to liability
insurance, insurance arising out of a workers' compensation or
similar law, automobile medical payment insurance, or insurance under
which benefits are payable with or without regard to fault and that
is statutorily required to be contained in any liability insurance
policy or equivalent self-insurance.
(2) The federal Medicare Program pursuant to Title XVIII of the
federal Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the federal Public Health
Service Act, as amended by Public Law 104-191, the federal Health
Insurance Portability and Accountability Act of 1996.
(10) A health
benefit plan under Section 5(e) of the federal Peace Corps Act (22
U.S.C. Sec. 2504(e)).
(11) Any other creditable coverage as defined by subsection (c) of
Section 2701 of Title XXVII of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg(c)).
(e) This section shall become operative on January 1, 2014.
SEC. 19. SEC. 18. Section 10198.7 of
the Insurance Code is amended to read:
10198.7. (a) Until January 1, 2014, no health benefit plan that
covers three or more persons and that is issued, renewed, or written
by any insurer, nonprofit hospital service plan, self-insured
employee welfare benefit plan, fraternal benefits society, or any
other entity shall exclude coverage for any individual on the basis
of a preexisting condition provision for a period greater than six
months following the individual's effective date of coverage, nor
shall limit or exclude coverage for a specific insured person by type
of illness, treatment, medical condition, or accident except for
satisfaction of a preexisting clause pursuant to this article.
Preexisting condition provisions contained in health benefit plans
may relate only to conditions for which medical advice, diagnosis,
care, or treatment, including use of prescription drugs, was
recommended or received from a licensed health practitioner during
the six months immediately preceding the effective date of coverage.
(b) Until January 1, 2014, no health benefit plan that covers one
or two individuals and that is issued, renewed, or written by any
insurer, self-insured employee welfare benefit plan, fraternal
benefits society, or any other entity shall exclude coverage on the
basis of a preexisting condition provision for a period greater than
12 months following the individual's effective date of coverage, nor
shall limit or exclude coverage for a specific insured person by type
of illness, treatment, medical condition, or accident, except for
satisfaction of a preexisting condition clause pursuant to this
article. Preexisting condition provisions contained in health benefit
plans may relate only to conditions for which medical advice,
diagnosis, care, or treatment, including use of prescription drugs,
was recommended or received from a licensed health practitioner
during the 12 months immediately preceding the effective date of
coverage.
(c) (1) Notwithstanding subdivision (a), a health benefit plan for
group coverage shall not impose any preexisting condition provision
upon any child under 19 years of age.
(2) Notwithstanding subdivision (b), a health benefit plan for
individual coverage that is a grandfathered plan within the meaning
of Section 1251 of the federal Patient Protection and Affordable Care
Act (Public Law 111-148) shall not impose any preexisting condition
provision upon any child under 19 years of age.
(d) Until January 1, 2014, a carrier that does not utilize a
preexisting condition provision may impose a waiting or affiliation
period not to exceed 60 days, before the coverage issued subject to
this article shall become effective. During the waiting or
affiliation period, the carrier is not required to provide health
care services and no premium shall be charged to the subscriber or
enrollee.
(e) Until January 1, 2014, a carrier that does not utilize a
preexisting condition provision in health plans that cover one or two
individuals may impose a contract provision excluding coverage for
waivered conditions. No carrier may exclude coverage on the basis of
a waivered condition for a period greater than 12 months following
the individual's effective date of coverage. A waivered condition
provision contained in health benefit plans may relate only to
conditions for which medical advice, diagnosis, care, or treatment,
including use of prescription drugs, was recommended or received from
a licensed health practitioner during the 12 months immediately
preceding the effective date of coverage.
(f) Until January 1, 2014, in determining whether a preexisting
condition provision, a waivered condition provision, or a waiting or
affiliation period applies to any person, all health benefit plans
shall credit the time the person was covered under creditable
coverage, provided the person becomes eligible for coverage under the
succeeding health benefit plan within 62 days of termination of
prior coverage, exclusive of any waiting or affiliation period, and
applies for coverage under the succeeding plan within the applicable
enrollment period. A health benefit plan shall also credit any time
an eligible employee must wait before enrolling in the health benefit
plan, including any affiliation or employer-imposed waiting period.
However, if a person's employment has ended, the availability of
health coverage offered through employment or sponsored by an
employer has terminated or, an employer's contribution toward health
coverage has terminated, a carrier shall credit the time the person
was covered under creditable coverage if the person becomes eligible
for health coverage offered through employment or sponsored by an
employer within 180 days, exclusive of any waiting or affiliation
period, and applies for coverage under the succeeding plan within the
applicable enrollment period.
(g) Until January 1, 2014, no health benefit plan that covers
three or more persons and that is issued, renewed, or written by any
insurer, nonprofit hospital service plan, self-insured employee
welfare benefit plan, fraternal benefits society, or any other entity
may exclude late enrollees from coverage for more than 12 months
from the date of the late enrollee's application for coverage. No
insurer, nonprofit hospital service plan, self-insured employee
welfare benefit plan, fraternal benefits society, or any other entity
shall require any premium or other periodic charge to be paid by or
on behalf of a late enrollee during the period of exclusion from
coverage permitted by this subdivision.
(h) An individual's period of creditable coverage shall be
certified pursuant to subsection (e) of Section 2701 of Title XXVII
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(e)).
(i) A group health benefit plan may not impose a preexisting
condition exclusion to a condition relating to benefits for pregnancy
or maternity care.
(j) Any entity providing aggregate or specific stop loss coverage
or any other assumption of risk with reference to a health benefit
plan shall provide that the plan meets all requirements of this
article concerning waiting periods, preexisting condition provisions,
and late enrollees.
(k) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 20. SEC. 19. Section 10198.7 is
added to the Insurance Code, to read:
10198.7. (a) No health benefit plan that covers one or more
enrollees shall exclude coverage for any individual on the basis of a
preexisting condition.
(b) (1) A health benefit plan for group coverage shall not impose
any preexisting condition provision upon any individual.
(2) A health benefit plan for individual coverage that is a
grandfathered plan within the meaning of Section 1251 of the federal
Patient Protection and Affordable Care Act (Public Law 111-148) shall
not impose any preexisting condition provision upon any individual.
(c) No A health benefit
plan may impose a 90-day waiting period from the date of the late
enrollee's application for coverage.
(d) An individual's period of creditable coverage shall be
certified pursuant to subsection (e) of Section 2701 of Title XXVII
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(e)).
(e) A group health benefit plan may not impose a preexisting
condition exclusion based on health status-related factors,
including, but not limited to, the following:
(1) Health status.
(2) Medical condition, including both physical and mental
illnesses.
(3) Claims experience.
(4) Receipt of medical care.
(5) Medical history.
(6) Genetic information.
(7) Evidence of insurability, including conditions arising from
domestic violence.
(8) Disability.
(9) Any other health status-related factor determined appropriate
by the federal government.
(10) Any other health status-related factor determined appropriate
by the commissioner.
(f) Any entity providing aggregate or specific stop loss coverage
or any other assumption of risk with reference to a health benefit
plan shall provide that the plan meets all requirements of this
article concerning waiting periods, preexisting condition provisions,
and late enrollees.
(g) This section shall become operative on January 1, 2014.
SEC. 21. SEC. 20. Section 10198.9 of
the Insurance Code is amended to read:
10198.9. (a) (1) Until January 1, 2014, except in the case of a
late enrollee, or for satisfaction of a preexisting condition clause
in the case of initial coverage of an eligible employee, a disability
insurer may not exclude any eligible employee or dependent who would
otherwise be entitled to health care services on the basis of any of
the following: the health status, the medical condition, including
both physical and mental illnesses, the claims experience, the
medical history, the genetic information, or the disability or
evidence of insurability, including conditions arising out of acts of
domestic violence of that employee or dependent. No health benefit
plan may limit or exclude coverage for a specific eligible employee
or dependent by type of illness, treatment, medical condition, or
accident, except for preexisting conditions as permitted by Section
10198.7.
(2) On or after January 1, 2014, a health insurer may not exclude
any eligible employee or dependent who would otherwise by entitled to
health care services on the basis of any of the following: the
health status, the medical condition, including both physical and
mental illnesses, the claims experience, the medical history, the
genetic information, or the disability or evidence of insurability
including conditions arising out of acts of domestic violence of that
employee or dependent. No health benefit plan may limit or exclude
coverage for a specific eligible employee or dependent by type of
illness, treatment, medical condition, or accident.
(b) For purposes of this section, "health benefit plan" shall have
the same meaning as in Section 10198.6 and subdivision (a) of
Section 10198.61.
(c) For purposes of this section, "eligible employee" shall have
the same meaning as in Section 10700 except that it shall apply to
any health benefit plan covering one or more eligible employees.
(d) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 22. SEC. 21. Section 10198.9 is
added to the Insurance Code, to read:
10198.9. (a) A health insurer may not exclude any eligible
employee or dependent who would otherwise be entitled to health care
services on the basis of any of the following: the health status, the
medical condition, including both physical and mental illnesses, the
claims experience, the medical history, the genetic information, or
the disability or evidence of insurability including conditions
arising out of acts of domestic violence of that employee or
dependent. No health benefit plan may limit or exclude coverage for a
specific eligible employee or dependent by type of illness,
treatment, medical condition, or accident.
(b) For purposes of this section, "health benefit plan" shall have
the same meaning as in Section 10198.6 and subdivision (a) of
Section 10198.61.
(c) For purposes of this section, "eligible employee" shall have
the same meaning as in Section 10700 except that it shall apply to
any health benefit plan covering one or more eligible employees.
(d) This section shall become operative on January 1, 2014.
SEC. 23. SEC. 22. Section 10700 of
the Insurance Code is amended to read:
10700. As used in this chapter:
(a) "Agent or broker" means a person or entity licensed under
Chapter 5 (commencing with Section 1621) of Part 2 of Division 1.
(b) "Benefit plan design" means a specific health coverage product
issued by a carrier to small employers, to trustees of associations
that include small employers, or to individuals if the coverage is
offered through employment or sponsored by an employer. It includes
services covered and the levels of copayment and deductibles, and it
may include the professional providers who are to provide those
services and the sites where those services are to be provided. A
benefit plan design may also be an integrated system for the
financing and delivery of quality health care services which has
significant incentives for the covered individuals to use the system.
(c) "Board" means the Major Risk Medical Insurance Board.
(d) "Carrier" means any disability insurance company or any other
entity that writes, issues, or administers health benefit plans that
cover the employees of small employers, regardless of the situs of
the contract or master policyholder. For the purposes of Articles 3
(commencing with Section 10719) and 4 (commencing with Section
10730), "carrier" also includes health care service plans.
(e) "Dependent" means the spouse or child of an eligible employee,
subject to applicable terms of the health benefit plan covering the
employee, and includes dependents of guaranteed association members
if the association elects to include dependents under its health
coverage at the same time it determines its membership composition
pursuant to subdivision (z).
(f) "Eligible employee" means either of the following:
(1) Any permanent employee who is actively engaged on a full-time
basis in the conduct of the business of the small employer with a
normal workweek of an average of 30 hours per week over
the course of a month, in the small employer's regular place of
business, who has met any statutorily authorized applicable waiting
period requirements. The term includes sole proprietors or partners
of a partnership, if they are actively engaged on a full-time basis
in the small employer's business, and they are included as employees
under a health benefit plan of a small employer, but does not include
employees who work on a part-time, temporary, or substitute basis.
It includes any eligible employee, as defined in this paragraph, who
obtains coverage through a guaranteed association. Employees of
employers purchasing through a guaranteed association shall be deemed
to be eligible employees if they would otherwise meet the definition
except for the number of persons employed by the employer. A
permanent employee who works at least 10 hours but not more than 29
hours is deemed to be an eligible employee if all four of the
following apply:
(A) The employee otherwise meets the definition of an eligible
employee except for the number of hours worked.
(B) The employer offers the employee health coverage under a
health benefit plan.
(C) All similarly situated individuals are offered coverage under
the health benefit plan.
(D) The employee must have worked at least 10 hours per normal
workweek for at least 50 percent of the weeks in the previous
calendar quarter. The insurer may request any necessary information
to document the hours and time period in question, including, but not
limited to, payroll records and employee wage and tax filings.
(2) Any member of a guaranteed association as defined in
subdivision (z).
(g) "Enrollee" means an eligible employee or dependent who
receives health coverage through the program from a participating
carrier.
(h) "Financially impaired" means, for the purposes of this
chapter, a carrier that, on or after the effective date of this
chapter, is not insolvent and is either:
(1) Deemed by the commissioner to be potentially unable to fulfill
its contractual obligations.
(2) Placed under an order of rehabilitation or conservation by a
court of competent jurisdiction.
(i) "Fund" means the California Small Group Reinsurance Fund.
(j) "Health benefit plan" means a policy or contract written or
administered by a carrier that arranges or provides health care
benefits for the covered eligible employees of a small employer and
their dependents. The term does not include accident only, credit,
disability income, coverage of Medicare services pursuant to
contracts with the United States government, Medicare supplement,
long-term care insurance, dental, vision, coverage issued as a
supplement to liability insurance, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(k) "In force business" means an existing health benefit plan
issued by the carrier to a small employer.
(l) "Late enrollee" means an eligible employee or dependent who
has declined health coverage under a health benefit plan offered by a
small employer at the time of the initial enrollment period provided
under the terms of the health benefit plan and who subsequently
requests enrollment in a health benefit plan of that small employer,
provided that the initial enrollment period shall be a period of at
least 30 days. It also means any member of an association that is a
guaranteed association as well as any other person eligible to
purchase through the guaranteed association when that person has
failed to purchase coverage during the initial enrollment period
provided under the terms of the guaranteed association's health
benefit plan and who subsequently requests enrollment in the plan,
provided that the initial enrollment period shall be a period of at
least 30 days. However, an eligible employee, another person eligible
for coverage through a guaranteed association pursuant to
subdivision (z), or an eligible dependent shall not be considered a
late enrollee if any of the following is applicable:
(1) The individual meets all of the following requirements:
(A) He or she was covered under another employer health benefit
plan, the Healthy Families Program, the Access for Infants and
Mothers (AIM) Program, or the Medi-Cal program, or the California
Health Benefit Exchange, at the time the individual was eligible to
enroll.
(B) He or she certified at the time of the initial enrollment that
coverage under another employer health benefit plan, the Healthy
Families Program, the AIM Program, the Medi-Cal program, or the
California Health Benefit Exchange was the reason for declining
enrollment provided that, if the individual was covered under another
employer health plan, the individual was given the opportunity to
make the certification required by this subdivision and was notified
that failure to do so could result in later treatment as a late
enrollee.
(C) He or she has lost or will lose coverage under another
employer health benefit plan as a result of termination of employment
of the individual or of a person through whom the individual was
covered as a dependent, change in employment status of the
individual, or of a person through whom the individual was covered as
a dependent, the termination of the other plan's coverage, cessation
of an employer's contribution toward an employee or dependent's
coverage, death of the person through whom the individual was covered
as a dependent, legal separation, or divorce; or he or she has lost
or will lose coverage under the Healthy Families Program, the AIM
Program, the Medi-Cal program, or the California Health Benefit
Exchange.
(D) He or she requests enrollment within 30 days after termination
of coverage or employer contribution toward coverage provided under
another employer health benefit plan, or requests enrollment within
60 days after termination of Medi-Cal program coverage, AIM Program
coverage, Healthy Families Program coverage, or coverage through the
California Health Benefit Exchange.
(2) The individual is employed by an employer who offers multiple
health benefit plans and the individual elects a different plan
during an open enrollment period.
(3) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee's health benefit plan.
(4) (A) In the case of an eligible employee as defined in
paragraph (1) of subdivision (f), the carrier cannot produce a
written statement from the employer stating that the individual or
the person through whom an individual was eligible to be covered as a
dependent, prior to declining coverage, was provided with, and
signed acknowledgment of, an explicit written notice in boldface type
specifying that failure to elect coverage during the initial
enrollment period permits the carrier to impose, at the time of the
individual's later decision to elect coverage, an exclusion from
coverage for a period of 12 months as well as a six-month preexisting
condition exclusion unless the individual meets the criteria
specified in paragraph (1), (2), or (3).
(B) In the case of an eligible employee who is a guaranteed
association member, the plan cannot produce a written statement from
the guaranteed association stating that the association sent a
written notice in boldface type to all potentially eligible
association members at their last known address prior to the initial
enrollment period informing members that failure to elect coverage
during the initial enrollment period permits the plan to impose, at
the time of the member's later decision to elect coverage, an
exclusion from coverage for a period of 12 months as well as a
six-month preexisting condition exclusion unless the member can
demonstrate that he or she meets the requirements of subparagraphs
(A), (C), and (D) of paragraph (1) or meets the requirements of
paragraph (2) or (3).
(C) In the case of an employer or person who is not a member of an
association, was eligible to purchase coverage through a guaranteed
association, and did not do so, and would not be eligible to purchase
guaranteed coverage unless purchased through a guaranteed
association, the employer or person can demonstrate that he or she
meets the requirements of subparagraphs (A), (C), and (D) of
paragraph (1), or meets the requirements of paragraph (2) or (3), or
that he or she recently had a change in status that would make him or
her eligible and that application for coverage was made within 30
days of the change.
(5) The individual is an employee or dependent who meets the
criteria described in paragraph (1) and was under a COBRA
continuation provision and the coverage under that provision has been
exhausted. For purposes of this section, the definition of "COBRA"
set forth in subdivision (e) of Section 10116.5 shall apply.
(6) The individual is a dependent of an enrolled eligible employee
who has lost or will lose his or her coverage under the Healthy
Families Program, the AIM Program, the Medi-Cal program, or the
California Health Benefit Exchange, and requests enrollment within 60
days after termination of that coverage.
(7) The individual is an eligible employee who previously declined
coverage under an employer health benefit plan and who has
subsequently acquired a dependent who would be eligible for coverage
as a dependent of the employee through marriage, birth, adoption, or
placement for adoption, and who enrolls for coverage under that
employer health benefit plan on his or her behalf and on behalf of
his or her dependent within 30 days following the date of marriage,
birth, adoption, or placement for adoption, in which case the
effective date of coverage shall be the first day of the month
following the date the completed request for enrollment is received
in the case of marriage, or the date of birth, or the date of
adoption or placement for adoption, whichever applies. Notice of the
special enrollment rights contained in this paragraph shall be
provided by the employer to an employee at or before the time the
employee is offered an opportunity to enroll in plan coverage.
(8) The individual is an eligible employee who has declined
coverage for himself or herself or his or her dependents during a
previous enrollment period because his or her dependents were covered
by another employer health benefit plan at the time of the previous
enrollment period. That individual may enroll himself or herself or
his or her dependents for plan coverage during a special open
enrollment opportunity if his or her dependents have lost or will
lose coverage under that other employer health benefit plan. The
special open enrollment opportunity shall be requested by the
employee not more than 30 days after the date that the other health
coverage is exhausted or terminated. Upon enrollment, coverage shall
be effective not later than the first day of the first calendar month
beginning after the date the request for enrollment is received.
Notice of the special enrollment rights contained in this paragraph
shall be provided by the employer to an employee at or before the
time the employee is offered an opportunity to enroll in plan
coverage.
(m) "New business" means a health benefit plan issued to a small
employer that is not the carrier's in force business.
(n) "Participating carrier" means a carrier that has entered into
a contract with the program to provide health benefits coverage under
this part.
(o) "Plan of operation" means the plan of operation of the fund,
including articles, bylaws, and operating rules adopted by the fund
pursuant to Article 3 (commencing with Section 10719).
(p) "Program" means the Health Insurance Plan of California.
(q) (1) Until January 1, 2014, "preexisting condition provision"
means a policy provision that excludes coverage for charges or
expenses incurred during a specified period following the insured's
effective date of coverage, as to a condition for which medical
advice, diagnosis, care, or treatment was recommended or received
during a specified period immediately preceding the effective date of
coverage..
(2) On and after January 1, 2014, no insurer shall limit or
exclude coverage for any individual based on a preexisting condition
whether or not any medical advice, diagnosis, care, or treatment was
recommended or received before that date.
(r) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program, that is
written or administered by a disability insurer, health care service
plan, fraternal benefits society, self-insured employer plan, or any
other entity, in this state or elsewhere, and that
arranges or provides medical, hospital, and
surgical coverage not designed to supplement other private or
governmental plans. The term includes continuation or conversion
coverage but does not include accident only, credit, coverage for
onsite medical clinics, disability income, Medicare supplement,
long-term care, dental, vision, coverage issued as a supplement to
liability insurance, insurance arising out of a workers' compensation
or similar law, automobile medical payment insurance, or insurance
under which benefits are payable with or without regard to fault and
that is statutorily required to be contained in any liability
insurance policy or equivalent self-insurance.
(2) The federal Medicare Program pursuant to Title XVIII of the
federal Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the federal Public Health
Service Act, as amended by Public Law 104-191, the federal Health
Insurance Portability and Accountability Act of 1996.
(10) A health benefit plan under Section 5(e) of the federal Peace
Corps Act (22 U.S.C. Sec. 2504(e)).
(11) Any other creditable coverage as defined by subsection (c) of
Section 2701 of Title XXVII of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg(c)).
(s) "Rating period" means the period for which premium rates
established by a carrier are in effect and shall be no less than 12
months.
(t) "Risk adjusted employee risk rate" means the rate determined
for an eligible employee of a small employer in a particular risk
category after applying the risk adjustment factor.
(u) "Risk adjustment factor" means the percent adjustment to be
applied equally to each standard employee risk rate for a particular
small employer, based upon any expected deviations from standard
claims. This factor may not be more than 120 percent or less than 80
percent until July 1, 1996. Effective July 1, 1996, this factor may
not be more than 110 percent or less than 90 percent. Effective
January 1, 2014, the risk adjustment factor shall be zero.
(v) "Risk category" means the following characteristics of an
eligible employee: age, geographic region, and family size of the
employee, plus the benefit plan design selected by the small
employer.
(1) No more than the following age categories may be used in
determining premium rates:
Under 30
30-39
40-49
50-54
55-59
60-64
65 and over
However, for the 65 and over age category, separate premium rates
may be specified depending upon whether coverage under the health
benefit plan will be primary or secondary to benefits provided by the
federal Medicare Program pursuant to Title XVIII of the federal
Social Security Act. Effective January 1, 2014, the rate for age
shall not vary by more than three to one for adults.
(2) Small employer carriers shall base rates to small employers
using no more than the following family size categories:
(A) Single.
(B) Married couple.
(C) One adult and child or children.
(D) Married couple and child or children.
(3) (A) In determining rates for small employers, a carrier that
operates statewide shall use no more than nine geographic regions in
the state, have no region smaller than an area in which the first
three digits of all its ZIP Codes are in common within a county, and
shall divide no county into more than two regions. Carriers shall be
deemed to be operating statewide if their coverage area includes 90
percent or more of the state's population. Geographic regions
established pursuant to this section shall, as a group, cover the
entire state, and the area encompassed in a geographic region shall
be separate and distinct from areas encompassed in other geographic
regions. Geographic regions may be noncontiguous.
(B) In determining rates for small employers, a carrier that does
not operate statewide shall use no more than the number of geographic
regions in the state than is determined by the following formula:
the population, as determined in the last federal census, of all
counties which are included in their entirety in a carrier's service
area divided by the total population of the state, as determined in
the last federal census, multiplied by nine. The resulting number
shall be rounded to the nearest whole integer. No region may be
smaller than an area in which the first three digits of all its ZIP
Codes are in common within a county and no county may be divided into
more than two regions. The area encompassed in a geographic region
shall be separate and distinct from areas encompassed in other
geographic regions. Geographic regions may be noncontiguous. No
carrier shall have less than one geographic area.
(w) "Small employer" means either of the following:
(1) Until January 1, 2017 2014 , any
person, proprietary or nonprofit firm, corporation, partnership,
public agency, or association that is actively engaged in business or
service that, on at least 50 percent of its working days during the
preceding calendar quarter, or preceding calendar year, employed at
least 2, but not more than 50, eligible employees, the majority of
whom were employed within this state, that was not formed primarily
for purposes of buying health insurance and in which a bona fide
employer-employee relationship exists. On or after January 1,
2014, and until December 31, 2016, any person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no
more than 50, eligible employees, the majority of whom were employed
within this state, that was not formed primarily for purposes of
buying health insurance, and in which a bona fide employer-employee
relationship exists. On or after January 1, 2017, any person,
firm, proprietary or nonprofit corporation, partnership, public
agency, or association that is actively engaged in business or
service, that, on at least 50 percent of its working days during the
preceding calendar quarter or preceding calendar year, employed at
least one, but no more than 100, eligible employees, the majority of
whom were employed within this state, that was not formed primarily
for purposes of buying health benefit plans, and in which a bona fide
employer-employee relationship exists. In determining whether to
apply the calendar quarter or calendar year test, the insurer shall
use the test that ensures eligibility if only one test would
establish eligibility. In determining the number of eligible
employees, companies that are affiliated companies and that are
eligible to file a combined income tax return for purposes of state
taxation shall be considered one employer. Subsequent to the issuance
of a health benefit plan to a small employer pursuant to this
chapter, and for the purpose of determining eligibility, the size of
a small employer shall be determined annually. Except as otherwise
specifically provided, provisions of this chapter that apply to a
small employer shall continue to apply until the health benefit plan
anniversary following the date the employer no longer meets the
requirements of this definition. It includes any small employer as
defined in this paragraph who purchases coverage through a guaranteed
association, and any employer purchasing coverage for employees
through a guaranteed association.
(2) Any guaranteed association, as defined in subdivision (y),
that purchases health coverage for members of the association.
(3) On or after January 1, 2014, a self-employed individual who
obtains at least 50 percent of annual income from self-employment as
demonstrated through personal income tax filings for the current or
prior year. To the extent permitted under the federal Patient
Protection and Affordable Care Act (Public Law 111-148) and any rules
or guidance issued consistent with that law, a self-employed
individual whose modified annual gross income is anticipated to be
less than 400 percent of the federal poverty level may at his or her
discretion seek to enroll as an individual rather than a small
employer through the California Health Benefit Exchange.
(x) "Standard employee risk rate" means the rate applicable to an
eligible employee in a particular risk category in a small employer
group.
(y) "Guaranteed association" means a nonprofit organization
comprised of a group of individuals or employers who associate based
solely on participation in a specified profession or industry,
accepting for membership any individual or employer meeting its
membership criteria which (1) includes one or more small employers as
defined in paragraph (1) of subdivision (w), (2) does not condition
membership directly or indirectly on the health or claims history of
any person, (3) uses membership dues solely for and in consideration
of the membership and membership benefits, except that the amount of
the dues shall not depend on whether the member applies for or
purchases insurance offered by the association, (4) is organized and
maintained in good faith for purposes unrelated to insurance, (5) has
been in active existence on January 1, 1992, and for at least five
years prior to that date, (6) has been offering health insurance to
its members for at least five years prior to January 1, 1992, (7) has
a constitution and bylaws, or other analogous governing documents
that provide for election of the governing board of the association
by its members, (8) offers any benefit plan design that is purchased
to all individual members and employer members in this state, (9)
includes any member choosing to enroll in the benefit plan design
offered to the association provided that the member has agreed to
make the required premium payments, and (10) covers at least 1,000
persons with the carrier with which it contracts. The requirement of
1,000 persons may be met if component chapters of a statewide
association contracting separately with the same carrier cover at
least 1,000 persons in the aggregate.
This subdivision applies regardless of whether a master policy by
an admitted insurer is delivered directly to the association or a
trust formed for or sponsored by an association to administer
benefits for association members.
For purposes of this subdivision, an association formed by a
merger of two or more associations after January 1, 1992, and
otherwise meeting the criteria of this subdivision shall be deemed to
have been in active existence on January 1, 1992, if its predecessor
organizations had been in active existence on January 1, 1992, and
for at least five years prior to that date and otherwise met the
criteria of this subdivision.
(z) "Members of a guaranteed association" means any individual or
employer meeting the association's membership criteria if that person
is a member of the association and chooses to purchase health
coverage through the association. At the association's discretion, it
may also include employees of association members, association
staff, retired members, retired employees of members, and surviving
spouses and dependents of deceased members. However, if an
association chooses to include those persons as members of the
guaranteed association, the association must so elect in advance of
purchasing coverage from a plan. Health plans may require an
association to adhere to the membership composition it selects for up
to 12 months.
(aa) "Affiliation period" means a period that, under the terms of
the health benefit plan, must expire before health care services
under the plan become effective.
(ab) "Wellness incentive" or "wellness program" means a program of
health promotion or disease prevention that is designed to promote
health or prevent disease and that meets the standards of Section
10718.8.
SEC. 24. SEC. 23. Section 10705 of
the Insurance Code is amended to read:
10705. Upon the effective date of this act:
(a) No group or individual policy or contract or certificate of
group insurance or statement of group coverage providing benefits to
employees of small employers as defined in this chapter shall be
issued or delivered by a carrier subject to the jurisdiction of the
commissioner regardless of the situs of the contract or master
policyholder or of the domicile of the carrier nor, except as
otherwise provided in Sections 10270.91 and 10270.92, shall a carrier
provide coverage subject to this chapter until a copy of the form of
the policy, contract, certificate, or statement of coverage is filed
with and approved by the commissioner in accordance with Sections
10290 and 10291, and the carrier has complied with the requirements
of Section 10717.
(b) (1) Each carrier, except a self-funded employer, shall fairly
and affirmatively offer, market, and sell all of the carrier's
benefit plan designs that are sold to, offered through, or sponsored
by, small employers or associations that include small employers to
all small employers in each geographic region in which the carrier
makes coverage available or provides benefits.
(2) A carrier contracting to participate in the California Health
Benefit Exchange shall be deemed to be in compliance with paragraph
(1) for a benefit plan design offered in those geographic regions in
which the carrier participates in the California Health Benefit
Exchange.
(3) (A) A carrier shall be deemed to meet the requirements of
paragraph (1) and subdivision (c) with respect to a benefit plan
design that qualifies as a grandfathered health plan under Section
1251 of PPACA if all of the following requirements are met:
(i) The carrier offers to renew the benefit plan design, unless
the carrier withdraws the benefit plan design from the small employer
market pursuant to subdivision (e) of Section 10713.
(ii) The carrier provides appropriate notice of the grandfathered
status of the benefit plan design in any materials provided to an
insured of the design describing the benefits provided under the
design, as required under PPACA.
(iii) The carrier makes no changes to the benefits covered under
the benefit plan design other than those required by a state or
federal law, regulation, rule, or guidance and those permitted to be
made to a grandfathered health plan under PPACA.
(B) For purposes of this paragraph, "PPACA" means the federal
Patient Protection and Affordable Care Act (Public Law 111-148), as
amended by the federal Health Care and Education Reconciliation Act
of 2010 (Public Law 111-152), and any rules, regulations, or guidance
issued thereunder. For purposes of this paragraph, a "grandfathered
health plan" shall have the meaning set forth in Section 1251 of
PPACA.
(4) Nothing in this section shall be construed to require an
association, or a trust established and maintained by an association
to receive a master insurance policy issued by an admitted insurer
and to administer the benefits thereof solely for association
members, to offer, market or sell a benefit plan design to those who
are not members of the association. However, if the association
markets, offers or sells a benefit plan design to those who are not
members of the association it is subject to the requirements of this
section. This shall apply to an association that otherwise meets the
requirements of paragraph (8) formed by merger of two or more
associations after January 1, 1992, if the predecessor organizations
had been in active existence on January 1, 1992, and for at least
five years prior to that date and met the requirements of paragraph
(5).
(5) A carrier which (A) effective January 1, 1992, and at least 20
years prior to that date, markets, offers, or sells benefit plan
designs only to all members of one association and (B) does not
market, offer or sell any other individual, selected group, or group
policy or contract providing medical, hospital, and surgical benefits
shall not be required to market, offer, or sell to those who are not
members of the association. However, if the carrier markets, offers
or sells any benefit plan design or any other individual, selected
group, or group policy or contract providing medical, hospital and
surgical benefits to those who are not members of the association it
is subject to the requirements of this section.
(6) Each carrier that sells health benefit plans to members of one
association pursuant to paragraph (5) shall submit an annual
statement to the commissioner which states that the carrier is
selling health benefit plans pursuant to paragraph (5) and which, for
the one association, lists all the information required by paragraph
(7).
(7) Each carrier that sells health benefit plans to members of any
association shall submit an annual statement to the commissioner
which lists each association to which the carrier sells health
benefit plans, the industry or profession which is served by the
association, the association's membership criteria, a list of
officers, the state in which the association is organized, and the
site of its principal office.
(8) For purposes of paragraphs (4) and (5), an association is a
nonprofit organization comprised of a group of individuals or
employers who associate based solely on participation in a specified
profession or industry, accepting for membership any individual or
small employer meeting its membership criteria, which do not
condition membership directly or indirectly on the health or claims
history of any person, which uses membership dues solely for and in
consideration of the membership and membership benefits, except that
the amount of the dues shall not depend on whether the member applies
for or purchases insurance offered by the association, which is
organized and maintained in good faith for purposes unrelated to
insurance, which has been in active existence on January 1, 1992, and
at least five years prior to that date, which has a constitution and
bylaws, or other analogous governing documents which provide for
election of the governing board of the association by its members,
which has contracted with one or more carriers to offer one or more
health benefit plans to all individual members and small employer
members in this state.
(c) Each carrier shall make available to each small employer all
benefit plan designs that the carrier offers or sells to small
employers or to associations that include small employers.
Notwithstanding subdivision (d) of Section 10700, for purposes of
this subdivision, companies that are affiliated companies or that are
eligible to file a consolidated income tax return shall be treated
as one carrier.
(d) Each carrier shall do all of the following:
(1) Prepare a brochure that summarizes all of its benefit plan
designs and make this summary available to small employers, agents
and brokers upon request. The summary shall include for each benefit
plan design information on benefits provided, a generic description
of the manner in which services are provided, such as how access to
providers is limited, benefit limitations, required copayments and
deductibles, standard employee risk rates, and, until January 1,
2014, an explanation of how creditable coverage is calculated if a
preexisting condition or affiliation period is imposed, and. The
summary shall also include a telephone number that can be called for
more detailed benefit information. Carriers are required to keep the
information contained in the brochure accurate and up to date, and,
upon updating the brochure, send copies to agents and brokers
representing the carrier. Any entity that provides administrative
services only with regard to a benefit plan design written or issued
by another carrier shall not be required to prepare a summary
brochure which includes that benefit plan design.
(2) For each benefit plan design, prepare a more detailed evidence
of coverage and make it available to small employers, agents and
brokers upon request. The evidence of coverage shall contain all
information that a prudent buyer would need to be aware of in making
selections of benefit plan designs. An entity that provides
administrative services only with regard to a benefit plan design
written or issued by another carrier shall not be required to prepare
an evidence of coverage for that benefit plan design.
(3) Provide to small employers, agents, and brokers, upon request,
for any given small employer the sum of the standard employee risk
rates and the sum of the risk adjusted standard employee risk rates.
When requesting this information, small employers, agents and brokers
shall provide the carrier with the information the carrier needs to
determine the small employer's risk adjusted employee risk rate.
(4) Provide copies of the current summary brochure to all agents
or brokers who represent the carrier and, upon updating the brochure,
send copies of the updated brochure to agents and brokers
representing the carrier for the purpose of selling health benefit
plans.
(5) Notwithstanding subdivision (d) of Section 10700, for purposes
of this subdivision, companies that are affiliated companies or that
are eligible to file a consolidated income tax return shall be
treated as one carrier.
(e) Every agent or broker representing one or more carriers for
the purpose of selling health benefit plans to small employers shall
do all of the following:
(1) When providing information on a health benefit plan to a small
employer but making no specific recommendations on particular
benefit plan designs:
(A) Advise the small employer of the carrier's obligation to sell
to any small employer any of the benefit plan designs it offers to
small employers and provide them, upon request, with the actual rates
that would be charged to that employer for a given benefit plan
design.
(B) Notify the small employer that the agent or broker will
procure rate and benefit information for the small employer on any
benefit plan design offered by a carrier for whom the agent or broker
sells health benefit plans.
(C) Notify the small employer that, upon request, the agent or
broker will provide the small employer with the summary brochure
required in paragraph (1) of subdivision (d) for any benefit plan
design offered by a carrier whom the agent or broker represents.
(D) Notify the small employer of the availability of coverage
through the California Health Benefit Exchange.
(2) When recommending a particular benefit plan design or designs,
advise the small employer that, upon request, the agent will provide
the small employer with the brochure required by paragraph (1) of
subdivision (d) containing the benefit plan design or designs being
recommended by the agent or broker.
(3) Prior to filing an application for a small employer for a
particular health benefit plan:
(A) For each of the benefit plan designs offered by the carrier
whose benefit plan design the agent or broker is presenting, provide
the small employer with the benefit summary required in paragraph (1)
of subdivision (d) and the sum of the standard employee risk rates
for that particular employer.
(B) Notify the small employer that, upon request, the agent or
broker will provide the small employer with an evidence of coverage
brochure for each benefit plan design the carrier offers.
(C) Until January 1, 2014, notify the small employer that
, from July 1, 1993, to July 1, 1996, actual rates may be 20 percent
higher or lower than the sum of the standard employee risk rates,
and from July 1, 1996, and thereafter, actual rates may be
10 percent higher or lower than the sum of the standard employee risk
rates depending on how the carrier assesses the risk of the small
employer's group. On or after January 1, 2013, notify the
small employer that, effective January 1, 2014, the actual rates
shall be the same for all small employers.
(D) Until January 1, 2014, notify the small employer that, upon
request, the agent or broker will submit information to the carrier
to ascertain the small employer's sum of the risk adjusted standard
employee risk rate for any benefit plan design the carrier offers. On
or after July 1, 2013, notify the small employer of the employee
rate effective January 1, 2014.
(E) Obtain a signed statement from the small employer
acknowledging that the small employer has received the disclosures
required by this paragraph and Section 10716.
(f) No carrier, agent, or broker shall induce or otherwise
encourage a small employer to separate or otherwise exclude an
eligible employee from a health benefit plan which, in the case of an
eligible employee meeting the definition in paragraph (1) of
subdivision (f) of Section 10700, is provided in connection with the
employee's employment or which, in the case of an eligible employee
as defined in paragraph (2) of subdivision (f) of Section 17000, is
provided in connection with a guaranteed association.
(g) No carrier shall reject an application from a small employer
for a benefit plan design provided:
(1) The small employer as defined by paragraph (1) of subdivision
(w) of Section 10700 offers health benefits to 100 percent of its
eligible employees as defined in paragraph (1) of subdivision (f) of
Section 10700. Employees who waive coverage on the grounds that they
have other group coverage shall not be counted as eligible employees.
(2) The small employer agrees to make the required premium
payments.
(h) No carrier or agent or broker shall, directly or indirectly,
engage in the following activities:
(1) Encourage or direct small employers to refrain from filing an
application for coverage with a carrier because of the health status,
claims experience, industry, occupation, or geographic location
within the carrier's approved service area of the small employer or
the small employer's employees.
(2) Encourage or
direct small employers to seek coverage from another carrier or the
California Health Benefit Exchange because of the health status,
claims experience, industry, occupation, or geographic location
within the carrier's approved service area of the small employer or
the small employer's employees.
(i) (1) No carrier shall, directly or indirectly, enter into any
contract, agreement, or arrangement with an agent or broker that
provides for or results in the compensation paid to an agent or
broker for a health benefit plan to be varied because of the health
status, claims experience, industry, occupation, or geographic
location of the small employer or the small employer's employees.
This subdivision shall not apply with respect to a compensation
arrangement that provides compensation to an agent or broker on the
basis of percentage of premium, provided that the percentage shall
not vary because of the health status, claims experience, industry,
occupation, or geographic area of the small employer.
(2) Effective January 1, 2014, a carrier shall not, directly or
indirectly, enter into any contract, agreement, or arrangement with
an agent or broker that provides for or results in the compensation
paid to an agent or broker for the sale of a health benefit plan to
be varied based on whether the small employer obtains coverage
through the California Health Benefit Exchange or directly from the
health benefit plan.
(j) Except in the case of a late insured, or for satisfaction of a
preexisting condition clause in the case of initial coverage of an
eligible employee, a disability insurer may not exclude any eligible
employee or dependent who would otherwise be entitled to health care
services on the basis of any of the following: the health status, the
medical condition, including both physical and mental illnesses, the
claims experience, the medical history, the genetic information, the
disability or evidence of insurability, including conditions arising
out of acts of domestic violence of that employee or dependent, or
any other health status-related factor as determined by the
department. No health benefit plan may limit or exclude coverage for
a specific eligible employee or dependent by type of illness,
treatment, medical condition, or accident, except for preexisting
conditions as permitted by Section 10198.7 or 10708.
(k) If a carrier enters into a contract, agreement, or other
arrangement with a third-party administrator or other entity to
provide administrative, marketing, or other services related to the
offering of health benefit plans to small employers in this state,
the third-party administrator shall be subject to this chapter.
(l) (1) With respect to the obligation to provide coverage newly
issued under subdivision (d), the carrier may cease enrolling new
small employer groups and new eligible employees as defined by
paragraph (2) of subdivision (f) of Section 10700 if it certifies to
the commissioner that the number of eligible employees and
dependents, of the employers newly enrolled or insured during the
current calendar year by the carrier equals or exceeds: (A) in the
case of a carrier that administers any self-funded health benefits
arrangement in California, 10 percent of the total number of eligible
employees, or eligible employees and dependents, respectively,
enrolled or insured in California by that carrier as of December 31
of the preceding year, or (B) in the case of a carrier that does not
administer any self-funded health benefit arrangements in California,
8 percent of the total number of eligible employees, or eligible
employees and dependents, respectively, enrolled or insured by the
carrier in California as of December 31 of the preceding year.
(2) Certification shall be deemed approved if not disapproved
within 45 days after submission to the commissioner. If that
certification is approved, the small employer carrier shall not offer
coverage to any small employers under any health benefit plans
during the remainder of the current year. If the certification is not
approved, the carrier shall continue to issue coverage as required
by subdivision (d) and be subject to administrative penalties as
established in Section 10718.
SEC. 25. SEC. 24. Section 10706 of
the Insurance Code is amended to read:
10706. Every carrier shall file with the commissioner the
reasonable participation requirements and employer contribution
requirements that are to be included in its health benefit plans.
Participation requirements shall be applied uniformly among all small
employer groups, except that a carrier may vary application of
minimum employer participation requirements by the size of the small
employer group and whether the employer contributes 100 percent of
the eligible employee's premium. Employer contribution requirements
shall not vary by employer size. Employer contribution requirements
shall be consistent with the federal Patient Protection and
Affordable Care Act (Public Law 111-148). A carrier shall not
establish a participation requirement that (1) requires a person who
meets the definition of a dependent in subdivision (e) of Section
10700 to enroll as a dependent if he or she is otherwise eligible for
coverage and wishes to enroll as an eligible employee and (2) allows
a carrier to reject an otherwise eligible small employer because of
the number of persons that waive coverage due to coverage through
another employer. Members of an association eligible for health
coverage eligible under subdivision (z) of Section 10700 but not
electing any health coverage through the association shall not be
counted as eligible employees for purposes of determining whether the
guaranteed association meets a carrier's reasonable participation
standards.
SEC. 26. SEC. 25. Section 10707 of
the Insurance Code is amended to read:
10707. (a) Until January 1, 2014, except in the case of a late
enrollee, or for satisfaction of a preexisting condition clause in
the case of initial coverage of an eligible employee, a carrier may
not exclude any eligible employee or dependent who would otherwise be
covered, on the basis of an actual or expected health condition of
that employee or dependent. No health benefit plan may limit or
exclude coverage for a specific eligible employee or dependent by
type of illness, treatment, medical condition, or accident, except
for preexisting conditions as permitted by Section 10708.
(b) On or after January 1, 2014, a carrier may not exclude any
eligible employee or dependent who would otherwise by entitled to
health care services on the basis of an actual or expected health
condition of that employee or dependent. No health benefit plan may
limit or exclude coverage for a specific eligible employee or
dependent by type of illness, treatment, medical condition, or
accident, except for preexisting conditions as permitted by Section
10708.
SEC. 27. SEC. 26. Section 10708 of
the Insurance Code is amended to read:
10708. (a) (1) Until January 1, 2014, preexisting condition
provisions of health benefit plans shall not exclude coverage for a
period beyond six months following the individual's effective date of
coverage and may only relate to conditions for which medical advice,
diagnosis, care, or treatment, including the use of prescription
medications, was recommended by or received from a licensed health
practitioner during the six months immediately preceding the
effective date of coverage.
(2) Notwithstanding paragraph (1), a health benefit plan offered
to a small employer shall not impose any preexisting condition
provision upon any child under 19 years of age.
(3) On or after January 1, 2014, preexisting condition provisions
of a health benefit plan shall not exclude coverage following the
individual's effective date of coverage for a condition based on the
fact that the condition was present before the date of enrollment of
the coverage, whether or not any medical advice, diagnosis, care, or
treatment was recommended or received before that date.
(b) (1) Until January, 2014, a carrier that does not utilize a
preexisting condition provision may impose a waiting or affiliation
period, not to exceed 60 days, before the coverage issued subject to
this chapter shall become effective. During the waiting or
affiliation period, the carrier is not required to provide health
care benefits and no premiums shall be charged to the subscriber or
enrollee.
(2) On or after January 1, 2014, no waiting or affiliation period
based on a preexisting condition, health status, or any other
factor prohibited under subdivision (f) of Section 1357.03
shall be imposed.
(c) Until January 1, 2014, in determining whether a preexisting
condition provision or a waiting period applies to any person, a plan
shall credit the time the person was covered under creditable
coverage, provided the person becomes eligible for coverage under the
succeeding plan contract within 62 days of termination of prior
coverage, exclusive of any waiting or affiliation period, and applies
for coverage with the succeeding health benefit plan contract within
the applicable enrollment period. A plan shall also credit any time
an eligible employee must wait before enrolling in the health benefit
plan, including any postenrollment or employer-imposed waiting or
affiliation period. However, if a person's employment has ended, the
availability of health coverage offered through employment or
sponsored by an employer has terminated, or an employer's
contribution toward health coverage has terminated, a plan shall
credit the time the person was covered under creditable coverage if
the person becomes eligible for health coverage offered through
employment or sponsored by an employer within 180 days, exclusive of
any waiting or affiliation period, and applies for coverage under the
succeeding health benefit plan within the applicable enrollment
period.
(d) Group health benefit plans may not impose a preexisting
conditions exclusion to a condition relating to benefits for
pregnancy or maternity care.
(e) A carrier providing aggregate or specific stop loss coverage
or any other assumption of risk with reference to a health benefit
plan shall provide that the plan meets all requirements of this
section concerning preexisting condition provisions and waiting or
affiliation periods.
(f) Until January 1, 2014, in addition to the preexisting
condition exclusions authorized by subdivision (a) and the waiting or
affiliation period authorized by subdivision (b), carriers providing
coverage to a guaranteed association may impose on employers or
individuals purchasing coverage who would not be eligible for
guaranteed coverage if they were not purchasing through the
association a waiting or affiliation period, not to exceed 60 days,
before the coverage issued subject to this chapter shall become
effective. During the waiting or affiliation period, the carrier is
not required to provide health care benefits and no premiums shall be
charged to the insured.
SEC. 28. SEC. 27. Section 10709 of
the Insurance Code is amended to read:
10709. (a) (1) Until January 1, 2014, no health benefit plan may
exclude late enrollees from coverage for more than 12 months from the
date of the late enrollee's application for coverage. No premiums
shall be charged to the late enrollee until the exclusion period has
ended.
(2) On or after January 1, 2014, no health benefit plan may
exclude late enrollees from coverage for more than 90 days from the
date of the late enrollees application for coverage. No premium shall
be charged to the late enrollee until the exclusion period has
ended.
(b) A carrier providing aggregate or specific stop loss coverage
or any other assumption of risk with reference to a health benefit
plan shall provide that the plan meets all requirements of this
section concerning late enrollees.
SEC. 29. SEC. 28. Section 10714 of
the Insurance Code is amended to read:
10714. Premiums for benefit plan designs written, issued, or
administered by carriers on or after the effective date of this act,
shall be subject to the following requirements:
(a) (1) The premium for new business shall be determined for an
eligible employee in a particular risk category after applying a risk
adjustment factor to the carrier's standard employee risk rates. The
risk adjusted employee risk rate may not be more than 120 percent or
less than 80 percent of the carrier's applicable standard employee
risk rate until July 1, 1996. Effective July 1, 1996, the risk
adjusted employee risk rate may not be more than 110 percent or less
than 90 percent. Effective January 1, 2014, the risk adjustment
factor shall be zero.
(2) The premium charged a small employer for new business shall be
equal to the sum of the risk adjusted employee risk rates.
(3) The standard employee risk rates applied to a small employer
for new business shall be in effect for no less than 12 months.
(b) (1) The premium for in force business shall be determined for
an eligible employee in a particular risk category after applying a
risk adjustment factor to the carrier's standard employee risk rates.
The risk adjusted employee risk rates may not be more than 120
percent or less than 80 percent of the carrier's applicable standard
employee risk rate until July 1, 1996. Effective July 1, 1996, the
risk adjusted employee risk rate may not be more than 110 percent or
less than 90 percent. The factor effective July 1, 1996, shall apply
to in force business at the earlier of either the time of renewal or
July 1, 1997. Until January 1, 2014, the risk adjustment factor
applied to a small employer may not increase by more than 10
percentage points from the risk adjustment factor applied in the
prior rating period. On or after January 1, 2014, the risk adjustment
factor shall be zero. The risk adjustment factor for a small
employer may not be modified more frequently than every 12 months.
(2) The premium charged a small employer for in force business
shall be equal to the sum of the risk adjusted employee risk rates.
The standard employee risk rates shall be in effect for no less than
six months.
(3) For a benefit plan design that a carrier has discontinued
offering, the risk adjustment factor applied to the standard employee
risk rates for the first rating period of the new benefit plan
design that the small employer elects to purchase shall be no greater
than the risk adjustment factor applied in the prior rating period
to the discontinued benefit plan design. However, the risk adjusted
employee rate may not be more than 120 percent or less than 80
percent of the carrier's applicable standard employee risk rate until
July 1, 1996. Effective July 1, 1996, the risk adjusted employee
risk rate may not be more than 110 percent or less than 90 percent.
The factor effective July 1, 1996, shall apply to in force business
at the earlier of either the time of renewal or July 1, 1997. On or
after January 1, 2014, the risk adjustment factor shall be zero. The
risk adjustment factor for a small employer may not be modified more
frequently than every 12 months.
(c) (1) For any small employer, a carrier may, with the consent of
the small employer, establish composite employee and dependent rates
for either new business or renewal of in force business. The
composite rates shall be determined as the average of the risk
adjusted employee risk rates for the small employer, as determined in
accordance with the requirements of subdivisions (a) and (b). The
sum of the composite rates so determined shall be equal to the sum of
the risk adjusted employee risk rates for the small employer.
(2) The composite rates shall be used for all employees and
dependents covered throughout a rating period of no less than six
months, nor more than 12 months, except that a carrier may reserve
the right to redetermine the composite rates if the enrollment under
the health benefit plan changes by more than a specified percentage
during the rating period. Any redetermination of the composite rates
shall be based on the same risk adjusted employee risk rates used to
determine the initial composite rates for the rating period. If a
carrier reserves the right to redetermine the rates and the
enrollment changes more than the specified percentage, the carrier
shall redetermine the composite rates if the redetermined rates would
result in a lower premium for the small employer. A carrier
reserving the right to redetermine the composite rates based upon a
change in enrollment shall use the same specified percentage to
measure that change with respect to all small employers electing
composite rates.
SEC. 30. SEC. 29. Section 10716 of
the Insurance Code is amended to read:
10716. In connection with the offering for sale of any benefit
plan design to small employers:
Each carrier shall make a reasonable disclosure, as part of its
solicitation and sales materials, of the following:
(a) Until January 1, 2014, the extent to which the premium rates
for a specified small employer are established or adjusted in part
based upon the actual or expected variation in claims costs or actual
or expected variation in health conditions of the employees and
dependents of the small employer.
(b) The provisions concerning the carrier's ability to change
premium rates and the factors other than claim experience which
affect changes in premium rates.
(c) Provisions relating to the guaranteed issue of policies and
contracts.
(d) Until January 1, 2014, provisions relating to the effect of
any preexisting condition provision.
(e) Provisions relating to the small employer's right to apply for
any benefit plan design written, issued, or administered by the
carrier at the time of application for a new health benefit plan, or
at the time of renewal of a health benefit plan.
(f) The availability, upon request, of a listing of all the
carrier's benefit plan designs, including the rates for each benefit
plan design.
SEC. 31. SEC. 30. Section 10717 of
the Insurance Code is amended to read:
10717. (a) No carrier shall provide or renew coverage subject to
this chapter until it has done all of the following:
(1) A statement has been filed with the commissioner listing all
of the carrier's benefit plan designs currently in force that are
offered or proposed to be offered for sale in this state, identified
by form number, and, if previously approved by the commissioner, the
date approved by the commissioner as well as, until January 1, 2014,
the standard employee risk rate for each risk category for each
benefit plan design and the highest and lowest risk adjustment
factors that the carrier intends to use in determining rates for each
benefit plan design. When filing a new benefit plan design pursuant
to Section 10705, carriers may submit both the policy form and, until
January 1, 2014, the standard employee risk rates for each risk
category at the same time.
(2) Until January 1, 2014:
(A) Thirty days expires after that statement is filed without
written notice from the commissioner specifying the reasons for his
or her opinion that the carrier's risk categories or risk adjustment
factors do not comply with the requirements of this chapter.
(B) Prior to that time the commissioner gives the carrier written
notice that the carrier's risk categories and risk adjustment factors
as filed comply with the requirements of this chapter.
(b) No carrier shall issue, deliver, renew, or revise a benefit
plan design lawfully provided pursuant to subdivision (a), and no
carrier shall change the risk categories, risk adjustment factors, or
standard employee risk rates for any benefit plan design until all
of the following requirements are met:
(1) The carrier files with the commissioner a statement of the
specific changes which the carrier proposes in the risk categories,
risk adjustment factors, or standard employee risk rates.
(2) Until January 1, 2014:
(A) Thirty days expires after such statement is filed without
written notice from the commissioner specifying the reasons for his
or her opinion that the carrier's risk categories or risk adjustment
factors do not comply with the requirements of this chapter.
(B) Prior to that time the commissioner gives the carrier written
notice that the carrier's risk categories and risk adjustment factors
as filed comply with the requirements of this chapter.
(c) Notwithstanding any provision to the contrary, until January
1, 2014, when a carrier is changing the standard employee risk rates
of a benefit plan design lawfully provided under (a) or (b) above but
is not changing the risk categories or risk adjustment factors which
have been previously authorized, the carrier need not comply with
the requirements of paragraph (2) of subdivision (b), but instead
shall submit the revised standard employee risk rates for the benefit
plan design prior to offering or renewing the benefit plan design.
(d) When submitting filings under subdivision (a), (b), or (c), a
carrier may also file with the commissioner at the time of the
filings, until January 1, 2014, a statement of the standard employee
risk rate for each risk category the carrier intends to use for each
month in the 12 months subsequent to the date of the filing. Once the
requirements of the applicable subdivision (a), (b), or (c), have
been met, these rates, until January 1, 2014, shall be used by the
carrier for the 12-month period unless the carrier is otherwise
informed by the commissioner in his or her response to the filings
submitted under subdivision (a), (b), or (c), provided that any
subsequent change in the standard employee risk rates charged by the
carrier which differ from those previously filed with the
commissioner must be newly filed in accordance with this subdivision
and provided that the carrier does not change the risk categories or
risk adjustment factors for the benefit plan design.
(e) Until January 1, 2014, if the commissioner notifies the
carrier, in writing, that the carrier's risk categories or risk
adjustment factors do not comply with the requirements of this
chapter, specifying the reasons for his or her opinion, it is
unlawful for the carrier, at any time after the receipt of such
notice, to utilize the noncomplying health benefit plan, benefit plan
design, risk categories, or risk adjustment factors in conjunction
with the health benefit plans or benefit plan designs for which the
filing was made.
(f) Each carrier shall maintain at its principal place of business
copies of all information required to be filed with the commissioner
pursuant to this section.
(g) Each carrier shall make the information and documentation
described in this section available to the commissioner upon request.
(h) Nothing in this section shall be construed to permit the
commissioner to establish or approve the rates charged to
policyholders for health benefit plans.
(i) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
SEC. 32. SEC. 31. Section 10717 is
added to the Insurance Code, to read:
10717. (a) No carrier shall provide or renew coverage subject to
this chapter until it has filed a statement with the commissioner
listing all of the carrier's benefit plan designs currently in force
that are offered or proposed to be offered for sale in this state,
identified by form number, and, if previously approved by the
commissioner, and the date approved by the commissioner.
(b) Each carrier shall maintain at its principal place of business
copies of all information required to be filed with the commissioner
pursuant to this section.
(c) Each carrier shall make the information and documentation
described in this section available to the commissioner upon request.
(d) Nothing in this section shall be construed to limit the
commissioner's authority to enforce the rating practices set forth in
this chapter.
(e) This section shall become operative on January 1, 2014.
SEC. 33. Section 10718.8 is added to the
Insurance Code, to read:
10718.8. On or after January 1, 2012, if a carrier offers a
wellness program pursuant to a health benefit plan issued pursuant to
this article, the wellness program shall meet the following
requirements:
(a) A rebate, discount, or other incentive offered under the
wellness program will not result in a variation in the premium of
greater than 1.2 to one and is not offered for copayments,
deductibles, or any other out-of-pocket costs for basic health care
services or prescription drug benefits, as described in this article.
(b) The wellness program meets the following standards:
(1) Is demonstrated by scientific evidence to improve health
outcomes as documented by peer-reviewed scientific evidence involving
multiple studies over time as demonstrated by the plan to the
department.
(2) Has approval of the department on an experimental basis as
part of the scientific research or a clinical trial that is conducted
by a recognized academic institution for a period not to exceed 24
months and that is expected to lead to the publication of
peer-reviewed scientific evidence.
(3) Is not based on an individual satisfying a standard that is
related to a health status factor, including the following:
(A) Health status.
(B) Medical condition, including both physical and mental
illnesses.
(C) Claims experience.
(D) Receipt of health care.
(E) Medical history.
(F) Genetic information.
(G) Evidence of insurability.
(H) Disability.
(I) Any other health status-related factor determined by guidance
issued pursuant to the federal Patient Protection and Affordable Care
Act (Public Law 111-148) or by the department through regulations.
(4) Is not related to or statistically correlated with any of the
following:
(A) Medical history, risk factors, or health status indicators of
any kind.
(B) Genetic predisposition.
(C) Age.
(D) Race or ethnicity.
(5) Does not make the cost of coverage exceed that provided under
the federal Patient Protection and Affordable Care Act (Public Law
111-148).
(6) Does not violate any of the following:
(A) The federal Americans with Disabilities Act.
(B) The federal Genetic Information Nondiscrimination Act.
(C) The federal Age Discrimination in Employment Act.
(D) The federal Civil Rights Act of 1964 or the Unruh Civil Rights
Act if the program would result in or cause disparate treatment on
the basis of race, gender, or national origin.
SEC. 34. SEC. 32. 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.