BILL NUMBER: AB 1461	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 29, 2012
	PASSED THE ASSEMBLY  AUGUST 31, 2012
	AMENDED IN SENATE  AUGUST 24, 2012
	AMENDED IN SENATE  AUGUST 21, 2012
	AMENDED IN ASSEMBLY  APRIL 9, 2012

INTRODUCED BY   Assembly Member Monning
   (Principal coauthor: Senator Hernandez)

                        JANUARY 9, 2012

   An act to amend Sections 1363 and 1399.829 of, to amend the
heading of Article 11.7 (commencing with Section 1399.825) of Chapter
2.2 of Division 2 of, to add Section 1399.836 to, to add Article
11.8 (commencing with Section 1399.845) to Chapter 2.2 of Division 2
of, and to repeal Section 1399.816 of, the Health and Safety Code,
and to amend Section 10965.3 of the Insurance Code, relating to
health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1461, Monning. Individual health care coverage.
   (1) Existing federal law, the federal Patient Protection and
Affordable Care Act (PPACA) enacts various health care coverage
market reforms that take effect January 1, 2014. Among other things,
PPACA requires each health insurance issuer that offers health
insurance coverage in the individual or group market in a state to
accept every employer and individual in the state that applies for
that coverage and to renew that coverage at the option of the plan
sponsor or the individual. PPACA prohibits a group health plan and a
health insurance issuer offering group or individual health insurance
coverage from imposing any preexisting condition exclusion with
respect to that plan or coverage. PPACA allows the premium rate
charge by a health insurance issuer offering small group or
individual coverage to vary only by family composition, rating area,
age, and tobacco use, as specified, and prohibits discrimination
against individuals based on health status.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law requires plans offering
coverage in the individual market to offer coverage for a child
subject to specified requirements.
   This bill would require a plan, on and after October 1, 2013, to
offer, market, and sell all of the plan's health benefit plans that
are sold in the individual market to all individuals and dependents
in each service area in which the plan provides or arranges for the
provision of health care services, with coverage effective on or
after January 1, 2014, as specified, but would require plans to limit
enrollment in individual health benefit plans to specified open
enrollment and special enrollment periods. The bill would prohibit
these health benefit plans from imposing any preexisting condition
upon any individual. Commencing January 1, 2014, the bill would
prohibit a plan from conditioning the issuance or offering of
individual health benefit plans on any health status-related factor,
as specified, and would authorize plans to use only age, geographic
region, and whether the plan covers an individual or family for
purposes of establishing rates for individual health benefit plans,
as specified. The bill would require a health care service plan to
issue a specified notice at least 60 days prior to the renewal date
of an individual grandfathered health plan to all subscribers of the
plan. The bill would make certain of these provisions inoperative if
the corresponding provisions of PPACA are repealed and would make
other related conforming changes.
   Because a willful violation of the bill's requirements with
respect to health care service plans would be a crime, the bill would
impose a state-mandated local program.
   (2) PPACA requires health insurance issuers to provide a summary
of benefits and coverage explanation pursuant to specified standards
to applicants and enrollees or policyholders.
   Existing law requires health care service plans to use disclosure
forms that contain specified information regarding the contracts
issued by the plan, including the benefits and coverage of the
contract, and the exceptions, reductions, and limitations that apply
to the contract. Existing law requires health care service plans that
offer individual or small group coverage to also provide a uniform
health plan benefits and coverage matrix containing the plan's major
provisions, as specified.
   This bill would authorize the Department of Managed Health Care to
waive or modify those requirements for purposes of compliance with
PPACA through issuance of all-plan letters until January 1, 2015.
   (3) The bill would provide that it shall become operative only if
SB 961 of the 2011-12 Regular Session is also enacted.
   (4) 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.


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

  SECTION 1.  Section 1363 of the Health and Safety Code is amended
to read:
   1363.  (a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding the
benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner. The
director may require that the materials be presented in a reasonably
uniform manner so as to facilitate comparisons between plan contracts
of the same or other types of plans. Nothing contained in this
chapter shall preclude the director from permitting the disclosure
form to be included with the evidence of coverage or plan contract.
   The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:
   (1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.
   (2) The exceptions, reductions, and limitations that apply to the
plan.
   (3) The full premium cost of the plan.
   (4) Any copayment, coinsurance, or deductible requirements that
may be incurred by the member or the member's family in obtaining
coverage under the plan.
   (5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to change
premiums.
   (6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:
   (A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.
   (ii) States, with respect to individual plan contracts, small
group plan contracts, and any other group plan contracts for which
health care services are not negotiated, that the applicant has a
right to view the evidence of coverage prior to enrollment, and, if
the evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.
   (B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that individuals
with special health care needs should read carefully those sections
that apply to them.
   (C) Includes the plan's telephone number or numbers that may be
used by an applicant to receive additional information about the
benefits of the plan or a statement where the telephone number or
numbers are located in the disclosure form.
   (D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the disclosure
form shall state where the health plan benefits and coverage matrix
is located.
   (E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.
   (7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.
   (8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.
   (9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.
   (10) If the plan utilizes arbitration to settle disputes, a
statement of that fact.
   (11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.
   (12) A description of any limitations on the patient's choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient's choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.
   (13) General authorization requirements for referral by a primary
care physician to a specialty care physician or a nonphysician health
care practitioner.
   (14) Conditions and procedures for disenrollment.
   (15) A description as to how an enrollee may request continuity of
care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.
   (16) Information concerning the right of an enrollee to request an
independent review in accordance with Article 5.55 (commencing with
Section 1374.30).
   (17) A notice as required by Section 1364.5.
   (b) (1) As of July 1, 1999, the director shall require each plan
offering a contract to an individual or small group to provide with
the disclosure form for individual and small group plan contracts a
uniform health plan benefits and coverage matrix containing the plan'
s major provisions in order to facilitate comparisons between plan
contracts. The uniform matrix shall include the following category
descriptions together with the corresponding copayments and
limitations in the following sequence:
   (A) Deductibles.
   (B) Lifetime maximums.
   (C) Professional services.
   (D) Outpatient services.
   (E) Hospitalization services.
   (F) Emergency health coverage.
   (G) Ambulance services.
   (H) Prescription drug coverage.
   (I) Durable medical equipment.
   (J) Mental health services.
   (K) Chemical dependency services.
   (L) Home health services.
   (M) Other.
   (2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:


THIS MATRIX IS INTENDED TO BE USED TO HELP YOU COMPARE COVERAGE
BENEFITS AND IS A SUMMARY ONLY. THE EVIDENCE OF COVERAGE AND PLAN
CONTRACT SHOULD BE CONSULTED FOR A DETAILED DESCRIPTION OF COVERAGE
BENEFITS AND LIMITATIONS.


   (c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.
   (d) All plans, solicitors, and representatives of a plan shall,
when presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with a
properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.
   (e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.
   (f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.
   (g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in the
group contract that may be less favorable to subscribers or
enrollees.
   (h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the plan
shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals and
with groups of the same or similar size for the plan's preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.
   (i) Subdivision (b) shall not apply to any coverage provided by a
plan for the Medi-Cal program or the Medicare program pursuant to
Title XVIII and Title XIX of the Social Security Act.
   (j) The department may waive or modify the requirements of this
section for the purpose of resolving duplication or conflict with
federal requirements for uniform benefit disclosure in effect
pursuant to Section 2715 of the federal Public Health Service Act and
the regulations adopted thereunder. The department shall implement
this subdivision in a manner that preserves disclosure requirements
of this section that exceed or are not in direct conflict with
federal requirements. Notwithstanding the Administrative Procedure
Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of
Division 3 of Title 2 of the Government Code), the department shall
implement this section through issuance of all-plan letters until
January 1, 2015.
  SEC. 2.  Section 1399.816 of the Health and Safety Code is
repealed.
  SEC. 3.  The heading of Article 11.7 (commencing with Section
1399.825) of Chapter 2.2 of Division 2 of the Health and Safety Code
is amended to read:

      Article 11.7.  Child Access to Health Care Coverage


  SEC. 4.  Section 1399.829 of the Health and Safety Code is amended
to read:
   1399.829.  (a) A health care service plan may use the following
characteristics of an eligible child for purposes of establishing the
rate of the plan contract for that child, where consistent with
federal regulations under PPACA: age, geographic region, and family
composition, plus the health care service plan contract selected by
the child or the responsible party for the child.
   (b) From the effective date of this article to December 31, 2013,
inclusive, rates for a child applying for coverage shall be subject
to the following limitations:
   (1) During any open enrollment period or for late enrollees, the
rate for any child due to health status shall not be more than two
times the standard risk rate for a child.
   (2) The rate for a child shall be subject to a 20-percent
surcharge above the highest allowable rate on a child applying for
coverage who is not a late enrollee and who failed to maintain
coverage with any health care service plan or health insurer for the
90-day period prior to the date of the child's application. The
surcharge shall apply for the 12-month period following the effective
date of the child's coverage.
   (3) If expressly permitted under PPACA and any rules, regulations,
or guidance issued pursuant to that act, a health care service plan
may rate a child based on health status during any period other than
an open enrollment period if the child is not a late enrollee.
   (4) If expressly permitted under PPACA and any rules, regulations,
or guidance issued pursuant to that act, a health care service plan
may condition an offer or acceptance of coverage on any preexisting
condition or other health status-related factor for a period other
than an open enrollment period and for a child who is not a late
enrollee.
   (c) For any individual health care service plan contract issued,
sold, or renewed prior to December 31, 2013, the health plan shall
provide to a child or responsible party for a child a notice that
states the following:

   "Please consider your options carefully before failing to maintain
or renewing coverage for a child for whom you are responsible. If
you attempt to obtain new individual coverage for that child, the
premium for the same coverage may be higher than the premium you pay
now."

   (d) A child who applied for coverage between September 23, 2010,
and the end of the initial open enrollment period shall be deemed to
have maintained coverage during that period.
   (e) Effective January 1, 2014, except for individual grandfathered
health plan coverage, the rate for any child shall be identical to
the standard risk rate.
   (f) Health care service plans shall not require documentation from
applicants relating to their coverage history.
   (g) (1) On and after January 1, 2013, and until January 1, 2014, a
health care service plan shall provide a notice to all applicants
for coverage under this article and to all enrollees, or the
responsible party for an enrollee, renewing coverage under this
article that contains the following information:
   (A) Information about the open enrollment period provided under
Section 1399.849.
   (B) An explanation that obtaining coverage during the open
enrollment period described in Section 1399.849 will not affect the
effective dates of coverage for coverage purchased pursuant to this
article unless the applicant cancels that coverage.
   (C) An explanation that coverage purchased pursuant to this
section shall be effective as required under subdivision (d) of
Section 1399.826 and that such coverage shall not prevent an
applicant from obtaining new coverage during the open enrollment
period described in Section 1399.849.
   (D) Information about the Medi-Cal program and the Healthy
Families Program and about subsidies available through the California
Health Benefit Exchange.
   (2) The notice described in paragraph (1) shall be in plain
language and 14-point type.
   (3) The department may adopt a model notice to be used by health
care service plans in order to comply with this subdivision, and
shall consult with the Department of Insurance in adopting that model
notice. Use of the model notice shall not require prior approval of
the department. Any model notice designated by the department for
purposes of this section shall not be subject to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).
  SEC. 5.  Section 1399.836 is added to the Health and Safety Code,
to read:
   1399.836.  Commencing January 1, 2014, in the event of a conflict
between the provisions of this chapter and the provisions of Chapter
11.8 (commencing with Section 1399.845), the provisions of Chapter
11.8 (commencing with Section 1399.845) shall prevail, except where
subdivision (j) of Section 1399.849 or subdivision (e) of Section
1399.855 makes any of the provisions of Chapter 11.8 (commencing with
Section 1399.845) inoperative, in which case the provisions of this
chapter and the operative provisions of Chapter 11.8 (commencing with
Section 1399.845) shall be harmonized to the extent permitted by
federal law.
  SEC. 6.  Article 11.8 (commencing with Section 1399.845) is added
to Chapter 2.2 of Division 2 of the Health and Safety Code, to read:

      Article 11.8.  Individual Access to Health Care Coverage


   1399.845.  For purposes of this article, the following definitions
shall apply:
   (a) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
   (b) "Dependent" means the spouse or registered domestic partner,
or child, of an individual, subject to applicable terms of the health
benefit plan.
   (c) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
   (d) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
   (e) "Health benefit plan" means any individual or group health
care service plan contract that provides medical, hospital, and
surgical benefits. The term does not include a specialized health
care service plan contract, a health care service plan conversion
contract offered pursuant to Section 1373.6, a health care service
plan contract provided in the Medi-Cal program (Chapter 7 (commencing
with Section 14000) of Part 3 of Division 9 of the Welfare and
Institutions Code), the Healthy Families Program (Part 6.2
(commencing with Section 12693) of Division 2 of the Insurance Code),
the Access for Infants and Mothers Program (Part 6.3 (commencing
with Section 12695) of Division 2 of the Insurance Code), or the
program under Part 6.4 (commencing with Section 12699.50) of Division
2 of the Insurance Code, a health care service plan contract offered
to a federally eligible defined individual under Article 4.6
(commencing with Section 1366.35), or Medicare supplement coverage,
to the extent consistent with PPACA.
   (f) "Policy year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
   (g) "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 pursuant to that law.
   (h) "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.
   (i) "Qualified health plan" has the same meaning as that term is
defined in Section 1301 of PPACA.
   (j) "Rating period" means the period for which premium rates
established by a plan are in effect.
   (k) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
   1399.847.  Every health care service plan offering individual
health benefit plans shall, in addition to complying with the
provisions of this chapter and rules adopted thereunder, comply with
the provisions of this article.
   1399.849.  (a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan's
health benefit plans that are sold in the individual market for
policy years on or after January 1, 2014, to all individuals and
dependents in each service area in which the plan provides or
arranges for the provision of health care services. A plan shall
limit enrollment in individual health benefit plans to open
enrollment periods and special enrollment periods as provided in
subdivisions (c) and (d).
   (2) A plan that offers qualified health plans through the Exchange
shall be deemed to be in compliance with paragraph (1) with respect
to an individual health benefit plan offered through the Exchange in
those geographic regions in which the plan offers health benefit
plans through the Exchange.
   (3) A plan shall allow the subscriber of an individual health
benefit plan to add a dependent to the subscriber's plan at the
option of the subscriber, consistent with the open enrollment, annual
enrollment, and special enrollment period requirements in this
section.
   (4) A health care service plan offering coverage in the individual
market shall not reject the request of a subscriber during an open
enrollment period to include a dependent of the subscriber as a
dependent on an existing individual health benefit plan.
   (b) An individual health benefit plan issued, amended, or renewed
on or after January 1, 2014, shall not impose any preexisting
condition provision upon any individual.
   (c) A plan shall provide an initial open enrollment period from
October 1, 2013, to March 31, 2014, inclusive, and annual enrollment
periods for plan years on or after January 1, 2015, from October 15
to December 7, inclusive, of the preceding calendar year.
   (d) (1) Subject to subdivision (e), commencing January 1, 2014, a
plan shall allow an individual to enroll in or change individual
health benefit plans offered outside the Exchange as a result of the
following triggering events:
   (A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, both of the following
definitions shall apply:
   (i) "Minimum essential coverage" has the same meaning as that term
is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).
   (ii) "Loss of minimum essential coverage" includes loss of that
coverage due to the circumstances described in Section 54.9801-6(a)
(3)(i) to (iii), inclusive, of Title 26 of the Code of Federal
Regulations. "Loss of minimum essential coverage" does not include
loss of that coverage due to the individual's failure to pay premiums
on a timely basis or situations allowing for a rescission, subject
to Section 1389.21.
   (B) He or she gains a dependent or becomes a dependent.
   (C) He or she is mandated to be covered pursuant to a valid state
or federal court order.
   (D) He or she has been released from incarceration.
   (E) His or her health benefit plan substantially violated a
material provision of the contract.
   (F) He or she gains access to new health benefit plans as a result
of a permanent move.
   (G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845 or
Section 10965 of the Insurance Code, for one of the conditions
described in subdivision (c) of Section 1373.96 and that provider is
no longer participating in the health benefit plan.
   (2) Subject to subdivision (e), commencing January 1, 2014, a
health insurer shall allow an individual to enroll in or change
individual health benefit plans offered through the Exchange as a
result of the triggering events listed in Section 155.420(d) of Title
45 of the Code of Federal Regulations. To the extent permitted by
federal law, any triggering event described in paragraph (1) that is
not listed in Section 155.420(d)(1) to (8), inclusive, of Title 45 of
the Code of Federal Regulations shall be considered an exceptional
circumstance under Section 155.420(d)(9) of Title 45 of the Code of
Federal Regulations.
   (e) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the date
of a triggering event identified in subdivision (d) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in subdivision (d) to select a plan
offered through the Exchange.
   (f) With respect to individual health benefit plans offered
outside the Exchange, after an individual submits a completed
application form for a plan, the health care service plan shall,
within 30 days, notify the individual of the individual's actual
premium charges for that plan established in accordance with Section
1399.855. The individual shall have 30 days in which to exercise the
right to buy coverage at the quoted premium charges.
   (g) (1) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during the
initial open enrollment period described in subdivision (c), when the
subscriber submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked, whichever
occurs earlier, by December 15, 2013, coverage under the individual
health benefit plan shall become effective no later than January 1,
2014. When that payment is delivered or postmarked within the first
15 days of any subsequent month, coverage shall become effective no
later than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and December 31,
2013, inclusive, or after the 15th day of any subsequent month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.
   (2) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during the
annual open enrollment period described in subdivision (c), when the
individual submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked, whichever
occurs later, by December 15, coverage shall become effective as of
the following January 1. When that payment is delivered or postmarked
within the first 15 days of any subsequent month, coverage shall
become effective no later than the first day of the following month.
When that payment is delivered or postmarked between December 16 and
December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day of
the second month following delivery or postmark of the payment.
   (3) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during a special
enrollment period described in subdivision (d), the following
provisions shall apply:
   (A) When the individual submits a premium payment, based on the
quoted premium charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the month,
coverage under the plan shall become effective no later than the
first day of the following month.
   (B) When the premium payment is neither delivered nor postmarked
until after the 15th day of the month, coverage shall become
effective no later than the first day of the second month following
delivery or postmark of the payment.
   (C) Notwithstanding subparagraph (A) or (B), in the case of a
birth, adoption, or placement for adoption, the coverage shall be
effective on the date of birth, adoption, or placement for adoption.
   (D) Notwithstanding subparagraph (A) or (B), in the case of
marriage or becoming a registered domestic partner or in the case
where a qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the following
month.
   (4) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage selected
pursuant to this section shall be the same as the applicable date
specified in Section 155.410 or 155.420 of Title 45 of the Code of
Federal Regulations.
   (h) (1) On or after January 1, 2014, a health care service plan
shall not establish rules for eligibility, including continued
eligibility, of any individual to enroll under the terms of an
individual health benefit plan based on any of the following factors:

                                             (A) Health status.
   (B) Medical condition, including physical and mental illnesses.
   (C) Claims experience.
   (D) Receipt of health care.
   (E) Medical history.
   (F) Genetic information.
   (G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
   (H) Disability.
   (I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.
   (2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her dependent to
fill out a health assessment or medical questionnaire prior to
enrollment under an individual health benefit plan. A health care
service plan shall not acquire or request information that relates to
a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
   (i) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
   (j) The following provisions of this section shall become
inoperative if Section 2702 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-1), as added by Section 1201 of PPACA, is
repealed:
   (1) Subdivision (a).
   (2) Subdivisions (c), (d), (e), and (g), except as they relate to
health benefit plans offered through the Exchange.
   1399.851.  (a) Commencing January 1, 2014, no health care service
plan or solicitor shall, directly or indirectly, engage in the
following activities:
   (1) Encourage or direct an individual to refrain from filing an
application for individual coverage with a plan because of the health
status, claims experience, industry, occupation, or geographic
location, provided that the location is within the plan's approved
service area, of the individual.
   (2) Encourage or direct an individual to seek individual coverage
from another plan or health insurer or the California Health Benefit
Exchange because of the health status, claims experience, industry,
occupation, or geographic location, provided that the location is
within the plan's approved service area, of the individual.
   (b) Commencing January 1, 2014, a health care service 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 an individual health
benefit plan to be varied because of the health status, claims
experience, industry, occupation, or geographic location of the
individual. 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 individual.
   1399.853.  (a) All individual health benefit plans shall conform
to the requirements of Sections 1365, 1366.3, 1367.001, and 1373.6,
and any other requirements imposed by this chapter, and shall be
renewable at the option of the enrollee except as permitted to be
canceled, rescinded, or not renewed pursuant to Section 1365.
   (b) Any plan that ceases to offer for sale new individual health
benefit plans pursuant to Section 1365 shall continue to be governed
by this article with respect to business conducted under this
article.
   1399.855.  (a) With respect to individual health benefit plans
issued, amended, or renewed on or after January 1, 2014, a health
care service plan may use only the following characteristics of an
individual, and any dependent thereof, for purposes of establishing
the rate of the individual health benefit plan covering the
individual and the eligible dependents thereof, along with the health
benefit plan selected by the individual:
   (1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services pursuant to Section
2701(a)(3) of the federal Public Health Service Act (42 U.S.C. Sec.
300gg(a)(3)). Rates based on age shall be determined based on the
individual's birthday and shall not vary by more than three to one
for adults.
   (2) (A) Geographic region. The geographic regions for purposes of
rating shall be the following:
   (i) Region 1 shall consist of the Counties of Alpine, Del Norte,
Siskiyou, Modoc, Lassen, Shasta, Trinity, Humboldt, Tehama, Plumas,
Nevada, Sierra, Mendocino, Lake, Butte, Glenn, Sutter, Yuba, Colusa,
Amador, Calaveras, and Tuolumne.
   (ii) Region 2 shall consist of the Counties of Napa, Sonoma,
Solano, and Marin.
   (iii) Region 3 shall consist of the Counties of Sacramento,
Placer, El Dorado, and Yolo.
   (iv) Region 4 shall consist of the County of San Francisco.
   (v) Region 5 shall consist of the County of Contra Costa.
   (vi) Region 6 shall consist of the County of Alameda.
   (vii) Region 7 shall consist of the County of Santa Clara.
   (viii) Region 8 shall consist of the County of San Mateo.
   (ix) Region 9 shall consist of the Counties of Santa Cruz,
Monterey, and San Benito.
   (x) Region 10 shall consist of the Counties of San Joaquin,
Stanislaus, Merced, Mariposa, and Tulare.
   (xi) Region 11 shall consist of the Counties of Madera, Fresno,
and Kings.
   (xii) Region 12 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.
   (xiii) Region 13 shall consist of the Counties of Mono, Inyo, and
Imperial.
   (xiv) Region 14 shall consist of the County of Kern.
   (xv) Region 15 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.
   (xvi) Region 16 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (xv).
   (xvii) Region 17 shall consist of the Counties of San Bernardino
and Riverside.
   (xviii) Region 18 shall consist of the County of Orange.
   (xix) Region 19 shall consist of the County of San Diego.
   (B) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review the
geographic rating regions specified in this paragraph and the impacts
of those regions on the health care coverage market in California,
and make a report to the appropriate policy committees of the
Legislature.
   (3) Whether the health benefit plan covers an individual or
family, as described in PPACA.
   (b) The rate for a health benefit plan subject to this section
shall not vary by any factor not described in this section.
   (c) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.
   (d) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
   (e) This section shall become inoperative if Section 2701 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg), as added by
Section 1201 of PPACA, is repealed.
   1399.857.  A health care service plan shall not be required to
offer an individual health benefit plan or accept applications for
the plan pursuant to this article in the case of any of the
following:
   (a) To an individual who does not work or reside within the plan's
approved service areas.
   (b) (1) Within a specific service area or portion of a service
area, if the plan reasonably anticipates and demonstrates to the
satisfaction of the director that it will not have sufficient health
care delivery resources to ensure that health care services will be
available and accessible to the individual because of its obligations
to existing enrollees.
   (2) A health care service plan that cannot offer an individual
health benefit plan to individuals because it is lacking in
sufficient health care delivery resources within a service area or a
portion of a service area may not offer a health benefit plan in the
area in which the plan is not offering coverage to individuals to new
employer groups until the plan notifies the director that it has the
ability to deliver services to individuals, and certifies to the
director that from the date of the notice it will enroll all
individuals requesting coverage in that area from the plan.
   (3) Nothing in this article shall be construed to limit the
director's authority to develop and implement a plan of
rehabilitation for a health care service plan whose financial
viability or organizational and administrative capacity has become
impaired.
   1399.859.  The director may require a health care service plan to
discontinue the offering of individual health benefit plans or
acceptance of applications from any individual upon a determination
by the director that the plan does not have sufficient financial
viability or organizational and administrative capacity to ensure the
delivery of health care services to its enrollees. In determining
whether the conditions of this section have been met, the director
shall consider, but not be limited to, the plan's compliance with the
requirements of Section 1367, Article 6 (commencing with Section
1375.1), and the rules adopted under those provisions.
   1399.860.  (a) On or before October 1, 2013, and annually
thereafter, a health care service plan shall issue the following
notice to all subscribers enrolled in an individual health benefit
plan that is a grandfathered health plan:

   New improved health insurance options are available in California.
You currently have health insurance that is exempt from many of the
new requirements. For instance, your plan may not include certain
consumer protections that apply to other plans, such as the
requirement for the provision of preventive health services without
any cost sharing and the prohibition against increasing your rates
based on your health status. You have the option to remain in your
current plan or switch to a new plan. Under the new rules, a health
plan cannot deny your application based on any health conditions you
may have. For more information about your options, please contact the
California Health Benefit Exchange, the Office of Patient Advocate,
your plan representative, an insurance broker, or a health care
navigator.

   (b) A health care service plan shall include the notice described
in subdivision (a) in any renewal material of the individual
grandfathered health plan and in any application for dependent
coverage under the individual grandfathered health plan.
   1399.861.  Except as otherwise provided in this article, this
article shall be implemented to the extent that it meets or exceeds
the requirements set forth in 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 pursuant to
that law.
  SEC. 7.  Section 10965.3 of the Insurance Code, as added by Section
5 of Senate Bill 961 of the 2011-12 Regular Session, is amended to
read:
   10965.3.  (a) (1) On and after October 1, 2013, a health insurer
shall fairly and affirmatively offer, market, and sell all of the
insurer's health benefit plans that are sold in the individual market
for policy years on or after January 1, 2014, to all individuals and
dependents in each service area in which the insurer provides or
arranges for the provision of health care services. An insurer shall
limit enrollment in individual health benefit plans to open
enrollment periods and special enrollment periods as provided in
subdivisions (c) and (d).
   (2) A health insurer that offers qualified health plans through
the Exchange shall be deemed to be in compliance with paragraph (1)
with respect to an individual health benefit plan offered through the
Exchange in those geographic regions in which the insurer offers
health benefit plans through the Exchange.
   (3) A health insurer shall allow the policyholder of an individual
health benefit plan to add a dependent to the policyholder's health
benefit plan at the option of the policyholder, consistent with the
open enrollment, annual enrollment, and special enrollment period
requirements in this section.
   (4) A health insurer offering coverage in the individual market
shall not reject the request of a policyholder during an open
enrollment period to include a dependent of the policyholder as a
dependent on an existing individual health benefit plan.
   (b) An individual health benefit plan issued, amended, or renewed
shall not impose any preexisting condition provision upon any
individual.
   (c) A health insurer shall provide an initial open enrollment
period from October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for plan years on or after January 1, 2015, from
October 15 to December 7, inclusive, of the preceding calendar year.
   (d) (1) Subject to subdivision (e), commencing January 1, 2014, a
health insurer shall allow an individual to enroll in or change
individual health benefit plans offered outside the Exchange as a
result of the following triggering events:
   (A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, both of the following
definitions shall apply:
   (i) "Minimum essential coverage" has the same meaning as that term
is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).
   (ii) "Loss of minimum essential coverage" includes loss of that
coverage due to the circumstances described in Section 54.9801-6(a)
(3)(i) to (iii), inclusive, of Title 26 of the Code of Federal
Regulations. "Loss of minimum essential coverage" does not include
loss of that coverage due to the individual's failure to pay premiums
on a timely basis or situations allowing for a rescission, subject
to Section 10384.17.
   (B) He or she gains a dependent or becomes a dependent.
   (C) He or she is mandated to be covered pursuant to a valid state
or federal court order.
   (D) He or she has been released from incarceration.
   (E) His or her health benefit plan substantially violated a
material provision of the policy.
   (F) He or she gains access to new health benefit plans as a result
of a permanent move.
   (G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 or
Section 1399.845 of the Health and Safety Code, for one of the
conditions described in subdivision (a) of Section 10133.56 and that
provider is no longer participating in the health benefit plan.
   (2) Subject to subdivision (e), commencing January 1, 2014, a
health insurer shall allow an individual to enroll in or change
individual health benefit plans offered through the Exchange as a
result of the triggering events listed in Section 155.420(d) of Title
45 of the Code of Federal Regulations. To the extent permitted by
federal law, any triggering event described in paragraph (1) that is
not listed in Section 155.420(d)(1) to (8), inclusive, of Title 45 of
the Code of Federal Regulations shall be considered an exceptional
circumstance under Section 155.420(d)(9) of Title 45 of the Code of
Federal Regulations.
   (e) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the date
of a triggering event identified in subdivision (d) to apply for
coverage from a health benefit plan subject to this section. With
respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in subdivision (d) to select a plan
offered through the Exchange.
   (f) With respect to individual health benefit plans offered
outside the Exchange, after an individual submits a completed
application form for a plan, the insurer shall, within 30 days,
notify the individual of the individual's actual premium charges for
that plan established in accordance with Section 10965.9. The
individual shall have 30 days in which to exercise the right to buy
coverage at the quoted premium charges.
   (g) (1) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during the
initial open enrollment period described in subdivision (c), when the
individual submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked, whichever
occurs earlier, by December 15, 2013, coverage under the individual
health benefit plan shall become effective no later than January 1,
2014. When that payment is delivered or postmarked within the first
15 days of any subsequent month, coverage shall become effective no
later than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and December 31,
2013, inclusive, or after the 15th day of any subsequent month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.
   (2) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during the
annual open enrollment period described in subdivision (c), when the
individual submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked, whichever
occurs later, by December 15, coverage shall become effective as of
the following January 1. When that payment is delivered or postmarked
within the first 15 days of any subsequent month, coverage shall
become effective no later than the first day of the following month.
When that payment is delivered or postmarked between December 16 and
December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day of
the second month following delivery or postmark of the payment.
   (3) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during a special
enrollment period described in subdivision (d), the following
provisions shall apply:
   (A) When the individual submits a premium payment, based on the
quoted premium charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the month,
coverage under the plan shall become effective no later than the
first day of the following month.
   (B) When the premium payment is neither delivered nor postmarked
until after the 15th day of the month, coverage shall become
effective no later than the first day of the second month following
delivery or postmark of the payment.
   (C) Notwithstanding subparagraph (A) or (B), in the case of a
birth, adoption, or placement for adoption, the coverage shall be
effective on the date of birth, adoption, or placement for adoption.
   (D) Notwithstanding subparagraph (A) or (B), in the case of
marriage or becoming a registered domestic partner or in the case
where a qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the following
month.
   (4) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage selected
pursuant to this section shall be the same as the applicable date
specified in Section 155.410 or 155.420 of Title 45 of the Code of
Federal Regulations.
   (h) (1) On or after January 1, 2014, a health insurer shall not
establish rules for eligibility, including continued eligibility, of
any individual to enroll under the terms of an individual health
benefit plan based on any of the following factors:
   (A) Health status.
   (B) Medical condition, including physical and mental illnesses.
   (C) Claims experience.
   (D) Receipt of health care.
   (E) Medical history.
   (F) Genetic information.
   (G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
   (H) Disability.
   (I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.
   (2) Notwithstanding subdivision (c) of Section 10291.5, a health
insurer shall not require an individual applicant or his or her
dependent to fill out a health assessment or medical questionnaire
prior to enrollment under an individual health benefit plan. A health
insurer shall not acquire or request information that relates to a
health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
   (i) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
   (j) The following provisions of this section shall become
inoperative if Section 2702 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-1), as added by Section 1201 of PPACA, is
repealed:
   (1) Subdivision (a).
   (2) Subdivisions (c), (d), (e), and (g), except as they relate to
health benefit plans offered through the Exchange.
  SEC. 8.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.
  SEC. 9.  This act shall become operative only if Senate Bill 961 of
the 2011-12 Regular Session is enacted and takes effect.