BILL NUMBER: SB 122	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Price

                        JANUARY 24, 2011

   An act to amend Section 1373 of the Health and Safety Code, and to
amend Section 10277 of the Insurance Code, relating to health care
coverage, and declaring the urgency thereof, to take effect
immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 122, as introduced, Price. Health care coverage: dependents.
   Existing law, the federal Patient Protection and Affordable Care
Act, requires a health insurance issuer issuing group or individual
coverage that provides dependent coverage of children to continue to
make that coverage available for an adult child until the child
attains 26 years of age with respect to plan years beginning on or
after September 23, 2010. Regulations promulgated under that
provision require issuers to provide certain dependents who have lost
or been denied coverage an opportunity to enroll, as specified.
Issuers of retiree-only plans or of excepted benefits are not
required to comply with those dependent coverage requirements.
   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. Existing law also
provides for the regulation of health insurers by the Department of
Insurance. Existing law prohibits the limiting age for dependent
children covered by health care service plan contracts and health
insurance policies from being less than 26 years of age with respect
to plan or policy years beginning on or after September 23, 2010,
except for certain group contracts and policies for plan or policy
years beginning before January 1, 2014, as specified. Existing law
requires plans and insurers to provide certain dependents who have
lost or been denied coverage an opportunity to enroll, as specified.
   This bill would exempt from those dependent coverage requirements
health care service plans or health insurance policies that provide
only excepted benefits and retiree-only plans or policies.
   This bill would declare that it is to take effect immediately as
an urgency statute.
   Vote: 2/3. Appropriation: no. Fiscal committee: no. State-mandated
local program: no.


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

  SECTION 1.  Section 1373 of the Health and Safety Code is amended
to read:
   1373.  (a) A plan contract may not provide an exception for other
coverage if the other coverage is entitlement to Medi-Cal benefits
under Chapter 7 (commencing with Section 14000) or Chapter 8
(commencing with Section 14200) of Part 3 of Division 9 of the
Welfare and Institutions Code, or Medicaid benefits under Subchapter
19 (commencing with Section 1396) of Chapter 7 of Title 42 of the
United States Code.
   Each plan contract shall be interpreted not to provide an
exception for the Medi-Cal or Medicaid benefits.
   A plan contract shall not provide an exemption for enrollment
because of an applicant's entitlement to Medi-Cal benefits under
Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing
with Section 14200) of Part 3 of Division 9 of the Welfare and
Institutions Code, or Medicaid benefits under Subchapter 19
(commencing with Section 1396) of Chapter 7 of Title 42 of the United
States Code.
   A plan contract may not provide that the benefits payable
thereunder are subject to reduction if the individual insured has
entitlement to the Medi-Cal or Medicaid benefits.
   (b) A plan contract that provides coverage, whether by specific
benefit or by the effect of general wording, for sterilization
operations or procedures shall not impose any disclaimer, restriction
on, or limitation of, coverage relative to the covered individual's
reason for sterilization.
   As used in this section, "sterilization operations or procedures"
shall have the same meaning as that specified in Section 10120 of the
Insurance Code.
   (c) Every plan contract that provides coverage to the spouse or
dependents of the subscriber or spouse shall grant immediate accident
and sickness coverage, from and after the moment of birth, to each
newborn infant of any subscriber or spouse covered and to each minor
child placed for adoption from and after the date on which the
adoptive child's birth parent or other appropriate legal authority
signs a written document, including, but not limited to, a health
facility minor release report, a medical authorization form, or a
relinquishment form, granting the subscriber or spouse the right to
control health care for the adoptive child or, absent this written
document, on the date there exists evidence of the subscriber's or
spouse's right to control the health care of the child placed for
adoption. No plan may be entered into or amended if it contains any
disclaimer, waiver, or other limitation of coverage relative to the
coverage or insurability of newborn infants of, or children placed
for adoption with, a subscriber or spouse covered as required by this
subdivision.
   (d) (1) Every plan contract that provides that coverage of a
dependent child of a subscriber shall terminate upon attainment of
the limiting age for dependent children specified in the plan, shall
also provide that attainment of the limiting age shall not operate to
terminate the coverage of the child while the child is and continues
to meet both of the following criteria:
   (A) Incapable of self-sustaining employment by reason of a
physically or mentally disabling injury, illness, or condition.
   (B) Chiefly dependent upon the subscriber for support and
maintenance.
   (2) The plan shall notify the subscriber that the dependent child'
s coverage will terminate upon attainment of the limiting age unless
the subscriber submits proof of the criteria described in
subparagraphs (A) and (B) of paragraph (1) to the plan within 60 days
of the date of receipt of the notification. The plan shall send this
notification to the subscriber at least 90 days prior to the date
the child attains the limiting age. Upon receipt of a request by the
subscriber for continued coverage of the child and proof of the
criteria described in subparagraphs (A) and (B) of paragraph (1), the
plan shall determine whether the child meets that criteria before
the child attains the limiting age. If the plan fails to make the
determination by that date, it shall continue coverage of the child
pending its determination.
   (3) The plan may subsequently request information about a
dependent child whose coverage is continued beyond the limiting age
under this subdivision but not more frequently than annually after
the two-year period following the child's attainment of the limiting
age.
   (4) If the subscriber changes carriers to another plan or to a
health insurer, the new plan or insurer shall continue to provide
coverage for the dependent child. The new plan or insurer may request
information about the dependent child initially and not more
frequently than annually thereafter to determine if the child
continues to satisfy the criteria in subparagraphs (A) and (B) of
paragraph (1). The subscriber shall submit the information requested
by the new plan or insurer within 60 days of receiving the request.
   (5) (A) Except as set forth in subparagraph (B), under no
circumstances shall the limiting age be less than 26 years of age
with respect to plan years beginning on or after September 23, 2010.
   (B) For plan years beginning before January 1, 2014, a group
health care service plan contract that qualifies as a grandfathered
health plan under Section 1251 of the federal Patient Protection and
Affordable Care Act (Public Law 111-148) and that makes available
dependent coverage of children may exclude from coverage an adult
child who has not attained the age of 26 years only if the adult
child is eligible to enroll in an eligible employer-sponsored health
plan, as defined in Section 5000A(f)(2) of the Internal Revenue Code,
other than a group health plan of a parent.
   (C) (i) With respect to a child (I) whose coverage under a group
or individual plan contract ended, or who was denied or not eligible
for coverage under a group or individual plan contract, because under
the terms of the contract the availability of dependent coverage of
children ended before the attainment of 26 years of age, and (II) who
becomes eligible for that coverage by reason of the application of
this paragraph, the health care service plan shall give the child an
opportunity to enroll that shall continue for at least 30 days. This
opportunity and the notice described in clause (ii) shall be provided
not later than the first day of the first plan year beginning on or
after September 23, 2010, consistent with 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 additional federal guidance or
regulations issued by the United States Secretary of Health and Human
Services.
   (ii) The health care service plan shall provide written notice
stating that a dependent described in clause (i) who has not attained
the age of 26 years is eligible to enroll in the plan for coverage.
This notice may be provided to the dependent's parent on behalf of
the dependent. If the notice is included with other enrollment
materials for a group plan, the notice shall be prominent.
   (iii) In the case of an individual who enrolls under this
subparagraph, coverage shall take effect no later than the first day
of the first plan year beginning on or after September 23, 2010.
   (iv) A dependent enrolling in a group health plan for coverage
pursuant to this subparagraph shall be treated as a special enrollee
as provided under the rules of Section 146.117(d) of Title 45 of the
Code of Federal Regulations. The health care service plan shall offer
the recipient of the notice all of the benefit packages available to
similarly situated individuals who did not lose coverage by reason
of cessation of dependent status. Any difference in benefits or
cost-sharing requirements shall constitute a different benefit
package. A dependent enrolling in a group health plan for coverage
pursuant to this subparagraph shall not be required to pay more for
coverage than similarly situated individuals who did not lose
coverage by reason of cessation of dependent status.
   (D) Nothing in this section shall require a health care service
plan to make coverage available for a child of a child receiving
dependent coverage. Nothing in this section shall be construed to
modify the definition of "dependent" as used in the Revenue and
Taxation Code with respect to the tax treatment of the cost of
coverage. 
   (E) This paragraph shall not apply to retiree-only plans or plans
that provide only excepted benefits, as defined in subsection (c) of
Section 300gg-91 of Title 42 of the United States Code. 
   (e) A plan contract that provides coverage, whether by specific
benefit or by the effect of general wording, for both an employee and
one or more covered persons dependent upon the employee and provides
for an extension of the coverage for any period following a
termination of employment of the employee shall also provide that
this extension of coverage shall apply to dependents upon the same
terms and conditions precedent as applied to the covered employee,
for the same period of time, subject to payment of premiums, if any,
as required by the terms of the policy and subject to any applicable
collective bargaining agreement.
   (f) A group contract shall not discriminate against handicapped
persons or against groups containing handicapped persons. Nothing in
this subdivision shall preclude reasonable provisions in a plan
contract against liability for services or reimbursement of the
handicap condition or conditions relating thereto, as may be allowed
by rules of the director.
   (g) Every group contract shall set forth the terms and conditions
under which subscribers and enrollees may remain in the plan in the
event the group ceases to exist, the group contract is terminated, or
an individual subscriber leaves the group, or the enrollees'
eligibility status changes.
   (h) (1) A health care service plan or specialized health care
service plan may provide for coverage of, or for payment for,
professional mental health services, or vision care services, or for
the exclusion of these services. If the terms and conditions include
coverage for services provided in a general acute care hospital or an
acute psychiatric hospital as defined in Section 1250 and do not
restrict or modify the choice of providers, the coverage shall extend
to care provided by a psychiatric health facility as defined in
Section 1250.2 operating pursuant to licensure by the State
Department of Mental Health. A health care service plan that offers
outpatient mental health services but does not cover these services
in all of its group contracts shall communicate to prospective group
contractholders as to the availability of outpatient coverage for the
treatment of mental or nervous disorders.
   (2) No plan shall prohibit the member from selecting any
psychologist who is licensed pursuant to the Psychology Licensing Law
(Chapter 6.6 (commencing with Section 2900) of Division 2 of the
Business and Professions Code), any optometrist who is the holder of
a certificate issued pursuant to Chapter 7 (commencing with Section
3000) of Division 2 of the Business and Professions Code or, upon
referral by a physician and surgeon licensed pursuant to the Medical
Practice Act (Chapter 5 (commencing with Section 2000) of Division 2
of the Business and Professions Code), (A) any marriage and family
therapist who is the holder of a license under Section 4980.50 of the
Business and Professions Code, (B) any licensed clinical social
worker who is the holder of a license under Section 4996 of the
Business and Professions Code, (C) any registered nurse licensed
pursuant to Chapter 6 (commencing with Section 2700) of Division 2 of
the Business and Professions Code, who possesses a master's degree
in psychiatric-mental health nursing and is listed as a
psychiatric-mental health nurse by the Board of Registered Nursing,
or (D) any advanced practice registered nurse certified as a clinical
nurse specialist pursuant to Article 9 (commencing with Section
2838) of Chapter 6 of Division 2 of the Business and Professions Code
who participates in expert clinical practice in the specialty of
psychiatric-mental health nursing, to perform the particular services
covered under the terms of the plan, and the certificate holder is
expressly authorized by law to perform these services.
   (3) Nothing in this section shall be construed to allow any
certificate holder or licensee enumerated in this section to perform
professional mental health services beyond his or her field or fields
of competence as established by his or her education, training, and
experience.
   (4) For the purposes of this section, "marriage and family
therapist" means a licensed marriage and family therapist who has
received specific instruction in assessment, diagnosis, prognosis,
and counseling, and psychotherapeutic treatment of premarital,
marriage, family, and child relationship dysfunctions that is
equivalent to the instruction required for licensure on January 1,
1981.
   (5) Nothing in this section shall be construed to allow a member
to select and obtain mental health or psychological or vision care
services from a certificate holder or licenseholder who is not
directly affiliated with or under contract to the health care service
plan or specialized health care service plan to which the member
belongs. All health care service plans and individual practice
associations that offer mental health benefits shall make reasonable
efforts to make available to their members the services of licensed
psychologists. However, a failure of a plan or association to comply
with the requirements of the preceding sentence shall not constitute
a misdemeanor.
   (6) As used in this subdivision, "individual practice association"
means an entity as defined in subsection (5) of Section 1307 of the
federal Public Health Service Act (42 U.S.C. Sec. 300e-1(5)).
   (7) Health care service plan coverage for professional mental
health services may include community residential treatment services
that are alternatives to inpatient care and that are directly
affiliated with the plan or to which enrollees are referred by
providers affiliated with the plan.
   (i) If the plan utilizes arbitration to settle disputes, the plan
contracts shall set forth the type of disputes subject to
arbitration, the process to be utilized, and how it is to be
initiated.
   (j) A plan contract that provides benefits that accrue after a
certain time of confinement in a health care facility shall specify
what constitutes a day of confinement or the number of consecutive
hours of confinement that are requisite to the commencement of
benefits.
   (k) If a plan provides coverage for a dependent child who is over
26 years of age and enrolled as a full-time student at a secondary or
postsecondary educational institution, the following shall apply:
   (1) Any break in the school calendar shall not disqualify the
dependent child from coverage.
   (2) If the dependent child takes a medical leave of absence, and
the nature of the dependent child's injury, illness, or condition
would render the dependent child incapable of self-sustaining
employment, the provisions of subdivision (d) shall apply if the
dependent child is chiefly dependent on the subscriber for support
and maintenance.
   (3) (A) If the dependent child takes a medical leave of absence
from school, but the nature of the dependent child's injury, illness,
or condition does not meet the requirements of paragraph (2), the
dependent child's coverage shall not terminate for a period not to
exceed 12 months or until the date on which the coverage is scheduled
to terminate pursuant to the terms and conditions of the plan,
whichever comes first. The period of coverage under this paragraph
shall commence on the first day of the medical leave of absence from
the school or on the date the physician determines the illness
prevented the dependent child from attending school, whichever comes
first. Any break in the school calendar shall not disqualify the
dependent child from coverage under this paragraph.
   (B) Documentation or certification of the medical necessity for a
leave of absence from school shall be submitted to the plan at least
30 days prior to the medical leave of absence from the school, if the
medical reason for the absence and the absence are foreseeable, or
30 days after the start date of the medical leave of absence from
school and shall be considered prima facie evidence of entitlement to
coverage under this paragraph.
   (4) This subdivision shall not apply to a specialized health care
service plan or to a Medicare supplement plan.
  SEC. 2.  Section 10277 of the Insurance Code is amended to read:
   10277.  (a) A group health insurance policy that provides that
coverage of a dependent child of an employee or other member of the
covered group shall terminate upon attainment of the limiting age for
dependent children specified in the policy, shall also provide that
attainment of the limiting age shall not operate to terminate the
coverage of the child while the child is and continues to meet both
of the following criteria:
   (1) Incapable of self-sustaining employment by reason of a
physically or mentally disabling injury, illness, or condition.
   (2) Chiefly dependent upon the employee or member for support and
maintenance.
   (b) The insurer shall notify the employee or member that the
dependent child's coverage will terminate upon attainment of the
limiting age unless the employee or member submits proof of the
criteria described in paragraphs (1) and (2) of subdivision (a) to
the insurer within 60 days of the date of receipt of the
notification. The insurer shall send this notification to the
employee or member at least 90 days prior to the date the child
attains the limiting age. Upon receipt of a request by the employee
or member for continued coverage of the child and proof of the
criteria described in paragraphs (1) and (2) of subdivision (a), the
insurer shall determine whether the dependent child meets that
criteria before the child attains the limiting age. If the insurer
fails to make the determination by that date, it shall continue
coverage of the child pending its determination.
   (c) The insurer may subsequently request information about a
dependent child whose coverage is continued beyond the limiting age
under subdivision (a), but not more frequently than annually after
the two-year period following the child's attainment of the limiting
age.
   (d) If the employee or member changes carriers to another insurer
or to a health care service plan, the new insurer or plan shall
continue to provide coverage for the dependent child. The new plan or
insurer may request information about the dependent child initially
and not more frequently than annually thereafter to determine if the
child continues to satisfy the criteria in paragraphs (1) and (2) of
subdivision (a). The employee or member shall submit the information
requested by the new plan or insurer within 60 days of receiving the
request.
   (e) If a group health insurance policy provides coverage for a
dependent child who is over 26 years of age and enrolled as a
full-time student at a secondary or postsecondary educational
institution, the following shall apply:
   (1) Any break in the school calendar shall not disqualify the
dependent child from coverage.
   (2)  If the dependent child takes a medical leave of absence, and
the nature of the dependent child's injury, illness, or condition
would render the dependent child incapable of self-sustaining
employment, the provisions of subdivision (a) shall apply if the
dependent child is chiefly dependent on the policyholder for support
and maintenance.
   (3) (A) If the dependent child takes a medical leave of absence
from school, but the nature of the dependent child's injury, illness,
or condition does not meet the requirements of paragraph (2), the
dependent child's coverage shall not terminate for a period not to
exceed 12 months or until the date on which the coverage is scheduled
to terminate pursuant to the terms and conditions of the policy,
whichever comes first. The period of coverage under this paragraph
shall commence on the first day of the medical leave of absence from
the school or on the date the physician determines the illness
prevented the dependent child from attending school, whichever comes
first. Any break in the school calendar shall not disqualify the
dependent child from coverage under this paragraph.
   (B) Documentation or certification of the medical necessity for a
leave of absence from school shall be submitted to the insurer at
least 30 days prior to the medical leave of absence from the school,
if the medical reason for the absence and the absence are
foreseeable, or 30 days after the start date of the medical leave of
absence from school and shall be considered prima facie evidence of
entitlement to coverage under this paragraph.
   (4) This subdivision shall not apply to a policy of specialized
health insurance, Medicare supplement insurance, CHAMPUS-supplement
or TRICARE-supplement insurance policies, or to hospital-only,
accident-only, or specified disease insurance policies that reimburse
for hospital, medical, or surgical benefits.
   (f) (1) Except as set forth in paragraph (2), under no
circumstances shall the limiting age under a group or individual
health insurance policy that provides coverage of a dependent child
be less than 26 years of age with respect to policy years beginning
on or after September 23, 2010.
   (2) For policy years beginning before January 1, 2014, a group
health insurance policy that qualifies as a grandfathered health plan
under Section 1251 of the federal Patient Protection and Affordable
Care Act (Public Law 111-148) and that makes available dependent
coverage of children may exclude from coverage an adult child who has
not attained the age of 26 years only if the adult child is eligible
to enroll in an eligible employer-sponsored health plan, as defined
in Section 5000A(f)(2) of the Internal Revenue Code, other than a
group health plan or policy of a parent.
   (3) (A) With respect to a child (i) whose coverage under a group
or individual health insurance policy ended, or who was denied or not
eligible for coverage under a group or individual health insurance
policy, because under the terms of the policy the availability of
dependent coverage of children ended before the attainment of 26
years of age, and (ii) who becomes eligible for that coverage by
reason of the application of this subdivision, the health insurer
shall give the child an opportunity to enroll that shall continue for
at least 30 days. This opportunity and the notice described in
subparagraph (B) shall be provided not later than the first day of
the first policy year beginning on or after September 23, 2010,
consistent with 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
additional federal guidance or regulations issued by the United
States Secretary of Health and Human Services.
   (B) The health insurer shall provide written notice stating that a
dependent described in subparagraph (A) who has not attained the age
of 26 years is eligible to apply for coverage. This notice may be
provided to the dependent's parent on behalf of the dependent. If the
notice is included with enrollment materials for a group policy, the
notice shall be prominent.
   (C) In the case of an individual who enrolls under this paragraph,
coverage shall take effect no later than the first day of the first
policy year beginning on or after September 23, 2010.
   (D) A dependent enrolling in coverage under a group policy
pursuant to this paragraph shall be treated as a special enrollee as
provided under the rules of Section 146.117(d) of Title 45 of the
Code of Federal Regulations. The health insurer shall offer the
recipient of the notice all of the benefit packages available to
similarly situated individuals who did not lose coverage by reason of
cessation of dependent status. Any difference in benefit or
cost-sharing requirements shall constitute a different benefit
package. A dependent enrolling in coverage under a group policy
pursuant to this paragraph shall not be required to pay more for
coverage than similarly situated individuals who did not lose
coverage by reason of cessation of dependent status.
   (4) Nothing in this section shall require a health insurer to make
coverage available for a child of a child receiving dependent
coverage. Nothing in this section shall be construed to modify the
definition of "dependent" as used in the Revenue and Taxation Code
with respect to the tax treatment of the cost of coverage. 
   (5) This subdivision shall not apply to retiree-only policies or
policies that provide only excepted benefits, as defined in
subsection (c) of Section 300gg-91 of Title 42 of the United States
Code. 
  SEC. 3.  This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
   In order to provide clarification in the law with regard to
exemptions that apply to certain health care service plans and health
insurance policies at the earliest possible time, it is necessary
that this act take effect immediately.