BILL NUMBER: SB 615 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 6, 2012
AMENDED IN ASSEMBLY JUNE 18, 2012
AMENDED IN SENATE MAY 10, 2011
AMENDED IN SENATE APRIL 13, 2011
INTRODUCED BY Senator Calderon
FEBRUARY 18, 2011
An act to amend Sections 742.20 and
Section 742.40 of the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 615, as amended, Calderon. Multiple employer welfare
arrangements: benefits.
Commencing January 1, 2014, existing law, the federal Patient
Protection and Affordable Care Act (PPACA), requires a health
insurance issuer that offers coverage in the small group or
individual market to ensure that such coverage includes the essential
health benefits package, as defined. Under existing federal law, a
health insurance issuer, defined to include an insurance company,
insurance service, or insurance organization including a health
maintenance organization and excluding a group health plan, that
offers health insurance coverage in the individual or small group
market is required to ensure that such coverage includes the
essential health benefits package. Commencing January 1, 2014,
existing law requires specified individuals to ensure that they are
covered under minimum essential coverage and a penalty is required to
be imposed for failure to comply with that requirement.
Existing law prohibits a self-funded or partially self-funded
multiple employer welfare arrangement (MEWA) from providing any
benefits for any resident of this state without obtaining a
certificate of compliance from the Insurance Commissioner. Existing
law imposes various eligibility requirements on a self-funded or
partially self-funded MEWA in order to obtain a certificate of
compliance, including, among other things, that it be a nonprofit
corporation, that it be established and maintained by a specified
association with at least 200 paid members, and that benefits be
only offered only to association
members.
Under existing law, a self-funded or partially self-funded MEWA
is limited to providing certain benefits that include, among other
things, medical, dental, and surgical benefits. Under existing law, a
MEWA is required to offer health care coverage benefits to any newly
eligible person and his or her dependents under terms and conditions
no less favorable than those offered to the MEWA employers' existing
employees and their dependents under specified circumstances.
This bill would, commencing January 1, 2014, prohibit a MEWA from
offering, issuing, selling, or renewing health care coverage benefits
unless the MEWA discloses whether the benefits constitute minimum
essential coverage, as defined under existing federal law.
This bill would, commencing January 1, 2014, prohibit a MEWA from
offering, marketing, representing, or selling any product, contract,
or discount arrangement as minimum essential coverage or as compliant
with the essential health benefits requirement under the federal
Patient Protection and Affordable Care Act, unless it meets the
applicable requirements under that act.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 742.20 of the Insurance Code
is amended to read:
742.20. The Legislature finds and declares the following:
(a) An alternative to insurance programs, health care maintenance
organizations, and panel provider organizations was established by
Congress in 1974 through the Employee Retirement Income Security Act
(ERISA). Among the various employee benefit programs established and
governed by ERISA are multiple employer welfare arrangements (MEWA),
which are subject as well to state regulatory and fiscal standards
not inconsistent with ERISA. MEWAs permit employer members of trade
associations to create trust funds for the purpose of offering and
providing health care benefits to their employees. MEWAs can be
created as fully insured or self-funded or partially self-funded
benefit programs.
(b) The Legislature recognizes that some MEWAs provide an
alternative mechanism to traditional health insurance for small
employers. It is the intent of the Legislature to ensure the
financial integrity of those MEWA programs that are already in
existence by requiring self-funded or partially self-funded MEWAs to
obtain a certificate of compliance from the Department of Insurance.
In order for the Department of Insurance to grant a certificate of
compliance, the MEWA must adhere to standards set forth in this act
which are not inconsistent with the provisions of ERISA. Further, it
is the intent of the Legislature to provide the Department of
Insurance with the authority to levy monetary penalties and to revoke
certificates of compliance from MEWAs that violate the provisions of
this act.
(c) The federal Patient Protection and Affordable Care Act enacted
various health care coverage market reforms that become operative on
January 1, 2014. It is the intent of the Legislature to encourage
MEWAs regulated by this article to provide certain essential health
benefits to the extent not inconsistent with ERISA.
(d) The Legislature has passed significant reforms in the area of
small group health insurance. This article, in no manner, circumvents
these reforms nor is it intended to be a precedent to do so.
Therefore, the small group reform legislation applies to MEWAs to the
extent it is not inconsistent with ERISA.
(e) The provisions of this article are consistent with and
authorized by ERISA, which confers upon the states limited authority
to regulate MEWAs.
SEC. 2. SECTION 1. Section 742.40 of
the Insurance Code is amended to read:
742.40. (a) A multiple employer welfare arrangement shall offer
health care coverage benefits to any new eligible person and his or
her dependents under terms and conditions no less favorable to those
offered to their employers' existing employees and their dependents,
if the newly eligible person had health care benefit coverage with
either the same or a different multiple employer welfare arrangement
within 31 days. The new coverage shall comply with existing
eligibility rules of the multiple employer welfare arrangement.
(b) A multiple employer welfare arrangement shall comply with the
requirements set forth in Sections 10198.7 and 10198.9.
(c) Notwithstanding any other provision of law, commencing January
1, 2014, a multiple employer welfare arrangement shall not offer,
issue, sell, or renew health care coverage benefits unless the
multiple employer welfare arrangement discloses in all marketing
material and solicitations whether the benefits constitute minimum
essential coverage as defined in Section 5000A(f) of Title 26 of the
Internal Revenue Code and any rules or regulations adopted
thereunder.
(c) Notwithstanding any other provision of law, commencing January
1, 2014, a multiple employer welfare arrangement shall not offer,
market, represent, or sell any product, contract, or discount
arrangement as minimum essential coverage or as compliant with the
essential health benefits requirement under the federal Patient
Protection and Affordable Care Act, unless it meets the applicable
requirements under that act.