BILL NUMBER: SB 961 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 9, 2012
INTRODUCED BY Senator Hernandez
(Principal coauthor: Assembly Member Monning)
JANUARY 10, 2012
An act to add Section 1374.59 to the Health and Safety
Code, relating to health care service plans amend
Sections 1357.51 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
Article 11.7 (commencing with Section 1399.825) of Chapter 2.2 of
Division 2 of, the Health and Safety Code, and to amend Sections
10198.7 and 10954 of, to amend the heading of Chapter 9.7 (commencing
with Section 10950) of Part 2 of Division 2 of, to add Section 10961
to, to add Chapter 9.8 (commencing with Section 10965) to Part 2 of
Division 2 of, and to repeal Chapter 9.7 (commencing with
Section 10950) of Part 2 of Division 2 of, the Insurance Code,
relating to health care coverage .
LEGISLATIVE COUNSEL'S DIGEST
SB 961, as amended, Hernandez. Health care service plans.
Individual health care coverage.
Existing 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 licensing 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 also provides for the licensing and
regulation of health insurers by the Insurance
Commissioner. The California Health Benefit Exchange is
governed by a board and the board is required to facilitate
enrollment of qualified individuals in qualified health plans.
Existing law requires plans and insurers offering
coverage in the individual market to offer coverage for a child
subject to specified requirements.
This bill would prohibit a health care service plan contract or
health insurance policy issued, amended, or renewed on or after
January 1, 2014, from imposing any preexisting condition provision
upon any individual, except as specified. The bill would require a
plan or insurer, on and after January 1, 2014, to offer, market, and
sell all of the plan's health benefit plans that are sold in the
individual market to all individuals in each service area in which
the plan provides or arranges for the provision of health care
services, but would require plans and insurers to limit enrollment to
specified open enrollment and special enrollment periods. Commencing
January 1, 2014, the bill would prohibit a plan or insurer from
conditioning the issuance or offering of individual health benefit
plans on any health status-related factor, as specified, and would
authorize plans and insurers to use only age, geographic region, and
family size for purposes of establishing rates for individual health
benefit plans. The bill would enact other related provisions and make
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.
Existing federal law, the federal Patient Protection and
Affordable Care Act, commencing on and after January 1, 2014,
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 requires the issuer to renew that coverage. Existing federal law,
commencing on and after January 1, 2014, prohibits discriminatory
premium rates charged by a health insurance issuer for health
insurance coverage offered in the individual or small group market,
as specified, and also prohibits discrimination against individuals
based on health status. Existing federal law, commencing on and after
January 1, 2014, except as otherwise specified, 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.
This bill would, to the extent requried by federal law, require a
health care service plan contract to comply with these federal
requirements. The bill would require the department to consult and
coordinate with the commissioner and the Exchange in carrying out
these provisions.
Because a willful violation of these provisions would constitute 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 1357.51 of the
Health and Safety Code is amended to read:
1357.51. (a) 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) 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. A plan contract for group
coverage issued, amended, or renewed on or after January
1, 2014, shall not impose any preexisting condition
provision upon any individual.
(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 (P.L. 111-148) shall not impose any preexisting
condition provision upon any child under 19 years of age. A plan
contract for individual coverage that is issued, amended, or renewed
on or after January 1, 2014, and 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.
(d) 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) 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) 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) 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)).
SEC. 2. 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. Individual Child
Access to Health Care Coverage
SEC. 3. 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 renew 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)
(e) Health care service plans may require documentation
from applicants relating to their coverage history.
SEC. 4. Section 1399.836 is added to the
Health and Safety Code , to read:
1399.836. This article 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. 5. 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) "Dependent" means the spouse or child of an individual,
subject to applicable terms of the health benefit plan.
(b) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(c) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(d) "Health benefit plan" means any individual or group health
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.
(e) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152), and any
subsequent rules or regulations issued pursuant to that law.
(f) "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.
(g) "Qualified health plan" has the same meaning as that term is
defined in Section 1301 of PPACA.
(h) "Rating period" means the period for which premium rates
established by a plan are in effect.
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 January 1, 2014, 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 to all
individuals in each service area in which the plan provides or
arranges for the provision of health care services. A plan shall
limit enrollment 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.
(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) Subject to subdivision (e), a plan shall allow an individual
to enroll in or change individual health benefit plans as a result of
the following triggering events:
(1) He or she loses minimum essential coverage. For purposes of
this paragraph, both of the following definitions shall apply:
(A) "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).
(B) "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.
(2) He or she gains a dependent or becomes a dependent through
marriage, birth, adoption, or placement for adoption.
(3) He or she becomes a resident of California.
(4) He or she is mandated to be covered pursuant to a valid state
or federal court order.
(5) With respect to individual health benefit plans offered
through the Exchange, the individual meets any of the requirements
listed in Section 155.420(d)(3) 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 63 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 63 days from the date of a
triggering event to select a plan offered through the Exchange.
(f) (1) 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.
(2) 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, except that coverage for an individual under 19 years of age
shall, at the option of the subscriber, become effective as required
under Section 1399.826. 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.
(3) 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.
(4) 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 in the case where a qualified individual loses minimum
essential coverage, the coverage effective date shall be the first
day of the following month.
(5) 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.
(g) On or after January 1, 2014, a health care service plan shall
not condition the issuance or offering of an individual health
benefit plan on any of the following 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
department.
(h) 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 that provides
dependent coverage.
(i) This section shall not apply to a grandfathered health plan.
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.
(c) This section shall not apply to a grandfathered health plan.
1399.853. (a) All individual health benefit plans shall conform
to the requirements of Sections 1365, 1366.3, 1367.001, and 1373.6,
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, as described in regulations adopted by the department in
conjunction with the Department of Insurance that do not prevent the
application of PPACA. 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) Geographic region. With respect to the 2014 plan year, the
geographic regions for purposes of rating shall be the same as those
used by a health benefit plan or contract entered into with the Board
of Administration of the Public Employees' Retirement System
pursuant to the Public Employees' Medical and Hospital Care Act (Part
5 (commencing with Section 22750) of Division 5 of Title 2 of the
Government Code). For subsequent plan years, the geographic regions
for purposes of rating shall be determined by the Exchange in
consultation with the department, the Department of Insurance, and
other private and public purchasers of health care coverage.
(3) Family size, 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
no less than 12 months.
(d) This section shall not apply to a grandfathered health plan.
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.
SEC. 6. Section 10198.7 of the
Insurance Code is amended to read:
10198.7. (a) 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) 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. A health
benefit plan for group coverage issued, amended, or renewed on or
after January 1, 2014, shall not impose any preexisting condition
provision upon any individual.
(2) Notwithstanding subdivision (b), a health benefit plan for
individual coverage that is not 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.
A health benefit plan for individual coverage that is issued,
amended, or renewed on or after January 1, 2014, and 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.
(d) 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) 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) 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) 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 subdivision (e) of Section 2701 of Title XXVII
of the federal Public Health Services 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.
SEC. 7. The heading of Chapter 9.7 (commencing with
Section 1 0950) of Part 2 of Division 2 of the
Insurance Code is amended to read:
CHAPTER 9.7. INDIVIDUAL CHILD
ACCESS TO HEALTH INSURANCE
SEC. 8. Section 10954 of the Insurance
Code is amended to read:
10954. (a) A carrier may use the following characteristics of an
eligible child for purposes of establishing the rate of the health
benefit plan for that child, where consistent with federal
regulations under PPACA: age, geographic region, and family
composition, plus the health benefit plan selected by the child or
the responsible party for a child.
(b) From the effective date of this chapter 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 carrier or health care service plan 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 carrier 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 carrier 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 benefit plan issued, sold, or
renewed prior to December 31, 2013, the carrier 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 renew 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 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)
(e) Carriers may require documentation from applicants
relating to their coverage history.
SEC. 9. Section 10961 is added to the
Insurance Code , to read:
10961. This chapter 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. 10. Chapter 9.8 (commencing with Section
10965) is added to Part 2 of Division 2 of the Insurance
Code , to read:
CHAPTER 9.8. INDIVIDUAL ACCESS TO HEALTH INSURANCE
10965. For purposes of this chapter, the following definitions
shall apply:
(a) "Dependent" means the spouse or child of an individual,
subject to applicable terms of the health benefit plan.
(b) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(c) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(d) "Health benefit plan" means any individual or group health
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.
(e) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the Health Care and
Education Reconciliation Act of 2010 (Public Law 111-152), and any
subsequent rules or regulations issued pursuant to that law.
(f) "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.
(g) "Qualified health plan" has the same meaning as that term is
defined in Section 1301 of PPACA.
(h) "Rating period" means the period for which premium rates
established by an insurer are in effect.
10965.1. Every health insurer offering individual health benefit
plans shall, in addition to complying with the provisions of this
part and rules adopted thereunder, comply with the provisions of this
chapter.
10965.3. (a) (1) On and after January 1, 2014, 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
to all individuals in each service area in which the insurer
provides or arranges for the provision of health care services. An
insurer shall limit enrollment 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.
(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) Subject to subdivision (e), a health insurer shall allow an
individual to enroll in or change individual health benefit plans as
a result of the following triggering events:
(1) He or she loses minimum essential coverage. For purposes of
this paragraph, both of the following definitions shall apply:
(A) "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).
(B) "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.
(2) He or she gains a dependent or becomes a dependent through
marriage, birth, adoption, or placement for adoption.
(3) He or she becomes a California resident.
(4) He or she is mandated to be covered pursuant to a valid state
or federal court order.
(5) With respect to individual health benefit plans offered
through the Exchange, the individual meets any of the requirements
listed in Section 155.420(d)(3) 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 63 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 63 days from the date of a
triggering event to select a plan offered through the Exchange.
(f) (1) 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.
(2) 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, except that coverage for an individual under 19 years of age
shall, at the option of the policyholder, become effective as
required under Section 10951. 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.
(3) 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.
(4) 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 in the case where a qualified individual loses minimum
essential coverage, the coverage effective date shall be the first
day of the following month.
(5) 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.
(g) On or after January 1, 2014, a health insurer shall not
condition the issuance or offering of an individual health benefit
plan on any of the following 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
department.
(h) 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 that provides
dependent coverage.
(i) This section shall not apply to a grandfathered health plan.
10965.5. (a) Commencing January 1, 2014, no health insurer or
agent or broker 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 an insurer because of the
health status, claims experience, industry, occupation, or geographic
location, provided that the location is within the insurer's
approved service area, of the individual.
(2) Encourage or direct an individual to seek individual coverage
from another health care service 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 insurer's approved service
area, of the individual.
(b) Commencing January 1, 2014, a health insurer shall not,
directly or indirectly, enter into any contract, agreement, or
arrangement with a broker or agent that provides for or results in
the compensation paid to a broker or agent 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 broker or
agent 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.
(c) This section shall not apply to a grandfathered health plan.
10965.7. (a) All individual health benefit plans shall conform to
the requirements of Sections 10112.1, 10127.18, 10273.4, and
12682.1, and shall be renewable at the option of the insured except
as permitted to be canceled, rescinded, or not renewed pursuant to
Section 10273.4.
(b) Any insurer that ceases to offer for sale new individual
health benefit plans pursuant to Section 10273.4 shall continue to be
governed by this chapter with respect to business conducted under
this chapter.
10965.9. (a) With respect to individual health benefit plans
issued, amended, or renewed on or after January 1, 2014, a health
insurer 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, as described in regulations adopted by the department in
conjunction with the Department of Managed Health Care that do not
prevent the application of PPACA. 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) Geographic region. With respect to the 2014 plan year, the
geographic regions for purposes of rating shall be the same as those
used by a health benefit plan or contract entered into with the Board
of Administration of the Public Employees' Retirement System
pursuant to the Public Employees' Medical and Hospital Care Act (Part
5 (commencing with Section 22750) of Division 5 of Title 2 of the
Government Code). For subsequent plan years, the geographic regions
for purposes of rating shall be determined by the Exchange in
consultation with the department, the Department of Managed Health
Care, and other private and public purchasers of health care
coverage.
(3) Family size, 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 no less than 12 months.
(d) This section shall not apply to a grandfathered health plan.
10965.11. A health insurer shall not be required to offer an
individual health benefit plan or accept applications for the plan
pursuant to this chapter in the case of any of the following:
(a) To an individual who does not work or reside within the
insurer's approved service areas.
(b) (1) Within a specific service area or portion of a service
area, if the insurer reasonably anticipates and demonstrates to the
satisfaction of the commissioner 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 insureds.
(2) A health insurer 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 insurer is not offering coverage to individuals to new
employer groups until the insurer notifies the commissioner that it
has the ability to deliver services to individuals, and certifies to
the commissioner that from the date of the notice it will enroll all
individuals requesting coverage in that area from the insurer.
(3) Nothing in this chapter shall be construed to limit the
commissioner's authority to develop and implement a plan of
rehabilitation for a health insurer whose financial viability or
organizational and administrative capacity has become impaired.
10965.13. The commissioner may require a health insurer to
discontinue the offering of individual health benefit plans or
acceptance of applications from any individual upon a determination
by the commissioner that the insurer does not have sufficient
financial viability or organizational and administrative capacity to
ensure the delivery of health care services to its insureds. In
determining whether the conditions of this section have been met, the
commissioner shall consider, but not be limited to, the insurer's
compliance with the requirements of this part and the rules adopted
under those provisions.
SECTION 1. Section 1374.59 is added to the
Health and Safety Code, to read:
1374.59. (a) To the extent required by federal law, every health
care service plan contract, except a specialized health care service
plan contract, shall comply with the following provisions related to
the offer, sale, issuance, and renewal of health care service plan
contracts, consistent with federal law and implementing rules,
regulations, and federal guidance:
(1) Guaranteed availability of coverage pursuant to Section 2702
of the Public Health Service Act (42 U.S.C. Sec. 300gg-1).
(2) Guaranteed renewability of coverage pursuant to Section 2703
of the Public Health Service Act (42 U.S.C. Sec. 300gg-2).
(3) The portability and nondiscrimination provisions in Sections
2701, 2704, and 2705 of the Public Health Service Act (42 U.S.C.
Secs. 300gg, 300gg-3, and 300gg-4).
(b) The department shall consult and coordinate with the Insurance
Commissioner in the implementation and enforcement of this section
to ensure uniform and consistent rules, regulations, guidance, and
enforcement for health care service plans sold to individuals in this
state.
(c) In implementing this section, the department shall, in
addition to the requirements in subdivision (b), consult and
coordinate with the California Health Benefit Exchange established
pursuant to Section 100500 of the Government Code.
SEC. 2. SEC. 11. 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.