BILL NUMBER: SB 961	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 29, 2012
	PASSED THE ASSEMBLY  AUGUST 28, 2012
	AMENDED IN ASSEMBLY  AUGUST 24, 2012
	AMENDED IN ASSEMBLY  AUGUST 20, 2012
	AMENDED IN SENATE  APRIL 9, 2012

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

                        JANUARY 10, 2012

   An act to amend Section 10954 of, to amend the heading of Chapter
9.7 (commencing with Section 10950) of Part 2 of Division 2 of, to
add Section 10960.5 to, to add Chapter 9.9 (commencing with Section
10965) to Part 2 of Division 2 of, and to repeal Section 10902.4 of,
the Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 961, Hernandez. Individual health care coverage.
   Existing federal law, the federal Patient Protection and
Affordable Care Act (PPACA) enacts various health care coverage
market reforms that take effect January 1, 2014. Among other things,
PPACA requires each health insurance issuer that offers health
insurance coverage in the individual or group market in a state to
accept every employer and individual in the state that applies for
that coverage and to renew that coverage at the option of the plan
sponsor or the individual. PPACA prohibits a group health plan and a
health insurance issuer offering group or individual health insurance
coverage from imposing any preexisting condition exclusion with
respect to that plan or coverage. PPACA allows the premium rate
charge by a health insurance issuer offering small group or
individual coverage to vary only by family composition, rating area,
age, and tobacco use, as specified, and prohibits discrimination
against individuals based on health status.
   Existing law provides for the regulation of health insurers by the
Insurance Commissioner and requires insurers offering coverage in
the individual market to offer coverage for a child subject to
specified requirements.
   This bill would require a health insurer, on and after October 1,
2013, to offer, market, and sell all of the insurer's health benefit
plans that are sold in the individual market to all individuals and
dependents in each service area in which the insurer provides or
arranges for the provision of health care services, with coverage
effective on or after January 1, 2014, as specified, but would
require insurers to limit enrollment in individual health benefit
plans to specified open enrollment and special enrollment periods.
The bill would prohibit these health benefit plans from imposing any
preexisting condition upon any individual. Commencing January 1,
2014, the bill would prohibit a health insurer from establishing
rules of eligibility for individual health benefit plans on any
health status-related factor, as specified, and would authorize
insurers to use only age, geographic region, and whether the plan
covers an individual or family for purposes of establishing rates for
individual health benefit plans, as specified. The bill would
require a health insurer to issue a specified notice at least 60 days
prior to the renewal date of an individual grandfathered health plan
to all subscribers and policyholders of the plan. The bill would
make certain of these provisions inoperative if the corresponding
provisions of PPACA are repealed and would make other conforming
changes. The bill would provide that it shall become operative only
if AB 1461 is also enacted.


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

  SECTION 1.  Section 10902.4 of the Insurance Code is repealed.
  SEC. 2.  The heading of Chapter 9.7 (commencing with Section 10950)
of Part 2 of Division 2 of the Insurance Code is amended to read:
      CHAPTER 9.7.  CHILD ACCESS TO HEALTH INSURANCE


  SEC. 3.  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 renewing coverage for a child for whom you are responsible. If
you attempt to obtain new individual coverage for that child, the
premium for the same coverage may be higher than the premium you pay
now."

   (d) A child who applied for coverage between September 23, 2010,
and the end of the initial 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) Carriers shall not require documentation from applicants
relating to their coverage history.
   (g) (1) On and after January 1, 2013, and until January 1, 2014, a
carrier shall provide a notice to all applicants for coverage under
this chapter and to all insureds, or the responsible party for an
insured, renewing coverage under this chapter that contains the
following information:
   (A) Information about the open enrollment period provided under
Section 10965.3.
   (B) An explanation that obtaining coverage during the open
enrollment period described in Section 10965.3 will not affect the
effective dates of coverage for coverage purchased pursuant to this
chapter unless the applicant cancels that coverage.
   (C) An explanation that coverage purchased pursuant to this
section shall be effective as required under subdivision (d) of
Section 10951 and that such coverage shall not prevent an applicant
from obtaining new coverage during the open enrollment period
described in Section 10965.3.
   (D) Information about the Medi-Cal program and the Healthy
Families Program and about subsidies available through the California
Health Benefit Exchange.
   (2) The notice described in paragraph (1) shall be in plain
language and 14-point type.
   (3) The department may adopt a model notice to be used by carriers
in order to comply with this subdivision and shall consult with the
Department of Managed Health Care in adopting that model notice. Use
of the model notice shall not require prior approval of the
department. Any model notice designated by the department for
purposes of this section shall not be subject to the Administrative
Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1
of Division 3 of Title 2 of the Government Code).
  SEC. 4.  Section 10960.5 is added to the Insurance Code, to read:
   10960.5.  Commencing January 1, 2014, in the event of a conflict
between the provisions of this chapter and the provisions of Chapter
9.9 (commencing with Section 10965), the provisions of Chapter 9.9
(commencing with Section 10965) shall prevail, except where
subdivision (j) of Section 10965.3 or subdivision (e) of Section
10965.9 makes any of the provisions of Chapter 9.9 (commencing with
Section 10965) inoperative, in which case the provisions of this
chapter and the operative provisions of Chapter 9.9 (commencing with
Section 10965) shall be harmonized to the extent permitted by federal
law.
  SEC. 5.  Chapter 9.9 (commencing with Section 10965) is added to
Part 2 of Division 2 of the Insurance Code, to read:
      CHAPTER 9.9.  INDIVIDUAL ACCESS TO HEALTH INSURANCE


   10965.  For purposes of this chapter, the following definitions
shall apply:
   (a) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
   (b) "Dependent" means the spouse or registered domestic partner,
or child, of an individual, subject to applicable terms of the health
benefit plan.
   (c) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
   (d) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
   (e) "Health benefit plan" means any individual or group policy of
health insurance, as defined in Section 106. The term does not
include a health insurance policy that provides excepted benefits, as
described in Sections 2722 and 2791 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-21; 42 U.S.C. Sec. 300gg-91),
subject to Section 10965.01, a health insurance conversion policy
offered pursuant to Section 12682.1, a health insurance policy
provided in the Medi-Cal program (Chapter 7 (commencing with Section
14000) of Part 3 of Division 9 of the Welfare and Institutions Code),
the Healthy Families Program (Part 6.2 (commencing with Section
12693) of Division 2), the Access for Infants and Mothers Program
(Part 6.3 (commencing with Section 12695) of Division 2), or the
program under Part 6.4 (commencing with Section 12699.50) of Division
2, or a health insurance policy offered to a federally eligible
defined individual under Chapter 8.5 (commencing with Section 10785),
to the extent consistent with PPACA.
   (f) "Policy year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
   (g) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued pursuant to that law.
   (h) "Preexisting condition provision" means a 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.
   (i) "Qualified health plan" has the same meaning as that term is
defined in Section 1301 of PPACA.
   (j) "Rating period" means the period for which premium rates
established by an insurer are in effect.
   (k) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
   10965.01.  (a) For purposes of this chapter, "health benefit plan"
does not include policies or certificates of specified disease or
hospital confinement indemnity provided that the carrier offering
those policies or certificates complies with the following:
   (1) The carrier files, on or before March 1 of each year, a
certification with the commissioner that contains the statement and
information described in paragraph (2).
   (2) The certification required in paragraph (1) shall contain the
following:
   (A) A statement from the carrier certifying that policies or
certificates described in this section (i) are being offered and
marketed as supplemental health insurance and not as a substitute for
coverage that provides essential health benefits as defined by the
state pursuant to Section 1302 of PPACA, and (ii) the disclosure
forms as described in Section 10603 contains the following statement
prominently on the first page:

   "This is a supplement to health insurance. It is not a substitute
for essential health benefits or minimum essential coverage as
defined in federal law."

   (B) A summary description of each policy or certificate described
in this section, including the average annual premium rates, or range
of premium rates in cases where premiums vary by age, gender, or
other factors, charged for the policies and certificates in this
state.
   (3) In the case of a policy or certificate that is described in
this section and that is offered for the first time in this state on
or after January 1, 2013, the carrier files with the commissioner the
information and statement required in paragraph (2) at least 30 days
prior to the date such a policy or certificate is issued or
delivered in this state.
   (b) As used in this section, "policies or certificates of
specified disease" and "policies or certificates of hospital
confinement indemnity" mean policies or certificates of insurance
sold to an insured to supplement other health insurance coverage as
specified in this section.
   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 October 1, 2013, a health insurer
shall fairly and affirmatively offer, market, and sell all of the
insurer's health benefit plans that are sold in the individual market
for policy years on or after January 1, 2014, to all individuals and
dependents in each service area in which the insurer provides or
arranges for the provision of health care services. An insurer shall
limit enrollment in individual health benefit plans to open
enrollment periods and special enrollment periods as provided in
subdivisions (c) and (d).
   (2) A health insurer that offers qualified health plans through
the Exchange shall be deemed to be in compliance with paragraph (1)
with respect to an individual health benefit plan offered through the
Exchange in those geographic regions in which the insurer offers
health benefit plans through the Exchange.
   (3) A health insurer shall allow the policyholder of an individual
health benefit plan to add a dependent to the policyholder's health
benefit plan at the option of the policyholder, consistent with the
open enrollment, annual enrollment, and special enrollment period
requirements in this section.
   (4) A health insurer offering coverage in the individual market
shall not reject the request of a policyholder during an open
enrollment period to include a dependent of the policyholder as a
dependent on an existing individual health benefit plan.
   (b) An individual health benefit plan issued, amended, or renewed
shall not impose any preexisting condition provision upon any
individual.
   (c) A health insurer shall provide an initial open enrollment
period from October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for plan years on or after January 1, 2015, from
October 15 to December 7, inclusive, of the preceding calendar year.
   (d) (1) Subject to subdivision (e), commencing January 1, 2014, a
health insurer shall allow an individual to enroll in or change
individual health benefit plans offered outside the Exchange as a
result of the following triggering events:
   (A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, both of the following
definitions shall apply:
   (i) "Minimum essential coverage" has the same meaning as that term
is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).
   (ii) "Loss of minimum essential coverage" includes loss of that
coverage due to the circumstances described in Section 54.9801-6(a)
(3)(i) to (iii), inclusive, of Title 26 of the Code of Federal
Regulations. "Loss of minimum essential coverage" does not include
loss of that coverage due to the individual's failure to pay premiums
on a timely basis or situations allowing for a rescission, subject
to Section 10384.17.
   (B) He or she gains a dependent or becomes a dependent.
   (C) He or she is mandated to be covered pursuant to a valid state
or federal court order.
   (D) He or she has been released from incarceration.
   (E) His or her health benefit plan substantially violated a
material provision of the policy.
   (F) He or she gains access to new health benefit plans as a result
of a permanent move.
   (G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 or
Section 1399.845 of the Health and Safety Code, for one of the
conditions described in subdivision (a) of Section 10133.56 and that
provider is terminated.
   (2) Subject to subdivision (e), commencing January 1, 2014, a
health insurer shall allow an individual to enroll in or change
individual health benefit plans offered through the Exchange as a
result of the triggering events listed in Section 155.420(d) of Title
45 of the Code of Federal Regulations. To the extent permitted by
federal law, any triggering event described in paragraph (1) that is
not listed in Section 155.420(d)(1) to (8), inclusive, of Title 45 of
the Code of Federal Regulations shall be considered an exceptional
circumstance under Section 155.420(d)(9) of Title 45 of the Code of
Federal Regulations.
   (e) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the date
of a triggering event identified in subdivision (d) to apply for
coverage from a health benefit plan subject to this section. With
respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in subdivision (d) to select a plan
offered through the Exchange.
   (f) With respect to individual health benefit plans offered
outside the Exchange, after an individual submits a completed
application form for a plan, the insurer shall, within 30 days,
notify the individual of the individual's actual premium charges for
that plan established in accordance with Section 10965.9. The
individual shall have 30 days in which to exercise the right to buy
coverage at the quoted premium charges.
   (g) (1) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during the
initial open enrollment period described in subdivision (c), when the
individual submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked, whichever
occurs earlier, by December 15, 2013, coverage under the individual
health benefit plan shall become effective no later than January 1,
2014. When that payment is delivered or postmarked within the first
15 days of any subsequent month, coverage shall become effective no
later than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and December 31,
2013, inclusive, or after the 15th day of any subsequent month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.
   (2) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during the
annual open enrollment period described in subdivision (c), when the
individual submits a premium payment, based on the quoted premium
charges, and that payment is delivered or postmarked, whichever
occurs later, by December 15, coverage shall become effective as of
the following January 1. When that payment is delivered or postmarked
within the first 15 days of any subsequent month, coverage shall
become effective no later than the first day of the following month.
When that payment is delivered or postmarked between December 16 and
December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day of
the second month following delivery or postmark of the payment.
   (3) With respect to an individual health benefit plan offered
outside the Exchange for which an individual applies during a special
enrollment period described in subdivision (d), the following
provisions shall apply:
   (A) When the individual submits a premium payment, based on the
quoted premium charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the month,
coverage under the plan shall become effective no later than the
first day of the following month.
   (B) When the premium payment is neither delivered nor postmarked
until after the 15th day of the month, coverage shall become
effective no later than the first day of the second month following
delivery or postmark of the payment.
   (C) Notwithstanding subparagraph (A) or (B), in the case of a
birth, adoption, or placement for adoption, the coverage shall be
effective on the date of birth, adoption, or placement for adoption.
   (D) Notwithstanding subparagraph (A) or (B), in the case of
marriage or becoming a registered domestic partner or in the case
where a qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the following
month.
   (4) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage selected
pursuant to this section shall be the same as the applicable date
specified in Section 155.410 or 155.420 of Title 45 of the Code of
Federal Regulations.
   (h) (1) On or after January 1, 2014, a health insurer shall not
establish rules for eligibility, including continued eligibility, of
any individual to enroll under the terms of an individual health
benefit plan based on any of the following factors:
   (A) Health status.
   (B) Medical condition, including physical and mental illnesses.
   (C) Claims experience.
   (D) Receipt of health care.
   (E) Medical history.
   (F) Genetic information.
   (G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
   (H) Disability.
   (I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.
   (2) Notwithstanding subdivision (c) of Section 10291.5, a health
insurer shall not require an individual applicant or his or her
dependent to fill out a health assessment or medical questionnaire
prior to enrollment under an individual health benefit plan. A health
insurer shall not acquire or request information that relates to a
health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
   (i) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
   (j) The following provisions of this section shall become
inoperative if Section 2702 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-1), as added by Section 1201 of PPACA, is
repealed:
   (1) Subdivision (a).
   (2) Subdivisions (c), (d), (e), and (g), except as they relate to
health benefit plans offered through the Exchange.
   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 be enforced in the same manner as Section
790.03, including through Sections 790.05 and 790.035.
   10965.7.  (a) All individual health benefit plans shall conform to
the requirements of Sections 10112.1, 10127.18, 10273.6, and
12682.1, and any other requirements imposed by this code, and shall
be renewable at the option of the insured except as permitted to be
canceled, rescinded, or not renewed pursuant to Section 10273.6.
   (b) Any insurer that ceases to offer for sale new individual
health benefit plans pursuant to Section 10273.6 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, pursuant to the age bands established by the United
States Secretary of Health and Human Services pursuant to Section
2701(a)(3) of the federal Public Health Service Act (42 U.S.C. Sec.
300gg(a)(3)). Rates based on age shall be determined based on the
individual's birthday and shall not vary by more than three to one
for adults.
   (2) (A) Geographic region. The geographic regions for purposes of
rating shall be the following:
   (i) Region 1 shall consist of the Counties of Alpine, Del Norte,
Siskiyou, Modoc, Lassen, Shasta, Trinity, Humboldt, Tehama, Plumas,
Nevada, Sierra, Mendocino, Lake, Butte, Glenn, Sutter, Yuba, Colusa,
Amador, Calaveras, and Tuolumne.
   (ii) Region 2 shall consist of the Counties of Napa, Sonoma,
Solano, and Marin.
   (iii) Region 3 shall consist of the Counties of Sacramento,
Placer, El Dorado, and Yolo.
   (iv) Region 4 shall consist of the County of San Francisco.
   (v) Region 5 shall consist of the County of Contra Costa.
   (vi) Region 6 shall consist of the County of Alameda.
   (vii) Region 7 shall consist of the County of Santa Clara.
   (viii) Region 8 shall consist of the County of San Mateo.
   (ix) Region 9 shall consist of the Counties of Santa Cruz,
Monterey, and San Benito.
   (x) Region 10 shall consist of the Counties of San Joaquin,
Stanislaus, Merced, Mariposa, and Tulare.
   (xi) Region 11 shall consist of the Counties of Madera, Fresno,
and Kings.
   (xii) Region 12 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.
   (xiii) Region 13 shall consist of the Counties of Mono, Inyo, and
Imperial.
   (xiv) Region 14 shall consist of the County of Kern.
   (xv) Region 15 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.
   (xvi) Region 16 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (xv).
   (xvii) Region 17 shall consist of the Counties of San Bernardino
and Riverside.
   (xviii) Region 18 shall consist of the County of Orange.
   (xix) Region 19 shall consist of the County of San Diego.
   (B) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Managed Heath Care, shall
review the geographic rating regions specified in this paragraph and
the impacts of those regions on the health care coverage market in
California, and make a report to the appropriate policy committees of
the Legislature.
   (3) Whether the health benefit plan covers an individual or
family, as described in PPACA.
   (b) The rate for a health benefit plan subject to this section
shall not vary by any factor not described in this section.
   (c) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.
   (d) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.
   (e) This section shall become inoperative if Section 2701 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg), as added by
Section 1201 of PPACA, is repealed.
   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.
   10965.14.  (a) On or before October 1, 2013, and annually
thereafter, a health insurer shall issue the following notice to all
policyholders enrolled in an individual health benefit plan that is a
grandfathered health plan:

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

   (b) A health insurer shall include the notice described in
subdivision (a) in any renewal material of the individual
grandfathered health plan and in any application for dependent
coverage under the individual grandfathered health plan.
   10965.15.  Except as otherwise provided in this chapter, this
chapter shall be implemented to the extent that it meets or exceeds
the requirements set forth in the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the federal
Health Care and Education Reconciliation Act of 2010 (Public Law
111-152), and any rules, regulations, or guidance issued pursuant to
that law.
  SEC. 6.  This act shall become operative only if Assembly Bill 1461
of the 2011-12 Regular Session is also enacted and becomes
operative.