Amended in Senate March 7, 2013

California Legislature—2013–14 First Extraordinary Session

Assembly Bill No. 2

Introduced by Assembly Member Pan

January 29, 2013

An act to amend begin delete Sections 1357.51, 1357.503, 1357.504, 1357.509, 1357.512, 1363, and 1399.829 of, to amend the heading of Article 11.7 (commencing with Section 1399.825) of Chapter 2.2 of Division 2 of, to amend and add Sections 1389.4 and 1389.7 of, to amend and repeal Section 1389.5 of, to amend, repeal, and add Sections 1399.805 and 1399.811 of, to add Sections 1348.96 and 1399.836 to, to add Article 11.8 (commencing with Section 1399.845) to Chapter 2.2 of Division 2 of, and to repeal Sections 1357.510 and 1399.816 of, the Health and Safety Code, and to amend end delete Sections begin insert 10119.1, end insert 10198.7, begin insert 10603, end insert 10753.05, 10753.06.5, 10753.11, 10753.12, 10753.14, and 10954 of, to amend the heading of Chapter 9.7 (commencing with Section 10950) of Part 2 of Division 2 of, to amend and add Sections 10113.95 and 10119.2 of, begin delete to amend and repeal Section 10119.1 of, to amend, repeal, and add Sections 10901.3 and 10901.9 of, end delete to add Sections 10127.21 and 10960.5 to, to add Chapter 9.9 (commencing with Section 10965) to Part 2 of Division 2 of, begin delete to add Part 6.25 (commencing with Section 12694.50) to Division 2 of, end delete and to repeal Section 10902.4 of, the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2, as amended, Pan. Health care coverage.

(1) Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA requires each health insurance issuer that offers health insurance coverage in the individual or group market in a state to accept every employer and individual in the state that applies for that coverage and to renew that coverage at the option of the plan sponsor or the individual. PPACA prohibits a group health plan and a health insurance issuer offering group or individual health insurance coverage from imposing any preexisting condition exclusion with respect to that plan or coverage. PPACA allows the premium rate charged by a health insurance issuer offering small group or individual coverage to vary only by rating area, age, tobacco use, and whether the coverage is for an individual or family and prohibits discrimination against individuals based on health status, as specified. PPACA requires an issuer to consider all enrollees in its individual market plans to be part of a single risk pool and to consider all enrollees in its small group market plans to be part of a single risk pool, as specified. PPACA also requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers, as specified.

Existing law begin delete , the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also end delete provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires begin delete plans and end delete insurers offering coverage in the individual market to offer coverage for a child subject to specified requirements. Existing law establishes the California Health Benefit Exchange (Exchange) to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and qualified small employers by January 1, 2014.

This bill would require begin delete a plan or end delete begin insert an end insert insurer, on and after October 1, 2013, to offer, market, and sell all of the begin delete plan’s or end delete 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 begin delete plan or end delete insurer provides or arranges for the provision of health care services, as specified, but would require begin delete plans and end delete 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 begin insert exclusion end insert upon any individual and from conditioning the issuance or offering of individual health benefit plans on any health status-related factor, as specified. The bill would require a begin delete health care service plan or end delete health insurer to consider the claims experience of all begin delete enrollees or end delete insureds of its nongrandfathered individual health benefit plans begin insert offered in the state end insert to be part of a single risk pool, begin insert as specified, end insert would require the begin delete plan or end delete insurer to establish a specified index rate for that market, and would authorize the begin delete plan or end delete insurer to vary premiums from the index rate based only on specified factors. The bill would authorize begin delete plans and end delete insurers to use only age, geographic region, and family size for purposes of establishing rates for individual health benefit plans, as specified. The bill would require begin delete plans and end delete insurers to provide specified information regarding the Exchange to applicants for and subscribers of individual health benefit plans offered outside the Exchange. The bill would prohibit begin delete a plan or end delete begin insert an end insert insurer from advertising or marketing an individual grandfathered health plan for the purpose of enrolling a dependent of the begin delete subscriber or end delete policyholder in the plan and would also require begin delete plans and end delete insurers to annually issue a specified notice to begin delete subscribers and end delete policyholders enrolled in a grandfathered plan. begin insert The bill would make certain of these provisions inoperative if, and 12 months after, certain provisions of PPACA are repealed or amended, as specified. end insert

Existing law requires begin delete plans and end delete insurers to guarantee issue their small employer health benefit plans, as specified. With respect to nongrandfathered small employer health benefit plans for plan years on or after January 1, 2014, among other things, existing law provides certain exceptions from the guarantee issue requirement, allows the premium for small employer health benefit plans to vary only by age, geographic region, and family size, as specified, and requires begin delete plans and end delete insurers to provide special enrollment periods and coverage effective dates consistent with the individual nongrandfathered market in the state. Existing law provides that these provisions shall be inoperative if specified provisions of PPACA are repealed.

This bill would modify the small employer special enrollment periods and coverage effective dates for purposes of consistency with the individual market reforms described above. The bill would also modify the exceptions from the guarantee issue requirement and the manner in which begin delete a plan or end delete begin insert an end insert insurer determines premium rates for a small employer health benefit plan, as specified. The bill would also require begin delete a plan or end delete begin insert an end insert insurer to consider the claims experience of all enrollees of its nongrandfathered small employer health benefit plans begin insert offered in this state end insert to be part of a single risk pool, begin insert as specified, end insert would require the begin delete plan or end delete insurer to establish a specified index rate for that market, and would authorize the begin delete plan or end delete insurer to vary premiums from the index rate based only on specified factors. The bill would begin delete delete the provisions making end delete begin insert make certain of end insert these provisions inoperative begin insert , as specified, end insert if begin insert , and 12 months after end insert specified provisions of PPACA are repealed.

begin delete

Because a willful violation of these requirements with respect to health care service plans would be a crime, the bill would impose a state-mandated local program.

end delete

(2) PPACA requires a state or the United States Secretary of Health and Human Services to implement a risk adjustment program for the 2014 benefit year and every benefit year thereafter, under which a charge is assessed on low actuarial risk plans and a payment is made to high actuarial risk plans, as specified. If a state that elects to operate an American Health Benefit Exchange elects not to administer this risk adjustment program, the secretary will operate the program and issuers will be required to submit data for purposes of the program to the secretary.

This bill would require that any data submitted by begin delete health care service plans and end delete health insurers to the secretary for purposes of the risk adjustment program also be submitted to the begin delete Department of Managed Health Care or the end delete Department of Insurance begin insert , in the same format. The bill would require the department to use that data for specified purposes end insert .

begin delete

(3) PPACA requires health insurance issuers to provide a summary of benefits and coverage explanation pursuant to specified standards to applicants and enrollees or policyholders.

end delete begin delete

Existing law requires health care service plans to use disclosure forms that contain specified information regarding the contracts issued by the plan, including the benefits and coverage of the contract, and the exceptions, reductions, and limitations that apply to the contract. Existing law requires health care service plans that offer individual or small group coverage to also provide a uniform health plan benefits and coverage matrix containing the plan’s major provisions, as specified.

end delete begin delete

This bill would authorize the Department of Managed Health Care to waive or modify those requirements for purposes of compliance with PPACA through issuance of all-plan letters until January 1, 2015.

end delete begin delete

(4) Existing law requires a health care service plan or a health insurer offering individual plan contracts or individual insurance policies to fairly and affirmatively offer, market, and sell certain individual contracts and policies to all federally eligible defined individuals, as defined, in each service area in which the plan or insurer provides or arranges for the provision of health care services. Existing law prohibits the premium for those policies and contracts from exceeding the premium paid by a subscriber of the California Major Risk Medical Insurance Program who is of the same age and resides in the same geographic region as the federally eligible defined individual, as specified.

end delete begin delete

This bill would instead prohibit the premium for those policies and contracts from exceeding the premium for a specified plan offered in the individual market through the California Health Benefit Exchange in the rating area in which the individual resides. The bill would make this requirement operative on the later of January 1, 2014, or the 91st day following the adjournment of the 2013-14 First Extraordinary Session. Because a willful violation of this requirement by a health care service plan would be a crime, the bill would impose a state-mandated local program.

end delete begin delete

(5) Existing law creates the Healthy Families Program, administered by the Managed Risk Medical Insurance Board, to arrange for the provision of health care services to eligible children through participating health, dental, and vision care plans, as defined. To be eligible for the program, existing law requires applicants to, among other requirements, be less than 19 years of age and have a limited gross household income, as specified. Existing law provides for the transition of specified enrollees of the Healthy Families Program to the Medi-Cal program, to the extent that those individuals are otherwise eligible, no sooner than January 1, 2013.

end delete begin delete

This bill would require plans offering coverage to Healthy Families Program enrollees, on or after January 1, 2012, including those transitioned to the Medi-Cal program, to offer 18 months of coverage, until a specified date, to individuals who were or are disenrolled from the program due to ineligibility because of age and are not eligible for full scope coverage under Medi-Cal. The bill would require plans to provide notice of eligibility for this coverage within a specified period of time and would require beneficiaries electing this coverage to pay no more than 110% of the average per subscriber payment made to all participating health, dental, or vision plans for program coverage, as specified.

end delete begin delete

(6) 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.

end delete begin delete

This bill would provide that no reimbursement is required by this act for a specified reason.

end delete begin insert

(3) Existing law requires insurers to provide a summary of information about each of their health insurance policies, as provided, upon the appropriate disclosure form as prescribed by the Insurance Commissioner.

end insert begin insert

This bill would provide that, on and after January 1, 2014, a health insurer issuing the federal uniform summary of benefits and coverage also complies with the commissioner’s disclosure requirements, but would require that the insurer ensure that all applicable state law disclosures are made in other documents. The bill would require the insurer to provide the commissioner a copy of the federal summary of benefits and coverage form and the corresponding health insurance policy, as specified.

end insert begin insert

(4) This bill would become operative only if S.B. 2 of the 2013-14 First Extraordinary Session is enacted and becomes effective.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete yes end delete begin insert no end insert .

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Section 1348.96 is added to the Health and Safety
Code, to read:

1348.96.  

Any data submitted by a health care service plan to
the United States Secretary of Health and Human Services, or his
or her designee, for purposes of the risk adjustment program
described in Section 1343 of the federal Patient Protection and
Affordable Care Act (42 U.S.C. Sec. 18063) shall be concurrently
submitted to the department.

SEC. 2.  

Section 1357.51 of the Health and Safety Code, as
added by Chapter 852 of the Statutes of 2012, is amended to read:

1357.51.  

(a) A health benefit plan for group coverage shall
not impose any preexisting condition provision or waivered
condition provision upon any enrollee.

(b) A nongrandfathered health benefit plan for individual
coverage shall not impose any preexisting condition provision or
waivered condition provision upon any enrollee. A grandfathered
health benefit plan for individual coverage shall not exclude
coverage on the basis of a waivered condition provision or
preexisting condition provision for a period greater than 12 months
following the enrollee’s effective date of coverage, nor limit or
exclude coverage for a specific enrollee by type of illness,
treatment, medical condition, or accident, except for satisfaction
of a preexisting condition provision or waivered condition
provision pursuant to this article. Waivered condition provisions
or preexisting condition provisions contained in individual
grandfathered 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) A health benefit plan for group coverage may apply a
waiting period of up to 60 days as a condition of employment if
applied equally to all eligible employees and dependents and if
consistent with PPACA. A health benefit plan for group coverage
through a health maintenance organization, as defined in Section
2791 of the federal Public Health Service Act, shall not impose
any affiliation period that exceeds 60 days. A waiting or affiliation
period shall not be based on a preexisting condition of an employee
or dependent, the health status of an employee or dependent, or
any other factor listed in Section 1357.52. An affiliation period
shall run concurrently with a waiting period. 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
enrollees.

(2) A health benefit plan for individual coverage shall not
impose any waiting or affiliation period.

(d) In determining whether a preexisting condition provision,
a waivered condition provision, or a waiting or affiliation period
applies to an 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.

(e) An individual’s period of creditable coverage shall be
certified pursuant to Section 2704(e) of Title XXVII of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-3(e)).

SEC. 3.  

Section 1357.503 of the Health and Safety Code is
amended to read:

1357.503.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
small employer health care service plan contracts for plan years
on or after January 1, 2014, to all small employers in each service
area in which the plan provides or arranges for the provision of
health care services.

(2) On and after October 1, 2013, a plan shall make available
to each small employer all small employer health care service plan
contracts that the plan offers and sells to small employers or to
associations that include small employers in this state for plan
years on or after January 1, 2014.

(3) A plan that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraphs
(1) and (2) with respect to small employer health care service plan
contracts offered through the Exchange in those geographic regions
in which the plan offers plan contracts through the Exchange.

(b) A plan shall provide enrollment periods consistent with
PPACA and described in Section 155.725 of Title 45 of the Code
of Federal Regulations. Commencing January 1, 2014, a plan shall
provide special enrollment periods consistent with the special
enrollment periods described in Section 1399.849, except for the
triggering events identified in paragraphs (d)(3) and (d)(6) of
Section 155.420 of Title 45 of the Code of Federal Regulations
with respect to plan contracts offered through the Exchange.

(c) No plan or solicitor shall induce or otherwise encourage a
small employer to separate or otherwise exclude an eligible
employee from a health care service plan contract that is provided
in connection with employee’s employment or membership in a
guaranteed association.

(d) Every plan shall file with the director the reasonable
employee participation requirements and employer contribution
requirements that will be applied in offering its plan contracts.
Participation requirements shall be applied uniformly among all
small employer groups, except that a plan may vary application
of minimum employee participation requirements by the size of
the small employer group and whether the employer contributes
100 percent of the eligible employee’s premium. Employer
contribution requirements shall not vary by employer size. A health
care service plan shall not establish a participation requirement
that (1) requires a person who meets the definition of a dependent
in Section 1357.500 to enroll as a dependent if he or she is
otherwise eligible for coverage and wishes to enroll as an eligible
employee and (2) allows a plan to reject an otherwise eligible small
employer because of the number of persons that waive coverage
due to coverage through another employer. Members of an
association eligible for health coverage under subdivision (m) of
Section 1357.500, but not electing any health coverage through
the association, shall not be counted as eligible employees for
purposes of determining whether the guaranteed association meets
a plan’s reasonable participation standards.

(e) The plan shall not reject an application from a small
employer for a small employer health care service plan contract
if all of the following conditions are met:

(1) The small employer offers health benefits to 100 percent of
its eligible employees. Employees who waive coverage on the
grounds that they have other group coverage shall not be counted
as eligible employees.

(2) The small employer agrees to make the required premium
payments.

(3) The small employer agrees to inform the small employer’s
employees of the availability of coverage and the provision that
those not electing coverage must wait until the next open
enrollment or a special enrollment period to obtain coverage
through the group if they later decide they would like to have
coverage.

(4) The employees and their dependents who are to be covered
by the plan contract work or reside in the service area in which
the plan provides or otherwise arranges for the provision of health
care services.

(f) No plan or solicitor shall, directly or indirectly, engage in
the following activities:

(1) Encourage or direct small employers to refrain from filing
an application for coverage with a plan because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan’s approved
service area.

(2) Encourage or direct small employers to seek coverage from
another plan because of the health status, claims experience,
industry, occupation of the small employer, or geographic location
provided that it is within the plan’s approved service area.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs.

(g) A 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
a health care service plan contract to be varied because of the health
status, claims experience, industry, occupation, or geographic
location of the small employer. 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 small
employer.

(h) (1) A policy or contract that covers a small employer, as
defined in Section 1304(b) of PPACA and in Section 1357.500,
shall not establish rules for eligibility, including continued
eligibility, of an individual, or dependent of an individual, to enroll
under the terms of the policy or contract based on any of the
following health status-related factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an eligible employee or dependent to fill out a
health assessment or medical questionnaire prior to enrollment
under a small employer health care service plan contract. A health
care service plan shall not acquire or request information that
relates to a health status-related factor from the applicant or his or
her dependent or any other source prior to enrollment of the
individual.

(i) (1) A health care service plan shall consider the claims
experience of all enrollees in all nongrandfathered small employer
health care service plan contracts offered in the state that are subject
to subdivision (a), including those enrollees who do not enroll in
the contracts through the Exchange, to be members of a single risk
pool.

(2) Each plan year, a health care service plan shall establish an
index rate for the small employer market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA, within the single
risk pool required under paragraph (1). The index rate shall be
adjusted on a market-wide basis based on the total expected
market-wide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA. The premium rate for all of the health
care service plan’s nongrandfathered small employer health care
service plan contracts shall use the applicable index rate, as
adjusted for total expected market-wide payments and charges
under the risk adjustment and reinsurance programs established
for the state pursuant to Sections 1343 and 1341 of PPACA, subject
only to the adjustments permitted under paragraph (3).

(3) A health care service plan may vary premiums rates for a
particular nongrandfathered small employer health care service
plan contract from its index rate based only on the following
actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the plan
contract.

(B) The plan contract’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the plan contract that are in
addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for plan contracts that offer
those benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(j) A plan shall comply with the requirements of Section 1374.3.

SEC. 4.  

Section 1357.504 of the Health and Safety Code is
amended to read:

1357.504.  

(a) With respect to small employer health care
service plan contracts offered outside the Exchange, after a small
employer submits a completed application form for a plan contract,
the health care service plan shall, within 30 days, notify the
employer of the employer’s actual premium charges for that plan
contract established in accordance with Section 1357.512. The
employer shall have 30 days in which to exercise the right to buy
coverage at the quoted premium charges.

(b) Except as provided in subdivision (c), when a small employer
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 contract shall become effective no later than the first day of
the following month. When that payment is neither delivered nor
postmarked until after the 15th day of a month, coverage shall
become effective no later than the first day of the second month
following delivery or postmark of the payment.

(c) (1) With respect to a small employer health care service
plan contract offered through the Exchange, a plan shall apply
coverage effective dates consistent with those required under
Section 155.720 of Title 45 of the Code of Federal Regulations
and paragraph (2) of subdivision (e) of Section 1399.849.

(2) With respect to a small employer health care service plan
contract offered outside the Exchange for which an individual
applies during a special enrollment period described in subdivision
(b) of Section 1357.503, the following provisions shall apply:

(A) Coverage under the plan contract shall become effective no
later than the first day of the first calendar month beginning after
the date the plan receives the request for special enrollment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, coverage under the plan
contract shall become effective on the date of birth, adoption, or
placement for adoption.

(d) During the first 30 days after the effective date of the plan
contract, the small employer shall have the option of changing
coverage to a different plan contract offered by the same health
care service plan. If a small employer notifies the plan of the
change within the first 15 days of a month, coverage under the
new plan contract shall become effective no later than the first day
of the following month. If a small employer notifies the plan of
the change after the 15th day of a month, coverage under the new
plan contract shall become effective no later than the first day of
the second month following notification.

SEC. 5.  

Section 1357.509 of the Health and Safety Code is
amended to read:

1357.509.  

(a) To the extent permitted by PPACA, no plan
shall be required to offer a health care service plan contract or
accept applications for the contract pursuant to this article in the
case of any of the following:

(1) To a small employer, if the eligible employees and
dependents who are to be covered by the plan contract do not live,
work or reside within a plan’s approved service areas.

(2) (A) Within a specific service area or portion of a service
area, if a plan reasonably anticipates and demonstrates to the
satisfaction of the director both of the following:

(i) It will not have sufficient health care delivery resources to
ensure that health care services will be available and accessible to
the eligible employee and dependents of the employee because of
its obligations to existing enrollees.

(ii) It is applying this subparagraph uniformly to all employers
without regard to the claims experience of those employers, and
their employees and dependents, or any health status-related factor
relating to those employees and dependents.

(B) A plan that cannot offer a health care service plan contract
to small employers because it is lacking in sufficient health care
delivery resources within a service area or a portion of a service
area pursuant to subparagraph (A) may not offer a contract in the
area in which the plan is not offering coverage to small employers
to new employer groups with more than 50 eligible employees
until the later of the following dates:

(i) The 181st day after the date that coverage is denied pursuant
to this paragraph.

(ii) The date the plan notifies the director that it has the ability
to deliver services to small employer groups, and certifies to the
director that from the date of the notice it will enroll all small
employer groups requesting coverage in that area from the plan.

(C) Subparagraph (B) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to the requirements
of this section.

(b) (1) A health care service plan may decline to offer a health
care service plan contract to a small employer if the plan
demonstrates to the satisfaction of the director both of the
following:

(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, 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), and the
rules adopted thereunder.

(B) It is applying this paragraph uniformly to all employers
without regard to the claims experience of those employers and
their employees and dependents or any health status-related factor
relating to those employees and dependents.

(2) A plan that denies coverage to a small employer under
paragraph (1) shall not offer coverage in the group market before
the later of the following dates:

(A) The 181st day after the date that coverage is denied pursuant
to paragraph (1).

(B) The date the plan demonstrates to the satisfaction of the
director that the plan has sufficient financial reserves necessary to
underwrite additional coverage.

(3) Paragraph (2) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

(4) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to the requirements of
this section.

(c) 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
to the extent permitted by PPACA.

SEC. 6.  

Section 1357.510 of the Health and Safety Code is
repealed.

SEC. 7.  

Section 1357.512 of the Health and Safety Code is
amended to read:

1357.512.  

(a) The premium rate for a small employer health
care service plan contract shall vary with respect to the particular
coverage involved only by the following:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the Centers for Medicare and Medicaid
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 using the individual’s age as of the date of the
contract issuance or renewal, as applicable, and shall not vary by
more than three to one for like individuals of different age who
are 21 years of age or older as described in federal regulations
adopted pursuant to Section 2701(a)(3) of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg(a)(3)).

(2) (A) Geographic region. Except as provided in subparagraph
(B), the geographic regions for purposes of rating shall be the
following:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt,
Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey,
Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou,
Sutter, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba.

(ii) Region 2 shall consist of the Counties of Fresno, Imperial,
Kern, Madera, Mariposa, Merced, Napa, Sacramento, San Joaquin,
San Luis Obispo, Santa Cruz, Solano, Sonoma, and Stanislaus.

(iii) Region 3 shall consist of the Counties of Alameda, Contra
Costa, Marin, San Francisco, San Mateo, and Santa Clara.

(iv) Region 4 shall consist of the Counties of Orange, Santa
Barbara, and Ventura.

(v) Region 5 shall consist of the County of Los Angeles.

(vi) Region 6 shall consist of the Counties of Riverside, San
Bernardino, and San Diego.

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg) and
obtained by the department and the Department of Insurance by
July 1, 2014:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

(xi) Region 11 shall consist of the Counties of Riverside and
San Bernardino.

(xii) Region 12 shall consist of the County of Orange.

(xiii) Region 13 shall consist of the County of San Diego.

(C) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review
the geographic rating regions specified in this paragraph and the
impacts of those regions on the health care coverage market in
California, and submit a report to the appropriate policy committees
of the Legislature.

(3) Whether the contract covers an individual or family, as
described in PPACA.

(b) The rate for a health care service plan contract subject to
this section shall not vary by any factor not described in this
section.

(c) The total premium charged to a small employer pursuant to
this section shall be determined by summing the premiums of
covered employees and dependents in accordance with Section
147.102(c)(1) of Title 45 of the Code of Federal Regulations.

(d) The rating period for rates subject to this section shall be no
less than 12 months from the date of issuance or renewal of the
plan contract.

SEC. 8.  

Section 1363 of the Health and Safety Code is amended
to read:

1363.  

(a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding
the benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner.
The director may require that the materials be presented in a
reasonably uniform manner so as to facilitate comparisons between
plan contracts of the same or other types of plans. Nothing
contained in this chapter shall preclude the director from permitting
the disclosure form to be included with the evidence of coverage
or plan contract.

The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:

(1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.

(2) The exceptions, reductions, and limitations that apply to the
plan.

(3) The full premium cost of the plan.

(4) Any copayment, coinsurance, or deductible requirements
that may be incurred by the member or the member’s family in
obtaining coverage under the plan.

(5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to
change premiums.

(6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:

(A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.

(ii) States, with respect to individual plan contracts, small group
plan contracts, and any other group plan contracts for which health
care services are not negotiated, that the applicant has a right to
view the evidence of coverage prior to enrollment, and, if the
evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.

(B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that
individuals with special health care needs should read carefully
those sections that apply to them.

(C) Includes the plan’s telephone number or numbers that may
be used by an applicant to receive additional information about
the benefits of the plan or a statement where the telephone number
or numbers are located in the disclosure form.

(D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the
disclosure form shall state where the health plan benefits and
coverage matrix is located.

(E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.

(7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.

(8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.

(9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.

(10) If the plan utilizes arbitration to settle disputes, a statement
of that fact.

(11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.

(12) A description of any limitations on the patient’s choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient’s choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.

(13) General authorization requirements for referral by a primary
care physician to a specialty care physician or a nonphysician
health care practitioner.

(14) Conditions and procedures for disenrollment.

(15) A description as to how an enrollee may request continuity
of care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.

(16) Information concerning the right of an enrollee to request
an independent review in accordance with Article 5.55
(commencing with Section 1374.30).

(17) A notice as required by Section 1364.5.

(b) (1) As of July 1, 1999, the director shall require each plan
offering a contract to an individual or small group to provide with
the disclosure form for individual and small group plan contracts
a uniform health plan benefits and coverage matrix containing the
plan’s major provisions in order to facilitate comparisons between
plan contracts. The uniform matrix shall include the following
category descriptions together with the corresponding copayments
and limitations in the following sequence:

(A) Deductibles.

(B) Lifetime maximums.

(C) Professional services.

(D) Outpatient services.

(E) Hospitalization services.

(F) Emergency health coverage.

(G) Ambulance services.

(H) Prescription drug coverage.

(I) Durable medical equipment.

(J) Mental health services.

(K) Chemical dependency services.

(L) Home health services.

(M) Other.

(2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:

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

(c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.

(d) All plans, solicitors, and representatives of a plan shall, when
presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with
a properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.

(e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.

(f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.

(g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in
the group contract that may be less favorable to subscribers or
enrollees.

(h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the
plan shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals
and with groups of the same or similar size for the plan’s preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.

(i) Subdivision (b) shall not apply to any coverage provided by
a plan for the Medi-Cal program or the Medicare program pursuant
to Title XVIII and Title XIX of the Social Security Act.

(j) Until January 1, 2015, the department may waive or modify
the requirements of this section for the purpose of resolving
duplication or conflict with federal requirements for uniform
benefit disclosure in effect pursuant to Section 2715 of the federal
Public Health Service Act and the regulations adopted thereunder.
The department shall implement this subdivision in a manner that
preserves disclosure requirements of this section that exceed or
are not in direct conflict with federal requirements.
Notwithstanding the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code), the department shall implement this
subdivision through issuance of all-plan letters.

SEC. 9.  

Section 1389.4 of the Health and Safety Code is
amended to read:

1389.4.  

(a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.

(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage
and sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting criteria
comply with Sections 1365.5 and 1389.1 and all other applicable
provisions of state and federal law.

(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage or
severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the
department underwriting materials or resource guides provided to
plan solicitors or solicitor firms, provided that those materials
include the information required to be submitted by this section.

(d) Commencing January 1, 2011, the director shall post on the
department’s Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific
information about rating and underwriting criteria and practices
in the individual market and information about the California Major
Risk Medical Insurance Program (Part 6.5 (commencing with
Section 12700) of Division 2 of the Insurance Code) and the federal
temporary high risk pool established pursuant to Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code. The director shall develop the information for the Internet
Web site in consultation with the Department of Insurance to
enhance the consistency of information provided to consumers.
Information about individual health coverage shall also include
the following notification:

“Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could
be denied coverage entirely.”

(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.

(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.

(g) This section shall become inoperative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 10.  

Section 1389.4 is added to the Health and Safety
Code, to read:

1389.4.  

(a) A full service health care service plan that renews
individual grandfathered health plans shall be subject to this
section.

(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for an
individual grandfathered health plan and sets the rate for that
coverage. These guidelines, policies, or procedures shall ensure
that the plan rating and underwriting criteria comply with Sections
1365.5 and 1389.1 and all other applicable provisions of state and
federal law.

(c) On or before the June 1 next following the operative date of
this section, and annually thereafter, every health care service plan
shall file with the department a general description of the criteria,
policies, procedures, or guidelines the plan uses for rating and
underwriting decisions related to individual grandfathered health
plans, which means automatic declinable health conditions, health
conditions that may lead to a coverage decline, height and weight
standards, health history, health care utilization, lifestyle, or
behavior that might result in a decline for coverage or severely
limit the plan products for which they would be eligible. A plan
may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan
solicitors or solicitor firms, provided that those materials include
the information required to be submitted by this section.

(d) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.

(e) This section shall not apply to a closed block of business,
as defined in Section 1367.15.

(f) For purposes of this section, the following definitions shall
apply:

(1) “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.

(2) “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

(g) This section shall become operative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 11.  

Section 1389.5 of the Health and Safety Code is
amended to read:

1389.5.  

(a) This section shall apply to a health care service
plan that provides coverage under an individual plan contract that
is issued, amended, delivered, or renewed on or after January 1,
2007.

(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.

“Without medical underwriting” means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who transfers to another individual
plan contract pursuant to this section.

(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make
the ranking available upon request. The plan shall update the
ranking whenever a new benefit design for individual purchasers
is approved.

(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this section,
at a minimum, when the plan changes the enrollee’s premium rate.
Posting this information on the plan’s Internet Web site shall not
constitute notice for purposes of this subdivision. The notice shall
adequately inform enrollees of the transfer rights provided under
this section, including information on the process to obtain details
about the individual plan contracts available to that enrollee and
advising that the enrollee may be unable to return to his or her
current individual plan contract if the enrollee transfers to another
individual plan contract.

(e) The requirements of this section shall not apply to the
following:

(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an
individual health benefit plan contract offered pursuant to Section
1366.35.

(2) An individual offered conversion coverage pursuant to
Section 1373.6.

(3) Individual coverage under a specialized health care service
plan contract.

(4) An individual enrolled in the Medi-Cal program pursuant
to Chapter 7 (commencing with Section 14000) of Division 9 of
Part 3 of the Welfare and Institutions Code.

(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695)
of Division 2 of the Insurance Code.

(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division
2 of the Insurance Code.

(f) It is the intent of the Legislature that individuals shall have
more choice in their health coverage when health care service plans
guarantee the right of an individual to transfer to another product
based on the plan’s own ranking system. The Legislature does not
intend for the department to review or verify the plan’s ranking
for actuarial or other purposes.

(g) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of that
date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

SEC. 12.  

Section 1389.7 of the Health and Safety Code is
amended to read:

1389.7.  

(a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered under an individual plan contract that was
rescinded, a new individual plan contract, without medical
underwriting, that provides equal benefits. A health care service
plan may also permit an individual, who was covered under an
individual plan contract that was rescinded, to remain covered
under that individual plan contract, with a revised premium rate
that reflects the number of persons remaining on the plan contract.

(b) “Without medical underwriting” means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.

(c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons
covered on the new individual plan contract.

(d) Notwithstanding subdivision (a) and (b), if an individual
was subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.

(e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to
coverage provided under this section.

(f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.

(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

(h) This section shall become inoperative on January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 13.  

Section 1389.7 is added to the Health and Safety
Code, to read:

1389.7.  

(a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered by the plan under an individual plan contract
that was rescinded, a new individual plan contract that provides
the most equivalent benefits.

(b) If a new individual plan contract is issued under subdivision
(a), the plan may revise the premium rate to reflect only the number
of persons covered on the new individual plan contract consistent
with Section 1399.855.

(c) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to
coverage provided under this section.

(d) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract under subdivision (a), and
this contract shall be effective as of the effective date of the original
plan contract and there shall be no lapse in coverage.

(e) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

(f) This section shall apply notwithstanding subdivision (a) or
(d) of Section 1399.849.

(g) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 14.  

Section 1399.805 of the Health and Safety Code is
amended to read:

1399.805.  

(a) (1) After the federally eligible defined individual
submits a completed application form for a plan contract, the plan
shall, within 30 days, notify the individual of the individual’s actual
premium charges for that plan contract, unless the plan has
provided notice of the premium charge prior to the application
being filed. In no case shall the premium charged for any health
care service plan contract identified in subdivision (d) of Section
1366.35 exceed the following amounts:

(A) For health care service plan contracts that offer services
through a preferred provider arrangement, the average premium
paid by a subscriber of the Major Risk Medical Insurance Program
who is of the same age and resides in the same geographic area as
the federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 and 64,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(B) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, 170 percent of the
standard premium charged to an individual who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 and 64, inclusive, the premium
shall not exceed 170 percent of the standard premium charged to
an individual who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual. The
individual shall have 30 days in which to exercise the right to buy
coverage at the quoted premium rates.

(2) A plan may adjust the premium based on family size, not to
exceed the following amounts:

(A) For health care service plans that offer services through a
preferred provider arrangement, the average of the Major Risk
Medical Insurance Program rate for families of the same size that
reside in the same geographic area as the federally eligible defined
individual.

(B) For health care service plans identified in subdivision (d)
of Section 1366.35 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to a family that is of the same size and resides in the same
geographic area as the federally eligible defined individual.

(b) When a federally eligible defined 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 shall begin no later
than the first day of the following month. When that payment is
neither delivered or postmarked until after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.

(c) During the first 30 days after the effective date of the plan
contract, the individual shall have the option of changing coverage
to a different plan contract offered by the same health care service
plan. If the individual notified the plan of the change within the
first 15 days of a month, coverage under the new plan contract
shall become effective no later than the first day of the following
month. If an enrolled individual notified the plan of the change
after the 15th day of a month, coverage under the new plan contract
shall become effective no later than the first day of the second
month following notification.

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of that
date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

SEC. 15.  

Section 1399.805 is added to the Health and Safety
Code, to read:

1399.805.  

(a) After the federally eligible defined individual
submits a completed application form for a plan contract, the plan
shall, within 30 days, notify the individual of the individual’s actual
premium charges for that plan contract, unless the plan has
provided notice of the premium charge prior to the application
being filed. In no case shall the premium charged for any health
care service plan contract identified in subdivision (d) of Section
1366.35 exceed the premium for the second lowest cost silver plan
of the individual market in the rating area in which the individual
resides which is offered through the California Health Benefit
Exchange established under Title 22 (commencing with Section
100500) of the Government Code, as described in Section
36B(b)(3)(B) of Title 26 of the United States Code.

(b) When a federally eligible defined 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 shall begin no later
than the first day of the following month. When that payment is
neither delivered nor postmarked until after the 15th day of a
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(c) During the first 30 days after the effective date of the plan
contract, the individual shall have the option of changing coverage
to a different plan contract offered by the same health care service
plan. If the individual notified the plan of the change within the
first 15 days of a month, coverage under the new plan contract
shall become effective no later than the first day of the following
month. If an enrolled individual notified the plan of the change
after the 15th day of a month, coverage under the new plan contract
shall become effective no later than the first day of the second
month following notification.

(d) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 16.  

Section 1399.811 of the Health and Safety Code is
amended to read:

1399.811.  

Premiums for contracts offered, delivered, amended,
or renewed by plans on or after January 1, 2001, shall be subject
to the following requirements:

(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:

(1) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 to 64 years,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(2) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, 170 percent of the
standard premium charged to an individual who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 to 64 years, inclusive, the premium
shall not exceed 170 percent of the standard premium charged to
an individual who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual.

(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:

(1) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 and 64 years,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(2) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, 170 percent of the
standard premium charged to an individual who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 and 64 years, inclusive, the
premium shall not exceed 170 percent of the standard premium
charged to an individual who is 59 years of age and resides in the
same geographic area as the federally eligible defined individual.
The premium effective on January 1, 2001, shall apply to in force
business at the earlier of either the time of renewal or July 1, 2001.

(c) The premium applied to a federally eligible defined
individual may not increase by more than the following amounts:

(1) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that offer services through a
preferred provider arrangement, the average increase in the
premiums charged to a subscriber of the Major Risk Medical
Insurance Program who is of the same age and resides in the same
geographic area as the federally eligible defined individual.

(2) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, the increase in premiums
charged to a nonfederally qualified individual who is of the same
age and resides in the same geographic area as the federally defined
eligible individual. The premium for an eligible individual may
not be modified more frequently than every 12 months.

(3) For a contract that a plan has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of that
date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

SEC. 17.  

Section 1399.811 is added to the Health and Safety
Code, to read:

1399.811.  

(a) Premiums for contracts offered, delivered,
amended, or renewed by plans on or after the operative date of
this section shall be subject to the following requirements:

(1) The premium for in force or new business for a federally
eligible defined individual shall not exceed the premium for the
second lowest cost silver plan of the individual market in the rating
area in which the individual resides which is offered through the
California Health Benefit Exchange established under Title 22
(commencing with Section 100500) of the Government Code, as
described in Section 36B(b)(3)(B) of Title 26 of the United States
Code.

(2) For a contract that a plan has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

(b) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 18.  

Section 1399.816 of the Health and Safety Code is
repealed.

SEC. 19.  

The heading of Article 11.7 (commencing with
Section 1399.825) of Chapter 2.2 of Division 2 of the Health and
Safety Code is amended to read:

 

Article 11.7.  Child Access to Health Care Coverage

 

SEC. 20.  

Section 1399.829 of the Health and Safety Code is
amended to read:

1399.829.  

(a) A health care service plan may use the following
characteristics of an eligible child for purposes of establishing the
rate of the plan contract for that child, where consistent with federal
regulations under PPACA: age, geographic region, and family
composition, plus the health care service plan contract selected by
the child or the responsible party for the child.

(b) From the effective date of this article to December 31, 2013,
inclusive, rates for a child applying for coverage shall be subject
to the following limitations:

(1) During any open enrollment period or for late enrollees, the
rate for any child due to health status shall not be more than two
times the standard risk rate for a child.

(2) The rate for a child shall be subject to a 20-percent surcharge
above the highest allowable rate on a child applying for coverage
who is not a late enrollee and who failed to maintain coverage with
any health care service plan or health insurer for the 90-day period
prior to the date of the child’s application. The surcharge shall
apply for the 12-month period following the effective date of the
child’s coverage.

(3) If expressly permitted under PPACA and any rules,
regulations, or guidance issued pursuant to that act, a health care
service plan may rate a child based on health status during any
period other than an open enrollment period if the child is not a
late enrollee.

(4) If expressly permitted under PPACA and any rules,
regulations, or guidance issued pursuant to that act, a health care
service plan may condition an offer or acceptance of coverage on
any preexisting condition or other health status-related factor for
a period other than an open enrollment period and for a child who
is not a late enrollee.

(c) For any individual health care service plan contract issued,
sold, or renewed prior to December 31, 2013, the health plan shall
provide to a child or responsible party for a child a notice that
states the following:

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

(d) A child who applied for coverage between September 23,
2010, and the end of the initial open enrollment period shall be
deemed to have maintained coverage during that period.

(e) Effective January 1, 2014, except for individual
grandfathered health plan coverage, the rate for any child shall be
identical to the standard risk rate.

(f) Health care service plans shall not require documentation
from applicants relating to their coverage history.

(g) (1) On and after the operative date of the act adding this
subdivision, and until January 1, 2014, a health care service plan
shall provide a notice to all applicants for coverage under this
article and to all enrollees, or the responsible party for an enrollee,
renewing coverage under this article that contains the following
information:

(A) Information about the open enrollment period provided
under Section 1399.849.

(B) An explanation that obtaining coverage during the open
enrollment period described in Section 1399.849 will not affect
the effective dates of coverage for coverage purchased pursuant
to this article unless the applicant cancels that coverage.

(C) An explanation that coverage purchased pursuant to this
article shall be effective as required under subdivision (d) of
Section 1399.826 and that such coverage shall not prevent an
applicant from obtaining new coverage during the open enrollment
period described in Section 1399.849.

(D) Information about the Medi-Cal program and the Healthy
Families Program and about subsidies available through the
California Health Benefit Exchange.

(2) The notice described in paragraph (1) shall be in plain
language and 14-point type.

(3) The department may adopt a model notice to be used by
health care service plans in order to comply with this subdivision,
and shall consult with the Department of Insurance in adopting
that model notice. Use of the model notice shall not require prior
approval of the department. Any model notice designated by the
department for purposes of this section shall not be subject to the
Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code).

SEC. 21.  

Section 1399.836 is added to the Health and Safety
Code, to read:

1399.836.  

This article shall become inoperative on January 1,
2014, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

SEC. 22.  

Article 11.8 (commencing with Section 1399.845)
is added to Chapter 2.2 of Division 2 of the Health and Safety
Code, to read:

 

Article 11.8.  Individual Access to Health Care Coverage

 

1399.845.  

For purposes of this article, the following definitions
shall apply:

(a) “Child” means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.

(b) “Dependent” means the spouse or registered domestic
partner, or child, of an individual, subject to applicable terms of
the health benefit plan.

(c) “Exchange” means the California Health Benefit Exchange
created by Section 100500 of the Government Code.

(d) “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

(e) “Health benefit plan” means any individual or group health
care service plan contract that provides medical, hospital, and
surgical benefits. The term does not include a specialized health
care service plan contract, a health care service plan conversion
contract offered pursuant to Section 1373.6, a health care service
plan contract provided in the Medi-Cal program (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code), the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), the Access for Infants and Mothers Program
(Part 6.3 (commencing with Section 12695) of Division 2 of the
Insurance Code), or the program under Part 6.4 (commencing with
Section 12699.50) of Division 2 of the Insurance Code, a health
care service plan contract offered to a federally eligible defined
individual under Article 4.6 (commencing with Section 1366.35),
or Medicare supplement coverage, to the extent consistent with
PPACA.

(f) “Policy year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations.

(g) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued pursuant to that law.

(h) “Preexisting condition provision” means a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the enrollee’s effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage.

(i) “Rating period” means the period for which premium rates
established by a plan are in effect.

(j) “Registered domestic partner” means a person who has
established a domestic partnership as described in Section 297 of
the Family Code.

1399.847.  

Every health care service plan offering individual
health benefit plans shall, in addition to complying with the
provisions of this chapter and rules adopted thereunder, comply
with the provisions of this article.

1399.849.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
health benefit plans that are sold in the individual market for policy
years on or after January 1, 2014, to all individuals and dependents
in each service area in which the plan provides or arranges for the
provision of health care services. A plan shall limit enrollment in
individual health benefit plans to open enrollment periods and
special enrollment periods as provided in subdivisions (c) and (d).

(2) A plan shall allow the subscriber of an individual health
benefit plan to add a dependent to the subscriber’s plan at the
option of the subscriber, consistent with the open enrollment,
annual enrollment, and special enrollment period requirements in
this section.

(3) A health care service plan offering coverage in the individual
market shall not reject the request of a subscriber during an open
enrollment period to include a dependent of the subscriber as a
dependent on an existing individual health benefit plan.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) A plan shall provide an initial open enrollment period from
October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for plan years on or after January 1, 2015, from
October 15 to December 7, inclusive, of the preceding calendar
year.

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a plan shall allow an individual to enroll in or change individual
health benefit plans 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, 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, but is not
limited to, 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 and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “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 clause (ii) and Sections 1389.7 and 1389.21.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered pursuant to a valid
state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health benefit plan substantially violated a
material provision of the contract.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845
or Section 10965 of the Insurance Code, for one of the conditions
described in subdivision (c) of Section 1373.96 and that provider
is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) 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 paragraph (1) 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 identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the following provisions shall apply:

(1) The effective date of coverage selected pursuant to this
section shall be consistent with the dates specified in Section
155.410 or 155.420 of Title 45 of the Code of Federal Regulations.

(2) Notwithstanding paragraph (1), in the case where an
individual acquires or becomes a dependent by entering into a
registered domestic partnership pursuant to Section 297 of the
Family Code and applies for coverage of that domestic partner
consistent with subdivision (d), the coverage effective date shall
be the first day of the month following the date he or she selects
a plan through the Exchange, unless an earlier date is agreed to
under Section 155.420(b)(3) of Title 45 of the Code of Federal
Regulations.

(f) With respect to individual health benefit plans offered outside
the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan contract, 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 for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the subscriber submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan 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 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. 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.

(B) Notwithstanding subparagraph (A), 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.

(C) Notwithstanding subparagraph (A), 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 month following
the date the plan receives the request for special enrollment.

(g) (1) A health care service plan shall not establish rules for
eligibility, including continued eligibility, of any individual to
enroll under the terms of an individual health benefit plan based
on any of the following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her dependent
to fill out a health assessment or medical questionnaire prior to
enrollment under an individual health benefit plan. A health care
service plan shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health care service plan shall consider the claims
experience of all enrollees in all individual health benefit plans
offered in the state that are subject to subdivision (a), including
those enrollees who do not enroll in the plans through the
Exchange, to be members of a single risk pool.

(2) Each policy year, a health care service plan shall establish
an index rate for the individual market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA, within the single
risk pool required under paragraph (1). The index rate shall be
adjusted on a market-wide basis based on the total expected
market-wide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA. The premium rate for all of the health
care service plan’s health benefit plans in the individual market
shall use the applicable index rate, as adjusted for total expected
market-wide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA, subject only to the adjustments
permitted under paragraph (3).

(3) A health care service plan may vary premiums rates for a
particular health benefit plan from its index rate based only on the
following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for plans that offer those
benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

1399.851.  

(a) 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.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs.

(b) 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 only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

1399.853.  

(a) All individual health benefit plans shall conform
to the requirements of Sections 1365, 1366.3, 1367.001, and
1373.6, and any other requirements imposed by this chapter, and
shall be renewable at the option of the enrollee except as permitted
to be canceled, rescinded, or not renewed pursuant to Section 1365.

(b) Any plan that ceases to offer for sale new individual health
benefit plans pursuant to Section 1365 shall continue to be
governed by this article with respect to business conducted under
this article.

1399.855.  

(a) With respect to individual health benefit plans
for policy years on or after January 1, 2014, a health care service
plan may use only the following characteristics of an individual,
and any dependent thereof, for purposes of establishing the rate
of the individual health benefit plan covering the individual and
the eligible dependents thereof, along with the health benefit plan
selected by the individual:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the federal Centers for Medicare and Medicaid
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 using the individual’s age as of the date of the plan
issuance or renewal, as applicable, and shall not vary by more than
three to one for like individuals of different age who are age 21 or
older as described in federal regulations adopted pursuant to
Section 2701(a)(3) of the federal Public Health Service Act (42
U.S.C. Sec. 300gg(a)(3)).

(2) (A) Geographic region. Except as provided in subparagraph
(B), the geographic regions for purposes of rating shall be the
following:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt,
Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey,
Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou,
Sutter, Tehama, Trinity, Tulare, Tuolomne, Yolo, and Yuba.

(ii) Region 2 shall consist of the Counties of Fresno, Imperial,
Kern, Madera, Mariposa, Merced, Napa, Sacramento, San Joaquin,
San Luis Obispo, Santa Cruz, Solano, Sonoma, and Stanislaus.

(iii) Region 3 shall consist of the Counties of Alameda, Contra
Costa, Marin, San Francisco, San Mateo, and Santa Clara.

(iv) Region 4 shall consist of the Counties of Orange, Santa
Barbara, and Ventura.

(v) Region 5 shall consist of the County of Los Angeles.

(vi) Region 6 shall consist of the Counties of Riverside, San
Bernardino, and San Diego.

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg) and
obtained by the department and the Department of Insurance by
July 1, 2014:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

(xi) Region 11 shall consist of the Counties of Riverside and
San Bernardino.

(xii) Region 12 shall consist of the County of Orange.

(xiii) Region 13 shall consist of the County of San Diego.

(C) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review
the geographic rating regions specified in this paragraph and the
impacts of those regions on the health care coverage market in
California, and make a report to the appropriate policy committees
of the Legislature.

(3) Whether the 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) With respect to family coverage under an individual health
benefit plan, the rating variation permitted under paragraph (1) of
subdivision (a) shall be applied based on the portion of the
premium attributable to each family member covered under the
plan. The total premium for family coverage shall be determined
by summing the premiums for each individual family member. In
determining the total premium for family members, premiums for
no more than the three oldest family members who are under age
21 shall be taken into account.

(d) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.

(e) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

(f) The requirement for submitting a report imposed under
subparagraph (B) of paragraph (2) of subdivision (a) is inoperative
on June 1, 2021, pursuant to Section 10231.5 of the Government
Code.

1399.857.  

(a) A health care service plan shall not be required
to offer an individual health benefit plan or accept applications for
the plan pursuant to Section 1399.849 in the case of any of the
following:

(1) To an individual who does not live or reside within the plan’s
approved service areas.

(2) (A) Within a specific service area or portion of a service
area, if the plan reasonably anticipates and demonstrates to the
satisfaction of the director both of the following:

(i) 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.

(ii) It is applying this subparagraph uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.

(B) 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 pursuant to subparagraph (A) shall not offer a health
benefit plan in that area to individuals until the later of the
following dates:

(i) The 181st day after the date coverage is denied pursuant to
this paragraph.

(ii) The date 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.

(C) Subparagraph (B) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to this section.

(b) (1) A health care service plan may decline to offer an
individual health benefit plan to an individual if the plan
demonstrates to the satisfaction of the director both of the
following:

(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, 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), and the
rules adopted thereunder.

(B) It is applying this subdivision uniformly to all individuals
without regard to the claims experience of those individuals any
health status-related factor relating to those individuals.

(2) A plan that denies coverage to an individual under paragraph
(1) shall not offer coverage in the individual market before the
later of the following dates:

(A) The 181st day after the date that coverage is denied pursuant
to paragraph (1).

(B) The date the plan demonstrates to the satisfaction of the
director that the plan has sufficient financial reserves necessary to
underwrite additional coverage.

(3) Paragraph (2) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

(4) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to this section.

(c) 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
to the extent permitted by PPACA.

(d) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

1399.859.  

(a) A health care service plan that receives an
application for an individual health benefit plan outside the
Exchange during the initial open enrollment period, an annual
enrollment period, or a special enrollment period described in
Section 1399.849 shall inform the applicant that he or she may be
eligible for lower cost coverage through the Exchange and shall
inform the applicant of the applicable enrollment period provided
through the Exchange described in Section 1399.849.

(b) On or before October 1, 2013, and annually thereafter, a
health care service plan shall issue a notice to a subscriber enrolled
in an individual health benefit plan offered outside the Exchange.
The notice shall inform the subscriber that he or she may be eligible
for lower cost coverage through the Exchange and shall inform
the subscriber of the applicable open enrollment period provided
through the Exchange described in Section 1399.849.

(c) This section shall not apply where the individual health
benefit plan described in subdivision (a) or (b) is a grandfathered
health plan.

1399.861.  

(a) On or before October 1, 2013, and annually
thereafter, a health care service plan shall issue the following notice
to all subscribers enrolled in an individual health benefit plan that
is a grandfathered health plan:

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

(b) Commencing October 1, 2013, a health care service plan
shall include the notice described in subdivision (a) in any renewal
material of the individual grandfathered health plan and in any
application for dependent coverage under the individual
grandfathered health plan.

(c) A health care service plan shall not advertise or market an
individual health benefit plan that is a grandfathered health plan
for purposes of enrolling a dependent of a subscriber into the plan
for policy years on or after January 1, 2014. Nothing in this
subdivision shall be construed to prohibit an individual enrolled
in an individual grandfathered health plan from adding a dependent
to that plan to the extent permitted by PPACA.

1399.862.  

Except as otherwise provided in this article, this
article shall only be implemented to the extent that it meets or
exceeds the requirements set forth in PPACA.

end delete

begin delete SEC. 23. end delete
begin insert SECTION 1. end insert   

Section 10113.95 of the Insurance Code is
amended to read:

10113.95.  

(a) A health insurer that issues, renews, or amends
individual health insurance policies shall be subject to this section.

(b) An insurer subject to this section shall have written policies,
procedures, or underwriting guidelines establishing the criteria
and process whereby the insurer makes its decision to provide or
to deny coverage to individuals applying for coverage and sets the
rate for that coverage. These guidelines, policies, or procedures
shall ensure that the plan rating and underwriting criteria comply
with Sections 10140 and 10291.5 and all other applicable
provisions.

(c) On or before June 1, 2006, and annually thereafter, every
insurer shall file with the commissioner a general description of
the criteria, policies, procedures, or guidelines that the insurer uses
for rating and underwriting decisions related to individual health
insurance policies, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage or
severely limit the health insurance products for which individuals
applying for coverage would be eligible. An insurer may comply
with this section by submitting to the department underwriting
materials or resource guides provided to agents and brokers,
provided that those materials include the information required to
be submitted by this section.

(d) Commencing January 1, 2011, the commissioner shall post
on the department’s Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific
information about rating and underwriting criteria and practices
in the individual market and information about the California Major
Risk Medical Insurance Program (Part 6.5 (commencing with
Section 12700)) and the federal temporary high risk pool
established pursuant to Part 6.6 (commencing with Section
12739.5). The commissioner shall develop the information for the
Internet Web site in consultation with the Department of Managed
Health Care to enhance the consistency of information provided
to consumers. Information about individual health insurance shall
also include the following notification:

“Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could
be denied coverage entirely.”

(e) Nothing in this section shall authorize public disclosure of
company-specific rating and underwriting criteria and practices
submitted to the commissioner.

(f) This section shall not apply to a closed block of business, as
defined in Section 10176.10.

(g)  begin insert (1) end insert begin insert   end insert This section shall become inoperative on November 1,
2013, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

begin insert

(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative 12 months after the date of that repeal or
amendment.

end insert

begin delete SEC. 24. end delete
begin insert SEC. 2. end insert   

Section 10113.95 is added to the Insurance Code, to
read:

10113.95.  

(a) A health insurer that renews individual
grandfathered health begin insert benefit end insert plans shall be subject to this section.

(b) An insurer subject to this section shall have written policies,
procedures, or underwriting guidelines establishing the criteria
and process whereby the insurer makes its decision to provide or
to deny coverage to begin delete individuals end delete begin insert dependents end insert applying for an
individual grandfathered health begin insert benefit end insert plan and sets the rate for
that coverage. These guidelines, policies, or procedures shall ensure
that the plan rating and underwriting criteria comply with Sections
10140 and 10291.5 and all other applicable begin delete provisions. end delete begin insert provisions
of state and federal law. end insert

(c) On or before the June 1 next following the operative date of
this section, and annually thereafter, every insurer shall file with
the commissioner a general description of the criteria, policies,
procedures, or guidelines that the insurer uses for rating and
underwriting decisions related to individual grandfathered health
begin insert benefit end insert plans, which means automatic declinable health conditions,
health conditions that may lead to a coverage decline, height and
weight standards, health history, health care utilization, lifestyle,
or behavior that might result in a decline for coverage or severely
limit the health insurance products for which individuals applying
for coverage would be eligible. An insurer may comply with this
section by submitting to the department underwriting materials or
resource guides provided to agents and brokers, provided that those
materials include the information required to be submitted by this
section.

(d) Nothing in this section shall authorize public disclosure of
company-specific rating and underwriting criteria and practices
submitted to the commissioner.

begin delete

(e) This section shall not apply to a closed block of business,
as defined in Section 10176.10.

end delete begin delete

(f)

end delete

begin insert (e) end insert  For purposes of this section, the following definitions shall
apply:

(1) “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.

(2) “Grandfathered health begin insert benefit end insert plan” has the same meaning
as that term is defined in Section 1251 of PPACA.

begin delete

(g) 

end delete

begin insert (f) end insert begin insert   end insert begin insert (1) end insert begin insert   end insert This section shall become operative on November 1,
2013, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

begin insert

(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individueal market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become inoperative 12 months after the date of that repeal
or amendment.

end insert

begin delete SEC. 25. end delete
begin insert SEC. 3. end insert   

Section 10119.1 of the Insurance Code is amended to
read:

10119.1.  

(a) This section shall apply to a health insurer that
covers hospital, medical, or surgical expenses under an individual
health benefit plan, as defined in subdivision (a) of Section
10198.6, that is issued, amended, renewed, or delivered on or after
January 1, 2007.

(b) At least once each year, a health insurer shall permit an
individual who has been covered for at least 18 months under an
individual health benefit plan to transfer, without medical
underwriting, to any other individual health benefit plan offered
by that same health insurer that provides equal or lesser benefits
as determined by the insurer.

“Without medical underwriting” means that the health insurer
shall not decline to offer coverage to, or deny enrollment of, the
individual or impose any preexisting condition exclusion on the
individual who transfers to another individual health benefit plan
pursuant to this section.

(c) The insurer shall establish, for the purposes of subdivision
(b), a ranking of the individual health benefit plans it offers to
individual purchasers and post the ranking on its Internet Web site
or make the ranking available upon request. The insurer shall
update the ranking whenever a new benefit design for individual
purchasers is approved.

(d) The insurer shall notify in writing all insureds of the right
to transfer to another individual health benefit plan pursuant to
this section, at a minimum, when the insurer changes the insured’s
premium rate. Posting this information on the insurer’s Internet
Web site shall not constitute notice for purposes of this subdivision.
The notice shall adequately inform insureds of the transfer rights
provided under this section including information on the process
to obtain details about the individual health benefit plans available
to that insured and advising that the insured may be unable to
return to his or her current individual health benefit plan if the
insured transfers to another individual health benefit plan.

(e) The requirements of this section shall not apply to the
following:

(1) A federally eligible defined individual, as defined in
subdivision (e) of Section 10900, who purchases individual
coverage pursuant to Section 10785.

(2) An individual offered conversion coverage pursuant to
Sections 12672 and 12682.1.

(3) An individual enrolled in the Medi-Cal program pursuant
to Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code.

(4) An individual enrolled in the Access for Infants and Mothers
Program, pursuant to Part 6.3 (commencing with Section 12695).

(5) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693).

(f) It is the intent of the Legislature that individuals shall have
more choice in their health care coverage when health insurers
guarantee the right of an individual to transfer to another product
based on the insurer’s own ranking system. The Legislature does
not intend for the department to review or verify the insurer’s
ranking for actuarial or other purposes.

(g)  begin insert (1) end insert begin insert   end insert This section shall begin delete remain in effect only until end delete begin insert become
inoperative on end insert January 1, 2014, or the 91st calendar day following
the adjournment of the 2013-14 First Extraordinary Session,
whichever date is begin delete later, and as of that date is repealed, unless a
later enacted statute, that becomes operative on or before that date,
deletes or extends the date on which it is repealed. end delete begin insert later. end insert

begin insert

(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative 12 months after the date of that repeal or
amendment.

end insert

begin delete SEC. 26. end delete
begin insert SEC. 4. end insert   

Section 10119.2 of the Insurance Code is amended to
read:

10119.2.  

(a) Every health insurer that offers, issues, or renews
health insurance under an individual health benefit plan, as defined
in subdivision (a) of Section 10198.6, shall offer to any individual,
who was covered under an individual health benefit plan that was
rescinded, a new individual health benefit plan without medical
underwriting that provides equal benefits. A health insurer may
also permit an individual, who was covered under an individual
health benefit plan that was rescinded, to remain covered under
that individual health benefit plan, with a revised premium rate
that reflects the number of persons remaining on the health benefit
plan.

(b) “Without medical underwriting” means that the health insurer
shall not decline to offer coverage to, or deny enrollment of, the
individual or impose any preexisting condition exclusion on the
individual who is issued a new individual health benefit plan or
remains covered under an individual health benefit plan pursuant
to this section.

(c) If a new individual health benefit plan is issued, the insurer
may revise the premium rate to reflect only the number of persons
covered under the new individual health benefit plan.

(d) Notwithstanding begin delete subdivision end delete begin insert subdivisions end insert (a) and (b), if an
individual was subject to a preexisting condition provision or a
waiting or affiliation period under the individual health benefit
plan that was rescinded, the health insurer may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual health benefit plan. The time period in the new
individual health benefit plan for the preexisting condition
provision or waiting or affiliation period shall not be longer than
the one in the individual health benefit plan that was rescinded
and the health insurer shall credit any time that the individual was
covered under the rescinded individual health benefit plan.

(e) The insurer shall notify in writing all insureds of the right
to coverage under an individual health benefit plan pursuant to
this section, at a minimum, when the insurer rescinds the individual
health benefit plan. The notice shall adequately inform insureds
of the right to coverage provided under this section.

(f) The insurer shall provide 60 days for insureds to accept the
offered new individual health benefit plan and this plan shall be
effective as of the effective date of the original individual health
benefit plan and there shall be no lapse in coverage.

(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

(h)  begin insert (1) end insert begin insert   end insert This section shall become inoperative on January 1,
2014, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

begin insert

(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative 12 months after the date of that repeal or
amendment.

end insert

begin delete SEC. 27. end delete
begin insert SEC. 5. end insert   

Section 10119.2 is added to the Insurance Code, to
read:

10119.2.  

(a) Every health insurer that offers, issues, or renews
health insurance under an individual health benefit plan, as defined
in subdivision (a) of Section 10198.6, through the California Health
Benefit Exchange shall offer to any individual, who was covered
by the insurer under an individual health benefit plan that was
rescinded, a new individual health benefit plan through the
Exchange that provides the most equivalent benefits.

(b) A health insurer that offers, issues, or renews individual
health benefit plans inside or outside the California Health Benefit
Exchange may also permit an individual, who was covered by the
insurer under an individual health benefit plan that was rescinded,
to remain covered under that individual health benefit plan, with
a revised premium rate that reflects the number of persons
remaining on the health benefit plan consistent with Section
10965.9.

(c) If a new individual health benefit plan is issued under
subdivision (a), the insurer may revise the premium rate to reflect
only the number of persons covered on the new individual health
benefit plan consistent with Section 10965.9.

(d) The insurer shall notify in writing all insureds of the right
to coverage under an individual health benefit plan pursuant to
this section, at a minimum, when the insurer rescinds the individual
health benefit plan. The notice shall adequately inform insureds
of the right to coverage provided under this section.

(e) The insurer shall provide 60 days for insureds to accept the
offered new individual health benefit plan under subdivision (a),
and this plan shall be effective as of the effective date of the
original health benefit plan and there shall be no lapse in coverage.

(f) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

(g) This section shall apply notwithstanding subdivision (a) or
(d) of Section 10965.3.

(h)  begin insert (1) end insert begin insert   end insert This section shall become operative on January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

begin insert

(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become inoperative 12 months after the date of that repeal
or amendment.

end insert

begin delete SEC. 28. end delete
begin insert SEC. 6. end insert   

Section 10127.21 is added to the Insurance Code, to
read:

10127.21.  

Any data submitted by a health insurer to the United
States Secretary of Health and Human Services, or his or her
designee, for purposes of the risk adjustment program described
in Section 1343 of the federal Patient Protection and Affordable
Care Act (42 U.S.C. Sec. 18063) shall be concurrently submitted
to the begin delete department. end delete begin insert department and in the same format. The
department shall use the information to monitor federal
implementation of risk adjustment in the state and to ensure that
insurers are in compliance with federal requirements related to
risk adjustment. end insert

begin delete SEC. 29. end delete
begin insert SEC. 7. end insert   

Section 10198.7 of the Insurance Code is amended to
read:

10198.7.  

(a) A health benefit plan for group coverage shall
not impose any preexisting condition provision or waivered
condition provision upon any individual.

(b) A nongrandfathered health benefit plan for individual
coverage shall not impose any preexisting condition provision or
waivered condition provision upon any individual. A grandfathered
health benefit plan for individual coverage shall not exclude
coverage on the basis of a waivered condition provision or
preexisting condition provision for a period greater than 12 months
following the individual’s effective date of coverage, nor limit or
exclude coverage for a specific insured by type of illness, treatment,
medical condition, or accident, except for satisfaction of a
preexisting condition provision or waivered condition provision
pursuant to this article. Waivered condition provisions or
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) A health benefit plan for group coverage may apply a
waiting period of up to 60 days as a condition of employment if
applied equally to all eligible employees and dependents and if
consistent with PPACA. A waiting period shall not be based on a
preexisting condition of an employee or dependent, the health
status of an employee or dependent, or any other factor listed in
Section 10198.9. During the waiting period, the health benefit plan
is not required to provide health care services and no premium
shall be charged to the policyholder or insureds.

(2) A health benefit plan for individual coverage shall not
impose a waiting period.

(d) In determining whether a preexisting condition provision,
a waivered condition provision, or a waiting period applies to a
person, a health benefit plan shall credit the time the person was
covered under creditable coverage, provided that the person
becomes eligible for coverage under the succeeding health benefit
plan within 62 days of termination of prior coverage, exclusive of
any waiting 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 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 period, and applies for coverage under
the succeeding plan within the applicable enrollment period.

(e) An individual’s period of creditable coverage shall be
certified pursuant to Section 2704(e) of Title XXVII of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-3(e)).

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 10603 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

10603.  

(a)  begin insert (1) end insert begin insert   end insert On or before April 1, 1975, the commissioner
shall promulgate a standard supplemental disclosure form for all
disability insurance policies. Upon the appropriate disclosure form
as prescribed by the commissioner, each insurer shall provide, in
easily understood language and in a uniform, clearly organized
manner, as prescribed and required by the commissioner, begin delete such end delete begin insert the end insert
summary information about each disability insurance policy offered
by the insurer as the commissioner finds is necessary to provide
for full and fair disclosure of the provisions of the policy.

begin insert

(2) On and after January 1, 2014, a disability insurer offering
health insurance coverage subject to Section 2715 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-15) shall satisfy
the requirements of this section and the implementing regulations
by providing the uniform summary of benefits and coverage
required under Section 2715 of the federal Public Health Service
Act and any rules or regulations issued thereunder. An insurer
that issues the federal uniform summary of benefits referenced in
this paragraph shall ensure that all applicable disclosures required
in this chapter and its implementing regulations are met in other
documents provided to policyholders and insureds. An insurer
subject to this paragraph shall provide the uniform summary of
benefits and coverage to the commissioner together with the
corresponding health insurance policy pursuant to Section 10290.

end insert

(b) Nothing in this section shall preclude the disclosure form
from being included with the evidence of coverage or certificate
of coverage or policy.

begin delete SEC. 30. end delete
begin insert SEC. 9. end insert   

Section 10753.05 of the Insurance Code is amended
to read:

10753.05.  

(a) No group or individual policy or contract or
certificate of group insurance or statement of group coverage
providing benefits to employees of small employers as defined in
this chapter shall be issued or delivered by a carrier subject to the
jurisdiction of the commissioner regardless of the situs of the
contract or master policyholder or of the domicile of the carrier
nor, except as otherwise provided in Sections 10270.91 and
10270.92, shall a carrier provide coverage subject to this chapter
until a copy of the form of the policy, contract, certificate, or
statement of coverage is filed with and approved by the
commissioner in accordance with Sections 10290 and 10291, and
the carrier has complied with the requirements of Section 10753.17.

(b) (1) On and after October 1, 2013, each carrier shall fairly
and affirmatively offer, market, and sell all of the carrier’s health
benefit plans that are sold to, offered through, or sponsored by,
small employers or associations that include small employers for
plan years on or after January 1, 2014, to all small employers in
each geographic region in which the carrier makes coverage
available or provides benefits.

(2) A carrier that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraph (1)
with respect to health benefit plans offered through the Exchange
in those geographic regions in which the carrier offers plans
through the Exchange.

(3) A carrier shall provide enrollment periods consistent with
PPACA and described in Section 155.725 of Title 45 of the Code
of Federal Regulations. Commencing January 1, 2014, a carrier
shall provide special enrollment periods consistent with the special
enrollment periods described in Section 10965.3, except for the
triggering events identified in paragraphs (d)(3) and (d)(6) of
Section 155.420 of Title 45 of the Code of Federal Regulations
with respect to health benefit plans offered through the Exchange.

(4) Nothing in this section shall be construed to require an
association, or a trust established and maintained by an association
to receive a master insurance policy issued by an admitted insurer
and to administer the benefits thereof solely for association
members, to offer, market or sell a benefit plan design to those
who are not members of the association. However, if the
association markets, offers or sells a benefit plan design to those
who are not members of the association it is subject to the
requirements of this section. This shall apply to an association that
otherwise meets the requirements of paragraph (8) formed by
merger of two or more associations after January 1, 1992, if the
predecessor organizations had been in active existence on January
1, 1992, and for at least five years prior to that date and met the
requirements of paragraph (5).

(5) A carrier which (A) effective January 1, 1992, and at least
20 years prior to that date, markets, offers, or sells benefit plan
designs only to all members of one association and (B) does not
market, offer or sell any other individual, selected group, or group
policy or contract providing medical, hospital and surgical benefits
shall not be required to market, offer, or sell to those who are not
members of the association. However, if the carrier markets, offers
or sells any benefit plan design or any other individual, selected
group, or group policy or contract providing medical, hospital and
surgical benefits to those who are not members of the association
it is subject to the requirements of this section.

(6) Each carrier that sells health benefit plans to members of
one association pursuant to paragraph (5) shall submit an annual
statement to the commissioner which states that the carrier is selling
health benefit plans pursuant to paragraph (5) and which, for the
one association, lists all the information required by paragraph (7).

(7) Each carrier that sells health benefit plans to members of
any association shall submit an annual statement to the
commissioner which lists each association to which the carrier
sells health benefit plans, the industry or profession which is served
by the association, the association’s membership criteria, a list of
officers, the state in which the association is organized, and the
site of its principal office.

(8) For purposes of paragraphs (4) and (6), an association is a
nonprofit organization comprised of a group of individuals or
employers who associate based solely on participation in a
specified profession or industry, accepting for membership any
individual or small employer meeting its membership criteria,
which do not condition membership directly or indirectly on the
health or claims history of any person, which uses membership
dues solely for and in consideration of the membership and
membership benefits, except that the amount of the dues shall not
depend on whether the member applies for or purchases insurance
offered by the association, which is organized and maintained in
good faith for purposes unrelated to insurance, which has been in
active existence on January 1, 1992, and at least five years prior
to that date, which has a constitution and bylaws, or other
analogous governing documents which provide for election of the
governing board of the association by its members, which has
contracted with one or more carriers to offer one or more health
benefit plans to all individual members and small employer
members in this state. begin insert Health coverage through an association
that is not related to employment shall be considered individual
coverage pursuant to Section 144.102(c) of Title 45 of the Code
of Federal Regulations. end insert

(c) On and after October 1, 2013, each carrier shall make
available to each small employer all health benefit plans that the
carrier offers or sells to small employers or to associations that
include small employers for plan years on or after January 1, 2014.
Notwithstanding subdivision (d) of Section 10753, for purposes
of this subdivision, companies that are affiliated companies or that
are eligible to file a consolidated income tax return shall be treated
as one carrier.

(d) Each carrier shall do all of the following:

(1) Prepare a brochure that summarizes all of its health benefit
plans and make this summary available to small employers, agents,
and brokers upon request. The summary shall include for each
plan information on benefits provided, a generic description of the
manner in which services are provided, such as how access to
providers is limited, benefit limitations, required copayments and
deductibles, an explanation of how creditable coverage is calculated
if a waiting period is imposed, and a telephone number that can
be called for more detailed benefit information. Carriers are
required to keep the information contained in the brochure accurate
and up to date, and, upon updating the brochure, send copies to
agents and brokers representing the carrier. Any entity that provides
administrative services only with regard to a health benefit plan
written or issued by another carrier shall not be required to prepare
a summary brochure which includes that benefit plan.

(2) For each health benefit plan, prepare a more detailed
evidence of coverage and make it available to small employers,
agents and brokers upon request. The evidence of coverage shall
contain all information that a prudent buyer would need to be aware
of in making selections of benefit plan designs. An entity that
provides administrative services only with regard to a health benefit
plan written or issued by another carrier shall not be required to
prepare an evidence of coverage for that health benefit plan.

(3) Provide copies of the current summary brochure to all agents
or brokers who represent the carrier and, upon updating the
brochure, send copies of the updated brochure to agents and brokers
representing the carrier for the purpose of selling health benefit
plans.

(4) Notwithstanding subdivision (c) of Section 10753, for
purposes of this subdivision, companies that are affiliated
companies or that are eligible to file a consolidated income tax
return shall be treated as one carrier.

(e) Every agent or broker representing one or more carriers for
the purpose of selling health benefit plans to small employers shall
do all of the following:

(1) When providing information on a health benefit plan to a
small employer but making no specific recommendations on
particular benefit plan designs:

(A) Advise the small employer of the carrier’s obligation to sell
to any small employer any of the health benefit plans it offers to
small employers, consistent with PPACA, and provide them, upon
request, with the actual rates that would be charged to that
employer for a given health benefit plan.

(B) Notify the small employer that the agent or broker will
procure rate and benefit information for the small employer on
any health benefit plan offered by a carrier for whom the agent or
broker sells health benefit plans.

(C) Notify the small employer that, upon request, the agent or
broker will provide the small employer with the summary brochure
required in paragraph (1) of subdivision (d) for any benefit plan
design offered by a carrier whom the agent or broker represents.

(D) Notify the small employer of the availability of coverage
and the availability of tax credits for certain employers consistent
with PPACA and state law, including any rules, regulations, or
guidance issued in connection therewith.

(2) When recommending a particular benefit plan design or
designs, advise the small employer that, upon request, the agent
will provide the small employer with the brochure required by
paragraph (1) of subdivision (d) containing the benefit plan design
or designs being recommended by the agent or broker.

(3) Prior to filing an application for a small employer for a
particular health benefit plan:

(A) For each of the health benefit plans offered by the carrier
whose health benefit plan the agent or broker is presenting, provide
the small employer with the benefit summary required in paragraph
(1) of subdivision (d) and the premium for that particular employer.

(B) Notify the small employer that, upon request, the agent or
broker will provide the small employer with an evidence of
coverage brochure for each health benefit plan the carrier offers.

(C) Obtain a signed statement from the small employer
acknowledging that the small employer has received the disclosures
required by this paragraph and Section 10753.16.

(f) No carrier, agent, or broker shall induce or otherwise
encourage a small employer to separate or otherwise exclude an
eligible employee from a health benefit plan which, in the case of
an eligible employee meeting the definition in paragraph (1) of
subdivision (f) of Section 10753, is provided in connection with
the employee’s employment or which, in the case of an eligible
employee as defined in paragraph (2) of subdivision (f) of Section
10753, is provided in connection with a guaranteed association.

(g) No carrier shall reject an application from a small employer
for a health benefit plan provided:

(1) The small employer as defined by subparagraph (A) of
paragraph (1) of subdivision (q) of Section 10753 offers health
benefits to 100 percent of its eligible employees as defined in
paragraph (1) of subdivision (f) of Section 10753. Employees who
waive coverage on the grounds that they have other group coverage
shall not be counted as eligible employees.

(2) The small employer agrees to make the required premium
payments.

(h) No carrier or agent or broker shall, directly or indirectly,
engage in the following activities:

(1) Encourage or direct small employers to refrain from filing
an application for coverage with a carrier because of the health
status, claims experience, industry, occupation, or geographic
location within the carrier’s approved service area of the small
employer or the small employer’s employees.

(2) Encourage or direct small employers to seek coverage from
another carrier because of the health status, claims experience,
industry, occupation, or geographic location within the carrier’s
approved service area of the small employer or the small
employer’s employees.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs begin insert end insert begin insert or discriminate based on the individual end insert begin insert ’s
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree o end insert begin insert f medical dependency, quality of life, or other health
conditions end insert .

begin insert

This subdivision shall be enforced in the same manner as Section
790.03, including through Sections 790.035 and 790.05.

end insert

(i) No carrier shall, directly or indirectly, enter into any contract,
agreement, or arrangement with an agent or broker that provides
for or results in the compensation paid to an agent or broker for a
health benefit plan to be varied because of the health status, claims
experience, industry, occupation, or geographic location of the
small employer or the small employer’s employees. This
subdivision shall not apply with respect to a compensation
arrangement that provides compensation to an agent or broker 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 small employer.

(j) (1) A health benefit plan offered to a small employer, as
defined in Section 1304(b) of PPACA and in Section 10753, shall
not establish rules for eligibility, including continued eligibility,
of an individual, or dependent of an individual, to enroll under the
terms of the plan based on any of the following health status-related
factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 10291.5, a carrier shall not require
an eligible employee or dependent to fill out a health assessment
or medical questionnaire prior to enrollment under a health benefit
plan. A carrier 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.

begin delete

(k) (1) A carrier shall consider the claims experience of all
insureds in all nongrandfathered health benefit plans offered in
the state that are subject to subdivision (a), including those insureds
who do not enroll in the plans through the Exchange, to be
members of a single risk pool.

end delete begin insert

(k) (1) A carrier shall consider as a single risk pool for rating
purposes in the small employer market the claims experience of
all insureds in all nongrandfathered small employer health benefit
plans offered by the carrier in this state, whether offered as health
care service plan contracts or health insurance policies, including
those insureds and enrollees who enroll in coverage through the
Exchange and insureds and enrollees covered by the carrier
outside of the Exchange.

end insert

(2) Each begin delete plan end delete begin insert calendar end insert year, a carrier shall establish an index
rate for the small employer market in the state based on the total
combined claims costs for providing essential health benefits, as
defined pursuant to Section 1302 of PPACA begin insert and Section 10112.27 end insert ,
within the single risk pool required under paragraph (1). The index
rate shall be adjusted on a marketwide basis based on the total
expected marketwide payments and charges under the risk
adjustment and reinsurance programs established for the state
pursuant to Sections 1343 and 1341 of PPACA. The premium rate
for all of the carrier’s nongrandfathered health benefit plans shall
use the applicable index rate, as adjusted for total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA, subject only to the adjustments
permitted under paragraph (3).

(3) A carrier may vary begin delete premiums end delete begin insert premium end insert rates for a particular
nongrandfathered health benefit plan from its index rate based
only on the following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for health benefit plans that
offer those benefits in addition to essential health benefits.

begin insert

(D) Administrative costs, excluding any user fees required by
the Exchange.

end insert begin delete

(D)

end delete

begin insert ( end insert begin insert E) end insert  With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(l) If a carrier enters into a contract, agreement, or other
arrangement with a third-party administrator or other entity to
provide administrative, marketing, or other services related to the
offering of health benefit plans to small employers in this state,
the third-party administrator shall be subject to this chapter.

(m) (1) Except as provided in paragraph (2), this section shall
become inoperative if Section 2702 of the federal Public Health
Service Act (42 U.S.C. Sec. begin delete 300gg-1), end delete begin insert 300gg-4), end insert as added by
Section 1201 of PPACA, is repealed, in which case begin insert , 12 months
after the repeal, end insert carriers subject to this section shall instead be
governed by Section 10705 to the extent permitted by federal law,
and all references in this chapter to this section shall instead refer
to Section 10705, except for purposes of paragraph (2).

(2) Paragraph (3) of subdivision (b) of this section shall remain
operative as it relates to health benefit plans offered through the
Exchange.

begin delete SEC. 31. end delete
begin insert SEC. 10. end insert   

Section 10753.06.5 of the Insurance Code is amended
to read:

10753.06.5.  

(a) With respect to health benefit plans offered
outside the Exchange, after a small employer submits a completed
application, the carrier shall, within 30 days, notify the employer
of the employer’s actual rates in accordance with Section 10753.14.
The employer shall have 30 days in which to exercise the right to
buy coverage at the quoted rates.

(b) Except as required under subdivision (c), when a small
employer submits a premium payment, based on the quoted rates,
and that payment is delivered or postmarked, whichever occurs
earlier, within the first 15 days of a month, coverage shall become
effective no later than the first day of the following month. When
that payment is neither delivered nor postmarked until after the
15th day of a month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(c) (1) With respect to a begin insert small employer end insert health benefit plan
offered through the Exchange, a carrier shall apply coverage
effective dates consistent with those required under Section
155.720 of Title 45 of the Code of Federal Regulations and
paragraph (2) of subdivision (e) of Section 10965.3.

(2) With respect to a begin insert small employer end insert health benefit plan offered
outside the Exchange for which an individual applies during a
special enrollment period described in paragraph (3) of subdivision
(b) of Section 10753.05, the following provisions shall apply:

(A) Coverage under the plan shall become effective no later
than the first day of the first calendar month beginning after the
date the carrier receives the request for special enrollment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, coverage under the plan shall
become effective on the date of birth, adoption, or placement for
adoption.

(d) During the first 30 days of coverage, the small employer
shall have the option of changing coverage to a different health
benefit plan offered by the same carrier. If a small employer
notifies the carrier of the change within the first 15 days of a month,
coverage under the new health benefit plan shall become effective
no later than the first day of the following month. If a small
employer notifies the carrier of the change after the 15th day of a
month, coverage under the new health benefit plan shall become
effective no later than the first day of the second month following
notification.

(e) All eligible employees and dependents listed on the small
employer’s completed application shall be covered on the effective
date of the health benefit plan.

begin delete SEC. 32. end delete
begin insert SEC. 11. end insert   

Section 10753.11 of the Insurance Code is amended
to read:

10753.11.  

(a) To the extent permitted by PPACA, no carrier
shall be required by the provisions of this chapter to do begin delete any end delete begin insert either end insert
of the following:

(1) To offer coverage to or accept applications from a small
employer where the small employer is seeking coverage for eligible
employees begin insert and dependents end insert who do not live, work, or reside in a
carrier’s begin delete approved end delete service areas.

(2) (A)  To offer coverage to, or accept applications from, a
small employer for a benefits plan design within an area if the
commissioner has found all of the following:

(i) The carrier will not have the capacity within the area in its
network of providers to deliver service adequately to the eligible
employees and dependents of that employee because of its
obligations to existing group contractholders and enrollees.

(ii) The carrier is applying this paragraph uniformly to all
employers without regard to the claims experience of those
employers, and their employees and dependents, or any health
status-related factor relating to those employees and dependents.

(iii) The action is not unreasonable or clearly inconsistent with
the intent of this chapter.

(B) A carrier that cannot offer coverage to small employers in
a specific service area because it is lacking sufficient capacity as
described in this paragraph may not offer coverage in the applicable
area to new employer groups begin delete with more than 50 eligible employees end delete
until the later of the following dates:

(i) The 181st day after the date that coverage is denied pursuant
to this paragraph.

(ii) The date the carrier notifies the commissioner that it has
regained capacity to deliver services to small employers, and
certifies to the commissioner that from the date of the notice it will
enroll all small groups requesting coverage from the carrier until
the carrier has met the requirements of subdivision (g) of Section
10753.05.

(C) Subparagraph (B) shall not limit the carrier’s ability to renew
coverage already in force or relieve the carrier of the responsibility
to renew that coverage as described in Sections 10273.4 and
10753.13.

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to the requirements
of this section.

begin delete SEC. 33. end delete
begin insert SEC. 12. end insert   

Section 10753.12 of the Insurance Code is amended
to read:

10753.12.  

(a) A carrier shall not be required to offer coverage
or accept applications for benefit plan designs pursuant to this
chapter where the carrier demonstrates to the satisfaction of the
commissioner both of the following:

(1) The acceptance of an application or applications would place
the carrier in a financially impaired condition.

(2) The carrier is applying this subdivision uniformly to all
employers without regard to the claims experience of those
employers and their employees and dependents or any health
status-related factor relating to those employees and dependents.

(b) The commissioner’s determination under subdivision (a)
shall follow an evaluation that includes a certification by the
commissioner that the acceptance of an application or applications
would place the carrier in a financially impaired condition.

(c) A carrier that has not offered coverage or accepted
applications pursuant to this chapter shall not offer coverage or
accept applications for any individual or group health benefit plan
until the later of the following dates:

(1) The 181st day after the date that coverage is denied pursuant
to this section.

(2) The date on which the carrier ceases to be financially
impaired, as determined by the commissioner.

(d) Subdivision (c) shall not limit the carrier’s ability to renew
coverage already in force or relieve the carrier of the responsibility
to renew that coverage as described in Sections 10273.4, 10273.6,
and 10753.13.

(e) Coverage offered within a service area after the period
specified in subdivision (c) shall be subject to the requirements of
this section.

begin delete SEC. 34. end delete
begin insert SEC. 13. end insert   

Section 10753.14 of the Insurance Code is amended
to read:

10753.14.  

(a) The premium rate for a health benefit plan
issued, amended, or renewed on or after January 1, 2014, shall
vary with respect to the particular coverage involved only by the
following:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the Centers for Medicare and Medicaid
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 using the individual’s age as of the date of the plan
issuance or renewal, as applicable, and shall not vary by more than
three to one for like individuals of different age who are 21 years
of age or older as described in federal regulations adopted pursuant
to Section 2701(a)(3) of the federal Public Health Service Act (42
U.S.C. Sec. 300gg(a)(3)).

(2) (A) Geographic region. begin delete Except as provided in subparagraph
(B), the end delete begin insert The end insert geographic regions for purposes of rating shall be the
following:

begin delete

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt,
Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey,
Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou,
Sutter, Tehama, Trinity, Tulare, Tuolomne, Yolo, and Yuba.

(ii) Region 2 shall consist of the Counties of Fresno, Imperial,
Kern, Madera, Mariposa, Merced, Napa, Sacramento, San Joaquin,
San Luis Obispo, Santa Cruz, Solano, Sonoma, and Stanislaus.

(iii) Region 3 shall consist of the Counties of Alameda, Contra
Costa, Marin, San Francisco, San Mateo, and Santa Clara.

(iv) Region 4 shall consist of the Counties of Orange, Santa
Barbara, and Ventura.

(v) Region 5 shall consist of the County of Los Angeles.

(vi) Region 6 shall consist of the Counties of Riverside, San
Bernardino, and San Diego.

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg) and
obtained by the department and the Department of Managed Health
Care by July 1, 2014:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

(xi) Region 11 shall consist of the Counties of San Bernardino
and Riverside.

(xii) Region 12 shall consist of the County of Orange.

(xiii) Region 13 shall consist of the County of San Diego.

end delete begin insert

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

end insert begin insert

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

end insert begin insert

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

end insert begin insert

(iv) Region 4 shall consist of the City and County of San
Francisco.

end insert begin insert

(v) Region 5 shall consist of the County of Contra Costa.

end insert begin insert

(vi) Region 6 shall consist of the County of Alameda.

end insert begin insert

(vii) Region 7 shall consist of the County of Santa Clara.

end insert begin insert

(viii) Region 8 shall consist of the County of San Mateo.

end insert begin insert

(ix) Region 9 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

end insert begin insert

(x) Region 10 shall consist of the Counties of Mariposa, Merced,
San Joaquin, Stanislaus, and Tulare.

end insert begin insert

(xi) Region 11 shall consist of the Counties of Fresno, Kings,
and Madera.

end insert begin insert

(xii) Region 12 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

end insert begin insert

(xiii) Region 13 shall consist of the Counties of Imperial, Inyo,
and Mono.

end insert begin insert

(xiv) Region 14 shall consist of the County of Kern.

end insert begin insert

(xv) Region 15 shall consist of the ZIP Codes in the County of
Los Angeles starting with 906 to 912, inclusive, 915, 917, 918,
and 935.

end insert begin insert

(xvi) Region 16 shall consist of the ZIP Codes in the County of
Los Angeles other than those identified in clause (xv).

end insert begin insert

(xvii) Region 17 shall consist of the Counties of Riverside and
San Bernardino.

end insert begin insert

(xviii) Region 18 shall consist of the County of Orange.

end insert begin insert

(xix) Region 19 shall consist of the County of San Diego.

end insert begin delete

(C)

end delete

begin insert (B) end insert begin insert   end insert begin insert (i) end insert begin insert   end insert No later than June 1, 2017, the department, in
collaboration with the Exchange and the Department of Managed
Health 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.

begin insert

(ii) The requirement for submitting a report imposed under this
subparagraph is inoperative June 1, 2021, pursuant to Section
10231.5 of the Government Code.

end insert

(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 total premium charged to a small employer pursuant to
this section shall be determined by summing the premiums of
covered employees and dependents in accordance with Section
147.102(c)(1) of Title 45 of the Code of Federal Regulations.

(d) The rating period for rates subject to this section shall be no
less than 12 months from the date of issuance or renewal of the
health benefit plan.

begin insert

(e) This section shall become inoperative if Section 2701 of the
federal Public Health Services Act (42 U.S.C. Sec. 300gg), as
added by Section 1201 of PPACA, is repealed, in which case, 12
months after the repeal, rates for health benefit plans subject to
this section shall instead be subject to Section 10714, to the extent
permitted by federal law, and all references to this section shall
be deemed to be references to Section 10714.

end insert

begin delete

SEC. 35.  

Section 10901.3 of the Insurance Code is amended
to read:

10901.3.  

(a) (1) After the federally eligible defined individual
submits a completed application form for a health benefit plan,
the carrier shall, within 30 days, notify the individual of the
individual’s actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
following amounts:

(A) For health benefit plans that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 and 64,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to an individual who is of the same age and resides in the same
geographic area as the federally eligible defined individual.
However, for federally qualified individuals who are between the
ages of 60 and 64, inclusive, the premium shall not exceed 170
percent of the standard premium charged to an individual who is
59 years of age and resides in the same geographic area as the
federally eligible defined individual. The individual shall have 30
days in which to exercise the right to buy coverage at the quoted
premium rates.

(2) A carrier may adjust the premium based on family size, not
to exceed the following amounts:

(A) For health benefit plans that offer services through a
preferred provider arrangement, the average of the Major Risk
Medical Insurance Program rate for families of the same size that
reside in the same geographic area as the federally eligible defined
individual.

(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to a family that is of the same size and resides in the same
geographic area as the federally eligible defined individual.

(b) When a federally eligible defined 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 shall begin no later
than the first day of the following month. When that payment is
neither delivered or postmarked until after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.

(c) During the first 30 days after the effective date of the health
benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change within
the first 15 days of a month, coverage under the new health benefit
plan shall become effective no later than the first day of the
following month. If an enrolled individual notified the carrier of
the change after the 15th day of a month, coverage under the health
benefit plan shall become effective no later than the first day of
the second month following notification.

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of that
date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

SEC. 36.  

Section 10901.3 is added to the Insurance Code, to
read:

10901.3.  

(a) After the federally eligible defined individual
submits a completed application form for a health benefit plan,
the carrier shall, within 30 days, notify the individual of the
individual’s actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
premium for the second lowest cost silver plan of the individual
market in the rating area in which the individual resides which is
offered through the California Health Benefit Exchange established
under Title 22 (commencing with Section 100500) of the
Government Code, as described in Section 36B(b)(3)(B) of Title
26 of the United States Code.

(b) When a federally eligible defined 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 shall begin no later
than the first day of the following month. When that payment is
neither delivered or postmarked until after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.

(c) During the first 30 days after the effective date of the health
benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change within
the first 15 days of a month, coverage under the new health benefit
plan shall become effective no later than the first day of the
following month. If an enrolled individual notified the carrier of
the change after the 15th day of a month, coverage under the health
benefit plan shall become effective no later than the first day of
the second month following notification.

(d) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 37.  

Section 10901.9 of the Insurance Code is amended
to read:

10901.9.  

Commencing January 1, 2001, premiums for health
benefit plans offered, delivered, amended, or renewed by carriers
shall be subject to the following requirements:

(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:

(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the
Major Risk Medical Insurance Program who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 to 64, inclusive, the premium shall
not exceed the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is 59 years of age and resides
in the same geographic area as the federally eligible defined
individual.

(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to an individual who is of the same age and resides in the same
geographic area as the federally eligible defined individual.
However, for federally qualified individuals who are between the
ages of 60 to 64, inclusive, the premium shall not exceed 170
percent of the standard premium charged to an individual who is
59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:

(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the
Major Risk Medical Insurance Program who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 and 64, inclusive, the premium
shall not exceed the average premium paid by a subscriber of the
Major Risk Medical Insurance Program who is 59 years of age
and resides in the same geographic area as the federally eligible
defined individual.

(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to an individual who is of the same age and resides in the same
geographic area as the federally eligible defined individual.
However, for federally qualified individuals who are between the
ages of 60 and 64, inclusive, the premium shall not exceed 170
percent of the standard premium charged to an individual who is
59 years of age and resides in the same geographic area as the
federally eligible defined individual. The premium effective on
January 1, 2001, shall apply to in force business at the earlier of
either the time of renewal or July 1, 2001.

(c) The premium applied to a federally eligible defined
individual may not increase by more than the following amounts:

(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average increase in the premiums charged to a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual.

(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, the increase in premiums charged to a
nonfederally qualified individual who is of the same age and resides
in the same geographic area as the federally defined eligible
individual. The premium for an eligible individual may not be
modified more frequently than every 12 months.

(3) For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of that
date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

SEC. 38.  

Section 10901.9 is added to the Insurance Code, to
read:

10901.9.  

(a) Commencing on the date on which the act adding
this section becomes operative, premiums for health benefit plans
offered, delivered, amended, or renewed by carriers shall be subject
to the following requirements:

(1) The premium for in force or new business for a federally
eligible defined individual shall not exceed the premium for the
second lowest cost silver plan of the individual market in the rating
area in which the individual resides which is offered through the
California Health Benefit Exchange established under Title 22
(commencing with Section 100500) of the Government Code, as
described in Section 36B(b)(3)(B) of Title 26 of the United States
Code.

(2) For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

(b) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

end delete

begin delete SEC. 39. end delete
begin insert SEC. 14. end insert   

Section 10902.4 of the Insurance Code is repealed.

begin delete SEC. 40. end delete
begin insert SEC. 15. end insert   

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

 

begin delete SEC. 41. end delete
begin insert SEC. 16. end insert   

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.

begin insert

(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.

end insert begin delete

(e)

end delete

begin insert (f) end insert  Carriers shall not require documentation from applicants
relating to their coverage history.

begin delete

(f)

end delete

begin insert (g) end insert  (1) On and after the operative date of the act adding this
subdivision, and until January 1, 2014, a carrier shall provide begin delete a end delete
begin insert the model end insert notice begin insert , as provided in paragraph (3), end insert 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
chapter 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 begin delete may end delete begin insert shall end insert adopt a begin insert uniform end insert 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 begin insert uniform end insert model notice. Use of the model notice shall
not require prior approval of the department. begin delete Any end delete begin insert The end insert model notice
begin delete designated end delete begin insert adopted end insert 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).

begin delete SEC. 42. end delete
begin insert SEC. 17. end insert   

Section 10960.5 is added to the Insurance Code, to
read:

10960.5.  

begin insert (a) end insert begin insert   end insert This chapter shall become inoperative on January
1, 2014, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

begin insert

(b) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become operative 12 months after the date of that repeal or
amendment.

end insert

begin delete SEC. 43. end delete
begin insert SEC. 18. end insert   

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.

begin insert

(d) “Family” means the policyholder and dependent or
dependents.

end insert begin delete

(d)

end delete

begin insert (e) end insert  “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

begin delete

(e)

end delete

begin insert (f) end insert  “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 begin delete , a health insurance conversion policy
offered pursuant to Section 12682.1, end delete 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, begin delete or a health insurance policy
offered to a federally eligible defined individual under Chapter
8.5 (commencing with Section 10785), end delete to the extent consistent
with PPACA begin insert or a specified disease or hospital indemnity policy,
subject to Section 10965.01 end insert .

begin delete

(f)

end delete

begin insert (g) end insert  “Policy year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations.

begin delete

(g)

end delete

begin insert (h) end insert  “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.

begin delete

(h)

end delete

begin insert (i) end insert  “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.

begin delete

(i)

end delete

begin insert (j) end insert  “Rating period” means the begin delete period end delete begin insert calendar year end insert for which
premium rates begin delete established by an insurer end delete are in effect begin insert pursuant to
subdivision (d) of Section 10965.9 end insert .

begin delete

(j)

end delete

begin insert (k) end insert  “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 begin insert issued or delivered end insert in this state.

(3) In the case of a policy or certificate that is described in this
section and that is offered begin delete for the first time end delete in this state on or after
January 1, begin delete 2013, end delete begin insert 2014, end insert 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.

begin insert

(4) The carrier issuing a policy or certificate of specified disease
or a policy or certificate of hospital confinement indemnity requires
that the person to be insured is covered by an individual or group
policy or contract that arranges or provides medical, hospital,
and surgical coverage not designed to supplement other private
or governmental plans.

end insert

(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. A health 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 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.

begin delete

(3) 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.

end delete

(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)  begin insert (1) end insert begin insert   end insert 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.

begin insert

(2) For individuals enrolled in noncalendar-year individual
health plan contracts, a plan shall provide a limited open
enrollment period beginning on the date that is 30 calendar days
prior to the date the policy year ends in 2014 pursuant to Section
147.104(b)(2) of Title 45 of the Code of Federal Regulations.

end insert

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a health insurer shall allow an individual to enroll in or change
individual health benefit plans 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, but is not
limited to, 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 and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “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 clause (ii) and Sections 10119.2 and 10384.17.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered begin insert as a dependent end insert pursuant
to a valid state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health begin delete benefit plan end delete begin insert coverage issuer end insert substantially
violated a material provision of the begin delete policy end delete begin insert health coverage contract end insert .

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 or
Section 1399.845 of the Health and Safety Code for one of the
conditions described in subdivision (a) of Section 10133.56 and
that provider is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have begin delete 63 end delete begin insert 60 end insert days from
the date of a triggering event identified in paragraph (1) 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 begin delete 63 end delete begin insert 60 end insert days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, begin delete the following provisions shall apply: end delete

begin delete (1) end delete begin delete   end delete begin delete The end delete begin insert the end insert effective date of coverage begin delete selected end delete begin insert required end insert pursuant
to this section shall be consistent with the dates specified in Section
155.410 or 155.420 of Title 45 of the Code of Federal Regulations. begin insert end insert
begin insert A dependent that is a registered domestic partner pursuant to
Section 297 of the Family Code shall have the same effective date
of coverage as a spouse. end insert

begin delete

(2) Notwithstanding paragraph (1), in the case where an
individual acquires a dependent or becomes a dependent by
entering into a registered domestic partnership pursuant to Section
297 of the Family Code and applies for coverage of that domestic
partner consistent with subdivision (d), the coverage effective date
shall be the first day of the month following the date he or she
selects a plan through the Exchange, unless an earlier date is agreed
to under Section 155.420(b)(3) of Title 45 of the Code of Federal
Regulations.

end delete

(f) With respect to an individual health benefit plan offered
outside the Exchange, the following provisions shall apply:

(1) 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 for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the policyholder 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.

(3) With respect to an individual health benefit plan 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 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. 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.

(B) Notwithstanding subparagraph (A), 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.

(C) Notwithstanding subparagraph (A), 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 month following
the date the insurer receives the request for special enrollment.

(g) (1) 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.

begin delete

(h) (1) A health insurer shall consider the claims experience of
all insureds in all individual health benefit plans offered in the
state that are subject to subdivision (a), including those insureds
who do not enroll in the plans through the Exchange, to be
members of a single risk pool.

end delete begin insert

(h) (1) A health insurer shall consider as a single risk pool for
rating purposes in the individual market the claims experience of
all insureds and enrollees in all nongrandfathered individual health
benefit plans offered by that insurer in this state, whether offered
as health care service plan contracts or individual health insurance
policies, including those insureds who enroll in individual coverage
through the Exchange and insureds who enroll in individual
coverage outside the Exchange.

end insert

(2) Each begin delete policy end delete begin insert calendar end insert year, a health insurer shall establish
an index rate for the individual market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA, within the single
risk pool required under paragraph (1). The index rate shall be
adjusted on a marketwide basis based on the total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA. The premium rate for all of the health
insurer’s health benefit plans in the individual market shall use the
applicable index rate, as adjusted for total expected marketwide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA, subject only to the adjustments permitted under
paragraph (3).

(3) A health insurer may vary begin delete premiums end delete begin insert premium end insert rates for a
particular health benefit plan from its index rate based only on the
following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA begin insert and Section 10112.27 end insert . These additional
benefits shall be pooled with similar benefits within the single risk
pool required under paragraph (1) and the claims experience from
those benefits shall be utilized to determine rate variations for
plans that offer those benefits in addition to essential health
benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA begin insert and Section 10112.3 end insert , the expected
impact of the specific eligibility categories for those plans.

begin insert

(E) Administrative costs, excluding any user fees required by
the Exchange.

end insert

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

begin insert

(k) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), subdivisions
(a), (b), and (g) shall become inoperative 12 months after the date
of that repeal or amendment and individual health care benefit
plans shall thereafter be subject to Sections 10901.2, 10951, and
10953.

end insert

10965.5.  

(a)  begin delete No end delete begin insert Commencing on October 1, 2013, no end insert 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
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.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs begin insert or discriminate based on an individual end insert begin insert ’s
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions end insert .

(b)  begin delete A end delete begin insert Commencing on October 1, 2013, a end insert 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 only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(d) 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 and the age rating
curve established by the federal Centers for Medicare and Medicaid
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 using the individual’s age as of the date of the plan
issuance or renewal, as applicable, and shall not vary by more than
three to one for like individuals of different age who are begin delete age 21 end delete
begin insert 21 years of age end insert or older as described in federal regulations adopted
pursuant to Section 2701(a)(3) of the federal Public Health Service
Act (42 U.S.C. Sec. 300gg(a)(3)).

(2) (A) Geographic region. begin delete Except as provided in subparagraph
(B), the end delete begin insert The end insert geographic regions for purposes of rating shall be the
following:

begin delete

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt,
Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey,
Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou,
Sutter, Tehama, Trinity, Tulare, Tuolomne, Yolo, and Yuba.

(ii) Region 2 shall consist of the Counties of Fresno, Imperial,
Kern, Madera, Mariposa, Merced, Napa, Sacramento, San Joaquin,
San Luis Obispo, Santa Cruz, Solano, Sonoma, and Stanislaus.

(iii) Region 3 shall consist of the Counties of Alameda, Contra
Costa, Marin, San Francisco, San Mateo, and Santa Clara.

(iv) Region 4 shall consist of the Counties of Orange, Santa
Barbara, and Ventura.

(v) Region 5 shall consist of the County of Los Angeles.

(vi) Region 6 shall consist of the Counties of Riverside, San
Bernardino, and San Diego.

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg) and
obtained by the department and the Department of Managed Health
Care by July 1, 2014:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

(xi) Region 11 shall consist of the Counties of San Bernardino
and Riverside.

(xii) Region 12 shall consist of the County of Orange.

(xiii) Region 13 shall consist of the County of San Diego.

end delete begin insert

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

end insert begin insert

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

end insert begin insert

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

end insert begin insert

(iv) Region 4 shall consist of the City and County of San
Francisco.

end insert begin insert

(v) Region 5 shall consist of the County of Contra Costa.

end insert begin insert

(vi) Region 6 shall consist of the County of Alameda.

end insert begin insert

(vii) Region 7 shall consist of the County of Santa Clara.

end insert begin insert

(viii) Region 8 shall consist of the County of San Mateo.

end insert begin insert

(ix) Region 9 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

end insert begin insert

(x) Region 10 shall consist of the Counties of Mariposa, Merced,
San Joaquin, Stanislaus, and Tulare.

end insert begin insert

(xi) Region 11 shall consist of the Counties of Fresno, Kings,
and Madera.

end insert begin insert

(xii) Region 12 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

end insert begin insert

(xiii) Region 13 shall consist of the Counties of Imperial, Inyo,
and Mono.

end insert begin insert

(xiv) Region 14 shall consist of the County of Kern.

end insert begin insert

(xv) Region 15 shall consist of the ZIP Codes in the County of
Los Angeles starting with 906 to 912, inclusive, 915, 917, 918,
and 935.

end insert begin insert

(xvi) Region 16 shall consist of the ZIP Codes in the County of
Los Angeles other than those identified in clause (xv).

end insert begin insert

(xvii) Region 17 shall consist of the Counties of Riverside and
San Bernardino.

end insert begin insert

(xviii) Region 18 shall consist of the County of Orange.

end insert begin insert

(xix) Region 19 shall consist of the County of San Diego.

end insert begin delete

(C)

end delete

begin insert (B) end insert  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 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) With respect to family coverage under an individual health
benefit plan, the rating variation permitted under paragraph (1) of
subdivision (a) shall be applied based on the portion of the
premium attributable to each family member covered under the
plan. The total premium for family coverage shall be determined
by summing the premiums for each individual family member. In
determining the total premium for family members, premiums for
no more than the three oldest family members who are under begin delete age
21 end delete begin insert 21 years of age end insert shall be taken into account.

(d) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.

(e) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

(f) The requirement for submitting a report imposed under
subparagraph (B) of paragraph (2) of subdivision (a) is inoperative
on June 1, 2021, pursuant to Section 10231.5 of the Government
Code.

begin insert

(g) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply
to the individual market, as defined in Section 2791 of the federal
Public Health Services Act (42 U.S.C. Sec. 300gg-4), this section
shall become inoperative 12 months after the date of that repeal
or the amendment.

end insert

10965.11.  

(a) A health insurer shall not be required to offer
an individual health benefit plan or accept applications for the plan
pursuant to Section 10965.3 in the case of any of the following:

(1) To an individual who does not live or reside within the
insurer’s approved service areas.

(2) (A) Within a specific service area or portion of a service
area, if the insurer reasonably anticipates and demonstrates to the
satisfaction of the commissioner both of the following:

(i) 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.

(ii) It is applying this subparagraph uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.

(B) A health insurer that cannot offer begin delete an individual end delete begin insert a end insert 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 pursuant to subparagraph (A) shall not offer begin delete an
individual end delete begin insert a end insert health benefit plan in that area until the later of the
following dates:

(i) The 181st day after the date coverage is denied pursuant to
this paragraph.

(ii) The date 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.

(C) Subparagraph (B) shall not limit the insurer’s ability to
renew coverage already in force or relieve the insurer of the
responsibility to renew that coverage as described in Section
10273.6.

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to this section.

(b) (1) A health insurer may decline to offer an individual health
benefit plan to an individual if the insurer demonstrates to the
satisfaction of the commissioner both of the following:

(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, 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.

(B) It is applying this subdivision uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.

(2) A health insurer that denies coverage to an individual under
paragraph (1) shall not offer coverage begin delete in the individual market end delete
before the later of the following dates:

(A) The 181st day after the date coverage is denied pursuant to
this subdivision.

(B) The date the insurer demonstrates to the satisfaction of the
commissioner that the insurer has sufficient financial reserves
necessary to underwrite additional coverage.

(3) Paragraph (2) shall not limit the insurer’s ability to renew
coverage already in force or relieve the insurer of the responsibility
to renew that coverage as described in Section 10273.6.

(C) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to this section.

(c) 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 begin delete impaired end delete
begin insert impaired, end insert to the extent permitted by PPACA.

10965.13.  

(a) A health insurer that receives an application for
an individual health benefit plan outside the Exchange during the
initial open enrollment period, an annual enrollment period, or a
special enrollment period described in Section 10965.3 shall inform
the applicant that he or she may be eligible for lower cost coverage
through the Exchange and shall inform the applicant of the
applicable enrollment period provided through the Exchange
described in Section 10965.3.

(b) On or before October 1, 2013, and annually thereafter, a
health insurer shall issue a notice to a policyholder enrolled in an
individual health benefit plan offered outside the Exchange. The
notice shall inform the policyholder that he or she may be eligible
for lower cost coverage through the Exchange and shall inform
the policyholder of the applicable open enrollment period provided
through the Exchange described in Section 10965.3.

(c) This section shall not apply where the individual health
benefit plan described in subdivision (a) or (b) is a grandfathered
health plan.

10965.15.  

(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:

begin delete

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.

end delete begin insert

New improved health insurance options are available in
California. You currently have health insurance that is not required
to follow many of the new laws. For example, your policy may not
provide preventive health services without you having to pay any
cost sharing (copayments or coinsurance). Also your current policy
may be allowed to increase your rates based on your health status
while new policies cannot. 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.

end insert

(b) Commencing October 1, 2013, 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.

(c) A health insurer shall not advertise or market an individual
health benefit plan that is a grandfathered health plan for purposes
of enrolling a dependent of a policyholder into the plan for policy
years on or after January 1, 2014. Nothing in this subdivision shall
be construed to prohibit an individual enrolled in an individual
grandfathered health plan from adding a dependent to that plan to
the extent permitted by PPACA.

10965.16.  

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 PPACA.

begin delete

SEC. 44.  

Part 6.25 (commencing with Section 12694.50) is
added to Division 2 of the Insurance Code, to read:

 

PART 6.25.  CHIP Continuation Coverage

 

12694.50.  

For purposes of this part, the following definitions
shall apply:

(a) “Board” means the Managed Risk Medical Insurance Board.

(b) “Department” means the State Department of Health Care
Services.

(c) “Participating dental plan” means any of the following plans
that is lawfully engaged in providing, arranging, paying for, or
reimbursing the cost of personal dental services under insurance
policies or health care service plan contracts, or membership
contracts, in consideration of premiums or other periodic charges
payable to it, and that, on or after January 1, 2012, has or had a
contract with the board or the department to provide coverage to
program subscribers:

(1) A dental insurer holding a valid outstanding certificate of
authority from the commissioner.

(2) A specialized health care service plan as defined under
subdivision (o) of Section 1345 of the Health and Safety Code.

(d) “Participating health plan” means any of the following plans
that is lawfully engaged in providing, arranging, paying for, or
reimbursing the cost of personal health care services under
insurance policies or health care service plan contracts, medical
and hospital service arrangements, or membership contracts, in
consideration of premiums or other periodic charges payable to it,
and that, on or after January 1, 2012, has or had a contract with
the board or the department to provide coverage to program
subscribers:

(1) A private health insurer holding a valid outstanding
certificate of authority from the commissioner.

(2) A health care service plan as defined under subdivision (f)
of Section 1345 of the Health and Safety Code, including a plan
operating as a geographic managed care plan pursuant to a contract
entered into under Article 2.91 (commencing with Section 14089)
of Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code.

(3) A county organized health system.

(e) “Participating vision care plan” means any of the following
plans that is lawfully engaged in providing, arranging, paying for,
or reimbursing the cost of personal vision services under insurance
policies or health care service plan contracts, or membership
contracts, in consideration of premiums or other periodic charges
payable to it, and that, on or after January 1, 2012, has or had a
contract with the board or the department to provide coverage to
program subscribers:

(1) A vision insurer holding a valid outstanding certificate of
authority from the commissioner.

(2) A specialized health care service plan as defined under
subdivision (o) of Section 1345 of the Health and Safety Code.

(f) “Program” means the federal Children’s Health Insurance
Program established in the state pursuant to Title XXI of the federal
Social Security Act and includes the program established under
Part 6.2 (commencing with Section 12693) and the transition of
the enrollees in that program pursuant to Section 14005.26 of the
Welfare and Institutions Code.

(g) “Qualified beneficiary” means an individual who meets all
of the following requirements:

(1) On or after January 1, 2012, received or receives coverage
under a participating dental, health, or vision plan under the
program.

(2) Was disenrolled or will be disenrolled from the program
due to loss of eligibility because of his or her age.

(3) Is not eligible for full scope benefits under the Medi-Cal
program.

(h) “Subscriber” means an individual who is eligible for and
enrolled in the program.

12694.52.  

(a) Until January 1, 2014, or the date that is six
months following the operative date of this part, whichever date
is later, every participating health, dental, and vision plan shall
offer coverage to a qualified beneficiary. The plan shall offer the
qualified beneficiary the same coverage that the beneficiary had
immediately prior to disenrollment from the program or coverage
with benefits that are most equivalent to the coverage that the
beneficiary had immediately prior to disenrollment from the
program.

(b) Except as otherwise provided in this part, coverage provided
pursuant to this part shall be provided under the same terms and
conditions that apply to similarly situated subscribers in the
program under the applicable participating plan.

(c) (1) For a qualified beneficiary who was disenrolled from
the program prior to the operative date of this part, the participating
health, dental, or vision plan shall provide written notification of
eligibility for coverage pursuant to this section to the qualified
beneficiary within 30 days of the operative date of this part.

(2) For a qualified beneficiary who is disenrolled from the
program on or after the operative date of this part, the participating
health, dental, or vision plan shall provide written notification of
eligibility for coverage pursuant to this section to the qualified
beneficiary no less than 30 days prior to disenrollment from the
program.

(3) The notice required under this subdivision shall state that
the qualified beneficiary must elect the coverage in writing and
deliver the written request, by first-class mail, or other reliable
means of delivery, including personal delivery, express mail, or
private courier company, to the participating plan within 60 days
of the mailing of the notice. The notice shall also state that a
qualified beneficiary electing coverage pursuant to this part shall
pay to the participating plan the amount of the required premium
payment, as set forth in Section 12694.54.

(d) A qualified beneficiary shall have 60 days from the mailing
of the notice required under subdivision (c) to elect coverage
pursuant to this section. The election shall be in writing and shall
be delivered by first-class mail, or other reliable means of delivery,
including personal delivery, express mail, or private courier
company, to the participating plan.

(e) A qualified beneficiary receiving coverage pursuant to this
part shall continue to receive that coverage until the coverage is
terminated at his or her election or pursuant to Section 12694.56,
whichever occurs first.

(f) A qualified beneficiary receiving coverage pursuant to this
part shall be considered part of the participating plan and treated
as similarly situated subscribers for contract purposes, unless
otherwise specified in this part.

12694.54.  

(a) A qualified beneficiary who elects coverage
pursuant to this part shall make the following premium payments
to the participating health, dental, or vision plan, as applicable:

(1) To the participating health plan: not more than 110 percent
of the average per subscriber payment made by the board or the
department to all participating health plans for coverage provided
under the program to subscribers who are one year of age or older.

(2) To the participating dental plan: not more than 110 percent
of the average per subscriber payment made by the board or the
department to all participating dental plans for coverage provided
under the program to subscribers who are one year of age or older.

(3) To the participating vision plan: not more than 110 percent
of the average per subscriber payment made by the board or the
department to all participating vision plans for coverage provided
under the program to subscribers who are one year of age or older.

(b) The premium payments required by this section shall be
made before the due date of each payment but not more frequently
than on a monthly basis.

12694.56.  

The continuation coverage provided pursuant to this
part shall terminate at the first to occur of the following:

(a) The date 18 months after the effective date of coverage
elected pursuant to this part.

(b) The end of the period for which premium payments were
made, if the qualified beneficiary ceases to make payments or fails
to make timely payments of a required premium, in accordance
with Section 12694.54 and the terms and conditions of the policy
or contract. In the case of nonpayment of premiums, reinstatement
shall be governed by the terms and conditions of the policy or
contract.

(c) The qualified beneficiary moves out of the plan’s service
area or the qualified beneficiary, or applicant acting on his or her
behalf, commits fraud or deception in the use of plan services.

end delete

begin delete SEC. 45. end delete
begin insert SEC. 19. end insert   

begin insert (a) end insert begin insert   end insert The Insurance Commissioner may adopt
begin delete regulations end delete begin insert regulations, end insert to implement the changes made to the
Insurance Code by this begin delete act end delete begin insert act, end insert pursuant 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). The
commissioner shall consult with the Director of the Department
of Managed Health Care prior to adopting any regulations pursuant
to this begin delete section end delete begin insert subdivision end insert for the specific purpose of ensuring, to
the extent practical, that there is consistency of regulations
applicable to entities regulated by the commissioner and those
regulated by begin delete the Director of end delete the Department of Managed Health
Care.

begin insert

(b) (1) The commissioner may adopt emergency regulations
implementing the changes made to the Insurance Code by this act
no later than December 31, 2014. The commissioner may readopt
any emergency regulation authorized by this section that is the
same as or substantially equivalent to an emergency regulation
previously adopted under this section.

end insert begin insert

(2) The initial adoption of emergency regulations implementing
this section and the one readoption of emergency regulations
authorized by this section shall be deemed an emergency and
necessary for the immediate preservation of the public peace,
health, safety, or general welfare. The initial emergency
regulations and, notwithstanding Section 11346.1 of the
Government Code, the one readoption of emergency regulations
authorized by this section shall be submitted to the Office of
Administrative Law for filing with the Secretary of State and each
shall remain in effect for no more than 180 days, by which time
final regulations may be adopted. The commissioner shall consult
with the Director of the Department of Managed Health Care prior
to adopting any regulations pursuant to this subdivision for the
specific purpose of ensuring, to the extent practical, that there is
consistency of regulations applicable to entities regulated by the
commissioner and those regulated by the Department of Managed
Health Care.

end insert

begin delete

SEC. 46.  

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.

end delete

begin insert

begin insert SEC. 2 end insert begin insert 0. end insert   

end insert begin insert

This bill shall become operative only if Senate Bill 2
of the 2013-14 First Extraordinary Session is enacted and becomes
effective.

end insert