Amended in Assembly April 16, 2013

Amended in Assembly March 21, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1180

Introduced by Assembly Member Pan

February 22, 2013

An act to begin delete repeal and add Sections 1399.805 and 1399.811 end delete begin insert amend Sections 1373.621 and 1389.5 of, to add and repeal Section 1363.08 of, to repeal Section 1399.816 of, and to repeal, add, and repeal Section 1399.818 end insert of begin insert , end insert the Health and Safety Code, and to begin delete repeal and add Sections 10901.3 and 10901.9 end delete begin insert amend Sections 10116.5, 10119.1, 10127.14, 10127.18, and 12672 of, to repeal Section 10902.4 of, and to repeal, add, and repeal Section 10902.6 end insert of begin insert , end insert the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 1180, as amended, Pan. Health care coverage: begin delete HIPAA rates. end delete begin insert federally eligible defined individuals: conversion or continuation of coverage. end insert

begin delete

Existing

end delete

begin insert (1) end insert begin insert   end insert begin insert Existing end insert law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Insurance Commissioner. 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.

This bill would begin delete 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. Because a willful violation of the bill’s requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program. end delete begin insert make these provisions of law applicable only to grandfathered individual health plan contracts or insurance policies, as defined, previously issued to federally eligible defined individuals, unless and until specified provisions of the federal Patient Protection and Affordable Care Act end insert begin insert (PPACA) are amended or repealed, as specified. end insert

begin delete

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

(2) Existing law requires a health care service plan or health insurer to offer continuation or conversion of individual or group coverage for a specified period of time and under certain circumstances.

end insert begin insert

The bill would make those provisions inoperative, unless and until specified provisions of PPACA are amended or repealed, as specified, and would make conforming changes.

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 insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1363.08 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 1363.08. end insert   

(a) Sections 1363.06 and 1363.07 shall be inoperative
on January 1, 2014.

(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 Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become inoperative and shall be repealed on January 1
following the date that it becomes inoperative.

(c) For purposes of this section, “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.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1373.621 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1373.621.  

(a) Except for a specialized health care service plan,
every health care service plan contract that is issued, amended,
delivered, or renewed in this state on or after January 1, 1999, that
provides hospital, medical, or surgical expense coverage under an
employer-sponsored group plan for an employer subject to
COBRA, as defined in subdivision (e), or an employer group for
which the plan is required to offer Cal-COBRA coverage, as
defined in subdivision (f), including a carrier providing replacement
coverage under Section 1399.63, shall further offer the former
employee the opportunity to continue benefits as required under
subdivision (b), and shall further offer the former spouse of an
employee or former employee the opportunity to continue benefits
as required under subdivision (c).

(b) (1) In the event a former employee who worked for the
employer for at least five years prior to the date of termination of
employment and who is 60 years of age or older on the date
employment ends is entitled to and so elects to continue benefits
under COBRA or Cal-COBRA for himself or herself and for any
spouse, the employee or spouse may further continue benefits
beyond the date coverage under COBRA or Cal-COBRA ends, as
set forth in paragraph (2). Except as otherwise specified,
continuation coverage shall be under the same benefit terms and
conditions as if the continuation coverage under COBRA or
Cal-COBRA had remained in force. For the employee or spouse,
continuation coverage following the end of COBRA or
Cal-COBRA is subject to payment of premiums to the health care
service plan. Individuals ineligible for COBRA or Cal-COBRA,
or who are eligible but have not elected or exhausted continuation
coverage under federal COBRA or Cal-COBRA, are not entitled
to continuation coverage under this section. Premiums for
continuation coverage under this section shall be billed by, and
remitted to, the health care service plan in accordance with
subdivision (d). Failure to pay the requisite premiums may result
in termination of the continuation coverage in accordance with the
applicable provisions in the plan’s group subscriber agreement
with the former employer.

(2) The employer shall notify the former employee or spouse
or both, or the former spouse of the employee or former employee,
of the availability of the continuation benefits under this section
in accordance with Section 2800.2 of the Labor Code. To continue
health care coverage pursuant to this section, the individual shall
elect to do so by notifying the plan in writing within 30 calendar
days prior to the date continuation coverage under COBRA or
Cal-COBRA is scheduled to end. Every health care service plan
and specialized health care service plan shall provide to the
employer replacing a health care service plan contract issued by
the plan, or to the employer’s agent or broker representative, within
15 days of any written request, information in possession of the
plan reasonably required to administer the requirements of Section
2800.2 of the Labor Code.

(3) The continuation coverage shall end automatically on the
earlier of (A) the date the individual reaches age 65, (B) the date
the individual is covered under any group health plan not
maintained by the employer or any other health plan, regardless
of whether that coverage is less valuable, (C) the date the individual
becomes entitled to Medicare under Title XVIII of the Social
Security Act, (D) for a spouse, five years from the date on which
continuation coverage under COBRA or Cal-COBRA was
scheduled to end for the spouse, or (E) the date on which the
employer terminates its group subscriber agreement with the health
care service plan and ceases to provide coverage for any active
employees through that plan, in which case the health care service
plan shall notify the former employee or spouse or both of the right
to a conversion plan in accordance with Section 1373.6.

(c) (1) If a former spouse of an employee or former employee
was covered as a qualified beneficiary under COBRA or
Cal-COBRA, the former spouse may further continue benefits
beyond the date coverage under COBRA or Cal-COBRA ends, as
set forth in paragraph (2) of subdivision (b). Except as otherwise
specified in this section, continuation coverage shall be under the
same benefit terms and conditions as if the continuation coverage
under COBRA or Cal-COBRA had remained in force. Continuation
coverage following the end of COBRA or Cal-COBRA is subject
to payment of premiums to the health care service plan. Premiums
for continuation coverage under this section shall be billed by, and
remitted to, the health care service plan in accordance with
subdivision (d). Failure to pay the requisite premiums may result
in termination of the continuation coverage in accordance with the
applicable provisions in the plan’s group subscriber agreement
with the employer or former employer.

(2) The continuation coverage for the former spouse shall end
automatically on the earlier of (A) the date the individual reaches
65 years of age, (B) the date the individual is covered under any
group health plan not maintained by the employer or any other
health plan, regardless of whether that coverage is less valuable,
(C) the date the individual becomes entitled to Medicare under
Title XVIII of the Social Security Act, (D) five years from the date
on which continuation coverage under COBRA or Cal-COBRA
was scheduled to end for the former spouse, or (E) the date on
which the employer or former employer terminates its group
subscriber agreement with the health care service plan and ceases
to provide coverage for any active employees through that plan begin delete ,
in which case the health care service plan shall notify the former
spouse of the right to a conversion plan in accordance with Section
1373.6 end delete .

(d) (1) If the premium charged to the employer for a specific
employee or dependent eligible under this section is adjusted for
the age of the specific employee, or eligible dependent, on other
than a composite basis, the rate for continuation coverage under
this section shall not exceed 102 percent of the premium charged
by the plan to the employer for an employee of the same age as
the former employee electing continuation coverage in the case of
an individual who was eligible for COBRA, and 110 percent in
the case of an individual who was eligible for Cal-COBRA. If the
coverage continued is that of a former spouse, the premium charged
shall not exceed 102 percent of the premium charged by the plan
to the employer for an employee of the same age as the former
spouse selecting continuation coverage in the case of an individual
who was eligible for COBRA, and 110 percent in the case of an
individual who was eligible for Cal-COBRA.

(2) If the premium charged to the employer for a specific
employee or dependent eligible under this section is not adjusted
for age of the specific employee, or eligible dependent, then the
rate for continuation coverage under this section shall not exceed
213 percent of the applicable current group rate. For purposes of
this section, the “applicable current group rate” means the total
premiums charged by the health care service plan for coverage for
the group, divided by the relevant number of covered persons.

(3) However, in computing the premiums charged to the specific
employer group, the health care service plan shall not include
consideration of the specific medical care expenditures for
beneficiaries receiving continuation coverage pursuant to this
section.

(e) For purposes of this section, “COBRA” means Section
4980B of Title 26 of the United States Code, Section 1161 et seq.
of Title 29 of the United States Code, and Section 300bb of Title
42 of the United States Code, as added by the Consolidated
Omnibus Budget Reconciliation Act of 1985 (Public Law 99-272),
and as amended.

(f) For purposes of this section, “Cal-COBRA” means the
continuation coverage that must be offered pursuant to Article 4.5
(commencing with Section 1366.20), or Article 1.7 (commencing
with Section 10128.50) of Chapter 1 of Part 2 of Division 2 of the
Insurance Code.

(g) For the purposes of this section, “former spouse” means
either an individual who is divorced from an employee or former
employee or an individual who was married to an employee or
former employee at the time of the death of the employee or former
employee.

(h) Every plan evidence of coverage that is issued, amended,
or renewed after July 1, 1999, shall contain a description of the
provisions and eligibility requirements for the continuation
coverage offered pursuant to this section.

begin delete

(i) This section shall take effect on January 1, 1999.

end delete begin delete

(j)

end delete

begin insert (i) end insert  This section does not apply to any individual who is not
eligible for its continuation coverage prior to January 1, 2005.

begin insert

begin insert SEC. 3. end insert   

end insert

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

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.

begin insert

(g) (1) This section shall be inoperative on January 1, 2014.

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 Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become operative on the date of that repeal or amendment.

end insert begin insert

(3) For purposes of this subdivision, “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.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 1399.816 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

1399.816.  

Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or
method to share in the financing of high-risk individuals. This
mechanism or method shall be established through a committee
of all carriers and health care service plans offering coverage to
individuals by July 1, 2002, and shall be implemented by January
1, 2003. If carriers and health care service plans wish to establish
a risk-sharing mechanism but cannot agree on the terms and
conditions of such an agreement, the Managed Risk Medical
Insurance Board shall develop a risk-sharing mechanism or method
by January 1, 2003, and it shall be implemented by July 1, 2003.

end delete

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 1399.818 of the end insert begin insert Health and Safety Code end insert begin insert is
repealed. end insert

begin delete

1399.818.  

This article shall apply to health care service plan
contracts offered, delivered, amended, or renewed on or after
January 1, 2001.

end delete

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 1399.818 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

begin insert

begin insert 1399.818. end insert   

(a) On and after January 1, 2014, this article and
Sections 1366.35 and 1373.6 shall apply only to grandfathered
individual health plan contracts previously issued to federally
eligible defined individuals.

(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 Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become inoperative and shall be repealed on January 1
following the date that it becomes inoperative.

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

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

(2) “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.

end insert

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 10116.5 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

10116.5.  

(a) Every policy of disability insurance that is issued,
amended, delivered, or renewed in this state on or after January
1, 1999, that provides hospital, medical, or surgical expense
coverage under an employer-sponsored group plan for an employer
subject to COBRA, as defined in subdivision (e), or an employer
group for which the disability insurer is required to offer
Cal-COBRA coverage, as defined in subdivision (f), including a
carrier providing replacement coverage under Section 10128.3,
shall further offer the former employee the opportunity to continue
benefits as required under subdivision (b), and shall further offer
the former spouse of an employee or former employee the
opportunity to continue benefits as required under subdivision (c).

(b) (1) If a former employee worked for the employer for at
least five years prior to the date of termination of employment and
is 60 years of age or older on the date employment ends is entitled
to and so elects to continue benefits under COBRA or Cal-COBRA
for himself or herself and for any spouse, the employee or spouse
may further continue benefits beyond the date coverage under
COBRA or Cal-COBRA ends, as set forth in paragraph (2). Except
as otherwise specified in this section, continuation coverage shall
be under the same benefit terms and conditions as if the
continuation coverage under COBRA or Cal-COBRA had remained
in force. For the employee or spouse, continuation coverage
following the end of COBRA or Cal-COBRA is subject to payment
of premiums to the insurer. Individuals ineligible for COBRA or
Cal-COBRA or who are eligible but have not elected or exhausted
continuation coverage under federal COBRA or Cal-COBRA are
not entitled to continuation coverage under this section. Premiums
for continuation coverage under this section shall be billed by, and
remitted to, the insurer in accordance with subdivision (d). Failure
to pay the requisite premiums may result in termination of the
continuation coverage in accordance with the applicable provisions
in the insurer’s group contract with the employer.

(2) The employer shall notify the former employee or spouse
or both, or the former spouse of the employee or former employee,
of the availability of the continuation benefits under this section
in accordance with Section 2800.2 of the Labor Code. To continue
health care coverage pursuant to this section, the individual shall
elect to do so by notifying the insurer in writing within 30 calendar
days prior to the date continuation coverage under COBRA or
Cal-COBRA is scheduled to end. Every disability insurer shall
provide to the employer replacing a group benefit plan policy
issued by the insurer, or to the employer’s agent or broker
representative, within 15 days of any written request, information
in possession of the insurer reasonably required to administer the
requirements of Section 2800.2 of the Labor Code.

(3) The continuation coverage shall end automatically on the
earlier of (A) the date the individual reaches age 65, (B) the date
the individual is covered under any group health plan not
maintained by the employer or any other insurer or health care
service plan, regardless of whether that coverage is less valuable,
(C) the date the individual becomes entitled to Medicare under
Title XVIII of the Social Security Act, (D) for a spouse, five years
from the date on which continuation coverage under COBRA or
Cal-COBRA was scheduled to end for the spouse, or (E) the date
on which the employer terminates its group contract with the
insurer and ceases to provide coverage for any active employees
through that insurer, in which case the insurer shall notify the
former employee or spouse, or both, of the right to a conversion
policy.

(c) (1) If a former spouse of an employee or former employee
was covered as a qualified beneficiary under COBRA or
Cal-COBRA, the former spouse may further continue benefits
beyond the date coverage under COBRA or Cal-COBRA ends, as
set forth in paragraph (2) of subdivision (b). Except as otherwise
specified in this section, continuation coverage shall be under the
same benefit terms and conditions as if the continuation coverage
under COBRA or Cal-COBRA had remained in force. Continuation
coverage following the end of COBRA or Cal-COBRA is subject
to payment of premiums to the insurer. Premiums for continuation
coverage under this section shall be billed by, and remitted to, the
insurer in accordance with subdivision (d). Failure to pay the
requisite premiums may result in termination of the continuation
coverage in accordance with the applicable provisions in the
insurer’s group contract with the employer or former employer.

(2) The continuation coverage for the former spouse shall end
automatically on the earlier of (A) the date the individual reaches
65 years of age, (B) the date the individual is covered under any
group health plan not maintained by the employer or any other
health care service plan or insurer, regardless of whether that
coverage is less valuable, (C) the date the individual becomes
entitled to Medicare under Title XVIII of the Social Security Act,
(D) five years from the date on which continuation coverage under
COBRA or Cal-COBRA was scheduled to end for the former
spouse, or (E) the date on which the employer or former employer
terminates its group contract with the insurer and ceases to provide
coverage for any active employees through that insurer begin delete , in which
case the insurer shall notify the former spouse of the right to a
conversion policy end delete .

(d) (1) If the premium charged to the employer for a specific
employee or dependent eligible under this section is adjusted for
the age of the specific employee, or eligible dependent, on other
than a composite basis, the rate for continuation coverage under
this section shall not exceed 102 percent of the premium charged
by the insurer to the employer for an employee of the same age as
the former employee electing continuation coverage in the case of
an individual who was eligible for COBRA, and 110 percent in
the case of an individual who was eligible for Cal-COBRA. If the
coverage continued is that of a former spouse, the premium charged
shall not exceed 102 percent of the premium charged by the plan
to the employer for an employee of the same age as the former
spouse selecting continuation coverage in the case of an individual
who was eligible for COBRA, and 110 percent in the case of an
individual who was eligible for Cal-COBRA.

(2) If the premium charged to the employer for a specific
employee or dependent eligible under this section is not adjusted
for age of the specific employee, or eligible dependent, then the
rate for continuation coverage under this section shall not exceed
213 percent of the applicable current group rate. For purposes of
this section, the “applicable current group rate” means the total
premiums charged by the insurer for coverage for the group,
divided by the relevant number of covered persons.

(3) However, in computing the premiums charged to the specific
employer group, the insurer shall not include consideration of the
specific medical care expenditures for beneficiaries receiving
continuation coverage pursuant to this section.

(e) For purposes of this section, “COBRA” means Section
4980B of Title 26, Section 1161 and following of Title 29, and
Section 300bb of Title 42 of the United States Code, as added by
the Consolidated Omnibus Budget Reconciliation Act of 1985
(P.L. 99-272), and as amended.

(f) For purposes of this section, “Cal-COBRA” means the
continuation coverage that must be offered pursuant to Article 1.7
(commencing with Section 10128.50), or Article 4.5 (commencing
with Section 1366.20) of Chapter 2.2 of Division 2 of the Health
and Safety Code.

(g) For the purposes of this section, “former spouse” means
either an individual who is divorced from an employee or former
employee or an individual who was married to an employee or
former employee at the time of the death of the employee or former
employee.

(h) Every group benefit plan evidence of coverage that is issued,
amended, or renewed after January 1, 1999, shall contain a
description of the provisions and eligibility requirements for the
continuation coverage offered pursuant to this section.

begin delete

(i) This section shall take effect on January 1, 1999.

end delete begin delete

(j)

end delete

begin insert (i) end insert  This section does not apply to any individual who is not
eligible for its continuation coverage prior to January 1, 2005.

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 10119.1 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

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.

begin insert

(g) (1) This section shall be inoperative on January 1, 2014.

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 2794 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become operative on the date of that repeal or amendment.

end insert begin insert

(3) For purposes of this subdivision, “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.

end insert

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 10127.14 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10127.14.  

(a) The department and the Department of Managed
Health Care shall compile information required by this section and
Section 1363.06 of the Health and Safety Code into two
comparative benefit matrices. The first matrix shall compare benefit
packages offered pursuant to Section 1373.62 of the Health and
Safety Code and Section 10127.15. The second matrix shall
compare benefit packages offered pursuant to Sections 1366.35,
1373.6, and 1399.804 of the Health and Safety Code and Sections
10785, 10901.2, and 12682.1.

(b) The comparative benefit matrix shall include:

(1) Benefit information submitted by health care service plans
pursuant to Section 1363.06 of the Health and Safety Code and by
health insurers pursuant to subdivision (d).

(2) The following statements in at least 12-point type at the top
of the matrix:

(A) “This benefit summary is intended to help you compare
coverage and benefits and is a summary only. For a more detailed
description of coverage, benefits, and limitations, please contact
the health care service plan or health insurer.”

(B) “The comparative benefit summary is updated annually, or
more often if necessary to be accurate.”

(C) “The most current version of this comparative benefit
summary is available on (address of the plan’s or insurer’s site).”

This subparagraph applies only to those health insurers that
maintain an Internet Web site.

(3) The telephone number or numbers that may be used by an
applicant to contact either the department or the Department of
Managed Health Care, as appropriate, for further assistance.

(c) The department and the Department of Managed Health
Care shall jointly prepare two standardized templates for use by
health care service plans and health insurers in submitting the
information required pursuant to subdivision (d) of Section 1363.06
and subdivision (d). The templates shall be exempt from the
provisions of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code.

(d) Health insurers shall submit the following to the department
by January 31, 2003, and annually thereafter:

(1) A summary explanation of the following for each product
described in subdivision (a):

(A) Eligibility requirements.

(B) The full premium cost of each benefit package in the service
area in which the individual and eligible dependents work or reside.

(C) When and under what circumstances benefits cease.

(D) The terms under which coverage may be renewed.

(E) Other coverage that may be available if benefits under the
described benefit package cease.

(F) The circumstances under which choice in the selection of
physicians and providers is permitted.

(G) Lifetime and annual maximums.

(H) Deductibles.

(2) A summary explanation of the following coverages, together
with the corresponding copayments and limitations, for each
product described in subdivision (a):

(A) Professional services.

(B) Outpatient services.

(C) Hospitalization services.

(D) Emergency health coverage.

(E) Ambulance services.

(F) Prescription drug coverage.

(G) Durable medical equipment.

(H) Mental health services.

(I) Residential treatment.

(J) Chemical dependency services.

(K) Home health services.

(L) Custodial care and skilled nursing facilities.

(3) The telephone number or numbers that may be used by an
applicant to access a health insurer customer service representative
and to request additional information about the insurance policy.

(4) Any other information specified by the department in the
template.

(e) Each health insurer shall provide the department with updates
to the information required by subdivision (d) at least annually, or
more often if necessary to maintain the accuracy of the information.

(f) The department and the Department of Managed Health Care
shall make the comparative benefit matrices available on their
respective Internet Web sites and to the health care service plans
and health insurers for dissemination as required by Section 1373.6
of the Health and Safety Code and Section 12682.1, after
confirming the accuracy of the description of the matrices with
the health insurers and health care service plans.

(g) As used in this section, “benefit matrix” shall have the same
meaning as benefit summary.

(h) This section shall not apply to accident-only, specified
disease, hospital indemnity, CHAMPUS supplement, long-term
care, Medicare supplement, dental-only, or vision-only insurance
policies.

begin insert

(i) (1) This section shall be inoperative on January 1, 2014.

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 2794 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become operative on the date of that repeal or amendment.

end insert begin insert

(3) For purposes of this subdivision, “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.

end insert

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 10127.18 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10127.18.  

(a) On and after January 1, 2005, a health insurer
issuing individual policies of health insurance that ceases to offer
individual coverage in this state shall offer coverage to the
policyholders who had been covered by those policies at the time
of withdrawal under the same terms and conditions as provided in
paragraph (3) of subdivision (a), paragraphs (2) to (4), inclusive,
of subdivision (b), subdivisions (c) to (e), inclusive, and subdivision
(h) of Section 12682.1.

(b) The department may adopt regulations to implement this
section.

(c) This section shall not apply when a plan participating in
Medi-Cal, Healthy Families, Access for Infants and Mothers, or
any other contract between the plan and a government entity no
longer contracts with the government entity to provide health
coverage in the state, or a specified area of the state, nor shall this
section apply when a plan ceases entirely to market, offer, and
issue any and all forms of coverage in any part of this state after
the effective date of this section.

begin insert

(d) (1) This section shall be inoperative on January 1, 2014.

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 2794 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become operative on the date of that repeal or amendment.

end insert begin insert

(3) For purposes of this subdivision, “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.

end insert

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 10902.4 of the end insert begin insert Insurance Code end insert begin insert is repealed. end insert

begin delete

10902.4.  

Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or
method to share in the financing of high-risk individuals. This
mechanism or method shall be established through a committee
of all carriers and health care service plans offering coverage to
individuals by July 1, 2002, and shall be implemented by January
1, 2003. If carriers and health care service plans wish to establish
a risk-sharing mechanism but cannot agree on the terms and
conditions of such an agreement, the Managed Risk Medical
Insurance Board shall develop a risk-sharing mechanism or method
by January 1, 2003, and it shall be implemented by July 1, 2003.

end delete

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 10902.6 of the end insert begin insert Insurance Code end insert begin insert is repealed. end insert

begin delete

10902.6.  

This chapter shall apply to policies or contracts
offered, delivered, amended, or renewed on or after January 1,
2001.

end delete

begin insert

begin insert SEC. 13. end insert   

end insert

begin insert Section 10902.6 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10902.6. end insert   

(a) On and after January 1, 2014, this chapter and
Sections 10785 and 12682.1 shall apply only to grandfathered
individual health insurance policies previously issued to federally
eligible defined individuals.

(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 Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become inoperative and shall be repealed on January 1
following the date that it becomes inoperative.

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

(1) “Grandfathered health insurance policy” has the same
meaning as “grandfathered health plan” in Section 1251 of
PPACA.

(2) “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.

end insert

begin insert

begin insert SEC. 14. end insert   

end insert

begin insert Section 12672 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

12672.  

begin insert (a) end insert begin insert   end insert Any group policy issued, amended, or renewed in
this state on or after January 1, 1983, which provides insurance
for employees or members on an expense-incurred or service basis,
other than for a specific disease or for accidental injuries only,
shall contain a provision that an employee or member whose
coverage under the group policy has been terminated for any reason
except as provided in this part, shall be entitled to have a converted
policy issued to him or her by the insurer under whose group policy
he or she was covered, without evidence of insurability, subject
to the terms and conditions of this part.

begin insert

(b) (1) This section shall be inoperative on January 1, 2014.

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 2794 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-04), this section
shall become operative on the date of that repeal or amendment.

end insert begin insert

(3) For purposes of this subdivision, “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.

end insert

begin delete

SECTION 1.  

Section 1399.805 of the Health and Safety Code
is repealed.

SEC. 2.  

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.

SEC. 3.  

Section 1399.811 of the Health and Safety Code is
repealed.

SEC. 4.  

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

1399.811.  

Premiums for contracts offered, delivered, amended,
or renewed by plans on or after January 1, 2014, shall be subject
to the following requirements:

(a) 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.

(b) 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.

SEC. 5.  

Section 10901.3 of the Insurance Code is repealed.

SEC. 6.  

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.

SEC. 7.  

Section 10901.9 of the Insurance Code is repealed.

SEC. 8.  

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

10901.9.  

Commencing on January 1, 2014, premiums for health
benefit plans offered, delivered, amended, or renewed by carriers
shall be subject to the following requirements:

(a) 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.

(b) 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.

SEC. 9.  

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