California Legislature—2013–14 Regular Session

Assembly BillNo. 2088


Introduced by Assembly Member Roger Hernández

February 20, 2014


An act to add Sections 10112.8 and 10112.9 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2088, as introduced, Roger Hernández. Health insurance: minimum value: specified disease and hospital confinement policies.

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014, and exempts health insurance coverage that provides excepted benefits from those reforms. PPACA requires each state to establish an American Health Benefits Exchange and allows qualified individuals to obtain premium assistance for coverage purchased through the Exchange. PPACA specifies that this premium assistance is not available if the individual is eligible for affordable employer-sponsored coverage that provides minimum value, as specified.

Existing law provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires that health benefit plans issued by health insurers in the small group market and the individual market comply with specified requirements. Existing law defines a health benefit plan for this purpose to exclude a policy or certificate of specified disease or hospital confinement indemnity if the insurer certifies to the commissioner that the policy is being offered as supplemental health insurance and not as a substitute for essential health benefits. Existing law requires an insurer issuing these policies in the small group market or the individual market to require that the persons to be covered are covered by coverage that is not designed to serve as supplemental coverage.

This bill would extend that requirement to an insurer issuing a policy of specified disease or hospital confinement indemnity or a policy that does not provide 60% minimum value in the large group market. The bill would require an insurer issuing those policies in the large group market to file a certification with the commissioner stating that the policies are being offered or marketed as supplemental health insurance and not as a substitute for minimum essential coverage.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

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SECTION 1.  

Section 10112.8 is added to the Insurance Code,
2to read:

3

10112.8.  

(a)  An insurer issuing a policy or certificate of
4specified disease or hospital confinement indemnity to a large
5group shall require that the persons to be covered by the policy
6are covered by an individual or group policy or contract that
7arranges or provides medical, hospital, and surgical coverage not
8designed to supplement other private or governmental plans.

9(b) An insurer issuing a policy or certificate of specified disease
10or hospital confinement indemnity to a large group shall comply
11with the following, in addition to complying with subdivision (a):

12(1) The insurer shall file, on or before March 1 of each year, a
13certification with the commissioner that contains the statement
14and information described in paragraph (2).

15(2) The certification required in paragraph (1) shall contain the
16following:

17(A) A statement from the insurer certifying that policies or
18certificates described in this section (i) are being offered and
19marketed as supplemental health insurance and not as a substitute
20for coverage that provides minimum essential coverage as defined
21in Section 5000A of the federal Internal Revenue Code, and (ii)
22the disclosure form as described in Section 10603 contains the
23following statement prominently on the first page: “This is a
24supplement to health insurance. It is not a substitute for essential
P3    1health benefits or minimum essential coverage as defined in federal
2law.”

3(B) A summary description of each policy or certificate
4described in this section, including the average annual premium
5rates, or range of premium rates in cases where premiums vary by
6age, gender, or other factors, charged for the policies and
7certificates issued or delivered in this state.

8(3) In the case of a policy or certificate that is described in this
9section and that is offered for the first time in this state with respect
10to plan years on or after January 1, 2015, the insurer files with the
11commissioner the information and statement required in paragraph
12(2) at least 30 days prior to the date that the policy or certificate
13is issued or delivered in this state.

14(c) As used in this section, the following definitions apply:

15(1) “Large group” means a group that is not a small employer,
16as defined in Section 10753.

17(2) “Policies or certificates of specified disease” and “policies
18or certificates of hospital confinement indemnity” mean policies
19or certificates of insurance sold to an insured to supplement other
20health insurance coverage as specified in this section.

21

SEC. 2.  

Section 10112.9 is added to the Insurance Code, to
22read:

23

10112.9.  

(a) An insurer issuing a policy or certificate of health
24insurance that does not provide a minimum value of at least 60
25percent to a large group shall require that the persons to be covered
26by the policy are covered by an individual or group policy or
27contract that arranges or provides medical, hospital, and surgical
28coverage not designed to supplement other private or government
29plans.

30(b) An insurer may offer, market, or sell a policy or certificate
31of health insurance in the large group market that provides a
32minimum value of less than 60 percent if the insurer offering the
33policy or certificate complies with the following, in addition to
34complying with subdivision (a):

35(1) The insurer files, on or before March 1 of each year, a
36certification with the commissioner that contains the statement
37and information described in paragraph (2).

38(2) The certification required in paragraph (1) shall contain the
39following:

P4    1(A) A statement from the insurer certifying that policies or
2certificates described in this section (i) are being offered and
3marketed as supplemental health insurance and not as a substitute
4for coverage that provides minimum essential coverage as defined
5in Section 5000A of the federal Internal Revenue Code, and (ii)
6the disclosure form as described in Section 10603 contains the
7following statement prominently on the first page: “This is a
8supplement to health insurance. It is not a substitute for essential
9health benefits or minimum essential coverage as defined in federal
10law.”

11(B) A summary description of each policy or certificate
12described in this section, including the average annual premium
13rates, or range of premium rates in cases where premiums vary by
14age, gender, or other factors, charged for the policies and
15certificates issued or delivered in this state.

16(3) In the case of a policy or certificate that is described in this
17section and that is offered for the first time in this state with respect
18to plan years on or after January 1, 2015, the insurer files with the
19commissioner the information and statement required in paragraph
20(2) at least 30 days prior to the date that the policy or certificate
21is issued or delivered in this state.

22(c) For purposes of this section, a plan provides a minimum
23value of at least 60 percent if it complies with Section 36B(c)(2)(C)
24of the federal Internal Revenue Code and any regulations or
25guidance adopted under that section.

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

27(1) “Large group” means a group that is not a small employer,
28as defined in Section 10753.

29(2)  “Plan year” has the meaning set forth in Section 144.103
30of Title 45 of the Code of Federal Regulations.



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