Amended in Assembly April 21, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 2088


Introduced by Assembly Member Roger Hernández

February 20, 2014


An act to addbegin delete Sections 10112.8 andend deletebegin insert Section 1367.010 to the Health and Safety Code, and to add Sectionend insert 10112.9 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2088, as amended, Roger Hernández. Health insurance: minimum value:begin delete specified disease and hospital confinement policies.end deletebegin insert large group market policies.end insert

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.

Existingbegin 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. Existingend insert law provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires that health benefit plans issued by health insurersbegin insert and health care service plansend insert in the small group market and the individual market comply with specified requirements. Existing law defines a health benefit plan forbegin delete this purposeend deletebegin insert the purpose of health benefit plans issued by health insurersend insert 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 tobegin insert a health care service plan that offers, amends, or renews a group health plan contract andend insert an insurer issuing a policybegin delete of specified disease or hospital confinement indemnity or a policyend delete that does not provide 60% minimum value in the large group market. The bill would require begin inserta health care service plan and end insertan insurer issuing those begin insertplan contracts and end insertpolicies in the large group market to file a certification with the begin insertdirector or end insertcommissioner stating that the policies are being offered or marketed as supplemental health insurance and not as a substitute for minimum essential coverage.begin insert By expanding the scope of an existing crime, this bill would impose a state-mandated local program.end insert

begin insert

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 insert
begin insert

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

end insert

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

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

begin delete
P2    1

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.

P3    1(b) An insurer issuing a policy or certificate of specified disease
2or hospital confinement indemnity to a large group shall comply
3with the following, in addition to complying with subdivision (a):

4(1) The insurer shall file, on or before March 1 of each year, a
5certification with the commissioner that contains the statement
6and information described in paragraph (2).

7(2) The certification required in paragraph (1) shall contain the
8following:

9(A) A statement from the insurer certifying that policies or
10certificates described in this section (i) are being offered and
11marketed as supplemental health insurance and not as a substitute
12for coverage that provides minimum essential coverage as defined
13in Section 5000A of the federal Internal Revenue Code, and (ii)
14the disclosure form as described in Section 10603 contains the
15following statement prominently on the first page: “This is a
16supplement to health insurance. It is not a substitute for essential
17health benefits or minimum essential coverage as defined in federal
18law.”

19(B) A summary description of each policy or certificate
20described in this section, including the average annual premium
21rates, or range of premium rates in cases where premiums vary by
22age, gender, or other factors, charged for the policies and
23certificates issued or delivered in this state.

24(3) In the case of a policy or certificate that is described in this
25section and that is offered for the first time in this state with respect
26to plan years on or after January 1, 2015, the insurer files with the
27commissioner the information and statement required in paragraph
28(2) at least 30 days prior to the date that the policy or certificate
29is issued or delivered in this state.

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

31(1) “Large group” means a group that is not a small employer,
32as defined in Section 10753.

33(2) “Policies or certificates of specified disease” and “policies
34or certificates of hospital confinement indemnity” mean policies
35or certificates of insurance sold to an insured to supplement other
36health insurance coverage as specified in this section.

end delete
37begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1367.010 is added to the end insertbegin insertHealth and
38Safety Code
end insert
begin insert, end insertimmediately following Section 1367.009begin insert, to read:end insert

begin insert
39

begin insert1367.010.end insert  

(a) A health care service plan that offers, amends,
40or renews a group plan contract that does not provide a minimum
P4    1value of at least 60 percent to a large group shall require that the
2persons to be covered by the plan contract are covered by an
3individual or group plan contract that arranges or provides
4medical, hospital, and surgical coverage not designed to
5supplement other private or governmental plans.

6(b) A health care service plan may offer, market, or sell a health
7plan contract in the large group market that provides a minimum
8of less than 60 percent if the health care service plan complies
9with the following, in addition to complying with subdivision (a):

10(1) The health care service plan files, on or before March 1 of
11each year, a certification with the director that contains the
12statement and information described in paragraph (2).

13(2) The certification required in paragraph (1) shall contain
14the following:

15(A) A statement from the health care service plan certifying that
16group plan contract described in this section (i) are being offered
17and marketed as supplemental health insurance and not as a
18substitute for coverage that provides minimum essential coverage
19as defined in Section 5000A of the federal Internal Revenue Code,
20and (ii) the disclosure form as described in Section 1363 contains
21the following statement prominently on the first page:

22“This is a supplement to health insurance. It is not a substitute
23for essential health benefits or minimum essential coverage as
24defined in federal law.”

25(B) A summary description of each group plan contract
26described in this section, including the average annual premium
27rates, or range of premium rates in cases where premiums vary
28by age, gender, or other factors, charged for the group plan
29contracts.

30(3) In the case of a group plan contract that is described in this
31section and that is offered for the first time in this state with respect
32to plan years on or after January 1, 2015, the health care service
33plan files with the director the information and statement required
34in paragraph (2) at least 30 days prior to the date that the plan
35contract is issued or delivered in this state.

36(c) For purposes of this section, a plan provides a minimum
37value of at least 60 percent if it complies with Section 36B(c)(2)(C)
38of the federal Internal Revenue Code and any regulations or
39 guidance adopted under that section.

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

P5    1(1) “Large group health care service plan contract” means a
2group health care service plan contract other than a contract
3issued to a small employer, as defined in Section 1357, 1357.500,
4or 1357.600.

5(2) “Plan year” has the meaning set forth in Section 144.103
6of Title 45 of the Code of Federal Regulations.

end insert
7

SEC. 2.  

Section 10112.9 is added to the Insurance Code, to
8read:

9

10112.9.  

(a) An insurer issuing a policy or certificate of health
10insurance that does not provide a minimum value of at least 60
11percent to a large group shall require that the persons to be covered
12by the policy are covered by an individual or group policy or
13contract that arranges or provides medical, hospital, and surgical
14coverage not designed to supplement other private or government
15plans.

16(b) An insurer may offer, market, or sell a policy or certificate
17of health insurance in the large group market that provides a
18minimum value of less than 60 percent if the insurer offering the
19policy or certificate complies with the following, in addition to
20complying with subdivision (a):

21(1) The insurer files, on or before March 1 of each year, a
22certification with the commissioner that contains the statement
23and information described in paragraph (2).

24(2) The certification required in paragraph (1) shall contain the
25following:

26(A) A statement from the insurer certifying that policies or
27certificates described in this section (i) are being offered and
28marketed as supplemental health insurance and not as a substitute
29for coverage that provides minimum essential coverage as defined
30in Section 5000A of the federal Internal Revenue Code, and (ii)
31the disclosure form as described in Section 10603 contains the
32following statement prominently on the first page:begin delete “Thisend delete

33begin insert “Thisend insert is a supplement to health insurance. It is not a substitute
34for essential health benefits or minimum essential coverage as
35defined in federal law.”

36(B) A summary description of each policy or certificate
37described in this section, including the average annual premium
38rates, or range of premium rates in cases where premiums vary by
39age, gender, or other factors, charged for the policies and
40certificates issued or delivered in this state.

P6    1(3) In the case of a policy or certificate that is described in this
2section and that is offered for the first time in this state with respect
3to plan years on or after January 1, 2015, the insurer files with the
4commissioner the information and statement required in paragraph
5(2) at least 30 days prior to the date that the policy or certificate
6is issued or delivered in this state.

7(c) For purposes of this section, a plan provides a minimum
8value of at least 60 percent if it complies with Section 36B(c)(2)(C)
9of the federal Internal Revenue Code and any regulations or
10guidance adopted under that section.

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

12(1) “Large group” means a group that is not a small employer,
13as defined in Section 10753.

14(2)  “Plan year” has the meaning set forth in Section 144.103
15of Title 45 of the Code of Federal Regulations.

16begin insert

begin insertSEC. 3.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
17Section 6 of Article XIII B of the California Constitution because
18the only costs that may be incurred by a local agency or school
19district will be incurred because this act creates a new crime or
20infraction, eliminates a crime or infraction, or changes the penalty
21for a crime or infraction, within the meaning of Section 17556 of
22the Government Code, or changes the definition of a crime within
23the meaning of Section 6 of Article XIII B of the California
24Constitution.

end insert

CORRECTIONS:

Text--Page 5.




O

Corrected 4-21-14—See last page.     98