Amended in Senate August 19, 2014

Amended in Senate July 1, 2014

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 add Section 1367.010 to the Health and Safety Code, and to add Section 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: large group market 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, 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 provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires that health benefit plans issued by health insurers and health care service plans in the small group market and the individual market comply with specified requirements. Existing law defines a health benefit plan for the purpose of health benefit plans issued by health insurers 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 a health care service plan that offers, amends, or renews a group health plan contract and an insurer issuing a policy, except a health care service plan or insurer issuing a specialized health care service plan or policy, that does not provide 60% minimum value in the large group market. The bill would require a health care service plan and an insurer, except a health care service plan or insurer issuing a specialized health care service plan or policy, issuing those plan contracts and policies in the large group market to file a certification with the director or commissioner stating that the policies are being offered or marketed as supplemental health insurance and not as a substitute for minimum essential coverage. This bill would exempt an insurer that is subject to specified disclosure requirements from these provisions. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

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.

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

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

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

P2    1

SECTION 1.  

Section 1367.010 is added to the Health and
2Safety Code
, immediately following Section 1367.009, to read:

3

1367.010.  

(a) A health care service plan, except a health care
4service plan offering a specialized health care service plan contract,
P3    1that offers, amends, or renews a group plan contract that does not
2provide a minimum value of at least 60 percent to a large group
3shall require that the persons to be covered by the plan contract
4are covered by an individual or group plan contract that arranges
5or provides medical, hospital, and surgical coverage not designed
6to supplement other private or governmental plans.

7(b) A health care service plan, except a health care service plan
8offering a specialized health care service plan contract, may offer,
9market, or sell a health plan contract in the large group market that
10provides a minimum of less than 60 percent if the health care
11service plan complies with the following, in addition to complying
12with subdivision (a):

13(1) The health care service plan files, on or before March 1 of
14each year, a certification with the director that contains the
15statement and information described in paragraph (2).

16(2) The certification required in paragraph (1) shall contain the
17following:

18(A) A statement from the health care service plan certifying that
19group plan contract described in this section (i)begin delete areend deletebegin insert isend insert being offered
20and marketed as supplemental health insurance and not as a
21substitute for coverage that provides minimum essential coverage
22as defined in Section 5000A of the federal Internal Revenue Code,
23and (ii) the disclosure form as described in Section 1363 contains
24the following statement prominently on the first page:

25“This is a supplement to health insurance. It is not a substitute
26for essential health benefits or minimum essential coverage as
27defined in federal law.”

28(B) A summary description of each group plan contract
29described in thisbegin delete section, including the average annual premium
30rates, or range of premium rates in cases where premiums vary by
31age, gender, or other factors, charged for the group plan contracts.end delete

32begin insert section.end insert

33(3) In the case of a group plan contract that is described in this
34section and that is offered for the first time in this state with respect
35to plan years on or after July 1, 2015, the health care service plan
36files with the director the information and statement required in
37paragraph (2) at least 30 days prior to the date that the plan contract
38is issued or delivered in this state.

39(c) For purposes of this section, a plan provides a minimum
40value of at least 60 percent if it complies with Section 36B(c)(2)(C)
P4    1of the federal Internal Revenue Code and any regulations or
2 guidance adopted under that section.

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

4(1) “Large group health care service plan contract” means a
5group health care service plan contract other than a contract issued
6to a small employer, as defined in Section 1357, 1357.500, or
71357.600.

8(2) “Plan year” has the meaning set forth in Section 144.103 of
9Title 45 of the Code of Federal Regulations.

10

SEC. 2.  

Section 10112.9 is added to the Insurance Code, to
11read:

12

10112.9.  

(a) An insurer, except an insurer issuing a specialized
13health insurance policy, issuing a policy or certificate of health
14insurance that does not provide a minimum value of at least 60
15percent to a large group shall require that the persons to be covered
16by the policy are covered by an individual or group policy or
17contract that arranges or provides medical, hospital, and surgical
18coverage not designed to supplement other private or government
19plans.

20(b) An insurer, except an insurer offering a specialized health
21insurance policy, may offer, market, or sell a policy or certificate
22of health insurance in the large group market that provides a
23minimum value of less than 60 percent if the insurer offering the
24policy or certificate complies with the following, in addition to
25complying with subdivision (a):

26(1) The insurer files, on or before March 1 of each year, a
27certification with the commissioner that contains the statement
28and information described in paragraph (2).

29(2) The certification required in paragraph (1) shall contain the
30following:

31(A) A statement from the insurer certifying that policies or
32certificates described in this section (i) are being offered and
33marketed as supplemental health insurance and not as a substitute
34for coverage that provides minimum essential coverage as defined
35in Section 5000A of the federal Internal Revenue Code, and (ii)
36the disclosure form as described in Section 10603 contains the
37following statement prominently on the first page:

38 “This is a supplement to health insurance. It is not a substitute
39for essential health benefits or minimum essential coverage as
40defined in federal law.”

P5    1(B) A summary description of each policy or certificate
2described in thisbegin delete section, including the average annual premium
3rates, or range of premium rates in cases where premiums vary by
4age, gender, or other factors, charged for the policies and
5certificates issued or delivered in this state.end delete
begin insert section.end insert

6(3) In the case of a policy or certificate that is described in this
7section and that is offered for the first time in this state with respect
8to plan years on or after July 1, 2015, the insurer files with the
9commissioner the information and statement required in paragraph
10(2) at least 30 days prior to the date that the policy or certificate
11is issued or delivered in this state.

12(c) For purposes of this section, a plan provides a minimum
13value of at least 60 percent if it complies with Section 36B(c)(2)(C)
14of the federal Internal Revenue Code and any regulations or
15guidance adopted under that section.

16(d) This section shall not apply to an insurer that is subject to
17the disclosure requirements described in Section 10198.61.

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

19(1) “Large group” means a group that is not a small employer,
20as defined in Section 10753.

21(2)  “Plan year” has the meaning set forth in Section 144.103
22of Title 45 of the Code of Federal Regulations.

23

SEC. 3.  

No reimbursement is required by this act pursuant to
24Section 6 of Article XIII B of the California Constitution because
25the only costs that may be incurred by a local agency or school
26district will be incurred because this act creates a new crime or
27infraction, eliminates a crime or infraction, or changes the penalty
28for a crime or infraction, within the meaning of Section 17556 of
29the Government Code, or changes the definition of a crime within
30the meaning of Section 6 of Article XIII B of the California
31Constitution.



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