BILL NUMBER: AB 2088	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 19, 2014
	AMENDED IN SENATE  JULY 1, 2014
	AMENDED IN ASSEMBLY  APRIL 21, 2014

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:

  SECTION 1.  Section 1367.010 is added to the Health and Safety
Code, immediately following Section 1367.009, to read:
   1367.010.  (a) A health care service plan, except a health care
service plan offering a specialized health care service plan
contract, that offers, amends, or renews a group plan contract that
does not provide a minimum value of at least 60 percent to a large
group shall require that the persons to be covered by the plan
contract are covered by an individual or group plan contract that
arranges or provides medical, hospital, and surgical coverage not
designed to supplement other private or governmental plans.
   (b) A health care service plan, except a health care service plan
offering a specialized health care service plan contract, may offer,
market, or sell a health plan contract in the large group market that
provides a minimum of less than 60 percent if the health care
service plan complies with the following, in addition to complying
with subdivision (a):
   (1) The health care service plan files, on or before March 1 of
each year, a certification with the director 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 health care service plan certifying that
group plan contract described in this section (i)  are
  is  being offered and marketed as supplemental
health insurance and not as a substitute for coverage that provides
minimum essential coverage as defined in Section 5000A of the federal
Internal Revenue Code, and (ii) the disclosure form as described in
Section 1363 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 group plan contract 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 group plan contracts.
  section. 
   (3) In the case of a group plan contract that is described in this
section and that is offered for the first time in this state with
respect to plan years on or after July 1, 2015, the health care
service plan files with the director the information and statement
required in paragraph (2) at least 30 days prior to the date that the
plan contract is issued or delivered in this state.
   (c) For purposes of this section, a plan provides a minimum value
of at least 60 percent if it complies with Section 36B(c)(2)(C) of
the federal Internal Revenue Code and any regulations or guidance
adopted under that section.
   (d) For purposes of this section, the following definitions apply:

   (1) "Large group health care service plan contract" means a group
health care service plan contract other than a contract issued to a
small employer, as defined in Section 1357, 1357.500, or 1357.600.
   (2) "Plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
  SEC. 2.  Section 10112.9 is added to the Insurance Code, to read:
   10112.9.  (a) An insurer, except an insurer issuing a specialized
health insurance policy, issuing a policy or certificate of health
insurance that does not provide a minimum value of at least 60
percent to a large group shall require that the persons to be covered
by the policy are 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 government
plans.
   (b) An insurer, except an insurer offering a specialized health
insurance policy, may offer, market, or sell a policy or certificate
of health insurance in the large group market that provides a minimum
value of less than 60 percent if the insurer offering the policy or
certificate complies with the following, in addition to complying
with subdivision (a):
   (1) The insurer 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 insurer 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 minimum essential coverage as defined in
Section 5000A of the federal Internal Revenue Code, and (ii) the
disclosure form 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
issued or delivered in this state.   section. 
   (3) In the case of a policy or certificate that is described in
this section and that is offered for the first time in this state
with respect to plan years on or after July 1, 2015, the insurer
files with the commissioner the information and statement required in
paragraph (2) at least 30 days prior to the date that the policy or
certificate is issued or delivered in this state.
   (c) For purposes of this section, a plan provides a minimum value
of at least 60 percent if it complies with Section 36B(c)(2)(C) of
the federal Internal Revenue Code and any regulations or guidance
adopted under that section.
   (d) This section shall not apply to an insurer that is subject to
the disclosure requirements described in Section 10198.61.
   (e) For purposes of this section, the following definitions apply:

   (1) "Large group" means a group that is not a small employer, as
defined in Section 10753.
   (2)  "Plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
  SEC. 3.  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.