Amended in Senate August 21, 2014

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 Bill No. 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 begin delete does not provide end delete begin insert provides less than end insert 60% minimum value in the large group market begin insert and would require that the persons to be covered are also covered by a contract or plan that provides at least 60% minimum value end insert . 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 begin delete does not
provide a minimum value of at least end delete begin insert provides minimum value of
less than end insert 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 begin insert and that provides at least 60 percent minimum
value end insert .

(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) 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.

(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 begin delete does not provide a minimum value of at least end delete
begin insert provides a minimum value of less than end insert 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 begin insert and that provides
at least 60 percent minimum value end insert .

(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.

(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.