California Legislature—2013–14 First Extraordinary Session

Senate Bill No. 2

Introduced by Senator Hernandez

(Principal coauthor: Senator Monning)

January 28, 2013

An act to amend Sections 1357.51, 1357.503, 1357.504, 1357.509, 1357.512, 1363, and 1399.829 of, to amend the heading of Article 11.7 (commencing with Section 1399.825) of Chapter 2.2 of Division 2 of, to amend and add Sections 1389.4 and 1389.7 of, to amend and repeal Section 1389.5 of, to amend, repeal, and add Sections 1399.805 and 1399.811 of, to add Sections 1348.96 and 1399.836 to, to add Article 11.8 (commencing with Section 1399.845) to Chapter 2.2 of Division 2 of, and to repeal Sections 1357.510 and 1399.816 of, the Health and Safety Code, and to amend Sections 10198.7, 10753.05, 10753.06.5, 10753.11, 10753.12, 10753.14, and 10954 of, to amend the heading of Chapter 9.7 (commencing with Section 10950) of Part 2 of Division 2 of, to amend and add Sections 10113.95 and 10119.2 of, to amend and repeal Section 10119.1 of, to amend, repeal, and add Sections 10901.3 and 10901.9 of, to add Sections 10127.21 and 10960.5 to, to add Chapter 9.9 (commencing with Section 10965) to Part 2 of Division 2 of, to add Part 6.25 (commencing with Section 12694.50) to Division 2 of, and to repeal Section 10902.4 of, the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 2, as introduced, Hernandez. Health care coverage.

(1) Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA requires each health insurance issuer that offers health insurance coverage in the individual or group market in a state to accept every employer and individual in the state that applies for that coverage and to renew that coverage at the option of the plan sponsor or the individual. PPACA prohibits a group health plan and a health insurance issuer offering group or individual health insurance coverage from imposing any preexisting condition exclusion with respect to that plan or coverage. PPACA allows the premium rate charged by a health insurance issuer offering small group or individual coverage to vary only by rating area, age, tobacco use, and whether the coverage is for an individual or family and prohibits discrimination against individuals based on health status, as specified. PPACA requires an issuer to consider all enrollees in its individual market plans to be part of a single risk pool and to consider all enrollees in its small group market plans to be part of a single risk pool, as specified. PPACA also requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers, 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 also provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires plans and insurers offering coverage in the individual market to offer coverage for a child subject to specified requirements. Existing law establishes the California Health Benefit Exchange (Exchange) to facilitate the purchase of qualified health plans through the Exchange by qualified individuals and qualified small employers by January 1, 2014.

This bill would require a plan or insurer, on and after October 1, 2013, to offer, market, and sell all of the plan’s or insurer’s health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in each service area in which the plan or insurer provides or arranges for the provision of health care services, as specified, but would require plans and insurers to limit enrollment in individual health benefit plans to specified open enrollment and special enrollment periods. The bill would prohibit these health benefit plans from imposing any preexisting condition upon any individual and from conditioning the issuance or offering of individual health benefit plans on any health status-related factor, as specified. The bill would require a health care service plan or health insurer to consider the claims experience of all enrollees or insureds of its nongrandfathered individual health benefit plans to be part of a single risk pool, would require the plan or insurer to establish a specified index rate for that market, and would authorize the plan or insurer to vary premiums from the index rate based only on specified factors. The bill would authorize plans and insurers to use only age, geographic region, and family size for purposes of establishing rates for individual health benefit plans, as specified. The bill would require plans and insurers to provide specified information regarding the Exchange to applicants for and subscribers of individual health benefit plans offered outside the Exchange. The bill would prohibit a plan or insurer from advertising or marketing an individual grandfathered health plan for the purpose of enrolling a dependent of the subscriber or policyholder in the plan and would also require plans and insurers to annually issue a specified notice to subscribers and policyholders enrolled in a grandfathered plan.

Existing law requires plans and insurers to guarantee issue their small employer health benefit plans, as specified. With respect to nongrandfathered small employer health benefit plans for plan years on or after January 1, 2014, among other things, existing law provides certain exceptions from the guarantee issue requirement, allows the premium for small employer health benefit plans to vary only by age, geographic region, and family size, as specified, and requires plans and insurers to provide special enrollment periods and coverage effective dates consistent with the individual nongrandfathered market in the state. Existing law provides that these provisions shall be inoperative if specified provisions of PPACA are repealed.

This bill would modify the small employer special enrollment periods and coverage effective dates for purposes of consistency with the individual market reforms described above. The bill would also modify the exceptions from the guarantee issue requirement and the manner in which a plan or insurer determines premium rates for a small employer health benefit plan, as specified. The bill would also require a plan or insurer to consider the claims experience of all enrollees of its nongrandfathered small employer health benefit plans to be part of a single risk pool, would require the plan or insurer to establish a specified index rate for that market, and would authorize the plan or insurer to vary premiums from the index rate based only on specified factors. The bill would delete the provisions making these provisions inoperative if specified provisions of PPACA are repealed.

Because a willful violation of these requirements with respect to health care service plans would be a crime, the bill would impose a state-mandated local program.

(2) PPACA requires a state or the United States Secretary of Health and Human Services to implement a risk adjustment program for the 2014 benefit year and every benefit year thereafter, under which a charge is assessed on low actuarial risk plans and a payment is made to high actuarial risk plans, as specified. If a state that elects to operate an American Health Benefit Exchange elects not to administer this risk adjustment program, the secretary will operate the program and issuers will be required to submit data for purposes of the program to the secretary.

This bill would require that any data submitted by health care service plans and health insurers to the secretary for purposes of the risk adjustment program also be submitted to the Department of Managed Health Care or the Department of Insurance.

(3) PPACA requires health insurance issuers to provide a summary of benefits and coverage explanation pursuant to specified standards to applicants and enrollees or policyholders.

Existing law requires health care service plans to use disclosure forms that contain specified information regarding the contracts issued by the plan, including the benefits and coverage of the contract, and the exceptions, reductions, and limitations that apply to the contract. Existing law requires health care service plans that offer individual or small group coverage to also provide a uniform health plan benefits and coverage matrix containing the plan’s major provisions, as specified.

This bill would authorize the Department of Managed Health Care to waive or modify those requirements for purposes of compliance with PPACA through issuance of all-plan letters until January 1, 2015.

(4) Existing law requires a health care service plan or a health insurer offering individual plan contracts or individual insurance policies to fairly and affirmatively offer, market, and sell certain individual contracts and policies to all federally eligible defined individuals, as defined, in each service area in which the plan or insurer provides or arranges for the provision of health care services. Existing law prohibits the premium for those policies and contracts from exceeding the premium paid by a subscriber of the California Major Risk Medical Insurance Program who is of the same age and resides in the same geographic region as the federally eligible defined individual, as specified.

This bill would instead prohibit the premium for those policies and contracts from exceeding the premium for a specified plan offered in the individual market through the California Health Benefit Exchange in the rating area in which the individual resides. The bill would make this requirement operative on the later of January 1, 2014, or the 91st day following the adjournment of the 2013-14 First Extraordinary Session. Because a willful violation of this requirement by a health care service plan would be a crime, the bill would impose a state-mandated local program.

(5) Existing law creates the Healthy Families Program, administered by the Managed Risk Medical Insurance Board, to arrange for the provision of health care services to eligible children through participating health, dental, and vision care plans, as defined. To be eligible for the program, existing law requires applicants to, among other requirements, be less than 19 years of age and have a limited gross household income, as specified. Existing law provides for the transition of specified enrollees of the Healthy Families Program to the Medi-Cal program, to the extent that those individuals are otherwise eligible, no sooner than January 1, 2013.

This bill would require plans offering coverage to Healthy Families Program enrollees, on or after January 1, 2012, including those transitioned to the Medi-Cal program, to offer 18 months of coverage, until a specified date, to individuals who were or are disenrolled from the program due to ineligibility because of age and are not eligible for full scope coverage under Medi-Cal. The bill would require plans to provide notice of eligibility for this coverage within a specified period of time and would require beneficiaries electing this coverage to pay no more than 110% of the average per subscriber payment made to all participating health, dental, or vision plans for program coverage, as specified.

(6) 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 1348.96 is added to the Health and Safety
Code, to read:

1348.96.  

Any data submitted by a health care service plan to
the United States Secretary of Health and Human Services, or his
or her designee, for purposes of the risk adjustment program
described in Section 1343 of the federal Patient Protection and
Affordable Care Act (42 U.S.C. Sec. 18063) shall be concurrently
submitted to the department.

SEC. 2.  

Section 1357.51 of the Health and Safety Code, as
added by Chapter 852 of the Statutes of 2012, is amended to read:

1357.51.  

(a) A begin delete nongrandfathered health benefit plan for group end delete
begin delete or individual coverage or a grandfathered end delete health benefit plan for
group coverage shall not impose any preexisting condition
begin insert provision end insert or waivered condition begin insert provision end insert upon any enrollee.

(b)  begin insert A nongrandfathered health benefit plan for individual end insert
begin insert coverage shall not impose any preexisting condition provision or end insert
begin insert waivered condition provision upon any enrollee. end insert begin insert end insert A grandfathered
health benefit plan for individual coverage shall not exclude
coverage on the basis of a waivered condition provision or
preexisting condition provision for a period greater than 12 months
following the enrollee’s effective date of coverage, nor limit or
exclude coverage for a specific enrollee by type of illness,
treatment, medical condition, or accident, except for satisfaction
of a preexisting condition begin delete clause end delete begin insert provision end insert or waivered condition
provision pursuant to this article. Waivered condition provisions
or preexisting condition provisions contained in individual
grandfathered health benefit plans may relate only to conditions
for which medical advice, diagnosis, care, or treatment, including
use of prescription drugs, was recommended or received from a
licensed health practitioner during the 12 months immediately
preceding the effective date of coverage.

(c) (1) A health benefit plan for group coverage may apply a
waiting period of up to 60 days as a condition of employment if
applied equally to all eligible employees and dependents and if
consistent with PPACA. A health benefit plan for group coverage
through a health maintenance organization, as defined in Section
2791 of the federal Public Health Service Act, shall not impose
any affiliation period that exceeds 60 days. A waiting or affiliation
period shall not be based on a preexisting condition of an employee
or dependent, the health status of an employee or dependent, or
any other factor listed in Section 1357.52. An affiliation period
shall run concurrently with a waiting period. During the waiting
or affiliation period, the plan is not required to provide health care
services and no premium shall be charged to the subscriber or
enrollees.

(2) A health benefit plan for individual coverage shall not
impose any waiting or affiliation period.

(d) In determining whether a preexisting condition provision,
a waivered condition provision, or a waiting or affiliation period
applies to an enrollee, a plan shall credit the time the enrollee was
covered under creditable coverage, provided that the enrollee
becomes eligible for coverage under the succeeding plan contract
within 62 days of termination of prior coverage, exclusive of any
waiting or affiliation period, and applies for coverage under the
succeeding plan within the applicable enrollment period. A plan
shall also credit any time that an eligible employee must wait
before enrolling in the plan, including any postenrollment or
employer-imposed waiting or affiliation period.

However, if a person’s employment has ended, the availability
of health coverage offered through employment or sponsored by
an employer has terminated, or an employer’s contribution toward
health coverage has terminated, a plan shall credit the time the
person was covered under creditable coverage if the person
becomes eligible for health coverage offered through employment
or sponsored by an employer within 180 days, exclusive of any
waiting or affiliation period, and applies for coverage under the
succeeding plan contract within the applicable enrollment period.

(e) An individual’s period of creditable coverage shall be
certified pursuant to Section 2704(e) of Title XXVII of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-3(e)).

SEC. 3.  

Section 1357.503 of the Health and Safety Code is
amended to read:

1357.503.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
small employer health care service plan contracts for plan years
on or after January 1, 2014, to all small employers in each service
area in which the plan provides or arranges for the provision of
health care services.

(2) On and after October 1, 2013, a plan shall make available
to each small employer all small employer health care service plan
contracts that the plan offers and sells to small employers or to
associations that include small employers in this state for plan
years on or after January 1, 2014.

(3) A plan that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraphs
(1) and (2) with respect to small employer health care service plan
contracts offered through the Exchange in those geographic regions
in which the plan offers plan contracts through the Exchange.

(b) A plan shall provide enrollment periods consistent with
PPACA and begin delete set forth end delete begin insert described end insert in Section 155.725 of Title 45 of
the Code of Federal Regulations. begin delete A end delete begin insert Commencing January 1, 2014, end insert
begin insert a end insert plan shall provide special enrollment periods consistent with the
special enrollment periods begin delete required in the individual
nongrandfathered market in the state under end delete begin insert described in end insert Section
1399.849, except for the triggering events identified in paragraphs
(d)(3) and (d)(6) of Section 155.420 of Title 45 of the Code of
Federal Regulations with respect to plan contracts offered through
the Exchange.

(c) No plan or solicitor shall induce or otherwise encourage a
small employer to separate or otherwise exclude an eligible
employee from a health care service plan contract that is provided
in connection with employee’s employment or membership in a
guaranteed association.

(d) Every plan shall file with the director the reasonable
employee participation requirements and employer contribution
requirements that will be applied in offering its plan contracts.
Participation requirements shall be applied uniformly among all
small employer groups, except that a plan may vary application
of minimum employee participation requirements by the size of
the small employer group and whether the employer contributes
100 percent of the eligible employee’s premium. Employer
contribution requirements shall not vary by employer size. A health
care service plan shall not establish a participation requirement
that (1) requires a person who meets the definition of a dependent
in Section 1357.500 to enroll as a dependent if he or she is
otherwise eligible for coverage and wishes to enroll as an eligible
employee and (2) allows a plan to reject an otherwise eligible small
employer because of the number of persons that waive coverage
due to coverage through another employer. Members of an
association eligible for health coverage under subdivision (m) of
Section 1357.500, but not electing any health coverage through
the association, shall not be counted as eligible employees for
purposes of determining whether the guaranteed association meets
a plan’s reasonable participation standards.

(e) The plan shall not reject an application from a small
employer for a small employer health care service plan contract
if all of the following conditions are met:

(1) The small employer offers health benefits to 100 percent of
its eligible employees. Employees who waive coverage on the
grounds that they have other group coverage shall not be counted
as eligible employees.

(2) The small employer agrees to make the required premium
payments.

(3) The small employer agrees to inform the small employer’s
employees of the availability of coverage and the provision that
those not electing coverage must wait until the next open
enrollment or a special enrollment period to obtain coverage
through the group if they later decide they would like to have
coverage.

(4) The employees and their dependents who are to be covered
by the plan contract work or reside in the service area in which
the plan provides or otherwise arranges for the provision of health
care services.

(f) No plan or solicitor shall, directly or indirectly, engage in
the following activities:

(1) Encourage or direct small employers to refrain from filing
an application for coverage with a plan because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan’s approved
service area.

(2) Encourage or direct small employers to seek coverage from
another plan because of the health status, claims experience,
industry, occupation of the small employer, or geographic location
provided that it is within the plan’s approved service area.

begin insert

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs.

end insert

(g) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor for the sale of
a health care service plan contract to be varied because of the health
status, claims experience, industry, occupation, or geographic
location of the small employer. This subdivision does not apply
to a compensation arrangement that provides compensation to a
solicitor on the basis of percentage of premium, provided that the
percentage shall not vary because of the health status, claims
experience, industry, occupation, or geographic area of the small
employer.

(h) (1) A policy or contract that covers a small employer, as
defined in Section 1304(b) of PPACA and in Section 1357.500,
shall not establish rules for eligibility, including continued
eligibility, of an individual, or dependent of an individual, to enroll
under the terms of the policy or contract based on any of the
following health status-related factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an eligible employee or dependent to fill out a
health assessment or medical questionnaire prior to enrollment
under a small employer health care service plan contract. A health
care service plan shall not acquire or request information that
relates to a health status-related factor from the applicant or his or
her dependent or any other source prior to enrollment of the
individual.

begin insert

(i) (1) A health care service plan shall consider the claims
experience of all enrollees in all nongrandfathered small employer
health care service plan contracts offered in the state that are
subject to subdivision (a), including those enrollees who do not
enroll in the contracts through the Exchange, to be members of a
single risk pool.

end insert begin insert

(2) Each plan year, a health care service plan shall establish
an index rate for the small employer market in the state based on
the total combined claims costs for providing essential health
benefits, as defined pursuant to Section 1302 of PPACA, within
the single risk pool required under paragraph (1). The index rate
shall be adjusted on a market-wide basis based on the total
expected market-wide payments and charges under the risk
adjustment and reinsurance programs established for the state
pursuant to Sections 1343 and 1341 of PPACA. The premium rate
for all of the health care service plan’s nongrandfathered small
employer health care service plan contracts shall use the
applicable index rate, as adjusted for total expected market-wide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA, subject only to the adjustments permitted under
paragraph (3).

end insert begin insert

(3) A health care service plan may vary premiums rates for a
particular nongrandfathered small employer health care service
plan contract from its index rate based only on the following
actuarially justified plan-specific factors:

end insert begin insert

(A) The actuarial value and cost-sharing design of the plan
contract.

end insert begin insert

(B) The plan contract’s provider network, delivery system
characteristics, and utilization management practices.

end insert begin insert

(C) The benefits provided under the plan contract that are in
addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for plan contracts that
offer those benefits in addition to essential health benefits.

end insert begin insert

(D) With respect to catastrophic plans, as described in
subsection (e) of Section 1302 of PPACA, the expected impact of
the specific eligibility categories for those plans.

end insert begin delete

(i)

end delete

begin insert (j) end insert  A plan shall comply with the requirements of Section 1374.3.

begin delete

(j)  (1) Except as provided in paragraph (2), this section shall
become inoperative if Section 2702 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-1), as added by Section 1201
of PPACA, is repealed, in which case health care services plans
subject to this section shall instead be governed by Section 1357.03
to the extent permitted by federal law, and all references in this
article to this section shall instead refer to Section 1357.03 except
for purposes of paragraph (2).

(2) Subdivision (b) of this section shall remain operative with
respect to health care service plan contracts offered through the
Exchange.

end delete

SEC. 4.  

Section 1357.504 of the Health and Safety Code is
amended to read:

1357.504.  

(a) With respect to small employer health care
service plan contracts offered outside the Exchange, after a small
employer submits a completed application form for a plan contract,
the health care service plan shall, within 30 days, notify the
employer of the employer’s actual premium charges for that plan
contract established in accordance with Section 1357.512. The
employer shall have 30 days in which to exercise the right to buy
coverage at the quoted premium charges.

(b)  begin delete (1) end delete begin delete   end delete Except as provided in begin delete paragraph (2) end delete begin insert subdivision (c) end insert ,
when a small employer submits a premium payment, based on the
quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan contract shall become effective
no later than the first day of the following month. When that
payment is neither delivered nor postmarked until after the 15th
day of a month, coverage shall become effective no later than the
first day of the second month following delivery or postmark of
the payment.

begin delete

(2) A health care service plan shall apply coverage effective
dates for plan contracts subject to this article consistent with the
coverage effective dates applicable to nongrandfathered individual
health care service plan contracts pursuant to Section 1399.849.

end delete begin insert

(c) (1) With respect to a small employer health care service
plan contract offered through the Exchange, a plan shall apply
coverage effective dates consistent with those required under
Section 155.720 of Title 45 of the Code of Federal Regulations
and paragraph (2) of subdivision (e) of Section 1399.849.

end insert begin insert

(2) With respect to a small employer health care service plan
contract offered outside the Exchange for which an individual
applies during a special enrollment period described in subdivision
(b) of Section 1357.503, the following provisions shall apply:

end insert begin insert

(A) Coverage under the plan contract shall become effective no
later than the first day of the first calendar month beginning after
the date the plan receives the request for special enrollment.

end insert begin insert

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, coverage under the plan
contract shall become effective on the date of birth, adoption, or
placement for adoption.

end insert begin delete

(c)

end delete

begin insert (d) end insert  During the first 30 days after the effective date of the plan
contract, the small employer shall have the option of changing
coverage to a different plan contract offered by the same health
care service plan. If a small employer notifies the plan of the
change within the first 15 days of a month, coverage under the
new plan contract shall become effective no later than the first day
of the following month. If a small employer notifies the plan of
the change after the 15th day of a month, coverage under the new
plan contract shall become effective no later than the first day of
the second month following notification.

SEC. 5.  

Section 1357.509 of the Health and Safety Code is
amended to read:

1357.509.  

begin insert (a) end insert begin insert   end insert To the extent permitted by PPACA, no plan
shall be required to offer a health care service plan contract or
accept applications for the contract pursuant to this article in the
case of any of the following:

begin delete

(a)

end delete

begin insert (1) end insert  To a small employer, begin delete if the small employer is not physically end delete
begin delete located in a plan’s approved service areas, or end delete if begin delete an end delete begin insert the end insert eligible
begin delete employee end delete begin insert employees end insert and dependents who are to be covered by the
plan contract do not begin insert live, end insert work or reside within a plan’s approved
service areas.

begin delete

(b) (1) 

end delete

begin insert (2) end insert begin insert   end insert begin insert (A) end insert begin insert   end insert Within a specific service area or portion of a service
area, if a plan reasonably anticipates and demonstrates to the
satisfaction of the director begin delete that it end delete begin insert both of the following: end insert

begin insert (i) end insert begin insert   end insert begin insert It end insert begin insert end insert will not have sufficient health care delivery resources to
ensure that health care services will be available and accessible to
the eligible employee and dependents of the employee because of
its obligations to existing enrollees.

begin insert

(ii) It is applying this subparagraph uniformly to all employers
without regard to the claims experience of those employers, and
their employees and dependents, or any health status-related factor
relating to those employees and dependents.

end insert begin delete

(2)

end delete

begin insert (B) end insert  A plan that cannot offer a health care service plan contract
to small employers because it is lacking in sufficient health care
delivery resources within a service area or a portion of a service
area begin insert pursuant to subparagraph (A) end insert may not offer a contract in the
area in which the plan is not offering coverage to small employers
to new employer groups with more than 50 eligible employees
until the begin insert later of the following dates: end insert

begin insert

(i) The 181st day after the date that coverage is denied pursuant
to this paragraph.

end insert

begin insert (ii) end insert begin insert   end insert begin insert The date the end insert begin insert end insert plan notifies the director that it has the ability
to deliver services to small employer groups, and certifies to the
director that from the date of the notice it will enroll all small
employer groups requesting coverage in that area from the plan
begin delete unless the plan has met the requirements of subdivision (d) end delete .

begin insert

(C) Subparagraph (B) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

end insert begin insert

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to the requirements
of this section.

end insert begin insert

(b) (1) A health care service plan may decline to offer a health
care service plan contract to a small employer if the plan
demonstrates to the satisfaction of the director both of the
following:

end insert begin insert

(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, the director shall consider, but
not be limited to, the plan’s compliance with the requirements of
Section 1367, Article 6 (commencing with Section 1375), and the
rules adopted thereunder.

end insert begin insert

(B) It is applying this paragraph uniformly to all employers
without regard to the claims experience of those employers and
their employees and dependents or any health status-related factor
relating to those employees and dependents.

end insert begin insert

(2) A plan that denies coverage to a small employer under
paragraph (1) shall not offer coverage in the group market before
the later of the following dates:

end insert begin insert

(A) The 181st day after the date that coverage is denied pursuant
to paragraph (1).

end insert begin insert

(B) The date the plan demonstrates to the satisfaction of the
director that the plan has sufficient financial reserves necessary
to underwrite additional coverage.

end insert begin insert

(3) Paragraph (2) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

end insert begin insert

(4) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to the requirements of
this section.

end insert begin delete

(3)

end delete

begin insert (c) end insert  Nothing in this article shall be construed to limit the
director’s authority to develop and implement a plan of
rehabilitation for a health care service plan whose financial viability
or organizational and administrative capacity has become impaired
begin insert to the extent permitted by PPACA end insert .

begin delete

(c) Offer coverage to a small employer or an eligible employee
as defined in paragraph (2) of subdivision (c) of Section 1357.500
that, within 12 months of application for coverage, disenrolled
from a plan contract offered by the plan.

(d) (1) The director approves the plan’s certification that the
number of eligible employees and dependents enrolled under
contracts issued during the current calendar year equals or exceeds
either of the following:

(A) In the case of a plan that administers any self-funded health
coverage arrangements in California, 10 percent of the total
enrollment of the plan in California as of December 31 of the
preceding year.

(B) In the case of a plan that does not administer any self-funded
health coverage arrangements in California, 8 percent of the total
enrollment of the plan in California as of December 31 of the
preceding year. If that certification is approved, the plan shall not
offer any health care service plan contract to any small employers
during the remainder of the current year.

(2) If a health care service plan treats an affiliate or subsidiary
as a separate carrier for the purpose of this article because one
health care service plan is qualified under the federal Health
Maintenance Organization Act (42 U.S.C. Sec. 300e et seq.) and
does not offer coverage to small employers, while the affiliate or
subsidiary offers a plan contract that is not qualified under the
federal Health Maintenance Organization Act (42 U.S.C. Sec. 300e
et seq.) and offers plan contracts to small employers, the health
care service plan offering coverage to small employers shall enroll
new eligible employees and dependents, equal to the applicable
percentage of the total enrollment of both the health care service
plan qualified under the federal Health Maintenance Organization
Act (42 U.S.C. Sec. 300e et seq.) and its affiliate or subsidiary.

(3) (A) The certified statement filed pursuant to this subdivision
shall state the following:

(i) Whether the plan administers any self-funded health coverage
arrangements in California.

(ii) The plan’s total enrollment as of December 31 of the
preceding year.

(iii) The number of eligible employees and dependents enrolled
under contracts issued to small employer groups during the current
calendar year.

(B) The director shall, within 45 days, approve or disapprove
the certified statement. If the certified statement is disapproved,
the plan shall continue to issue coverage as required by Section
1357.503 and be subject to disciplinary action as set forth in Article
7 (commencing with Section 1386).

(e) A health care service plan that, as of December 31 of the
prior year, had a total enrollment of fewer than 100,000 and 50
percent or more of the plan’s total enrollment have premiums paid
by the Medi-Cal program.

(f) A social health maintenance organization, as described in
subsection (a) of Section 2355 of the federal Deficit Reduction
Act of 1984 (Public Law 98-369), that, as of December 31 of the
prior year, had a total enrollment of fewer than 100,000 and has
50 percent or more of the organization’s total enrollment premiums
paid by the Medi-Cal program or Medicare Program, or by a
combination of Medi-Cal and Medicare. In no event shall this
exemption be based upon enrollment in Medicare supplement
contracts, as described in Article 3.5 (commencing with Section
1358).

end delete

SEC. 6.  

Section 1357.510 of the Health and Safety Code is
repealed.

begin delete

1357.510.  

The director may require a plan to discontinue the
offering of contracts or acceptance of applications from any small
employer or group upon a determination by the director that the
plan does not have sufficient financial viability, or organizational
and administrative capacity to ensure the delivery of health care
services to its enrollees. In determining whether the conditions of
this section have been met, the director shall consider, but not be
limited to, the plan’s compliance with the requirements of Section
1367, Article 6 (commencing with Section 1375), and the rules
adopted thereunder.

end delete

SEC. 7.  

Section 1357.512 of the Health and Safety Code is
amended to read:

1357.512.  

(a) The premium rate for a small employer health
care service plan contract shall vary with respect to the particular
coverage involved only by the following:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services begin insert and the age rating end insert
begin insert curve established by the Centers for Medicare and Medicaid end insert
begin insert Services end insert pursuant to Section 2701(a)(3) of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall
be determined begin delete based on the individual’s birthday end delete begin insert using the end insert
begin insert individual’s age as of the date of the contract issuance or renewal, end insert
begin insert as applicable, end insert and shall not vary by more than three to one for
begin delete adults end delete begin insert like individuals of different age who are 21 years of age or end insert
begin insert older as described in federal regulations adopted pursuant to end insert
begin insert Section 2701(a)(3) of the federal Public Health Service Act (42 end insert
begin insert U.S.C. Sec. 300gg(a)(3)) end insert .

(2) (A) Geographic region. begin delete The end delete begin insert Except as provided in end insert
begin insert subparagraph (B), the end insert geographic regions for purposes of rating
shall be the following:

(i) Region 1 shall consist of the Counties of Alpine, begin insert Amador, end insert
begin insert Butte, Calaveras, Colusa, end insert Del Norte, begin insert El Dorado, Glenn, Humboldt, end insert
begin insert Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey, end insert
begin insert Nevada, Placer, Plumas, San Benito, Shasta, Sierra, end insert Siskiyou,
begin delete Modoc, Lassen, Shasta, Trinity, Humboldt, Tehama, Plumas, end delete
begin delete Nevada, Sierra, Mendocino, Lake, Butte, Glenn, end delete Sutter, begin insert Tehama, end insert
begin insert Trinity, Tulare, Tuolumne, Yolo, and end insert Yuba begin delete , Colusa, Amador, end delete
begin delete Calaveras, and Tuolumne end delete .

(ii) Region 2 shall consist of the Counties of begin insert Fresno, Imperial, end insert
begin insert Kern, Madera, Mariposa, Merced, end insert Napa, begin insert Sacramento, San Joaquin, end insert
begin insert San Luis Obispo, Santa Cruz, Solano, end insert Sonoma, begin delete Solano, and Marin end delete
begin insert and Stanislaus end insert .

begin delete

(iii) Region 3 shall consist of the Counties of Sacramento,
Placer, El Dorado, and Yolo.

end delete begin delete

(iv)

end delete

begin insert (iii) end insert  Region begin delete 4 end delete begin insert 3 end insert shall consist of the begin delete County end delete begin insert Counties end insert of begin insert Alameda, end insert
begin insert Contra Costa, Marin, end insert San Francisco begin insert , San Mateo, and Santa Clara end insert .

begin delete

(v) Region 5 shall consist of the County of Contra Costa.

(vi) Region 6 shall consist of the County of Alameda.

(vii) Region 7 shall consist of the County of Santa Clara.

(viii) Region 8 shall consist of the County of San Mateo.

(ix) Region 9 shall consist of the Counties of Santa Cruz,
Monterey, and San Benito.

(x) Region 10 shall consist of the Counties of San Joaquin,
Stanislaus, Merced, Mariposa, and Tulare.

(xi) Region 11 shall consist of the Counties of Madera, Fresno,
and Kings.

(xii)

end delete

begin insert (iv) end insert  Region begin delete 12 end delete begin insert 4 end insert shall consist of the Counties of begin delete San Luis end delete
begin delete Obispo, end delete begin insert Orange, end insert Santa Barbara, and Ventura.

begin delete

(xiii) Region 13 shall consist of the Counties of Mono, Inyo,
and Imperial.

end delete begin delete

(xiv) Region 14 shall consist of the County of Kern.

end delete begin delete

(xv)

end delete

begin insert (v) end insert  Region begin delete 15 end delete begin insert 5 end insert shall consist of the begin delete ZIP Codes in end delete begin insert County of end insert Los
Angeles begin delete County starting with 906 to 912, inclusive, 915, 917, 918, end delete
begin delete and 935 end delete .

begin delete

(xvi) Region 16 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (xv).

end delete begin delete

(xvii)

end delete

begin insert (vi) end insert  Region begin delete 17 end delete begin insert 6 end insert shall consist of the Counties of begin insert Riverside, end insert San
Bernardino begin insert , end insert and begin delete Riverside end delete begin insert San Diego end insert .

begin delete

(xviii) Region 18 shall consist of the County of Orange.

(xix) Region 19 shall consist of the County of San Diego.

end delete begin insert

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg)
and obtained by the department and the Department of Insurance
by July 1, 2014:

end insert begin insert

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

end insert begin insert

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

end insert begin insert

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

end insert begin insert

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

end insert begin insert

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

end insert begin insert

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

end insert begin insert

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

end insert begin insert

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

end insert begin insert

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

end insert begin insert

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

end insert begin insert

(xi) Region 11 shall consist of the Counties of Riverside and
San Bernardino.

end insert begin insert

(xii) Region 12 shall consist of the County of Orange.

end insert begin insert

(xiii) Region 13 shall consist of the County of San Diego.

end insert begin delete

(B)

end delete

begin insert (C) end insert  No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review
the geographic rating regions specified in this paragraph and the
impacts of those regions on the health care coverage market in
California, and submit a report to the appropriate policy committees
of the Legislature.

(3) Whether the contract covers an individual or family, as
described in PPACA.

(b) The rate for a health care service plan contract subject to
this section shall not vary by any factor not described in this
section.

begin insert

(c) The total premium charged to a small employer pursuant to
this section shall be determined by summing the premiums of
covered employees and dependents in accordance with Section
147.102(c)(1) of Title 45 of the Code of Federal Regulations.

end insert begin delete

(c)

end delete

begin insert (d) end insert  The rating period for rates subject to this section shall be no
less than 12 months from the date of issuance or renewal of the
plan contract.

begin delete

(d) This section shall become inoperative if Section 2701 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg), as added
by Section 1201 of PPACA, is repealed, in which case rates for
health care service plan contracts subject to this section shall
instead be subject to Section 1357.12, to the extent permitted by
federal law, and all references to this section shall be deemed to
be references to Section 1357.12.

end delete

SEC. 8.  

Section 1363 of the Health and Safety Code is amended
to read:

1363.  

(a) The director shall require the use by each plan of
disclosure forms or materials containing information regarding
the benefits, services, and terms of the plan contract as the director
may require, so as to afford the public, subscribers, and enrollees
with a full and fair disclosure of the provisions of the plan in
readily understood language and in a clearly organized manner.
The director may require that the materials be presented in a
reasonably uniform manner so as to facilitate comparisons between
plan contracts of the same or other types of plans. Nothing
contained in this chapter shall preclude the director from permitting
the disclosure form to be included with the evidence of coverage
or plan contract.

The disclosure form shall provide for at least the following
information, in concise and specific terms, relative to the plan,
together with additional information as may be required by the
director, in connection with the plan or plan contract:

(1) The principal benefits and coverage of the plan, including
coverage for acute care and subacute care.

(2) The exceptions, reductions, and limitations that apply to the
plan.

(3) The full premium cost of the plan.

(4) Any copayment, coinsurance, or deductible requirements
that may be incurred by the member or the member’s family in
obtaining coverage under the plan.

(5) The terms under which the plan may be renewed by the plan
member, including any reservation by the plan of any right to
change premiums.

(6) A statement that the disclosure form is a summary only, and
that the plan contract itself should be consulted to determine
governing contractual provisions. The first page of the disclosure
form shall contain a notice that conforms with all of the following
conditions:

(A) (i) States that the evidence of coverage discloses the terms
and conditions of coverage.

(ii) States, with respect to individual plan contracts, small group
plan contracts, and any other group plan contracts for which health
care services are not negotiated, that the applicant has a right to
view the evidence of coverage prior to enrollment, and, if the
evidence of coverage is not combined with the disclosure form,
the notice shall specify where the evidence of coverage can be
obtained prior to enrollment.

(B) Includes a statement that the disclosure and the evidence of
coverage should be read completely and carefully and that
individuals with special health care needs should read carefully
those sections that apply to them.

(C) Includes the plan’s telephone number or numbers that may
be used by an applicant to receive additional information about
the benefits of the plan or a statement where the telephone number
or numbers are located in the disclosure form.

(D) For individual contracts, and small group plan contracts as
defined in Article 3.1 (commencing with Section 1357), the
disclosure form shall state where the health plan benefits and
coverage matrix is located.

(E) Is printed in type no smaller than that used for the remainder
of the disclosure form and is displayed prominently on the page.

(7) A statement as to when benefits shall cease in the event of
nonpayment of the prepaid or periodic charge and the effect of
nonpayment upon an enrollee who is hospitalized or undergoing
treatment for an ongoing condition.

(8) To the extent that the plan permits a free choice of provider
to its subscribers and enrollees, the statement shall disclose the
nature and extent of choice permitted and the financial liability
that is, or may be, incurred by the subscriber, enrollee, or a third
party by reason of the exercise of that choice.

(9) A summary of the provisions required by subdivision (g) of
Section 1373, if applicable.

(10) If the plan utilizes arbitration to settle disputes, a statement
of that fact.

(11) A summary of, and a notice of the availability of, the
process the plan uses to authorize, modify, or deny health care
services under the benefits provided by the plan, pursuant to
Sections 1363.5 and 1367.01.

(12) A description of any limitations on the patient’s choice of
primary care physician, specialty care physician, or nonphysician
health care practitioner, based on service area and limitations on
the patient’s choice of acute care hospital care, subacute or
transitional inpatient care, or skilled nursing facility.

(13) General authorization requirements for referral by a primary
care begin delete physician end delete begin insert physician end insert to a specialty care physician or a
nonphysician health care practitioner.

(14) Conditions and procedures for disenrollment.

(15) A description as to how an enrollee may request continuity
of care as required by Section 1373.96 and request a second opinion
pursuant to Section 1383.15.

(16) Information concerning the right of an enrollee to request
an independent review in accordance with Article 5.55
(commencing with Section 1374.30).

(17) A notice as required by Section 1364.5.

(b) (1) As of July 1, 1999, the director shall require each plan
offering a contract to an individual or small group to provide with
the disclosure form for individual and small group plan contracts
a uniform health plan benefits and coverage matrix containing the
plan’s major provisions in order to facilitate comparisons between
plan contracts. The uniform matrix shall include the following
category descriptions together with the corresponding copayments
and limitations in the following sequence:

(A) Deductibles.

(B) Lifetime maximums.

(C) Professional services.

(D) Outpatient services.

(E) Hospitalization services.

(F) Emergency health coverage.

(G) Ambulance services.

(H) Prescription drug coverage.

(I) Durable medical equipment.

(J) Mental health services.

(K) Chemical dependency services.

(L) Home health services.

(M) Other.

(2) The following statement shall be placed at the top of the
matrix in all capital letters in at least 10-point boldface type:

begin insert end insert

THIS MATRIX IS INTENDED TO BE USED TO HELP YOU
COMPARE COVERAGE BENEFITS AND IS A SUMMARY
ONLY. THE EVIDENCE OF COVERAGE AND PLAN
CONTRACT SHOULD BE CONSULTED FOR A DETAILED
DESCRIPTION OF COVERAGE BENEFITS AND
LIMITATIONS.

begin insert end insert

(c) Nothing in this section shall prevent a plan from using
appropriate footnotes or disclaimers to reasonably and fairly
describe coverage arrangements in order to clarify any part of the
matrix that may be unclear.

(d) All plans, solicitors, and representatives of a plan shall, when
presenting any plan contract for examination or sale to an
individual prospective plan member, provide the individual with
a properly completed disclosure form, as prescribed by the director
pursuant to this section for each plan so examined or sold.

(e) In the case of group contracts, the completed disclosure form
and evidence of coverage shall be presented to the contractholder
upon delivery of the completed health care service plan agreement.

(f) Group contractholders shall disseminate copies of the
completed disclosure form to all persons eligible to be a subscriber
under the group contract at the time those persons are offered the
plan. If the individual group members are offered a choice of plans,
separate disclosure forms shall be supplied for each plan available.
Each group contractholder shall also disseminate or cause to be
disseminated copies of the evidence of coverage to all applicants,
upon request, prior to enrollment and to all subscribers enrolled
under the group contract.

(g) In the case of conflicts between the group contract and the
evidence of coverage, the provisions of the evidence of coverage
shall be binding upon the plan notwithstanding any provisions in
the group contract that may be less favorable to subscribers or
enrollees.

(h) In addition to the other disclosures required by this section,
every health care service plan and any agent or employee of the
plan shall, when presenting a plan for examination or sale to any
individual purchaser or the representative of a group consisting of
25 or fewer individuals, disclose in writing the ratio of premium
costs to health services paid for plan contracts with individuals
and with groups of the same or similar size for the plan’s preceding
fiscal year. A plan may report that information by geographic area,
provided the plan identifies the geographic area and reports
information applicable to that geographic area.

(i) Subdivision (b) shall not apply to any coverage provided by
a plan for the Medi-Cal program or the Medicare program pursuant
to Title XVIII and Title XIX of the Social Security Act.

begin insert

(j) Until January 1, 2015, the department may waive or modify
the requirements of this section for the purpose of resolving
duplication or conflict with federal requirements for uniform
benefit disclosure in effect pursuant to Section 2715 of the federal
Public Health Service Act and the regulations adopted thereunder.
The department shall implement this subdivision in a manner that
preserves disclosure requirements of this section that exceed or
are not in direct conflict with federal requirements.
Notwithstanding the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code), the department shall implement this
subdivision through issuance of all-plan letters.

end insert

SEC. 9.  

Section 1389.4 of the Health and Safety Code is
amended to read:

1389.4.  

(a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.

(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage
and sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting criteria
comply with Sections 1365.5 and 1389.1 and all other applicable
provisions of state and federal law.

(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage or
severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the
department underwriting materials or resource guides provided to
plan solicitors or solicitor firms, provided that those materials
include the information required to be submitted by this section.

(d) Commencing January 1, 2011, the director shall post on the
department’s Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific
information about rating and underwriting criteria and practices
in the individual market and information about the California Major
Risk Medical Insurance Program (Part 6.5 (commencing with
Section 12700) of Division 2 of the Insurance Code) and the federal
temporary high risk pool established pursuant to Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code. The director shall develop the information for the Internet
Web site in consultation with the Department of Insurance to
enhance the consistency of information provided to consumers.
Information about individual health coverage shall also include
the following notification:

“Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could
be denied coverage entirely.”

(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.

(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.

begin insert

(g) This section shall become inoperative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

end insert

SEC. 10.  

Section 1389.4 is added to the Health and Safety
Code, to read:

1389.4.  

(a) A full service health care service plan that renews
individual grandfathered health plans shall be subject to this
section.

(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for an
individual grandfathered health plan and sets the rate for that
coverage. These guidelines, policies, or procedures shall ensure
that the plan rating and underwriting criteria comply with Sections
1365.5 and 1389.1 and all other applicable provisions of state and
federal law.

(c) On or before the June 1 next following the operative date of
this section, and annually thereafter, every health care service plan
shall file with the department a general description of the criteria,
policies, procedures, or guidelines the plan uses for rating and
underwriting decisions related to individual grandfathered health
plans, which means automatic declinable health conditions, health
conditions that may lead to a coverage decline, height and weight
standards, health history, health care utilization, lifestyle, or
behavior that might result in a decline for coverage or severely
limit the plan products for which they would be eligible. A plan
may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan
solicitors or solicitor firms, provided that those materials include
the information required to be submitted by this section.

(d) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.

(e) This section shall not apply to a closed block of business,
as defined in Section 1367.15.

(f) For purposes of this section, the following definitions shall
apply:

(1) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued pursuant to that law.

(2) “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

(g) This section shall become operative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 11.  

Section 1389.5 of the Health and Safety Code is
amended to read:

1389.5.  

(a) This section shall apply to a health care service
plan that provides coverage under an individual plan contract that
is issued, amended, delivered, or renewed on or after January 1,
2007.

(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.

“Without medical underwriting” means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who transfers to another individual
plan contract pursuant to this section.

(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make
the ranking available upon request. The plan shall update the
ranking whenever a new benefit design for individual purchasers
is approved.

(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this section,
at a minimum, when the plan changes the enrollee’s premium rate.
Posting this information on the plan’s Internet Web site shall not
constitute notice for purposes of this subdivision. The notice shall
adequately inform enrollees of the transfer rights provided under
this section, including information on the process to obtain details
about the individual plan contracts available to that enrollee and
advising that the enrollee may be unable to return to his or her
current individual plan contract if the enrollee transfers to another
individual plan contract.

(e) The requirements of this section shall not apply to the
following:

(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an
individual health benefit plan contract offered pursuant to Section
1366.35.

(2) An individual offered conversion coverage pursuant to
Section 1373.6.

(3) Individual coverage under a specialized health care service
plan contract.

(4) An individual enrolled in the Medi-Cal program pursuant
to Chapter 7 (commencing with Section 14000) of Division 9 of
Part 3 of the Welfare and Institutions Code.

(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695)
of Division 2 of the Insurance Code.

(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division
2 of the Insurance Code.

(f) It is the intent of the Legislature that individuals shall have
more choice in their health coverage when health care service plans
guarantee the right of an individual to transfer to another product
based on the plan’s own ranking system. The Legislature does not
intend for the department to review or verify the plan’s ranking
for actuarial or other purposes.

begin insert

(g) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of
that date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

end insert

SEC. 12.  

Section 1389.7 of the Health and Safety Code is
amended to read:

1389.7.  

(a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered under an individual plan contract that was
rescinded, a new individual plan contract, without medical
underwriting, that provides equal benefits. A health care service
plan may also permit an individual, who was covered under an
individual plan contract that was rescinded, to remain covered
under that individual plan contract, with a revised premium rate
that reflects the number of persons remaining on the plan contract.

(b) “Without medical underwriting” means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.

(c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons
covered on the new individual plan contract.

(d) Notwithstanding subdivision (a) and (b), if an individual
was subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.

(e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to
coverage provided under this section.

(f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.

(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

begin insert

(h) This section shall become inoperative on January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

end insert

SEC. 13.  

Section 1389.7 is added to the Health and Safety
Code, to read:

1389.7.  

(a) Every health care service plan that offers, issues,
or renews individual plan contracts shall offer to any individual,
who was covered by the plan under an individual plan contract
that was rescinded, a new individual plan contract that provides
the most equivalent benefits.

(b) If a new individual plan contract is issued under subdivision
(a), the plan may revise the premium rate to reflect only the number
of persons covered on the new individual plan contract consistent
with Section 1399.855.

(c) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to
coverage provided under this section.

(d) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract under subdivision (a), and
this contract shall be effective as of the effective date of the original
plan contract and there shall be no lapse in coverage.

(e) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

(f) This section shall apply notwithstanding subdivision (a) or
(d) of Section 1399.849.

(g) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 14.  

Section 1399.805 of the Health and Safety Code is
amended to read:

1399.805.  

(a) (1) After the federally eligible defined individual
submits a completed application form for a plan contract, the plan
shall, within 30 days, notify the individual of the individual’s actual
premium charges for that plan contract, unless the plan has
provided notice of the premium charge prior to the application
being filed. In no case shall the premium charged for any health
care service plan contract identified in subdivision (d) of Section
1366.35 exceed the following amounts:

(A) For health care service plan contracts that offer services
through a preferred provider arrangement, the average premium
paid by a subscriber of the Major Risk Medical Insurance Program
who is of the same age and resides in the same geographic area as
the federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 and 64,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(B) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, 170 percent of the
standard premium charged to an individual who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 and 64, inclusive, the premium
shall not exceed 170 percent of the standard premium charged to
an individual who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual. The
individual shall have 30 days in which to exercise the right to buy
coverage at the quoted premium rates.

(2) A plan may adjust the premium based on family size, not to
exceed the following amounts:

(A) For health care service plans that offer services through a
preferred provider arrangement, the average of the Major Risk
Medical Insurance Program rate for families of the same size that
reside in the same geographic area as the federally eligible defined
individual.

(B) For health care service plans identified in subdivision (d)
of Section 1366.35 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to a family that is of the same size and resides in the same
geographic area as the federally eligible defined individual.

(b) When a federally eligible defined individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier,
within the first 15 days of the month, coverage shall begin no later
than the first day of the following month. When that payment is
neither delivered or postmarked until after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.

(c) During the first 30 days after the effective date of the plan
contract, the individual shall have the option of changing coverage
to a different plan contract offered by the same health care service
plan. If the individual notified the plan of the change within the
first 15 days of a month, coverage under the new plan contract
shall become effective no later than the first day of the following
month. If an enrolled individual notified the plan of the change
after the 15th day of a month, coverage under the new plan contract
shall become effective no later than the first day of the second
month following notification.

begin insert

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of
that date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

end insert

SEC. 15.  

Section 1399.805 is added to the Health and Safety
Code, to read:

1399.805.  

(a) After the federally eligible defined individual
submits a completed application form for a plan contract, the plan
shall, within 30 days, notify the individual of the individual’s actual
premium charges for that plan contract, unless the plan has
provided notice of the premium charge prior to the application
being filed. In no case shall the premium charged for any health
care service plan contract identified in subdivision (d) of Section
1366.35 exceed the premium for the second lowest cost silver plan
of the individual market in the rating area in which the individual
resides which is offered through the California Health Benefit
Exchange established under Title 22 (commencing with Section
100500) of the Government Code, as described in Section
36B(b)(3)(B) of Title 26 of the United States Code.

(b) When a federally eligible defined individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier,
within the first 15 days of the month, coverage shall begin no later
than the first day of the following month. When that payment is
neither delivered nor postmarked until after the 15th day of a
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(c) During the first 30 days after the effective date of the plan
contract, the individual shall have the option of changing coverage
to a different plan contract offered by the same health care service
plan. If the individual notified the plan of the change within the
first 15 days of a month, coverage under the new plan contract
shall become effective no later than the first day of the following
month. If an enrolled individual notified the plan of the change
after the 15th day of a month, coverage under the new plan contract
shall become effective no later than the first day of the second
month following notification.

(d) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 16.  

Section 1399.811 of the Health and Safety Code is
amended to read:

1399.811.  

Premiums for contracts offered, delivered, amended,
or renewed by plans on or after January 1, 2001, shall be subject
to the following requirements:

(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:

(1) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 to 64 years,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(2) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, 170 percent of the
standard premium charged to an individual who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 to 64 years, inclusive, the premium
shall not exceed 170 percent of the standard premium charged to
an individual who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual.

(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:

(1) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 and 64 years,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(2) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, 170 percent of the
standard premium charged to an individual who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 and 64 years, inclusive, the
premium shall not exceed 170 percent of the standard premium
charged to an individual who is 59 years of age and resides in the
same geographic area as the federally eligible defined individual.
The premium effective on January 1, 2001, shall apply to in force
business at the earlier of either the time of renewal or July 1, 2001.

(c) The premium applied to a federally eligible defined
individual may not increase by more than the following amounts:

(1) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that offer services through a
preferred provider arrangement, the average increase in the
premiums charged to a subscriber of the Major Risk Medical
Insurance Program who is of the same age and resides in the same
geographic area as the federally eligible defined individual.

(2) For health care service plan contracts identified in
subdivision (d) of Section 1366.35 that do not offer services
through a preferred provider arrangement, the increase in premiums
charged to a nonfederally qualified individual who is of the same
age and resides in the same geographic area as the federally defined
eligible individual. The premium for an eligible individual may
not be modified more frequently than every 12 months.

(3) For a contract that a plan has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

begin insert

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of
that date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

end insert

SEC. 17.  

Section 1399.811 is added to the Health and Safety
Code, to read:

1399.811.  

(a) Premiums for contracts offered, delivered,
amended, or renewed by plans on or after the operative date of
this section shall be subject to the following requirements:

(1) The premium for in force or new business for a federally
eligible defined individual shall not exceed the premium for the
second lowest cost silver plan of the individual market in the rating
area in which the individual resides which is offered through the
California Health Benefit Exchange established under Title 22
(commencing with Section 100500) of the Government Code, as
described in Section 36B(b)(3)(B) of Title 26 of the United States
Code.

(2) For a contract that a plan has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

(b) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 18.  

Section 1399.816 of the Health and Safety Code is
repealed.

begin delete

1399.816.  

Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or
method to share in the financing of high-risk individuals. This
mechanism or method shall be established through a committee
of all carriers and health care service plans offering coverage to
individuals by July 1, 2002, and shall be implemented by January
1, 2003. If carriers and health care service plans wish to establish
a risk-sharing mechanism but cannot agree on the terms and
conditions of such an agreement, the Managed Risk Medical
Insurance Board shall develop a risk-sharing mechanism or method
by January 1, 2003, and it shall be implemented by July 1, 2003.

end delete

SEC. 19.  

The heading of Article 11.7 (commencing with
Section 1399.825) of Chapter 2.2 of Division 2 of the Health and
Safety Code is amended to read:

 

Article 11.7.  begin delete Individual end delete begin insert Child end insert Access to Health Care Coverage

 

SEC. 20.  

Section 1399.829 of the Health and Safety Code is
amended to read:

1399.829.  

(a) A health care service plan may use the following
characteristics of an eligible child for purposes of establishing the
rate of the plan contract for that child, where consistent with federal
regulations under PPACA: age, geographic region, and family
composition, plus the health care service plan contract selected by
the child or the responsible party for the child.

(b) From the effective date of this article to December 31, 2013,
inclusive, rates for a child applying for coverage shall be subject
to the following limitations:

(1) During any open enrollment period or for late enrollees, the
rate for any child due to health status shall not be more than two
times the standard risk rate for a child.

(2) The rate for a child shall be subject to a 20-percent surcharge
above the highest allowable rate on a child applying for coverage
who is not a late enrollee and who failed to maintain coverage with
any health care service plan or health insurer for the 90-day period
prior to the date of the child’s application. The surcharge shall
apply for the 12-month period following the effective date of the
child’s coverage.

(3) If expressly permitted under PPACA and any rules,
regulations, or guidance issued pursuant to that act, a health care
service plan may rate a child based on health status during any
period other than an open enrollment period if the child is not a
late enrollee.

(4) If expressly permitted under PPACA and any rules,
regulations, or guidance issued pursuant to that act, a health care
service plan may condition an offer or acceptance of coverage on
any preexisting condition or other health status-related factor for
a period other than an open enrollment period and for a child who
is not a late enrollee.

(c) For any individual health care service plan contract issued,
sold, or renewed prior to December 31, 2013, the health plan shall
provide to a child or responsible party for a child a notice that
states the following:

“Please consider your options carefully before failing to maintain
or begin delete renew end delete begin insert renewing end insert coverage for a child for whom you are
responsible. If you attempt to obtain new individual coverage for
that child, the premium for the same coverage may be higher than
the premium you pay now.”

(d) A child who applied for coverage between September 23,
2010, and the end of the initial open enrollment period shall be
deemed to have maintained coverage during that period.

(e) Effective January 1, 2014, except for individual
grandfathered health plan coverage, the rate for any child shall be
identical to the standard risk rate.

(f) Health care service plans begin delete may end delete begin insert shall not end insert require
documentation from applicants relating to their coverage history.

begin insert

(g) (1) On and after the operative date of the act adding this
subdivision, and until January 1, 2014, a health care service plan
shall provide a notice to all applicants for coverage under this
article and to all enrollees, or the responsible party for an enrollee,
renewing coverage under this article that contains the following
information:

end insert begin insert

(A) Information about the open enrollment period provided
under Section 1399.849.

end insert begin insert

(B) An explanation that obtaining coverage during the open
enrollment period described in Section 1399.849 will not affect
the effective dates of coverage for coverage purchased pursuant
to this article unless the applicant cancels that coverage.

end insert begin insert

(C) An explanation that coverage purchased pursuant to this
article shall be effective as required under subdivision (d) of
Section 1399.826 and that such coverage shall not prevent an
applicant from obtaining new coverage during the open enrollment
period described in Section 1399.849.

end insert begin insert

(D) Information about the Medi-Cal program and the Healthy
Families Program and about subsidies available through the
California Health Benefit Exchange.

end insert begin insert

(2) The notice described in paragraph (1) shall be in plain
language and 14-point type.

end insert begin insert

(3) The department may adopt a model notice to be used by
health care service plans in order to comply with this subdivision,
and shall consult with the Department of Insurance in adopting
that model notice. Use of the model notice shall not require prior
approval of the department. Any model notice designated by the
department for purposes of this section shall not be subject to the
Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code).

end insert

SEC. 21.  

Section 1399.836 is added to the Health and Safety
Code, to read:

1399.836.  

This article shall become inoperative on January 1,
2014, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

SEC. 22.  

Article 11.8 (commencing with Section 1399.845)
is added to Chapter 2.2 of Division 2 of the Health and Safety
Code, to read:

 

Article 11.8.  Individual Access to Health Care Coverage

 

1399.845.  

For purposes of this article, the following definitions
shall apply:

(a) “Child” means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.

(b) “Dependent” means the spouse or registered domestic
partner, or child, of an individual, subject to applicable terms of
the health benefit plan.

(c) “Exchange” means the California Health Benefit Exchange
created by Section 100500 of the Government Code.

(d) “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

(e) “Health benefit plan” means any individual or group health
care service plan contract that provides medical, hospital, and
surgical benefits. The term does not include a specialized health
care service plan contract, a health care service plan conversion
contract offered pursuant to Section 1373.6, a health care service
plan contract provided in the Medi-Cal program (Chapter 7
(commencing with Section 14000) of Part 3 of Division 9 of the
Welfare and Institutions Code), the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), the Access for Infants and Mothers Program
(Part 6.3 (commencing with Section 12695) of Division 2 of the
Insurance Code), or the program under Part 6.4 (commencing with
Section 12699.50) of Division 2 of the Insurance Code, a health
care service plan contract offered to a federally eligible defined
individual under Article 4.6 (commencing with Section 1366.35),
or Medicare supplement coverage, to the extent consistent with
PPACA.

(f) “Policy year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations.

(g) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued pursuant to that law.

(h) “Preexisting condition provision” means a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the enrollee’s effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage.

(i) “Rating period” means the period for which premium rates
established by a plan are in effect.

(j) “Registered domestic partner” means a person who has
established a domestic partnership as described in Section 297 of
the Family Code.

1399.847.  

Every health care service plan offering individual
health benefit plans shall, in addition to complying with the
provisions of this chapter and rules adopted thereunder, comply
with the provisions of this article.

1399.849.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
health benefit plans that are sold in the individual market for policy
years on or after January 1, 2014, to all individuals and dependents
in each service area in which the plan provides or arranges for the
provision of health care services. A plan shall limit enrollment in
individual health benefit plans to open enrollment periods and
special enrollment periods as provided in subdivisions (c) and (d).

(2) A plan shall allow the subscriber of an individual health
benefit plan to add a dependent to the subscriber’s plan at the
option of the subscriber, consistent with the open enrollment,
annual enrollment, and special enrollment period requirements in
this section.

(3) A health care service plan offering coverage in the individual
market shall not reject the request of a subscriber during an open
enrollment period to include a dependent of the subscriber as a
dependent on an existing individual health benefit plan.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) A plan shall provide an initial open enrollment period from
October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for plan years on or after January 1, 2015, from
October 15 to December 7, inclusive, of the preceding calendar
year.

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a plan shall allow an individual to enroll in or change individual
health benefit plans as a result of the following triggering events:

(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, the following definitions
shall apply:

(i) “Minimum essential coverage” has the same meaning as that
term is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include
loss of that coverage due to the individual’s failure to pay
premiums on a timely basis or situations allowing for a rescission,
subject to clause (ii) and Sections 1389.7 and 1389.21.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered pursuant to a valid
state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health benefit plan substantially violated a
material provision of the contract.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845
or Section 10965 of the Insurance Code, for one of the conditions
described in subdivision (c) of Section 1373.96 and that provider
is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 63 days from the
date of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 63 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the following provisions shall apply:

(1) The effective date of coverage selected pursuant to this
section shall be consistent with the dates specified in Section
155.410 or 155.420 of Title 45 of the Code of Federal Regulations.

(2) Notwithstanding paragraph (1), in the case where an
individual acquires or becomes a dependent by entering into a
registered domestic partnership pursuant to Section 297 of the
Family Code and applies for coverage of that domestic partner
consistent with subdivision (d), the coverage effective date shall
be the first day of the month following the date he or she selects
a plan through the Exchange, unless an earlier date is agreed to
under Section 155.420(b)(3) of Title 45 of the Code of Federal
Regulations.

(f) With respect to individual health benefit plans offered outside
the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan contract, the health care service plan shall, within 30
days, notify the individual of the individual’s actual premium
charges for that plan established in accordance with Section
1399.855. The individual shall have 30 days in which to exercise
the right to buy coverage at the quoted premium charges.

(2) With respect to an individual health benefit plan for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the subscriber submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan for which
an individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs later, by
December 15, coverage shall become effective as of the following
January 1. When that payment is delivered or postmarked within
the first 15 days of any subsequent month, coverage shall become
effective no later than the first day of the following month. When
that payment is delivered or postmarked between December 16
and December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(4) With respect to an individual health benefit plan for which
an individual applies during a special enrollment period described
in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based
on the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan shall become effective no later
than the first day of the following month. When the premium
payment is neither delivered nor postmarked until after the 15th
day of the month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage
or becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the month following
the date the plan receives the request for special enrollment.

(g) (1) A health care service plan shall not establish rules for
eligibility, including continued eligibility, of any individual to
enroll under the terms of an individual health benefit plan based
on any of the following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her dependent
to fill out a health assessment or medical questionnaire prior to
enrollment under an individual health benefit plan. A health care
service plan shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health care service plan shall consider the claims
experience of all enrollees in all individual health benefit plans
offered in the state that are subject to subdivision (a), including
those enrollees who do not enroll in the plans through the
Exchange, to be members of a single risk pool.

(2) Each policy year, a health care service plan shall establish
an index rate for the individual market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA, within the single
risk pool required under paragraph (1). The index rate shall be
adjusted on a market-wide basis based on the total expected
market-wide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA. The premium rate for all of the health
care service plan’s health benefit plans in the individual market
shall use the applicable index rate, as adjusted for total expected
market-wide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA, subject only to the adjustments
permitted under paragraph (3).

(3) A health care service plan may vary premiums rates for a
particular health benefit plan from its index rate based only on the
following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for plans that offer those
benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

1399.851.  

(a) No health care service plan or solicitor shall,
directly or indirectly, engage in the following activities:

(1) Encourage or direct an individual to refrain from filing an
application for individual coverage with a plan because of the
health status, claims experience, industry, occupation, or
geographic location, provided that the location is within the plan’s
approved service area, of the individual.

(2) Encourage or direct an individual to seek individual coverage
from another plan or health insurer or the California Health Benefit
Exchange because of the health status, claims experience, industry,
occupation, or geographic location, provided that the location is
within the plan’s approved service area, of the individual.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs.

(b) A health care service plan shall not, directly or indirectly,
enter into any contract, agreement, or arrangement with a solicitor
that provides for or results in the compensation paid to a solicitor
for the sale of an individual health benefit plan to be varied because
of the health status, claims experience, industry, occupation, or
geographic location of the individual. This subdivision does not
apply to a compensation arrangement that provides compensation
to a solicitor on the basis of percentage of premium, provided that
the percentage shall not vary because of the health status, claims
experience, industry, occupation, or geographic area of the
individual.

(c) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

1399.853.  

(a) All individual health benefit plans shall conform
to the requirements of Sections 1365, 1366.3, 1367.001, and
1373.6, and any other requirements imposed by this chapter, and
shall be renewable at the option of the enrollee except as permitted
to be canceled, rescinded, or not renewed pursuant to Section 1365.

(b) Any plan that ceases to offer for sale new individual health
benefit plans pursuant to Section 1365 shall continue to be
governed by this article with respect to business conducted under
this article.

1399.855.  

(a) With respect to individual health benefit plans
for policy years on or after January 1, 2014, a health care service
plan may use only the following characteristics of an individual,
and any dependent thereof, for purposes of establishing the rate
of the individual health benefit plan covering the individual and
the eligible dependents thereof, along with the health benefit plan
selected by the individual:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the federal Centers for Medicare and Medicaid
Services pursuant to Section 2701(a)(3) of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall
be determined using the individual’s age as of the date of the plan
issuance or renewal, as applicable, and shall not vary by more than
three to one for like individuals of different age who are age 21 or
older as described in federal regulations adopted pursuant to
Section 2701(a)(3) of the federal Public Health Service Act (42
U.S.C. Sec. 300gg(a)(3)).

(2) (A) Geographic region. Except as provided in subparagraph
(B), the geographic regions for purposes of rating shall be the
following:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt,
Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey,
Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou,
Sutter, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba.

(ii) Region 2 shall consist of the Counties of Fresno, Imperial,
Kern, Madera, Mariposa, Merced, Napa, Sacramento, San Joaquin,
San Luis Obispo, Santa Cruz, Solano, Sonoma, and Stanislaus.

(iii) Region 3 shall consist of the Counties of Alameda, Contra
Costa, Marin, San Francisco, San Mateo, and Santa Clara.

(iv) Region 4 shall consist of the Counties of Orange, Santa
Barbara, and Ventura.

(v) Region 5 shall consist of the County of Los Angeles.

(vi) Region 6 shall consist of the Counties of Riverside, San
Bernardino, and San Diego.

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg) and
obtained by the department and the Department of Insurance by
July 1, 2014:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

(xi) Region 11 shall consist of the Counties of Riverside and
San Bernardino.

(xii) Region 12 shall consist of the County of Orange.

(xiii) Region 13 shall consist of the County of San Diego.

(C) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Insurance, shall review
the geographic rating regions specified in this paragraph and the
impacts of those regions on the health care coverage market in
California, and make a report to the appropriate policy committees
of the Legislature.

(3) Whether the plan covers an individual or family, as described
in PPACA.

(b) The rate for a health benefit plan subject to this section shall
not vary by any factor not described in this section.

(c) With respect to family coverage under an individual health
benefit plan, the rating variation permitted under paragraph (1) of
subdivision (a) shall be applied based on the portion of the
premium attributable to each family member covered under the
plan. The total premium for family coverage shall be determined
by summing the premiums for each individual family member. In
determining the total premium for family members, premiums for
no more than the three oldest family members who are under age
21 shall be taken into account.

(d) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.

(e) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

(f) The requirement for submitting a report imposed under
subparagraph (B) of paragraph (2) of subdivision (a) is inoperative
on June 1, 2021, pursuant to Section 10231.5 of the Government
Code.

1399.857.  

(a) A health care service plan shall not be required
to offer an individual health benefit plan or accept applications for
the plan pursuant to Section 1399.849 in the case of any of the
following:

(1) To an individual who does not live or reside within the plan’s
approved service areas.

(2) (A) Within a specific service area or portion of a service
area, if the plan reasonably anticipates and demonstrates to the
satisfaction of the director both of the following:

(i) It will not have sufficient health care delivery resources to
ensure that health care services will be available and accessible to
the individual because of its obligations to existing enrollees.

(ii) It is applying this subparagraph uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.

(B) A health care service plan that cannot offer an individual
health benefit plan to individuals because it is lacking in sufficient
health care delivery resources within a service area or a portion of
a service area pursuant to subparagraph (A) shall not offer a health
benefit plan in that area to individuals until the later of the
following dates:

(i) The 181st day after the date coverage is denied pursuant to
this paragraph.

(ii) The date the plan notifies the director that it has the ability
to deliver services to individuals, and certifies to the director that
from the date of the notice it will enroll all individuals requesting
coverage in that area from the plan.

(C) Subparagraph (B) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to this section.

(b) (1) A health care service plan may decline to offer an
individual health benefit plan to an individual if the plan
demonstrates to the satisfaction of the director both of the
following:

(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, the director shall consider, but
not be limited to, the plan’s compliance with the requirements of
Section 1367, Article 6 (commencing with Section 1375), and the
rules adopted thereunder.

(B) It is applying this subdivision uniformly to all individuals
without regard to the claims experience of those individuals any
health status-related factor relating to those individuals.

(2) A plan that denies coverage to an individual under paragraph
(1) shall not offer coverage in the individual market before the
later of the following dates:

(A) The 181st day after the date that coverage is denied pursuant
to paragraph (1).

(B) The date the plan demonstrates to the satisfaction of the
director that the plan has sufficient financial reserves necessary to
underwrite additional coverage.

(3) Paragraph (2) shall not limit the plan’s ability to renew
coverage already in force or relieve the plan of the responsibility
to renew that coverage as described in Section 1365.

(4) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to this section.

(c) Nothing in this article shall be construed to limit the
director’s authority to develop and implement a plan of
rehabilitation for a health care service plan whose financial viability
or organizational and administrative capacity has become impaired
to the extent permitted by PPACA.

(d) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

1399.859.  

(a) A health care service plan that receives an
application for an individual health benefit plan outside the
Exchange during the initial open enrollment period, an annual
enrollment period, or a special enrollment period described in
Section 1399.849 shall inform the applicant that he or she may be
eligible for lower cost coverage through the Exchange and shall
inform the applicant of the applicable enrollment period provided
through the Exchange described in Section 1399.849.

(b) On or before October 1, 2013, and annually thereafter, a
health care service plan shall issue a notice to a subscriber enrolled
in an individual health benefit plan offered outside the Exchange.
The notice shall inform the subscriber that he or she may be eligible
for lower cost coverage through the Exchange and shall inform
the subscriber of the applicable open enrollment period provided
through the Exchange described in Section 1399.849.

(c) This section shall not apply where the individual health
benefit plan described in subdivision (a) or (b) is a grandfathered
health plan.

1399.861.  

(a) On or before October 1, 2013, and annually
thereafter, a health care service plan shall issue the following notice
to all subscribers enrolled in an individual health benefit plan that
is a grandfathered health plan:

New improved health insurance options are available in
California. You currently have health insurance that is exempt
from many of the new requirements. For instance, your plan may
not include certain consumer protections that apply to other plans,
such as the requirement for the provision of preventive health
services without any cost sharing and the prohibition against
increasing your rates based on your health status. You have the
option to remain in your current plan or switch to a new plan.
Under the new rules, a health plan cannot deny your application
based on any health conditions you may have. For more
information about your options, please contact the California
Health Benefit Exchange, the Office of Patient Advocate, your
plan representative, an insurance broker, or a health care navigator.

(b) Commencing October 1, 2013, a health care service plan
shall include the notice described in subdivision (a) in any renewal
material of the individual grandfathered health plan and in any
application for dependent coverage under the individual
grandfathered health plan.

(c) A health care service plan shall not advertise or market an
individual health benefit plan that is a grandfathered health plan
for purposes of enrolling a dependent of a subscriber into the plan
for policy years on or after January 1, 2014. Nothing in this
subdivision shall be construed to prohibit an individual enrolled
in an individual grandfathered health plan from adding a dependent
to that plan to the extent permitted by PPACA.

1399.862.  

Except as otherwise provided in this article, this
article shall only be implemented to the extent that it meets or
exceeds the requirements set forth in PPACA.

SEC. 23.  

Section 10113.95 of the Insurance Code is amended
to read:

10113.95.  

(a) A health insurer that issues, renews, or amends
individual health insurance policies shall be subject to this section.

(b) An insurer subject to this section shall have written policies,
procedures, or underwriting guidelines establishing the criteria
and process whereby the insurer makes its decision to provide or
to deny coverage to individuals applying for coverage and sets the
rate for that coverage. These guidelines, policies, or procedures
shall ensure that the plan rating and underwriting criteria comply
with Sections 10140 and 10291.5 and all other applicable
provisions.

(c) On or before June 1, 2006, and annually thereafter, every
insurer shall file with the commissioner a general description of
the criteria, policies, procedures, or guidelines that the insurer uses
for rating and underwriting decisions related to individual health
insurance policies, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage or
severely limit the health insurance products for which individuals
applying for coverage would be eligible. An insurer may comply
with this section by submitting to the department underwriting
materials or resource guides provided to agents and brokers,
provided that those materials include the information required to
be submitted by this section.

(d) Commencing January 1, 2011, the commissioner shall post
on the department’s Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific
information about rating and underwriting criteria and practices
in the individual market and information about the California Major
Risk Medical Insurance Program (Part 6.5 (commencing with
Section 12700)) and the federal temporary high risk pool
established pursuant to Part 6.6 (commencing with Section
12739.5). The commissioner shall develop the information for the
Internet Web site in consultation with the Department of Managed
Health Care to enhance the consistency of information provided
to consumers. Information about individual health insurance shall
also include the following notification:

begin insert end insert

“Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could
be denied coverage entirely.”

begin insert end insert

(e) Nothing in this section shall authorize public disclosure of
company-specific rating and underwriting criteria and practices
submitted to the commissioner.

(f) This section shall not apply to a closed block of business, as
defined in Section 10176.10.

begin insert

(g) This section shall become inoperative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

end insert

SEC. 24.  

Section 10113.95 is added to the Insurance Code, to
read:

10113.95.  

(a) A health insurer that renews individual
grandfathered health plans shall be subject to this section.

(b) An insurer subject to this section shall have written policies,
procedures, or underwriting guidelines establishing the criteria
and process whereby the insurer makes its decision to provide or
to deny coverage to individuals applying for an individual
grandfathered health plan and sets the rate for that coverage. These
guidelines, policies, or procedures shall ensure that the plan rating
and underwriting criteria comply with Sections 10140 and 10291.5
and all other applicable provisions.

(c) On or before the June 1 next following the operative date of
this section, and annually thereafter, every insurer shall file with
the commissioner a general description of the criteria, policies,
procedures, or guidelines that the insurer uses for rating and
underwriting decisions related to individual grandfathered health
plans, which means automatic declinable health conditions, health
conditions that may lead to a coverage decline, height and weight
standards, health history, health care utilization, lifestyle, or
behavior that might result in a decline for coverage or severely
limit the health insurance products for which individuals applying
for coverage would be eligible. An insurer may comply with this
section by submitting to the department underwriting materials or
resource guides provided to agents and brokers, provided that those
materials include the information required to be submitted by this
section.

(d) Nothing in this section shall authorize public disclosure of
company-specific rating and underwriting criteria and practices
submitted to the commissioner.

(e) This section shall not apply to a closed block of business,
as defined in Section 10176.10.

(f) For purposes of this section, the following definitions shall
apply:

(1) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued pursuant to that law.

(2) “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

(g) This section shall become operative on November 1, 2013,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 25.  

Section 10119.1 of the Insurance Code is amended
to read:

10119.1.  

(a) This section shall apply to a health insurer that
covers hospital, medical, or surgical expenses under an individual
health benefit plan, as defined in subdivision (a) of Section
10198.6, that is issued, amended, renewed, or delivered on or after
January 1, 2007.

(b) At least once each year, a health insurer shall permit an
individual who has been covered for at least 18 months under an
individual health benefit plan to transfer, without medical
underwriting, to any other individual health benefit plan offered
by that same health insurer that provides equal or lesser benefits
as determined by the insurer.

“Without medical underwriting” means that the health insurer
shall not decline to offer coverage to, or deny enrollment of, the
individual or impose any preexisting condition exclusion on the
individual who transfers to another individual health benefit plan
pursuant to this section.

(c) The insurer shall establish, for the purposes of subdivision
(b), a ranking of the individual health benefit plans it offers to
individual purchasers and post the ranking on its Internet Web site
or make the ranking available upon request. The insurer shall
update the ranking whenever a new benefit design for individual
purchasers is approved.

(d) The insurer shall notify in writing all insureds of the right
to transfer to another individual health benefit plan pursuant to
this section, at a minimum, when the insurer changes the insured’s
premium rate. Posting this information on the insurer’s Internet
Web site shall not constitute notice for purposes of this subdivision.
The notice shall adequately inform insureds of the transfer rights
provided under this section including information on the process
to obtain details about the individual health benefit plans available
to that insured and advising that the insured may be unable to
return to his or her current individual health benefit plan if the
insured transfers to another individual health benefit plan.

(e) The requirements of this section shall not apply to the
following:

(1) A federally eligible defined individual, as defined in
subdivision (e) of Section 10900, who purchases individual
coverage pursuant to Section 10785.

(2) An individual offered conversion coverage pursuant to
Sections 12672 and 12682.1.

(3) An individual enrolled in the Medi-Cal program pursuant
to Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code.

(4) An individual enrolled in the Access for Infants and Mothers
Program, pursuant to Part 6.3 (commencing with Section 12695).

(5) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693).

(f) It is the intent of the Legislature that individuals shall have
more choice in their health care coverage when health insurers
guarantee the right of an individual to transfer to another product
based on the insurer’s own ranking system. The Legislature does
not intend for the department to review or verify the insurer’s
ranking for actuarial or other purposes.

begin insert

(g) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of
that date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

end insert

SEC. 26.  

Section 10119.2 of the Insurance Code is amended
to read:

10119.2.  

(a) Every health insurer that offers, issues, or renews
health insurance under an individual health benefit plan, as defined
in subdivision (a) of Section 10198.6, shall offer to any individual,
who was covered under an individual health benefit plan that was
rescinded, a new individual health benefit plan without medical
underwriting that provides equal benefits. A health insurer may
also permit an individual, who was covered under an individual
health benefit plan that was rescinded, to remain covered under
that individual health benefit plan, with a revised premium rate
that reflects the number of persons remaining on the health benefit
plan.

(b) “Without medical underwriting” means that the health insurer
shall not decline to offer coverage to, or deny enrollment of, the
individual or impose any preexisting condition exclusion on the
individual who is issued a new individual health benefit plan or
remains covered under an individual health benefit plan pursuant
to this section.

(c) If a new individual health benefit plan is issued, the insurer
may revise the premium rate to reflect only the number of persons
covered under the new individual health benefit plan.

(d) Notwithstanding subdivision (a) and (b), if an individual
was subject to a preexisting condition provision or a waiting or
affiliation period under the individual health benefit plan that was
rescinded, the health insurer may apply the same preexisting
condition provision or waiting or affiliation period in the new
individual health benefit plan. The time period in the new
individual health benefit plan for the preexisting condition
provision or waiting or affiliation period shall not be longer than
the one in the individual health benefit plan that was rescinded
and the health insurer shall credit any time that the individual was
covered under the rescinded individual health benefit plan.

(e) The insurer shall notify in writing all insureds of the right
to coverage under an individual health benefit plan pursuant to
this section, at a minimum, when the insurer rescinds the individual
health benefit plan. The notice shall adequately inform insureds
of the right to coverage provided under this section.

(f) The insurer shall provide 60 days for insureds to accept the
offered new individual health benefit plan and this plan shall be
effective as of the effective date of the original individual health
benefit plan and there shall be no lapse in coverage.

(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

begin insert

(h) This section shall become inoperative on January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

end insert

SEC. 27.  

Section 10119.2 is added to the Insurance Code, to
read:

10119.2.  

(a) Every health insurer that offers, issues, or renews
health insurance under an individual health benefit plan, as defined
in subdivision (a) of Section 10198.6, through the California Health
Benefit Exchange shall offer to any individual, who was covered
by the insurer under an individual health benefit plan that was
rescinded, a new individual health benefit plan through the
Exchange that provides the most equivalent benefits.

(b) A health insurer that offers, issues, or renews individual
health benefit plans inside or outside the California Health Benefit
Exchange may also permit an individual, who was covered by the
insurer under an individual health benefit plan that was rescinded,
to remain covered under that individual health benefit plan, with
a revised premium rate that reflects the number of persons
remaining on the health benefit plan consistent with Section
10965.9.

(c) If a new individual health benefit plan is issued under
subdivision (a), the insurer may revise the premium rate to reflect
only the number of persons covered on the new individual health
benefit plan consistent with Section 10965.9.

(d) The insurer shall notify in writing all insureds of the right
to coverage under an individual health benefit plan pursuant to
this section, at a minimum, when the insurer rescinds the individual
health benefit plan. The notice shall adequately inform insureds
of the right to coverage provided under this section.

(e) The insurer shall provide 60 days for insureds to accept the
offered new individual health benefit plan under subdivision (a),
and this plan shall be effective as of the effective date of the
original health benefit plan and there shall be no lapse in coverage.

(f) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.

(g) This section shall apply notwithstanding subdivision (a) or
(d) of Section 10965.3.

(h) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 28.  

Section 10127.21 is added to the Insurance Code, to
read:

10127.21.  

Any data submitted by a health insurer to the United
States Secretary of Health and Human Services, or his or her
designee, for purposes of the risk adjustment program described
in Section 1343 of the federal Patient Protection and Affordable
Care Act (42 U.S.C. Sec. 18063) shall be concurrently submitted
to the department.

SEC. 29.  

Section 10198.7 of the Insurance Code is amended
to read:

10198.7.  

(a) A begin delete nongrandfathered health benefit plan for group end delete
begin delete or individual coverage or a grandfathered end delete health benefit plan for
group coverage shall not impose any preexisting condition
provision or waivered condition provision upon any individual.

(b)  begin insert A nongrandfathered health benefit plan for individual end insert
begin insert coverage shall not impose any preexisting condition provision or end insert
begin insert waivered condition provision upon any individual. end insert A grandfathered
health benefit plan for individual coverage shall not exclude
coverage on the basis of a waivered condition provision or
preexisting condition provision for a period greater than 12 months
following the individual’s effective date of coverage, nor limit or
exclude coverage for a specific insured by type of illness, treatment,
medical condition, or accident, except for satisfaction of a
preexisting condition begin delete clause end delete begin insert provision end insert or waivered condition
provision pursuant to this article. Waivered condition provisions
or preexisting condition provisions contained in health benefit
plans may relate only to conditions for which medical advice,
diagnosis, care, or treatment, including use of prescription drugs,
was recommended or received from a licensed health practitioner
during the 12 months immediately preceding the effective date of
coverage.

(c) (1) A health benefit plan for group coverage may apply a
waiting period of up to 60 days as a condition of employment if
applied equally to all eligible employees and dependents and if
consistent with PPACA. A begin delete waitingperiod end delete begin insert waiting period end insert shall not
be based on a preexisting condition of an employee or dependent,
the health status of an employee or dependent, or any other factor
listed in Section 10198.9. During the waiting period, the health
benefit plan is not required to provide health care services and no
premium shall be charged to the policyholder or insureds.

(2) A health benefit plan for individual coverage shall not
impose a waiting period.

(d) In determining whether a preexisting condition provision,
a waivered condition provision, or a waiting period applies to a
person, a health benefit plan shall credit the time the person was
covered under creditable coverage, provided that the person
becomes eligible for coverage under the succeeding health benefit
plan within 62 days of termination of prior coverage, exclusive of
any waiting period, and applies for coverage under the succeeding
plan within the applicable enrollment period. A plan shall also
credit any time that an eligible employee must wait before enrolling
in the plan, including any postenrollment or employer-imposed
waiting period. However, if a person’s employment has ended, the
availability of health coverage offered through employment or
sponsored by an employer has terminated, or an employer’s
contribution toward health coverage has terminated, a carrier shall
credit the time the person was covered under creditable coverage
if the person becomes eligible for health coverage offered through
employment or sponsored by an employer within 180 days,
exclusive of any waiting period, and applies for coverage under
the succeeding plan within the applicable enrollment period.

(e) An individual’s period of creditable coverage shall be
certified pursuant to Section 2704(e) of Title XXVII of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-3(e)).

SEC. 30.  

Section 10753.05 of the Insurance Code is amended
to read:

10753.05.  

(a) No group or individual policy or contract or
certificate of group insurance or statement of group coverage
providing benefits to employees of small employers as defined in
this chapter shall be issued or delivered by a carrier subject to the
jurisdiction of the commissioner regardless of the situs of the
contract or master policyholder or of the domicile of the carrier
nor, except as otherwise provided in Sections 10270.91 and
10270.92, shall a carrier provide coverage subject to this chapter
until a copy of the form of the policy, contract, certificate, or
statement of coverage is filed with and approved by the
commissioner in accordance with Sections 10290 and 10291, and
the carrier has complied with the requirements of Section 10753.17.

(b) (1) On and after October 1, 2013, each carrier shall fairly
and affirmatively offer, market, and sell all of the carrier’s health
benefit plans that are sold to, offered through, or sponsored by,
small employers or associations that include small employers for
plan years on or after January 1, 2014, to all small employers in
each geographic region in which the carrier makes coverage
available or provides benefits.

(2) A carrier that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraph (1)
with respect to health benefit plans offered through the Exchange
in those geographic regions in which the carrier offers plans
through the Exchange.

(3) A carrier shall provide enrollment periods consistent with
PPACA and begin delete set forth end delete begin insert described end insert in Section 155.725 of Title 45 of
the Code of Federal Regulations. begin delete A end delete begin insert Commencing January 1, 2014, end insert
begin insert a end insert carrier shall provide special enrollment periods consistent with
the special enrollment periods begin delete required in the individual end delete
begin delete nongrandfathered market in the state, as set forth end delete begin insert described end insert in
Section 10965.3, except for the triggering events identified in
paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of the
Code of Federal Regulations with respect to health benefit plans
offered through the Exchange.

(4) Nothing in this section shall be construed to require an
association, or a trust established and maintained by an association
to receive a master insurance policy issued by an admitted insurer
and to administer the benefits thereof solely for association
members, to offer, market or sell a benefit plan design to those
who are not members of the association. However, if the
association markets, offers or sells a benefit plan design to those
who are not members of the association it is subject to the
requirements of this section. This shall apply to an association that
otherwise meets the requirements of paragraph (8) formed by
merger of two or more associations after January 1, 1992, if the
predecessor organizations had been in active existence on January
1, 1992, and for at least five years prior to that date and met the
requirements of paragraph (5).

(5) A carrier which (A) effective January 1, 1992, and at least
20 years prior to that date, markets, offers, or sells benefit plan
designs only to all members of one association and (B) does not
market, offer or sell any other individual, selected group, or group
policy or contract providing medical, hospital and surgical benefits
shall not be required to market, offer, or sell to those who are not
members of the association. However, if the carrier markets, offers
or sells any benefit plan design or any other individual, selected
group, or group policy or contract providing medical, hospital and
surgical benefits to those who are not members of the association
it is subject to the requirements of this section.

(6) Each carrier that sells health benefit plans to members of
one association pursuant to paragraph (5) shall submit an annual
statement to the commissioner which states that the carrier is selling
health benefit plans pursuant to paragraph (5) and which, for the
one association, lists all the information required by paragraph (7).

(7) Each carrier that sells health benefit plans to members of
any association shall submit an annual statement to the
commissioner which lists each association to which the carrier
sells health benefit plans, the industry or profession which is served
by the association, the association’s membership criteria, a list of
officers, the state in which the association is organized, and the
site of its principal office.

(8) For purposes of paragraphs (4) and (6), an association is a
nonprofit organization comprised of a group of individuals or
employers who associate based solely on participation in a
specified profession or industry, accepting for membership any
individual or small employer meeting its membership criteria,
which do not condition membership directly or indirectly on the
health or claims history of any person, which uses membership
dues solely for and in consideration of the membership and
membership benefits, except that the amount of the dues shall not
depend on whether the member applies for or purchases insurance
offered by the association, which is organized and maintained in
good faith for purposes unrelated to insurance, which has been in
active existence on January 1, 1992, and at least five years prior
to that date, which has a constitution and bylaws, or other
analogous governing documents which provide for election of the
governing board of the association by its members, which has
contracted with one or more carriers to offer one or more health
benefit plans to all individual members and small employer
members in this state.

(c) On and after October 1, 2013, each carrier shall make
available to each small employer all health benefit plans that the
carrier offers or sells to small employers or to associations that
include small employers for plan years on or after January 1, 2014.
Notwithstanding subdivision (d) of Section 10753, for purposes
of this subdivision, companies that are affiliated companies or that
are eligible to file a consolidated income tax return shall be treated
as one carrier.

(d) Each carrier shall do all of the following:

(1) Prepare a brochure that summarizes all of its health benefit
plans and make this summary available to small employers, agents,
and brokers upon request. The summary shall include for each
plan information on benefits provided, a generic description of the
manner in which services are provided, such as how access to
providers is limited, benefit limitations, required copayments and
deductibles, an explanation of how creditable coverage is calculated
if a waiting period is imposed, and a telephone number that can
be called for more detailed benefit information. Carriers are
required to keep the information contained in the brochure accurate
and up to date, and, upon updating the brochure, send copies to
agents and brokers representing the carrier. Any entity that provides
administrative services only with regard to a health benefit plan
written or issued by another carrier shall not be required to prepare
a summary brochure which includes that benefit plan.

(2) For each health benefit plan, prepare a more detailed
evidence of coverage and make it available to small employers,
agents and brokers upon request. The evidence of coverage shall
contain all information that a prudent buyer would need to be aware
of in making selections of benefit plan designs. An entity that
provides administrative services only with regard to a health benefit
plan written or issued by another carrier shall not be required to
prepare an evidence of coverage for that health benefit plan.

(3) Provide copies of the current summary brochure to all agents
or brokers who represent the carrier and, upon updating the
brochure, send copies of the updated brochure to agents and brokers
representing the carrier for the purpose of selling health benefit
plans.

(4) Notwithstanding subdivision (c) of Section 10753, for
purposes of this subdivision, companies that are affiliated
companies or that are eligible to file a consolidated income tax
return shall be treated as one carrier.

(e) Every agent or broker representing one or more carriers for
the purpose of selling health benefit plans to small employers shall
do all of the following:

(1) When providing information on a health benefit plan to a
small employer but making no specific recommendations on
particular benefit plan designs:

(A) Advise the small employer of the carrier’s obligation to sell
to any small employer any of the health benefit plans it offers to
small employers, consistent with PPACA, and provide them, upon
request, with the actual rates that would be charged to that
employer for a given health benefit plan.

(B) Notify the small employer that the agent or broker will
procure rate and benefit information for the small employer on
any health benefit plan offered by a carrier for whom the agent or
broker sells health benefit plans.

(C) Notify the small employer that, upon request, the agent or
broker will provide the small employer with the summary brochure
required in paragraph (1) of subdivision (d) for any benefit plan
design offered by a carrier whom the agent or broker represents.

(D) Notify the small employer of the availability of coverage
and the availability of tax credits for certain employers consistent
with PPACA and state law, including any rules, regulations, or
guidance issued in connection therewith.

(2) When recommending a particular benefit plan design or
designs, advise the small employer that, upon request, the agent
will provide the small employer with the brochure required by
paragraph (1) of subdivision (d) containing the benefit plan design
or designs being recommended by the agent or broker.

(3) Prior to filing an application for a small employer for a
particular health benefit plan:

(A) For each of the health benefit plans offered by the carrier
whose health benefit plan the agent or broker is presenting, provide
the small employer with the benefit summary required in paragraph
(1) of subdivision (d) and the premium for that particular employer.

(B) Notify the small employer that, upon request, the agent or
broker will provide the small employer with an evidence of
coverage brochure for each health benefit plan the carrier offers.

(C) Obtain a signed statement from the small employer
acknowledging that the small employer has received the disclosures
required by this paragraph and Section 10753.16.

(f) No carrier, agent, or broker shall induce or otherwise
encourage a small employer to separate or otherwise exclude an
eligible employee from a health benefit plan which, in the case of
an eligible employee meeting the definition in paragraph (1) of
subdivision (f) of Section 10753, is provided in connection with
the employee’s employment or which, in the case of an eligible
employee as defined in paragraph (2) of subdivision (f) of Section
10753, is provided in connection with a guaranteed association.

(g) No carrier shall reject an application from a small employer
for a health benefit plan provided:

(1) The small employer as defined by subparagraph (A) of
paragraph (1) of subdivision (q) of Section 10753 offers health
benefits to 100 percent of its eligible employees as defined in
paragraph (1) of subdivision (f) of Section 10753. Employees who
waive coverage on the grounds that they have other group coverage
shall not be counted as eligible employees.

(2) The small employer agrees to make the required premium
payments.

(h) No carrier or agent or broker shall, directly or indirectly,
engage in the following activities:

(1) Encourage or direct small employers to refrain from filing
an application for coverage with a carrier because of the health
status, claims experience, industry, occupation, or geographic
location within the carrier’s approved service area of the small
employer or the small employer’s employees.

(2) Encourage or direct small employers to seek coverage from
another carrier because of the health status, claims experience,
industry, occupation, or geographic location within the carrier’s
approved service area of the small employer or the small
employer’s employees.

begin insert

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs.

end insert

(i) No carrier shall, directly or indirectly, enter into any contract,
agreement, or arrangement with an agent or broker that provides
for or results in the compensation paid to an agent or broker for a
health benefit plan to be varied because of the health status, claims
experience, industry, occupation, or geographic location of the
small employer or the small employer’s employees. This
subdivision shall not apply with respect to a compensation
arrangement that provides compensation to an agent or broker on
the basis of percentage of premium, provided that the percentage
shall not vary because of the health status, claims experience,
industry, occupation, or geographic area of the small employer.

(j) (1) A health benefit plan offered to a small employer, as
defined in Section 1304(b) of PPACA and in Section 10753, shall
not establish rules for eligibility, including continued eligibility,
of an individual, or dependent of an individual, to enroll under the
terms of the plan based on any of the following health status-related
factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 10291.5, a carrier shall not require
an eligible employee or dependent to fill out a health assessment
or medical questionnaire prior to enrollment under a health benefit
plan. A carrier shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

begin insert

(k) (1) A carrier shall consider the claims experience of all
insureds in all nongrandfathered health benefit plans offered in
the state that are subject to subdivision (a), including those
insureds who do not enroll in the plans through the Exchange, to
be members of a single risk pool.

end insert begin insert

(2) Each plan year, a carrier shall establish an index rate for
the small employer market in the state based on the total combined
claims costs for providing essential health benefits, as defined
pursuant to Section 1302 of PPACA, within the single risk pool
required under paragraph (1). The index rate shall be adjusted
on a market-wide basis based on the total expected market-wide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA. The premium rate for all of the carrier’s
nongrandfathered health benefit plans shall use the applicable
index rate, as adjusted for total expected market-wide payments
and charges under the risk adjustment and reinsurance programs
established for the state pursuant to Sections 1343 and 1341 of
PPACA, subject only to the adjustments permitted under paragraph
(3).

end insert begin insert

(3) A carrier may vary premiums rates for a particular
nongrandfathered health benefit plan from its index rate based
only on the following actuarially justified plan-specific factors:

end insert begin insert

(A) The actuarial value and cost-sharing design of the health
benefit plan.

end insert begin insert

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

end insert begin insert

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for health benefit plans
that offer those benefits in addition to essential health benefits.

end insert begin insert

(D) With respect to catastrophic plans, as described in
subsection (e) of Section 1302 of PPACA, the expected impact of
the specific eligibility categories for those plans.

end insert begin delete

(k)

end delete

begin insert (l) end insert  If a carrier enters into a contract, agreement, or other
arrangement with a third-party administrator or other entity to
provide administrative, marketing, or other services related to the
offering of health benefit plans to small employers in this state,
the third-party administrator shall be subject to this chapter.

begin delete

(l) (1) With respect to the obligation to provide coverage newly
issued under subdivision (c), to the extent permitted by PPACA,
the carrier may cease enrolling new small employer groups and
new eligible employees as defined by paragraph (2) of subdivision
(f) of Section 10753 if it certifies to the commissioner that the
number of eligible employees and dependents, of the employers
newly enrolled or insured during the current calendar year by the
carrier equals or exceeds: (A) in the case of a carrier that
administers any self-funded health benefits arrangement in
California, 10 percent of the total number of eligible employees,
or eligible employees and dependents, respectively, enrolled or
insured in California by that carrier as of December 31 of the
preceding year, or (B) in the case of a carrier that does not
administer any self-funded health benefit arrangements in
California, 8 percent of the total number of eligible employees, or
eligible employees and dependents, respectively, enrolled or
insured by the carrier in California as of December 31 of the
preceding year.

(2) Certification shall be deemed approved if not disapproved
within 45 days after submission to the commissioner. If that
certification is approved, the small employer carrier shall not offer
coverage to any small employers under any health benefit plans
during the remainder of the current year. If the certification is not
approved, the carrier shall continue to issue coverage as required
by subdivision (c) and be subject to administrative penalties as
established in Section 10753.18.

end delete

(m) (1) Except as provided in paragraph (2), this section shall
become inoperative if Section 2702 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-1), as added by Section 1201
of PPACA, is repealed, in which case carriers subject to this section
shall instead be governed by Section 10705 to the extent permitted
by federal law, and all references in this chapter to this section
shall instead refer to Section 10705, except for purposes of
paragraph (2).

(2) Paragraph (3) of subdivision (b) of this section shall remain
operative as it relates to health benefit plans offered through the
Exchange.

SEC. 31.  

Section 10753.06.5 of the Insurance Code is amended
to read:

10753.06.5.  

(a) With respect to health benefit plans offered
outside the Exchange, after a small employer submits a completed
application, the carrier shall, within 30 days, notify the employer
of the employer’s actual rates in accordance with Section 10753.14.
The employer shall have 30 days in which to exercise the right to
buy coverage at the quoted rates.

(b)  begin delete (1) end delete begin delete   end delete Except as required under begin delete paragraph (2) end delete begin insert subdivision (c) end insert ,
when a small employer submits a premium payment, based on the
quoted rates, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of a month,
coverage shall become effective no later than the first day of the
following month. When that payment is neither delivered nor
postmarked until after the 15th day of a month, coverage shall
become effective no later than the first day of the second month
following delivery or postmark of the payment.

begin delete

(2) A carrier shall apply coverage effective dates for health
benefit plans subject to this chapter consistent with the coverage
effective dates applicable to nongrandfathered individual health
benefit plans set forth in Section 10965.3.

end delete begin insert

(c) (1) With respect to a health benefit plan offered through
the Exchange, a carrier shall apply coverage effective dates
consistent with those required under Section 155.720 of Title 45
of the Code of Federal Regulations and paragraph (2) of
subdivision (e) of Section 10965.3.

end insert begin insert

(2) With respect to a health benefit plan offered outside the
Exchange for which an individual applies during a special
enrollment period described in paragraph (3) of subdivision (b)
of Section 10753.05, the following provisions shall apply:

end insert begin insert

(A) Coverage under the plan shall become effective no later
than the first day of the first calendar month beginning after the
date the carrier receives the request for special enrollment.

end insert begin insert

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, coverage under the plan shall
become effective on the date of birth, adoption, or placement for
adoption.

end insert begin delete

(c)

end delete

begin insert (d) end insert  During the first 30 days of coverage, the small employer
shall have the option of changing coverage to a different health
benefit plan offered by the same carrier. If a small employer
notifies the carrier of the change within the first 15 days of a month,
coverage under the new health benefit plan shall become effective
no later than the first day of the following month. If a small
employer notifies the carrier of the change after the 15th day of a
month, coverage under the new health benefit plan shall become
effective no later than the first day of the second month following
notification.

begin delete

(d)

end delete

begin insert (e) end insert  All eligible employees and dependents listed on the small
employer’s completed application shall be covered on the effective
date of the health benefit plan.

SEC. 32.  

Section 10753.11 of the Insurance Code is amended
to read:

10753.11.  

begin insert (a) end insert begin insert   end insert To the extent permitted by PPACA, no carrier
shall be required by the provisions of this chapter begin insert to do any of the end insert
begin insert following end insert :

begin delete

(a) To offer coverage to, or accept applications from, a small
employer as defined in subparagraph (A) of paragraph (1) of
subdivision (q) of Section 10753, where the small employer is not
physically located in a carrier’s approved service areas.

end delete begin delete

(b)

end delete

begin insert (1) end insert  To offer coverage to or accept applications from a small
employer begin delete as defined in subparagraph (B) of paragraph (1) of end delete
begin delete subdivision (q) of Section 10753 end delete where the small employer is
seeking coverage for eligible employees who do not begin insert live, end insert work begin insert , end insert
or reside in a carrier’s approved service areas.

begin delete

(c) To include in a health benefit plan an otherwise eligible
employee or dependent, when the eligible employee or dependent
does not work or reside within a carrier’s approved service area,
except as provided in Section 10753.02.1.

(d)

end delete

begin insert (2) end insert   begin insert (A) end insert begin insert   end insert To offer coverage to, or accept applications from, a
small employer for a benefits plan design within an area if the
commissioner has found begin delete that the carrier will end delete begin insert all of the following: end insert

begin insert (i) end insert begin insert   end insert begin insert The carrier will end insert begin insert end insert not have the capacity within the area in its
network of providers to deliver service adequately to the eligible
employees and dependents of that employee because of its
obligations to existing group contractholders and enrollees begin delete and end delete
begin delete that the end delete begin insert . end insert

begin insert

(ii) The carrier is applying this paragraph uniformly to all
employers without regard to the claims experience of those
employers, and their employees and dependents, or any health
status-related factor relating to those employees and dependents.

end insert

begin insert (iii) end insert begin insert   end insert begin insert The end insert action is not unreasonable or clearly inconsistent with
the intent of this chapter.

begin insert (B) end insert begin insert   end insert A carrier that cannot offer coverage to small employers in
a specific service area because it is lacking sufficient capacity begin insert as end insert
begin insert described in this paragraph end insert may not offer coverage in the
applicable area to new employer groups with more than 50 eligible
employees until the begin insert later of the following dates: end insert

begin insert

(i) The 181st day after the date that coverage is denied pursuant
to this paragraph.

end insert

begin insert (ii) end insert begin insert   end insert begin insert The date the end insert carrier notifies the commissioner that it has
regained capacity to deliver services to small employers, and
certifies to the commissioner that from the date of the notice it will
enroll all small groups requesting coverage from the carrier until
the carrier has met the requirements of subdivision begin delete (h) end delete begin insert (g) end insert of
Section 10753.05.

begin insert

(C) Subparagraph (B) shall not limit the carrier’s ability to
renew coverage already in force or relieve the carrier of the
responsibility to renew that coverage as described in Sections
10273.4 and 10753.13.

end insert begin insert

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to the requirements
of this section.

end insert begin delete

(e) To offer coverage to a small employer, or an eligible
employee as defined in paragraph (2) of subdivision (f) of Section
10753, who within 12 months of application for coverage
terminated from a health benefit plan offered by the carrier.

end delete

SEC. 33.  

Section 10753.12 of the Insurance Code is amended
to read:

10753.12.  

(a) A carrier shall not be required to offer coverage
or accept applications for benefit plan designs pursuant to this
chapter where the begin delete commissioner determines that the end delete begin insert carrier end insert
begin insert demonstrates to the satisfaction of the commissioner both of the end insert
begin insert following: end insert

begin insert (1) end insert begin insert   end insert begin insert The end insert acceptance of an application or applications would place
the carrier in a financially impaired condition.

begin insert

(2) The carrier is applying this subdivision uniformly to all
employers without regard to the claims experience of those
employers and their employees and dependents or any health
status-related factor relating to those employees and dependents.

end insert

(b) The commissioner’s determination begin insert under subdivision (a) end insert
shall follow an evaluation that includes a certification by the
commissioner that the acceptance of an application or applications
would place the carrier in a financially impaired condition.

(c) A carrier that has not offered coverage or accepted
applications pursuant to this chapter shall not offer coverage or
accept applications for any individual or group health benefit plan
until the begin delete commissioner has determined that end delete begin insert later of the following end insert
begin insert dates: end insert

begin insert

(1) The 181st day after the date that coverage is denied pursuant
to this section.

end insert

begin insert ( end insert begin insert 2) end insert begin insert   end insert begin insert The date on which end insert the carrier begin delete has ceased end delete begin insert ceases end insert to be
financially impaired begin insert , as determined by the commissioner end insert .

begin insert

(d) Subdivision (c) shall not limit the carrier’s ability to renew
coverage already in force or relieve the carrier of the responsibility
to renew that coverage as described in Sections 10273.4, 10273.6,
and 10753.13.

end insert begin insert

(e) Coverage offered within a service area after the period
specified in subdivision (c) shall be subject to the requirements of
this section.

end insert

SEC. 34.  

Section 10753.14 of the Insurance Code is amended
to read:

10753.14.  

(a) The premium rate for a health benefit plan
issued, amended, or renewed on or after January 1, 2014, shall
vary with respect to the particular coverage involved only by the
following:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services begin insert and the age rating end insert
begin insert curve established by the Centers for Medicare and Medicaid end insert
begin insert Services end insert pursuant to Section 2701(a)(3) of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall
be determined begin delete based on the individual’s birthday end delete begin insert using the end insert
begin insert individual’s age as of the date of the plan issuance or renewal, as end insert
begin insert applicable, end insert and shall not vary by more than three to one for begin delete adults end delete
begin insert like individuals of different age who are 21 years of age or older end insert
begin insert as described in federal regulations adopted pursuant to Section end insert
begin insert 2701(a)(3) of the federal Public Health Service Act (42 U.S.C. end insert
begin insert Sec. 300gg(a)(3)) end insert .

(2) (A) Geographic region. begin delete The end delete begin insert Except as provided in end insert
begin insert subparagraph (B), the end insert geographic regions for purposes of rating
shall be the following:

(i) Region 1 shall consist of the Counties of Alpine, begin insert Amador, end insert
begin insert Butte, Calaveras, Colusa, end insert Del Norte, begin insert El Dorado, Glenn, Humboldt, end insert
begin insert Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey, end insert
begin insert Nevada, Placer, Plumas, San Benito, Shasta, Sierra, end insert Siskiyou,
begin delete Modoc, Lassen, Shasta, Trinity, Humboldt, Tehama, Plumas, end delete
begin delete Nevada, Sierra, Mendocino, Lake, Butte, Glenn, Sutter, end delete begin insert Sutter, end insert
begin insert Tehama, Trinity, Tulare, Tuolumne, Yolo, and end insert Yuba begin delete , Colusa, end delete
begin delete Amador, Calaveras, and Tuolumne end delete .

(ii) Region 2 shall consist of the Counties of begin insert Fresno, Imperial, end insert
begin insert Kern, Madera, Mariposa, Merced, end insert Napa, begin insert Sacramento, San Joaquin, end insert
begin insert San Luis Obispo, Santa Cruz, Solano, end insert Sonoma, begin delete Solano, and Marin end delete
begin insert and Stanislaus end insert .

begin delete

(iii) Region 3 shall consist of the Counties of Sacramento,
Placer, El Dorado, and Yolo.

end delete begin delete

(iv)

end delete

begin insert (iii) end insert  Region begin delete 4 end delete begin insert 3 end insert shall consist of the begin delete County end delete begin insert Counties end insert of begin insert Alameda, end insert
begin insert Contra Costa, Marin, end insert San Francisco begin insert , San Mateo, and Santa Clara end insert .

begin delete

(v) Region 5 shall consist of the County of Contra Costa.

(vi) Region 6 shall consist of the County of Alameda.

(vii) Region 7 shall consist of the County of Santa Clara.

(viii) Region 8 shall consist of the County of San Mateo.

(ix) Region 9 shall consist of the Counties of Santa Cruz,
Monterey, and San Benito.

(x) Region 10 shall consist of the Counties of San Joaquin,
Stanislaus, Merced, Mariposa, and Tulare.

(xi) Region 11 shall consist of the Counties of Madera, Fresno,
and Kings.

(xii)

end delete

begin insert (iv) end insert  Region begin delete 12 end delete begin insert 4 end insert shall consist of the Counties of begin delete San Luis end delete
begin delete Obispo, end delete begin insert Orange, end insert Santa Barbara, and Ventura.

begin delete

(xiii) Region 13 shall consist of the Counties of Mono, Inyo,
and Imperial.

(xiv) Region 14 shall consist of the County of Kern.

(xv)

end delete

begin insert (v) end insert  Region begin delete 15 end delete begin insert 5 end insert shall consist of the begin delete ZIP Codes in end delete begin insert County of end insert Los
Angeles begin delete County starting with 906 to 912, inclusive, 915, 917, 918, end delete
begin delete and 935 end delete .

begin delete

(xvi) Region 16 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (xv).

(xvii) Region 17 shall consist of the Counties of San Bernardino
and Riverside.

(xviii) Region 18 shall consist of the County of Orange.

(xix)

end delete

begin insert (vi) end insert  Region begin delete 19 end delete begin insert 6 end insert shall consist of the begin delete County end delete begin insert Counties end insert of
begin insert Riverside, San Bernardino, and end insert San Diego.

begin insert

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701
of the federal Public Health Service Act (42 U.S.C. Sec. 300gg)
and obtained by the department and the Department of Managed
Health Care by July 1, 2014:

end insert begin insert

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

end insert begin insert

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

end insert begin insert

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

end insert begin insert

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

end insert begin insert

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

end insert begin insert

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

end insert begin insert

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

end insert begin insert

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

end insert begin insert

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

end insert begin insert

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

end insert begin insert

(xi) Region 11 shall consist of the Counties of San Bernardino
and Riverside.

end insert begin insert

(xii) Region 12 shall consist of the County of Orange.

end insert begin insert

(xiii) Region 13 shall consist of the County of San Diego.

end insert begin delete

(B)

end delete

begin insert (C) end insert  No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Managed Health Care,
shall review the geographic rating regions specified in this
paragraph and the impacts of those regions on the health care
coverage market in California, and make a report to the appropriate
policy committees of the Legislature.

(3) Whether the health benefit plan covers an individual or
family, as described in PPACA.

(b) The rate for a health benefit plan subject to this section shall
not vary by any factor not described in this section.

begin insert

(c) The total premium charged to a small employer pursuant to
this section shall be determined by summing the premiums of
covered employees and dependents in accordance with Section
147.102(c)(1) of Title 45 of the Code of Federal Regulations.

end insert begin delete

(c)

end delete

begin insert (d) end insert  The rating period for rates subject to this section shall be no
less than 12 months from the date of issuance or renewal of the
health benefit plan.

begin delete

(d) This section shall become inoperative if Section 2701 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg), as added
by Section 1201 of PPACA, is repealed, in which case rates for
health benefit plans subject to this section shall instead be subject
to Section 10714, to the extent permitted by federal law, and all
references to this section shall be deemed to be references to
Section 10714.

end delete

SEC. 35.  

Section 10901.3 of the Insurance Code is amended
to read:

10901.3.  

(a) (1) After the federally eligible defined individual
submits a completed application form for a health benefit plan,
the carrier shall, within 30 days, notify the individual of the
individual’s actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
following amounts:

(A) For health benefit plans that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual. However, for federally
qualified individuals who are between the ages of 60 and 64,
inclusive, the premium shall not exceed the average premium paid
by a subscriber of the Major Risk Medical Insurance Program who
is 59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to an individual who is of the same age and resides in the same
geographic area as the federally eligible defined individual.
However, for federally qualified individuals who are between the
ages of 60 and 64, inclusive, the premium shall not exceed 170
percent of the standard premium charged to an individual who is
59 years of age and resides in the same geographic area as the
federally eligible defined individual. The individual shall have 30
days in which to exercise the right to buy coverage at the quoted
premium rates.

(2) A carrier may adjust the premium based on family size, not
to exceed the following amounts:

(A) For health benefit plans that offer services through a
preferred provider arrangement, the average of the Major Risk
Medical Insurance Program rate for families of the same size that
reside in the same geographic area as the federally eligible defined
individual.

(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to a family that is of the same size and resides in the same
geographic area as the federally eligible defined individual.

(b) When a federally eligible defined individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier,
within the first 15 days of the month, coverage shall begin no later
than the first day of the following month. When that payment is
neither delivered or postmarked until after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.

(c) During the first 30 days after the effective date of the health
benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change within
the first 15 days of a month, coverage under the new health benefit
plan shall become effective no later than the first day of the
following month. If an enrolled individual notified the carrier of
the change after the 15th day of a month, coverage under the health
benefit plan shall become effective no later than the first day of
the second month following notification.

begin insert

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of
that date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

end insert

SEC. 36.  

Section 10901.3 is added to the Insurance Code, to
read:

10901.3.  

(a) After the federally eligible defined individual
submits a completed application form for a health benefit plan,
the carrier shall, within 30 days, notify the individual of the
individual’s actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
premium for the second lowest cost silver plan of the individual
market in the rating area in which the individual resides which is
offered through the California Health Benefit Exchange established
under Title 22 (commencing with Section 100500) of the
Government Code, as described in Section 36B(b)(3)(B) of Title
26 of the United States Code.

(b) When a federally eligible defined individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier,
within the first 15 days of the month, coverage shall begin no later
than the first day of the following month. When that payment is
neither delivered or postmarked until after the 15th day of a month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.

(c) During the first 30 days after the effective date of the health
benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change within
the first 15 days of a month, coverage under the new health benefit
plan shall become effective no later than the first day of the
following month. If an enrolled individual notified the carrier of
the change after the 15th day of a month, coverage under the health
benefit plan shall become effective no later than the first day of
the second month following notification.

(d) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 37.  

Section 10901.9 of the Insurance Code is amended
to read:

10901.9.  

Commencing January 1, 2001, premiums for health
benefit plans offered, delivered, amended, or renewed by carriers
shall be subject to the following requirements:

(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:

(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the
Major Risk Medical Insurance Program who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 to 64, inclusive, the premium shall
not exceed the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is 59 years of age and resides
in the same geographic area as the federally eligible defined
individual.

(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to an individual who is of the same age and resides in the same
geographic area as the federally eligible defined individual.
However, for federally qualified individuals who are between the
ages of 60 to 64, inclusive, the premium shall not exceed 170
percent of the standard premium charged to an individual who is
59 years of age and resides in the same geographic area as the
federally eligible defined individual.

(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:

(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the
Major Risk Medical Insurance Program who is of the same age
and resides in the same geographic area as the federally eligible
defined individual. However, for federally qualified individuals
who are between the ages of 60 and 64, inclusive, the premium
shall not exceed the average premium paid by a subscriber of the
Major Risk Medical Insurance Program who is 59 years of age
and resides in the same geographic area as the federally eligible
defined individual.

(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, 170 percent of the standard premium charged
to an individual who is of the same age and resides in the same
geographic area as the federally eligible defined individual.
However, for federally qualified individuals who are between the
ages of 60 and 64, inclusive, the premium shall not exceed 170
percent of the standard premium charged to an individual who is
59 years of age and resides in the same geographic area as the
federally eligible defined individual. The premium effective on
January 1, 2001, shall apply to in force business at the earlier of
either the time of renewal or July 1, 2001.

(c) The premium applied to a federally eligible defined
individual may not increase by more than the following amounts:

(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average increase in the premiums charged to a
subscriber of the Major Risk Medical Insurance Program who is
of the same age and resides in the same geographic area as the
federally eligible defined individual.

(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred
provider arrangement, the increase in premiums charged to a
nonfederally qualified individual who is of the same age and resides
in the same geographic area as the federally defined eligible
individual. The premium for an eligible individual may not be
modified more frequently than every 12 months.

begin delete

(2)

end delete

begin insert (3) end insert  For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

begin insert

(d) This section shall remain in effect only until January 1, 2014,
or the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later, and as of
that date is repealed, unless a later enacted statute, that becomes
operative on or before that date, deletes or extends the date on
which it is repealed.

end insert

SEC. 38.  

Section 10901.9 is added to the Insurance Code, to
read:

10901.9.  

(a) Commencing on the date on which the act adding
this section becomes operative, premiums for health benefit plans
offered, delivered, amended, or renewed by carriers shall be subject
to the following requirements:

(1) The premium for in force or new business for a federally
eligible defined individual shall not exceed the premium for the
second lowest cost silver plan of the individual market in the rating
area in which the individual resides which is offered through the
California Health Benefit Exchange established under Title 22
(commencing with Section 100500) of the Government Code, as
described in Section 36B(b)(3)(B) of Title 26 of the United States
Code.

(2) For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall
be no greater than the premium applied in the prior rating period
to the discontinued contract.

(b) This section shall become operative on January 1, 2014, or
the 91st calendar day following the adjournment of the 2013-14
First Extraordinary Session, whichever date is later.

SEC. 39.  

Section 10902.4 of the Insurance Code is repealed.

begin delete

10902.4.  

Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or
method to share in the financing of high-risk individuals. This
mechanism or method shall be established through a committee
of all carriers and health care service plans offering coverage to
individuals by July 1, 2002, and shall be implemented by January
1, 2003. If carriers and health care service plans wish to establish
a risk-sharing mechanism but cannot agree on the terms and
conditions of such an agreement, the Managed Risk Medical
Insurance Board shall develop a risk-sharing mechanism or method
by January 1, 2003, and it shall be implemented by July 1, 2003.

end delete

SEC. 40.  

The heading of Chapter 9.7 (commencing with
Section 10950) of Part 2 of Division 2 of the Insurance Code is
amended to read:

 

Chapter  9.7. begin delete Individual end delete begin insert Child end insert Access to Health
Insurance

 

SEC. 41.  

Section 10954 of the Insurance Code is amended to
read:

10954.  

(a) A carrier may use the following characteristics of
an eligible child for purposes of establishing the rate of the health
benefit plan for that child, where consistent with federal regulations
under PPACA: age, geographic region, and family composition,
plus the health benefit plan selected by the child or the responsible
party for a child.

(b) From the effective date of this chapter to December 31,
2013, inclusive, rates for a child applying for coverage shall be
subject to the following limitations:

(1) During any open enrollment period or for late enrollees, the
rate for any child due to health status shall not be more than two
times the standard risk rate for a child.

(2) The rate for a child shall be subject to a 20-percent surcharge
above the highest allowable rate on a child applying for coverage
who is not a late enrollee and who failed to maintain coverage with
any carrier or health care service plan for the 90-day period prior
to the date of the child’s application. The surcharge shall apply
for the 12-month period following the effective date of the child’s
coverage.

(3) If expressly permitted under PPACA and any rules,
regulations, or guidance issued pursuant to that act, a carrier may
rate a child based on health status during any period other than an
open enrollment period if the child is not a late enrollee.

(4) If expressly permitted under PPACA and any rules,
regulations, or guidance issued pursuant to that act, a carrier may
condition an offer or acceptance of coverage on any preexisting
condition or other health status-related factor for a period other
than an open enrollment period and for a child who is not a late
enrollee.

(c) For any individual health benefit plan issued, sold, or
renewed prior to December 31, 2013, the carrier shall provide to
a child or responsible party for a child a notice that states the
following:

“Please consider your options carefully before failing to maintain
or begin delete renew end delete begin insert renewing end insert coverage for a child for whom you are
responsible. If you attempt to obtain new individual coverage for
that child, the premium for the same coverage may be higher than
the premium you pay now.”

(d) A child who applied for coverage between September 23,
2010, and the end of the initial enrollment period shall be deemed
to have maintained coverage during that period.

begin delete

(e) Effective January 1, 2014, except for individual
grandfathered health plan coverage, the rate for any child shall be
identical to the standard risk rate.

end delete begin delete

(f)

end delete

begin insert (e) end insert  Carriers begin delete may end delete begin insert shall not end insert require documentation from applicants
relating to their coverage history.

begin insert

(f) (1) On and after the operative date of the act adding this
subdivision, and until January 1, 2014, a carrier shall provide a
notice to all applicants for coverage under this chapter and to all
insureds, or the responsible party for an insured, renewing
coverage under this chapter that contains the following
information:

end insert begin insert

(A) Information about the open enrollment period provided
under Section 10965.3.

end insert begin insert

(B) An explanation that obtaining coverage during the open
enrollment period described in Section 10965.3 will not affect the
effective dates of coverage for coverage purchased pursuant to
this chapter unless the applicant cancels that coverage.

end insert begin insert

(C) An explanation that coverage purchased pursuant to this
chapter shall be effective as required under subdivision (d) of
Section 10951 and that such coverage shall not prevent an
applicant from obtaining new coverage during the open enrollment
period described in Section 10965.3.

end insert begin insert

(D) Information about the Medi-Cal program and the Healthy
Families Program and about subsidies available through the
California Health Benefit Exchange.

end insert begin insert

(2) The notice described in paragraph (1) shall be in plain
language and 14-point type.

end insert begin insert

(3) The department may adopt a model notice to be used by
carriers in order to comply with this subdivision, and shall consult
with the Department of Managed Health Care in adopting that
model notice. Use of the model notice shall not require prior
approval of the department. Any model notice designated by the
department for purposes of this section shall not be subject to the
Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code).

end insert

SEC. 42.  

Section 10960.5 is added to the Insurance Code, to
read:

10960.5.  

This chapter shall become inoperative on January 1,
2014, or the 91st calendar day following the adjournment of the
2013-14 First Extraordinary Session, whichever date is later.

SEC. 43.  

Chapter 9.9 (commencing with Section 10965) is
added to Part 2 of Division 2 of the Insurance Code, to read:

 

Chapter  9.9. Individual Access to Health Insurance

 

10965.  

For purposes of this chapter, the following definitions
shall apply:

(a) “Child” means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.

(b) “Dependent” means the spouse or registered domestic
partner, or child, of an individual, subject to applicable terms of
the health benefit plan.

(c) “Exchange” means the California Health Benefit Exchange
created by Section 100500 of the Government Code.

(d) “Grandfathered health plan” has the same meaning as that
term is defined in Section 1251 of PPACA.

(e) “Health benefit plan” means any individual or group policy
of health insurance, as defined in Section 106. The term does not
include a health insurance policy that provides excepted benefits,
as described in Sections 2722 and 2791 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-21; 42 U.S.C. Sec. 300gg-91),
subject to Section 10965.01, a health insurance conversion policy
offered pursuant to Section 12682.1, a health insurance policy
provided in the Medi-Cal program (Chapter 7 (commencing with
Section 14000) of Part 3 of Division 9 of the Welfare and
Institutions Code), the Healthy Families Program (Part 6.2
(commencing with Section 12693) of Division 2), the Access for
Infants and Mothers Program (Part 6.3 (commencing with Section
12695) of Division 2), or the program under Part 6.4 (commencing
with Section 12699.50) of Division 2, or a health insurance policy
offered to a federally eligible defined individual under Chapter
8.5 (commencing with Section 10785), to the extent consistent
with PPACA.

(f) “Policy year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations.

(g) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued pursuant to that law.

(h) “Preexisting condition provision” means a policy provision
that excludes coverage for charges or expenses incurred during a
specified period following the insured’s effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage.

(i) “Rating period” means the period for which premium rates
established by an insurer are in effect.

(j) “Registered domestic partner” means a person who has
established a domestic partnership as described in Section 297 of
the Family Code.

10965.01.  

(a) For purposes of this chapter, “health benefit
plan” does not include policies or certificates of specified disease
or hospital confinement indemnity provided that the carrier offering
those policies or certificates complies with the following:

(1) The carrier 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 carrier 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 essential health benefits as defined by
the state pursuant to Section 1302 of PPACA, and (ii) the disclosure
forms 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 in this state.

(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 on or after
January 1, 2013, the carrier files with the commissioner the
information and statement required in paragraph (2) at least 30
days prior to the date such a policy or certificate is issued or
delivered in this state.

(b) As used in this section, “policies or certificates of specified
disease” and “policies or certificates of hospital confinement
indemnity” mean policies or certificates of insurance sold to an
insured to supplement other health insurance coverage as specified
in this section.

10965.1.  

Every health insurer offering individual health benefit
plans shall, in addition to complying with the provisions of this
part and rules adopted thereunder, comply with the provisions of
this chapter.

10965.3.  

(a) (1) On and after October 1, 2013, a health insurer
shall fairly and affirmatively offer, market, and sell all of the
insurer’s health benefit plans that are sold in the individual market
for policy years on or after January 1, 2014, to all individuals and
dependents in each service area in which the insurer provides or
arranges for the provision of health care services. A health insurer
shall limit enrollment in individual health benefit plans to open
enrollment periods and special enrollment periods as provided in
subdivisions (c) and (d).

(2) A health insurer shall allow the policyholder of an individual
health benefit plan to add a dependent to the policyholder’s health
benefit plan at the option of the policyholder, consistent with the
open enrollment, annual enrollment, and special enrollment period
requirements in this section.

(3) A health insurer offering coverage in the individual market
shall not reject the request of a policyholder during an open
enrollment period to include a dependent of the policyholder as a
dependent on an existing individual health benefit plan.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) A health insurer shall provide an initial open enrollment
period from October 1, 2013, to March 31, 2014, inclusive, and
annual enrollment periods for plan years on or after January 1,
2015, from October 15 to December 7, inclusive, of the preceding
calendar year.

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a health insurer shall allow an individual to enroll in or change
individual health benefit plans as a result of the following triggering
events:

(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, both of the following
definitions shall apply:

(i) “Minimum essential coverage” has the same meaning as that
term is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include
loss of that coverage due to the individual’s failure to pay
premiums on a timely basis or situations allowing for a rescission,
subject to clause (ii) and Sections 10119.2 and 10384.17.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered pursuant to a valid
state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health benefit plan substantially violated a
material provision of the policy.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 or
Section 1399.845 of the Health and Safety Code for one of the
conditions described in subdivision (a) of Section 10133.56 and
that provider is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 63 days from the
date of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 63 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the following provisions shall apply:

(1) The effective date of coverage selected pursuant to this
section shall be consistent with the dates specified in Section
155.410 or 155.420 of Title 45 of the Code of Federal Regulations.

(2) Notwithstanding paragraph (1), in the case where an
individual acquires a dependent or becomes a dependent by
entering into a registered domestic partnership pursuant to Section
297 of the Family Code and applies for coverage of that domestic
partner consistent with subdivision (d), the coverage effective date
shall be the first day of the month following the date he or she
selects a plan through the Exchange, unless an earlier date is agreed
to under Section 155.420(b)(3) of Title 45 of the Code of Federal
Regulations.

(f) With respect to an individual health benefit plan offered
outside the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan, the insurer shall, within 30 days, notify the individual
of the individual’s actual premium charges for that plan established
in accordance with Section 10965.9. The individual shall have 30
days in which to exercise the right to buy coverage at the quoted
premium charges.

(2) With respect to an individual health benefit plan for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the policyholder submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan for which
an individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs later, by
December 15, coverage shall become effective as of the following
January 1. When that payment is delivered or postmarked within
the first 15 days of any subsequent month, coverage shall become
effective no later than the first day of the following month. When
that payment is delivered or postmarked between December 16
and December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(4) With respect to an individual health benefit plan for which
an individual applies during a special enrollment period described
in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based
on the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan shall become effective no later
than the first day of the following month. When the premium
payment is neither delivered nor postmarked until after the 15th
day of the month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage
or becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the month following
the date the insurer receives the request for special enrollment.

(g) (1) A health insurer shall not establish rules for eligibility,
including continued eligibility, of any individual to enroll under
the terms of an individual health benefit plan based on any of the
following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding subdivision (c) of Section 10291.5, a health
insurer shall not require an individual applicant or his or her
dependent to fill out a health assessment or medical questionnaire
prior to enrollment under an individual health benefit plan. A health
insurer shall not acquire or request information that relates to a
health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health insurer shall consider the claims experience of
all insureds in all individual health benefit plans offered in the
state that are subject to subdivision (a), including those insureds
who do not enroll in the plans through the Exchange, to be
members of a single risk pool.

(2) Each policy year, a health insurer shall establish an index
rate for the individual market in the state based on the total
combined claims costs for providing essential health benefits, as
defined pursuant to Section 1302 of PPACA, within the single risk
pool required under paragraph (1). The index rate shall be adjusted
on a market-wide basis based on the total expected market-wide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA. The premium rate for all of the health insurer’s
health benefit plans in the individual market shall use the applicable
index rate, as adjusted for total expected market-wide payments
and charges under the risk adjustment and reinsurance programs
established for the state pursuant to Sections 1343 and 1341 of
PPACA, subject only to the adjustments permitted under paragraph
(3).

(3) A health insurer may vary premiums rates for a particular
health benefit plan from its index rate based only on the following
actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for plans that offer those
benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

10965.5.  

(a) No health insurer or agent or broker shall, directly
or indirectly, engage in the following activities:

(1) Encourage or direct an individual to refrain from filing an
application for individual coverage with an insurer because of the
health status, claims experience, industry, occupation, or
geographic location, provided that the location is within the
insurer’s approved service area, of the individual.

(2) Encourage or direct an individual to seek individual coverage
from another health care service plan or health insurer or the
Exchange because of the health status, claims experience, industry,
occupation, or geographic location, provided that the location is
within the insurer’s approved service area, of the individual.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs.

(b) A health insurer shall not, directly or indirectly, enter into
any contract, agreement, or arrangement with a broker or agent
that provides for or results in the compensation paid to a broker
or agent for the sale of an individual health benefit plan to be varied
because of the health status, claims experience, industry,
occupation, or geographic location of the individual. This
subdivision does not apply to a compensation arrangement that
provides compensation to a broker or agent on the basis of
percentage of premium, provided that the percentage shall not vary
because of the health status, claims experience, industry,
occupation, or geographic area of the individual.

(c) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(d) This section shall be enforced in the same manner as Section
790.03, including through Sections 790.05 and 790.035.

10965.7.  

(a) All individual health benefit plans shall conform
to the requirements of Sections 10112.1, 10127.18, 10273.6, and
12682.1, and any other requirements imposed by this code, and
shall be renewable at the option of the insured except as permitted
to be canceled, rescinded, or not renewed pursuant to Section
10273.6.

(b) Any insurer that ceases to offer for sale new individual health
benefit plans pursuant to Section 10273.6 shall continue to be
governed by this chapter with respect to business conducted under
this chapter.

10965.9.  

(a) With respect to individual health benefit plans
issued, amended, or renewed on or after January 1, 2014, a health
insurer may use only the following characteristics of an individual,
and any dependent thereof, for purposes of establishing the rate
of the individual health benefit plan covering the individual and
the eligible dependents thereof, along with the health benefit plan
selected by the individual:

(1) Age, pursuant to the age bands established by the United
States Secretary of Health and Human Services and the age rating
curve established by the federal Centers for Medicare and Medicaid
Services pursuant to Section 2701(a)(3) of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall
be determined using the individual’s age as of the date of the plan
issuance or renewal, as applicable, and shall not vary by more than
three to one for like individuals of different age who are age 21 or
older as described in federal regulations adopted pursuant to
Section 2701(a)(3) of the federal Public Health Service Act (42
U.S.C. Sec. 300gg(a)(3)).

(2) (A) Geographic region. Except as provided in subparagraph
(B), the geographic regions for purposes of rating shall be the
following:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt,
Inyo, Kings, Lake, Lassen, Mendocino, Modoc, Mono, Monterey,
Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou,
Sutter, Tehama, Trinity, Tulare, Tuolumne, Yolo, and Yuba.

(ii) Region 2 shall consist of the Counties of Fresno, Imperial,
Kern, Madera, Mariposa, Merced, Napa, Sacramento, San Joaquin,
San Luis Obispo, Santa Cruz, Solano, Sonoma, and Stanislaus.

(iii) Region 3 shall consist of the Counties of Alameda, Contra
Costa, Marin, San Francisco, San Mateo, and Santa Clara.

(iv) Region 4 shall consist of the Counties of Orange, Santa
Barbara, and Ventura.

(v) Region 5 shall consist of the County of Los Angeles.

(vi) Region 6 shall consist of the Counties of Riverside, San
Bernardino, and San Diego.

(B) For the 2015 plan year and plan years thereafter, the
geographic regions for purposes of rating shall be the following,
subject to federal approval if required pursuant to Section 2701 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg) and
obtained by the department and the Department of Managed Health
Care by July 1, 2014:

(i) Region 1 shall consist of the Counties of Alpine, Amador,
Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra,
Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa,
Solano, and Sonoma.

(iii) Region 3 shall consist of the Counties of El Dorado, Placer,
Sacramento, and Yolo.

(iv) Region 4 shall consist of the Counties of Alameda, Contra
Costa, San Francisco, San Mateo, and Santa Clara.

(v) Region 5 shall consist of the Counties of Monterey, San
Benito, and Santa Cruz.

(vi) Region 6 shall consist of the Counties of Fresno, Kings,
Madera, Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(vii) Region 7 shall consist of the Counties of San Luis Obispo,
Santa Barbara, and Ventura.

(viii) Region 8 shall consist of the Counties of Imperial, Inyo,
Kern, and Mono.

(ix) Region 9 shall consist of the ZIP Codes in Los Angeles
County starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(x) Region 10 shall consist of the ZIP Codes in Los Angeles
County other than those identified in clause (ix).

(xi) Region 11 shall consist of the Counties of San Bernardino
and Riverside.

(xii) Region 12 shall consist of the County of Orange.

(xiii) Region 13 shall consist of the County of San Diego.

(C) No later than June 1, 2017, the department, in collaboration
with the Exchange and the Department of Managed Heath Care,
shall review the geographic rating regions specified in this
paragraph and the impacts of those regions on the health care
coverage market in California, and make a report to the appropriate
policy committees of the Legislature.

(3) Whether the plan covers an individual or family, as described
in PPACA.

(b) The rate for a health benefit plan subject to this section shall
not vary by any factor not described in this section.

(c) With respect to family coverage under an individual health
benefit plan, the rating variation permitted under paragraph (1) of
subdivision (a) shall be applied based on the portion of the
premium attributable to each family member covered under the
plan. The total premium for family coverage shall be determined
by summing the premiums for each individual family member. In
determining the total premium for family members, premiums for
no more than the three oldest family members who are under age
21 shall be taken into account.

(d) The rating period for rates subject to this section shall be
from January 1 to December 31, inclusive.

(e) This section shall not apply to an individual health benefit
plan that is a grandfathered health plan.

(f) The requirement for submitting a report imposed under
subparagraph (B) of paragraph (2) of subdivision (a) is inoperative
on June 1, 2021, pursuant to Section 10231.5 of the Government
Code.

10965.11.  

(a) A health insurer shall not be required to offer
an individual health benefit plan or accept applications for the plan
pursuant to Section 10965.3 in the case of any of the following:

(1) To an individual who does not live or reside within the
insurer’s approved service areas.

(2) (A) Within a specific service area or portion of a service
area, if the insurer reasonably anticipates and demonstrates to the
satisfaction of the commissioner both of the following:

(i) It will not have sufficient health care delivery resources to
ensure that health care services will be available and accessible to
the individual because of its obligations to existing insureds.

(ii) It is applying this subparagraph uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.

(B) A health insurer that cannot offer an individual health benefit
plan to individuals because it is lacking in sufficient health care
delivery resources within a service area or a portion of a service
area pursuant to subparagraph (A) shall not offer an individual
health benefit plan in that area until the later of the following dates:

(i) The 181st day after the date coverage is denied pursuant to
this paragraph.

(ii) The date the insurer notifies the commissioner that it has
the ability to deliver services to individuals, and certifies to the
commissioner that from the date of the notice it will enroll all
individuals requesting coverage in that area from the insurer.

(C) Subparagraph (B) shall not limit the insurer’s ability to
renew coverage already in force or relieve the insurer of the
responsibility to renew that coverage as described in Section
10273.6.

(D) Coverage offered within a service area after the period
specified in subparagraph (B) shall be subject to this section.

(b) (1) A health insurer may decline to offer an individual health
benefit plan to an individual if the insurer demonstrates to the
satisfaction of the commissioner both of the following:

(A) It does not have the financial reserves necessary to
underwrite additional coverage. In determining whether this
subparagraph has been satisfied, the commissioner shall consider,
but not be limited to, the insurer’s compliance with the
requirements of this part and the rules adopted under those
provisions.

(B) It is applying this subdivision uniformly to all individuals
without regard to the claims experience of those individuals or any
health status-related factor relating to those individuals.

(2) A health insurer that denies coverage to an individual under
paragraph (1) shall not offer coverage in the individual market
before the later of the following dates:

(A) The 181st day after the date coverage is denied pursuant to
this subdivision.

(B) The date the insurer demonstrates to the satisfaction of the
commissioner that the insurer has sufficient financial reserves
necessary to underwrite additional coverage.

(3) Paragraph (2) shall not limit the insurer’s ability to renew
coverage already in force or relieve the insurer of the responsibility
to renew that coverage as described in Section 10273.6.

(C) Coverage offered within a service area after the period
specified in paragraph (2) shall be subject to this section.

(c) Nothing in this chapter shall be construed to limit the
commissioner’s authority to develop and implement a plan of
rehabilitation for a health insurer whose financial viability or
organizational and administrative capacity has become impaired
to the extent permitted by PPACA.

10965.13.  

(a) A health insurer that receives an application for
an individual health benefit plan outside the Exchange during the
initial open enrollment period, an annual enrollment period, or a
special enrollment period described in Section 10965.3 shall inform
the applicant that he or she may be eligible for lower cost coverage
through the Exchange and shall inform the applicant of the
applicable enrollment period provided through the Exchange
described in Section 10965.3.

(b) On or before October 1, 2013, and annually thereafter, a
health insurer shall issue a notice to a policyholder enrolled in an
individual health benefit plan offered outside the Exchange. The
notice shall inform the policyholder that he or she may be eligible
for lower cost coverage through the Exchange and shall inform
the policyholder of the applicable open enrollment period provided
through the Exchange described in Section 10965.3.

(c) This section shall not apply where the individual health
benefit plan described in subdivision (a) or (b) is a grandfathered
health plan.

10965.15.  

(a) On or before October 1, 2013, and annually
thereafter, a health insurer shall issue the following notice to all
policyholders enrolled in an individual health benefit plan that is
a grandfathered health plan:

New improved health insurance options are available in
California. You currently have health insurance that is exempt
from many of the new requirements. For instance, your policy may
not include certain consumer protections that apply to other
policies, such as the requirement for the provision of preventive
health services without any cost sharing and the prohibition against
increasing your rates based on your health status. You have the
option to remain in your current policy or switch to a new policy.
Under the new rules, a health insurance company cannot deny your
application based on any health conditions you may have. For
more information about your options, please contact the California
Health Benefit Exchange, the Office of Patient Advocate, your
policy representative, an insurance broker, or a health care
navigator.

(b) Commencing October 1, 2013, a health insurer shall include
the notice described in subdivision (a) in any renewal material of
the individual grandfathered health plan and in any application for
dependent coverage under the individual grandfathered health
plan.

(c) A health insurer shall not advertise or market an individual
health benefit plan that is a grandfathered health plan for purposes
of enrolling a dependent of a policyholder into the plan for policy
years on or after January 1, 2014. Nothing in this subdivision shall
be construed to prohibit an individual enrolled in an individual
grandfathered health plan from adding a dependent to that plan to
the extent permitted by PPACA.

10965.16.  

Except as otherwise provided in this chapter, this
chapter shall be implemented to the extent that it meets or exceeds
the requirements set forth in PPACA.

SEC. 44.  

Part 6.25 (commencing with Section 12694.50) is
added to Division 2 of the Insurance Code, to read:

 

PART 6.25.  CHIP Continuation Coverage

 

12694.50.  

For purposes of this part, the following definitions
shall apply:

(a) “Board” means the Managed Risk Medical Insurance Board.

(b) “Department” means the State Department of Health Care
Services.

(c) “Participating dental plan” means any of the following plans
that is lawfully engaged in providing, arranging, paying for, or
reimbursing the cost of personal dental services under insurance
policies or health care service plan contracts, or membership
contracts, in consideration of premiums or other periodic charges
payable to it, and that, on or after January 1, 2012, has or had a
contract with the board or the department to provide coverage to
program subscribers:

(1) A dental insurer holding a valid outstanding certificate of
authority from the commissioner.

(2) A specialized health care service plan as defined under
subdivision (o) of Section 1345 of the Health and Safety Code.

(d) “Participating health plan” means any of the following plans
that is lawfully engaged in providing, arranging, paying for, or
reimbursing the cost of personal health care services under
insurance policies or health care service plan contracts, medical
and hospital service arrangements, or membership contracts, in
consideration of premiums or other periodic charges payable to it,
and that, on or after January 1, 2012, has or had a contract with
the board or the department to provide coverage to program
subscribers:

(1) A private health insurer holding a valid outstanding
certificate of authority from the commissioner.

(2) A health care service plan as defined under subdivision (f)
of Section 1345 of the Health and Safety Code, including a plan
operating as a geographic managed care plan pursuant to a contract
entered into under Article 2.91 (commencing with Section 14089)
of Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code.

(3) A county organized health system.

(e) “Participating vision care plan” means any of the following
plans that is lawfully engaged in providing, arranging, paying for,
or reimbursing the cost of personal vision services under insurance
policies or health care service plan contracts, or membership
contracts, in consideration of premiums or other periodic charges
payable to it, and that, on or after January 1, 2012, has or had a
contract with the board or the department to provide coverage to
program subscribers:

(1) A vision insurer holding a valid outstanding certificate of
authority from the commissioner.

(2) A specialized health care service plan as defined under
subdivision (o) of Section 1345 of the Health and Safety Code.

(f) “Program” means the federal Children’s Health Insurance
Program established in the state pursuant to Title XXI of the federal
Social Security Act and includes the program established under
Part 6.2 (commencing with Section 12693) and the transition of
the enrollees in that program pursuant to Section 14005.26 of the
Welfare and Institutions Code.

(g) “Qualified beneficiary” means an individual who meets all
of the following requirements:

(1) On or after January 1, 2012, received or receives coverage
under a participating dental, health, or vision plan under the
program.

(2) Was disenrolled or will be disenrolled from the program
due to loss of eligibility because of his or her age.

(3) Is not eligible for full scope benefits under the Medi-Cal
program.

(h) “Subscriber” means an individual who is eligible for and
enrolled in the program.

12694.52.  

(a) Until January 1, 2014, or the date that is six
months following the operative date of this part, whichever date
is later, every participating health, dental, and vision plan shall
offer coverage to a qualified beneficiary. The plan shall offer the
qualified beneficiary the same coverage that the beneficiary had
immediately prior to disenrollment from the program or coverage
with benefits that are most equivalent to the coverage that the
beneficiary had immediately prior to disenrollment from the
program.

(b) Except as otherwise provided in this part, coverage provided
pursuant to this part shall be provided under the same terms and
conditions that apply to similarly situated subscribers in the
program under the applicable participating plan.

(c) (1) For a qualified beneficiary who was disenrolled from
the program prior to the operative date of this part, the participating
health, dental, or vision plan shall provide written notification of
eligibility for coverage pursuant to this section to the qualified
beneficiary within 30 days of the operative date of this part.

(2) For a qualified beneficiary who is disenrolled from the
program on or after the operative date of this part, the participating
health, dental, or vision plan shall provide written notification of
eligibility for coverage pursuant to this section to the qualified
beneficiary no less than 30 days prior to disenrollment from the
program.

(3) The notice required under this subdivision shall state that
the qualified beneficiary must elect the coverage in writing and
deliver the written request, by first-class mail, or other reliable
means of delivery, including personal delivery, express mail, or
private courier company, to the participating plan within 60 days
of the mailing of the notice. The notice shall also state that a
qualified beneficiary electing coverage pursuant to this part shall
pay to the participating plan the amount of the required premium
payment, as set forth in Section 12694.54.

(d) A qualified beneficiary shall have 60 days from the mailing
of the notice required under subdivision (c) to elect coverage
pursuant to this section. The election shall be in writing and shall
be delivered by first-class mail, or other reliable means of delivery,
including personal delivery, express mail, or private courier
company, to the participating plan.

(e) A qualified beneficiary receiving coverage pursuant to this
part shall continue to receive that coverage until the coverage is
terminated at his or her election or pursuant to Section 12694.56,
whichever occurs first.

(f) A qualified beneficiary receiving coverage pursuant to this
part shall be considered part of the participating plan and treated
as similarly situated subscribers for contract purposes, unless
otherwise specified in this part.

12694.54.  

(a) A qualified beneficiary who elects coverage
pursuant to this part shall make the following premium payments
to the participating health, dental, or vision plan, as applicable:

(1) To the participating health plan: not more than 110 percent
of the average per subscriber payment made by the board or the
department to all participating health plans for coverage provided
under the program to subscribers who are one year of age or older.

(2) To the participating dental plan: not more than 110 percent
of the average per subscriber payment made by the board or the
department to all participating dental plans for coverage provided
under the program to subscribers who are one year of age or older.

(3) To the participating vision plan: not more than 110 percent
of the average per subscriber payment made by the board or the
department to all participating vision plans for coverage provided
under the program to subscribers who are one year of age or older.

(b) The premium payments required by this section shall be
made before the due date of each payment but not more frequently
than on a monthly basis.

12694.56.  

The continuation coverage provided pursuant to this
part shall terminate at the first to occur of the following:

(a) The date 18 months after the effective date of coverage
elected pursuant to this part.

(b) The end of the period for which premium payments were
made, if the qualified beneficiary ceases to make payments or fails
to make timely payments of a required premium, in accordance
with Section 12694.54 and the terms and conditions of the policy
or contract. In the case of nonpayment of premiums, reinstatement
shall be governed by the terms and conditions of the policy or
contract.

(c) The qualified beneficiary moves out of the plan’s service
area or the qualified beneficiary, or applicant acting on his or her
behalf, commits fraud or deception in the use of plan services.

SEC. 45.  

The Insurance Commissioner may adopt regulations
to implement the changes made to the Insurance Code by this act
pursuant to the Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code). The commissioner shall consult with
the Director of the Department of Managed Health Care prior to
adopting any regulations pursuant to this section for the specific
purpose of ensuring, to the extent practical, that there is consistency
of regulations applicable to entities regulated by the commissioner
and those regulated by the Director of the Department of Managed
Health Care.

SEC. 46.  

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.