SB 161, as amended, Hernandez. Stop-loss insurance coverage.
Existing law prohibits a person from transacting any class of insurance business, including health insurance, in this state without first being an admitted insurer. Under existing law, admission is secured by procuring a certificate of authority from the Insurance Commissioner. Existing law prohibits a health insurance policy from being issued or delivered to any person in this state unless specified requirements have been met, including that a copy of the form and premium rates are filed with the commissioner. Under existing law, if the commissioner notifies the health insurer that the filed form does not comply with specified requirements, it is unlawful for that health insurer to issue any health insurance policy in that form.
Existing law, with respect to small employer health insurance, requires
begin delete a carrierend delete providing aggregate or specific stop-loss coverage or any other assumption of risk with reference to a health benefit plan, as defined, to provide that the plan meets specified requirements concerning preexisting condition provisions, waiting or affiliation periods, and late enrollees.
Existing law, the federal Patient Protection and Affordable Care Act (PPACA), commencing January 1, 2014, 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 the plan or coverage.
This bill would
begin delete requireend delete a stop-loss begin delete carrier,end delete as defined, begin delete to offer coverage to all employees and dependents of a small employer to which it issues a stop-loss insurance policy and would prohibit the carrierend delete from excluding any employee or dependent on the basis of actual or expected health status-related factors, as specified. Except as specified, the bill would require a stop-loss begin delete carrierend delete to renew, at the option of the small employer, all stop-loss insurance policies. The bill would prohibit a stop-loss insurance policy issued on or after January 1, 2014, to a small employer from containing certain individual or aggregate attachment points for a policy year or providing direct coverage, as defined, of an begin delete employee’s health claimsend delete. The bill would make a stop-loss begin delete carrierend delete in violation of these provisions subject to administrative penalties and would begin delete require those fine and penalty moneys to be deposited in the General Fund and be available upon appropriation by the Legislatureend delete.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Article 5 (commencing with Section 10752) is
2added to Chapter 8 of Part 2 of Division 2 of the Insurance Code,
As used in this article, the following definitions shall
9(a) “Attachment point” means the amount of health claims
10incurred by a small employer in a policy year for its employees
11and their dependents
12 above which the stop-loss
begin delete carrierend delete incurs a liability for
P3 1(1) “Individual attachment point” means the
amount of health
2claims incurred by a small employer in a policy year for an
3individual employee or dependent of an employee above which the stop-loss
begin delete carrierend delete
5 incurs a liability for payment. For purposes of this article, “specific attachment point”
7has the same meaning as “individual attachment point.”
8(2) “Aggregate attachment point” means the amount of
9health claims incurred by a small employer in a policy year for all
10covered employees and their dependents above which the stop-loss
begin delete carrierend delete
12 incurs a liability for payment.
14(b) “Dependent” means the spouse, registered domestic partner
15as described in Section 297 of the Family Code, or child of an
17(c) “Direct coverage” means that an insurance company assumes
18a direct obligation to an employee under an insurance policy to
19pay or indemnify the employee for health claims incurred by the
20employee or the employee’s dependents.
21(d) “Expected claims” means the total amount of health claims that
begin delete, in the
23absence of a stop-loss insurance policy or other insurance, are
24projected to be incurred by a small employer for its employees
25and their dependents.end delete
27(e) “Policy year” means the 12-month period that is designated
28as the policy year for the stop-loss insurance
29policy. If the stop-loss insurance policy does not designate a policy
30year, the policy year is the year in which the total amount of health
31claims incurred by a small employer for an individual employee
32or dependent of an employee, or the aggregate amount for all
33covered employees and their dependents, are added together for
34the purposes of determining whether the
begin delete amount ofend delete claims begin delete hasend delete
35 exceeded the attachment point.
36(f) “Small employer” has the same meaning as defined in
37subdivision (w) of Section 10700.
begin delete carrier”end delete means an insurance company
begin delete or other entityend delete providing individual or aggregate stop-loss insurance
40coverage, or any other assumption of risk, to a small
P4 1employer for the health claims
begin delete ofend delete its employees and
begin delete, regardless of the situs of the contract or master .
4(h) “Stop-loss insurance policy” means a policy, contract,
5certificate, or statement of coverage between a stop-loss
begin delete carrierend delete
6 and small employer providing individual or aggregate
7stop-loss insurance coverage, or any other assumption of
8risk, to a small employer
begin delete for the health claimsend delete of its
10employees and their dependents
begin delete, regardless of the situs of the .
11contract or master policyholderend delete
begin delete carrierend delete shall begin delete offer coverage to all not exclude
13employees and dependents of employees of a small employer to
14which it issues a stop-loss insurance policy and shallend delete
15any employee or dependent on the basis of an actual or expected
16health status-related factor. Health status-related factors include,
17but are not limited to, any of the following: health status; medical
18condition, including both physical and mental illnesses; claims
19experience; medical history; receipt of health care; genetic
20information; disability; evidence of insurability, including
21conditions arising out of acts of domestic violence of the employee
22or dependent; or any other health status-related factor as determined
23by the department.
begin delete carrierend delete shall renew, at the option
25of the small employer, all stop-loss insurance policies written,
26issued, administered, or renewed on or after January 1, 2014, and
27all stop-loss insurance policies in force on or after
begin delete theend delete January 1, 2014, except as follows:
29(a) (1) For nonpayment of the
required premiums by the small
30employer, if the small employer has been duly notified and billed
31for the charge and at least a 30-day grace period has elapsed since
32the date of notification
begin delete or, if longer, the period of time required
33for notice and any other requirements pursuant to Section 2703,
342712, or 2742 of the federal Public Health Service Act (42 U.S.C.
35Sec. 300gg-2, 300gg-12, or 300gg-42) and any subsequent rules
36or regulations has elapsedend delete
37(2) A stop-loss
begin delete carrierend delete shall continue to provide coverage
38as required by the small employer’s policy during the grace period
39described in paragraph (1).
begin delete This section does not affect or impair
40the small employer’s or carrier’s other rights and responsibilities
P5 1pursuant to the policy.end delete
begin deleteIf end deletethe stop-loss begin delete carrierend delete demonstrates fraud or
5an intentional misrepresentation of material fact by the small
6employer under the terms of the stop-loss insurance policy.
begin deleteIf end deletethe stop-loss begin delete carrierend delete has been determined
8by the commissioner to be financially impaired.
begin deleteIf end deletethe stop-loss begin delete carrierend delete ceases to write, issue,
10or administer new stop-loss insurance policies in this state;
11provided, however, that the following conditions are satisfied:
12(1) Notice of the decision to cease writing, issuing, or
13administering new or existing stop-loss insurance policies in this
14state is provided to the commissioner, and to the small employer,
15at least 180 days prior to the discontinuation of the coverage.
16(2) Stop-loss insurance policies subject to this article shall not
17be canceled until 180 days after the date of the notice required
18under paragraph (1). During that time, the stop-loss
begin delete carrierend delete
19 shall continue to comply with this article.
No stop-loss insurance policy issued on or after
21January 1, 2014, to a small employer shall contain any of the
23(a) An individual attachment point for a policy year that is less
begin delete ninety-five thousand dollars ($95,000)end delete.
26(b) An aggregate attachment point for a policy year that is less
27than the greater of one of the following:
begin deleteNineteen thousand dollars ($19,000) end deletetimes the total number of covered employees
31(2) One hundred twenty percent of expected claims.
32(3) Ninety-five thousand dollars ($95,000).end delete
34(c) A provision for direct coverage of an
begin delete employee’s health
The commissioner may adopt regulations as may be
37necessary to carry out the purposes of this article. In adopting
38regulations, the commissioner shall comply with Chapter 3.5
39(commencing with Section 11340) of Part 1 of Division 3 of Title
402 of the Government Code.
begin delete carrierend delete that violates the provisions
2of this article is subject to the remedies and administrative penalties
begin delete carriersend delete in Sections 10718 and 10718.5. begin delete All
4fine and penalty moneys received pursuant to this section shall be
5deposited in the General Fund and shall be available for
6expenditure by the commissioner upon appropriation by the
The provisions of this article are severable. If any
16provision of this article or its application is held invalid, that
17invalidity shall not affect other provisions or applications that can
18be given effect without the invalid provision or application.