Amended in Senate April 28, 2014

Amended in Senate March 25, 2014

Senate Bill No. 1446

Introduced by Senator DeSaulnier

February 21, 2014

An act to add Section 1367.012 to the Health and Safety Code, and to add Section 10112.300 to the Insurance Code, relating to health care coverage, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 1446, as amended, DeSaulnier. Health care begin delete coverage. end delete begin insert coverage: small employer market. end insert

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect with respect to plan years on or after 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. PPACA requires a health insurance issuer that offers coverage in the small group or individual market to ensure that the coverage includes the essential health benefits package, as defined. However, guidance issued under PPACA grants transitional relief to health insurance coverage in the individual or small group market for policies begin delete that have issued or will issue in 2014 that are renewed on or before end delete begin insert in effect on October 1, 2013, that are renewed for a policy year starting between January 1, 2014, and end insert October 1, 2016, and exempts that coverage from certain PPACA reforms, as specified.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975 (Knox-Keene Act), provides for the licensure and regulation of health care service plans by the Department of Managed Health Care. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law implements the PPACA reforms described above under the Knox-Keene Act and the laws governing health insurance.

This bill would allow a small employer health care service plan contract or a small employer health begin delete benefit plan, as defined, end delete begin insert insurance policy end insert that begin delete is end delete begin insert was in effect on October 1, 2013, that is still end insert in effect as of the effective date of this act, begin insert and end insert that does not qualify as a grandfathered health plan under PPACA begin insert , end insert to be renewed until October 1, 2016, and to continue to be in force until September 30, 2017. The bill would exempt those health care service plan contracts and health begin delete benefit plans end delete begin insert insurance policies end insert from various provisions of state law that implement the PPACA reforms described above begin insert and would require that the contracts and policies be amended to comply with those provisions by October 1, 2017, in order to remain in force on and after that date end insert . The bill would require that these provisions be implemented only to the extent permitted by PPACA.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Section 1367.012 is added to the Health and
Safety Code, to read:

1367.012.  

(a)  begin insert (1) end insert begin insert   end insert A small employer health care service plan
contract in effect on October 1, 2013, begin insert including those renewed by
December 31, 2013, end insert and still in effect as of the effective date of
this section, that does not qualify as a grandfathered health plan
under Section 1251 of PPACA may be renewed until October 1,
2016, and may continue to be in force until September 30, 2017,
subject to applicable federal law, and any other requirements
imposed by this chapter.

begin insert

(2) A small employer health care service plan contract described
in paragraph (1) may continue to be in force after September 30,
2017, if the contract is amended to comply with all of the provisions
listed in subdivision (e) by October 1, 2017, and complies with all
other applicable provisions of law.

end insert

(b) Prior to renewing a small employer health care service plan
contract pursuant to begin insert paragraph (1) of end insert subdivision (a), the health
care service plan shall provide notice to the group contractholder
regarding the option to renew coverage pursuant to subdivision
(a) using the relevant notice attached to the guidance entitled
begin delete “Industry end delete begin insert “Insurance end insert Standards Bulletin Series - Extension of
Transition Policy through October 1, 2016,” issued by the United
States Department of Health and Human Services, Centers for
Medicare and Medicaid Services on March 5, 2014.

(c) A small employer health care service plan contract in effect
on October 1, 2013, begin insert including those renewed by December 31,
2013, end insert and still in effect as of the effective date of this section, that
does not qualify as a grandfathered health plan under Section 1251
of PPACA that is renewed on or before October 1, 2016, and that
continues to be in force until no later than September 30, 2017, is
exempt from the following provisions:

(1)  begin delete Subdivision end delete begin insert Paragraphs (1) and (2) of subdivision (a) of,
and subdivisions (e) and end insert (i) of begin insert , end insert Section 1357.503.

(2) Section 1357.512.

begin delete

(3) Subdivision (a) of Section 1357.503.

(4) Subdivision (e) of Section 1357.503.

(5) Section 1365.

(6) Section 1367.005.

end delete begin insert

(3) Sections 1367.005. and 1357.508.

end insert begin delete

(7)

end delete

begin insert (4) end insert  Section begin delete 1367.0065 for health care service plan contracts
renewed on or after January 1, 2014, and Section 1367.006 for
health care service plan contracts renewed after January 1, 2015. end delete
begin insert 1367.0065. end insert

begin insert

(5) Section 1367.006.

end insert begin delete

(8)

end delete

begin insert (6) end insert  Section 1367.007.

begin delete

(9)

end delete

begin insert (7) end insert  Section 1367.009.

(d) A small employer health care service plan contract described
in begin insert paragraph (1) of end insert subdivision (a) shall begin delete continue to be subject to
the following provisions: end delete begin insert be subject to Sections 1357.12 and
1357.13, and shall continue to be subject to Article 3.16
(commencing with Section 1357.500), except as provided in
subdivision (c), and to all otherwise applicable provisions of this
chapter. end insert

begin delete

(1) Sections 1357.12 and 1357.13.

end delete begin delete

(2) Subdivision (a) of Section 1357.506 and Section 1357.51.

end delete begin delete

(3) Subdivision (h) of Section 1357.503 and Section 1357.52.

end delete begin delete

(4) Subdivision (b) of Section 1357.506 and paragraph (1) of
subdivision (c) of Section 1357.51.

end delete begin delete

(5) Section 1357.514.

end delete begin insert

(e) No later than October 1, 2017, a small employer health care
service plan contract described in paragraph (1) of subdivision
(a) may be amended to comply with all of the following:

end insert begin insert

(1) Paragraphs (1) and (2) of subdivision (a) of, and
subdivisions (e) and (i) of, Section 1357.503.

end insert begin insert

(2) Section 1357.512.

end insert begin insert

(3) Sections 1357.508 and 1367.005.

end insert begin insert

(4) Section 1367.006.

end insert begin insert

(5) Section 1367.007.

end insert begin insert

(6) Section 1367.009.

end insert begin delete

(e)

end delete

begin insert (f) end insert  This section shall be implemented only to the extent permitted
by PPACA.

begin delete

(f)

end delete

begin insert (g) end insert  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) “Small employer health care service plan contract” means
a group health care service plan contract begin insert , other than a specialized
health care service plan contract, end insert issued to a small employer, as
defined in subdivision (s) of Section 1357.500.

SEC. 2.  

Section 10112.300 is added to the Insurance Code, to
read:

10112.300.  

(a)  begin insert (1) end insert begin insert   end insert A small employer health benefit plan in
effect on October 1, 2013, begin insert including those renewed by December
31, 2013, end insert and still in effect as of the effective date of this section,
that does not qualify as a grandfathered health plan under Section
1251 of PPACA may be renewed until October 1, 2016, and may
continue to be in force until September 30, 2017, subject to
applicable federal law, and any other requirements imposed by
this part.

begin insert

(2) A small employer health benefit plan described in paragraph
(1) may continue to be in force after September 30, 2017, if the
plan is amended to comply with all of the provisions listed in
subdivision (e) by October 1, 2017, and complies with all other
applicable provisions of law.

end insert

(b) Prior to renewing a small employer health benefit plan
pursuant to begin insert paragraph (1) of end insert subdivision (a), the insurer shall
provide notice to the group contractholder regarding the option to
renew coverage pursuant to subdivision (a) using the relevant
notice attached to the guidance entitled begin delete “Industry end delete begin insert “Insurance end insert
Standards Bulletin Series - Extension of Transition Policy through
October 1, 2016,” issued by the United States Department of Health
and Human Services, Centers for Medicare and Medicaid Services
on March 5, 2014.

(c) A small employer health benefit plan in effect on October
1, 2013, begin insert including those renewed by December 31, 2013, end insert and still
in effect as of the effective date of this section, that does not qualify
as a grandfathered health plan under Section 1251 of PPACA that
is renewed on or before October 1, 2016, and that continues to be
in force until no later than September 30, 2017, is exempt from
the following provisions:

(1)  begin delete Subdivision (k) of end delete begin insert Paragraph (1) of subdivision (b) of, and
subdivisions (c), (g), and (k) of, end insert Section 10753.05.

(2) Section 10753.14.

begin delete

(3) Paragraph (1) of subdivision (b) of Section 10753.05 and
subdivision (c) of Section 10753.05.

end delete begin delete

(4) Subdivision (g) of Section 10753.05.

end delete begin delete

(5) Section 10753.13.

end delete begin delete

(6)

end delete

begin insert (3) end insert  Section 10112.27.

begin delete

(7)

end delete

begin insert (4) end insert  Section begin delete 10112.285 for policies renewed on or after January
1, 2014, and Section 10112.28 for policies renewed on or after
January 1, 2015. end delete begin insert 10112.285. end insert

begin insert

(5) Section 10112.28.

end insert begin delete

(8)

end delete

begin insert (6) end insert  Section 10112.29.

begin delete

(9)

end delete

begin insert (7) end insert  Section 10112.297.

(d) A small employer health benefit plan described in begin insert paragraph
(1) of end insert subdivision (a) shall begin delete continue to be subject to the following
provisions: end delete begin insert be subject to Sections 10714 and 10715, and shall
continue to be subject to Chapter 8.01 (commencing with Section
10753), except as provided in subdivision (c), and to all otherwise
applicable provisions of this part. end insert

begin delete

(1) Sections 10714 and 10715.

end delete begin delete

(2) Sections 10753.08 and 10198.7.

end delete begin delete

(3) Subdivision (j) of Section 10753.05 and Section 10198.9.

end delete begin delete

(4) Subdivision (b) of Section 10753.08 and paragraph (1) of
subdivision (c) of Section 10198.7.

end delete begin delete

(5) Section 10753.16.

end delete begin insert

(e) No later than October 1, 2017, a small employer health
benefit plan described in paragraph (1) of subdivision (a) may be
amended to comply with all of the following:

end insert begin insert

(1) Paragraph (1) of subdivision (b) of, and subdivisions (c),
(g), and (k) of, Section 10753.05.

end insert begin insert

(2) Section 10753.14.

end insert begin insert

(3) Section 10112.27.

end insert

begin insert (4) end insert begin insert   end insert begin insert Section 10112.28. end insert

begin insert

(5) Section 10112.29.

end insert begin insert

(6) Section 10112.297.

end insert begin delete

(e)

end delete

begin insert (f) end insert  This section shall be implemented only to the extent permitted
by PPACA.

begin delete

(f)

end delete

begin insert (g) end insert  For purposes of this section, the following definitions shall
apply:

(1) “Health benefit plan” has the same meaning as defined in
subdivision (j) of Section 10753.

(2) “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.

(3) “Small employer health benefit plan” means a group health
benefit plan issued to a small employer, as defined in Section
10753.

SEC. 3.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to carry out the extended transitional policy under the
federal Patient Protection and Affordable Care Act begin insert (Public Law
111-148) end insert announced by the United States Department of Health
and Human Services, Centers for Medicare and Medicaid Services
on March 5, 2014, and to allow small businesses to re-enroll in
their current health care coverage in 2014, it is necessary that this
act take effect immediately.