Amended in Senate May 12, 2014

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 coverage: small employer market.

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 in effect on October 1, 2013, that are renewed for a policy year starting between January 1, 2014, and 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 insurance policy that was in effect on October 1, 2013, that is still in effect as of the effective date of this act, and that does not qualify as a grandfathered health plan under PPACA, to be renewed until begin delete October 1, 2016, end delete begin insert January 1, 2015, end insert and to continue to be in force until begin delete September 30, 2017 end delete begin insert December 31, 2015 end insert . The bill would exempt those health care service plan contracts and health insurance policies from various provisions of state law that implement the PPACA reforms described above and would require that the contracts and policies be amended to comply with those provisions by begin delete October 1, 2017, end delete begin insert January 1, 2016, end insert in order to remain in force on and after that date. 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) (1) A small employer health care service plan
contract in effect on October 1, 2013, including those renewed by
December 31, 2013, 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 begin delete October 1,
2016, end delete begin insert January 1, 2015, end insert and may continue to be in force until
begin delete September 30, 2017, end delete begin insert December 31, 2015, end insert subject to applicable
federal law, and any other requirements imposed by this chapter.

(2) A small employer health care service plan contract described
in paragraph (1) may continue to be in force after begin delete September 30,
2017, end delete begin insert December 31, 2015, end insert if the contract is amended to comply
with all of the provisions listed in subdivision (e) by begin delete October 1,
2017, end delete begin insert January 1, 2016, end insert and complies with all other applicable
provisions of law.

(b)  begin insert (1) end insert begin insert   end insert Prior to renewing a small employer health care service
plan contract pursuant to paragraph (1) of 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 “Insurance 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.

begin insert

(2) A health care service plan shall include the following notice
with the notice issued pursuant to paragraph (1):

end insert
begin insert end insert
begin insert

“New health care coverage options are available in California.
You currently have health care coverage that is not required to
comply with many new laws. For example, your current plan might
not include coverage for some of the benefits that must be covered
in the new health care products.

end insert begin insert

You have the option to remain with your current coverage for
one more year or switch to new coverage that complies with the
new laws. Talk to Covered California (1-800-300-1506), your plan
representative, or your insurance agent to discuss options.”

end insert
begin insert end insert
begin insert

(3) A health care service plan shall include with the notices
issued pursuant to paragraphs (1) and (2), the premium, cost
sharing, and benefits associated with the plan’s standard benefit
designs approved consistent with subdivision (c) of Section 100504
of the Government Code for the geographic region of the small
employer.

end insert

(c) A small employer health care service plan contract in effect
on October 1, 2013, including those renewed by December 31,
2013, 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 begin delete October 1, 2016, end delete begin insert January
1, 2015, end insert and that continues to be in force until no later than
begin delete September 30, 2017, end delete begin insert December 31, 2015, end insert is exempt from the
following provisions:

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

(2) Section 1357.512.

(3) Sections 1367.005 and 1357.508.

(4) Section 1367.0065.

(5) Section 1367.006.

(6) Section 1367.007.

(7) Section 1367.009.

(d) A small employer health care service plan contract described
in paragraph (1) of subdivision (a) shall 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.

(e) No later than begin delete October 1, 2017, end delete begin insert January 1, 2016, end insert 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:

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

(2) Section 1357.512.

(3) Sections 1357.508 and 1367.005.

(4) Section 1367.006.

(5) Section 1367.007.

(6) Section 1367.009.

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

(g) 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, other than a specialized
health care service plan contract, 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) (1) A small employer health benefit plan in
effect on October 1, 2013, including those renewed by December
31, 2013, 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 begin delete October 1, 2016, end delete begin insert January
1, 2015, end insert and may continue to be in force until begin delete September 30, 2017, end delete
begin insert December 31, 2015, end insert subject to applicable federal law, and any
other requirements imposed by this part.

(2) A small employer health benefit plan described in paragraph
(1) may continue to be in force after begin delete September 30, 2017, end delete
begin insert December 31, 2015, end insert if the plan is amended to comply with all of
the provisions listed in subdivision (e) by begin delete October 1, 2017, end delete begin insert January
1, 2016, end insert and complies with all other applicable provisions of law.

(b)  begin insert (1) end insert begin insert   end insert Prior to renewing a small employer health benefit plan
pursuant to paragraph (1) of 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 “Insurance 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.

begin insert

(2) An insurer shall include the following notice with the notice
issued pursuant to paragraph (1):

end insert
begin insert

“New health care coverage options are available in California.
You currently have health care coverage that is not required to
comply with many new laws. For example, your current insurance
might not include coverage for some of the benefits that must be
covered in the new health care products.

end insert begin insert

You have the option to remain with your current coverage for
one more year or switch to new coverage that complies with the
new laws. Talk to Covered California (1-800-300-1506), your plan
representative, or your insurance agent to discuss options.”

end insert
begin insert

(3) An insurer shall include with the notices issued pursuant to
paragraphs (1) and (2), the premium, cost sharing, and benefits
associated with the plan’s standard benefit designs approved
consistent with subdivision (c) of Section 100504 of the
Government Code for the geographic region of the small employer.

end insert

(c) A small employer health benefit plan in effect on October
1, 2013, including those renewed by December 31, 2013, 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 begin delete October 1, 2016, end delete begin insert January 1, 2015, end insert and
that continues to be in force until no later than begin delete September 30, 2017, end delete
begin insert December 31, 2015, end insert is exempt from the following provisions:

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

(2) Section 10753.14.

(3) Section 10112.27.

(4) Section 10112.285.

(5) Section 10112.28.

(6) Section 10112.29.

(7) Section 10112.297.

(d) A small employer health benefit plan described in paragraph
(1) of subdivision (a) shall 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.

(e) No later than begin delete October 1, 2017, end delete begin insert January 1, 2016, end insert a small
employer health benefit plan described in paragraph (1) of
subdivision (a) may be amended to comply with all of the
following:

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

(2) Section 10753.14.

(3) Section 10112.27.

(4) Section 10112.28.

(5) Section 10112.29.

(6) Section 10112.297.

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

(g) 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 (Public Law
111-148) 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 begin delete re-enroll end delete
begin insert reenroll end insert in their current health care coverage begin delete in 2014, end delete begin insert until 2016, end insert
it is necessary that this act take effect immediately.