BILL NUMBER: SB 1446 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 12, 2014
AMENDED IN SENATE APRIL 28, 2014
AMENDED IN SENATE MARCH 25, 2014
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
October 1, 2016, January 1, 2015, and to
continue to be in force until September 30, 2017
December 31, 2015 . 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 October 1, 2017,
January 1, 2016, 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 October 1,
2016, January 1, 2015, and may continue to be in
force until September 30, 2017, December 31,
2015, 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 September
30, 2017, December 31, 2015, if the contract is
amended to comply with all of the provisions listed in subdivision
(e) by October 1, 2017, January 1, 2016,
and complies with all other applicable provisions of law.
(b) (1) 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.
(2) A health care service plan shall include the following notice
with the notice issued pursuant to paragraph (1):
"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.
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."
(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.
(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 October 1, 2016,
January 1, 2015, and that continues to be in
force until no later than September 30, 2017,
December 31, 2015, 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 October 1, 2017, January
1, 2016, 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 October 1, 2016,
January 1, 2015, and may continue to be in force until
September 30, 2017, December 31, 2015, 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 September 30, 2017,
December 31, 2015, if the plan is amended to
comply with all of the provisions listed in subdivision (e) by
October 1, 2017, January 1, 2016, and
complies with all other applicable provisions of law.
(b) (1) 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.
(2) An insurer shall include the following notice with the notice
issued pursuant to paragraph (1):
"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.
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."
(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.
(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 October 1, 2016,
January 1, 2015, and that continues to be in force until no
later than September 30, 2017, December 31,
2015, 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 October 1, 2017, January
1, 2016, 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 re-enroll
reenroll in their current health care coverage
in 2014, until 2016, it is necessary
that this act take effect immediately.