Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 248


Introduced by Assembly Member Roger Hernández

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(Coauthor: Assembly Member Gonzalez)

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February 9, 2015


An act to add Section 1367.010 to the Health and Safety Code, and to add Section 10112.9 to the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 248, as amended, Roger Hernández. Health insurance: minimum value: large group market policies.

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014, and exempts health insurance coverage that provides excepted benefits from those reforms. PPACA requires each state to establish an American Health Benefits Exchange and allows qualified individuals to obtain premium assistance for coverage purchased through the Exchange. PPACA specifies that this premium assistance is not available if the individual is eligible for affordable employer-sponsored coverage that provides minimum value, 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 provides for the regulation of health insurers by the Insurance Commissioner. Existing law requires that health benefit plans issued by health insurers and health care service plans in the small group market and the individual market comply with specified requirements. Existing law defines a health benefit plan for the purpose of health benefit plans issued by health insurers to exclude a policy or certificate of specified disease or hospital confinement indemnity if the insurer certifies to the commissioner that the policy is being offered as supplemental health insurance and not as a substitute for essential health benefits. Existing law requires an insurer issuing these policies in the small group market or the individual market to require that the persons to be covered are covered by coverage that is not designed to serve as supplemental coverage.

This bill would extend that requirement to a health care service plan that offers, amends, or renews a group health plan contract and an insurer issuing a policy, except a health care service plan or insurer issuing a specialized health care service plan or policy, that provides less than 60% minimum value in the large group market and would require that the persons to be covered are also covered by a contract or plan that provides at least 60% minimum value. The bill would not apply to limited wraparound coverage, as described in a specified federal regulation, from these provisions. This bill would exempt an insurer that is subject to specified disclosure requirements from these provisions. By expanding the scope of an existing crime, this bill would impose a state-mandated local program.

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:

P2    1

SECTION 1.  

(a) The Legislature finds and declares that an
2employee of a large employer who accepts health coverage from
3his or her employer that is less than 60 percent minimum value is
4barred by federal guidance from obtaining federal tax credits for
5affordable health coverage through Covered California.

6(b) It is the intent of the Legislature in enacting this act to ensure
7that employees of large employers who are offered health coverage
8by their employers are offered coverage that meets or exceeds 60
P3    1percent minimum value, the minimum standard for comprehensive
2employer coverage under federal law. This requirement applies if
3an employer purchases that health coverage from a health plan or
4health insurer regulated by the State of California.

5

SEC. 2.  

Section 1367.010 is added to the Health and Safety
6Code
, to read:

7

1367.010.  

(a) (1) A health care service plan, except a health
8care service plan offering a specialized health care service plan
9contract, that offers, amends, or renews a large group health care
10service plan contract shall not market, offer, amend, or renew a
11large group plan contract that provides a minimum value of less
12than 60 percent.

13(2) This section shall not apply to limited wraparound coverage,
14consistent with Section 146.145(b) of Title 45 of the Code of
15Federal Regulations.

16(b) For purposes of this section, a planbegin delete providesend deletebegin insert shall provideend insert
17 a minimum value of at least 60begin delete percent if it complies withend deletebegin insert percent,
18as described inend insert
Section 36B(c)(2)(C) of the federal Internal
19Revenue Code and any regulation or guidance adopted under that
20section.

21(c) The following definitions apply for purposes of this section:

22(1) “Large group health care service plan contract” means a
23group health care service plan contract other than a contract issued
24to abegin delete “small employer”,end deletebegin insert “small employer,”end insert as defined in Section
251357, 1357.500, or 1357.600.

26(2) “Plan year” has the meaning set forth in Section 144.103 of
27Title 45 of the Code of Federal Regulations.

28

SEC. 3.  

Section 10112.9 is added to the Insurance Code, to
29read:

30

10112.9.  

(a) (1) An insurer, except an insurer issuing a
31specialized health insurance policy, issuing a policy or certificate
32of health insurance shall not market, offer, amend,begin delete issueend deletebegin insert issue,end insert or
33renew a large group plan contract that provides a minimum value
34of less than 60 percent.

35(2) This section shall not apply to limited wraparound coverage,
36that is consistent with Section 146.145(b) of Title 45 of the Code
37of Federal Regulations.

38(b) For purposes of this section, a planbegin delete providesend deletebegin insert shall provideend insert
39 a minimum value of at least 60begin delete percent if it complies withend deletebegin insert percent,
40as described inend insert
Section 36B(c)(2)(C) of the federal Internal
P4    1Revenue Code and any regulations or guidance adopted under that
2section.

3(c) This section shall not apply to an insurer that is subject to
4the disclosure requirements described in Section 10198.61.

5(d) For purposes of this section, the following definitions apply:

6(1) “Large group” means a group that is not abegin delete “small employer”,end delete
7begin insert “small employer,”end insert as defined in Section 10753.

8(2) “Plan year” has the meaning set forth in Section 144.103 of
9Title 45 of the Code of Federal Regulations.

10

SEC. 4.  

No reimbursement is required by this act pursuant to
11Section 6 of Article XIII B of the California Constitution because
12the only costs that may be incurred by a local agency or school
13district will be incurred because this act creates a new crime or
14infraction, eliminates a crime or infraction, or changes the penalty
15for a crime or infraction, within the meaning of Section 17556 of
16the Government Code, or changes the definition of a crime within
17the meaning of Section 6 of Article XIII B of the California
18Constitution.



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