Amended in Senate June 10, 2015

Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 248

Introduced by Assembly Member Roger Hernández

(Coauthor: Assembly Member Gonzalez)

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 begin insert nongrandfathered end insert 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, begin insert and a policy that provides coverage for Medicare services pursuant to federal government contracts, end insert from these provisions. This bill would exempt an insurer that is subject to specified disclosure requirements from these provisions. begin insert The bill also would not apply to certain grandfathered health insurance policies that provide basic health care services without annual or lifetime limits, as specified. This bill would require life licensees that offer health benefit coverage to large group purchasers to document to the commissioner that the health benefits provided to the insureds provides at least 60% minimum value. end insert By expanding the scope of an existing crime, begin insert with respect to the regulation of health care service plans, end insert 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:

SECTION 1.  

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

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

SEC. 2.  

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

1367.010.  

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

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

(b) For purposes of this section, a plan shall provide a minimum
value of at least 60 percent, as described in Section 36B(c)(2)(C)
of the federal Internal Revenue Code and any regulation or
guidance adopted under that section.

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

(1) “Large group health care service plan contract” means a
group health care service plan contract other than a contract issued
to a “small employer,” as defined in Section 1357, 1357.500, or
1357.600.

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

SEC. 3.  

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

10112.9.  

(a) (1)  begin delete An end delete begin insert Notwithstanding end insert begin insert Section 10273.4, an end insert begin insert end insert
insurer, except an insurer issuing a specialized health insurance
policy, issuing a policy or certificate of health begin delete insurance end delete begin insert insurance,
as defined in subdivision (b) of Section 106, end insert shall not market, offer,
amend, issue, or renew a large group plan contract that provides
a minimum value of less than 60 begin delete percent end delete begin insert percent, except as
provided in subdivision (d) end insert .

(2) This section shall not apply to limited wraparound coverage,
that is consistent with Section 146.145(b) of Title 45 of the Code
of Federal Regulations. begin insert This section also shall not apply to a policy
that provides coverage of Medicare services pursuant to contracts
with the United States government. end insert

begin insert

(3) This section shall not apply to a grandfathered health
insurance policy that provides basic health care services, as
defined in subdivision (b) of Section 1345 of the Health and Safety
Code, without annual or lifetime limits for any of the basic health
care services.

end insert

(b) For purposes of this section, a plan shall provide a minimum
value of at least 60 percent, as described in Section 36B(c)(2)(C)
of the federal Internal Revenue Code and any regulations or
guidance adopted under that section.

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

begin insert

(d) A life licensee who is authorized to transact accident and
health insurance, as described in paragraph (2) of subdivision (a)
of Section 1626, that offers coverage of health benefits to a large
group purchaser, shall document to the commissioner that the
health benefits provided to the insureds provides at least 60 percent
minimum value and shall not offer, sell, or transact coverage that
does not provide at least 60 percent minimum value. For this
purpose, health reimbursement accounts do not constitute benefits
provided to the insureds.

end insert begin delete

(d)

end delete

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

(1) “Large group” means a group that is not a “small employer,”
as defined in Section 10753.

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

SEC. 4.  

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