Amended in Senate June 29, 2015

Amended in Senate June 10, 2015

Amended in Assembly April 14, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 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 nongrandfathered 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 delete andend deletebegin insert orend insert a policy that provides coverage for Medicare services pursuant to federal governmentbegin delete contracts, from these provisions.end deletebegin insert contracts.end insert This bill would exempt an insurer that is subject to specified disclosure requirements from these provisions. 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.begin delete 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 delete By expanding the scope of an existing crime, with respect to the regulation of health care service plans, 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:

P3    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
9percent minimum value, the minimum standard for comprehensive
10employer coverage under federal law. This requirement applies if
11an employer purchases that health coverage from a health plan or
12health insurer regulated by the State of California.

13

SEC. 2.  

Section 1367.010 is added to the Health and Safety
14Code
, to read:

15

1367.010.  

(a) (1) A nongrandfathered health care service plan,
16except a health care service plan offering a specialized health care
17service plan contract, that offers, amends, or renews a large group
18health care service plan contract shall not market, offer, amend,
19or renew a large group plan contract that provides a minimum
20value of less than 60 percent.

21(2) This section shall not apply to limited wraparound coverage,
22consistent with Section 146.145(b) of Title 45 of the Code of
23Federal Regulations.

24(b) For purposes of this section, a plan shall provide a minimum
25value of at least 60 percent, as described in Section 36B(c)(2)(C)
26of the federal Internal Revenue Code and any regulation or
27guidance adopted under that section.

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

29(1) “Large group health care service plan contract” means a
30group health care service plan contract other than a contract issued
31to a “small employer,” as defined in Section 1357, 1357.500, or
321357.600.

33(2) “Plan year” has the meaning set forth in Section 144.103 of
34Title 45 of the Code of Federal Regulations.

35

SEC. 3.  

Section 10112.9 is added to the Insurance Code, to
36read:

37

10112.9.  

(a) (1) Notwithstanding Section 10273.4, an insurer,
38except an insurer issuing a specialized health insurance policy,
P4    1issuing a policy or certificate of health insurance, as defined in
2subdivision (b) of Section 106, shall not market, offer, amend,
3issue, or renew a large group plan contract that provides a minimum
4value of less than 60begin delete percent, except as provided in subdivision
5(d).end delete
begin insert percent.end insert

6(2) This section shall not apply to limited wraparound coverage,
7that is consistent with Section 146.145(b) of Title 45 of the Code
8of Federal Regulations. This section also shall not apply to a policy
9that provides coverage of Medicare services pursuant to contracts
10with the United States government.

11(3) This section shall not apply to a grandfathered health
12insurance policy that provides basic health care services, as defined
13in subdivision (b) of Section 1345 of the Health and Safety Code,
14without annual or lifetime limits for any of the basic health care
15services.

16(b) For purposes of this section, a plan shall provide a minimum
17value of at least 60 percent, as described in Section 36B(c)(2)(C)
18of the federal Internal Revenue Code and any regulations or
19guidance adopted under that section.

20(c) This section shall not apply to an insurer that is subject to
21the disclosure requirements described in Section 10198.61.

begin delete

22(d) A life licensee who is authorized to transact accident and
23health insurance, as described in paragraph (2) of subdivision (a)
24of Section 1626, that offers coverage of health benefits to a large
25group purchaser, shall document to the commissioner that the
26health benefits provided to the insureds provides at least 60 percent
27minimum value and shall not offer, sell, or transact coverage that
28does not provide at least 60 percent minimum value. For this
29purpose, health reimbursement accounts do not constitute benefits
30provided to the insureds.

end delete
begin delete

31(e)

end delete

32begin insert(d)end insert For purposes of this section, the following definitions apply:

33(1) “Large group” means a group that is not a “small employer,”
34as defined in Section 10753.

35(2) “Plan year” has the meaning set forth in Section 144.103 of
36Title 45 of the Code of Federal Regulations.

37

SEC. 4.  

No reimbursement is required by this act pursuant to
38Section 6 of Article XIII B of the California Constitution because
39the only costs that may be incurred by a local agency or school
40district will be incurred because this act creates a new crime or
P5    1infraction, eliminates a crime or infraction, or changes the penalty
2for a crime or infraction, within the meaning of Section 17556 of
3the Government Code, or changes the definition of a crime within
4the meaning of Section 6 of Article XIII B of the California
5Constitution.



O

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