Amended in Assembly May 5, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 1305

Introduced by Assembly Member Bonta

February 27, 2015

An act to amend Section 1367.006 of the Health and Safety Code, and to amend Section 10112.28 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 1305, as amended, Bonta. Limitations on cost sharing: family coverage.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA establishes annual limits on specified forms of cost sharing, including deductibles, on all essential health benefits for nongrandfathered individual and group health insurance coverage.

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 also provides for the regulation of health insurers by the Department of Insurance. Existing law requires, for nongrandfathered products in the individual or small group markets, a health care service plan contract or health insurance policy, except a specialized begin insert health care service plan or end insert health insurance policy, that is issued, amended, or renewed on or after January 1, 2015, to provide for a limit on annual out-of-pocket expenses for all covered benefits that meet the definition of essential health benefits, and requires the plan contract or policy, for nongrandfathered products in the large group market, to provide that limit for covered benefits to the extent that the limit does not conflict with federal law or guidance, as specified. Existing law prohibits this limit from exceeding the limit described in a specified provision of federal law.

This bill would require, for family coverage, the above-described limit on annual out-of-pocket expenses to include a maximum out-of-pocket limit for each individual covered by the plan contract or policy that is less than or equal to the maximum out-of-pocket limit for individual coverage under the plan contract or policy. begin insert The bill would require a plan contract or policy for family coverage that includes a deductible, except a high deductible health plan, to include a deductible for each individual covered under the plan contract or policy that is less than or equal to the deductible for individual coverage under the plan contract or policy. The bill would require a plan contract or policy for family coverage that includes a deductible and is a high deductible health plan, as defined in federal law, to include a deductible for each individual covered by the plan contract or policy that is equal to either the amount set forth in a specified federal law or the deductible for individual coverage under the plan contract or policy, whichever is greater. end insert Because a willful violation of these requirements by a health care service plan would be a 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:

SECTION 1.  

Section 1367.006 of the Health and Safety Code
is amended to read:

1367.006.  

(a) This section shall apply to nongrandfathered
individual and group health care service plan contracts that provide
coverage for essential health benefits, as defined in Section
1367.005, and that are issued, amended, or renewed on or after
January 1, 2015.

(b) (1) For nongrandfathered health care service plan contracts
in the individual or small group markets, a health care service plan
contract, except a specialized health care service plan contract,
that is issued, amended, or renewed on or after January 1, 2015,
shall provide for a limit on annual out-of-pocket expenses for all
covered benefits that meet the definition of essential health benefits
in Section 1367.005, including out-of-network emergency care
consistent with Section 1371.4.

(2) For nongrandfathered health care service plan contracts in
the large group market, a health care service plan contract, except
a specialized health care service plan contract, that is issued,
amended, or renewed on or after January 1, 2015, shall provide
for a limit on annual out-of-pocket expenses for covered benefits,
including out-of-network emergency care consistent with Section
1371.4. This limit shall only apply to essential health benefits, as
defined in Section 1367.005, that are covered under the plan to
the extent that this provision does not conflict with federal law or
guidance on out-of-pocket maximums for nongrandfathered health
care service plan contracts in the large group market.

(c) (1) The limit described in subdivision (b) shall not exceed
the limit described in Section 1302(c) of PPACA, and any
subsequent rules, regulations, or guidance issued under that section.

(2) The limit described in subdivision (b) shall result in a total
maximum out-of-pocket limit for all covered essential health
benefits equal to the dollar amounts in effect under Section
223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the
dollar amounts adjusted as specified in Section 1302(c)(1)(B) of
PPACA.

(3) For family coverage, the limit described in subdivision (b)
shall include a maximum out-of-pocket limit for each individual
covered by the plan that is less than or equal to the maximum
out-of-pocket limit for individual coverage under the plan contract.

(d) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible enrollees described in Section
1402 of PPACA, and any subsequent rules, regulations, or guidance
issued under that section.

(e) If an essential health benefit is offered or provided by a
specialized health care service plan, the total annual out-of-pocket
maximum for all covered essential benefits shall not exceed the
limit in subdivision (b). This section shall not apply to a specialized
health care service plan that does not offer an essential health
benefit as defined in Section 1367.005.

(f) The maximum out-of-pocket limit shall apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered benefits that meet the definition of essential
health benefits in Section 1367.005.

(g)  begin delete If end delete begin insert (1) end insert begin insert   end insert begin insert Except as provided in paragraph (2), if end insert a health care
service plan contract for family coverage includes a deductible,
the plan contract shall include a deductible for each individual
covered by the plan that is less than or equal to the deductible for
individual coverage under the plan contract.

begin insert

(2) If a health care service plan contract for family coverage
includes a deductible and is a high deductible health plan under
the definition set forth in Section 223(c)(2) of Title 26 of the United
States Code, the plan contract shall include a deductible for each
individual covered by the plan that is equal to either the amount
set forth in Section 223(c)(2)(A)(i)(II) of Title 26 of the United
States Code or the deductible for individual coverage under the
plan contract, whichever is greater.

end insert

(h) For nongrandfathered health plan contracts in the group
market, “plan year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations. For
nongrandfathered health plan contracts sold in the individual
market, “plan year” means the calendar year.

(i) “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 thereunder.

SEC. 2.  

Section 10112.28 of the Insurance Code is amended
to read:

10112.28.  

(a) This section shall apply to nongrandfathered
individual and group health insurance policies that provide
coverage for essential health benefits, as defined in Section
10112.27, and that are issued, amended, or renewed on or after
January 1, 2015.

(b) (1) For nongrandfathered health insurance policies in the
individual or small group markets, a health insurance policy, except
a specialized health insurance policy, that is issued, amended, or
renewed on or after January 1, 2015, shall provide for a limit on
annual out-of-pocket expenses for all covered benefits that meet
the definition of essential health benefits in Section 10112.27,
including out-of-network emergency care.

(2) For nongrandfathered health insurance policies in the large
group market, a health insurance policy, except a specialized health
insurance policy, that is issued, amended, or renewed on or after
January 1, 2015, shall provide for a limit on annual out-of-pocket
expenses for covered benefits, including out-of-network emergency
care. This limit shall apply only to essential health benefits, as
defined in Section 10112.27, that are covered under the policy to
the extent that this provision does not conflict with federal law or
guidance on out-of-pocket maximums for nongrandfathered health
insurance policies in the large group market.

(c) (1) The limit described in subdivision (b) shall not exceed
the limit described in Section 1302(c) of PPACA and any
subsequent rules, regulations, or guidance issued under that section.

(2) The limit described in subdivision (b) shall result in a total
maximum out-of-pocket limit for all covered essential health
benefits that shall equal the dollar amounts in effect under Section
223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the
dollar amounts adjusted as specified in Section 1302(c)(1)(B) of
PPACA.

(3) For family coverage, the limit described in subdivision (b)
shall include a maximum out-of-pocket limit for each individual
covered by the policy that is less than or equal to the maximum
out-of-pocket limit for individual coverage under the policy.

(d) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible insureds described in Section
1402 of PPACA and any subsequent rules, regulations, or guidance
issued under that section.

(e) If an essential health benefit is offered or provided by a
specialized health insurance policy, the total annual out-of-pocket
maximum for all covered essential benefits shall not exceed the
limit in subdivision (b). This section shall not apply to a specialized
health insurance policy that does not offer an essential health
benefit as defined in Section 10112.27.

(f) The maximum out-of-pocket limit shall apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered benefits that meet the definition of essential
health benefits, as defined in Section 10112.27.

(g)  begin delete If end delete begin insert (1) end insert begin insert   end insert begin insert Except as provided in paragraph (2), if end insert a health
insurance policy for family coverage includes a deductible, the
policy shall include a deductible for each individual covered under
the policy that is less than or equal to the deductible for individual
coverage under the policy.

begin insert

(2) If a health insurance policy for family coverage includes a
deductible and is a high deductible health plan under the definition
set forth in Section 223(c)(2) of Title 26 of the United States Code,
the policy shall include a deductible for each individual covered
by the policy that is equal to either the amount set forth in Section
223(c)(2)(A)(i)(II) of Title 26 of the United States Code or the
deductible for individual coverage under the policy, whichever is
greater.

end insert

(h) For nongrandfathered health insurance policies in the group
market, “policy year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations. For
nongrandfathered health insurance policies sold in the individual
market, “policy year” means the calendar year.

(i) “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 thereunder.

SEC. 3.  

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.