Amended in Assembly April 5, 2016

Amended in Assembly March 18, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2115

Introduced by Assembly Member Wood

February 17, 2016

An act to amend begin delete Section 1367.009 end delete begin insert Sections 1366.24 and 1366.50 end insert of the Health and Safety Code, begin insert and to amend Sections 10128.54 and 10786 of the Insurance Code, end insert relating to health care begin delete service plans. end delete begin insert coverage. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 2115, as amended, Wood. Health care begin delete service plans: levels of coverage. end delete begin insert coverage: disclosures. end insert

begin insert

Existing law, the federal Patient Protection and Affordable Care Act, requires each state to, by January 1, 2014, establish an American Health Benefit Exchange that makes available qualified health plans to qualified individuals and small employers. Existing state law establishes the California Health Benefit Exchange within state government for the purpose of facilitating the enrollment of qualified individuals and qualified small employers in qualified health plans.

end insert begin insert

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the 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 Department of Insurance. Existing law requires specified health care service plans and health insurers to provide to individuals who cease to be enrolled in individual or group health care coverage a notice informing those individuals that they may be eligible for reduced-cost coverage through the California Health Benefit Exchange or no-cost coverage through Medi-Cal. Existing law also requires every disclosure form issued by a health care service plan or insurer for specified group benefit plans to include a statement notifying the individual to examine his or her options carefully before declining the group coverage.

end insert begin insert

This bill would instead require every disclosure form issued by a health care service plan or insurer for specified group benefit plans to include a statement notifying the individual that he or she may be eligible for reduced-cost coverage through the California Health Benefit Exchange, no-cost coverage through Medi-Cal, coverage through an insured spouse, or free or discounted prescription medicines through a manufacturer’s patient assistance program. The bill would also require a statement regarding patient assistance programs to be included in the notice from health care service plans and health insurers to individuals who cease to be enrolled in individual or group health care coverage. Because a willful violation of these requirements by a health care service plan would be a crime, the bill would impose a state-mandated local program.

end insert begin insert

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.

end insert begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert begin delete

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that took effect January 1, 2014. Among other things, PPACA establishes annual limits on deductibles for employer-sponsored plans and defines bronze, silver, gold, and platinum levels of coverage for the nongrandfathered individual and small group markets.

end delete begin delete

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, including defining levels of coverage. Existing law makes a willful violation of the act a crime. Existing law requires the actuarial value for nongrandfathered small group markets to be determined in accordance with, among other things, a consideration by the Department of Managed Health Care, in consultation with the Department of Insurance and the California Health Benefit Exchange, of whether to exercise state-level flexibility with respect to the actuarial value calculator in order to take into account the unique characteristics of the California health care coverage market.

end delete begin delete

This bill would require the Department of Managed Health Care to also work in consultation with the State Department of Health Care Services in making the above consideration.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1366.24 of the end insert begin insert Health and Safety Code end insert

begin insert is amended to read: end insert

1366.24.  

(a) Every health care service plan evidence of
coverage, provided for group benefit plans subject to this article,
that is issued, amended, or renewed on or after January 1, 1999,
shall disclose to covered employees of group benefit plans subject
to this article the ability to continue coverage pursuant to this
article, as required by this section.

(b) This disclosure shall state that all enrollees who are eligible
to be qualified beneficiaries, as defined in subdivision (c) of
Section 1366.21, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the health
care service plan, or the employer if the employer contracts to
perform the administrative services as provided for in Section
1366.25, of all qualifying events as specified in paragraphs (1),
(3), (4), and (5) of subdivision (d) of Section 1366.21 within 60
days of the date of the qualifying event. This disclosure shall
inform enrollees that failure to make the notification to the health
care service plan, or to the employer when under contract to
provide the administrative services, within the required 60 days
will disqualify the qualified beneficiary from receiving continuation
coverage pursuant to this article. The disclosure shall further state
that a qualified beneficiary who wishes to continue coverage under
the group benefit plan pursuant to this article must request the
continuation in writing and deliver the written request, by first-class
mail, or other reliable means of delivery, including personal
delivery, express mail, or private courier company, to the health
care service plan, or to the employer if the plan has contracted
with the employer for administrative services pursuant to
subdivision (d) of Section 1366.25, within the 60-day period
following the later of (1) the date that the enrollee’s coverage under
the group benefit plan terminated or will terminate by reason of a
qualifying event, or (2) the date the enrollee was sent notice
pursuant to subdivision (e) of Section 1366.25 of the ability to
continue coverage under the group benefit plan. The disclosure
required by this section shall also state that a qualified beneficiary
electing continuation shall pay to the health care service plan, in
accordance with the terms and conditions of the plan contract,
which shall be set forth in the notice to the qualified beneficiary
pursuant to subdivision (d) of Section 1366.25, the amount of the
required premium payment, as set forth in Section 1366.26. The
disclosure shall further require that the qualified beneficiary’s first
premium payment required to establish premium payment be
delivered by first-class mail, certified mail, or other reliable means
of delivery, including personal delivery, express mail, or private
courier company, to the health care service plan, or to the employer
if the employer has contracted with the plan to perform the
administrative services pursuant to subdivision (d) of Section
1366.25, within 45 days of the date the qualified beneficiary
provided written notice to the health care service plan or the
employer, if the employer has contracted to perform the
administrative services, of the election to continue coverage in
order for coverage to be continued under this article. This
disclosure shall also state that the first premium payment must
equal an amount sufficient to pay any required premiums and all
premiums due, and that failure to submit the correct premium
amount within the 45-day period will disqualify the qualified
beneficiary from receiving continuation coverage pursuant to this
article.

(c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to subdivision
(b) of Section 1366.27 may continue their coverage for the balance
of the period that the qualified beneficiary would have remained
covered under the prior group benefit plan, including the
requirements for election and payment. The disclosure shall clearly
state that continuation coverage shall terminate if the qualified
beneficiary fails to comply with the requirements pertaining to
enrollment in, and payment of premiums to, the new group benefit
plan within 30 days of receiving notice of the termination of the
prior group benefit plan.

(d) Prior to August 1, 1998, every health care service plan shall
provide to all covered employees of employers subject to this
article a written notice containing the disclosures required by this
section, or shall provide to all covered employees of employers
subject to this section a new or amended evidence of coverage that
includes the disclosures required by this section. Any specialized
health care service plan that, in the ordinary course of business,
maintains only the addresses of employer group purchasers of
benefits and does not maintain addresses of covered employees,
may comply with the notice requirements of this section through
the provision of the notices to its employer group purchasers of
benefits.

(e) Every plan disclosure form issued, amended, or renewed on
and after January 1, 1999, for a group benefit plan subject to this
article shall provide a notice that, under state law, an enrollee may
be entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found
in the plan’s evidence of coverage.

begin delete

(f) Every disclosure issued, amended, or renewed on and after
July 1, 2006, for a group benefit plan subject to this article shall
include the following notice:

“Please examine your options carefully before declining this
coverage. You should be aware that companies selling individual
health insurance typically require a review of your medical history
that could result in a higher premium or you could be denied
coverage entirely.”

end delete begin insert

(f) A disclosure issued, amended, or renewed on or after July
1, 2017, for a group plan subject to this article shall include the
following notice:

end insert
begin insert end insert
begin insert

“In addition to your coverage continuation options, you may be
eligible for the following:

end insert begin insert

(1) Coverage through Covered California. By enrolling through
Covered California during the annual open enrollment period,
you may qualify for lower monthly premiums and lower
out-of-pocket costs. Your family members may also qualify for
coverage through Covered California. To find out more about how
to apply through Covered California, visit the Covered California
Internet Web site at http:www.coveredca.com.

end insert begin insert

(2) Coverage though Medi-Cal. Depending on your income,
you may qualify for low- or no-cost coverage though Medi-Cal
and can apply anytime. Your family members may also qualify for
Medi-Cal. To find out more about how to apply for Medi-Cal, visit
the Covered California Internet Web site at
http:www.coveredca.com.

end insert begin insert

(3) Coverage through an insured spouse. If your spouse has
coverage that extends to family members, you may be eligible to
be added to that benefit plan.

end insert begin insert

(4) Free or discounted prescription medicines through a
manufacturer. You may be eligible for a patient assistance program
offered by the manufacturer of any medicines you currently may
be taking. To find out more about these programs, contact the
manufacturer of your medicine or use an Internet Web site search
tool, such as those provided by the Partnership for Prescription
Assistance at https://www.ppars.org or RxAssist at
http://www.rxassist.org.”

end insert
begin insert end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1366.50 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1366.50.  

(a) On and after January 1, begin delete 2014, end delete begin insert 2017, end insert a health care
service plan providing individual or group health care coverage
shall provide to enrollees or subscribers who cease to be enrolled
in coverage a notice informing them that they may be eligible for
reduced-cost coverage through the California Health Benefit
Exchange established under Title 22 (commencing with Section
100500) of the Government begin delete Code or end delete begin insert Code, end insert no-cost coverage
through begin delete Medi-Cal end delete begin insert Medi-Cal, or free or reduced prescription
coverage medicines through a manufacturer’s patient assistance
program end insert . The notice shall include information on obtaining
coverage begin insert or assistance end insert pursuant to those programs, shall be in no
less than 12-point type, and shall be developed by the department,
no later than July 1, begin delete 2013, end delete begin insert 2017, end insert in consultation with the
Department of Insurance and the California Health Benefit
Exchange.

(b) The notice described in subdivision (a) may be incorporated
into or sent simultaneously with and in the same manner as any
other notices sent by the health care service plan.

(c) This section shall not apply with respect to a specialized
health care service plan contract or a Medicare supplemental plan
contract.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 10128.54 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10128.54.  

(a) Every insurer’s evidence of coverage for group
benefit plans subject to this article, that is issued, amended, or
renewed on or after January 1, 1999, shall disclose to covered
employees of group benefit plans subject to this article the ability
to continue coverage pursuant to this article, as required by this
section.

(b) This disclosure shall state that all insureds who are eligible
to be qualified beneficiaries, as defined in subdivision (c) of
Section 10128.51, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the insurer,
or the employer if the employer contracts to perform the
administrative services as provided for in Section 10128.55, of all
qualifying events as specified in paragraphs (1), (3), (4), and (5)
of subdivision (d) of Section 10128.51 within 60 days of the date
of the qualifying event. This disclosure shall inform insureds that
failure to make the notification to the insurer, or to the employer
when under contract to provide the administrative services, within
the required 60 days will disqualify the qualified beneficiary from
receiving continuation coverage pursuant to this article. The
disclosure shall further state that a qualified beneficiary who wishes
to continue coverage under the group benefit plan pursuant to this
article must request the continuation in writing and deliver the
written request, by first-class mail, or other reliable means of
delivery, including personal delivery, express mail, or private
courier company, to the disability insurer, or to the employer if
the plan has contracted with the employer for administrative
services pursuant to subdivision (d) of Section 10128.55, within
the 60-day period following the later of (1) the date that the
insured’s coverage under the group benefit plan terminated or will
terminate by reason of a qualifying event, or (2) the date the insured
was sent notice pursuant to subdivision (e) of Section 10128.55
of the ability to continue coverage under the group benefit plan.
The disclosure required by this section shall also state that a
qualified beneficiary electing continuation shall pay to the disability
insurer, in accordance with the terms and conditions of the policy
or contract, which shall be set forth in the notice to the qualified
beneficiary pursuant to subdivision (d) of Section 10128.55, the
amount of the required premium payment, as set forth in Section
10128.56. The disclosure shall further require that the qualified
beneficiary’s first premium payment required to establish premium
payment be delivered by first-class mail, certified mail, or other
reliable means of delivery, including personal delivery, express
mail, or private courier company, to the disability insurer, or to
the employer if the employer has contracted with the insurer to
perform the administrative services pursuant to subdivision (d) of
Section 10128.55, within 45 days of the date the qualified
beneficiary provided written notice to the insurer or the employer,
if the employer has contracted to perform the administrative
services, of the election to continue coverage in order for coverage
to be continued under this article. This disclosure shall also state
that the first premium payment must equal an amount sufficient
to pay all required premiums and all premiums due, and that failure
to submit the correct premium amount within the 45-day period
will disqualify the qualified beneficiary from receiving continuation
coverage pursuant to this article.

(c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to Section
10128.57 may continue their coverage for the balance of the period
that the qualified beneficiary would have remained covered under
the prior group benefit plan, including the requirements for election
and payment. The disclosure shall clearly state that continuation
coverage shall terminate if the qualified beneficiary fails to comply
with the requirements pertaining to enrollment in, and payment of
premiums to, the new group benefit plan within 30 days of
receiving notice of the termination of the prior group benefit plan.

(d) Prior to August 1, 1998, every insurer shall provide to all
covered employees of employers subject to this article written
notice containing the disclosures required by this section, or shall
provide to all covered employees of employers subject to this
article a new or amended evidence of coverage that includes the
disclosures required by this section. Any insurer that, in the
ordinary course of business, maintains only the addresses of
employer group purchasers of benefits, and does not maintain
addresses of covered employees, may comply with the notice
requirements of this section through the provision of the notices
to its employer group purchases of benefits.

(e) Every disclosure form issued, amended, or renewed on and
after January 1, 1999, for a group benefit plan subject to this article
shall provide a notice that, under state law, an insured may be
entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found
in the evidence of coverage.

begin delete

(f) Every disclosure form issued, amended, or renewed on and
after July 1, 2006, for a group benefit plan subject to this article
shall include the following notice:

end delete begin delete

“Please examine your options carefully before declining this
coverage. You should be aware that companies selling individual
health insurance typically require a review of your medical history
that could result in a higher premium or you could be denied
coverage entirely.”

end delete begin insert

(f) A disclosure issued, amended, or renewed on or after July
1, 2017, for a group plan subject to this article shall include the
following notice:

end insert
begin insert end insert
begin insert

“In addition to your coverage continuation options, you may be
eligible for the following:

end insert begin insert

(1) Coverage through Covered California. By enrolling through
Covered California during the annual open enrollment period,
you may qualify for lower monthly premiums and lower
out-of-pocket costs. Your family members may also qualify for
coverage through Covered California. To find out more about how
to apply through Covered California, visit the Covered California
Internet Web site at http:www.coveredca.com.

end insert begin insert

(2) Coverage though Medi-Cal. Depending on your income,
you may qualify for low- or no-cost coverage though Medi-Cal
and can apply anytime. Your family members may also qualify for
Medi-Cal. To find out more about how to apply for Medi-Cal, visit
the Covered California Internet Web site at
http:www.coveredca.com.

end insert begin insert

(3) Coverage through an insured spouse. If your spouse has
coverage that extends to family members, you may be eligible to
be added to that benefit plan.

end insert begin insert

(4) Free or discounted prescription medicines through a
manufacturer. You may be eligible for a patient assistance program
offered by the manufacturer of any medicines you currently may
be taking. To find out more about these programs, contact the
manufacturer of your medicine or use an Internet Web site search
tool, such as those provided by the Partnership for Prescription
Assistance at https://www.ppars.org or RxAssist at
http://www.rxassist.org.”

end insert
begin insert end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 10786 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

10786.  

(a) On and after January 1, begin delete 2014, end delete begin insert 2017, end insert a health insurer
providing health insurance coverage shall provide to policyholders
in individual policies or certificate holders in group policies who
cease to be enrolled in coverage a notice informing them that they
may be eligible for reduced-cost coverage through the California
Health Benefit Exchange established under Title 22 (commencing
with Section 100500) of the Government begin delete Code or end delete begin insert Code, end insert no-cost
coverage through begin delete Medi-Cal. end delete begin insert Medi-Cal, or free or reduced
prescription coverage medicines through a manufacturer’s patient
assistance program. end insert The notice shall include information on
obtaining coverage pursuant to those programs, shall be in no less
than 12-point type, and shall be developed by the department, no
later than July 1 begin delete , 2013, end delete begin insert 2017, end insert in consultation with the Department
of Managed Health Care and the California Health Benefit
Exchange.

(b) The notice described in subdivision (a) may be incorporated
into or sent simultaneously with and in the same manner as any
other notices sent by the health insurer.

(c) This section shall not apply with respect to a specialized
health insurance policy or a health insurance policy consisting
solely of coverage of excepted benefits as described in Section
2722 of the federal Public Health Service Act (42 U.S.C. Sec.
300gg-21).

begin insert

begin insert SEC. 5. end insert   

end insert begin insert

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.

end insert

begin delete

SECTION 1.  

Section 1367.009 of the Health and Safety Code
is amended to read:

1367.009.  

(a) Levels of coverage for the nongrandfathered
small group market are defined as follows:

(1) Bronze level: A health care service plan contract in the
bronze level shall provide a level of coverage that is actuarially
equivalent to 60 percent of the full actuarial value of the benefits
provided under the plan contract.

(2) Silver level: A health care service plan contract in the silver
level shall provide a level of coverage that is actuarially equivalent
to 70 percent of the full actuarial value of the benefits provided
under the plan contract.

(3) Gold level: A health care service plan contract in the gold
level shall provide a level of coverage that is actuarially equivalent
to 80 percent of the full actuarial value of the benefits provided
under the plan contract.

(4) Platinum level: A health care service plan contract in the
platinum level shall provide a level of coverage that is actuarially
equivalent to 90 percent of the full actuarial value of the benefits
provided under the plan contract.

(b) Actuarial value for nongrandfathered small employer health
care service plan contracts shall be determined in accordance with
all of the following:

(1) Actuarial value shall not vary by more than plus or minus
2 percent.

(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in Section 1367.005 and as provided to
a standard, nonelderly population. For this purpose, a standard
population shall not include those receiving coverage through the
Medi-Cal or Medicare programs.

(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.

(4) The actuarial value for pediatric dental benefits, whether
offered by a full service plan or a specialized plan, shall be
consistent with federal law and guidance applicable to the plan
type.

(5) The department, in consultation with the Department of
Insurance, the State Department of Health Care Services, and the
Exchange, shall consider whether to exercise state-level flexibility
with respect to the actuarial value calculator in order to take into
account the unique characteristics of the California health care
coverage market, including the prevalence of health care service
plans, total cost of care paid for by the plan, price of care, patterns
of service utilization, and relevant demographic factors.

(6) Employer contributions toward health reimbursement
accounts and health savings accounts shall count toward the
actuarial value of the product in the manner specified in federal
rules and guidance.

(c) “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.

end delete