BILL NUMBER: AB 2115 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 5, 2016
AMENDED IN ASSEMBLY MARCH 18, 2016
INTRODUCED BY Assembly Member Wood
FEBRUARY 17, 2016
An act to amend Section 1367.009 Sections
1366.24 and 1366.50 of the Health and Safety Code, and to
amend Sections 10128.54 and 10786 of the Insurance Code,
relating to health care service plans.
coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 2115, as amended, Wood. Health care service plans:
levels of coverage. coverage: disclosures.
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.
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.
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.
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.
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.
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.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1366.24 of the
Health and Safety Code is amended to read:
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.
(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."
(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:
"In addition to your coverage continuation options, you may be
eligible for the following:
(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.
(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.
(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.
(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."
SEC. 2. Section 1366.50 of the Health
and Safety Code is amended to read:
1366.50. (a) On and after January 1, 2014,
2017, 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 Code or
Code, no-cost coverage through Medi-Cal
Medi-Cal, or free or reduced prescription coverage medicines through
a manufacturer's patient assistance program . The notice shall
include information on obtaining coverage or assistance
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,
2013, 2017, 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.
SEC. 3. Section 10128.54 of the
Insurance Code is amended to read:
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.
(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:
"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."
(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:
"In addition to your coverage continuation options, you may be
eligible for the following:
(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.
(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.
(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.
(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."
SEC. 4. Section 10786 of the Insurance
Code is amended to read:
10786. (a) On and after January 1, 2014,
2017, 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
Code or Code, no-cost coverage through
Medi-Cal. Medi-Cal, or free or reduced
prescription coverage medicines through a manufacturer's patient
assistance program. 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 , 2013, 2017, 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).
SEC. 5. 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.
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.