Amended in Assembly April 20, 2016

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 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 coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2115, as amended, Wood. Health care 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 begin delete spouse, end delete begin insert spouse or parent, end insert 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.

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 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) A disclosure issued, amended, or renewed on or after July
1, 2017, for a group begin insert benefit end insert 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 begin delete spouse. end delete begin insert spouse or parent. end insert If
your spouse has coverage that extends to family members, you
may be eligible to be added to that benefit plan. begin insert Federal law does
not require employers to offer coverage to spouses. end 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

begin delete http://www.rxassist.org.” end delete begin insert http://www.rxassist.org. The
manufacturer determines which individuals and which prescription
medications are eligible for the manufacturer’s program. This
assistance does not constitute coverage and will not meet the
requirements of the individual mandate under the Affordable Care
Act.” end insert

SEC. 2.  

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

1366.50.  

(a) On and after January 1, 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, no-cost coverage through
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,
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 begin delete purchases end delete begin insert purchasers end insert 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) A disclosure issued, amended, or renewed on or after July
1, 2017, for a group begin insert benefit end insert 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 begin delete spouse. end delete begin insert spouse or parent. end insert If
your spouse has coverage that extends to family members, you
may be eligible to be added to that benefit plan. begin insert Federal law does
not require employers to offer coverage to spouses. end 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

begin delete http://www.rxassist.org.” end delete begin insert http://www.rxassist.org. The
manufacturer determines which individuals and which prescription
medications are eligible for the manufacturer’s program. This
assistance does not constitute coverage and will not meet the
requirements of the individual mandate under the Affordable Care
Act.” end insert

SEC. 4.  

Section 10786 of the Insurance Code is amended to
read:

10786.  

(a) On and after January 1, 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, no-cost coverage
through 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
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.