Senate BillNo. 125


Introduced by Senator Hernandez

January 16, 2015


An act to amend Sections 1399.849, 127660, 127662, 127664, and 127665 of the Health and Safety Code, and to amend Section 10965.3 of the Insurance Code, relating to health care coverage, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 125, as introduced, Hernandez. Health care coverage.

(1) Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms as of January 1, 2014. Among other things, PPACA requires each health insurance issuer that offers health insurance coverage in the individual or group market in a state to accept every employer and individual in the state that applies for that coverage and to renew that coverage at the option of the plan sponsor or the individual.

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 a health care service plan or health insurer, on and after October 1, 2013, to offer, market, and sell all of the plan’s insurer’s health benefit plans that are sold in the individual market for policy years on or after January 1, 2014, to all individuals and dependents in each service area in which the plan or insurer provides or arranges for the provision of health care services, as specified, but requires plans and insurers to limit enrollment in individual health benefit plans to specified open enrollment and special enrollment periods. Existing law requires a plan or insurer to provide annual enrollment periods for policy years on or after January 1, 2016, from October 15 to December 7, inclusive, of the preceding calendar year.

This bill would instead require that those annual enrollment periods extend from October 1 to December 15, inclusive. Because a willful violation of that requirement by a health care service plan would be a crime, the bill would impose a state-mandated local program.

(2) Existing law establishes the California Health Benefit Review Program to assess legislation that proposes to mandate or repeal a mandated health benefit or service, as defined. Existing law requests the University of California to provide the analysis to the appropriate policy and fiscal committees of the Legislature within 60 days after receiving a request for the analysis. Existing law also requests that the university report to the Governor and the Legislature on the implementation of the program by January 1, 2014.

This bill would request the University of California to include essential health benefits and the impact on the California Health Benefit Exchange in the analysis prepared under the program. The bill would further request that the University of California assess legislation that impacts health insurance benefit design, cost sharing, premiums, and other health insurance topics. The bill would request that the university provide the analysis to the appropriate policy and fiscal committees of the Legislature not later than 60 days, or in a manner and pursuant to a timeline agreed to by the Legislature and the program, after receiving the request, as specified. The bill would also extend the date by which the university is requested to report to the Governor and the Legislature on the implementation program until January 1, 2017.

Existing law establishes the Health Care Benefits Fund to support the university in implementing the program. Existing law imposes an annual charge on health care service plans and health insurers, as specified, to be deposited into the fund. Existing law prohibits the total annual assessment pursuant to that provision from exceeding $2,000,000. Under existing law, the fund and the program are repealed as of December 31, 2015.

This bill would extend until June 30, 2017, the operative date of the program and the fund, including the annual charge on health care service plans and health insurers. The bill would repeal the above-described provisions as of June 30, 2017.

(3) 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.

(4) This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. 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.  

Section 1399.849 of the Health and Safety Code
2 is amended to read:

3

1399.849.  

(a) (1) On and after October 1, 2013, a plan shall
4fairly and affirmatively offer, market, and sell all of the plan’s
5health benefit plans that are sold in the individual market for policy
6years on or after January 1, 2014, to all individuals and dependents
7in each service area in which the plan provides or arranges for the
8provision of health care services. A plan shall limit enrollment in
9individual health benefit plans to open enrollment periods, annual
10enrollment periods, and special enrollment periods as provided in
11subdivisions (c) and (d).

12(2) A plan shall allow the subscriber of an individual health
13benefit plan to add a dependent to the subscriber’s plan at the
14option of the subscriber, consistent with the open enrollment,
15annual enrollment, and special enrollment period requirements in
16this section.

17(b) An individual health benefit plan issued, amended, or
18renewed on or after January 1, 2014, shall not impose any
19preexisting condition provision upon any individual.

20(c) (1) A plan shall provide an initial open enrollment period
21from October 1, 2013, to March 31, 2014, inclusive, an annual
22enrollment period for the policy year beginning on January 1, 2015,
23from November 15, 2014, to February 15, 2015, inclusive, and
24annual enrollment periods for policy years beginning on or after
25January 1, 2016, from Octoberbegin delete 15end deletebegin insert 1end insert to Decemberbegin delete 7,end deletebegin insert 15,end insert inclusive,
26of the preceding calendar year.

27(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
28of Federal Regulations, for individuals enrolled in noncalendar
P4    1year individual health plan contracts, a plan shall also provide a
2limited open enrollment period beginning on the date that is 30
3calendar days prior to the date the policy year ends in 2014.

4(d) (1) Subject to paragraph (2), commencing January 1, 2014,
5a plan shall allow an individual to enroll in or change individual
6health benefit plans as a result of the following triggering events:

7(A) He or she or his or her dependent loses minimum essential
8coverage. For purposes of this paragraph, the following definitions
9shall apply:

10(i) “Minimum essential coverage” has the same meaning as that
11term is defined in subsection (f) of Section 5000A of the Internal
12Revenue Code (26 U.S.C. Sec. 5000A).

13(ii) “Loss of minimum essential coverage” includes, but is not
14limited to, loss of that coverage due to the circumstances described
15in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
16Code of Federal Regulations and the circumstances described in
17Section 1163 of Title 29 of the United States Code. “Loss of
18minimum essential coverage” also includes loss of that coverage
19for a reason that is not due to the fault of the individual.

20(iii) “Loss of minimum essential coverage” does not include
21loss of that coverage due to the individual’s failure to pay
22premiums on a timely basis or situations allowing for a rescission,
23subject to clause (ii) and Sections 1389.7 and 1389.21.

24(B) He or she gains a dependent or becomes a dependent.

25(C) He or she is mandated to be covered as a dependent pursuant
26to a valid state or federal court order.

27(D) He or she has been released from incarceration.

28(E) His or her health coverage issuer substantially violated a
29material provision of the health coverage contract.

30(F) He or she gains access to new health benefit plans as a result
31of a permanent move.

32(G) He or she was receiving services from a contracting provider
33under another health benefit plan, as defined in Section 1399.845
34of this code or Section 10965 of the Insurance Code, for one of
35the conditions described in subdivision (c) of Section 1373.96 and
36that provider is no longer participating in the health benefit plan.

37(H) He or she demonstrates to the Exchange, with respect to
38health benefit plans offered through the Exchange, or to the
39department, with respect to health benefit plans offered outside
40the Exchange, that he or she did not enroll in a health benefit plan
P5    1during the immediately preceding enrollment period available to
2the individual because he or she was misinformed that he or she
3was covered under minimum essential coverage.

4(I) He or she is a member of the reserve forces of the United
5States military returning from active duty or a member of the
6California National Guard returning from active duty service under
7Title 32 of the United States Code.

8(J) With respect to individual health benefit plans offered
9 through the Exchange, in addition to the triggering events listed
10in this paragraph, any other events listed in Section 155.420(d) of
11Title 45 of the Code of Federal Regulations.

12(2) With respect to individual health benefit plans offered
13outside the Exchange, an individual shall have 60 days from the
14date of a triggering event identified in paragraph (1) to apply for
15coverage from a health care service plan subject to this section.
16With respect to individual health benefit plans offered through the
17Exchange, an individual shall have 60 days from the date of a
18triggering event identified in paragraph (1) to select a plan offered
19through the Exchange, unless a longer period is provided in Part
20155 (commencing with Section 155.10) of Subchapter B of Subtitle
21A of Title 45 of the Code of Federal Regulations.

22(e) With respect to individual health benefit plans offered
23through the Exchange, the effective date of coverage required
24pursuant to this section shall be consistent with the dates specified
25in Section 155.410 or 155.420 of Title 45 of the Code of Federal
26Regulations, as applicable. A dependent who is a registered
27domestic partner pursuant to Section 297 of the Family Code shall
28have the same effective date of coverage as a spouse.

29(f) With respect to individual health benefit plans offered outside
30the Exchange, the following provisions shall apply:

31(1) After an individual submits a completed application form
32for a plan contract, the health care service plan shall, within 30
33days, notify the individual of the individual’s actual premium
34charges for that plan established in accordance with Section
351399.855. The individual shall have 30 days in which to exercise
36the right to buy coverage at the quoted premium charges.

37(2) With respect to an individual health benefit plan for which
38an individual applies during the initial open enrollment period
39described in subdivision (c), when the subscriber submits a
40premium payment, based on the quoted premium charges, and that
P6    1payment is delivered or postmarked, whichever occurs earlier, by
2December 15, 2013, coverage under the individual health benefit
3plan shall become effective no later than January 1, 2014. When
4that payment is delivered or postmarked within the first 15 days
5of any subsequent month, coverage shall become effective no later
6than the first day of the following month. When that payment is
7delivered or postmarked between December 16, 2013, and
8December 31, 2013, inclusive, or after the 15th day of any
9subsequent month, coverage shall become effective no later than
10the first day of the second month following delivery or postmark
11of the payment.

12(3) With respect to an individual health benefit plan for which
13an individual applies during the annual open enrollment period
14described in subdivision (c), when the individual submits a
15premium payment, based on the quoted premium charges, and that
16payment is delivered or postmarked, whichever occurs later, by
17December 15, coverage shall become effective as of the following
18January 1. When that payment is delivered or postmarked within
19the first 15 days of any subsequent month, coverage shall become
20effective no later than the first day of the following month. When
21that payment is delivered or postmarked between December 16
22and December 31, inclusive, or after the 15th day of any subsequent
23month, coverage shall become effective no later than the first day
24of the second month following delivery or postmark of the
25payment.

26(4) With respect to an individual health benefit plan for which
27an individual applies during a special enrollment period described
28in subdivision (d), the following provisions shall apply:

29(A) When the individual submits a premium payment, based
30on the quoted premium charges, and that payment is delivered or
31postmarked, whichever occurs earlier, within the first 15 days of
32the month, coverage under the plan shall become effective no later
33than the first day of the following month. When the premium
34payment is neither delivered nor postmarked until after the 15th
35day of the month, coverage shall become effective no later than
36the first day of the second month following delivery or postmark
37of the payment.

38(B) Notwithstanding subparagraph (A), in the case of a birth,
39adoption, or placement for adoption, the coverage shall be effective
40on the date of birth, adoption, or placement for adoption.

P7    1(C) Notwithstanding subparagraph (A), in the case of marriage
2or becoming a registered domestic partner or in the case where a
3qualified individual loses minimum essential coverage, the
4coverage effective date shall be the first day of the month following
5the date the plan receives the request for special enrollment.

6(g) (1) A health care service plan shall not establish rules for
7eligibility, including continued eligibility, of any individual to
8enroll under the terms of an individual health benefit plan based
9on any of the following factors:

10(A) Health status.

11(B) Medical condition, including physical and mental illnesses.

12(C) Claims experience.

13(D) Receipt of health care.

14(E) Medical history.

15(F) Genetic information.

16(G) Evidence of insurability, including conditions arising out
17of acts of domestic violence.

18(H) Disability.

19(I) Any other health status-related factor as determined by any
20federal regulations, rules, or guidance issued pursuant to Section
212705 of the federal Public Health Service Act.

22(2) Notwithstanding Section 1389.1, a health care service plan
23shall not require an individual applicant or his or her dependent
24to fill out a health assessment or medical questionnaire prior to
25enrollment under an individual health benefit plan. A health care
26service plan shall not acquire or request information that relates
27to a health status-related factor from the applicant or his or her
28dependent or any other source prior to enrollment of the individual.

29(h) (1) A health care service plan shall consider as a single risk
30pool for rating purposes in the individual market the claims
31experience of all insureds and all enrollees in all nongrandfathered
32individual health benefit plans offered by that health care service
33plan in this state, whether offered as health care service plan
34contracts or individual health insurance policies, including those
35insureds and enrollees who enroll in individual coverage through
36the Exchange and insureds and enrollees who enroll in individual
37coverage outside of the Exchange. Student health insurance
38coverage, as that coverage is defined in Section 147.145(a) of Title
3945 of the Code of Federal Regulations, shall not be included in a
40health care service plan’s single risk pool for individual coverage.

P8    1(2) Each calendar year, a health care service plan shall establish
2an index rate for the individual market in the state based on the
3total combined claims costs for providing essential health benefits,
4as defined pursuant to Section 1302 of PPACA, within the single
5risk pool required under paragraph (1). The index rate shall be
6adjusted on a marketwide basis based on the total expected
7marketwide payments and charges under the risk adjustment and
8reinsurance programs established for the state pursuant to Sections
91343 and 1341 of PPACA and Exchange user fees, as described
10in subdivision (d) of Section 156.80 of Title 45 of the Code of
11Federal Regulations. The premium rate for all of the health benefit
12plans in the individual market within the single risk pool required
13under paragraph (1) shall use the applicable marketwide adjusted
14index rate, subject only to the adjustments permitted under
15paragraph (3).

16(3) A health care service plan may vary premium rates for a
17particular health benefit plan from its index rate based only on the
18following actuarially justified plan-specific factors:

19(A) The actuarial value and cost-sharing design of the health
20benefit plan.

21(B) The health benefit plan’s provider network, delivery system
22characteristics, and utilization management practices.

23(C) The benefits provided under the health benefit plan that are
24in addition to the essential health benefits, as defined pursuant to
25Section 1302 of PPACA and Section 1367.005. These additional
26benefits shall be pooled with similar benefits within the single risk
27pool required under paragraph (1) and the claims experience from
28those benefits shall be utilized to determine rate variations for
29plans that offer those benefits in addition to essential health
30benefits.

31(D) With respect to catastrophic plans, as described in subsection
32(e) of Section 1302 of PPACA, the expected impact of the specific
33eligibility categories for those plans.

34(E) Administrative costs, excluding user fees required by the
35Exchange.

36(i) This section shall only apply with respect to individual health
37benefit plans for policy years on or after January 1, 2014.

38(j) This section shall not apply to a grandfathered health plan.

39(k) If Section 5000A of the Internal Revenue Code, as added
40by Section 1501 of PPACA, is repealed or amended to no longer
P9    1apply to the individual market, as defined in Section 2791 of the
2federal Public Health Service Act (42 U.S.C. Sec. 300gg-91),
3subdivisions (a), (b), and (g) shall become inoperative 12 months
4after that repeal or amendment.

5

SEC. 2.  

Section 127660 of the Health and Safety Code is
6amended to read:

7

127660.  

(a) The Legislature hereby requests the University of
8California to establish the California Health Benefit Review
9Program to assess legislation proposing to mandate a benefit or
10service, as defined in subdivisionbegin delete (c)end deletebegin insert (d)end insert, and legislation proposing
11to repeal a mandated benefit or service, as defined in subdivision
12begin delete (d)end deletebegin insert (e)end insert, and to prepare a written analysis with relevant data on the
13following:

14(1) Public health impacts, including, but not limited to, all of
15the following:

16(A) The impact on the health of the community, including the
17reduction of communicable disease and the benefits of prevention
18such as those provided by childhood immunizations and prenatal
19care.

20(B) The impact on the health of the community, including
21diseases and conditions where gender and racial disparities in
22outcomes are established in peer-reviewed scientific and medical
23literature.

24(C) The extent to which the benefit or service reduces premature
25death and the economic loss associated with disease.

26(2) Medical impacts, including, but not limited to, all of the
27following:

28(A) The extent to which the benefit or service is generally
29recognized by the medical community as being effective in the
30screening, diagnosis, or treatment of a condition or disease, as
31demonstrated by a review of scientific and peer reviewed medical
32literature.

33(B) The extent to which the benefit or service is generally
34available and utilized by treating physicians.

35(C) The contribution of the benefit or service to the health status
36of the population, including the results of any research
37demonstrating the efficacy of the benefit or service compared to
38alternatives, including not providing the benefit or service.

P10   1(D) The extent to which mandating or repealing the benefits or
2services would not diminish or eliminate access to currently
3available health care benefits or services.

4(3) Financial impacts, including, but not limited to, all of the
5following:

6(A) The extent to which the coverage or repeal of coverage will
7increase or decrease the benefit or cost of the benefit or service.

8(B) The extent to which the coverage or repeal of coverage will
9increase the utilization of the benefit or service, or will be a
10substitute for, or affect the cost of, alternative benefits or services.

11(C) The extent to which the coverage or repeal of coverage will
12increase or decrease the administrative expenses of health care
13service plans and health insurers and the premium and expenses
14of subscribers, enrollees, and policyholders.

15(D) The impact of this coverage or repeal of coverage on the
16total cost of health care.

17(E) The potential cost or savings to the private sector, including
18the impact on small employers as defined in paragraph (1) of
19subdivision (l) of Section 1357, the Public Employees’ Retirement
20System, other retirement systems funded by the state or by a local
21government, individuals purchasing individual health insurance,
22and publicly funded state health insurance programs, including
23the Medi-Cal program and the Healthy Families Program.

24(F) The extent to which costs resulting from lack of coverage
25or repeal of coverage are or would be shifted to other payers,
26including both public and private entities.

27(G) The extent to which mandating or repealing the proposed
28benefit or service would not diminish or eliminate access to
29currently available health care benefits or services.

30(H) The extent to which the benefit or service is generally
31utilized by a significant portion of the population.

32(I) The extent to which health care coverage for the benefit or
33service is already generally available.

34(J) The level of public demand for health care coverage for the
35benefit or service, including the level of interest of collective
36bargaining agents in negotiating privately for inclusion of this
37coverage in group contracts, and the extent to which the mandated
38benefit or service is covered by self-funded employer groups.

39(K) In assessing and preparing a written analysis of the financial
40impact of legislation proposing to mandate a benefit or service and
P11   1legislation proposing to repeal a mandated benefit or service
2 pursuant to this paragraph, the Legislature requests the University
3of California to use a certified actuary or other person with relevant
4knowledge and expertise to determine the financial impact.

begin insert

5(4) The impact on essential health benefits, as defined in Section
61367.005 of this code and Section 10112.27 of the Insurance Code,
7and the impact on the California Health Benefit Exchange.

end insert
begin insert

8(b) The Legislature further requests that the California Health
9Benefit Review Program assess legislation that impacts health
10insurance benefit design, cost sharing, premiums, and other health
11insurance topics.

end insert
begin delete

12(b)

end delete

13begin insert(c)end insert The Legislature requests that the University of California
14provide every analysis to the appropriate policy and fiscal
15committees of the Legislature not later than 60begin delete daysend deletebegin insert days, or in a
16manner and pursuant to a timeline agreed to by the Legislature
17and the California Health Benefit Review Program,end insert
after receiving
18a request made pursuant to Section 127661. In addition, the
19Legislature requests that the university post every analysis on the
20 Internet and make every analysis available to the public upon
21request.

begin delete

22(c)

end delete

23begin insert(d)end insert As used in this section, “legislation proposing to mandate a
24benefit or service” means a proposed statute that requires a health
25care service plan or a health insurer, or both, to do any of the
26following:

27(1) Permit a person insured or covered under the policy or
28contract to obtain health care treatment or services from a particular
29type of health care provider.

30(2) Offer or provide coverage for the screening, diagnosis, or
31treatment of a particular disease or condition.

32(3) Offer or provide coverage of a particular type of health care
33treatment or service, or of medical equipment, medical supplies,
34or drugs used in connection with a health care treatment or service.

begin delete

35(d)

end delete

36begin insert(e)end insert As used in this section, “legislation proposing to repeal a
37mandated benefit or service” means a proposed statute that, if
38enacted, would become operative on or after January 1, 2008, and
39would repeal an existing requirement that a health care service
40plan or a health insurer, or both, do any of the following:

P12   1(1) Permit a person insured or covered under the policy or
2contract to obtain health care treatment or services from a particular
3type of health care provider.

4(2) Offer or provide coverage for the screening, diagnosis, or
5treatment of a particular disease or condition.

6(3) Offer or provide coverage of a particular type of health care
7treatment or service, or of medical equipment, medical supplies,
8or drugs used in connection with a health care treatment or service.

9

SEC. 3.  

Section 127662 of the Health and Safety Code is
10amended to read:

11

127662.  

(a) In order to effectively support the University of
12California and its work in implementing this chapter, there is
13hereby established in the State Treasury, the Health Care Benefits
14Fund. The university’s work in providing the bill analyses shall
15be supported from the fund.

16(b) Forbegin delete fiscal yearsend deletebegin insert theend insert 2010-11 tobegin delete 2014-15end deletebegin insert 2016-17end insert, inclusive,
17begin insert fiscal years,end insert each health care service plan, except a specialized
18health care service plan, and each health insurer, as defined in
19Section 106 of the Insurance Code, shall be assessed an annual fee
20in an amount determined through regulation. The amount of the
21fee shall be determined by the Department of Managed Health
22Care and the Department of Insurance in consultation with the
23university and shall be limited to the amount necessary to fund the
24actual and necessary expenses of the university and its work in
25implementing this chapter. The total annual assessment on health
26care service plans and health insurers shall not exceed two million
27dollars ($2,000,000).

28(c) The Department of Managed Health Care and the Department
29of Insurance, in coordination with the university, shall assess the
30health care service plans and health insurers, respectively, for the
31costs required to fund the university’s activities pursuant to
32 subdivision (b).

33(1) Health care service plans shall be notified of the assessment
34on or before June 15 of each year with the annual assessment notice
35issued pursuant to Section 1356. The assessment pursuant to this
36section is separate and independent of the assessments in Section
371356.

38(2) Health insurers shall be noticed of the assessment in
39accordance with the notice for the annual assessment or quarterly
40premium tax revenues.

P13   1(3) The assessed fees required pursuant to subdivision (b) shall
2be paid on an annual basis no later than August 1 of each year.
3The Department of Managed Health Care and the Department of
4Insurance shall forward the assessed fees to the Controller for
5deposit in the Health Care Benefits Fund immediately following
6their receipt.

7(4) “Health insurance,” as used in this subdivision, does not
8include Medicare supplement, vision-only, dental-only, or
9CHAMPUS supplement insurance, or hospital indemnity,
10accident-only, or specified disease insurance that does not pay
11benefits on a fixed benefit, cash payment only basis.

12

SEC. 4.  

Section 127664 of the Health and Safety Code is
13amended to read:

14

127664.  

The Legislature requests the University of California
15to submit a report to the Governor and the Legislature by January
161,begin delete 2014end deletebegin insert 2017end insert, regarding the implementation of this chapter.begin insert This
17report shall be submitted in compliance with Section 9795 of the
18Government Code.end insert

19

SEC. 5.  

Section 127665 of the Health and Safety Code is
20amended to read:

21

127665.  

This chapter shall remain in effect untilbegin delete December 31,
222015end delete
begin insert June 30, 2017end insert, and shall be repealed as of that date, unless
23a later enacted statute that becomes operative on or before
24begin delete December 31, 2015end deletebegin insert June 30, 2017end insert, deletes or extends that date.

25

SEC. 6.  

Section 10965.3 of the Insurance Code is amended to
26read:

27

10965.3.  

(a) (1) On and after October 1, 2013, a health insurer
28shall fairly and affirmatively offer, market, and sell all of the
29insurer’s health benefit plans that are sold in the individual market
30for policy years on or after January 1, 2014, to all individuals and
31dependents in each service area in which the insurer provides or
32arranges for the provision of health care services. A health insurer
33shall limit enrollment in individual health benefit plans to open
34enrollment periods, annual enrollment periods, and special
35enrollment periods as provided in subdivisions (c) and (d).

36(2) A health insurer shall allow the policyholder of an individual
37health benefit plan to add a dependent to the policyholder’s health
38benefit plan at the option of the policyholder, consistent with the
39open enrollment, annual enrollment, and special enrollment period
40requirements in this section.

P14   1(b) An individual health benefit plan issued, amended, or
2renewed on or after January 1, 2014, shall not impose any
3preexisting condition provision upon any individual.

4(c) (1) A health insurer shall provide an initial open enrollment
5period from October 1, 2013, to March 31, 2014, inclusive, an
6annual enrollment period for the policy year beginning on January
71, 2015, from November 15, 2014, to February 15, 2015, inclusive,
8and annual enrollment periods for policy years beginning on or
9after January 1, 2016, from Octoberbegin delete 15end deletebegin insert 1end insert to Decemberbegin delete 7,end deletebegin insert 15,end insert
10 inclusive, of the preceding calendar year.

11(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
12of Federal Regulations, for individuals enrolled in noncalendar-year
13individual health plan contracts, a health insurer shall also provide
14a limited open enrollment period beginning on the date that is 30
15calendar days prior to the date the policy year ends in 2014.

16(d) (1) Subject to paragraph (2), commencing January 1, 2014,
17a health insurer shall allow an individual to enroll in or change
18individual health benefit plans as a result of the following triggering
19events:

20(A) He or she or his or her dependent loses minimum essential
21coverage. For purposes of this paragraph, both of the following
22definitions shall apply:

23(i) “Minimum essential coverage” has the same meaning as that
24term is defined in subsection (f) of Section 5000A of the Internal
25Revenue Code (26 U.S.C. Sec. 5000A).

26(ii) “Loss of minimum essential coverage” includes, but is not
27limited to, loss of that coverage due to the circumstances described
28in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
29Code of Federal Regulations and the circumstances described in
30Section 1163 of Title 29 of the United States Code. “Loss of
31minimum essential coverage” also includes loss of that coverage
32for a reason that is not due to the fault of the individual.

33(iii) “Loss of minimum essential coverage” does not include
34loss of that coverage due to the individual’s failure to pay
35premiums on a timely basis or situations allowing for a rescission,
36subject to clause (ii) and Sections 10119.2 and 10384.17.

37(B) He or she gains a dependent or becomes a dependent.

38(C) He or she is mandated to be covered as a dependent pursuant
39to a valid state or federal court order.

40(D) He or she has been released from incarceration.

P15   1(E) His or her health coverage issuer substantially violated a
2material provision of the health coverage contract.

3(F) He or she gains access to new health benefit plans as a result
4of a permanent move.

5(G) He or she was receiving services from a contracting provider
6under another health benefit plan, as defined in Section 10965 of
7this code or Section 1399.845 of the Health and Safety Code, for
8one of the conditions described in subdivision (a) of Section
910133.56 and that provider is no longer participating in the health
10benefit plan.

11(H) He or she demonstrates to the Exchange, with respect to
12health benefit plans offered through the Exchange, or to the
13department, with respect to health benefit plans offered outside
14the Exchange, that he or she did not enroll in a health benefit plan
15during the immediately preceding enrollment period available to
16the individual because he or she was misinformed that he or she
17was covered under minimum essential coverage.

18(I) He or she is a member of the reserve forces of the United
19States military returning from active duty or a member of the
20California National Guard returning from active duty service under
21Title 32 of the United States Code.

22(J) With respect to individual health benefit plans offered
23through the Exchange, in addition to the triggering events listed
24in this paragraph, any other events listed in Section 155.420(d) of
25Title 45 of the Code of Federal Regulations.

26(2) With respect to individual health benefit plans offered
27outside the Exchange, an individual shall have 60 days from the
28date of a triggering event identified in paragraph (1) to apply for
29coverage from a health care service plan subject to this section.
30With respect to individual health benefit plans offered through the
31Exchange, an individual shall have 60 days from the date of a
32triggering event identified in paragraph (1) to select a plan offered
33through the Exchange, unless a longer period is provided in Part
34155 (commencing with Section 155.10) of Subchapter B of Subtitle
35A of Title 45 of the Code of Federal Regulations.

36(e) With respect to individual health benefit plans offered
37through the Exchange, the effective date of coverage required
38pursuant to this section shall be consistent with the dates specified
39in Section 155.410 or 155.420 of Title 45 of the Code of Federal
40Regulations, as applicable. A dependent who is a registered
P16   1domestic partner pursuant to Section 297 of the Family Code shall
2have the same effective date of coverage as a spouse.

3(f) With respect to an individual health benefit plan offered
4outside the Exchange, the following provisions shall apply:

5(1) After an individual submits a completed application form
6for a plan, the insurer shall, within 30 days, notify the individual
7of the individual’s actual premium charges for that plan established
8in accordance with Section 10965.9. The individual shall have 30
9days in which to exercise the right to buy coverage at the quoted
10premium charges.

11(2) With respect to an individual health benefit plan for which
12an individual applies during the initial open enrollment period
13described in subdivision (c), when the policyholder submits a
14premium payment, based on the quoted premium charges, and that
15payment is delivered or postmarked, whichever occurs earlier, by
16December 15, 2013, coverage under the individual health benefit
17plan shall become effective no later than January 1, 2014. When
18that payment is delivered or postmarked within the first 15 days
19of any subsequent month, coverage shall become effective no later
20than the first day of the following month. When that payment is
21delivered or postmarked between December 16, 2013, and
22December 31, 2013, inclusive, or after the 15th day of any
23subsequent month, coverage shall become effective no later than
24the first day of the second month following delivery or postmark
25of the payment.

26(3) With respect to an individual health benefit plan for which
27an individual applies during the annual open enrollment period
28described in subdivision (c), when the individual submits a
29premium payment, based on the quoted premium charges, and that
30payment is delivered or postmarked, whichever occurs later, by
31December 15, coverage shall become effective as of the following
32January 1. When that payment is delivered or postmarked within
33the first 15 days of any subsequent month, coverage shall become
34effective no later than the first day of the following month. When
35that payment is delivered or postmarked between December 16
36and December 31, inclusive, or after the 15th day of any subsequent
37month, coverage shall become effective no later than the first day
38of the second month following delivery or postmark of the
39payment.

P17   1(4) With respect to an individual health benefit plan for which
2an individual applies during a special enrollment period described
3in subdivision (d), the following provisions shall apply:

4(A) When the individual submits a premium payment, based
5on the quoted premium charges, and that payment is delivered or
6postmarked, whichever occurs earlier, within the first 15 days of
7the month, coverage under the plan shall become effective no later
8than the first day of the following month. When the premium
9payment is neither delivered nor postmarked until after the 15th
10day of the month, coverage shall become effective no later than
11the first day of the second month following delivery or postmark
12of the payment.

13(B) Notwithstanding subparagraph (A), in the case of a birth,
14adoption, or placement for adoption, the coverage shall be effective
15on the date of birth, adoption, or placement for adoption.

16(C) Notwithstanding subparagraph (A), in the case of marriage
17or becoming a registered domestic partner or in the case where a
18qualified individual loses minimum essential coverage, the
19coverage effective date shall be the first day of the month following
20the date the insurer receives the request for special enrollment.

21(g) (1) A health insurer shall not establish rules for eligibility,
22including continued eligibility, of any individual to enroll under
23the terms of an individual health benefit plan based on any of the
24following factors:

25(A) Health status.

26(B) Medical condition, including physical and mental illnesses.

27(C) Claims experience.

28(D) Receipt of health care.

29(E) Medical history.

30(F) Genetic information.

31(G) Evidence of insurability, including conditions arising out
32of acts of domestic violence.

33(H) Disability.

34(I) Any other health status-related factor as determined by any
35federal regulations, rules, or guidance issued pursuant to Section
362705 of the federal Public Health Service Act.

37(2) Notwithstanding subdivision (c) of Section 10291.5, a health
38insurer shall not require an individual applicant or his or her
39dependent to fill out a health assessment or medical questionnaire
40prior to enrollment under an individual health benefit plan. A health
P18   1insurer shall not acquire or request information that relates to a
2health status-related factor from the applicant or his or her
3dependent or any other source prior to enrollment of the individual.

4(h) (1) A health insurer shall consider as a single risk pool for
5rating purposes in the individual market the claims experience of
6all insureds and enrollees in all nongrandfathered individual health
7benefit plans offered by that insurer in this state, whether offered
8as health care service plan contracts or individual health insurance
9policies, including those insureds and enrollees who enroll in
10individual coverage through the Exchange and insureds and
11enrollees who enroll in individual coverage outside the Exchange.
12Student health insurance coverage, as such coverage is defined in
13Section 147.145(a) of Title 45 of the Code of Federal Regulations,
14shall not be included in a health insurer’s single risk pool for
15individual coverage.

16(2) Each calendar year, a health insurer shall establish an index
17rate for the individual market in the state based on the total
18combined claims costs for providing essential health benefits, as
19defined pursuant to Section 1302 of PPACA, within the single risk
20pool required under paragraph (1). The index rate shall be adjusted
21on a marketwide basis based on the total expected marketwide
22payments and charges under the risk adjustment and reinsurance
23programs established for the state pursuant to Sections 1343 and
241341 of PPACA and Exchange user fees, as described in
25subdivision (d) of Section 156.80 of Title 45 of the Code of Federal
26Regulations. The premium rate for all of the health benefit plans
27in the individual market within the single risk pool required under
28paragraph (1) shall use the applicable marketwide adjusted index
29rate, subject only to the adjustments permitted under paragraph
30(3).

31(3) A health insurer may vary premium rates for a particular
32health benefit plan from its index rate based only on the following
33actuarially justified plan-specific factors:

34(A) The actuarial value and cost-sharing design of the health
35benefit plan.

36(B) The health benefit plan’s provider network, delivery system
37characteristics, and utilization management practices.

38(C) The benefits provided under the health benefit plan that are
39in addition to the essential health benefits, as defined pursuant to
40Section 1302 of PPACA and Section 10112.27. These additional
P19   1benefits shall be pooled with similar benefits within the single risk
2pool required under paragraph (1) and the claims experience from
3those benefits shall be utilized to determine rate variations for
4plans that offer those benefits in addition to essential health
5benefits.

6(D) With respect to catastrophic plans, as described in subsection
7(e) of Section 1302 of PPACA, the expected impact of the specific
8eligibility categories for those plans.

9(E) Administrative costs, excluding any user fees required by
10the Exchange.

11(i) This section shall only apply with respect to individual health
12benefit plans for policy years on or after January 1, 2014.

13(j) This section shall not apply to a grandfathered health plan.

14(k) If Section 5000A of the Internal Revenue Code, as added
15by Section 1501 of PPACA, is repealed or amended to no longer
16apply to the individual market, as defined in Section 2791 of the
17federal Public Health Service Act (42 U.S.C. Sec. 300gg-91),
18subdivisions (a), (b), and (g) shall become inoperative 12 months
19after the date of that repeal or amendment and individual health
20care benefit plans shall thereafter be subject to Sections 10901.2,
2110951, and 10953.

22

SEC. 7.  

No reimbursement is required by this act pursuant to
23Section 6 of Article XIII B of the California Constitution because
24the only costs that may be incurred by a local agency or school
25district will be incurred because this act creates a new crime or
26infraction, eliminates a crime or infraction, or changes the penalty
27for a crime or infraction, within the meaning of Section 17556 of
28the Government Code, or changes the definition of a crime within
29the meaning of Section 6 of Article XIII B of the California
30Constitution.

31

SEC. 8.  

This act is an urgency statute necessary for the
32immediate preservation of the public peace, health, or safety within
33the meaning of Article IV of the Constitution and shall go into
34immediate effect. The facts constituting the necessity are:

35In order to maintain appropriate standards of accuracy and
36efficiency with respect to matters relating to health care coverage
37in California, by adjusting the next open enrollment period for the
38individual health care coverage market as needed to comply with
39federal law, and ensuring that the University of California is
40provided with sufficient advance notice regarding the continuing
P20   1duties of the university to plan and carry out necessary health care
2benefit research and analysis as requested pursuant to this act, it
3is necessary that this act take effect immediately.



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