Amended in Senate April 6, 2015

Amended in Senate February 26, 2015

Senate BillNo. 125


Introduced by Senator Hernandez

January 16, 2015


An act to amend Sections 1399.849, 127660, 127662, and 127664 of, and to repeal and add Section 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 amended, 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 November 1, of the preceding calendar year, to January 31 of the benefit year, 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 January 1, 2018.

(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
P4    1January 1, 2016, from November 1, of the preceding calendar year,
2to January 31 of the benefit year, inclusive.

3(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
4of Federal Regulations, for individuals enrolled in noncalendar
5year individual health plan contracts, a plan shall also provide a
6limited open enrollment period beginning on the date that is 30
7calendar days prior to the date the policy year ends in 2014.

8(d) (1) Subject to paragraph (2), commencing January 1, 2014,
9a plan shall allow an individual to enroll in or change individual
10health benefit plans as a result of the following triggering events:

11(A) He or she or his or her dependent loses minimum essential
12coverage. For purposes of this paragraph, the following definitions
13shall apply:

14(i) “Minimum essential coverage” has the same meaning as that
15term is defined in subsection (f) of Section 5000A of the Internal
16Revenue Code (26 U.S.C. Sec. 5000A).

17(ii) “Loss of minimum essential coverage” includes, but is not
18limited to, loss of that coverage due to the circumstances described
19in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
20Code of Federal Regulations and the circumstances described in
21Section 1163 of Title 29 of the United States Code. “Loss of
22minimum essential coverage” also includes loss of that coverage
23for a reason that is not due to the fault of the individual.

24(iii) “Loss of minimum essential coverage” does not include
25loss of that coverage due to the individual’s failure to pay
26premiums on a timely basis or situations allowing for a rescission,
27subject to clause (ii) and Sections 1389.7 and 1389.21.

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

29(C) He or she is mandated to be covered as a dependent pursuant
30to a valid state or federal court order.

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

32(E) His or her health coverage issuer substantially violated a
33material provision of the health coverage contract.

34(F) He or she gains access to new health benefit plans as a result
35of a permanent move.

36(G) He or she was receiving services from a contracting provider
37under another health benefit plan, as defined in Section 1399.845
38of this code or Section 10965 of the Insurance Code, for one of
39the conditions described in subdivision (c) of Section 1373.96 of
P5    1this code and that provider is no longer participating in the health
2benefit plan.

3(H) He or she demonstrates to the Exchange, with respect to
4health benefit plans offered through the Exchange, or to the
5department, with respect to health benefit plans offered outside
6the Exchange, that he or she did not enroll in a health benefit plan
7during the immediately preceding enrollment period available to
8the individual because he or she was misinformed that he or she
9was covered under minimum essential coverage.

10(I) He or she is a member of the reserve forces of the United
11States military returning from active duty or a member of the
12California National Guard returning from active duty service under
13Title 32 of the United States Code.

14(J) With respect to individual health benefit plans offered
15through the Exchange, in addition to the triggering events listed
16in this paragraph, any other events listed in Section 155.420(d) of
17Title 45 of the Code of Federal Regulations.

18(2) With respect to individual health benefit plans offered
19outside the Exchange, an individual shall have 60 days from the
20date of a triggering event identified in paragraph (1) to apply for
21coverage from a health care service plan subject to this section.
22With respect to individual health benefit plans offered through the
23Exchange, an individual shall have 60 days from the date of a
24triggering event identified in paragraph (1) to select a plan offered
25through the Exchange, unless a longer period is provided in Part
26155 (commencing with Section 155.10) of Subchapter B of Subtitle
27A of Title 45 of the Code of Federal Regulations.

28(e) With respect to individual health benefit plans offered
29through the Exchange, the effective date of coverage required
30pursuant to this section shall be consistent with the dates specified
31in Section 155.410 or 155.420 of Title 45 of the Code of Federal
32Regulations, as applicable. A dependent who is a registered
33domestic partner pursuant to Section 297 of the Family Code shall
34have the same effective date of coverage as a spouse.

35(f) With respect to individual health benefit plans offered outside
36the Exchange, the following provisions shall apply:

37(1) After an individual submits a completed application form
38for a plan contract, the health care service plan shall, within 30
39days, notify the individual of the individual’s actual premium
40charges for that plan established in accordance with Section
P6    11399.855. The individual shall have 30 days in which to exercise
2the right to buy coverage at the quoted premium charges.

3(2) With respect to an individual health benefit plan for which
4an individual applies during the initial open enrollment period
5described in subdivision (c), when the subscriber submits a
6premium payment, based on the quoted premium charges, and that
7payment is delivered or postmarked, whichever occurs earlier, by
8December 15, 2013, coverage under the individual health benefit
9plan shall become effective no later than January 1, 2014. When
10that payment is delivered or postmarked within the first 15 days
11of any subsequent month, coverage shall become effective no later
12than the first day of the following month. When that payment is
13delivered or postmarked between December 16, 2013, to December
1431, 2013, inclusive, or after the 15th day of any subsequent month,
15coverage shall become effective no later than the first day of the
16second month following delivery or postmark of the payment.

17(3) With respect to an individual health benefit plan for which
18an individual applies during the annual open enrollment period
19described in subdivision (c), when the individual submits a
20premium payment, based on the quoted premium charges, and that
21payment is delivered or postmarked, whichever occurs later, by
22December 15, coverage shall become effective as of the following
23January 1. When that payment is delivered or postmarked within
24the first 15 days of any subsequent month, coverage shall become
25effective no later than the first day of the following month. When
26that payment is delivered or postmarked between December 16 to
27December 31, inclusive, or after the 15th day of any subsequent
28month, coverage shall become effective no later than the first day
29of the second month following delivery or postmark of the
30payment.

31(4) With respect to an individual health benefit plan for which
32an individual applies during a special enrollment period described
33in subdivision (d), the following provisions shall apply:

34(A) When the individual submits a premium payment, based
35on the quoted premium charges, and that payment is delivered or
36postmarked, whichever occurs earlier, within the first 15 days of
37the month, coverage under the plan shall become effective no later
38than the first day of the following month. When the premium
39payment is neither delivered nor postmarked until after the 15th
40day of the month, coverage shall become effective no later than
P7    1the first day of the second month following delivery or postmark
2of the payment.

3(B) Notwithstanding subparagraph (A), in the case of a birth,
4adoption, or placement for adoption, the coverage shall be effective
5on the date of birth, adoption, or placement for adoption.

6(C) Notwithstanding subparagraph (A), in the case of marriage
7or becoming a registered domestic partner or in the case where a
8qualified individual loses minimum essential coverage, the
9coverage effective date shall be the first day of the month following
10the date the plan receives the request for special enrollment.

11(g) (1) A health care service plan shall not establish rules for
12eligibility, including continued eligibility, of any individual to
13enroll under the terms of an individual health benefit plan based
14on any of the following factors:

15(A) Health status.

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

17(C) Claims experience.

18(D) Receipt of health care.

19(E) Medical history.

20(F) Genetic information.

21(G) Evidence of insurability, including conditions arising out
22of acts of domestic violence.

23(H) Disability.

24(I) Any other health status-related factor as determined by any
25federal regulations, rules, or guidance issued pursuant to Section
262705 of the federal Public Health Service Act (Public Law 78-410).

27(2) Notwithstanding Section 1389.1, a health care service plan
28shall not require an individual applicant or his or her dependent
29to fill out a health assessment or medical questionnaire prior to
30enrollment under an individual health benefit plan. A health care
31service plan shall not acquire or request information that relates
32to a health status-related factor from the applicant or his or her
33dependent or any other source prior to enrollment of the individual.

34(h) (1) A health care service plan shall consider as a single risk
35pool for rating purposes in the individual market the claims
36experience of all insureds and all enrollees in all nongrandfathered
37individual health benefit plans offered by that health care service
38plan in this state, whether offered as health care service plan
39contracts or individual health insurance policies, including those
40insureds and enrollees who enroll in individual coverage through
P8    1the Exchange and insureds and enrollees who enroll in individual
2coverage outside of the Exchange. Student health insurance
3coverage, as that coverage is defined in Section 147.145(a) of Title
445 of the Code of Federal Regulations, shall not be included in a
5health care service plan’s single risk pool for individual coverage.

6(2) Each calendar year, a health care service plan shall establish
7an index rate for the individual market in the state based on the
8total combined claims costs for providing essential health benefits,
9as defined pursuant to Section 1302 of PPACA, within the single
10risk pool required under paragraph (1). The index rate shall be
11adjusted on a marketwide basis based on the total expected
12marketwide payments and charges under the risk adjustment and
13reinsurance programs established for the state pursuant to Sections
141343 and 1341 of PPACA and Exchange user fees, as described
15in subdivision (d) of Section 156.80 of Title 45 of the Code of
16Federal Regulations. The premium rate for all of the health benefit
17plans in the individual market within the single risk pool required
18under paragraph (1) shall use the applicable marketwide adjusted
19index rate, subject only to the adjustments permitted under
20paragraph (3).

21(3) A health care service plan may vary premium rates for a
22particular health benefit plan from its index rate based only on the
23following actuarially justified plan-specific factors:

24(A) The actuarial value and cost-sharing design of the health
25benefit plan.

26(B) The health benefit plan’s provider network, delivery system
27characteristics, and utilization management practices.

28(C) The benefits provided under the health benefit plan that are
29in addition to the essential health benefits, as defined pursuant to
30Section 1302 of PPACA and Section 1367.005. These additional
31benefits shall be pooled with similar benefits within the single risk
32pool required under paragraph (1) and the claims experience from
33those benefits shall be utilized to determine rate variations for
34plans that offer those benefits in addition to essential health
35benefits.

36(D) With respect to catastrophic plans, as described in subsection
37(e) of Section 1302 of PPACA, the expected impact of the specific
38eligibility categories for those plans.

39(E) Administrative costs, excluding user fees required by the
40Exchange.

P9    1(i) This section shall only apply with respect to individual health
2benefit plans for policy years on or after January 1, 2014.

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

4(k) If Section 5000A of the Internal Revenue Code, as added
5by Section 1501 of PPACA, is repealed or amended to no longer
6apply to the individual market, as defined in Section 2791 of the
7federal Public Health Service Act (42 U.S.C. Sec. 300gg-91),
8subdivisions (a), (b), and (g) shall become inoperative 12 months
9after that repeal or amendment.

10

SEC. 2.  

Section 127660 of the Health and Safety Code is
11amended to read:

12

127660.  

(a) The Legislature hereby requests the University of
13California to establish the California Health Benefit Review
14Program to assess legislation proposing to mandate a benefit or
15service, as defined in subdivision (d), and legislation proposing to
16repeal a mandated benefit or service, as defined in subdivision (e),
17and to prepare a written analysis with relevant data on the
18following:

19(1) Public health impacts, including, but not limited to, all of
20the following:

21(A) The impact on the health of the community, including the
22reduction of communicable disease and the benefits of prevention
23such as those provided by childhood immunizations and prenatal
24care.

25(B) The impact on the health of the community, including
26diseases and conditions wherebegin delete gender and racialend delete disparities in
27outcomesbegin insert associated with the social determinants of health as well
28as gender, race, sexual orientation, or gender identityend insert
are
29established in peer-reviewed scientific and medical literature.

30(C) The extent to which the benefit or service reduces premature
31death and the economic loss associated with disease.

32(2) Medical impacts, including, but not limited to, all of the
33following:

34(A) The extent to which the benefit or service is generally
35recognized by the medical community as being effective in the
36screening, diagnosis, or treatment of a condition or disease, as
37demonstrated by a review of scientific and peer-reviewed medical
38literature.

39(B) The extent to which the benefit or service is generally
40available and utilized by treating physicians.

P10   1(C) The contribution of the benefit or service to the health status
2of the population, including the results of any research
3demonstrating the efficacy of the benefit or service compared to
4alternatives, including not providing the benefit or service.

5(D) The extent to which mandating or repealing the benefits or
6services would not diminish or eliminate access to currently
7available health care benefits or services.

8(3) Financial impacts, including, but not limited to, all of the
9following:

10(A) The extent to which the coverage or repeal of coverage will
11increase or decrease the benefit or cost of the benefit or service.

12(B) The extent to which the coverage or repeal of coverage will
13increase the utilization of the benefit or service, or will be a
14substitute for, or affect the cost of, alternative benefits or services.

15(C) The extent to which the coverage or repeal of coverage will
16increase or decrease the administrative expenses of health care
17service plans and health insurers and the premium and expenses
18of subscribers, enrollees, and policyholders.

19(D) The impact of this coverage or repeal of coverage on the
20total cost of health care.

21(E) The potential cost or savings to the private sector, including
22the impact on small employers as defined in paragraph (1) of
23subdivision (l) of Section 1357, the Public Employees’ Retirement
24System, other retirement systems funded by the state or by a local
25government, individuals purchasing individual health insurance,
26and publicly funded state health insurance programs, including
27the Medi-Cal program and the Healthy Families Program.

28(F) The extent to which costs resulting from lack of coverage
29or repeal of coverage are or would be shifted to other payers,
30including both public and private entities.

31(G) The extent to which mandating or repealing the proposed
32benefit or service would not diminish or eliminate access to
33currently available health care benefits or services.

34(H) The extent to which the benefit or service is generally
35utilized by a significant portion of the population.

36(I) The extent to which health care coverage for the benefit or
37service is already generally available.

38(J) The level of public demand for health care coverage for the
39benefit or service, including the level of interest of collective
40bargaining agents in negotiating privately for inclusion of this
P11   1coverage in group contracts, and the extent to which the mandated
2benefit or service is covered by self-funded employer groups.

3(K) In assessing and preparing a written analysis of the financial
4impact of legislation proposing to mandate a benefit or service and
5legislation proposing to repeal a mandated benefit or service
6pursuant to this paragraph, the Legislature requests the University
7of California to use a certified actuary or other person with relevant
8knowledge and expertise to determine the financial impact.

9(4) The impact on essential health benefits, as defined in Section
101367.005 of this code and Section 10112.27 of the Insurance Code,
11and the impact on the California Health Benefit Exchange.

12(b) The Legislature further requests that the California Health
13Benefit Review Program assess legislation that impacts health
14insurance benefit design, cost sharing, premiums, and other health
15insurance topics.

16(c) The Legislature requests that the University of California
17provide every analysis to the appropriate policy and fiscal
18committees of the Legislature not later than 60 days, or in a manner
19and pursuant to a timeline agreed to by the Legislature and the
20California Health Benefit Review Program, after receiving a request
21made pursuant to Section 127661. In addition, the Legislature
22requests that the university post every analysis on the Internet and
23make every analysis available to the public upon request.

24(d) As used in this section, “legislation proposing to mandate a
25benefit or service” means a proposed statute that requires a health
26care service plan or a health insurer, or both, to do any of the
27following:

28(1) Permit a person insured or covered under the policy or
29contract to obtain health care treatment or services from a particular
30type of health care provider.

31(2) Offer or provide coverage for the screening, diagnosis, or
32treatment of a particular disease or condition.

33(3) Offer or provide coverage of a particular type of health care
34treatment or service, or of medical equipment, medical supplies,
35or drugs used in connection with a health care treatment or service.

36(e) 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) For the 2010-11 to 2016-17 fiscal years, inclusive, each
17health care service plan, except a specialized health care service
18plan, and each health insurer, as defined in Section 106 of the
19Insurance Code, shall be assessed an annual fee in an amount
20determined through regulation. The amount of the fee shall be
21determined by the Department of Managed Health Care and the
22Department of Insurance in consultation with the university and
23shall be limited to the amount necessary to fund the actual and
24necessary expenses of the university and its work in implementing
25this chapter. The total annual assessment on health care service
26plans and health insurers shall not exceed two million dollars
27($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
32subdivision (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
39 accordance 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, 2017, regarding the implementation of this chapter. This report
17shall be submitted in compliance with Section 9795 of the
18Government Code.

19

SEC. 5.  

Section 127665 of the Health and Safety Code is
20repealed.

21

SEC. 6.  

Section 127665 is added to the Health and Safety Code,
22to read:

23

127665.  

This chapter shall become inoperative on July 1, 2017,
24and, as of January 1, 2018, is repealed, unless a later enacted
25statute, that becomes operative on or before January 1, 2018,
26deletes or extends the dates on which it becomes inoperative and
27is repealed.

28

SEC. 7.  

Section 10965.3 of the Insurance Code is amended to
29read:

30

10965.3.  

(a) (1) On and after October 1, 2013, a health insurer
31shall fairly and affirmatively offer, market, and sell all of the
32insurer’s health benefit plans that are sold in the individual market
33for policy years on or after January 1, 2014, to all individuals and
34dependents in each service area in which the insurer provides or
35arranges for the provision of health care services. A health insurer
36shall limit enrollment in individual health benefit plans to open
37enrollment periods, annual enrollment periods, and special
38enrollment periods as provided in subdivisions (c) and (d).

39(2) A health insurer shall allow the policyholder of an individual
40health benefit plan to add a dependent to the policyholder’s health
P14   1benefit plan at the option of the policyholder, consistent with the
2open enrollment, annual enrollment, and special enrollment period
3requirements in this section.

4(b) An individual health benefit plan issued, amended, or
5renewed on or after January 1, 2014, shall not impose any
6preexisting condition provision upon any individual.

7(c) (1) A health insurer shall provide an initial open enrollment
8period from October 1, 2013, to March 31, 2014, inclusive, an
9annual enrollment period for the policy year beginning on January
101, 2015, from November 15, 2014, to February 15, 2015, inclusive,
11and annual enrollment periods for policy years beginning on or
12after January 1, 2016, from November 1, of the preceding calendar
13year, to January 31 of the benefit year, inclusive.

14(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
15of Federal Regulations, for individuals enrolled in noncalendar
16year individual health plan contracts, a health insurer shall also
17provide a limited open enrollment period beginning on the date
18that is 30 calendar days prior to the date the policy year ends in
192014.

20(d) (1) Subject to paragraph (2), commencing January 1, 2014,
21a health insurer shall allow an individual to enroll in or change
22individual health benefit plans as a result of the following triggering
23events:

24(A) He or she or his or her dependent loses minimum essential
25coverage. For purposes of this paragraph, both of the following
26definitions shall apply:

27(i) “Minimum essential coverage” has the same meaning as that
28term is defined in subsection (f) of Section 5000A of the Internal
29Revenue Code (26 U.S.C. Sec. 5000A).

30(ii) “Loss of minimum essential coverage” includes, but is not
31limited to, loss of that coverage due to the circumstances described
32in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
33Code of Federal Regulations and the circumstances described in
34Section 1163 of Title 29 of the United States Code. “Loss of
35minimum essential coverage” also includes loss of that coverage
36for a reason that is not due to the fault of the individual.

37(iii) “Loss of minimum essential coverage” does not include
38loss of that coverage due to the individual’s failure to pay
39premiums on a timely basis or situations allowing for a rescission,
40subject to clause (ii) and Sections 10119.2 and 10384.17.

P15   1(B) He or she gains a dependent or becomes a dependent.

2(C) He or she is mandated to be covered as a dependent pursuant
3to a valid state or federal court order.

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

5(E) His or her health coverage issuer substantially violated a
6material provision of the health coverage contract.

7(F) He or she gains access to new health benefit plans as a result
8of a permanent move.

9(G) He or she was receiving services from a contracting provider
10under another health benefit plan, as defined in Section 10965 of
11this code or Section 1399.845 of the Health and Safety Code, for
12one of the conditions described in subdivision (a) of Section
1310133.56 of this code and that provider is no longer participating
14in the health benefit plan.

15(H) He or she demonstrates to the Exchange, with respect to
16health benefit plans offered through the Exchange, or to the
17department, with respect to health benefit plans offered outside
18the Exchange, that he or she did not enroll in a health benefit plan
19during the immediately preceding enrollment period available to
20the individual because he or she was misinformed that he or she
21was covered under minimum essential coverage.

22(I) He or she is a member of the reserve forces of the United
23States military returning from active duty or a member of the
24California National Guard returning from active duty service under
25Title 32 of the United States Code.

26(J) With respect to individual health benefit plans offered
27through the Exchange, in addition to the triggering events listed
28in this paragraph, any other events listed in Section 155.420(d) of
29Title 45 of the Code of Federal Regulations.

30(2) With respect to individual health benefit plans offered
31outside the Exchange, an individual shall have 60 days from the
32date of a triggering event identified in paragraph (1) to apply for
33coverage from a health care service plan subject to this section.
34With respect to individual health benefit plans offered through the
35Exchange, an individual shall have 60 days from the date of a
36triggering event identified in paragraph (1) to select a plan offered
37through the Exchange, unless a longer period is provided in Part
38155 (commencing with Section 155.10) of Subchapter B of Subtitle
39A of Title 45 of the Code of Federal Regulations.

P16   1(e) With respect to individual health benefit plans offered
2through the Exchange, the effective date of coverage required
3pursuant to this section shall be consistent with the dates specified
4in Section 155.410 or 155.420 of Title 45 of the Code of Federal
5Regulations, as applicable. A dependent who is a registered
6domestic partner pursuant to Section 297 of the Family Code shall
7have the same effective date of coverage as a spouse.

8(f) With respect to an individual health benefit plan offered
9outside the Exchange, the following provisions shall apply:

10(1) After an individual submits a completed application form
11for a plan, the insurer shall, within 30 days, notify the individual
12of the individual’s actual premium charges for that plan established
13in accordance with Section 10965.9. The individual shall have 30
14days in which to exercise the right to buy coverage at the quoted
15premium charges.

16(2) With respect to an individual health benefit plan for which
17an individual applies during the initial open enrollment period
18described in subdivision (c), when the policyholder submits a
19premium payment, based on the quoted premium charges, and that
20payment is delivered or postmarked, whichever occurs earlier, by
21December 15, 2013, coverage under the individual health benefit
22plan shall become effective no later than January 1, 2014. When
23that payment is delivered or postmarked within the first 15 days
24of any subsequent month, coverage shall become effective no later
25than the first day of the following month. When that payment is
26delivered or postmarked between December 16, 2013, to December
2731, 2013, inclusive, or after the 15th day of any subsequent month,
28coverage shall become effective no later than the first day of the
29second month following delivery or postmark of the payment.

30(3) With respect to an individual health benefit plan for which
31an individual applies during the annual open enrollment period
32described in subdivision (c), when the individual submits a
33premium payment, based on the quoted premium charges, and that
34payment is delivered or postmarked, whichever occurs later, by
35December 15, coverage shall become effective as of the following
36January 1. When that payment is delivered or postmarked within
37the first 15 days of any subsequent month, coverage shall become
38effective no later than the first day of the following month. When
39that payment is delivered or postmarked between December 16 to
40December 31, inclusive, or after the 15th day of any subsequent
P17   1month, coverage shall become effective no later than the first day
2of the second month following delivery or postmark of the
3payment.

4(4) With respect to an individual health benefit plan for which
5an individual applies during a special enrollment period described
6in subdivision (d), the following provisions shall apply:

7(A) When the individual submits a premium payment, based
8on the quoted premium charges, and that payment is delivered or
9postmarked, whichever occurs earlier, within the first 15 days of
10the month, coverage under the plan shall become effective no later
11than the first day of the following month. When the premium
12payment is neither delivered nor postmarked until after the 15th
13day of the month, coverage shall become effective no later than
14the first day of the second month following delivery or postmark
15of the payment.

16(B) Notwithstanding subparagraph (A), in the case of a birth,
17adoption, or placement for adoption, the coverage shall be effective
18on the date of birth, adoption, or placement for adoption.

19(C) Notwithstanding subparagraph (A), in the case of marriage
20or becoming a registered domestic partner or in the case where a
21qualified individual loses minimum essential coverage, the
22coverage effective date shall be the first day of the month following
23 the date the insurer receives the request for special enrollment.

24(g) (1) A health insurer shall not establish rules for eligibility,
25including continued eligibility, of any individual to enroll under
26the terms of an individual health benefit plan based on any of the
27following factors:

28(A) Health status.

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

30(C) Claims experience.

31(D) Receipt of health care.

32(E) Medical history.

33(F) Genetic information.

34(G) Evidence of insurability, including conditions arising out
35of acts of domestic violence.

36(H) Disability.

37(I) Any other health status-related factor as determined by any
38federal regulations, rules, or guidance issued pursuant to Section
392705 of the federal Public Health Service Act (Public Law 78-410).

P18   1(2) Notwithstanding subdivision (c) of Section 10291.5, a health
2insurer shall not require an individual applicant or his or her
3dependent to fill out a health assessment or medical questionnaire
4prior to enrollment under an individual health benefit plan. A health
5insurer shall not acquire or request information that relates to a
6health status-related factor from the applicant or his or her
7dependent or any other source prior to enrollment of the individual.

8(h) (1) A health insurer shall consider as a single risk pool for
9rating purposes in the individual market the claims experience of
10all insureds and enrollees in all nongrandfathered individual health
11benefit plans offered by that insurer in this state, whether offered
12as health care service plan contracts or individual health insurance
13policies, including those insureds and enrollees who enroll in
14individual coverage through the Exchange and insureds and
15enrollees who enroll in individual coverage outside the Exchange.
16Student health insurance coverage, as such coverage is defined in
17Section 147.145(a) of Title 45 of the Code of Federal Regulations,
18shall not be included in a health insurer’s single risk pool for
19individual coverage.

20(2) Each calendar year, a health insurer shall establish an index
21rate for the individual market in the state based on the total
22combined claims costs for providing essential health benefits, as
23defined pursuant to Section 1302 of PPACA, within the single risk
24pool required under paragraph (1). The index rate shall be adjusted
25on a marketwide basis based on the total expected marketwide
26payments and charges under the risk adjustment and reinsurance
27programs established for the state pursuant to Sections 1343 and
281341 of PPACA and Exchange user fees, as described in
29subdivision (d) of Section 156.80 of Title 45 of the Code of Federal
30Regulations. The premium rate for all of the health benefit plans
31in the individual market within the single risk pool required under
32paragraph (1) shall use the applicable marketwide adjusted index
33rate, subject only to the adjustments permitted under paragraph
34(3).

35(3) A health insurer may vary premium rates for a particular
36health benefit plan from its index rate based only on the following
37actuarially justified plan-specific factors:

38(A) The actuarial value and cost-sharing design of the health
39benefit plan.

P19   1(B) The health benefit plan’s provider network, delivery system
2characteristics, and utilization management practices.

3(C) The benefits provided under the health benefit plan that are
4in addition to the essential health benefits, as defined pursuant to
5Section 1302 of PPACA and Section 10112.27. These additional
6benefits shall be pooled with similar benefits within the single risk
7pool required under paragraph (1) and the claims experience from
8those benefits shall be utilized to determine rate variations for
9plans that offer those benefits in addition to essential health
10benefits.

11(D) With respect to catastrophic plans, as described in subsection
12(e) of Section 1302 of PPACA, the expected impact of the specific
13eligibility categories for those plans.

14(E) Administrative costs, excluding any user fees required by
15the Exchange.

16(i) This section shall only apply with respect to individual health
17benefit plans for policy years on or after January 1, 2014.

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

19(k) If Section 5000A of the Internal Revenue Code, as added
20by Section 1501 of PPACA, is repealed or amended to no longer
21apply to the individual market, as defined in Section 2791 of the
22federal Public Health Service Act (42 U.S.C. Sec. 300gg-91),
23subdivisions (a), (b), and (g) shall become inoperative 12 months
24after the date of that repeal or amendment and individual health
25care benefit plans shall thereafter be subject to Sections 10901.2,
2610951, and 10953.

27

SEC. 8.  

No reimbursement is required by this act pursuant to
28Section 6 of Article XIII B of the California Constitution because
29the only costs that may be incurred by a local agency or school
30district will be incurred because this act creates a new crime or
31infraction, eliminates a crime or infraction, or changes the penalty
32for a crime or infraction, within the meaning of Section 17556 of
33the Government Code, or changes the definition of a crime within
34the meaning of Section 6 of Article XIII B of the California
35Constitution.

36

SEC. 9.  

This act is an urgency statute necessary for the
37immediate preservation of the public peace, health, or safety within
38the meaning of Article IV of the Constitution and shall go into
39immediate effect. The facts constituting the necessity are:

P20   1In order to maintain appropriate standards of accuracy and
2efficiency with respect to matters relating to health care coverage
3in California, by adjusting the next open enrollment period for the
4individual health care coverage market as needed to comply with
5federal law, and ensuring that the University of California is
6provided with sufficient advance notice regarding the continuing
7duties of the university to plan and carry out necessary health care
8benefit research and analysis as requested pursuant to this act, it
9is necessary that this act take effect immediately.



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