BILL NUMBER: SB 125 CHAPTERED
BILL TEXT
CHAPTER 9
FILED WITH SECRETARY OF STATE JUNE 17, 2015
APPROVED BY GOVERNOR JUNE 17, 2015
PASSED THE SENATE JUNE 4, 2015
PASSED THE ASSEMBLY JUNE 2, 2015
AMENDED IN ASSEMBLY MAY 21, 2015
AMENDED IN ASSEMBLY MAY 19, 2015
AMENDED IN ASSEMBLY MAY 6, 2015
AMENDED IN SENATE APRIL 6, 2015
AMENDED IN SENATE FEBRUARY 26, 2015
INTRODUCED BY Senator Hernandez
JANUARY 16, 2015
An act to amend Sections 1357.500, 1399.849, 127660, 127662, and
127664 of, and to repeal and add Section 127665 of, the Health and
Safety Code, and to amend Sections 10753 and 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, 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 or 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) PPACA requires each state, by January 1, 2014, to establish an
American Health Benefit Exchange that facilitates the purchase of
qualified health plans by qualified individuals and qualified small
employers. PPACA, in connection with state health benefit exchanges,
defines a small employer to mean an employer who employed an average
of at least one but not more than 100 employees on business days
during the preceding calendar year, and requires the number of
employees, for purposes of determining the size of the employer, to
be determined using a counting method in which full-time equivalents
are treated as full-time employees for plan years beginning on or
after January 1, 2016.
Existing law establishes the California Health Benefit Exchange
within state government for the purpose of facilitating the purchase
of qualified health plans through the Exchange by qualified
individuals and small employers. Existing law requires, on and after
October 1, 2013, a health care service plan or health insurer to
fairly and affirmatively offer, market, and sell all of the plan's or
insurer's small employer plan contracts or health benefit plans for
plan years on or after January 1, 2014, to all small employers in
each service area or geographic region in which the plan or insurer
provides or arranges for health care services or benefits. For plan
years commencing on or after January 1, 2016, existing law defines a
small employer to mean any person, firm, proprietary or nonprofit
organization, partnership, public agency, or association that is
actively engaged in business or service, that, on at least 50% of its
working days during the preceding calendar quarter or preceding
calendar year, employed at least one, but no more than 100, eligible
full-time employees, as specified.
This bill would revise the definition of small employer, for plan
years commencing on or after January 1, 2016, to instead require the
use of the full-time equivalent employee counting method for
determining the size of the employer, as specified under PPACA.
(3) 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.
(4) 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.
(5) This bill would declare that it is to take effect immediately
as an urgency statute.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1357.500 of the Health and Safety Code is
amended to read:
1357.500. As used in this article, the following definitions
shall apply:
(a) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
(b) "Dependent" means the spouse or registered domestic partner,
or child, of an eligible employee, subject to applicable terms of the
health care service plan contract covering the employee, and
includes dependents of guaranteed association members if the
association elects to include dependents under its health coverage at
the same time it determines its membership composition pursuant to
subdivision (m).
(c) "Eligible employee" means either of the following:
(1) Any permanent employee who is actively engaged on a full-time
basis in the conduct of the business of the small employer with a
normal workweek of an average of 30 hours per week over the course of
a month, at the small employer's regular places of business, who has
met any statutorily authorized applicable waiting period
requirements. The term includes sole proprietors or partners of a
partnership, if they are actively engaged on a full-time basis in the
small employer's business and included as employees under a health
care service plan contract of a small employer, but does not include
employees who work on a part-time, temporary, or substitute basis. It
includes any eligible employee, as defined in this paragraph, who
obtains coverage through a guaranteed association. Employees of
employers purchasing through a guaranteed association shall be deemed
to be eligible employees if they would otherwise meet the definition
except for the number of persons employed by the employer. Permanent
employees who work at least 20 hours but not more than 29 hours are
deemed to be eligible employees if all four of the following apply:
(A) They otherwise meet the definition of an eligible employee
except for the number of hours worked.
(B) The employer offers the employees health coverage under a
health benefit plan.
(C) All similarly situated individuals are offered coverage under
the health benefit plan.
(D) The employee must have worked at least 20 hours per normal
workweek for at least 50 percent of the weeks in the previous
calendar quarter. The health care service plan may request any
necessary information to document the hours and time period in
question, including, but not limited to, payroll records and employee
wage and tax filings.
(2) Any member of a guaranteed association as defined in
subdivision (m).
(d) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(e) "In force business" means an existing health benefit plan
contract issued by the plan to a small employer.
(f) "Late enrollee" means an eligible employee or dependent who
has declined enrollment in a health benefit plan offered by a small
employer at the time of the initial enrollment period provided under
the terms of the health benefit plan consistent with the periods
provided pursuant to Section 1357.503 and who subsequently requests
enrollment in a health benefit plan of that small employer, except
where the employee or dependent qualifies for a special enrollment
period provided pursuant to Section 1357.503. It also means any
member of an association that is a guaranteed association as well as
any other person eligible to purchase through the guaranteed
association when that person has failed to purchase coverage during
the initial enrollment period provided under the terms of the
guaranteed association's plan contract consistent with the periods
provided pursuant to Section 1357.503 and who subsequently requests
enrollment in the plan, except where that member or person qualifies
for a special enrollment period provided pursuant to Section
1357.503.
(g) "New business" means a health care service plan contract
issued to a small employer that is not the plan's in force business.
(h) "Preexisting condition provision" means a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the enrollee's effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage. No health care
service plan shall limit or exclude coverage for any individual based
on a preexisting condition whether or not any medical advice,
diagnosis, care, or treatment was recommended or received before that
date.
(i) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program that is
written or administered by a disability insurer, health care service
plan, fraternal benefits society, self-insured employer plan, or any
other entity, in this state or elsewhere, and that arranges or
provides medical, hospital, and surgical coverage not designed to
supplement other private or governmental plans. The term includes
continuation or conversion coverage but does not include accident
only, credit, coverage for onsite medical clinics, disability income,
Medicare supplement, long-term care, dental, vision, coverage issued
as a supplement to liability insurance, insurance arising out of a
workers' compensation or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(2) The Medicare Program pursuant to Title XVIII of the federal
Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) Chapter 55 (commencing with Section 1071) of Title 10 of the
United States Code (Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A health plan offered under Chapter 89 (commencing with
Section 8901) of Title 5 of the United States Code (Federal Employees
Health Benefits Program (FEHBP)).
(8) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the Public Health Service Act,
as amended by Public Law 104-191, the Health Insurance Portability
and Accountability Act of 1996.
(9) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C. Sec. 2504(e)).
(10) Any other creditable coverage as defined by subsection (c) of
Section 2704 of Title XXVII of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-3(c)).
(j) "Rating period" means the period for which premium rates
established by a plan are in effect and shall be no less than 12
months from the date of issuance or renewal of the plan contract.
(k) (1) "Small employer" means any of the following:
(A) For plan years commencing on or after January 1, 2014, and on
or before December 31, 2015, any person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 50,
eligible employees, the majority of whom were employed within this
state, that was not formed primarily for purposes of buying health
care service plan contracts, and in which a bona fide
employer-employee relationship exists. For plan years commencing on
or after January 1, 2016, any person, firm, proprietary or nonprofit
corporation, partnership, public agency, or association that is
actively engaged in business or service, that, on at least 50 percent
of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 100,
employees, the majority of whom were employed within this state,
that was not formed primarily for purposes of buying health care
service plan contracts, and in which a bona fide employer-employee
relationship exists. In determining whether to apply the calendar
quarter or calendar year test, a health care service plan shall use
the test that ensures eligibility if only one test would establish
eligibility. In determining the number of employees or eligible
employees, companies that are affiliated companies and that are
eligible to file a combined tax return for purposes of state taxation
shall be considered one employer. Subsequent to the issuance of a
health care service plan contract to a small employer pursuant to
this article, and for the purpose of determining eligibility, the
size of a small employer shall be determined annually. Except as
otherwise specifically provided in this article, provisions of this
article that apply to a small employer shall continue to apply until
the plan contract anniversary following the date the employer no
longer meets the requirements of this definition. It includes any
small employer as defined in this paragraph who purchases coverage
through a guaranteed association, and any employer purchasing
coverage for employees through a guaranteed association. This
subparagraph shall be implemented to the extent consistent with
PPACA, except that the minimum requirement of one employee shall be
implemented only to the extent required by PPACA.
(B) Any guaranteed association, as defined in subdivision (l),
that purchases health coverage for members of the association.
(2) For plan years commencing on or after January 1, 2014, the
definition of an employer, for purposes of determining whether an
employer with one employee shall include sole proprietors, certain
owners of "S" corporations, or other individuals, shall be consistent
with Section 1304 of PPACA.
(3) For plan years commencing on or after January 1, 2016, the
definition of small employer, for purposes of determining employer
eligibility in the small employer market, shall be determined using
the method for counting full-time employees and full-time equivalent
employees set forth in Section 4980H(c)(2) of the Internal Revenue
Code.
(l) "Guaranteed association" means a nonprofit organization
comprised of a group of individuals or employers who associate based
solely on participation in a specified profession or industry,
accepting for membership any individual or employer meeting its
membership criteria, and that (1) includes one or more small
employers as defined in subparagraph (A) of paragraph (1) of
subdivision (k), (2) does not condition membership directly or
indirectly on the health or claims history of any person, (3) uses
membership dues solely for and in consideration of the membership and
membership benefits, except that the amount of the dues shall not
depend on whether the member applies for or purchases insurance
offered to the association, (4) is organized and maintained in good
faith for purposes unrelated to insurance, (5) has been in active
existence on January 1, 1992, and for at least five years prior to
that date, (6) has included health insurance as a membership benefit
for at least five years prior to January 1, 1992, (7) has a
constitution and bylaws, or other analogous governing documents that
provide for election of the governing board of the association by its
members, (8) offers any plan contract that is purchased to all
individual members and employer members in this state, (9) includes
any member choosing to enroll in the plan contracts offered to the
association provided that the member has agreed to make the required
premium payments, and (10) covers at least 1,000 persons with the
health care service plan with which it contracts. The requirement of
1,000 persons may be met if component chapters of a statewide
association contracting separately with the same carrier cover at
least 1,000 persons in the aggregate.
This subdivision applies regardless of whether a contract issued
by a plan is with an association, or a trust formed for or sponsored
by an association, to administer benefits for association members.
For purposes of this subdivision, an association formed by a
merger of two or more associations after January 1, 1992, and
otherwise meeting the criteria of this subdivision shall be deemed to
have been in active existence on January 1, 1992, if its predecessor
organizations had been in active existence on January 1, 1992, and
for at least five years prior to that date and otherwise met the
criteria of this subdivision.
(m) "Members of a guaranteed association" means any individual or
employer meeting the association's membership criteria if that person
is a member of the association and chooses to purchase health
coverage through the association. At the association's discretion, it
also may include employees of association members, association
staff, retired members, retired employees of members, and surviving
spouses and dependents of deceased members. However, if an
association chooses to include these persons as members of the
guaranteed association, the association shall make that election in
advance of purchasing a plan contract. Health care service plans may
require an association to adhere to the membership composition it
selects for up to 12 months.
(n) "Affiliation period" means a period that, under the terms of
the health care service plan contract, must expire before health care
services under the contract become effective.
(o) "Grandfathered health plan" has the meaning set forth in
Section 1251 of PPACA.
(p) "Nongrandfathered small employer health care service plan
contract" means a small employer health care service plan contract
that is not a grandfathered health plan.
(q) "Plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
(r) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
(s) "Small employer health care service plan contract" means a
health care service plan contract issued to a small employer.
(t) "Waiting period" means a period that is required to pass with
respect to an employee before the employee is eligible to be covered
for benefits under the terms of the contract.
(u) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
(v) "Family" means the subscriber and his or her dependent or
dependents.
(w) "Health benefit plan" means a health care service plan
contract that provides medical, hospital, and surgical benefits for
the covered eligible employees of a small employer and their
dependents. The term does not include coverage of Medicare services
pursuant to contracts with the United States government, Medicare
supplement coverage, or coverage under a specialized health care
service plan contract.
SEC. 2. Section 1399.849 of the Health and Safety Code is amended
to read:
1399.849. (a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan'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 provides or
arranges for the provision of health care services. A plan shall
limit enrollment in individual health benefit plans to open
enrollment periods, annual enrollment periods, and special enrollment
periods as provided in subdivisions (c) and (d).
(2) A plan shall allow the subscriber of an individual health
benefit plan to add a dependent to the subscriber's plan at the
option of the subscriber, consistent with the open enrollment, annual
enrollment, and special enrollment period requirements in this
section.
(b) An individual health benefit plan issued, amended, or renewed
on or after January 1, 2014, shall not impose any preexisting
condition provision upon any individual.
(c) (1) A plan shall provide an initial open enrollment period
from October 1, 2013, to March 31, 2014, inclusive, an annual
enrollment period for the policy year beginning on January 1, 2015,
from November 15, 2014, to February 15, 2015, inclusive, and annual
enrollment periods for policy years beginning on or after January 1,
2016, from November 1, of the preceding calendar year, to January 31
of the benefit year, inclusive.
(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code of
Federal Regulations, for individuals enrolled in noncalendar year
individual health plan contracts, a plan shall also provide a limited
open enrollment period beginning on the date that is 30 calendar
days prior to the date the policy year ends in 2014.
(d) (1) Subject to paragraph (2), commencing January 1, 2014, a
plan shall allow an individual to enroll in or change individual
health benefit plans as a result of the following triggering events:
(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, the following definitions
shall apply:
(i) "Minimum essential coverage" has the same meaning as that term
is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).
(ii) "Loss of minimum essential coverage" includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. "Loss of minimum
essential coverage" also includes loss of that coverage for a reason
that is not due to the fault of the individual.
(iii) "Loss of minimum essential coverage" does not include loss
of that coverage due to the individual's failure to pay premiums on a
timely basis or situations allowing for a rescission, subject to
clause (ii) and Sections 1389.7 and 1389.21.
(B) He or she gains a dependent or becomes a dependent.
(C) He or she is mandated to be covered as a dependent pursuant to
a valid state or federal court order.
(D) He or she has been released from incarceration.
(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.
(F) He or she gains access to new health benefit plans as a result
of a permanent move.
(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845 of
this code or Section 10965 of the Insurance Code, for one of the
conditions described in subdivision (c) of Section 1373.96 of this
code and that provider is no longer participating in the health
benefit plan.
(H) He or she demonstrates to the Exchange, with respect to health
benefit plans offered through the Exchange, or to the department,
with respect to health benefit plans offered outside the Exchange,
that he or she did not enroll in a health benefit plan during the
immediately preceding enrollment period available to the individual
because he or she was misinformed that he or she was covered under
minimum essential coverage.
(I) He or she is a member of the reserve forces of the United
States military returning from active duty or a member of the
California National Guard returning from active duty service under
Title 32 of the United States Code.
(J) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed in
this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.
(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the date
of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part 155
(commencing with Section 155.10) of Subchapter B of Subtitle A of
Title 45 of the Code of Federal Regulations.
(e) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage required
pursuant to this section shall be consistent with the dates specified
in Section 155.410 or 155.420 of Title 45 of the Code of Federal
Regulations, as applicable. A dependent who is a registered domestic
partner pursuant to Section 297 of the Family Code shall have the
same effective date of coverage as a spouse.
(f) With respect to individual health benefit plans offered
outside the Exchange, the following provisions shall apply:
(1) After an individual submits a completed application form for a
plan contract, the health care service plan shall, within 30 days,
notify the individual of the individual's actual premium charges for
that plan established in accordance with Section 1399.855. The
individual shall have 30 days in which to exercise the right to buy
coverage at the quoted premium charges.
(2) With respect to an individual health benefit plan for which an
individual applies during the initial open enrollment period
described in subdivision (c), when the subscriber submits a premium
payment, based on the quoted premium charges, and that payment is
delivered or postmarked, whichever occurs earlier, by December 15,
2013, coverage under the individual health benefit plan shall become
effective no later than January 1, 2014. When that payment is
delivered or postmarked within the first 15 days of any subsequent
month, coverage shall become effective no later than the first day of
the following month. When that payment is delivered or postmarked
between December 16, 2013, to December 31, 2013, inclusive, or after
the 15th day of any subsequent month, coverage shall become effective
no later than the first day of the second month following delivery
or postmark of the payment.
(3) With respect to an individual health benefit plan for which an
individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a premium
payment, based on the quoted premium charges, and that payment is
delivered or postmarked, whichever occurs later, by December 15,
coverage shall become effective as of the following January 1. When
that payment is delivered or postmarked within the first 15 days of
any subsequent month, coverage shall become effective no later than
the first day of the following month. When that payment is delivered
or postmarked between December 16 to December 31, inclusive, or after
the 15th day of any subsequent month, coverage shall become
effective no later than the first day of the second month following
delivery or postmark of the payment.
(4) With respect to an individual health benefit plan for which an
individual applies during a special enrollment period described in
subdivision (d), the following provisions shall apply:
(A) When the individual submits a premium payment, based on the
quoted premium charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the month,
coverage under the plan shall become effective no later than the
first day of the following month. When the premium payment is neither
delivered nor postmarked until after the 15th day of the month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.
(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.
(C) Notwithstanding subparagraph (A), in the case of marriage or
becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the coverage
effective date shall be the first day of the month following the date
the plan receives the request for special enrollment.
(g) (1) A health care service plan shall not establish rules for
eligibility, including continued eligibility, of any individual to
enroll under the terms of an individual health benefit plan based on
any of the following factors:
(A) Health status.
(B) Medical condition, including physical and mental illnesses.
(C) Claims experience.
(D) Receipt of health care.
(E) Medical history.
(F) Genetic information.
(G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(H) Disability.
(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act (Public Law 78-410).
(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her dependent to
fill out a health assessment or medical questionnaire prior to
enrollment under an individual health benefit plan. A health care
service plan shall not acquire or request information that relates to
a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
(h) (1) A health care service plan shall consider as a single risk
pool for rating purposes in the individual market the claims
experience of all insureds and all enrollees in all nongrandfathered
individual health benefit plans offered by that health care service
plan in this state, whether offered as health care service plan
contracts or individual health insurance policies, including those
insureds and enrollees who enroll in individual coverage through the
Exchange and insureds and enrollees who enroll in individual coverage
outside of the Exchange. Student health insurance coverage, as that
coverage is defined in Section 147.145(a) of Title 45 of the Code of
Federal Regulations, shall not be included in a health care service
plan's single risk pool for individual coverage.
(2) Each calendar year, a health care service plan shall establish
an index rate for the individual market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section
1302 of PPACA, within the single risk pool required under
paragraph (1). The index rate shall be adjusted on a marketwide basis
based on the total expected marketwide payments and charges under
the risk adjustment and reinsurance programs established for the
state pursuant to Sections 1343 and 1341 of PPACA and Exchange user
fees, as described in subdivision (d) of Section 156.80 of Title 45
of the Code of Federal Regulations. The premium rate for all of the
health benefit plans in the individual market within the single risk
pool required under paragraph (1) shall use the applicable marketwide
adjusted index rate, subject only to the adjustments permitted under
paragraph (3).
(3) A health care service plan may vary premium rates for a
particular health benefit plan from its index rate based only on the
following actuarially justified plan-specific factors:
(A) The actuarial value and cost-sharing design of the health
benefit plan.
(B) The health benefit plan's provider network, delivery system
characteristics, and utilization management practices.
(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA and Section 1367.005. These additional benefits
shall be pooled with similar benefits within the single risk pool
required under paragraph (1) and the claims experience from those
benefits shall be utilized to determine rate variations for plans
that offer those benefits in addition to essential health benefits.
(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.
(E) Administrative costs, excluding user fees required by the
Exchange.
(i) This section shall only apply with respect to individual
health benefit plans for policy years on or after January 1, 2014.
(j) This section shall not apply to a grandfathered health plan.
(k) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-91), subdivisions
(a), (b), and (g) shall become inoperative 12 months after that
repeal or amendment.
SEC. 3. Section 127660 of the Health and Safety Code is amended to
read:
127660. (a) The Legislature hereby requests the University of
California to establish the California Health Benefit Review Program
to assess legislation proposing to mandate a benefit or service, as
defined in subdivision (d), and legislation proposing to repeal a
mandated benefit or service, as defined in subdivision (e), and to
prepare a written analysis with relevant data on the following:
(1) Public health impacts, including, but not limited to, all of
the following:
(A) The impact on the health of the community, including the
reduction of communicable disease and the benefits of prevention such
as those provided by childhood immunizations and prenatal care.
(B) The impact on the health of the community, including diseases
and conditions where disparities in outcomes associated with the
social determinants of health as well as gender, race, sexual
orientation, or gender identity are established in peer-reviewed
scientific and medical literature.
(C) The extent to which the benefit or service reduces premature
death and the economic loss associated with disease.
(2) Medical impacts, including, but not limited to, all of the
following:
(A) The extent to which the benefit or service is generally
recognized by the medical community as being effective in the
screening, diagnosis, or treatment of a condition or disease, as
demonstrated by a review of scientific and peer-reviewed medical
literature.
(B) The extent to which the benefit or service is generally
available and utilized by treating physicians.
(C) The contribution of the benefit or service to the health
status of the population, including the results of any research
demonstrating the efficacy of the benefit or service compared to
alternatives, including not providing the benefit or service.
(D) The extent to which mandating or repealing the benefits or
services would not diminish or eliminate access to currently
available health care benefits or services.
(3) Financial impacts, including, but not limited to, all of the
following:
(A) The extent to which the coverage or repeal of coverage will
increase or decrease the benefit or cost of the benefit or service.
(B) The extent to which the coverage or repeal of coverage will
increase the utilization of the benefit or service, or will be a
substitute for, or affect the cost of, alternative benefits or
services.
(C) The extent to which the coverage or repeal of coverage will
increase or decrease the administrative expenses of health care
service plans and health insurers and the premium and expenses of
subscribers, enrollees, and policyholders.
(D) The impact of this coverage or repeal of coverage on the total
cost of health care.
(E) The potential cost or savings to the private sector, including
the impact on small employers as defined in paragraph (1) of
subdivision (l) of Section 1357, the Public Employees' Retirement
System, other retirement systems funded by the state or by a local
government, individuals purchasing individual health insurance, and
publicly funded state health insurance programs, including the
Medi-Cal program and the Healthy Families Program.
(F) The extent to which costs resulting from lack of coverage or
repeal of coverage are or would be shifted to other payers, including
both public and private entities.
(G) The extent to which mandating or repealing the proposed
benefit or service would not diminish or eliminate access to
currently available health care benefits or services.
(H) The extent to which the benefit or service is generally
utilized by a significant portion of the population.
(I) The extent to which health care coverage for the benefit or
service is already generally available.
(J) The level of public demand for health care coverage for the
benefit or service, including the level of interest of collective
bargaining agents in negotiating privately for inclusion of this
coverage in group contracts, and the extent to which the mandated
benefit or service is covered by self-funded employer groups.
(K) In assessing and preparing a written analysis of the financial
impact of legislation proposing to mandate a benefit or service and
legislation proposing to repeal a mandated benefit or service
pursuant to this paragraph, the Legislature requests the University
of California to use a certified actuary or other person with
relevant knowledge and expertise to determine the financial impact.
(4) The impact on essential health benefits, as defined in Section
1367.005 of this code and Section 10112.27 of the Insurance Code,
and the impact on the California Health Benefit Exchange.
(b) The Legislature further requests that the California Health
Benefit Review Program assess legislation that impacts health
insurance benefit design, cost sharing, premiums, and other health
insurance topics.
(c) The Legislature requests that the University of California
provide every 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
California Health Benefit Review Program, after receiving a request
made pursuant to Section 127661. In addition, the Legislature
requests that the university post every analysis on the Internet and
make every analysis available to the public upon request.
(d) As used in this section, "legislation proposing to mandate a
benefit or service" means a proposed statute that requires a health
care service plan or a health insurer, or both, to do any of the
following:
(1) Permit a person insured or covered under the policy or
contract to obtain health care treatment or services from a
particular type of health care provider.
(2) Offer or provide coverage for the screening, diagnosis, or
treatment of a particular disease or condition.
(3) Offer or provide coverage of a particular type of health care
treatment or service, or of medical equipment, medical supplies, or
drugs used in connection with a health care treatment or service.
(e) As used in this section, "legislation proposing to repeal a
mandated benefit or service" means a proposed statute that, if
enacted, would become operative on or after January 1, 2008, and
would repeal an existing requirement that a health care service plan
or a health insurer, or both, do any of the following:
(1) Permit a person insured or covered under the policy or
contract to obtain health care treatment or services from a
particular type of health care provider.
(2) Offer or provide coverage for the screening, diagnosis, or
treatment of a particular disease or condition.
(3) Offer or provide coverage of a particular type of health care
treatment or service, or of medical equipment, medical supplies, or
drugs used in connection with a health care treatment or service.
SEC. 4. Section 127662 of the Health and Safety Code is amended to
read:
127662. (a) In order to effectively support the University of
California and its work in implementing this chapter, there is hereby
established in the State Treasury, the Health Care Benefits Fund.
The university's work in providing the bill analyses shall be
supported from the fund.
(b) For the 2010-11 to 2016-17 fiscal years, inclusive, each
health care service plan, except a specialized health care service
plan, and each health insurer, as defined in Section 106 of the
Insurance Code, shall be assessed an annual fee in an amount
determined through regulation. The amount of the fee shall be
determined by the Department of Managed Health Care and the
Department of Insurance in consultation with the university and shall
be limited to the amount necessary to fund the actual and necessary
expenses of the university and its work in implementing this chapter.
The total annual assessment on health care service plans and health
insurers shall not exceed two million dollars ($2,000,000).
(c) The Department of Managed Health Care and the Department of
Insurance, in coordination with the university, shall assess the
health care service plans and health insurers, respectively, for the
costs required to fund the university's activities pursuant to
subdivision (b).
(1) Health care service plans shall be notified of the assessment
on or before June 15 of each year with the annual assessment notice
issued pursuant to Section 1356. The assessment pursuant to this
section is separate and independent of the assessments in Section
1356.
(2) Health insurers shall be noticed of the assessment in
accordance with the notice for the annual assessment or quarterly
premium tax revenues.
(3) The assessed fees required pursuant to subdivision (b) shall
be paid on an annual basis no later than August 1 of each year. The
Department of Managed Health Care and the Department of Insurance
shall forward the assessed fees to the Controller for deposit in the
Health Care Benefits Fund immediately following their receipt.
(4) "Health insurance," as used in this subdivision, does not
include Medicare supplement, vision-only, dental-only, or CHAMPUS
supplement insurance, or hospital indemnity, accident-only, or
specified disease insurance that does not pay benefits on a fixed
benefit, cash payment only basis.
SEC. 5. Section 127664 of the Health and Safety Code is amended to
read:
127664. The Legislature requests the University of California to
submit a report to the Governor and the Legislature by January 1,
2017, regarding the implementation of this chapter. This report shall
be submitted in compliance with Section 9795 of the Government Code.
SEC. 6. Section 127665 of the Health and Safety Code is repealed.
SEC. 7. Section 127665 is added to the Health and Safety Code, to
read:
127665. This chapter shall become inoperative on July 1, 2017,
and, as of January 1, 2018, is repealed, unless a later enacted
statute, that becomes operative on or before January 1, 2018, deletes
or extends the dates on which it becomes inoperative and is
repealed.
SEC. 8. Section 10753 of the Insurance Code is amended to read:
10753. (a) "Agent or broker" means a person or entity licensed
under Chapter 5 (commencing with Section 1621) of Part 2 of Division
1.
(b) "Benefit plan design" means a specific health coverage product
issued by a carrier to small employers, to trustees of associations
that include small employers, or to individuals if the coverage is
offered through employment or sponsored by an employer. It includes
services covered and the levels of copayment and deductibles, and it
may include the professional providers who are to provide those
services and the sites where those services are to be provided. A
benefit plan design may also be an integrated system for the
financing and delivery of quality health care services which has
significant incentives for the covered individuals to use the system.
(c) "Carrier" means a health insurer or any other entity that
writes, issues, or administers health benefit plans that cover the
employees of small employers, regardless of the situs of the contract
or master policyholder.
(d) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
(e) "Dependent" means the spouse or registered domestic partner,
or child, of an eligible employee, subject to applicable terms of the
health benefit plan covering the employee, and includes dependents
of guaranteed association members if the association elects to
include dependents under its health coverage at the same time it
determines its membership composition pursuant to subdivision (s).
(f) "Eligible employee" means either of the following:
(1) Any permanent employee who is actively engaged on a full-time
basis in the conduct of the business of the small employer with a
normal workweek of an average of 30 hours per week over the course of
a month, in the small employer's regular place of business, who has
met any statutorily authorized applicable waiting period
requirements. The term includes sole proprietors or partners of a
partnership, if they are actively engaged on a full-time basis in the
small employer's business, and they are included as employees under
a health benefit plan of a small employer, but does not include
employees who work on a part-time, temporary, or substitute basis. It
includes any eligible employee, as defined in this paragraph, who
obtains coverage through a guaranteed association. Employees of
employers purchasing through a guaranteed association shall be deemed
to be eligible employees if they would otherwise meet the definition
except for the number of persons employed by the employer. A
permanent employee who works at least 20 hours but not more than 29
hours is deemed to be an eligible employee if all four of the
following apply:
(A) The employee otherwise meets the definition of an eligible
employee except for the number of hours worked.
(B) The employer offers the employee health coverage under a
health benefit plan.
(C) All similarly situated individuals are offered coverage under
the health benefit plan.
(D) The employee must have worked at least 20 hours per normal
workweek for at least 50 percent of the weeks in the previous
calendar quarter. The insurer may request any necessary information
to document the hours and time period in question, including, but not
limited to, payroll records and employee wage and tax filings.
(2) Any member of a guaranteed association as defined in
subdivision (s).
(g) "Enrollee" means an eligible employee or dependent who
receives health coverage through the program from a participating
carrier.
(h) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(i) "Financially impaired" means, for the purposes of this
chapter, a carrier that, on or after the effective date of this
chapter, is not insolvent and is either:
(1) Deemed by the commissioner to be potentially unable to fulfill
its contractual obligations.
(2) Placed under an order of rehabilitation or conservation by a
court of competent jurisdiction.
(j) "Health benefit plan" means a policy of health insurance, as
defined in Section 106, for the covered eligible employees of a small
employer and their dependents. The term does not include coverage of
Medicare services pursuant to contracts with the United States
government, or coverage that provides excepted benefits, as described
in Sections 2722 and 2791 of the federal Public Health Service Act,
subject to Section 10701.
(k) "In force business" means an existing health benefit plan
issued by the carrier to a small employer.
(l) "Late enrollee" means an eligible employee or dependent who
has declined health coverage under a health benefit plan offered by a
small employer at the time of the initial enrollment period provided
under the terms of the health benefit plan consistent with the
periods provided pursuant to Section 10753.05 and who subsequently
requests enrollment in a health benefit plan of that small employer,
except where the employee or dependent qualifies for a special
enrollment period provided pursuant to Section 10753.05. It also
means any member of an association that is a guaranteed association
as well as any other person eligible to purchase through the
guaranteed association when that person has failed to purchase
coverage during the initial enrollment period provided under the
terms of the guaranteed association's health benefit plan consistent
with the periods provided pursuant to Section 10753.05 and who
subsequently requests enrollment in the plan, except where the
employee or dependent qualifies for a special enrollment period
provided pursuant to Section 10753.05.
(m) "New business" means a health benefit plan issued to a small
employer that is not the carrier's in force business.
(n) "Preexisting condition provision" means a policy provision
that excludes coverage for charges or expenses incurred during a
specified period following the insured's effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage.
(o) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program, that is
written or administered by a health insurer, health care service
plan, fraternal benefits society, self-insured employer plan, or any
other entity, in this state or elsewhere, and that arranges or
provides medical, hospital, and surgical coverage not designed to
supplement other private or governmental plans. The term includes
continuation or conversion coverage but does not include accident
only, credit, coverage for onsite medical clinics, disability income,
Medicare supplement, long-term care, dental, vision, coverage issued
as a supplement to liability insurance, insurance arising out of a
workers' compensation or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(2) The federal Medicare Program pursuant to Title XVIII of the
federal Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) Chapter 55 (commencing with Section 1071) of Title 10 of the
United States Code (Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A health plan offered under Chapter 89 (commencing with
Section 8901) of Title 5 of the United States Code (Federal Employees
Health Benefits Program (FEHBP)).
(8) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the federal Public Health
Service Act, as amended by Public Law 104-191, the federal Health
Insurance Portability and Accountability Act of 1996.
(9) A health benefit plan under Section 5(e) of the federal Peace
Corps Act (22 U.S.C. Sec. 2504(e)).
(10) Any other creditable coverage as defined by subdivision (c)
of Section 2704 of Title XXVII of the federal Public Health Service
Act (42 U.S.C. Sec. 300gg-3(c)).
(p) "Rating period" means the period for which premium rates
established by a carrier are in effect and shall be no less than 12
months from the date of issuance or renewal of the health benefit
plan.
(q) (1) "Small employer" means either of the following:
(A) For plan years commencing on or after January 1, 2014, and on
or before December 31, 2015, any person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 50,
eligible employees, the majority of whom were employed within this
state, that was not formed primarily for purposes of buying health
benefit plans, and in which a bona fide employer-employee
relationship exists. For plan years commencing on or after January 1,
2016, any person, firm, proprietary or nonprofit corporation,
partnership, public agency, or association that is actively engaged
in business or service, that, on at least 50 percent of its working
days during the preceding calendar quarter or preceding calendar
year, employed at least one, but no more than 100, employees, the
majority of whom were employed within this state, that was not formed
primarily for purposes of buying health benefit plans, and in which
a bona fide employer-employee relationship exists. In determining
whether to apply the calendar quarter or calendar year test, a
carrier shall use the test that ensures eligibility if only one test
would establish eligibility. In determining the number of employees
or eligible employees, companies that are affiliated companies and
that are eligible to file a combined tax return for purposes of state
taxation shall be considered one employer. Subsequent to the
issuance of a health benefit plan to a small employer pursuant to
this chapter, and for the purpose of determining eligibility, the
size of a small employer shall be determined annually. Except as
otherwise specifically provided in this chapter, provisions of this
chapter that apply to a small employer shall continue to apply until
the plan contract anniversary following the date the employer no
longer meets the requirements of this definition. It includes any
small employer as defined in this subparagraph who purchases coverage
through a guaranteed association, and any employer purchasing
coverage for employees through a guaranteed association. This
subparagraph shall be implemented to the extent consistent with
PPACA, except that the minimum requirement of one employee shall be
implemented only to the extent required by PPACA.
(B) Any guaranteed association, as defined in subdivision (r),
that purchases health coverage for members of the association.
(2) For plan years commencing on or after January 1, 2014, the
definition of an employer, for purposes of determining whether an
employer with one employee shall include sole proprietors, certain
owners of "S" corporations, or other individuals, shall be consistent
with Section 1304 of PPACA.
(3) For plan years commencing on or after January 1, 2016, the
definition of small employer, for purposes of determining employer
eligibility in the small employer market, shall be determined using
the method for counting full-time employees and full-time equivalent
employees set forth in Section 4980H(c)(2) of the Internal Revenue
Code.
(r) "Guaranteed association" means a nonprofit organization
comprised of a group of individuals or employers who associate based
solely on participation in a specified profession or industry,
accepting for membership any individual or employer meeting its
membership criteria which (1) includes one or more small employers as
defined in subparagraph (A) of paragraph (1) of subdivision (q), (2)
does not condition membership directly or indirectly on the health
or claims history of any person, (3) uses membership dues solely for
and in consideration of the membership and membership benefits,
except that the amount of the dues shall not depend on whether the
member applies for or purchases insurance offered by the association,
(4) is organized and maintained in good faith for purposes unrelated
to insurance, (5) has been in active existence on January 1, 1992,
and for at least five years prior to that date, (6) has been offering
health insurance to its members for at least five years prior to
January 1, 1992, (7) has a constitution and bylaws, or other
analogous governing documents that provide for election of the
governing board of the association by its members, (8) offers any
benefit plan design that is purchased to all individual members and
employer members in this state, (9) includes any member choosing to
enroll in the benefit plan design offered to the association provided
that the member has agreed to make the required premium payments,
and (10) covers at least 1,000 persons with the carrier with which it
contracts. The requirement of 1,000 persons may be met if component
chapters of a statewide association contracting separately with the
same carrier cover at least 1,000 persons in the aggregate.
This subdivision applies regardless of whether a master policy by
an admitted insurer is delivered directly to the association or a
trust formed for or sponsored by an association to administer
benefits for association members.
For purposes of this subdivision, an association formed by a
merger of two or more associations after January 1, 1992, and
otherwise meeting the criteria of this subdivision shall be deemed to
have been in active existence on January 1, 1992, if its predecessor
organizations had been in active existence on January 1, 1992, and
for at least five years prior
to that date and otherwise met the criteria of this subdivision.
(s) "Members of a guaranteed association" means any individual or
employer meeting the association's membership criteria if that person
is a member of the association and chooses to purchase health
coverage through the association. At the association's discretion, it
may also include employees of association members, association
staff, retired members, retired employees of members, and surviving
spouses and dependents of deceased members. However, if an
association chooses to include those persons as members of the
guaranteed association, the association must so elect in advance of
purchasing coverage from a plan. Health plans may require an
association to adhere to the membership composition it selects for up
to 12 months.
(t) "Grandfathered health plan" has the meaning set forth in
Section 1251 of PPACA.
(u) "Nongrandfathered health benefit plan" means a health benefit
plan that is not a grandfathered health plan.
(v) "Plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
(w) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
(x) "Waiting period" means a period that is required to pass with
respect to the employee before the employee is eligible to be covered
for benefits under the terms of the contract.
(y) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
(z) "Family" means the policyholder and his or her dependents.
SEC. 9. Section 10965.3 of the Insurance Code is amended to read:
10965.3. (a) (1) On and after October 1, 2013, a health insurer
shall fairly and affirmatively offer, market, and sell all of the
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 insurer provides or
arranges for the provision of health care services. A health insurer
shall limit enrollment in individual health benefit plans to open
enrollment periods, annual enrollment periods, and special enrollment
periods as provided in subdivisions (c) and (d).
(2) A health insurer shall allow the policyholder of an individual
health benefit plan to add a dependent to the policyholder's health
benefit plan at the option of the policyholder, consistent with the
open enrollment, annual enrollment, and special enrollment period
requirements in this section.
(b) An individual health benefit plan issued, amended, or renewed
on or after January 1, 2014, shall not impose any preexisting
condition provision upon any individual.
(c) (1) A health insurer shall provide an initial open enrollment
period from October 1, 2013, to March 31, 2014, inclusive, an annual
enrollment period for the policy year beginning on January 1, 2015,
from November 15, 2014, to February 15, 2015, inclusive, and annual
enrollment periods for policy years beginning on or after January 1,
2016, from November 1, of the preceding calendar year, to January 31
of the benefit year, inclusive.
(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code of
Federal Regulations, for individuals enrolled in noncalendar year
individual health plan contracts, a health insurer shall also provide
a limited open enrollment period beginning on the date that is 30
calendar days prior to the date the policy year ends in 2014.
(d) (1) Subject to paragraph (2), commencing January 1, 2014, a
health insurer shall allow an individual to enroll in or change
individual health benefit plans as a result of the following
triggering events:
(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, both of the following
definitions shall apply:
(i) "Minimum essential coverage" has the same meaning as that term
is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).
(ii) "Loss of minimum essential coverage" includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. "Loss of minimum
essential coverage" also includes loss of that coverage for a reason
that is not due to the fault of the individual.
(iii) "Loss of minimum essential coverage" does not include loss
of that coverage due to the individual's failure to pay premiums on a
timely basis or situations allowing for a rescission, subject to
clause (ii) and Sections 10119.2 and 10384.17.
(B) He or she gains a dependent or becomes a dependent.
(C) He or she is mandated to be covered as a dependent pursuant to
a valid state or federal court order.
(D) He or she has been released from incarceration.
(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.
(F) He or she gains access to new health benefit plans as a result
of a permanent move.
(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 of
this code or Section 1399.845 of the Health and Safety Code, for one
of the conditions described in subdivision (a) of Section 10133.56 of
this code and that provider is no longer participating in the health
benefit plan.
(H) He or she demonstrates to the Exchange, with respect to health
benefit plans offered through the Exchange, or to the department,
with respect to health benefit plans offered outside the Exchange,
that he or she did not enroll in a health benefit plan during the
immediately preceding enrollment period available to the individual
because he or she was misinformed that he or she was covered under
minimum essential coverage.
(I) He or she is a member of the reserve forces of the United
States military returning from active duty or a member of the
California National Guard returning from active duty service under
Title 32 of the United States Code.
(J) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed in
this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.
(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the date
of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part 155
(commencing with Section 155.10) of Subchapter B of Subtitle A of
Title 45 of the Code of Federal Regulations.
(e) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage required
pursuant to this section shall be consistent with the dates specified
in Section 155.410 or 155.420 of Title 45 of the Code of Federal
Regulations, as applicable. A dependent who is a registered domestic
partner pursuant to Section 297 of the Family Code shall have the
same effective date of coverage as a spouse.
(f) With respect to an individual health benefit plan offered
outside the Exchange, the following provisions shall apply:
(1) After an individual submits a completed application form for a
plan, the insurer shall, within 30 days, notify the individual of
the individual's actual premium charges for that plan established in
accordance with Section 10965.9. The individual shall have 30 days in
which to exercise the right to buy coverage at the quoted premium
charges.
(2) With respect to an individual health benefit plan for which an
individual applies during the initial open enrollment period
described in subdivision (c), when the policyholder submits a premium
payment, based on the quoted premium charges, and that payment is
delivered or postmarked, whichever occurs earlier, by December 15,
2013, coverage under the individual health benefit plan shall become
effective no later than January 1, 2014. When that payment is
delivered or postmarked within the first 15 days of any subsequent
month, coverage shall become effective no later than the first day of
the following month. When that payment is delivered or postmarked
between December 16, 2013, to December 31, 2013, inclusive, or after
the 15th day of any subsequent month, coverage shall become effective
no later than the first day of the second month following delivery
or postmark of the payment.
(3) With respect to an individual health benefit plan for which an
individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a premium
payment, based on the quoted premium charges, and that payment is
delivered or postmarked, whichever occurs later, by December 15,
coverage shall become effective as of the following January 1. When
that payment is delivered or postmarked within the first 15 days of
any subsequent month, coverage shall become effective no later than
the first day of the following month. When that payment is delivered
or postmarked between December 16 to December 31, inclusive, or after
the 15th day of any subsequent month, coverage shall become
effective no later than the first day of the second month following
delivery or postmark of the payment.
(4) With respect to an individual health benefit plan for which an
individual applies during a special enrollment period described in
subdivision (d), the following provisions shall apply:
(A) When the individual submits a premium payment, based on the
quoted premium charges, and that payment is delivered or postmarked,
whichever occurs earlier, within the first 15 days of the month,
coverage under the plan shall become effective no later than the
first day of the following month. When the premium payment is neither
delivered nor postmarked until after the 15th day of the month,
coverage shall become effective no later than the first day of the
second month following delivery or postmark of the payment.
(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.
(C) Notwithstanding subparagraph (A), in the case of marriage or
becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the coverage
effective date shall be the first day of the month following the date
the insurer receives the request for special enrollment.
(g) (1) A health insurer shall not establish rules for
eligibility, including continued eligibility, of any individual to
enroll under the terms of an individual health benefit plan based on
any of the following factors:
(A) Health status.
(B) Medical condition, including physical and mental illnesses.
(C) Claims experience.
(D) Receipt of health care.
(E) Medical history.
(F) Genetic information.
(G) Evidence of insurability, including conditions arising out of
acts of domestic violence.
(H) Disability.
(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act (Public Law 78-410).
(2) Notwithstanding subdivision (c) of Section 10291.5, a health
insurer shall not require an individual applicant or his or her
dependent to fill out a health assessment or medical questionnaire
prior to enrollment under an individual health benefit plan. A health
insurer shall not acquire or request information that relates to a
health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.
(h) (1) A health insurer shall consider as a single risk pool for
rating purposes in the individual market the claims experience of all
insureds and enrollees in all nongrandfathered individual health
benefit plans offered by that insurer in this state, whether offered
as health care service plan contracts or individual health insurance
policies, including those insureds and enrollees who enroll in
individual coverage through the Exchange and insureds and enrollees
who enroll in individual coverage outside the Exchange. Student
health insurance coverage, as such coverage is defined in Section
147.145(a) of Title 45 of the Code of Federal Regulations, shall not
be included in a health insurer's single risk pool for individual
coverage.
(2) Each calendar year, a health insurer shall establish an index
rate for the individual market in the state based on the total
combined claims costs for providing essential health benefits, as
defined pursuant to Section 1302 of PPACA, within the single risk
pool required under paragraph (1). The index rate shall be adjusted
on a marketwide basis based on the total expected marketwide payments
and charges under the risk adjustment and reinsurance programs
established for the state pursuant to Sections 1343 and 1341 of PPACA
and Exchange user fees, as described in subdivision (d) of Section
156.80 of Title 45 of the Code of Federal Regulations. The premium
rate for all of the health benefit plans in the individual market
within the single risk pool required under paragraph (1) shall use
the applicable marketwide adjusted index rate, subject only to the
adjustments permitted under paragraph (3).
(3) A health insurer may vary premium rates for a particular
health benefit plan from its index rate based only on the following
actuarially justified plan-specific factors:
(A) The actuarial value and cost-sharing design of the health
benefit plan.
(B) The health benefit plan's provider network, delivery system
characteristics, and utilization management practices.
(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA and Section 10112.27. These additional benefits
shall be pooled with similar benefits within the single risk pool
required under paragraph (1) and the claims experience from those
benefits shall be utilized to determine rate variations for plans
that offer those benefits in addition to essential health benefits.
(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.
(E) Administrative costs, excluding any user fees required by the
Exchange.
(i) This section shall only apply with respect to individual
health benefit plans for policy years on or after January 1, 2014.
(j) This section shall not apply to a grandfathered health plan.
(k) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Sec. 300gg-91), subdivisions
(a), (b), and (g) shall become inoperative 12 months after the date
of that repeal or amendment and individual health care benefit plans
shall thereafter be subject to Sections 10901.2, 10951, and 10953.
SEC. 10. 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.
SEC. 11. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to maintain appropriate standards of accuracy and
efficiency with respect to matters relating to health care coverage
in California, by adjusting the next open enrollment period for the
individual health care coverage market as needed to comply with
federal law, and ensuring that the University of California is
provided with sufficient advance notice regarding the continuing
duties of the university to plan and carry out necessary health care
benefit research and analysis as requested pursuant to this act, it
is necessary that this act take effect immediately.