Senate Bill No. 503

Introduced by Senator Hernandez

February 26, 2015

An act to amend Section 1366.24 of the Health and Safety Code, and to amend Section 10128.54 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 503, as introduced, Hernandez. Cal-COBRA: disclosures.

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. The California Continuation Benefits Replacement Act (Cal-COBRA) requires health care service plans and health insurers providing coverage under a group benefit plan to employers of 2 to 19 eligible employees to offer a continuation of that coverage for a specified period of time to certain qualified beneficiaries, as specified. Existing law requires a group benefit plan that is subject to Cal-COBRA to make specified disclosures to covered employees, including that a covered employee who is considering declining continuation of coverage should be aware that companies selling individual health insurance may require a review of the employee’s medical history that could result in a higher premium or denial of coverage.

This bill would eliminate the disclosure requirement described above.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1366.24 of the Health and Safety Code
is amended to read:

1366.24.  

(a) Every health care service plan evidence of
coverage, provided for group benefit plans subject to this article,
that is issued, amended, or renewed on or after January 1, 1999,
shall disclose to covered employees of group benefit plans subject
to this article the ability to continue coverage pursuant to this
article, as required by this section.

(b) This disclosure shall state that all enrollees who are eligible
to be qualified beneficiaries, as defined in subdivision (c) of
Section 1366.21, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the health
care service plan, or the employer if the employer contracts to
perform the administrative services as provided for in Section
1366.25, of all qualifying events as specified in paragraphs (1),
(3), (4), and (5) of subdivision (d) of Section 1366.21 within 60
days of the date of the qualifying event. This disclosure shall
inform enrollees that failure to make the notification to the health
care service plan, or to the employer when under contract to
provide the administrative services, within the required 60 days
will disqualify the qualified beneficiary from receiving continuation
coverage pursuant to this article. The disclosure shall further state
that a qualified beneficiary who wishes to continue coverage under
the group benefit plan pursuant to this article begin delete must end delete begin insert shall end insert request
the continuation in writing and deliver the written request, by
first-class mail, or other reliable means of delivery, including
personal delivery, express mail, or private courier company, to the
health care service plan, or to the employer if the plan has
contracted with the employer for administrative services pursuant
to subdivision (d) of Section 1366.25, within the 60-day period
following the later of (1) the date that the enrollee’s coverage under
the group benefit plan terminated or will terminate by reason of a
qualifying event, or (2) the date the enrollee was sent notice
pursuant to subdivision (e) of Section 1366.25 of the ability to
continue coverage under the group benefit plan. The disclosure
required by this section shall also state that a qualified beneficiary
electing continuation shall pay to the health care service plan, in
accordance with the terms and conditions of the plan contract,
which shall be set forth in the notice to the qualified beneficiary
pursuant to subdivision (d) of Section 1366.25, the amount of the
required premium payment, as set forth in Section 1366.26. The
disclosure shall further require that the qualified beneficiary’s first
premium payment required to establish premium payment be
delivered by first-class mail, certified mail, or other reliable means
of delivery, including personal delivery, express mail, or private
courier company, to the health care service plan, or to the employer
if the employer has contracted with the plan to perform the
administrative services pursuant to subdivision (d) of Section
1366.25, within 45 days of the date the qualified beneficiary
provided written notice to the health care service plan or the
employer, if the employer has contracted to perform the
administrative services, of the election to continue coverage in
order for coverage to be continued under this article. This
disclosure shall also state that the first premium payment begin delete must end delete
begin insert shall end insert equal an amount sufficient to pay any required premiums
and all premiums due, and that failure to submit the correct
premium amount within the 45-day period will disqualify the
qualified beneficiary from receiving continuation coverage pursuant
to this article.

(c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to subdivision
(b) of Section 1366.27 may continue their coverage for the balance
of the period that the qualified beneficiary would have remained
covered under the prior group benefit plan, including the
requirements for election and payment. The disclosure shall clearly
state that continuation coverage shall terminate if the qualified
beneficiary fails to comply with the requirements pertaining to
enrollment in, and payment of premiums to, the new group benefit
plan within 30 days of receiving notice of the termination of the
prior group benefit plan.

(d) Prior to August 1, 1998, every health care service plan shall
provide to all covered employees of employers subject to this
article a written notice containing the disclosures required by this
section, or shall provide to all covered employees of employers
subject to this section a new or amended evidence of coverage that
includes the disclosures required by this section. Any specialized
health care service plan that, in the ordinary course of business,
maintains only the addresses of employer group purchasers of
benefits and does not maintain addresses of covered employees,
may comply with the notice requirements of this section through
the provision of the notices to its employer group purchasers of
benefits.

(e) Every plan disclosure form issued, amended, or renewed on
and after January 1, 1999, for a group benefit plan subject to this
article shall provide a notice that, under state law, an enrollee may
be entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found
in the plan’s evidence of coverage.

begin delete

(f) Every disclosure issued, amended, or renewed on and after
July 1, 2006, for a group benefit plan subject to this article shall
include the following notice:

end delete begin delete

“Please examine your options carefully before declining this
coverage. You should be aware that companies selling individual
health insurance typically require a review of your medical history
that could result in a higher premium or you could be denied
coverage entirely.”

end delete

SEC. 2.  

Section 10128.54 of the Insurance Code is amended
to read:

10128.54.  

(a) Every insurer’s evidence of coverage for group
benefit plans subject to this article, that is issued, amended, or
renewed on or after January 1, 1999, shall disclose to covered
employees of group benefit plans subject to this article the ability
to continue coverage pursuant to this article, as required by this
section.

(b) This disclosure shall state that all insureds who are eligible
to be qualified beneficiaries, as defined in subdivision (c) of
Section 10128.51, shall be required, as a condition of receiving
benefits pursuant to this article, to notify, in writing, the insurer,
or the employer if the employer contracts to perform the
administrative services as provided for in Section 10128.55, of all
qualifying events as specified in paragraphs (1), (3), (4), and (5)
of subdivision (d) of Section 10128.51 within 60 days of the date
of the qualifying event. This disclosure shall inform insureds that
failure to make the notification to the insurer, or to the employer
when under contract to provide the administrative services, within
the required 60 days will disqualify the qualified beneficiary from
receiving continuation coverage pursuant to this article. The
disclosure shall further state that a qualified beneficiary who wishes
to continue coverage under the group benefit plan pursuant to this
article begin delete must end delete begin insert shall end insert request the continuation in writing and deliver
the written request, by first-class mail, or other reliable means of
delivery, including personal delivery, express mail, or private
courier company, to the disability insurer, or to the employer if
the plan has contracted with the employer for administrative
services pursuant to subdivision (d) of Section 10128.55, within
the 60-day period following the later of (1) the date that the
insured’s coverage under the group benefit plan terminated or will
terminate by reason of a qualifying event, or (2) the date the insured
was sent notice pursuant to subdivision (e) of Section 10128.55
of the ability to continue coverage under the group benefit plan.
The disclosure required by this section shall also state that a
qualified beneficiary electing continuation shall pay to the disability
insurer, in accordance with the terms and conditions of the policy
or contract, which shall be set forth in the notice to the qualified
beneficiary pursuant to subdivision (d) of Section 10128.55, the
amount of the required premium payment, as set forth in Section
10128.56. The disclosure shall further require that the qualified
beneficiary’s first premium payment required to establish premium
payment be delivered by first-class mail, certified mail, or other
reliable means of delivery, including personal delivery, express
mail, or private courier company, to the disability insurer, or to
the employer if the employer has contracted with the insurer to
perform the administrative services pursuant to subdivision (d) of
Section 10128.55, within 45 days of the date the qualified
beneficiary provided written notice to the insurer or the employer,
if the employer has contracted to perform the administrative
services, of the election to continue coverage in order for coverage
to be continued under this article. This disclosure shall also state
that the first premium payment begin delete must end delete begin insert shall end insert equal an amount
sufficient to pay all required premiums and all premiums due, and
that failure to submit the correct premium amount within the 45-day
period will disqualify the qualified beneficiary from receiving
continuation coverage pursuant to this article.

(c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to Section
10128.57 may continue their coverage for the balance of the period
that the qualified beneficiary would have remained covered under
the prior group benefit plan, including the requirements for election
and payment. The disclosure shall clearly state that continuation
coverage shall terminate if the qualified beneficiary fails to comply
with the requirements pertaining to enrollment in, and payment of
premiums to, the new group benefit plan within 30 days of
receiving notice of the termination of the prior group benefit plan.

(d) Prior to August 1, 1998, every insurer shall provide to all
covered employees of employers subject to this article written
notice containing the disclosures required by this section, or shall
provide to all covered employees of employers subject to this
article a new or amended evidence of coverage that includes the
disclosures required by this section. Any insurer that, in the
ordinary course of business, maintains only the addresses of
employer group purchasers of benefits, and does not maintain
addresses of covered employees, may comply with the notice
requirements of this section through the provision of the notices
to its employer group purchases of benefits.

(e) Every disclosure form issued, amended, or renewed on and
after January 1, 1999, for a group benefit plan subject to this article
shall provide a notice that, under state law, an insured may be
entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found
in the evidence of coverage.

begin delete

(f) Every disclosure form issued, amended, or renewed on and
after July 1, 2006, for a group benefit plan subject to this article
shall include the following notice:

end delete begin delete

“Please examine your options carefully before declining this
coverage. You should be aware that companies selling individual
health insurance typically require a review of your medical history
that could result in a higher premium or you could be denied
coverage entirely.”

end delete