BILL NUMBER: SB 503 INTRODUCED
BILL TEXT
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 must
shall request the continuation in writing and
deliver the written request, by first-class mail, or other reliable
means of delivery, including personal delivery, express mail, or
private courier company, to the health care service plan, or to the
employer if the plan has contracted with the employer for
administrative services pursuant to subdivision (d) of Section
1366.25, within the 60-day period following the later of (1) the date
that the enrollee's coverage under the group benefit plan terminated
or will terminate by reason of a qualifying event, or (2) the date
the enrollee was sent notice pursuant to subdivision (e) of Section
1366.25 of the ability to continue coverage under the group benefit
plan. The disclosure required by this section shall also state that a
qualified beneficiary electing continuation shall pay to the health
care service plan, in accordance with the terms and conditions of the
plan contract, which shall be set forth in the notice to the
qualified beneficiary pursuant to subdivision (d) of Section 1366.25,
the amount of the required premium payment, as set forth in Section
1366.26. The disclosure shall further require that the qualified
beneficiary's first premium payment required to establish premium
payment be delivered by first-class mail, certified mail, or other
reliable means of delivery, including personal delivery, express
mail, or private courier company, to the health care service plan, or
to the employer if the employer has contracted with the plan to
perform the administrative services pursuant to subdivision (d) of
Section 1366.25, within 45 days of the date the qualified beneficiary
provided written notice to the health care service plan or the
employer, if the employer has contracted to perform the
administrative services, of the election to continue coverage in
order for coverage to be continued under this article. This
disclosure shall also state that the first premium payment
must shall equal an amount sufficient to pay any
required premiums and all premiums due, and that failure to submit
the correct premium amount within the 45-day period will disqualify
the qualified beneficiary from receiving continuation coverage
pursuant to this article.
(c) The disclosure required by this section shall also describe
separately how qualified beneficiaries whose continuation coverage
terminates under a prior group benefit plan pursuant to subdivision
(b) of Section 1366.27 may continue their coverage for the balance of
the period that the qualified beneficiary would have remained
covered under the prior group benefit plan, including the
requirements for election and payment. The disclosure shall clearly
state that continuation coverage shall terminate if the qualified
beneficiary fails to comply with the requirements pertaining to
enrollment in, and payment of premiums to, the new group benefit plan
within 30 days of receiving notice of the termination of the prior
group benefit plan.
(d) Prior to August 1, 1998, every health care service plan shall
provide to all covered employees of employers subject to this article
a written notice containing the disclosures required by this
section, or shall provide to all covered employees of employers
subject to this section a new or amended evidence of coverage that
includes the disclosures required by this section. Any specialized
health care service plan that, in the ordinary course of business,
maintains only the addresses of employer group purchasers of benefits
and does not maintain addresses of covered employees, may comply
with the notice requirements of this section through the provision of
the notices to its employer group purchasers of benefits.
(e) Every plan disclosure form issued, amended, or renewed on and
after January 1, 1999, for a group benefit plan subject to this
article shall provide a notice that, under state law, an enrollee may
be entitled to continuation of group coverage and that additional
information regarding eligibility for this coverage may be found in
the plan's evidence of coverage.
(f) 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:
"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."
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 must shall request the
continuation in writing and deliver the written request, by
first-class mail, or other reliable means of delivery, including
personal delivery, express mail, or private courier company, to the
disability insurer, or to the employer if the plan has contracted
with the employer for administrative services pursuant to subdivision
(d) of Section 10128.55, within the 60-day period following the
later of (1) the date that the insured's coverage under the group
benefit plan terminated or will terminate by reason of a qualifying
event, or (2) the date the insured was sent notice pursuant to
subdivision (e) of Section 10128.55 of the ability to continue
coverage under the group benefit plan. The disclosure required by
this section shall also state that a qualified beneficiary electing
continuation shall pay to the disability insurer, in accordance with
the terms and conditions of the policy or contract, which shall be
set forth in the notice to the qualified beneficiary pursuant to
subdivision (d) of Section 10128.55, the amount of the required
premium payment, as set forth in Section 10128.56. The disclosure
shall further require that the qualified beneficiary's first premium
payment required to establish premium payment be delivered by
first-class mail, certified mail, or other reliable means of
delivery, including personal delivery, express mail, or private
courier company, to the disability insurer, or to the employer if the
employer has contracted with the insurer to perform the
administrative services pursuant to subdivision (d) of Section
10128.55, within 45 days of the date the qualified beneficiary
provided written notice to the insurer or the employer, if the
employer has contracted to perform the administrative services, of
the election to continue coverage in order for coverage to be
continued under this article. This disclosure shall also state that
the first premium payment must shall
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.
(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:
"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."