BILL NUMBER: SB 1814 CHAPTERED 09/27/00 CHAPTER 707 FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2000 APPROVED BY GOVERNOR SEPTEMBER 25, 2000 PASSED THE SENATE AUGUST 31, 2000 PASSED THE ASSEMBLY AUGUST 29, 2000 AMENDED IN ASSEMBLY AUGUST 28, 2000 AMENDED IN ASSEMBLY AUGUST 18, 2000 AMENDED IN ASSEMBLY JULY 6, 2000 AMENDED IN ASSEMBLY JUNE 20, 2000 INTRODUCED BY Senator Speier FEBRUARY 24, 2000 An act to amend Sections 1358.11 and 1358.12 of, and to add and repeal Section 1358.22 of, the Health and Safety Code, and to amend Sections 10192.11, 10192.12, and 10192.20 of, and to add and repeal Section 10194.9 of, the Insurance Code, relating to health insurance, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST SB 1814, Speier. Insurance: Medicare supplement: rate guide. (1) Existing law provides that each Medicare supplement contract currently available from an issuer shall be made available to any person who submits an application prior to or during the 6-month period after he or she reaches age 65 and who is enrolled for benefits under Medicare Part B, and prohibits discrimination in the pricing of a contract because of the health status or medical condition of an applicant. This bill would exclude those applicants who are 64 years and younger and have End-Stage Renal Disease. The bill would permit an issuer of a Medicare supplement contract to treat applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification. (2) Existing law provides that an individual enrolled in Medicare Part B by reason of disability is entitled to open enrollment, as specified, for 6 months after he or she reaches age 65. This bill would change the eligibility to 6 months after the person first becomes eligible for Medicare Part B, and would provide for a one-time open enrollment period for all individuals eligible for Medicare by reason of disability who do not have End-Stage Renal Disease. (3) Existing law guarantees an individual the issuance of a Medicare supplement policy or contract when the employee's welfare plan that provides health benefits that supplement the benefits under Medicare terminates, or the plan ceases to provide all of those supplemental health benefits to the individual. This bill would make the individual eligible if the plan ceases to provide some, all, or substantially all of those supplemental health benefits to the individual and the employer no longer provides the individual with insurance that covers all of the payment for the Part B 20% coinsurance. (4) Existing law guarantees an individual the issuance of a Medicare supplement policy or contract when the individual, upon first becoming eligible for benefits under Medicare Part A at age 65 years, enrolls in a Medicare+Choice plan under Medicare Part C, and disenrolls from the plan by not later than 12 months after the effective date of enrollment. This bill would permit the individual to postpone enrollment in Medicare Part A or Part B while eligible for employer sponsored coverage. (5) Existing law guarantees to specified eligible individuals the issuance of a Medicare supplement policy or contract that has a benefit package classified as plan A, B, C, or F offered by any issuer. This bill would add at least one plan that includes coverage for prescription medications as a guaranteed plan, as specified. (6) Existing law requires every insurer marketing Medicare supplement insurance coverage in this state to follow specified marketing practices relating to the sale of Medicare supplement insurance coverage. This bill would require the Insurance Commissioner to annually prepare a rate guide, as specified, that would cover all the Medicare supplement insurance policies and Medicare supplement contracts sold by each company that sells Medicare supplement insurance in California. (7) Existing law provides for the regulation of Medicare supplement contracts issued by health care service plans by the Department of Managed Care, effective no later than July 1, 2000, or earlier pursuant to an executive order of the Governor. A willful violation of the provisions governing Medicare supplement contracts is a crime. Because a violation of this bill's requirements with respect to Medicare supplement contracts would be a crime, this bill would impose a state-mandated local program by creating a new crime. 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. (8) The changes to existing law described in (1), (2), (3), (4), (5), and (6) above would be accomplished by amending provisions of law added by Senate Bill 764 of the 1999-2000 Regular Session. These amended provisions would only become operative if Senate Bill 764 of the 1999-2000 Regular Session is enacted, becomes operative, and this bill is chaptered after Senate Bill 764. If these conditions are met, these provisions would become operative on January 1, 2001. (9) This bill would also enact provisions requiring notice, effective September 30, 2000, to certain individuals whose health coverage will terminate effective January 1, 2001, that issuers of Medicare supplement policies are required to offer and allow those individuals to enroll in certain plans, if currently offered by the issuer, that include coverage for prescription medications. This requirement would be repealed on January 1, 2001. (10) This bill would declare that it would take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1358.11 of the Health and Safety Code, as added by Senate Bill 764 of the 1999-2000 Regular Session, is amended to read: 1358.11. (a) An issuer shall not deny or condition the offering or effectiveness of any Medicare supplement contract available for sale in this state, nor discriminate in the pricing of a contract because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a contract that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement contract currently available from an issuer shall be made available to all applicants who qualify under this subdivision and are 65 years of age or older. Medicare supplement contracts A, B, C, F, and at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer, shall be made available to any applicant who qualifies under this subdivision who is 64 years of age or younger and who does not have End-Stage Renal Disease. This section does not prohibit an issuer in determining subscriber rates from treating applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification. (b) (1) If an applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition. (2) If the applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this subdivision shall be as specified by the director. (c) Except as provided in subdivision (b) and Section 1358.23, subdivision (a) shall not be construed as preventing the exclusion of benefits under a contract, during the first six months, based on a preexisting condition for which the enrollee received treatment or was otherwise diagnosed during the six months before the coverage became effective. (d) An individual enrolled in Medicare Part B by reason of disability shall be entitled to open enrollment described in this section for six months after he or she first becomes eligible for Medicare Part B. Sales during the open enrollment period shall not be discouraged by any means, including the altering of the commission structure. There shall be a one-time open enrollment period of 120 days commencing on January 1, 2001, for all individuals eligible for Medicare by reason of disability who do not have End-Stage Renal Disease. (e) An individual who is 65 years of age or older and enrolled in Medicare Part B is entitled to open enrollment described in this section for six months following: (1) Receipt of a notice of termination or, if no notice is received, the effective date of termination, from any employer-sponsored health plan including an employer-sponsored retiree health plan. For purposes of this section, "employer-sponsored retiree health plan" includes any coverage for medical expenses that is directly or indirectly sponsored or established by an employer for employees or retirees, their spouses, dependents, or other included covered persons. (2) Termination of health care services for a military retiree or the retiree's Medicare eligible spouse or dependent as a result of a military base closure. (f) An individual who is 65 years of age or older and enrolled in Medicare Part B is entitled to open enrollment described in this section if the individual was covered under a policy, certificate, or contract providing Medicare supplement coverage but that coverage terminated because the individual established residence at a location not served by the issuer. (g) (1) An individual who was previously enrolled in, but whose coverage was terminated between September 1, 1998, and December 31, 1998, by a Medicare managed care plan shall be entitled to a new 60-day open enrollment period in addition to any open enrollment authorized by federal law or regulations, for any and all Medicare supplement coverage available on a guaranteed basis under state and federal law or regulation for persons terminated by their Medicare managed care plan. (2) The new open enrollment period specified in paragraph (1) shall commence 90 days after January 1, 2000. Within 30 days of January 1, 2000, health plans shall notify their former Medicare enrollees who were terminated during the period specified in paragraph (1) of the new open enrollment period. Health plan notices shall inform the terminated enrollees of the opportunity to secure advice and assistance from the Health Insurance Counseling and Advocacy Program (HICAP) in their area, along with the toll-free telephone number for HICAP. (3) An individual who was previously enrolled in but whose coverage was terminated after January 1, 1999, by a Medicare managed care plan shall be entitled to an additional 60-day open enrollment period to be added on to and run consecutively after any open enrollment period authorized by federal law or regulations, for any and all Medicare supplement coverage available on a guaranteed basis under state and federal law or regulations for persons terminated by their Medicare managed care plan. (4) Health plans that terminate Medicare enrollees shall notify those enrollees in the termination notice of the additional open enrollment period authorized by this subdivision. Health plan notices shall inform enrollees of the opportunity to secure advice and assistance from the Health Insurance Counseling Advocacy Program (HICAP) in their area, along with the toll-free telephone number for HICAP. (h) An individual shall be entitled to an annual open enrollment period lasting 30 days or more, commencing with the individual's birthday, during which time that person may purchase any Medicare supplement coverage, with the exception of a Medicare Select contract, that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, no issuer that falls under this provision shall deny or condition the issuance or effectiveness of Medicare supplement coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition of the individual if, at the time of the open enrollment period, the individual is covered under another Medicare supplement policy, certificate, or contract. An issuer that offers Medicare supplement contracts shall notify an enrollee of his or her rights under this subdivision at least 30 and no more than 60 days before the beginning of the open enrollment period. SEC. 2. Section 1358.12 of the Health and Safety Code, as added by Senate Bill 764 of the 1999-2000 Regular Session, is amended to read: 1358.12. (a) (1) With respect to the guaranteed issue of a Medicare supplement contract, eligible persons are those individuals described in subdivision (b) who apply to enroll under the contract not later than 63 days after the date of the termination of enrollment described in subdivision (b), and who submit evidence of the date of termination or disenrollment with the application for a Medicare supplement contract. (2) With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement contract described in subdivision (c) that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of the Medicare supplement contract because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under the Medicare supplement contract. (b) An eligible person is an individual described in any of the following paragraphs: (1) The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide some, all, or substantially all of those supplemental health benefits to the individual and the employer no longer provides the individual with insurance that covers all of the payment for the Part B 20 percent coinsurance. (2) The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan under Medicare Part C, and any of the following apply: (A) The organization's or plan's certification, under this part, has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides. (B) The individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the secretary, but not including termination of the individual's enrollment on the basis described in Section 1851(g)(3)(B) of the federal Social Security Act, where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under Section 1856 of that act, or the plan is terminated for all individuals within a residence area. (C) The individual demonstrates, in accordance with guidelines established by the director, either of the following: (i) The organization offering the plan substantially violated a material provision of the organization's contract under this article in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accordance with applicable quality standards. (ii) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual. (D) The individual meets other exceptional conditions as the director may provide. (3) The individual meets both of the following conditions: (A) The individual is enrolled with any of the following: (i) An eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost). (ii) A similar organization operating under demonstration project authority, effective for periods before April 1, 1999. (iii) An organization under an agreement under Section 1833(a)(1) (A) of the federal Social Security Act (health care prepayment plan). (iv) An organization under a Medicare Select policy. (B) The individual's enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under the first sentence of Section 1851(e)(4) of the federal Social Security Act as delineated in paragraph (2) of subdivision (b). (4) The individual is enrolled under a Medicare supplement contract and the enrollment ceases because of the following: the insolvency of the issuer or bankruptcy of the nonissuer organization; the involuntary termination of coverage or enrollment under the contract; the issuer of the contract substantially violated a material provision of the contract; or the issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the contract's provisions in marketing the contract to the individual. (5) The individual meets both of the following conditions: (A) The individual was enrolled under a Medicare supplement contract and terminates enrollment and subsequently enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under Medicare Part C, any eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost), any similar organization operating under demonstration project authority, an organization under an agreement under Section 1833(a)(1)(A) of the federal Social Security Act (health care prepayment plan), or a Medicare Select contract. (B) The subsequent enrollment under subparagraph (A) is terminated by the enrollee during any period within the first 12 months of the subsequent enrollment (during which the enrollee is permitted to terminate the subsequent enrollment under Section 1851(e) of the federal Social Security Act). (6) The individual, upon first becoming eligible for benefits under Medicare Part A at age 65 years, or who postpones enrollment in Medicare Part A or Part B while eligible for employer-sponsored coverage and is older than age 65 years, and enrolls in a Medicare+Choice plan under Medicare Part C, and disenrolls from the plan by not later than 12 months after the effective date of enrollment. (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision (b), eligible persons are entitled to a Medicare supplement contract that has a benefit package classified as plan A, B, C, F, and at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer. (2) Under paragraph (5) of subdivision (b), eligible persons are entitled to the same Medicare supplement contract in which they were most recently previously enrolled, if available from the same issuer, or, if not so available, a contract described in paragraph (1) of subdivision (c). (3) Under paragraph (6) of subdivision (b), eligible persons are entitled to any Medicare supplement contract offered by any issuer. (d) (1) At the time of an event described in subdivision (b) because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the contract, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement contracts under subdivision (a). That notice shall be communicated contemporaneously with the notification of termination. (2) At the time of an event described in subdivision (b) because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the contract, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement contracts under subdivision (a). That notice shall be communicated within ten working days of the issuer receiving notification of disenrollment. SEC. 2.5. Section 1358.22 is added to the Health and Safety Code, to read: 1358.22. (a) (1) With respect to the guaranteed issue of a Medicare supplement contract, eligible persons are those individuals described in subdivision (b) who apply to enroll under the contract not later than 63 days after the date of the termination of enrollment described in subdivision (b), and who submit evidence of the date of termination or disenrollment with the application for a Medicare supplement contract. (2) With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement contract described in subdivision (c) that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of the Medicare supplement contract because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under the Medicare supplement contract. (b) An eligible person is an individual described in any of the following paragraphs: (1) The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide some, all, or substantially all of those supplemental health benefits to the individual and the employer no longer provides the individual with insurance that covers all of the payment for the Part B 20-percent coinsurance. (2) The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan under Medicare Part C, and any of the following apply: (A) The organization's or plan's certification, under this part, has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides. (B) The individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the secretary, but not including termination of the individual's enrollment on the basis described in Section 1851(g)(3)(B) of the federal Social Security Act, where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under Section 1856 of that act, or the plan is terminated for all individuals within a residence area. (C) The individual demonstrates, in accordance with guidelines established by the director, either of the following: (i) The organization offering the plan substantially violated a material provision of the organization's contract under this article in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accordance with applicable quality standards. (ii) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual. (D) The individual meets other exceptional conditions as the director may provide. (3) The individual meets both of the following conditions: (A) The individual is enrolled with any of the following: (i) An eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost). (ii) A similar organization operating under demonstration project authority, effective for periods before April 1, 1999. (iii) An organization under an agreement under Section 1833(a)(1) (A) of the federal Social Security Act (health care prepayment plan). (iv) An organization under a Medicare Select policy. (B) The individual's enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under the first sentence of Section 1851(e)(4) of the federal Social Security Act as delineated in paragraph (2) of subdivision (b). (4) The individual is enrolled under a Medicare supplement contract and the enrollment ceases because of the following: the insolvency of the issuer or bankruptcy of the nonissuer organization; the involuntary termination of coverage or enrollment under the contract; the issuer of the contract substantially violated a material provision of the contract; or the issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the contract's provisions in marketing the contract to the individual. (5) The individual meets both of the following conditions: (A) The individual was enrolled under a Medicare supplement contract and terminates enrollment and subsequently enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under Medicare Part C, any eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost), any similar organization operating under demonstration project authority, an organization under an agreement under Section 1833(a)(1)(A) of the federal Social Security Act (health care prepayment plan), or a Medicare Select contract. (B) The subsequent enrollment under subparagraph (A) is terminated by the enrollee during any period within the first 12 months of the subsequent enrollment (during which the enrollee is permitted to terminate the subsequent enrollment under Section 1851(e) of the federal Social Security Act). (6) The individual, upon first becoming eligible for benefits under Medicare Part A at age 65 years, or who postpones enrollment in Medicare Part A or Part B while eligible for employer-sponsored coverage and is older than age 65 years, and enrolls in a Medicare+Choice plan under Medicare Part C, and disenrolls from the plan by not later than 12 months after the effective date of enrollment. (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision (b), eligible persons are entitled to a Medicare supplement contract that has a benefit package classified as plan A, B, C, F, and at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer. (2) Under paragraph (5) of subdivision (b), eligible persons are entitled to the same Medicare supplement contract in which they were most recently previously enrolled, if available from the same issuer, or, if not so available, a contract described in paragraph (1) of subdivision (c). (3) Under paragraph (6) of subdivision (b), eligible persons are entitled to any Medicare supplement contract offered by any issuer. (d) (1) At the time of an event described in subdivision (b) because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the contract, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement contracts under subdivision (a). That notice shall be communicated contemporaneously with the notification of termination. Effective September 30, 2000, for terminations effective January 1, 2001, that notice shall also inform the individual that issuers are required to offer and allow individuals to enroll, during the application period following notification, in at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer. That coverage would be effective on January 1, 2001. (2) At the time of an event described in subdivision (b) because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the contract, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement contracts under subdivision (a). That notice shall be communicated within 10 working days of the issuer receiving notification of disenrollment. (e) This section shall remain in effect only until January 1, 2001, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2001, deletes or extends that date. SEC. 3. Section 10192.11 of the Insurance Code, as added by Senate Bill 764 of the 1999-2000 Regular Session, is amended to read: 10192.11. (a) An issuer shall not deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of a policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a policy or certificate that is submitted prior to or during the six-month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement policy and certificate currently available from an issuer shall be made available to all applicants who qualify under this subdivision and are 65 years of age or older. Medicare supplement contracts A, B, C, F, and at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer, shall be made available to any applicant who qualifies under this subdivision who is 64 years of age or younger and who does not have End-Stage Renal Disease. This section does not prohibit an issuer in determining premium rates from treating applicants who are under 65 years of age and are eligible for Medicare Part B as a separate risk classification. This section shall not be construed as preventing the exclusion of benefits for preexisting conditions as defined in paragraph (1) of subdivision (a) of Section 10192.8. (b) (1) If an applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage of at least six months, the issuer shall not exclude benefits based on a preexisting condition. (2) If the applicant qualifies under subdivision (a) and submits an application during the time period referenced in subdivision (a) and, as of the date of application, has had a continuous period of creditable coverage that is less than six months, the issuer shall reduce the period of any preexisting condition exclusion by the aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The manner of the reduction under this subdivision shall be as specified by the commissioner. (c) Except as provided in subdivision (b) and Section 10192.23, subdivision (a) shall not be construed as preventing the exclusion of benefits under a policy, during the first six months, based on a preexisting condition for which the policyholder or certificate holder received treatment or was otherwise diagnosed during the six months before the coverage became effective. (d) An individual enrolled in Medicare Part B by reason of disability will be entitled to open enrollment described in this section for six months after he or she first becomes eligible for Medicare Part B. Every issuer shall make available to every applicant qualified for open enrollment all policies and certificates offered by that issuer at the time of application. Issuers shall not discourage sales during the open enrollment period by any means, including the altering of the commission structure. There shall be a one-time open enrollment period of 120 days commencing on January 1, 2001, for all individuals eligible for Medicare by reason of disability who do not have End-Stage Renal Disease. (e) An individual who is 65 years of age or older and enrolled in Medicare Part B is entitled to open enrollment described in this section for six months following: (1) Receipt of a notice of termination or, if no notice is received, the effective date of termination, from any employer-sponsored health plan including an employer-sponsored retiree health plan. For purposes of this section, "employer-sponsored retiree health plan" includes any coverage for medical expenses that is directly or indirectly sponsored or established by an employer for employees or retirees, their spouses, dependents, or other included insureds. (2) Termination of health care services for a military retiree or the retiree's Medicare eligible spouse or dependent as a result of a military base closure. (f) An individual who is 65 years of age or older and enrolled in Medicare Part B is entitled to open enrollment described in this section if the individual was covered under a policy, certificate, or contract providing Medicare supplement coverage but that coverage terminated because the individual established residence at a location not served by the plan. (g) (1) An individual who was previously enrolled in but whose coverage was terminated between September 1, 1998, and December 31, 1998, by a Medicare managed care plan shall be entitled to a new 60-day open enrollment period in addition to any open enrollment authorized by federal law or regulations, for any and all Medicare supplement coverage provided by Medicare supplement insurers and available on a guaranteed basis under state and federal law or regulations for persons terminated by their Medicare managed care plan. (2) The new open enrollment period specified in paragraph (1) shall commence 90 days after January 1, 2000. (3) An individual who was previously enrolled in but whose coverage was terminated after January 1, 1999, by a Medicare managed care plan shall be entitled to an additional 60-day open enrollment period to be added on to and run consecutively after any open enrollment period authorized by federal law or regulations, for any and all Medicare supplement coverage provided by Medicare supplement insurers and available on a guaranteed basis under state and federal law or regulations for persons terminated by their Medicare managed care plan. An individual shall be entitled to an annual open enrollment period lasting 30 days or more, commencing with the individual's birthday, during which time that person may purchase any Medicare supplement policy, with the exception of a Medicare Select policy, that offers benefits equal to or lesser than those provided by the previous coverage. During this open enrollment period, no issuer that falls under this provision shall deny or condition the issuance or effectiveness of Medicare supplement coverage, nor discriminate in the pricing of coverage, because of health status, claims experience, receipt of health care, or medical condition of the individual if, at the time of the open enrollment period, the individual is covered under another Medicare supplement policy or contract. An issuer shall notify a policyholder of his or her rights under this subdivision at least 30 and no more than 60 days before the beginning of the open enrollment period. SEC. 4. Section 10192.12 of the Insurance Code, as added by Senate Bill 764 of the 1999-2000 Regular Session, is amended to read: 10192.12. (a) (1) With respect to the guaranteed issue of a Medicare supplement policy, eligible persons are those individuals described in subdivision (b) who apply to enroll under the policy not later than 63 days after the date of the termination of enrollment described in subdivision (b), and who submit evidence of the date of termination or disenrollment with the application for a Medicare supplement policy. (2) With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement policy described in subdivision (c) that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under such a Medicare supplement policy. (b) An eligible person is an individual described in any of the following paragraphs: (1) The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide some, all, or substantially all of those supplemental health benefits to the individual and the employer no longer provides the individual with insurance that covers all of the payment for the Part B 20-percent coinsurance. (2) The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan Medicare Part C, and any of the following apply: (A) The organization's or plan's certification, under this part, has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides. (B) The individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the secretary, but not including termination of the individual's enrollment on the basis described in Section 1851(g)(3)(B) of the federal Social Security Act, where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under Section 1856 of that act, or the plan is terminated for all individuals within a residence area. (C) The individual demonstrates, in accordance with guidelines established by the commissioner, either of the following: (i) The organization offering the plan substantially violated a material provision of the organization's contract under this article in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accordance with applicable quality standards. (ii) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual. (D) The individual meets other exceptional conditions as the commissioner may provide. (3) The individual meets both of the following conditions: (A) The individual is enrolled with any of the following: (i) An eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost). (ii) A similar organization operating under demonstration project authority, effective for periods before April 1, 1999. (iii) An organization under an agreement under Section 1833(a)(1) (A) of the federal Social Security Act (health care prepayment plan). (iv) An organization under a Medicare Select policy. (B) The individual's enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under the first sentence of Section 1851(e)(4) of the federal Social Security Act as delineated in paragraph (2) of subdivision (b). (4) The individual is enrolled under a Medicare supplement policy and the enrollment ceases because of the following: the insolvency of the issuer or bankruptcy of the nonissuer organization; the involuntary termination of coverage or enrollment under the policy; the issuer of the policy substantially violated a material provision of the policy; or the issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual. (5) The individual meets both of the following conditions: (A) The individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under Medicare Part C, any eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost), any similar organization operating under demonstration project authority, an organization under an agreement under Section 1833(a)(1)(A) of the federal Social Security Act (health care prepayment plan), or a Medicare Select policy. (B) The subsequent enrollment under subparagraph (A) is terminated by the enrollee during any period within the first 12 months of the subsequent enrollment (during which the enrollee is permitted to terminate the subsequent enrollment under Section 1851(e) of the federal Social Security Act). (6) The individual, upon first becoming eligible for benefits under Medicare Part A at age 65 years, or who postpones enrollment in Medicare Part A or Part B while eligible for employer-sponsored coverage and is older than age 65 years, and enrolls in a Medicare+Choice plan under Medicare Part C, and disenrolls from the plan by not later than 12 months after the effective date of enrollment. (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision (b), eligible persons are entitled to a Medicare supplement policy that has a benefit package classified as plan A, B, C, F, and at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer. (2) Under paragraph (5) of subdivision (b), eligible persons are entitled to the same Medicare supplement policy in which they were most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in paragraph (1) of subdivision (c). (3) Under paragraph (6) of subdivision (b), eligible persons are entitled to any Medicare supplement policy offered by any issuer. (d) (1) At the time of an event described in subdivision (b) because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subdivision (a). That notice shall be communicated contemporaneously with the notification of termination. (2) At the time of an event described in subdivision (b) because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subdivision (a). That notice shall be communicated within ten working days of the issuer receiving notification of disenrollment. SEC. 5. Section 10192.20 of the Insurance Code, as added by Senate Bill 764 of the 1999-2000 Regular Session, is amended to read: 10192.20. (a) An issuer, directly or through its producers, shall do each of the following: (1) Establish marketing procedures to ensure that any comparison of policies by its agents or other producers will be fair and accurate. (2) Establish marketing procedures to ensure that excessive insurance is not sold or issued. (3) Display prominently by type, stamp, or other appropriate means, on the first page of the policy, the following: "Notice to buyer: This policy may not cover all of your medical expenses." (4) Inquire and otherwise make every reasonable effort to identify whether a prospective applicant for a Medicare supplement policy already has health insurance and the types and amounts of that insurance. (5) Establish auditable procedures for verifying compliance with this subdivision. (b) In addition to the practices prohibited by this code or any other law, the following acts and practices are prohibited: (1) Twisting, which means knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert an insurance policy or to take out a policy of insurance with another insurer. (2) High pressure tactics, which means employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance. (3) Cold lead advertising, which means making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is the solicitation of insurance and that contact will be made by an insurance agent or insurance company. (c) The terms "Medicare supplement," "Medicare Wrap-Around" and words of similar import shall not be used unless the policy is issued in compliance with this article. The term "medigap" shall not be used. (d) The commissioner each year shall prepare a rate guide for Medicare supplement insurance and Medicare supplement contracts. The commissioner each year shall make the rate guide available on or before the date of the fall Medicare annual open enrollment. The rate guide shall include all of the following for each company that sells Medicare supplemental insurance or Medicare supplement contracts in California: (1) A listing of all the policies, plans A through J, that are available from the company. (2) A listing of all the policies, plans A through J, for Medicare beneficiaries under the age of 65 that are available from the company. (3) The toll-free telephone number of the company that consumers can use to obtain information from the company. (4) Sample rates for each policy listed pursuant to paragraphs (1) and (2). The sample rates shall be for ages 0-65, 65, 70, 75, and 80. (5) The premium rate methodology for each policy listed pursuant to paragraphs (1) and (2). "Premium rate methodology" means attained age, issue age, or community rated. (6) The waiting period for preexisting conditions for each policy listed pursuant to paragraphs (1) and (2). (e) The consumer rate guide prepared pursuant to subdivision (d) shall be distributed using all of the following methods: (1) Through Health Insurance Counseling and Advocacy Program (HICAP) offices. (2) By telephone, using the department's consumer toll-free telephone number. (3) On the department's Internet web site. (4) In addition to the distribution methods described in paragraphs (1) to (3), inclusive, each insurer that markets Medicare supplement insurance or Medicare supplement contracts in this state shall provide on the application form a statement that reads as follows: "A rate guide is available that compares the policies sold by different insurers. You can obtain a copy of this rate guide by calling the Department of Insurance's consumer toll-free telephone number (1-800-927-HELP), by calling the Health Insurance Counseling and Advocacy Program (HICAP) toll-free telephone number (1-800-434-0222), or by accessing the Department of Insurance's Internet web site (www.insurance.ca.gov)." SEC. 5.5. Section 10194.9 is added to the Insurance Code, to read: 10194.9. (a) (1) With respect to the guaranteed issue of a Medicare supplement policy, eligible persons are those individuals described in subdivision (b) who apply to enroll under the policy not later than 63 days after the date of the termination of enrollment described in subdivision (b), and who submit evidence of the date of termination or disenrollment with the application for a Medicare supplement policy. (2) With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement policy described in subdivision (c) that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under such a Medicare supplement policy. (b) An eligible person is an individual described in any of the following paragraphs: (1) The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare, and the plan terminates, or the plan ceases to provide some, all, or substantially all of those supplemental health benefits to the individual and the employer no longer provides the individual with insurance that covers all of the payment for the Part B 20-percent coinsurance. (2) The individual is enrolled with a Medicare+Choice organization under a Medicare+Choice plan Medicare Part C, and any of the following apply: (A) The organization's or plan's certification, under this part, has been terminated or the organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides. (B) The individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the secretary, but not including termination of the individual's enrollment on the basis described in Section 1851(g)(3)(B) of the federal Social Security Act, where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under Section 1856 of that act, or the plan is terminated for all individuals within a residence area. (C) The individual demonstrates, in accordance with guidelines established by the commissioner, either of the following: (i) The organization offering the plan substantially violated a material provision of the organization's contract under this article in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide the covered care in accordance with applicable quality standards. (ii) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual. (D) The individual meets other exceptional conditions as the commissioner may provide. (3) The individual meets both of the following conditions: (A) The individual is enrolled with any of the following: (i) An eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost). (ii) A similar organization operating under demonstration project authority, effective for periods before April 1, 1999. (iii) An organization under an agreement under Section 1833(a)(1) (A) of the federal Social Security Act (health care prepayment plan). (iv) An organization under a Medicare Select policy. (B) The individual's enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under the first sentence of Section 1851(e)(4) of the federal Social Security Act as delineated in paragraph (2) of subdivision (b). (4) The individual is enrolled under a Medicare supplement policy and the enrollment ceases because of the following: the insolvency of the issuer or bankruptcy of the nonissuer organization; the involuntary termination of coverage or enrollment under the policy; the issuer of the policy substantially violated a material provision of the policy; or the issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual. (5) The individual meets both of the following conditions: (A) The individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare+Choice organization under a Medicare+Choice plan under Medicare Part C, any eligible organization under a contract under Section 1876 of the federal Social Security Act (Medicare risk or cost), any similar organization operating under demonstration project authority, an organization under an agreement under Section 1833(a)(1)(A) of the federal Social Security Act (health care prepayment plan), or a Medicare Select policy. (B) The subsequent enrollment under subparagraph (A) is terminated by the enrollee during any period within the first 12 months of the subsequent enrollment (during which the enrollee is permitted to terminate the subsequent enrollment under Section 1851(e) of the federal Social Security Act). (6) The individual, upon first becoming eligible for benefits under Medicare Part A at age 65 years, or who postpones enrollment in Medicare Part A or Part B while eligible for employer-sponsored coverage and is older than age 65 years, and enrolls in a Medicare+Choice plan under Medicare Part C, and disenrolls from the plan by not later than 12 months after the effective date of enrollment. (c) (1) Under paragraphs (1), (2), (3), and (4) of subdivision (b), eligible persons are entitled to a Medicare supplement policy that has a benefit package classified as plan A, B, C, F, and at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer. (2) Under paragraph (5) of subdivision (b), eligible persons are entitled to the same Medicare supplement policy in which they were most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in paragraph (1) of subdivision (c). (3) Under paragraph (6) of subdivision (b), eligible persons are entitled to any Medicare supplement policy offered by any issuer. (d) (1) At the time of an event described in subdivision (b) because of which an individual loses coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subdivision (a). That notice shall be communicated contemporaneously with the notification of termination. Effective September 30, 2000, for terminations effective January 1, 2001, that notification shall also inform the individual that issuers must offer and allow individuals to enroll, during the application period following notification, in at least one letter-designated plan (H, I, or J, at the discretion of the issuer) that includes coverage for prescription medications, if currently available from an issuer. That coverage would be effective January 1, 2001. (2) At the time of an event described in subdivision (b) because of which an individual ceases enrollment under a contract or agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this section, and of the obligations of issuers of Medicare supplement policies under subdivision (a). That notice shall be communicated within 10 working days of the issuer receiving notification of disenrollment. (e) This section shall remain in effect only until January 1, 2001, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2001, deletes or extends that date. SEC. 6. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB 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 XIIIB of the California Constitution. SEC. 7. Sections 1, 2, 3, 4, and 5 of this act shall not become operative unless Senate Bill 764 of the 1999-2000 Regular Session is enacted and becomes operative, and this act is chaptered after Senate Bill 764. In that case, those sections shall become operative on January 1, 2001. SEC. 8. 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 require timely notification of certain persons whose health care coverage may be terminated effective January 1, 2001, relative to their rights to enroll in Medicare supplement insurance plans that offer coverage for prescription medications, it is necessary that this act take effect immediately.