BILL NUMBER: AB 108 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Hayashi
JANUARY 12,2009
An act to amend Section 1389.1 of, and to add Sections 1389.12 and
1389.21 to, the Health and Safety Code, and to amend Section 10291.5
of, and to add Sections 10384.15 and 10384.17 to, the Insurance
Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 108, as introduced, Hayashi. Individual health care coverage.
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 its provisions a crime. Existing law provides for the
regulation of health insurers by the Department of Insurance.
Existing law prohibits the Director of the Department of Managed
Health Care and the Insurance Commissioner from approving a plan
contract or health insurance policy without a finding that the
application conforms to specified requirements. Existing law
prohibits the cancellation or nonrenewal of an enrollment or
subscription by a health care service plan except in specified
circumstances. Existing law prohibits the nonrenewal of individual
health benefit plans by a health insurer except in specified
circumstances.
This bill would require the director and the commissioner to
jointly, by regulation, establish standard information and health
history questions to be used by health care service plans and health
insurers for their individual health care coverage application forms,
as specified. The bill would also prohibit a health care service
plan or health insurer from rescinding an individual health care
service plan contract or individual health insurance policy for any
reason after 18 months following the issuance of the plan contract or
policy.
Because this bill would impose additional requirements on health
care service plans, the willful violation of which would be a crime,
it would impose a state-mandated local program.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1389.1 of the Health and Safety Code is amended
to read:
1389.1. (a) The director
shall not approve any plan contract unless the director finds that
the application form conforms to both of the following
requirements:
(1)
(a) All applications
application forms for coverage which include
health-related the standard information and
health history questions shall contain clear and
unambiguous questions designed to ascertain the health condition or
history of the applicant required by Section 1389.12
.
(2) The application questions related to an applicant's health
shall be based on medical information that is reasonable and
necessary for medical underwriting purposes. The
(b) The application
shall include form includes a prominently
displayed notice that shall read reads
:
"California law prohibits an HIV test from being required or used
by health care service plans as a condition of obtaining coverage."
(b) Nothing in this section shall authorize the director to
establish or require a single or standard application form for
application questions.
SEC. 2. Section 1389.12 is added to the Health and Safety Code, to
read:
1389.12. (a) On or before January 1, 2010, the director shall, by
regulation, establish standard information and health history
questions that shall be used by all health care service plans for
their individual health care coverage application forms. The director
shall jointly develop the regulation with the Insurance
Commissioner. The regulation shall include a set of approved
questions for use in health care service plan and health insurance
application forms for individual health plan contracts and individual
health insurance policies. The application forms for individual
health plan contracts and individual health insurance policies may
only contain questions from the set of approved questions established
pursuant to this subdivision.
(b) The standard information and health history questions
developed by the director shall contain clear and unambiguous
information and questions designed to ascertain the health history of
the applicant and shall be based on the medical information that is
reasonable and necessary for medical underwriting purposes.
(c) On or after July 1, 2010, all individual health care service
plan application forms shall utilize only the pool of approved
questions and the standardized information established pursuant to
this section.
SEC. 3. Section 1389.21 is added to the Health and Safety Code, to
read:
1389.21. Once a plan has issued an individual health care service
plan contract, the health care service plan may not rescind the
health care service plan contract for any reason after 18 months
following the issuance of the plan contract.
SEC. 4. Section 10291.5 of the Insurance Code is amended to read:
10291.5. (a) The purpose of this section is to achieve both of
the following:
(1) Prevent, in respect to disability insurance, fraud, unfair
trade practices, and insurance economically unsound to the insured.
(2) Assure Ensure that the language
of all insurance policies can be readily understood and interpreted.
(b) The commissioner shall not approve any disability policy for
insurance or delivery in this state in any of the following
circumstances:
(1) If the commissioner finds that it contains any provision, or
has any label, description of its contents, title, heading, backing,
or other indication of its provisions which
that is unintelligible, uncertain, ambiguous, or abstruse, or
likely to mislead a person to whom the policy is offered, delivered
, or issued.
(2) If it contains any provision for payment at a rate, or in an
amount (other than the product of rate times the periods for which
payments are promised) for loss caused by particular event or events
(as distinguished from character of physical injury or illness of the
insured) more than triple the lowest rate, or amount, promised in
the policy for the same loss caused by any other event or events
(loss caused by sickness, loss caused by accident, and different
degrees of disability each being considered, for the purpose of this
paragraph, a different loss); or if it contains any provision for
payment for any confining loss of time at a rate more than six times
the least rate payable for any partial loss of time or more than
twice the least rate payable for any nonconfining total loss of time;
or if it contains any provision for payment for any nonconfining
total loss of time at a rate more than three times the least rate
payable for any partial loss of time.
(3) If it contains any provision for payment for disability caused
by particular event or events (as distinguished from character of
physical injury or illness of the insured) payable for a term more
than twice the least term of payment provided by the policy for the
same degree of disability caused by any other event or events; or if
it contains any benefit for total nonconfining disability payable for
lifetime or for more than 12 months and any benefit for partial
disability, unless the benefit for partial disability is payable for
at least three months; or if it contains any benefit for total
confining disability payable for lifetime or for more than 12 months,
unless it also contains benefit for total nonconfining disability
caused by the same event or events payable for at least three months,
and, if it also contains any benefit for partial disability, unless
the benefit for partial disability is payable for at least three
months. The provisions of this paragraph shall apply separately to
accident benefits and to sickness benefits.
(4) If it contains provision or provisions which would have the
effect, upon any termination of the policy, of reducing or ending the
liability as the insurer would have, but for the termination, for
loss of time resulting from accident occurring while the policy is in
force or for loss of time commencing while the policy is in force
and resulting from sickness contracted while the policy is in force
or for other losses resulting from accident occurring or sickness
contracted while the policy is in force, and also contains provision
or provisions reserving to the insurer the right to cancel or refuse
to renew the policy, unless it also contains other provision or
provisions the effect of which is that termination of the policy as
the result of the exercise by the insurer of any such right shall not
reduce or end the liability in respect to the hereinafter specified
losses as the insurer would have had under the policy, including its
other limitations, conditions, reductions, and restrictions, had the
policy not been so terminated.
The specified losses referred to in the preceding paragraph are:
(i) Loss of time which commences while the policy is in force and
results from sickness contracted while the policy is in force.
(ii) Loss of time which commences within 20 days following and
results from accident occurring while the policy is in force.
(iii) Losses which result from accident occurring or sickness
contracted while the policy is in force and arise out of the care or
treatment of illness or injury and which occur within 90 days from
the termination of the policy or during a period of continuous
compensable loss or losses which period commences prior to the end of
such 90 days.
(iv) Losses other than those specified in clause (i), (ii), or
(iii) of this paragraph which result from accident occurring or
sickness contracted while the policy is in force and which losses
occur within 90 days following the accident or the contraction of the
sickness.
(5) If by any caption, label, title, or description of contents
the policy states, implies, or infers without reasonable
qualification that it provides loss of time indemnity for lifetime,
or for any period of more than two years, if the loss of time
indemnity is made payable only when house confined or only under
special contingencies not applicable to other total loss of time
indemnity.
(6) If it contains any benefit for total confining disability
payable only upon condition that the confinement be of an abnormally
restricted nature unless the caption of the part containing any such
benefit is accurately descriptive of the nature of the confinement
required and unless, if the policy has a description of contents,
label, or title, at least one of them contain reference to the nature
of the confinement required.
(7) (A) If, irrespective of the premium charged therefor, any
benefit of the policy is, or the benefits of the policy as a whole
are, not sufficient to be of real economic value to the insured.
(B) In determining whether benefits are of real economic value to
the insured, the commissioner shall not differentiate between
insureds of the same or similar economic or occupational classes and
shall give due consideration to all of the following:
(i) The right of insurers to exercise sound underwriting judgment
in the selection and amounts of risks.
(ii) Amount of benefit, length of time of benefit, nature or
extent of benefit, or any combination of those factors.
(iii) The relative value in purchasing power of the benefit or
benefits.
(iv) Differences in insurance issued on an industrial or other
special basis.
(C) To be of real economic value, it shall not be necessary that
any benefit or benefits cover the full amount of any loss which might
be suffered by reason of the occurrence of any hazard or event
insured against.
(8) If it substitutes a specified indemnity upon the occurrence of
accidental death for any benefit of the policy, other than a
specified indemnity for dismemberment, which would accrue prior to
the time of that death or if it contains any provision which has the
effect, other than at the election of the insured exercisable within
not less than 20 days in the case of benefits specifically limited to
the loss by removal of one or more fingers or one or more toes or
within not less than 90 days in all other cases, of doing any of the
following:
(A) Of substituting, upon the occurrence of the loss of both
hands, both feet, one hand and one foot, the sight of both eyes or
the sight of one eye and the loss of one hand or one foot, some
specified indemnity for any or all benefits under the policy unless
the indemnity so specified is equal to or greater than the total of
the benefit or benefits for which such specified indemnity is
substituted and which, assuming in all cases that the insured would
continue to live, could possibly accrue within four years from the
date of such dismemberment under all other provisions of the policy
applicable to the particular event or events (as distinguished from
character of physical injury or illness) causing the dismemberment.
(B) Of substituting, upon the occurrence of any other
dismemberment some specified indemnity for any or all benefits under
the policy unless the indemnity so specified is equal to or greater
than one-fourth of the total of the benefit or benefits for which the
specified indemnity is substituted and which, assuming in all cases
that the insured would continue to live, could possibly accrue within
four years from the date of the dismemberment under all other
provisions of the policy applicable to the particular event or events
(as distinguished from character of physical injury or illness)
causing the dismemberment.
(C) Of substituting a specified indemnity upon the occurrence of
any dismemberment for any benefit of the policy which would accrue
prior to the time of dismemberment.
As used in this section, loss of a hand shall be severance at or
above the wrist joint, loss of a foot shall be severance at or above
the ankle joint, loss of an eye shall be the irrecoverable loss of
the entire sight thereof, loss of a finger shall mean at least one
entire phalanx thereof and loss of a toe the entire toe.
(9) If it contains provision, other than as provided in Section
10369.3, reducing any original benefit more than 50 percent on
account of age of the insured.
(10) If the insuring clause or clauses contain no reference to the
exceptions, limitations, and reductions (if any) or no specific
reference to, or brief statement of, each abnormally restrictive
exception, limitation, or reduction.
(11) If it contains benefit or benefits for loss or losses from
specified diseases only unless:
(A) All of the diseases so specified in each provision granting
the benefits fall within some general classification based upon the
following:
(i) The part or system of the human body principally subject to
all such diseases.
(ii) The similarity in nature or cause of such diseases.
(iii) In case of diseases of an unusually serious nature and
protracted course of treatment, the common characteristics of all
such diseases with respect to severity of affliction and cost of
treatment.
(B) The policy is entitled and each provision granting the
benefits is separately captioned in clearly understandable words so
as to accurately describe the classification of diseases covered and
expressly point out, when that is the case, that not all diseases of
the classification are covered.
(12) If it does not contain provision for a grace period of at
least the number of days specified below for the payment of each
premium falling due after the first premium, during which grace
period the policy shall continue in force provided, that the grace
period to be included in the policy shall be not less than seven days
for policies providing for weekly payment of premium, not less than
10 days for policies providing for monthly payment of premium and not
less than 31 days for all other policies.
(13) If it fails to conform in any respect with any law of this
state.
(c) The commissioner shall not approve any disability policy
covering hospital, medical, or surgical expenses unless the
commissioner finds that the application form conforms to
both of the following requirements:
(1) All applications application forms
for disability insurance covering hospital, medical, or
surgical expenses, except that which is guaranteed issue,
which include the standard information and health
history questions relating to medical conditions,
shall contain clear and unambiguous questions designed to ascertain
the health condition or history of the applicant
required by Section 10384.15 .
(2) The application questions designed to ascertain the
health condition or history of the applicant shall be based on
medical information that is reasonable and necessary for medical
underwriting purposes. The application shall include
form includes a prominently displayed notice that states:
"California law prohibits an HIV test from being required or used
by health insurance companies as a condition of obtaining health
insurance coverage."
(d) Nothing in this section authorizes the commissioner to
establish or require a single or standard application form for
application questions.
(e)
(d) The commissioner may, from time to time as
conditions warrant, after notice and hearing, promulgate such
reasonable rules and regulations, and amendments and additions
thereto, as are necessary or convenient, to establish, in advance of
the submission of policies, the standard or standards conforming to
subdivision (b), by which he or she shall disapprove or withdraw
approval of any disability policy.
In promulgating any such rule or regulation the commissioner shall
give consideration to the criteria herein established and to the
desirability of approving for use in policies in this state uniform
provisions, nationwide or otherwise, and is hereby granted the
authority to consult with insurance authorities of any other state
and their representatives individually or by way of convention or
committee, to seek agreement upon those provisions.
Any such rule or regulation shall be promulgated in accordance
with the procedure provided in Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(f)
(e) The commissioner may withdraw approval of filing of
any policy or other document or matter required to be approved by
the commissioner, or filed with him or her, by this chapter when the
commissioner would be authorized to disapprove or refuse filing of
the same if originally submitted at the time of the action of
withdrawal.
Any such withdrawal shall be in writing and shall specify reasons.
An insurer adversely affected by any such withdrawal may, within a
period of 30 days following mailing or delivery of the writing
containing the withdrawal, by written request secure a hearing to
determine whether the withdrawal should be annulled, modified, or
confirmed. Unless, at any time, it is mutually agreed to the
contrary, a hearing shall be granted and commenced within 30 days
following filing of the request and shall proceed with reasonable
dispatch to determination. Unless the commissioner in writing in the
withdrawal, or subsequent thereto, grants an extension, any such
withdrawal shall, in the absence of any such request, be effective,
prospectively and not retroactively, on the 91st day following the
mailing or delivery of the withdrawal, and, if request for the
hearing is filed, on the 91st day following mailing or delivery of
written notice of the commissioner's determination.
(g)
(f) No proceeding under this section is subject to
Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of
Title 2 of the Government Code.
(h)
(g) Except as provided in subdivision (k)
(i) , any action taken by the commissioner under
this section is subject to review by the courts of this state and
proceedings on review shall be in accordance with the Code of Civil
Procedure.
Notwithstanding any other provision of law to the contrary,
petition for any such review may be filed at any time before the
effective date of the action taken by the commissioner. No action of
the commissioner shall become effective before the expiration of 20
days after written notice and a copy thereof are mailed or delivered
to the person adversely affected, and any action so submitted for
review shall not become effective for a further period of 15 days
after the filing of the petition in court. The court may stay the
effectiveness thereof for a longer period.
(i)
(h) This section shall be liberally construed to
effectuate the purpose and intentions herein stated; but shall not be
construed to grant the commissioner power to fix or regulate rates
for disability insurance or prescribe a standard form of disability
policy, except that the commissioner shall prescribe a standard
supplementary disclosure form for presentation with all disability
insurance policies, pursuant to Section 10603.
(j) This section shall be effective on and after July 1, 1950, as
to all policies thereafter submitted and on and after January 1,
1951, the commissioner may withdraw approval pursuant to subdivision
(d) of any policy thereafter issued or delivered in this state
irrespective of when its form may have been submitted or approved,
and prior to those dates the provisions of law in effect on January
1, 1949, shall apply to those policies.
(k)
(i) Any such policy issued by an insurer to an insured
on a form approved by the commissioner, and in accordance with the
conditions, if any, contained in the approval, at a time when that
approval is outstanding shall, as between the insurer and the
insured, or any person claiming under the policy, be conclusively
presumed to comply with, and conform to, this section.
SEC. 5. Section 10384.15 is added to the Insurance Code, to read:
10384.15. (a) On or before January 1, 2010, the commissioner
shall, by regulation, establish standard information and health
history questions that shall be used by all health insurers for their
individual health care coverage application forms. The commissioner
shall jointly develop the regulation with the Director of the
Department of Managed Health Care. The regulation shall include a set
of approved questions for use in health care service plan and health
insurance application forms for individual health plan contracts and
individual health insurance policies. The application forms for
individual health plan contracts and individual health insurance
policies may only contain questions from the set of approved
questions established pursuant to this subdivision.
(b) The standard information and health history questions
developed by the commissioner shall contain clear and unambiguous
information and questions designed to ascertain the health history of
the applicant and shall be based on the medical information that is
reasonable and necessary for medical underwriting purposes.
(c) On or after July 1, 2010, all individual health insurance
application forms shall utilize only the pool of approved questions
and the standardized information established pursuant to this
section.
SEC. 6. Section 10384.17 is added to the Insurance Code, to read:
10384.17. Once an insurer has issued an individual health
insurance policy, the insurer shall not rescind the policy for any
reason after 18 months following the issuance of the policy.
SEC. 7. 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. 8. (a) The amendments made to Section 1389.1 of the Health
and Safety Code by this act shall become operative on July 1, 2010.
(b) The amendments made to Section 10291.5 of the Insurance Code
by this act shall become operative on July 1, 2010.