BILL ANALYSIS
AB 108
Page 1
Correction (in bold text) - November 10, 2009
CONCURRENCE IN SENATE AMENDMENTS
AB 108 (Hayashi)
As Amended July 23, 2009
Majority vote
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|ASSEMBLY: |48-29|(May 11, 2009) |SENATE: |23-14|(September 2, |
| | | | | |2009) |
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Original Committee Reference: HEALTH
SUMMARY : Prohibits health plans and health insurers, after 24
months from the issuance of an individual health plan contract
or health insurance policy, from rescinding the individual
coverage for any reason, and prohibits canceling, limiting, or
raising premiums in a contract or policy due to any omissions,
misrepresentations, or inaccuracies in the application form,
whether willful or not.
The Senate amendments state that nothing in this bill shall be
construed to alter existing law that otherwise applies to a
health plan or insurer within the first 24 months following the
issuance of an individual health plan contract or health
insurance policy.
EXISTING LAW :
1)Provides for regulation of health plans by the Department of
Managed Health Care (DMHC) under the Knox-Keene Health Care
Service Plan Act of 1975 (Knox-Keene) and for regulation of
health insurers by the California Department of Insurance
(CDI) under the Insurance Code.
2)Prohibits health plans and health insurers from engaging in
"post-claims underwriting," defined as rescinding, canceling,
or limiting of a plan contract due to a plan or insurer's
failure to complete medical underwriting and resolve all
reasonable questions arising from written information
submitted on or with an application before issuing the plan
contract or policy. For health plans regulated by DMHC,
provides that the prohibition against post-claims underwriting
does not limit a plan's remedies upon a showing of willful
AB 108
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misrepresentation.
3)Prohibits a health plan or health insurer from rescinding or
modifying an authorization for services after the service is
rendered, for any reason, including but not limited to, the
health plan or health insurer's subsequent rescission,
cancellation, or modification of the enrollee or insured's
contract or policy, or the health plan or health insurer's
subsequent determination that the carrier did not make an
accurate determination of the enrollee or subscriber's
eligibility.
4)Requires applications for health plan contracts and health
insurance policies to conform to certain standards for
underwriting, including clear and unambiguous questions, when
health-related questions are used to ascertain an applicant's
health, and requires questions relating to the health
condition or health history of the applicant to be based on
medical information reasonable and necessary for medical
underwriting purposes.
5)Prohibits health insurers but not health plans from voiding
(rescinding) a policy or denying a claim based on
misstatements in the application after two years (24 months),
except for fraudulent misrepresentations, sometimes referred
to as an incontestability clause for insurance purposes.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version of this bill passed by the Senate.
FISCAL EFFECT :
Analysis Prepared by : Deborah Kelch / HEALTH / (916) 319-2097
FN: 0002733