California Legislature—2013–14 Regular Session

Assembly Bill No. 2433

Introduced by Assembly Member Mansoor

February 21, 2014

An act to amend Section 1367.008 of the Health and Safety Code, and to amend Section 10112.295 of the Insurance Code, relating to health care coverage, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 2433, as introduced, Mansoor. Health care coverage: catastrophic plans.

Existing law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA requires applicable individuals to maintain minimum essential coverage and requires health insurance issuers that offer coverage in the individual or small group market to ensure that the coverage includes the essential health benefits package, which is defined to mean coverage that, among other things, provides the bronze, silver, gold, and platinum level of coverage, as specified. PPACA exempts from this requirement a catastrophic plan that meets specified requirements and is sold only to an individual under 30 years of age or an individual who is exempt from the PPACA requirement to obtain minimum coverage because he or she cannot afford coverage or has suffered a hardship, as specified.

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 the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance. Existing law defines bronze, silver, gold, and platinum levels of coverage for the nongrandfathered individual market consistent with the definitions in PPACA and authorizes a catastrophic plan to be offered in the individual market only if the individual purchasing the plan is under 30 years of age or the individual has a certificate of exemption pursuant to PPACA because the individual is not offered affordable coverage or because the individual faces hardship.

The bill would, to the extent permitted by PPACA, require that an individual be deemed to face hardship for purposes of this provision if his or her coverage was withdrawn from the market between December 1, 2013, and March 31, 2014, as specified. Because a willful violation of this requirement by a health care service plan would be a crime, the bill 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.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

SECTION 1.  

Section 1367.008 of the Health and Safety Code
is amended to read:

1367.008.  

(a) Levels of coverage for the nongrandfathered
individual market are defined as follows:

(1) Bronze level: A health care service plan contract in the
bronze level shall provide a level of coverage that is actuarially
equivalent to 60 percent of the full actuarial value of the benefits
provided under the plan contract.

(2) Silver level: A health care service plan contract in the silver
level shall provide a level of coverage that is actuarially equivalent
to 70 percent of the full actuarial value of the benefits provided
under the plan contract.

(3) Gold level: A health care service plan contract in the gold
level shall provide a level of coverage that is actuarially equivalent
to 80 percent of the full actuarial value of the benefits provided
under the plan contract.

(4) Platinum level: A health care service plan contract in the
platinum level shall provide a level of coverage that is actuarially
equivalent to 90 percent of the full actuarial value of the benefits
provided under the plan contract.

(b) Actuarial value for nongrandfathered individual health care
service plan contracts shall be determined in accordance with the
following:

(1) Actuarial value shall not vary by more than plus or minus
2 percent.

(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in Section 1367.005 and as provided to
a standard, nonelderly population. For this purpose, a standard
population shall not include those receiving coverage through the
Medi-Cal or Medicare programs.

(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.

(4) The actuarial value for pediatric dental benefits, whether
offered by a full service plan or a specialized plan, shall be
consistent with federal law and guidance applicable to the plan
type.

(5) The department, in consultation with the Department of
Insurance and the Exchange, shall consider whether to exercise
state-level flexibility with respect to the actuarial value calculator
in order to take into account the unique characteristics of the
California health care coverage market, including the prevalence
of health care service plans, total cost of care paid for by the plan,
price of care, patterns of service utilization, and relevant
demographic factors.

(c) (1) A catastrophic plan is a health care service plan contract
that provides no benefits for any plan year until the enrollee has
incurred cost-sharing expenses in an amount equal to the annual
limit on out-of-pocket costs as specified in Section 1367.006 except
that it shall provide coverage for at least three primary care visits.
A carrier that is not participating in the Exchange shall not offer,
market, or sell a catastrophic plan in the individual market.

(2) A catastrophic plan may be offered only in the individual
market and only if consistent with this paragraph. Catastrophic
plans may be offered only if either of the following apply:

(A) The individual purchasing the plan has not yet attained 30
years of age before the beginning of the plan year.

(B) The individual has a certificate of exemption from Section
5000(A) of the Internal Revenue Code because the individual is
not offered affordable coverage or because the individual faces
hardship. begin insert To the extent permitted by PPACA, an individual shall
be deemed to face hardship for purposes of this subparagraph if
his or her coverage under a policy of health insurance, as defined
in subdivision (a) of Section 106 of the Insurance Code, other than
a specialized health insurance policy or a Medicare supplement
policy, or a health care service plan contract, other than a
specialized health care service plan contract or a Medicare
supplement contract, was canceled between December 1, 2013,
and March 31, 2014, pursuant to paragraph (5) or (6) of
subdivision (a) of Section 1365 or subdivision (d) or (e) of Section
10273.4 or Section 10273.6 of the Insurance Code. end insert

(d) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued thereunder.

SEC. 2.  

Section 10112.295 of the Insurance Code is amended
to read:

10112.295.  

(a) Levels of coverage for the nongrandfathered
individual market are defined as follows:

(1) Bronze level: A health insurance policy in the bronze level
shall provide a level of coverage that is actuarially equivalent to
60 percent of the full actuarial value of the benefits provided under
the policy.

(2) Silver level: A health insurance policy in the silver level
shall provide a level of coverage that is actuarially equivalent to
70 percent of the full actuarial value of the benefits provided under
the policy.

(3) Gold level: A health insurance policy in the gold level shall
provide a level of coverage that is actuarially equivalent to 80
percent of the full actuarial value of the benefits provided under
the policy.

(4) Platinum level: A health insurance policy in the platinum
level shall provide a level of coverage that is actuarially equivalent
to 90 percent of the full actuarial value of the benefits provided
under the policy.

(b) Actuarial value for nongrandfathered individual health
insurance policies shall be determined in accordance with the
following:

(1) Actuarial value shall not vary by more than plus or minus
2 percent.

(2) Actuarial value shall be determined on the basis of essential
health benefits as defined in Section 10112.27 and as provided to
a standard, nonelderly population. For this purpose, a standard
population shall not include those receiving coverage through the
Medi-Cal or Medicare programs.

(3) The department may use the actuarial value methodology
developed consistent with Section 1302(d) of PPACA.

(4) The actuarial value for pediatric dental benefits, whether
offered by a major medical policy or a specialized health insurance
policy, shall be consistent with federal law and guidance applicable
to the policy type.

(5) The department, in consultation with the Department of
Managed Health Care and the Exchange, shall consider whether
to exercise state-level flexibility with respect to the actuarial value
calculator in order to take into account the unique characteristics
of the California health care coverage market, including the
prevalence of health insurance policies, total cost of care paid for
by the health insurer, price of care, patterns of service utilization,
and relevant demographic factors.

(c) (1) A catastrophic policy is a health insurance policy that
provides no benefits for any plan year until the insured has incurred
cost-sharing expenses in an amount equal to the annual limit on
out-of-pocket costs as specified in Section 10112.28 except that
it shall provide coverage for at least three primary care visits. A
carrier that is not participating in the Exchange shall not offer,
market, or sell a catastrophic plan in the individual market.

(2) A catastrophic policy may be offered only in the individual
market and only if consistent with this paragraph. Catastrophic
policies may be offered only if either of the following apply:

(A) The individual purchasing the policy has not yet attained
30 years of age before the beginning of the plan year.

(B) The individual has a certificate of exemption from Section
5000(A) of the Internal Revenue Code because the individual is
not offered affordable coverage or because the individual faces
hardship. begin insert To the extent permitted by PPACA, an individual shall
be deemed to face hardship for purposes of this subparagraph if
his or her coverage under a policy of health insurance, as defined
in subdivision (a) of Section 106, other than a specialized health
insurance policy or a Medicare supplement policy, or a health
care service plan contract, as defined in Section 1345 of the Health
and Safety Code, other than a specialized health care service plan
contract or a Medicare supplement contract, was canceled between
December 1, 2013, and March 31, 2014, pursuant to subdivision
(d) or (e) of Section 10273.4 or Section 10273.6 or paragraph (5)
or (6) of subdivision (a) of Section 1365 of the Health and Safety
Code. end insert

(d) This section shall apply to a policy of health insurance, as
defined in subdivision (b) of Section 106, that covers any essential
health benefit as defined in Section 10112.27. This section shall
not apply to a specialized health insurance policy that does not
cover any of the essential health benefits.

(e) “PPACA” means the federal Patient Protection and
Affordable Care Act (Public Law 111-148), as amended by the
federal Health Care and Education Reconciliation Act of 2010
(Public Law 111-152), and any rules, regulations, or guidance
issued thereunder.

SEC. 3.  

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. 4.  

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:

Many health care service plans and health insurers terminated
health plans in anticipation of compliance with the federal Patient
Protection and Affordable Care Act. In order to ensure that
individuals enrolled in those plans will have access to the hardship
exemption announced by the United States Department of Health
and Human Services on December 19, 2013, it is necessary that
this act take effect immediately.