Amended in Senate March 17, 2014

Senate Bill No. 959

Introduced by Senator Hernandez

February 6, 2014

An act to amend begin insert Section 100503 of the Government Code, to amend end insert Sections 1357.503 begin insert , 1366.6, 1367.005, 1367.006, 1374.21, 1385.03, 1385.06, 1385.07, 1385.11, 1389.25, end insert and 1399.849 of the Health and Safety Code, and to amend Sections begin insert 10112.27, 10112.28, 10112.3, 10113.9, 10181.3, 10181.6, 10181.7, 10181.11, 10199.1, end insert 10753.05 begin insert , end insert and 10965.3 of the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

SB 959, as amended, Hernandez. Health care begin delete coverage: small group and individual markets: single risk pool: index rate. end delete begin insert coverage. end insert

Existing federal 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 each state to, by January 1, 2014, establish an American Health Benefit Exchange that facilitates the purchase of qualified health plans by qualified individuals and qualified small employers. PPACA requires a health insurance issuer to consider all enrollees in its individual market plans to be part of a single risk pool and to consider all enrollees in its small group market plans to be part of a single risk pool. PPACA also requires an issuer to establish an index rate for each of those markets based on the total combined claim costs for providing essential health benefits within the single risk pool for that market and authorizes the issuer to vary premium rates from the index rate based only on specified factors. PPACA requires that the index rate be adjusted based on Exchange user fees and expected payments and charges under certain risk adjustment and reinsurance programs.

Existing begin insert law establishes the California Health Benefit Exchange within state government for the purpose of facilitating the purchase of qualified health plans through the Exchange by qualified individuals and small employers. Existing end insert 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 also provides for the regulation of health insurers by the Department of Insurance. Existing law requires a health care service plan and a health insurer to consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered small employer plans begin insert , whether offered as health care service plan contracts or health insurance policies end insert , and to also consider as a single risk pool the claims experience of all enrollees and insureds in its nongrandfathered individual market plans begin insert , whether offered as health care service plan contracts or health insurance policies end insert . Existing law requires a plan or insurer to establish an index rate for those markets, as specified, and authorizes the plan or insurer to vary premium rates from the index rate based only on specified factors. Existing law requires that the index rate be adjusted based on expected payments and charges under the risk adjustment and reinsurance programs specified under PPACA.

This bill would begin insert require that both the enrollees of nongrandfathered individual health benefit plans issued by a health care service plan and the insureds of nongrandfathered individual health benefit plans issued by a health insurer that is a corporate affiliate, subsidiary, or parent of the plan be part of a single risk pool and would make parallel changes with respect to the small group market. The bill would end insert require that the index rate also be adjusted based on Exchange user fees, as specified under PPACA. begin delete 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. end delete

begin insert

PPACA requires a health insurance issuer offering coverage in the individual or small group market to ensure that the coverage includes the essential health benefits package and defines this package to mean coverage that, among other requirements, provides the platinum, gold, silver, or bronze level of coverage or, in the individual market, provides catastrophic coverage to specified individuals. Existing law requires health care service plans and health insurers participating in the Exchange to fairly and affirmatively offer, market, and sell in the Exchange at least one product in each of these 5 levels of coverage. Existing law requires a health care service plan or health insurer that does not participate in the Exchange to offer at least one standardized product designated by the Exchange in each of the platinum, gold, silver, and bronzed levels of coverage.

end insert begin insert

This bill would specify that health care service plans and health insurers participating in the small group market of the Exchange are only required to fairly and affirmatively offer, market, and sell in that market the platinum, gold, silver, and bronze levels of coverage. The bill would also specify that the requirement for plans or insurers not participating in the Exchange to offer at least one standardized product designated by the Exchange in each of those levels of coverage only applies to the individual and small group markets.

end insert begin insert

Existing law prohibits a health care service plan or a health insurer offering coverage in the individual market from changing the premium rate or coverage without providing specified notice to the subscriber or policyholder at least 60 days prior to the contract or policy renewal date.

end insert begin insert

The bill would require that the notice be sent on the earlier of 60 days prior to the renewal date or 15 days prior to the start of the annual enrollment period applicable to the contract or policy.

end insert begin insert

Existing law requires a plan or insurer that declines to offer coverage or denies enrollment for an individual or his or her dependents applying for individual coverage or that offers individual or small group coverage at a rate that is higher than the standard rate to provide the applicant with the reason for the decision in writing.

end insert begin insert

This bill would delete those requirements.

end insert begin insert

Existing law requires a health care service plan or health insurer in the individual or small group market to file rate information with the Department of Managed Health Care or the Department of Insurance, as applicable, at least 60 days prior to implementing a rate change and requires the filing to be concurrent with the notice sent to subscribers prior to increasing premium rates. Existing law requires that the rate filing include specified information regarding the proposed rate increase and the plan’s overall annual medical trend factor assumptions in each rate filing for all benefits and by aggregate benefit category. Existing law authorizes the plan to provide aggregated additional data that demonstrates year-to-year cost increases in specific benefit categories in major geographic regions of the state to be defined by the department to include no more than 9 regions.

end insert begin insert

This bill would eliminate the requirement that the rate filing be concurrent with the notice sent to subscribers prior to increasing premium rates. The bill would also require that a rate filing include specified information regarding a plan or insurer’s proposed rate change, rather than rate increase, and would require that the geographic regions correspond with those regions used by the plan to establish premium rates.

end insert begin insert

The bill would make other related, conforming, and technical changes.

end insert begin insert

Because a willful violation of the bill’s requirements with respect to health care service plans would be a crime, the bill would impose a state-mandated local program.

end insert

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:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert , as
amended by Section 4 of Chapter 5 of the First Extraordinary
Session of the Statutes of 2013, is amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act begin insert , subject
to subdivision (e) of this section, paragraph (2) of subdivision (d)
of Section 1366.6 of the Health and Safety Code, and paragraph
(2) of subdivision (d) of Section 10112.3 of the Insurance Code end insert .

(e) Require, as a condition of participation in the begin insert individual
market of the end insert Exchange, carriers to fairly and affirmatively offer,
market, and sell in the begin insert individual market of the end insert Exchange at least
one product within each of the five levels of coverage contained
in subsections (d) and (e) of Section 1302 of the federal act begin insert and
require, as a condition of participation in the SHOP Program,
carriers to fairly and affirmatively offer, market, and sell in the
SHOP Program at least one product within each of the four levels
of coverage contained in subsection (d) of Section 1302 of the
federal act end insert . The board may require carriers to offer additional
products within each of those begin delete five end delete levels of coverage. This
subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Except as otherwise provided in this section and Section
100504.5, require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries. “Product” also does not include a bridge plan product
offered pursuant to Section 100504.5.

(3) Except as required by Section 1301(a)(1)(C)(ii) of the federal
act, a carrier offering a bridge plan product in the Exchange may
limit the products it offers in the Exchange solely to a bridge plan
product contract.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and reenrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange.

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1) Annually prepare a written report on the implementation
and performance of the Exchange functions during the preceding
fiscal year, including, at a minimum, the manner in which funds
were expended and the progress toward, and the achievement of,
the requirements of this title. The report shall also include data
provided by health care service plans and health insurers offering
bridge plan products regarding the extent of health care provider
and health facility overlap in their Medi-Cal networks as compared
to the health care provider and health facility networks contracting
with the plan or insurer in their bridge plan contracts. This report
shall be transmitted to the Legislature and the Governor and shall
be made available to the public on the Internet Web site of the
Exchange. A report made to the Legislature pursuant to this
subdivision shall be submitted pursuant to Section 9795.

(2) The Exchange shall prepare, or contract for the preparation
of, an evaluation of the bridge plan program using the first three
years of experience with the program. The evaluation shall be
provided to the health policy and fiscal committees of the
Legislature in the fourth year following federal approval of the
bridge plan option. The evaluation shall include, but not be limited
to, all of the following:

(A) The number of individuals eligible to participate in the
bridge plan program each year by category of eligibility.

(B) The number of eligible individuals who elect a bridge plan
option each year by category of eligibility.

(C) The average length of time, by region and statewide, that
individuals remain in the bridge plan option each year by category
of eligibility.

(D) The regions of the state with a bridge plan option, and the
carriers in each region that offer a bridge plan, by year.

(E) The premium difference each year, by region, between the
bridge plan and the first and second lowest cost plan for individuals
in the Exchange who are not eligible for the bridge plan.

(F) The effect of the bridge plan on the premium subsidy amount
for bridge plan eligible individuals each year by each region.

(G) Based on a survey of individuals enrolled in the bridge plan:

(i) Whether individuals enrolling in the bridge plan product are
able to keep their existing health care providers.

(ii) Whether individuals would want to retain their bridge plan
product, buy a different Exchange product, or decline to purchase
health insurance if there was no bridge plan product available. The
Exchange may include questions designed to elicit the information
in this subparagraph as part of an existing survey of individuals
receiving coverage in the Exchange.

(3) In addition to the evaluation required by paragraph (2), the
Exchange shall post the items in subparagraphs (A) to (F),
inclusive, on its Internet Web site each year.

(4) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
act and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014.

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in Section 1312(c)(3) of the federal act to merge the
individual and small employer markets. In its report, the board
shall provide information, based on at least two years of data from
the Exchange, on the potential impact on rates paid by individuals
and by small employers in a merged individual and small employer
market, as compared to the rates paid by individuals and small
employers if a separate individual and small employer market is
maintained. A report made pursuant to this subdivision shall be
submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

(z) This section shall become inoperative on the October 1 that
is five years after the date that federal approval of the bridge plan
option occurs, and, as of the second January 1 thereafter, is
repealed, unless a later enacted statute that is enacted before that
date deletes or extends the dates on which it becomes inoperative
and is repealed.

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 100503 of the end insert begin insert Government Code end insert begin insert , as added by
Section 5 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read: end insert

100503.  

In addition to meeting the minimum requirements of
Section 1311 of the federal act, the board shall do all of the
following:

(a) Determine the criteria and process for eligibility, enrollment,
and disenrollment of enrollees and potential enrollees in the
Exchange and coordinate that process with the state and local
government entities administering other health care coverage
programs, including the State Department of Health Care Services,
the Managed Risk Medical Insurance Board, and California
counties, in order to ensure consistent eligibility and enrollment
processes and seamless transitions between coverage.

(b) Develop processes to coordinate with the county entities
that administer eligibility for the Medi-Cal program and the entity
that determines eligibility for the Healthy Families Program,
including, but not limited to, processes for case transfer, referral,
and enrollment in the Exchange of individuals applying for
assistance to those entities, if allowed or required by federal law.

(c) Determine the minimum requirements a carrier must meet
to be considered for participation in the Exchange, and the
standards and criteria for selecting qualified health plans to be
offered through the Exchange that are in the best interests of
qualified individuals and qualified small employers. The board
shall consistently and uniformly apply these requirements,
standards, and criteria to all carriers. In the course of selectively
contracting for health care coverage offered to qualified individuals
and qualified small employers through the Exchange, the board
shall seek to contract with carriers so as to provide health care
coverage choices that offer the optimal combination of choice,
value, quality, and service.

(d) Provide, in each region of the state, a choice of qualified
health plans at each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act begin insert , subject
to subdivision (e) of this section, paragraph (2) of subdivision (d)
of Section 1366.6 of the Health and Safety Code and paragraph
(2) of subdivision (d) of Section 10112.3 of the Insurance Code end insert .

(e) Require, as a condition of participation in the Exchange,
carriers to fairly and affirmatively offer, market, and sell in the
Exchange at least one product within each of the five levels of
coverage contained in subsections (d) and (e) of Section 1302 of
the federal act begin insert and require, as a condition of participation in the
SHOP Program, carriers to fairly and affirmatively offer, market,
and sell in the SHOP Program at least one product within each
of the four levels of coverage contained in subsection (d) of Section
1302 of the federal act end insert . The board may require carriers to offer
additional products within each of those begin delete five end delete levels of coverage.
This subdivision shall not apply to a carrier that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504.

(f) (1) Require, as a condition of participation in the Exchange,
carriers that sell any products outside the Exchange to do both of
the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and carriers for enrolled
Healthy Families beneficiaries or contracts entered into pursuant
to Chapter 7 (commencing with Section 14000) of, or Chapter 8
(commencing with Section 14200) of, Part 3 of Division 9 of the
Welfare and Institutions Code between the State Department of
Health Care Services and carriers for enrolled Medi-Cal
beneficiaries.

(g) Determine when an enrollee’s coverage commences and the
extent and scope of coverage.

(h) Provide for the processing of applications and the enrollment
and disenrollment of enrollees.

(i) Determine and approve cost-sharing provisions for qualified
health plans.

(j) Establish uniform billing and payment policies for qualified
health plans offered in the Exchange to ensure consistent
enrollment and disenrollment activities for individuals enrolled in
the Exchange.

(k) Undertake activities necessary to market and publicize the
availability of health care coverage and federal subsidies through
the Exchange. The board shall also undertake outreach and
enrollment activities that seek to assist enrollees and potential
enrollees with enrolling and reenrolling in the Exchange in the
least burdensome manner, including populations that may
experience barriers to enrollment, such as the disabled and those
with limited English language proficiency.

(l) Select and set performance standards and compensation for
navigators selected under subdivision (l) of Section 100502.

(m) Employ necessary staff.

(1) The board shall hire a chief fiscal officer, a chief operations
officer, a director for the SHOP Exchange, a director of Health
Plan Contracting, a chief technology and information officer, a
general counsel, and other key executive positions, as determined
by the board, who shall be exempt from civil service.

(2) (A) The board shall set the salaries for the exempt positions
described in paragraph (1) and subdivision (i) of Section 100500
in amounts that are reasonably necessary to attract and retain
individuals of superior qualifications. The salaries shall be
published by the board in the board’s annual budget. The board’s
annual budget shall be posted on the Internet Web site of the
Exchange. To determine the compensation for these positions, the
board shall cause to be conducted, through the use of independent
outside advisors, salary surveys of both of the following:

(i) Other state and federal health insurance exchanges that are
most comparable to the Exchange.

(ii) Other relevant labor pools.

(B) The salaries established by the board under subparagraph
(A) shall not exceed the highest comparable salary for a position
of that type, as determined by the surveys conducted pursuant to
subparagraph (A).

(C) The Department of Human Resources shall review the
methodology used in the surveys conducted pursuant to
subparagraph (A).

(3) The positions described in paragraph (1) and subdivision (i)
of Section 100500 shall not be subject to otherwise applicable
provisions of the Government Code or the Public Contract Code
and, for those purposes, the Exchange shall not be considered a
state agency or public entity.

(n) Assess a charge on the qualified health plans offered by
carriers that is reasonable and necessary to support the
development, operations, and prudent cash management of the
Exchange. This charge shall not affect the requirement under
Section 1301 of the federal act that carriers charge the same
premium rate for each qualified health plan whether offered inside
or outside the Exchange.

(o) Authorize expenditures, as necessary, from the California
Health Trust Fund to pay program expenses to administer the
Exchange.

(p) Keep an accurate accounting of all activities, receipts, and
expenditures, and annually submit to the United States Secretary
of Health and Human Services a report concerning that accounting.
Commencing January 1, 2016, the board shall conduct an annual
audit.

(q) (1) Annually prepare a written report on the implementation
and performance of the Exchange functions during the preceding
fiscal year, including, at a minimum, the manner in which funds
were expended and the progress toward, and the achievement of,
the requirements of this title. This report shall be transmitted to
the Legislature and the Governor and shall be made available to
the public on the Internet Web site of the Exchange. A report made
to the Legislature pursuant to this subdivision shall be submitted
pursuant to Section 9795.

(2) In addition to the report described in paragraph (1), the board
shall be responsive to requests for additional information from the
Legislature, including providing testimony and commenting on
proposed state legislation or policy issues. The Legislature finds
and declares that activities including, but not limited to, responding
to legislative or executive inquiries, tracking and commenting on
legislation and regulatory activities, and preparing reports on the
implementation of this title and the performance of the Exchange,
are necessary state requirements and are distinct from the
promotion of legislative or regulatory modifications referred to in
subdivision (d) of Section 100520.

(r) Maintain enrollment and expenditures to ensure that
expenditures do not exceed the amount of revenue in the fund, and
if sufficient revenue is not available to pay estimated expenditures,
institute appropriate measures to ensure fiscal solvency.

(s) Exercise all powers reasonably necessary to carry out and
comply with the duties, responsibilities, and requirements of this
act and the federal act.

(t) Consult with stakeholders relevant to carrying out the
activities under this title, including, but not limited to, all of the
following:

(1) Health care consumers who are enrolled in health plans.

(2) Individuals and entities with experience in facilitating
enrollment in health plans.

(3) Representatives of small businesses and self-employed
individuals.

(4) The State Medi-Cal Director.

(5) Advocates for enrolling hard-to-reach populations.

(u) Facilitate the purchase of qualified health plans in the
Exchange by qualified individuals and qualified small employers
no later than January 1, 2014.

(v) Report, or contract with an independent entity to report, to
the Legislature by December 1, 2018, on whether to adopt the
option in Section 1312(c)(3) of the federal act to merge the
individual and small employer markets. In its report, the board
shall provide information, based on at least two years of data from
the Exchange, on the potential impact on rates paid by individuals
and by small employers in a merged individual and small employer
market, as compared to the rates paid by individuals and small
employers if a separate individual and small employer market is
maintained. A report made pursuant to this subdivision shall be
submitted pursuant to Section 9795.

(w) With respect to the SHOP Program, collect premiums and
administer all other necessary and related tasks, including, but not
limited to, enrollment and plan payment, in order to make the
offering of employee plan choice as simple as possible for qualified
small employers.

(x) Require carriers participating in the Exchange to immediately
notify the Exchange, under the terms and conditions established
by the board when an individual is or will be enrolled in or
disenrolled from any qualified health plan offered by the carrier.

(y) Ensure that the Exchange provides oral interpretation
services in any language for individuals seeking coverage through
the Exchange and makes available a toll-free telephone number
for the hearing and speech impaired. The board shall ensure that
written information made available by the Exchange is presented
in a plainly worded, easily understandable format and made
available in prevalent languages.

(z) This section shall become operative only if Section 4 of the
act that added this section becomes inoperative pursuant to
subdivision (z) of that Section 4.

begin delete SECTION 1. end delete
begin insert SEC. 3. end insert   

Section 1357.503 of the Health and Safety Code is
amended to read:

1357.503.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
small employer health care service plan contracts for plan years
on or after January 1, 2014, to all small employers in each service
area in which the plan provides or arranges for the provision of
health care services.

(2) On and after October 1, 2013, a plan shall make available
to each small employer all small employer health care service plan
contracts that the plan offers and sells to small employers or to
associations that include small employers in this state for plan
years on or after January 1, 2014. Health coverage through an
association that is not related to employment shall be considered
individual coverage pursuant to Section 144.102(c) of Title 45 of
the Code of Federal Regulations.

(3) A plan that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraphs
(1) and (2) with respect to small employer health care service plan
contracts offered through the Exchange in those geographic regions
in which the plan offers plan contracts through the Exchange.

(b) A plan shall provide enrollment periods consistent with
PPACA and described in Section 155.725 of Title 45 of the Code
of Federal Regulations. Commencing January 1, 2014, a plan shall
provide special enrollment periods consistent with the special
enrollment periods described in Section 1399.849, to the extent
permitted by PPACA, except for the triggering events identified
in paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of
the Code of Federal Regulations with respect to plan contracts
offered through the Exchange.

(c) No plan or solicitor shall induce or otherwise encourage a
small employer to separate or otherwise exclude an eligible
employee from a health care service plan contract that is provided
in connection with employee’s employment or membership in a
guaranteed association.

(d) Every plan shall file with the director the reasonable
employee participation requirements and employer contribution
requirements that will be applied in offering its plan contracts.
Participation requirements shall be applied uniformly among all
small employer groups, except that a plan may vary application
of minimum employee participation requirements by the size of
the small employer group and whether the employer contributes
100 percent of the eligible employee’s premium. Employer
contribution requirements shall not vary by employer size. A health
care service plan shall not establish a participation requirement
that (1) requires a person who meets the definition of a dependent
in Section 1357.500 to enroll as a dependent if he or she is
otherwise eligible for coverage and wishes to enroll as an eligible
employee and (2) allows a plan to reject an otherwise eligible small
employer because of the number of persons that waive coverage
due to coverage through another employer. Members of an
association eligible for health coverage under subdivision (m) of
Section 1357.500, but not electing any health coverage through
the association, shall not be counted as eligible employees for
purposes of determining whether the guaranteed association meets
a plan’s reasonable participation standards.

(e) The plan shall not reject an application from a small
employer for a small employer health care service plan contract
if all of the following conditions are met:

(1) The small employer offers health benefits to 100 percent of
its eligible employees. Employees who waive coverage on the
grounds that they have other group coverage shall not be counted
as eligible employees.

(2) The small employer agrees to make the required premium
payments.

(3) The small employer agrees to inform the small employer’s
employees of the availability of coverage and the provision that
those not electing coverage must wait until the next open
enrollment or a special enrollment period to obtain coverage
through the group if they later decide they would like to have
coverage.

(4) The employees and their dependents who are to be covered
by the plan contract work or reside in the service area in which
the plan provides or otherwise arranges for the provision of health
care services.

(f) No plan or solicitor shall, directly or indirectly, engage in
the following activities:

(1) Encourage or direct small employers to refrain from filing
an application for coverage with a plan because of the health status,
claims experience, industry, occupation of the small employer, or
geographic location provided that it is within the plan’s approved
service area.

(2) Encourage or direct small employers to seek coverage from
another plan because of the health status, claims experience,
industry, occupation of the small employer, or geographic location
provided that it is within the plan’s approved service area.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs or discriminate based on an individual’s
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions.

(g) A plan shall not, directly or indirectly, enter into any
contract, agreement, or arrangement with a solicitor that provides
for or results in the compensation paid to a solicitor for the sale of
a health care service plan contract to be varied because of the health
status, claims experience, industry, occupation, or geographic
location of the small employer. This subdivision does not apply
to a compensation arrangement that provides compensation to a
solicitor on the basis of percentage of premium, provided that the
percentage shall not vary because of the health status, claims
experience, industry, occupation, or geographic area of the small
employer.

(h) (1) A policy or contract that covers a small employer, as
defined in Section 1304(b) of PPACA and in Section 1357.500,
shall not establish rules for eligibility, including continued
eligibility, of an individual, or dependent of an individual, to enroll
under the terms of the policy or contract based on any of the
following health status-related factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an eligible employee or dependent to fill out a
health assessment or medical questionnaire prior to enrollment
under a small employer health care service plan contract. A health
care service plan shall not acquire or request information that
relates to a health status-related factor from the applicant or his or
her dependent or any other source prior to enrollment of the
individual.

(i) (1) A health care service plan shall consider as a single risk
pool for rating purposes in the small employer market the claims
experience of all enrollees in all nongrandfathered small employer
health begin delete benefit plans end delete begin insert care service plan contracts end insert offered by the
health care service plan in this state begin delete , whether offered as health care
service plan contracts or health insurance policies, end delete begin insert and all insureds
in all nongrandfathered health benefit plans subject to Chapter
8.01 (commencing with Section 10753) of Part 2 of Division 2 of
the Insurance Code offered by a health insurer that is a corporate
affiliate, subsidiary, or parent of the plan, end insert including those insureds
and enrollees who enroll in coverage through the Exchange and
insureds and enrollees begin delete covered by the health care service plan end delete begin insert who
enroll in coverage end insert outside of the Exchange.

(2) At least each calendar year, and no more frequently than
each calendar quarter, a health care service plan shall establish an
index rate for the small employer market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA and Section
1367.005, within the single risk pool required under paragraph
(1). The index rate shall be adjusted on a marketwide basis based
on the total expected marketwide payments and charges under the
risk adjustment and reinsurance programs established for the state
pursuant to Sections 1343 and 1341 of PPACA and Exchange user
fees, as described in subdivision (d) of Section 156.80 of Title 45
of the Code of Federal Regulations. The premium rate for all of
the begin delete health care service plan’s end delete nongrandfathered small employer
health care service plan contracts begin insert and nongrandfathered health
benefit plans within the single risk pool required under paragraph
(1) end insert shall use the applicable index rate, as adjusted for total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA, subject only to the adjustments
permitted under paragraph (3).

(3) A health care service plan may vary premium rates for a
particular nongrandfathered small employer health care service
plan contract from its index rate based only on the following
actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the plan
contract.

(B) The plan contract’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the plan contract that are in
addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for plan contracts that offer
those benefits in addition to essential health benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(E) Administrative costs, excluding any user fees required by
the Exchange.

(j) A plan shall comply with the requirements of Section 1374.3.

(k) (1) Except as provided in paragraph (2), if Section 2702 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg-1),
as added by Section 1201 of PPACA, is repealed, this section shall
become inoperative 12 months after the repeal date, in which case
health care service plans subject to this section shall instead be
governed by Section 1357.03 to the extent permitted by federal
law, and all references in this article to this section shall instead
refer to Section 1357.03 except for purposes of paragraph (2).

(2) Subdivision (b) shall remain operative with respect to health
care service plan contracts offered through the Exchange.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 1366.6 of the end insert begin insert Health and Safety Code end insert begin insert , as
amended by Section 8 of Chapter 5 of the First Extraordinary
Session of the Statutes of 2013, is amended to read: end insert

1366.6.  

(a) For purposes of this section, the following
definitions shall apply:

(1) “Exchange” means the California Health Benefit Exchange
established in Title 22 (commencing with Section 100500) of the
Government Code.

(2) “Federal act” 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 amendments to, or regulations or
guidance issued under, those acts.

(3) “Qualified health plan” has the same meaning as that term
is defined in Section 1301 of the federal act.

(4) “Small employer” has the same meaning as that term is
defined in Section begin delete 1357 end delete begin insert 1357.500 end insert .

(b) (1) Health care service plans participating in the begin insert individual
market of the end insert Exchange shall fairly and affirmatively offer, market,
and sell in the begin insert individual market of the end insert Exchange at least one
product within each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act. begin insert Health
care service plans participating in the Small Business Health
Options Program (SHOP Program) of the Exchange, established
pursuant to subdivision (m) of Section 100504 of the Government
Code, shall fairly and affirmatively offer, market, and sell in the
SHOP Program at least one product within each of the four levels
of coverage contained in subsection (d) of Section 1302 of the
federal act. end insert

(2) The board established under Section 100500 of the
Government Code may require plans to sell additional products
within each of begin delete those end delete begin insert the end insert levels of coverage begin insert identified in paragraph
(1) end insert .

(3) This subdivision shall not apply to a plan that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504 of the Government Code.

(4) This subdivision shall not apply to a bridge plan product
that meets the requirements of Section 100504.5 of the Government
Code to the extent approved by the appropriate federal agency.

(c) (1) Health care service plans participating in the Exchange
that sell any products outside the Exchange shall do both of the
following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and health care service
plans for enrolled Healthy Families beneficiaries or to contracts
entered into pursuant to Chapter 7 (commencing with Section
14000) of, or Chapter 8 (commencing with Section 14200) of, Part
3 of Division 9 of the Welfare and Institutions Code between the
State Department of Health Care Services and health care service
plans for enrolled Medi-Cal beneficiaries, or for contracts with
bridge plan products that meet the requirements of Section
100504.5 of the Government Code.

(d)  begin insert (1) end insert begin insert   end insert Commencing January 1, 2014, a health care service plan
shall, with respect to begin insert individual end insert plan contracts that cover hospital,
medical, or surgical benefits, only sell the five levels of coverage
contained in subsections (d) and (e) of Section 1302 of the federal
act, except that a health care service plan that does not participate
in the Exchange shall, with respect to begin insert individual end insert plan contracts
that cover hospital, medical, or surgical benefits, only sell the four
levels of coverage contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete
begin insert 1302 end insert of the federal act.

begin insert

(2) Commencing January 1, 2014, a health care service plan
shall, with respect to small employer plan contracts that cover
hospital, medical, or surgical expenses, only sell the four levels
of coverage contained in subsection (d) of Section 1302 of the
federal act.

end insert

(e) Commencing January 1, 2014, a health care service plan
that does not participate in the Exchange shall, with respect to
begin insert individual or small employer end insert plan contracts that cover hospital,
medical, or surgical benefits, offer at least one standardized product
that has been designated by the Exchange in each of the four levels
of coverage contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete begin insert 1302 end insert
of the federal act. This subdivision shall only apply if the board
of the Exchange exercises its authority under subdivision (c) of
Section 100504 of the Government Code. Nothing in this
subdivision shall require a plan that does not participate in the
Exchange to offer standardized products in the small employer
market if the plan only sells products in the individual market.
Nothing in this subdivision shall require a plan that does not
participate in the Exchange to offer standardized products in the
individual market if the plan only sells products in the small
employer market. This subdivision shall not be construed to
prohibit the plan from offering other products provided that it
complies with subdivision (d).

(f) For purposes of this section, a bridge plan product shall mean
an individual health benefit plan, as defined in subdivision (f) of
Section 1399.845, that is offered by a health care service plan
licensed under this chapter that contracts with the Exchange
pursuant to Title 22 (commencing with Section 100500) of the
Government Code.

(g) This section shall become inoperative on the October 1 that
is five years after the date that federal approval of the bridge plan
option occurs, and, as of the second January 1 thereafter, is
repealed, unless a later enacted statute that is enacted before that
date deletes or extends the dates on which it becomes inoperative
and is repealed.

begin insert

begin insert SEC. 5. end insert   

end insert

begin insert Section 1366.6 of the end insert begin insert Health and Safety Code end insert begin insert , as added
by Section 9 of Chapter 5 of the 1st Extraordinary Session of the
Statutes of 2013, is amended to read: end insert

1366.6.  

(a) For purposes of this section, the following
definitions shall apply:

(1) “Exchange” means the California Health Benefit Exchange
established in Title 22 (commencing with Section 100500) of the
Government Code.

(2) “Federal act” 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 amendments to, or regulations or
guidance issued under, those acts.

(3) “Qualified health plan” has the same meaning as that term
is defined in Section 1301 of the federal act.

(4) “Small employer” has the same meaning as that term is
defined in Section begin delete 1357 end delete begin insert 1357.500 end insert .

(b)  begin insert (1) end insert begin insert   end insert Health care service plans participating in the begin insert individual
market of the end insert Exchange shall fairly and affirmatively offer, market,
and sell in the begin insert individual market of the end insert Exchange at least one
product within each of the five levels of coverage contained in
subsections (d) and (e) of Section 1302 of the federal act. begin delete The end delete
begin insert Health care service plans participating in the Small Business
Health Options Program (SHOP Program) of the Exchange,
established pursuant to subdivision (m) of Section 100504 of the
Government Code, shall fairly and affirmatively offer, market, and
sell in the SHOP Program at least one product within each of the
four levels of coverage contained in subsection (d) of Section 1302
of the federal act. end insert

begin insert (2) end insert begin insert   end insert begin insert The end insert board established under Section 100500 of the
Government Code may require plans to sell additional products
within each of begin delete those end delete begin insert the end insert levels of coverage begin insert identified in paragraph
(1) end insert . begin delete This end delete

begin insert (3) end insert begin insert   end insert begin insert This end insert subdivision shall not apply to a plan that solely offers
supplemental coverage in the Exchange under paragraph (10) of
subdivision (a) of Section 100504 of the Government Code.

(c) (1) Health care service plans participating in the Exchange
that sell any products outside the Exchange shall do both of the
following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 of the Insurance Code between the
Managed Risk Medical Insurance Board and health care service
plans for enrolled Healthy Families beneficiaries or to contracts
entered into pursuant to Chapter 7 (commencing with Section
14000) of, or Chapter 8 (commencing with Section 14200) of, Part
3 of Division 9 of the Welfare and Institutions Code between the
State Department of Health Care Services and health care service
plans for enrolled Medi-Cal beneficiaries.

(d)  begin insert (1) end insert begin insert   end insert Commencing January 1, 2014, a health care service plan
shall, with respect to begin insert individual end insert plan contracts that cover hospital,
medical, or surgical benefits, only sell the five levels of coverage
contained in subsections (d) and (e) of Section 1302 of the federal
act, except that a health care service plan that does not participate
in the Exchange shall, with respect to begin insert individual end insert plan contracts
that cover hospital, medical, or surgical benefits, only sell the four
levels of coverage contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete
begin insert 1302 end insert of the federal act.

begin insert

(2) Commencing January 1, 2014, a health care service plan
shall, with respect to small employer plan contracts that cover
hospital, medical, or surgical expenses, only sell the four levels
of coverage contained in subsection (d) of Section 1302 of the
federal act.

end insert

(e) Commencing January 1, 2014, a health care service plan
that does not participate in the Exchange shall, with respect to
begin insert individual or small employer end insert plan contracts that cover hospital,
medical, or surgical benefits, offer at least one standardized product
that has been designated by the Exchange in each of the four levels
of coverage contained in begin insert subdivision (d) of end insert Section begin delete 1302(d) end delete begin insert 1302 end insert
of the federal act. This subdivision shall only apply if the board
of the Exchange exercises its authority under subdivision (c) of
Section 100504 of the Government Code. Nothing in this
subdivision shall require a plan that does not participate in the
Exchange to offer standardized products in the small employer
market if the plan only sells products in the individual market.
Nothing in this subdivision shall require a plan that does not
participate in the Exchange to offer standardized products in the
individual market if the plan only sells products in the small
employer market. This subdivision shall not be construed to
prohibit the plan from offering other products provided that it
complies with subdivision (d).

(f) This section shall become operative only if Section 8 of the
act that added this section becomes inoperative pursuant to
subdivision (g) of that Section 8.

begin insert

begin insert SEC. 6. end insert   

end insert

begin insert Section 1367.005 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1367.005.  

(a) An individual or small group health care service
plan contract issued, amended, or renewed on or after January 1,
2014, shall, at a minimum, include coverage for essential health
benefits pursuant to PPACA and as outlined in this section. For
purposes of this section, “essential health benefits” means all of
the following:

(1) Health benefits within the categories identified in Section
1302(b) of PPACA: ambulatory patient services, emergency
services, hospitalization, maternity and newborn care, mental health
and substance use disorder services, including behavioral health
treatment, prescription drugs, rehabilitative and habilitative services
and devices, laboratory services, preventive and wellness services
and chronic disease management, and pediatric services, including
oral and vision care.

(2) (A) The health benefits covered by the Kaiser Foundation
Health Plan Small Group HMO 30 plan (federal health product
identification number 40513CA035) as this plan was offered during
the first quarter of 2012, as follows, regardless of whether the
benefits are specifically referenced in the evidence of coverage or
plan contract for that plan:

(i) Medically necessary basic health care services, as defined
in subdivision (b) of Section 1345 and in Section 1300.67 of Title
28 of the California Code of Regulations.

(ii) The health benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as
described in the following sections: Sections 1367.002, 1367.06,
and 1367.35 (preventive services for children); Section 1367.25
(prescription drug coverage for contraceptives); Section 1367.45
(AIDS vaccine); Section 1367.46 (HIV testing); Section 1367.51
(diabetes); Section 1367.54 (alpha feto protein testing); Section
1367.6 (breast cancer screening); Section 1367.61 (prosthetics for
laryngectomy); Section 1367.62 (maternity hospital stay); Section
1367.63 (reconstructive surgery); Section 1367.635 (mastectomies);
Section 1367.64 (prostate cancer); Section 1367.65
(mammography); Section 1367.66 (cervical cancer); Section
1367.665 (cancer screening tests); Section 1367.67 (osteoporosis);
Section 1367.68 (surgical procedures for jaw bones); Section
1367.71 (anesthesia for dental); Section 1367.9 (conditions
attributable to diethylstilbestrol); Section 1368.2 (hospice care);
Section 1370.6 (cancer clinical trials); Section 1371.5 (emergency
response ambulance or ambulance transport services); subdivision
(b) of Section 1373 (sterilization operations or procedures); Section
1373.4 (inpatient hospital and ambulatory maternity); Section
1374.56 (phenylketonuria); Section 1374.17 (organ transplants for
HIV); Section 1374.72 (mental health parity); and Section 1374.73
(autism/behavioral health treatment).

(iii) Any other benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as
described in those statutes.

(iv) The health benefits covered by the plan that are not
otherwise required to be covered under this chapter, to the extent
required pursuant to Sections 1367.18, 1367.21, 1367.215, 1367.22,
1367.24, and 1367.25, and Section 1300.67.24 of Title 28 of the
California Code of Regulations.

(v) Any other health benefits covered by the plan that are not
otherwise required to be covered under this chapter.

(B) Where there are any conflicts or omissions in the plan
identified in subparagraph (A) as compared with the requirements
for health benefits under this chapter that were enacted prior to
December 31, 2011, the requirements of this chapter shall be
controlling, except as otherwise specified in this section.

(C) Notwithstanding subparagraph (B) or any other provision
of this section, the home health services benefits covered under
the plan identified in subparagraph (A) shall be deemed to not be
in conflict with this chapter.

(D) For purposes of this section, the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
(Public Law 110-343) shall apply to a contract subject to this
section. Coverage of mental health and substance use disorder
services pursuant to this paragraph, along with any scope and
duration limits imposed on the benefits, shall be in compliance
with the Paul Wellstone and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008 (Public Law 110-343), and all
rules, regulations, or guidance issued pursuant to Section 2726 of
the federal Public Health Service Act (42 U.S.C. Sec. 300gg-26).

(3) With respect to habilitative services, in addition to any
habilitative services identified in paragraph (2), coverage shall
also be provided as required by federal rules, regulations, and
guidance issued pursuant to Section 1302(b) of PPACA.
Habilitative services shall be covered under the same terms and
conditions applied to rehabilitative services under the plan contract.

(4) With respect to pediatric vision care, the same health benefits
for pediatric vision care covered under the Federal Employees
Dental and Vision Insurance Program vision plan with the largest
national enrollment as of the first quarter of 2012. The pediatric
vision care benefits covered pursuant to this paragraph shall be in
addition to, and shall not replace, any vision services covered under
the plan identified in paragraph (2).

(5) With respect to pediatric oral care, the same health benefits
for pediatric oral care covered under the dental plan available to
subscribers of the Healthy Families Program in 2011-12, including
the provision of medically necessary orthodontic care provided
pursuant to the federal Children’s Health Insurance Program
Reauthorization Act of 2009. The pediatric oral care benefits
covered pursuant to this paragraph shall be in addition to, and shall
not replace, any dental or orthodontic services covered under the
plan identified in paragraph (2).

(b) Treatment limitations imposed on health benefits described
in this section shall be no greater than the treatment limitations
imposed by the corresponding plans identified in subdivision (a),
subject to the requirements set forth in paragraph (2) of subdivision
(a).

(c) Except as provided in subdivision (d), nothing in this section
shall be construed to permit a health care service plan to make
substitutions for the benefits required to be covered under this
section, regardless of whether those substitutions are actuarially
equivalent.

(d) To the extent permitted under Section 1302 of PPACA and
any rules, regulations, or guidance issued pursuant to that section,
and to the extent that substitution would not create an obligation
for the state to defray costs for any individual, a plan may substitute
its prescription drug formulary for the formulary provided under
the plan identified in subdivision (a) as long as the coverage for
prescription drugs complies with the sections referenced in clauses
(ii) and (iv) of subparagraph (A) of paragraph (2) of subdivision
(a) that apply to prescription drugs.

(e) No health care service plan, or its agent, solicitor, or
representative, shall issue, deliver, renew, offer, market, represent,
or sell any product, contract, or discount arrangement as compliant
with the essential health benefits requirement in federal law, unless
it meets all of the requirements of this section.

(f) This section shall apply regardless of whether the plan
contract is offered inside or outside the California Health Benefit
Exchange created by Section 100500 of the Government Code.

(g) Nothing in this section shall be construed to exempt a plan
or a plan contract from meeting other applicable requirements of
law.

(h) This section shall not be construed to prohibit a plan contract
from covering additional benefits, including, but not limited to,
spiritual care services that are tax deductible under Section 213 of
the Internal Revenue Code.

(i) Subdivision (a) shall not apply to any of the following:

(1) A specialized health care service plan contract.

(2) A Medicare supplement plan.

(3) A plan contract that qualifies as a grandfathered health plan
under Section 1251 of PPACA or any rules, regulations, or
guidance issued pursuant to that section.

(j) Nothing in this section shall be implemented in a manner
that conflicts with a requirement of PPACA.

(k) This section shall be implemented only to the extent essential
health benefits are required pursuant to PPACA.

(l) An essential health benefit is required to be provided under
this section only to the extent that federal law does not require the
state to defray the costs of the benefit.

(m) Nothing in this section shall obligate the state to incur costs
for the coverage of benefits that are not essential health benefits
as defined in this section.

(n) A plan is not required to cover, under this section, changes
to health benefits that are the result of statutes enacted on or after
December 31, 2011.

(o) (1) The department may adopt emergency regulations
implementing this section. The department may, on a one-time
basis, readopt any emergency regulation authorized by this section
that is the same as, or substantially equivalent to, an emergency
regulation previously adopted under this section.

(2) The initial adoption of emergency regulations implementing
this section and the readoption of emergency regulations authorized
by this subdivision shall be deemed an emergency and necessary
for the immediate preservation of the public peace, health, safety,
or general welfare. The initial emergency regulations and the
readoption of emergency regulations authorized by this section
shall be submitted to the Office of Administrative Law for filing
with the Secretary of State and each shall remain in effect for no
more than 180 days, by which time final regulations may be
adopted.

(3) The director shall consult with the Insurance Commissioner
to ensure consistency and uniformity in the development of
regulations under this subdivision.

(4) This subdivision shall become inoperative on March 1, 2016.

(p) For purposes of this section, the following definitions shall
apply:

(1) “Habilitative services” means medically necessary health
care services and health care devices that assist an individual in
partially or fully acquiring or improving skills and functioning and
that are necessary to address a health condition, to the maximum
extent practical. These services address the skills and abilities
needed for functioning in interaction with an individual’s
environment. Examples of health care services that are not
habilitative services include, but are not limited to, respite care,
day care, recreational care, residential treatment, social services,
custodial care, or education services of any kind, including, but
not limited to, vocational training. Habilitative services shall be
covered under the same terms and conditions applied to
rehabilitative services under the plan contract.

(2) (A) “Health benefits,” unless otherwise required to be
defined pursuant to federal rules, regulations, or guidance issued
pursuant to Section 1302(b) of PPACA, means health care items
or services for the diagnosis, cure, mitigation, treatment, or
prevention of illness, injury, disease, or a health condition,
including a behavioral health condition.

(B) “Health benefits” does not mean any cost-sharing
requirements such as copayments, coinsurance, or deductibles.

(3) “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.

(4) “Small group health care service plan contract” means a
group health care service plan contract issued to a small employer,
as defined in Section begin delete 1357 end delete begin insert 1357.500 end insert .

begin insert

begin insert SEC. 7. end insert   

end insert

begin insert Section 1367.006 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1367.006.  

(a) This section shall apply to nongrandfathered
individual and group health care service plan contracts that provide
coverage for essential health benefits, as defined in Section
1367.005, and that are issued, amended, or renewed on or after
January 1, 2015.

(b) (1) For nongrandfathered health care service plan contracts
in the individual or small group markets, a health care service plan
contract, except a specialized health care service plan contract,
that is issued, amended, or renewed on or after January 1, 2015,
shall provide for a limit on annual out-of-pocket expenses for all
covered benefits that meet the definition of essential health benefits
in Section 1367.005, including out-of-network emergency care
consistent with Section begin delete 1317.4. end delete begin insert 1371.4. end insert

(2) For nongrandfathered health care service plan contracts in
the large group market, a health care service plan contract, except
a specialized health care service plan contract, that is issued,
amended, or renewed on or after January 1, 2015, shall provide
for a limit on annual out-of-pocket expenses for covered benefits,
including out-of-network emergency care consistent with Section
1371.4. This limit shall only apply to essential health benefits, as
defined in Section 1367.005, that are covered under the plan to
the extent that this provision does not conflict with federal law or
guidance on out-of-pocket maximums for nongrandfathered health
care service plan contracts in the large group market.

(c) (1) The limit described in subdivision (b) shall not exceed
the limit described in Section 1302(c) of PPACA, and any
subsequent rules, regulations, or guidance issued under that section.

(2) The limit described in subdivision (b) shall result in a total
maximum out-of-pocket limit for all begin insert covered end insert essential health
benefits equal to the dollar amounts in effect under Section
223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the
dollar amounts adjusted as specified in Section 1302(c)(1)(B) of
PPACA.

(d) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible enrollees described in Section
1402 of PPACA, and any subsequent rules, regulations, or guidance
issued under that section.

(e) If an essential health benefit is offered or provided by a
specialized health care service plan, the total annual out-of-pocket
maximum for all covered essential benefits shall not exceed the
limit in subdivision (b). This section shall not apply to a specialized
health care service plan that does not offer an essential health
benefit as defined in Section 1367.005.

(f) The maximum out-of-pocket limit shall apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered benefits that meet the definition of essential
health benefits in Section 1367.005.

(g) For nongrandfathered health plan contracts in the group
market, “plan year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations. For
nongrandfathered health plan contracts sold in the individual
market, “plan year” means the calendar year.

(h) “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.

begin insert

begin insert SEC. 8. end insert   

end insert

begin insert Section 1374.21 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1374.21.  

(a) No change in premium rates or changes in
coverage stated in a group health care service plan contract shall
become effective unless the plan has delivered in writing a notice
indicating the change or changes at least 60 days prior to the
contract renewal effective date.

(b) A health care service plan that declines to offer coverage to
or denies enrollment for a large group applying for coverage begin delete or
that offers small group coverage at a rate that is higher than the
standard employee risk rate, end delete shall, at the time of the denial begin delete or offer end delete
of coverage, provide the applicant with the specific reason or
reasons for the decision in writing, in clear, easily understandable
language.

begin insert

begin insert SEC. 9. end insert   

end insert

begin insert Section 1385.03 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1385.03.  

(a)  begin delete (1) end delete begin delete   end delete All health care service plans shall file with
the department all required rate information for individual and
small group health care service plan contracts at least 60 days prior
to implementing any rate change.

begin delete

(2) For individual health care service plan contracts, the filing
shall be concurrent with the notice required under Section 1389.25.

end delete begin delete

(3) For small group health care service plan contracts, the filing
shall be concurrent with the notice required under subdivision (a)
of Section 1374.21.

end delete

(b) A plan shall disclose to the department all of the following
for each individual and small group rate filing:

(1) Company name and contact information.

(2) Number of plan contract forms covered by the filing.

(3) Plan contract form numbers covered by the filing.

(4) Product type, such as a preferred provider organization or
health maintenance organization.

(5) Segment type.

(6) Type of plan involved, such as for profit or not for profit.

(7) Whether the products are opened or closed.

(8) Enrollment in each plan contract and rating form.

(9) Enrollee months in each plan contract form.

(10) Annual rate.

(11) Total earned premiums in each plan contract form.

(12) Total incurred claims in each plan contract form.

(13) Average rate begin delete increase end delete begin insert change end insert initially requested.

(14) Review category: initial filing for new product, filing for
existing product, or resubmission.

(15) Average rate of begin delete increase end delete begin insert change end insert .

(16) Effective date of rate begin delete increase end delete begin insert change end insert .

(17) Number of subscribers or enrollees affected by each plan
contract form.

(18) The plan’s overall annual medical trend factor assumptions
in each rate filing for all benefits and by aggregate benefit category,
including hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology. A plan may provide aggregated additional data that
demonstrates or reasonably estimates year-to-year cost begin delete increases end delete
begin insert changes end insert in specific benefit categories in begin delete major geographic regions
of the state. For purposes of this paragraph, “major geographic
region” shall be defined by the department and shall include no
more than nine regions end delete begin insert the geographic regions listed in Sections
1357.512 and 1399.855 end insert . A health plan that exclusively contracts
with no more than two medical groups in the state to provide or
arrange for professional medical services for the enrollees of the
plan shall instead disclose the amount of its actual trend experience
for the prior contract year by aggregate benefit category, using
benefit categories that are, to the maximum extent possible, the
same or similar to those used by other plans.

(19) The amount of the projected trend attributable to the use
of services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for
the enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.

(20) A comparison of claims cost and rate of changes over time.

(21) Any changes in enrollee cost-sharing over the prior year
associated with the submitted rate filing.

(22) Any changes in enrollee benefits over the prior year
associated with the submitted rate filing.

(23) The certification described in subdivision (b) of Section
1385.06.

(24) Any changes in administrative costs.

(25) Any other information required for rate review under
PPACA.

(c) A health care service plan subject to subdivision (a) shall
also disclose the following aggregate data for all rate filings
submitted under this section in the individual and small group
health plan markets:

(1) Number and percentage of rate filings reviewed by the
following:

(A) Plan year.

(B) Segment type.

(C) Product type.

(D) Number of subscribers.

(E) Number of covered lives affected.

(2) The plan’s average rate begin delete increase end delete begin insert change end insert by the following
categories:

(A) Plan year.

(B) Segment type.

(C) Product type.

(3) Any cost containment and quality improvement efforts since
the plan’s last rate filing for the same category of health benefit
plan. To the extent possible, the plan shall describe any significant
new health care cost containment and quality improvement efforts
and provide an estimate of potential savings together with an
estimated cost or savings for the projection period.

(d) The department may require all health care service plans to
submit all rate filings to the National Association of Insurance
Commissioners’ System for Electronic Rate and Form Filing
(SERFF). Submission of the required rate filings to SERFF shall
be deemed to be filing with the department for purposes of
compliance with this section.

(e) A plan shall submit any other information required under
PPACA. A plan shall also submit any other information required
pursuant to any regulation adopted by the department to comply
with this article.

begin insert

begin insert SEC. 10. end insert   

end insert

begin insert Section 1385.06 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1385.06.  

(a) A filing submitted under this article shall be
actuarially sound.

(b) (1) The plan shall contract with an independent actuary or
actuaries consistent with this section.

(2) A filing submitted under this article shall include a
certification by an independent actuary or actuarial firm that the
rate begin delete increase end delete begin insert change end insert is reasonable or unreasonable and, if
unreasonable, that the justification for the begin delete increase end delete begin insert change end insert is based
on accurate and sound actuarial assumptions and methodologies.
Unless PPACA requires a certification of actuarial soundness for
each large group contract, a filing submitted under Section 1385.04
shall include a certification by an independent actuary, as described
in this section, that the aggregate or average rate increase is based
on accurate and sound actuarial assumptions and methodologies.

(3) The actuary or actuarial firm acting under paragraph (2)
shall not be an affiliate or a subsidiary of, nor in any way owned
or controlled by, a health care service plan or a trade association
of health care service plans. A board member, director, officer, or
employee of the actuary or actuarial firm shall not serve as a board
member, director, or employee of a health care service plan. A
board member, director, or officer of a health care service plan or
a trade association of health care service plans shall not serve as
a board member, director, officer, or employee of the actuary or
actuarial firm.

(c) Nothing in this article shall be construed to permit the
director to establish the rates charged subscribers and enrollees
for covered health care services.

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 1385.07 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1385.07.  

(a) Notwithstanding Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code,
all information submitted under this article shall be made publicly
available by the department except as provided in subdivision (b).

(b) The contracted rates between a health care service plan and
a provider shall be deemed confidential information that shall not
be made public by the department and are exempt from disclosure
under the California Public Records Act (Chapter 3.5 (commencing
with Section 6250) of Division 7 of Title 1 of the Government
Code). The contracted rates between a health care service plan and
a large group shall be deemed confidential information that shall
not be made public by the department and are exempt from
disclosure under the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code).

(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.

(d) In addition, the department and the health care service plan
shall, at a minimum, make the following information readily
available to the public on their Internet Web sites, in plain language
and in a manner and format specified by the department, except
as provided in subdivision (b). The information shall be made
public for 60 days prior to the implementation of the rate begin delete increase end delete
begin insert change end insert . The information shall include:

(1) Justifications for any unreasonable rate begin delete increases end delete begin insert changes end insert ,
including all information and supporting documentation as to why
the rate begin delete increase end delete begin insert change end insert is justified.

(2) A plan’s overall annual medical trend factor assumptions in
each rate filing for all benefits.

(3) A health plan’s actual costs, by aggregate benefit category
to include hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology.

(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual plan contract
trends by aggregate benefit category, such as hospital inpatient,
hospital outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology. A health plan that
exclusively contracts with no more than two medical groups in the
state to provide or arrange for professional medical services for
the enrollees of the plan shall instead disclose the amount of its
actual trend experience for the prior contract year by aggregate
benefit category, using benefit categories that are, to the maximum
extent possible, the same or similar to those used by other plans.

begin insert

begin insert SEC. 12. end insert   

end insert

begin insert Section 1385.11 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1385.11.  

(a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review the rate filing to ensure
compliance with the law.

(b) The department may review other filings.

(c) The department shall accept and post to its Internet Web site
any public comment on a rate begin delete increase end delete begin insert change end insert submitted to the
department during the 60-day period described in subdivision (d)
of Section 1385.07.

(d) The department shall report to the Legislature at least
quarterly on all unreasonable rate filings.

(e) The department shall post on its Internet Web site any
begin delete changes end delete begin insert modifications end insert submitted by the plan to the proposed rate
begin delete increase end delete begin insert change end insert , including any documentation submitted by the
plan supporting those begin delete changes end delete begin insert modifications end insert .

(f) If the begin delete department finds end delete begin insert director makes a decision end insert that an
unreasonable rate begin delete increase end delete begin insert change end insert is not justified or that a rate
filing contains inaccurate information, the department shall post
begin delete its finding end delete begin insert that decision end insert on its Internet Web site.

(g) Nothing in this article shall be construed to impair or impede
the department’s authority to administer or enforce any other
provision of this chapter.

begin insert

begin insert SEC. 13. end insert   

end insert

begin insert Section 1389.25 of the end insert begin insert Health and Safety Code end insert begin insert is
amended to read: end insert

1389.25.  

(a) (1) This section shall apply only to a full service
health care service plan offering health coverage in the individual
market in California and shall not apply to a specialized health
care service plan, a health care service plan contract in the
Medi-Cal program (Chapter 7 (commencing with Section 14000)
of Part 3 of Division 9 of the Welfare and Institutions Code), a
health care service plan conversion contract offered pursuant to
Section 1373.6, a health care service plan contract in the Healthy
Families Program (Part 6.2 (commencing with Section 12693) of
Division 2 of the Insurance Code), or a health care service plan
contract offered to a federally eligible defined individual under
Article 4.6 (commencing with Section 1366.35).

(2) A local initiative, as defined in subdivision (v) of Section
53810 of Title 22 of the California Code of Regulations, that is
awarded a contract by the State Department of Health Care Services
pursuant to subdivision (b) of Section 53800 of Title 22 of the
California Code of Regulations, shall not be subject to this section
unless the plan offers coverage in the individual market to persons
not covered by Medi-Cal or the Healthy Families Program.

begin delete

(b) (1) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate, shall, at the time of
the denial or offer of coverage, provide the individual applicant
with the specific reason or reasons for the decision in writing in
clear, easily understandable language.

(2)

end delete

begin insert (b) end insert begin insert   end insert begin insert (1) end insert  No change in the premium rate or coverage for an
individual plan contract shall become effective unless the plan has
delivered a written notice of the change at least begin insert 15 days prior to
the start of the annual enrollment period applicable to the contract
or end insert 60 days prior to the effective date of the contract begin delete renewal or the
date on which the rate or coverage changes. A notice of an increase
in the premium rate shall include the reasons for the rate increase. end delete
begin insert renewal, whichever occurs earlier in the calendar year. end insert

begin delete

(3)

end delete

begin insert (2) end insert  The written notice required pursuant to paragraph begin delete (2) end delete begin insert (1) end insert
shall be delivered to the individual contractholder at his or her last
address known to the begin delete plan, at least 60 days prior to the effective
date of the change end delete begin insert plan end insert . The notice shall state in italics and in
12-point type the actual dollar amount of the premium rate increase
and the specific percentage by which the current premium will be
increased. The notice shall describe in plain, understandable
English any changes in the plan design or any changes in benefits,
including a reduction in benefits or changes to waivers, exclusions,
or conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface,
the reason for a premium rate change or a change to the plan design
or benefits.

begin delete

(4) If a plan rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the plan shall inform the applicant
about the state’s high-risk health insurance pool, the California
Major Risk Medical Insurance Program (MRMIP) (Part 6.5
(commencing with Section 12700) of Division 2 of the Insurance
Code), and the federal temporary high risk pool established
pursuant to Part 6.6 (commencing with Section 12739.5) of
Division 2 of the Insurance Code. The information provided to the
applicant by the plan shall be in accordance with standards
developed by the department, in consultation with the Managed
Risk Medical Insurance Board, and shall specifically include the
toll-free telephone number and Internet Web site address for
MRMIP and the federal temporary high risk pool. The requirement
to notify applicants of the availability of MRMIP and the federal
temporary high risk pool shall not apply when a health plan rejects
an applicant for Medicare supplement coverage.

end delete

(c) A notice provided pursuant to this section is a private and
confidential communication and, at the time of application, the
plan shall give the individual applicant the opportunity to designate
the address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information.

begin delete SEC. 2. end delete
begin insert SEC. 14. end insert   

Section 1399.849 of the Health and Safety Code is
amended to read:

1399.849.  

(a) (1) On and after October 1, 2013, a plan shall
fairly and affirmatively offer, market, and sell all of the plan’s
health benefit plans that are sold in the individual market for policy
years on or after January 1, 2014, to all individuals and dependents
in each service area in which the plan provides or arranges for the
provision of health care services. A plan shall limit enrollment in
individual health benefit plans to open enrollment periods and
special enrollment periods as provided in subdivisions (c) and (d).

(2) A plan shall allow the subscriber of an individual health
benefit plan to add a dependent to the subscriber’s plan at the
option of the subscriber, consistent with the open enrollment,
annual enrollment, and special enrollment period requirements in
this section.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) (1) A plan shall provide an initial open enrollment period
from October 1, 2013, to March 31, 2014, inclusive, and annual
enrollment periods for plan years on or after January 1, 2015, from
October 15 to December 7, inclusive, of the preceding calendar
year.

(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
of Federal Regulations, for individuals enrolled in noncalendar
year individual health plan contracts, a plan shall provide a limited
open enrollment period beginning on the date that is 30 calendar
days prior to the date the policy year ends in 2014.

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a plan shall allow an individual to enroll in or change individual
health benefit plans as a result of the following triggering events:

(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, the following definitions
shall apply:

(i) “Minimum essential coverage” has the same meaning as that
term is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include
loss of that coverage due to the individual’s failure to pay
premiums on a timely basis or situations allowing for a rescission,
subject to clause (ii) and Sections 1389.7 and 1389.21.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered as a dependent pursuant
to a valid state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 1399.845
begin insert of this code end insert or Section 10965 of the Insurance Code, for one of
the conditions described in subdivision (c) of Section 1373.96 and
that provider is no longer participating in the health benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) He or she is a member of the reserve forces of the United
States military returning from active duty or a member of the
California National Guard returning from active duty service under
Title 32 of the United States Code.

(J) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the
date of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage required
pursuant to this section shall be consistent with the dates specified
in Section 155.410 or 155.420 of Title 45 of the Code of Federal
Regulations, as applicable. A dependent who is a registered
domestic partner pursuant to Section 297 of the Family Code shall
have the same effective date of coverage as a spouse.

(f) With respect to individual health benefit plans offered outside
the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan contract, the health care service plan shall, within 30
days, notify the individual of the individual’s actual premium
charges for that plan established in accordance with Section
1399.855. The individual shall have 30 days in which to exercise
the right to buy coverage at the quoted premium charges.

(2) With respect to an individual health benefit plan for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the subscriber submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan for which
an individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs later, by
December 15, coverage shall become effective as of the following
January 1. When that payment is delivered or postmarked within
the first 15 days of any subsequent month, coverage shall become
effective no later than the first day of the following month. When
that payment is delivered or postmarked between December 16
and December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(4) With respect to an individual health benefit plan for which
an individual applies during a special enrollment period described
in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based
on the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan shall become effective no later
than the first day of the following month. When the premium
payment is neither delivered nor postmarked until after the 15th
day of the month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage
or becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the month following
the date the plan receives the request for special enrollment.

(g) (1) A health care service plan shall not establish rules for
eligibility, including continued eligibility, of any individual to
enroll under the terms of an individual health benefit plan based
on any of the following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 1389.1, a health care service plan
shall not require an individual applicant or his or her dependent
to fill out a health assessment or medical questionnaire prior to
enrollment under an individual health benefit plan. A health care
service plan shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health care service plan shall consider as a single risk
pool for rating purposes in the individual market the claims
experience of all begin delete insureds and end delete enrollees in all nongrandfathered
individual health benefit plans offered by that health care service
plan in this state begin delete , whether offered as health care service plan
contracts or individual health insurance policies, end delete begin insert and all insureds
in all nongrandfathered individual health benefit plans, as defined
in Section 10965 of the Insurance Code, offered in this state by a
health insurer that is a corporate affiliate, subsidiary, or parent
of the plan, end insert including those insureds and enrollees who enroll in
individual coverage through the Exchange and insureds and
enrollees who enroll in individual coverage outside of the
Exchange. Student health insurance coverage, as that coverage is
defined in Section 147.145(a) of Title 45 of the Code of Federal
Regulations, shall not be included in a health care service plan’s
single risk pool for individual coverage.

(2) Each calendar year, a health care service plan shall establish
an index rate for the individual market in the state based on the
total combined claims costs for providing essential health benefits,
as defined pursuant to Section 1302 of PPACA, within the single
risk pool required under paragraph (1). The index rate shall be
adjusted on a marketwide basis based on the total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA and Exchange user fees, as described
in subdivision (d) of Section 156.80 of Title 45 of the Code of
Federal Regulations. The premium rate for all of the begin delete health care
service plan’s end delete health benefit plans in the individual market begin insert within
the single risk pool required under paragraph (1) end insert shall use the
applicable index rate, as adjusted for total expected marketwide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA, subject only to the adjustments permitted under
paragraph (3).

(3) A health care service plan may vary premium rates for a
particular health benefit plan from its index rate based only on the
following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA and Section 1367.005. These additional
benefits shall be pooled with similar benefits within the single risk
pool required under paragraph (1) and the claims experience from
those benefits shall be utilized to determine rate variations for
plans that offer those benefits in addition to essential health
benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(E) Administrative costs, excluding user fees required by the
Exchange.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to begin delete an individual health benefit
plan that is end delete a grandfathered health plan.

(k) If Section 5000A of the Internal Revenue Code, as added
by Section 1501 of PPACA, is repealed or amended to no longer
apply to the individual market, as defined in Section 2791 of the
federal Public Health Service Act (42 U.S.C. Sec. begin delete 300gg-4), end delete
begin insert 300gg-91), end insert subdivisions (a), (b), and (g) shall become inoperative
12 months after that repeal or amendment.

begin insert

begin insert SEC. 15. end insert   

end insert

begin insert Section 10112.27 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10112.27.  

(a) An individual or small group health insurance
policy issued, amended, or renewed on or after January 1, 2014,
shall, at a minimum, include coverage for essential health benefits
pursuant to PPACA and as outlined in this section. This section
shall exclusively govern what benefits a health insurer must cover
as essential health benefits. For purposes of this section, “essential
health benefits” means all of the following:

(1) Health benefits within the categories identified in Section
1302(b) of PPACA: ambulatory patient services, emergency
services, hospitalization, maternity and newborn care, mental health
and substance use disorder services, including behavioral health
treatment, prescription drugs, rehabilitative and habilitative services
and devices, laboratory services, preventive and wellness services
and chronic disease management, and pediatric services, including
oral and vision care.

(2) (A) The health benefits covered by the Kaiser Foundation
Health Plan Small Group HMO 30 plan (federal health product
identification number 40513CA035) as this plan was offered during
the first quarter of 2012, as follows, regardless of whether the
benefits are specifically referenced in the plan contract or evidence
of coverage for that plan:

(i) Medically necessary basic health care services, as defined
in subdivision (b) of Section 1345 of the Health and Safety Code
and in Section 1300.67 of Title 28 of the California Code of
Regulations.

(ii) The health benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as
described in the following sections of the Health and Safety Code:
Sections 1367.002, 1367.06, and 1367.35 (preventive services for
children); Section 1367.25 (prescription drug coverage for
contraceptives); Section 1367.45 (AIDS vaccine); Section 1367.46
(HIV testing); Section 1367.51 (diabetes); Section 1367.54 (alpha
feto protein testing); Section 1367.6 (breast cancer screening);
Section 1367.61 (prosthetics for laryngectomy); Section 1367.62
(maternity hospital stay); Section 1367.63 (reconstructive surgery);
Section 1367.635 (mastectomies); Section 1367.64 (prostate
cancer); Section 1367.65 (mammography); Section 1367.66
(cervical cancer); Section 1367.665 (cancer screening tests);
Section 1367.67 (osteoporosis); Section 1367.68 (surgical
procedures for jaw bones); Section 1367.71 (anesthesia for dental);
Section 1367.9 (conditions attributable to diethylstilbestrol);
Section 1368.2 (hospice care); Section 1370.6 (cancer clinical
trials); Section 1371.5 (emergency response ambulance or
ambulance transport services); subdivision (b) of Section 1373
(sterilization operations or procedures); Section 1373.4 (inpatient
hospital and ambulatory maternity); Section 1374.56
(phenylketonuria); Section 1374.17 (organ transplants for HIV);
Section 1374.72 (mental health parity); and Section 1374.73
(autism/behavioral health treatment).

(iii) Any other benefits mandated to be covered by the plan
pursuant to statutes enacted before December 31, 2011, as
described in those statutes.

(iv) The health benefits covered by the plan that are not
otherwise required to be covered under Chapter 2.2 (commencing
with Section 1340) of Division 2 of the Health and Safety Code,
to the extent otherwise required pursuant to Sections 1367.18,
1367.21, 1367.215, 1367.22, 1367.24, and 1367.25 of the Health
and Safety Code, and Section 1300.67.24 of Title 28 of the
California Code of Regulations.

(v) Any other health benefits covered by the plan that are not
otherwise required to be covered under Chapter 2.2 (commencing
with Section 1340) of Division 2 of the Health and Safety Code.

(B) Where there are any conflicts or omissions in the plan
identified in subparagraph (A) as compared with the requirements
for health benefits under Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code that were
enacted prior to December 31, 2011, the requirements of Chapter
2.2 (commencing with Section 1340) of Division 2 of the Health
and Safety Code shall be controlling, except as otherwise specified
in this section.

(C) Notwithstanding subparagraph (B) or any other provision
of this section, the home health services benefits covered under
the plan identified in subparagraph (A) shall be deemed to not be
in conflict with Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code.

(D) For purposes of this section, the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of 2008
(Public Law 110-343) shall apply to a policy subject to this section.
Coverage of mental health and substance use disorder services
pursuant to this paragraph, along with any scope and duration
limits imposed on the benefits, shall be in compliance with the
Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (Public Law 110-343), and all rules,
regulations, and guidance issued pursuant to Section 2726 of the
federal Public Health Service Act (42 U.S.C. Sec. 300gg-26).

(3) With respect to habilitative services, in addition to any
habilitative services identified in paragraph (2), coverage shall
also be provided as required by federal rules, regulations, or
guidance issued pursuant to Section 1302(b) of PPACA.
Habilitative services shall be covered under the same terms and
conditions applied to rehabilitative services under the policy.

(4) With respect to pediatric vision care, the same health benefits
for pediatric vision care covered under the Federal Employees
Dental and Vision Insurance Program vision plan with the largest
national enrollment as of the first quarter of 2012. The pediatric
vision care services covered pursuant to this paragraph shall be in
addition to, and shall not replace, any vision services covered under
the plan identified in paragraph (2).

(5) With respect to pediatric oral care, the same health benefits
for pediatric oral care covered under the dental plan available to
subscribers of the Healthy Families Program in 2011-12, including
the provision of medically necessary orthodontic care provided
pursuant to the federal Children’s Health Insurance Program
Reauthorization Act of 2009. The pediatric oral care benefits
covered pursuant to this paragraph shall be in addition to, and shall
not replace, any dental or orthodontic services covered under the
plan identified in paragraph (2).

(b) Treatment limitations imposed on health benefits described
in this section shall be no greater than the treatment limitations
imposed by the corresponding plans identified in subdivision (a),
subject to the requirements set forth in paragraph (2) of subdivision
(a).

(c) Except as provided in subdivision (d), nothing in this section
shall be construed to permit a health insurer to make substitutions
for the benefits required to be covered under this section, regardless
of whether those substitutions are actuarially equivalent.

(d) To the extent permitted under Section 1302 of PPACA and
any rules, regulations, or guidance issued pursuant to that section,
and to the extent that substitution would not create an obligation
for the state to defray costs for any individual, an insurer may
substitute its prescription drug formulary for the formulary
provided under the plan identified in subdivision (a) as long as the
coverage for prescription drugs complies with the sections
referenced in clauses (ii) and (iv) of subparagraph (A) of paragraph
(2) of subdivision (a) that apply to prescription drugs.

(e) No health insurer, or its agent, producer, or representative,
shall issue, deliver, renew, offer, market, represent, or sell any
product, policy, or discount arrangement as compliant with the
essential health benefits requirement in federal law, unless it meets
all of the requirements of this section. This subdivision shall be
enforced in the same manner as Section 790.03, including through
the means specified in Sections 790.035 and 790.05.

(f) This section shall apply regardless of whether the policy is
offered inside or outside the California Health Benefit Exchange
created by Section 100500 of the Government Code.

(g) Nothing in this section shall be construed to exempt a health
insurer or a health insurance policy from meeting other applicable
requirements of law.

(h) This section shall not be construed to prohibit a policy from
covering additional benefits, including, but not limited to, spiritual
care services that are tax deductible under Section 213 of the
Internal Revenue Code.

(i) Subdivision (a) shall not apply to any of the following:

(1) A policy that provides excepted benefits as described in
Sections 2722 and 2791 of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-21; 42 U.S.C. Sec. 300gg-91).

(2) A policy that qualifies as a grandfathered health plan under
Section 1251 of PPACA or any binding rules, regulation, or
guidance issued pursuant to that section.

(j) Nothing in this section shall be implemented in a manner
that conflicts with a requirement of PPACA.

(k) This section shall be implemented only to the extent essential
health benefits are required pursuant to PPACA.

(l) An essential health benefit is required to be provided under
this section only to the extent that federal law does not require the
state to defray the costs of the benefit.

(m) Nothing in this section shall obligate the state to incur costs
for the coverage of benefits that are not essential health benefits
as defined in this section.

(n) An insurer is not required to cover, under this section,
changes to health benefits that are the result of statutes enacted on
or after December 31, 2011.

(o) (1) The commissioner may adopt emergency regulations
implementing this section. The commissioner may, on a one-time
basis, readopt any emergency regulation authorized by this section
that is the same as, or substantially equivalent to, an emergency
regulation previously adopted under this section.

(2) The initial adoption of emergency regulations implementing
this section and the readoption of emergency regulations authorized
by this subdivision shall be deemed an emergency and necessary
for the immediate preservation of the public peace, health, safety,
or general welfare. The initial emergency regulations and the
readoption of emergency regulations authorized by this section
shall be submitted to the Office of Administrative Law for filing
with the Secretary of State and each shall remain in effect for no
more than 180 days, by which time final regulations may be
adopted.

(3) The commissioner shall consult with the Director of the
Department of Managed Health Care to ensure consistency and
uniformity in the development of regulations under this
subdivision.

(4) This subdivision shall become inoperative on March 1, 2016.

(p) Nothing in this section shall impose on health insurance
policies the cost sharing or network limitations of the plans
identified in subdivision (a) except to the extent otherwise required
to comply with provisions of this code, including this section, and
as otherwise applicable to all health insurance policies offered to
individuals and small groups.

(q) For purposes of this section, the following definitions shall
apply:

(1) “Habilitative services” means medically necessary health
care services and health care devices that assist an individual in
partially or fully acquiring or improving skills and functioning and
that are necessary to address a health condition, to the maximum
extent practical. These services address the skills and abilities
needed for functioning in interaction with an individual’s
environment. Examples of health care services that are not
habilitative services include, but are not limited to, respite care,
day care, recreational care, residential treatment, social services,
custodial care, or education services of any kind, including, but
not limited to, vocational training. Habilitative services shall be
covered under the same terms and conditions applied to
rehabilitative services under the policy.

(2) (A) “Health benefits,” unless otherwise required to be
defined pursuant to federal rules, regulations, or guidance issued
pursuant to Section 1302(b) of PPACA, means health care items
or services for the diagnosis, cure, mitigation, treatment, or
prevention of illness, injury, disease, or a health condition,
including a behavioral health condition.

(B) “Health benefits” does not mean any cost-sharing
requirements such as copayments, coinsurance, or deductibles.

(3) “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.

(4) “Small group health insurance policy” means a group health
begin delete care service end delete insurance policy issued to a small employer, as defined
in Section begin delete 10700 end delete begin insert 10753 end insert .

begin insert

begin insert SEC. 16. end insert   

end insert

begin insert Section 10112.28 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10112.28.  

(a) This section shall apply to nongrandfathered
individual and group health insurance policies that provide
coverage for essential health benefits, as defined in Section
10112.27, and that are issued, amended, or renewed on or after
January 1, 2015.

(b) (1) For nongrandfathered health insurance policies in the
individual or small group markets, a health insurance policy, except
a specialized health insurance policy, that is issued, amended, or
renewed on or after January 1, 2015, shall provide for a limit on
annual out-of-pocket expenses for all covered benefits that meet
the definition of essential health benefits in Section 10112.27,
including out-of-network emergency care.

(2) For nongrandfathered health insurance policies in the large
group market, a health insurance policy, except a specialized health
insurance policy, that is issued, amended, or renewed on or after
January 1, 2015, shall provide for a limit on annual out-of-pocket
expenses for covered benefits, including out-of-network emergency
care. This limit shall apply only to essential health benefits, as
defined in Section 10112.27, that are covered under the policy to
the extent that this provision does not conflict with federal law or
guidance on out-of-pocket maximums for nongrandfathered health
insurance policies in the large group market.

(c) (1) The limit described in subdivision (b) shall not exceed
the limit described in Section 1302(c) of PPACA and any
subsequent rules, regulations, or guidance issued under that section.

(2) The limit described in subdivision (b) shall result in a total
maximum out-of-pocket limit for all covered essential health
benefits that shall equal the dollar amounts in effect under Section
223(c)(2)(A)(ii) of the Internal Revenue Code of 1986 with the
dollar amounts adjusted as specified in Section 1302(c)(1)(B) of
PPACA.

(d) Nothing in this section shall be construed to affect the
reduction in cost sharing for eligible insureds described in Section
1402 of PPACA and any subsequent rules, regulations, or guidance
issued under that section.

(e) If an essential health benefit is offered or provided by a
specialized health insurance policy, the total annual out-of-pocket
maximum for all covered essential benefits shall not exceed the
limit in subdivision (b). This section shall not apply to a specialized
health insurance policy that does not offer an essential health
benefit as defined in Section begin delete 10112.28. end delete begin insert 10112.27. end insert

(f) The maximum out-of-pocket limit shall apply to any
copayment, coinsurance, deductible, and any other form of cost
sharing for all covered benefits that meet the definition of essential
health benefits, as defined in Section begin delete 10112.28. end delete begin insert 10112.27. end insert

(g) For nongrandfathered health insurance policies in the group
market, “policy year” has the meaning set forth in Section 144.103
of Title 45 of the Code of Federal Regulations. For
nongrandfathered health insurance policies sold in the individual
market, “policy year” means the calendar year.

(h) “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.

begin insert

begin insert SEC. 17. end insert   

end insert

begin insert Section 10112.3 of the end insert begin insert Insurance Code end insert begin insert , as amended
by Section 11 of Chapter 5 of the First Extraordinary Session of
the Statutes of 2013, is amended to read: end insert

10112.3.  

(a) For purposes of this section, the following
definitions shall apply:

(1) “Exchange” means the California Health Benefit Exchange
established in Title 22 (commencing with Section 100500) of the
Government Code.

(2) “Federal act” 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 amendments to, or regulations or
guidance issued under, those acts.

(3) “Qualified health plan” has the same meaning as that term
is defined in Section 1301 of the federal act.

(4) “Small employer” has the same meaning as that term is
defined in Section begin delete 10700 end delete begin insert 10753 end insert .

(b)  begin insert (1) end insert begin insert   end insert Health insurers participating in the begin insert individual market
of the end insert Exchange shall fairly and affirmatively offer, market, and
sell in the begin insert individual market of the end insert Exchange at least one product
within each of the five levels of coverage contained in subsections
(d) and (e) of Section 1302 of the federal act. begin delete The end delete begin insert Health insurers
participating in the Small Business Health Options Program
(SHOP Program) of the Exchange, established pursuant to
subdivision (m) of Section 100504 of the Government Code, shall
fairly and affirmatively offer, market, and sell in the SHOP
Program at least one product within each of the four levels of
coverage contained in subsection (d) of Section 1302 of the federal
act. end insert

begin insert (2) end insert begin insert   end insert begin insert The end insert board established under Section 100500 of the
Government Code may require insurers to sell additional products
within each of begin delete those end delete begin insert the end insert levels of coverage begin insert identified in paragraph
(1) end insert . begin delete This end delete

begin insert (3) end insert begin insert   end insert begin insert This end insert subdivision shall not apply to an insurer that solely
offers supplemental coverage in the Exchange under paragraph
(10) of subdivision (a) of Section 100504 of the Government Code.
This subdivision shall not apply to a bridge plan product of a
Medi-Cal managed care plan that contracts with the State
Department of Health Care Services pursuant to Section 14005.70
of the Welfare and Institutions Code and that meets the
requirements of Section 100504.5 of the Government Code, to the
extent approved by the appropriate federal agency.

(c) (1) Health insurers participating in the Exchange that sell
any products outside the Exchange shall do both of the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 between the Managed Risk Medical
Insurance Board and health insurers for enrolled Healthy Families
beneficiaries or to contracts entered into pursuant to Chapter 7
(commencing with Section 14000) of, or Chapter 8 (commencing
with Section 14200) of, Part 3 of Division 9 of the Welfare and
Institutions Code between the State Department of Health Care
Services and health insurers for enrolled Medi-Cal beneficiaries
or for contracts with bridge plan products that meet the
requirements of Section 100504.5 of the Government Code.

(d)  begin insert (1) end insert begin insert   end insert Commencing January 1, 2014, a health insurer begin insert shall end insert ,
with respect to begin insert individual end insert policies that cover hospital, medical, or
surgical benefits, begin delete may end delete only sell the five levels of coverage
contained in subsections (d) and (e) of Section 1302 of the federal
act, except that a health insurer that does not participate in the
Exchange begin delete may end delete begin insert shall end insert , with respect to begin insert individual end insert policies that cover
hospital, medical, or surgical benefits, only sell the four levels of
coverage contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete begin insert 1302 end insert of
the federal act.

begin insert

(2) Commencing January 1, 2014, a health insurer shall, with
respect to small employer policies that cover hospital, medical,
or surgical expenses, only sell the four levels of coverage contained
in subsection (d) of Section 1302 of the federal act.

end insert

(e) Commencing January 1, 2014, a health insurer that does not
participate in the Exchange shall, with respect to begin insert individual or
small employer end insert policies that cover hospital, medical, or surgical
expenses, offer at least one standardized product that has been
designated by the Exchange in each of the four levels of coverage
contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete begin insert 1302 end insert of the federal
act. This subdivision shall only apply if the board of the Exchange
exercises its authority under subdivision (c) of Section 100504 of
the Government Code. Nothing in this subdivision shall require
an insurer that does not participate in the Exchange to offer
standardized products in the small employer market if the insurer
only sells products in the individual market. Nothing in this
subdivision shall require an insurer that does not participate in the
Exchange to offer standardized products in the individual market
if the insurer only sells products in the small employer market.
This subdivision shall not be construed to prohibit the insurer from
offering other products provided that it complies with subdivision
(d).

(f) For purposes of this section, a bridge plan product shall mean
an individual health benefit plan, as defined in subdivision (a) of
Section 10198.6 that is offered by a health insurer that contracts
with the Exchange pursuant to Section 100504.5 of the Government
Code.

(g) This section shall become inoperative on the October 1 that
is five years after the date that federal approval of the bridge plan
option occurs, and, as of the second January 1 thereafter, is
repealed, unless a later enacted statute that is enacted before that
date deletes or extends the dates on which it becomes inoperative
and is repealed.

begin insert

begin insert SEC. 18. end insert   

end insert

begin insert Section 10112.3 of the end insert begin insert Insurance Code end insert begin insert , as added by
Section 12 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read: end insert

10112.3.  

(a) For purposes of this section, the following
definitions shall apply:

(1) “Exchange” means the California Health Benefit Exchange
established in Title 22 (commencing with Section 100500) of the
Government Code.

(2) “Federal act” 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 amendments to, or regulations or
guidance issued under, those acts.

(3) “Qualified health plan” has the same meaning as that term
is defined in Section 1301 of the federal act.

(4) “Small employer” has the same meaning as that term is
defined in Section begin delete 10700 end delete begin insert 10753 end insert .

(b)  begin insert (1) end insert begin insert   end insert Health insurers participating in the begin insert individual market
of the end insert Exchange shall fairly and affirmatively offer, market, and
sell in the begin insert individual market of the end insert Exchange at least one product
within each of the five levels of coverage contained in subsections
(d) and (e) of Section 1302 of the federal act. begin delete The end delete begin insert Health insurers
participating in the Small Business Health Options Program
(SHOP Program) of the Exchange, established pursuant to
subdivision (m) of Section 100504 of the Government Code, shall
fairly and affirmatively offer, market, and sell in the SHOP
Program at least one product within each of the four levels of
coverage contained in subsection (d) of Section 1302 of the federal
act. end insert

begin insert (2) end insert begin insert   end insert begin insert The end insert board established under Section 100500 of the
Government Code may require insurers to sell additional products
within each of begin delete those end delete begin insert the end insert levels of coverage begin insert identified in paragraph
(1) end insert . begin delete This end delete

begin insert (3) end insert begin insert   end insert begin insert This end insert subdivision shall not apply to an insurer that solely
offers supplemental coverage in the Exchange under paragraph
(10) of subdivision (a) of Section 100504 of the Government Code.

(c) (1) Health insurers participating in the Exchange that sell
any products outside the Exchange shall do both of the following:

(A) Fairly and affirmatively offer, market, and sell all products
made available to individuals in the Exchange to individuals
purchasing coverage outside the Exchange.

(B) Fairly and affirmatively offer, market, and sell all products
made available to small employers in the Exchange to small
employers purchasing coverage outside the Exchange.

(2) For purposes of this subdivision, “product” does not include
contracts entered into pursuant to Part 6.2 (commencing with
Section 12693) of Division 2 between the Managed Risk Medical
Insurance Board and health insurers for enrolled Healthy Families
beneficiaries or to contracts entered into pursuant to Chapter 7
(commencing with Section 14000) of, or Chapter 8 (commencing
with Section 14200) of, Part 3 of Division 9 of the Welfare and
Institutions Code between the State Department of Health Care
Services and health insurers for enrolled Medi-Cal beneficiaries.

(d)  begin insert (1) end insert begin insert   end insert Commencing January 1, 2014, a health insurer begin insert shall end insert ,
with respect to begin insert individual end insert policies that cover hospital, medical, or
surgical benefits, begin delete may end delete only sell the five levels of coverage
contained in subsections (d) and (e) of Section 1302 of the federal
act, except that a health insurer that does not participate in the
Exchange begin delete may end delete begin insert shall end insert , with respect to begin insert individual end insert policies that cover
hospital, medical, or surgical benefits, only sell the four levels of
coverage contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete begin insert 1302 end insert of
the federal act.

begin insert

(2) Commencing January 1, 2014, a health insurer shall, with
respect to small employer policies that cover hospital, medical,
or surgical expenses, only sell the four levels of coverage contained
in subsection (d) of Section 1302 of the federal act.

end insert

(e) Commencing January 1, 2014, a health insurer that does not
participate in the Exchange shall, with respect to begin insert individual or
small employer end insert policies that cover hospital, medical, or surgical
expenses, offer at least one standardized product that has been
designated by the Exchange in each of the four levels of coverage
contained in begin insert subsection (d) of end insert Section begin delete 1302(d) end delete begin insert 1302 end insert of the federal
act. This subdivision shall only apply if the board of the Exchange
exercises its authority under subdivision (c) of Section 100504 of
the Government Code. Nothing in this subdivision shall require
an insurer that does not participate in the Exchange to offer
standardized products in the small employer market if the insurer
only sells products in the individual market. Nothing in this
subdivision shall require an insurer that does not participate in the
Exchange to offer standardized products in the individual market
if the insurer only sells products in the small employer market.
This subdivision shall not be construed to prohibit the insurer from
offering other products provided that it complies with subdivision
(d).

(f) This section shall become operative only if Section 11 of the
act that added this section becomes inoperative pursuant to
subdivision (g) of that Section 11.

begin insert

begin insert SEC. 19. end insert   

end insert

begin insert Section 10113.9 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10113.9.  

(a) This section shall not apply to short-term limited
duration health insurance, vision-only, dental-only, or
CHAMPUS-supplement insurance, or to hospital indemnity,
hospital-only, accident-only, or specified disease insurance that
does not pay benefits on a fixed benefit, cash payment only basis.

begin delete

(b) (1) A health insurer that declines to offer coverage to or
denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate shall, at the time of
the denial or offer of coverage, provide the applicant with the
specific reason or reasons for the decision in writing, in clear,
easily understandable language.

(2)

end delete

begin insert (b) end insert begin insert   end insert begin insert (1) end insert  No change in the premium rate or coverage for an
individual health insurance policy shall become effective unless
the insurer has delivered a written notice of the change at least begin insert 15
days prior to the start of the annual enrollment period applicable
to the policy or end insert 60 days prior to the effective date of the policy
begin delete renewal or the date on which the rate or coverage changes. A notice
of an increase in the premium rate shall include the reasons for the
rate increase. end delete begin insert renewal, whichever occurs earlier in the calendar
year. end insert

begin delete

(3)

end delete

begin insert (2) end insert  The written notice required pursuant to paragraph begin delete (2) end delete begin insert (1) end insert
shall be delivered to the individual policyholder at his or her last
address known to the begin delete insurer, at least 60 days prior to the effective
date of the change end delete begin insert insurer end insert . The notice shall state in italics and in
12-point type the actual dollar amount of the premium increase
and the specific percentage by which the current premium will be
increased. The notice shall describe in plain, understandable
English any changes in the policy or any changes in benefits,
including a reduction in benefits or changes to waivers, exclusions,
or conditions, and highlight this information by printing it in italics.
The notice shall specify in a minimum of 10-point bold typeface,
the reason for a premium rate change or a change in coverage or
benefits.

begin delete

(4) If an insurer rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the insurer shall inform the
applicant about the state’s high-risk health insurance pool, the
California Major Risk Medical Insurance Program (MRMIP) (Part
6.5 (commencing with Section 12700)), and the federal temporary
high risk pool established pursuant to Part 6.6 (commencing with
Section 12739.5). The information provided to the applicant by
the insurer shall be in accordance with standards developed by the
department, in consultation with the Managed Risk Medical
Insurance Board, and shall specifically include the toll-free
telephone number and Internet Web site address for MRMIP and
the federal temporary high risk pool. The requirement to notify
applicants of the availability of MRMIP and the federal temporary
high risk pool shall not apply when a health plan rejects an
applicant for Medicare supplement coverage.

end delete

(c) A notice provided pursuant to this section is a private and
confidential communication and, at the time of application, the
insurer shall give the applicant the opportunity to designate the
address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information.

begin insert

begin insert SEC. 20. end insert   

end insert

begin insert Section 10181.3 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10181.3.  

(a)  begin delete (1) end delete begin delete   end delete begin delete end delete All health insurers shall file with the
department all required rate information for individual and small
group health insurance policies at least 60 days prior to
implementing any rate change.

begin delete

(2) For individual health insurance policies, the filing shall be
concurrent with the notice required under Section 10113.9.

end delete begin delete

(3) For small group health insurance policies, the filing shall
be concurrent with the notice required under Section 10199.1.

end delete

(b) An insurer shall disclose to the department all of the
following for each individual and small group rate filing:

(1) Company name and contact information.

(2) Number of policy forms covered by the filing.

(3) Policy form numbers covered by the filing.

(4) Product type, such as indemnity or preferred provider
organization.

(5) Segment type.

(6) Type of insurer involved, such as for profit or not for profit.

(7) Whether the products are opened or closed.

(8) Enrollment in each policy and rating form.

(9) Insured months in each policy form.

(10) Annual rate.

(11) Total earned premiums in each policy form.

(12) Total incurred claims in each policy form.

(13) Average rate begin delete increase end delete begin insert change end insert initially requested.

(14) Review category: initial filing for new product, filing for
existing product, or resubmission.

(15) Average rate of begin delete increase end delete begin insert change end insert .

(16) Effective date of rate begin delete increase end delete begin insert change end insert .

(17) Number of policyholders or insureds affected by each
policy form.

(18) The insurer’s overall annual medical trend factor
assumptions in each rate filing for all benefits and by aggregate
benefit category, including hospital inpatient, hospital outpatient,
physician services, prescription drugs and other ancillary services,
laboratory, and radiology. An insurer may provide aggregated
additional data that demonstrates or reasonably estimates
year-to-year cost begin delete increases end delete begin insert changes end insert in specific benefit categories
in begin delete major geographic regions of the state end delete begin insert the geographic regions
listed in Sections 10753.14 and 10965.9 end insert . For purposes of this
paragraph, “major geographic region” shall be defined by the
department and shall include no more than nine regions.

(19) The amount of the projected trend attributable to the use
of services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.

(20) A comparison of claims cost and rate of changes over time.

(21) Any changes in insured cost-sharing over the prior year
associated with the submitted rate filing.

(22) Any changes in insured benefits over the prior year
associated with the submitted rate filing.

(23) The certification described in subdivision (b) of Section
10181.6.

(24) Any changes in administrative costs.

(25) Any other information required for rate review under
PPACA.

(c) An insurer subject to subdivision (a) shall also disclose the
following aggregate data for all rate filings submitted under this
section in the individual and small group health insurance markets:

(1) Number and percentage of rate filings reviewed by the
following:

(A) Plan year.

(B) Segment type.

(C) Product type.

(D) Number of policyholders.

(E) Number of covered lives affected.

(2) The insurer’s average rate begin delete increase end delete begin insert change end insert by the following
categories:

(A) Plan year.

(B) Segment type.

(C) Product type.

(3) Any cost containment and quality improvement efforts since
the insurer’s last rate filing for the same category of health benefit
plan. To the extent possible, the insurer shall describe any
significant new health care cost containment and quality
improvement efforts and provide an estimate of potential savings
together with an estimated cost or savings for the projection period.

(d) The department may require all health insurers to submit all
rate filings to the National Association of Insurance
Commissioners’ System for Electronic Rate and Form Filing
(SERFF). Submission of the required rate filings to SERFF shall
be deemed to be filing with the department for purposes of
compliance with this section.

(e) A health insurer shall submit any other information required
under PPACA. A health insurer shall also submit any other
information required pursuant to any regulation adopted by the
department to comply with this article.

begin insert

begin insert SEC. 21. end insert   

end insert

begin insert Section 10181.6 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10181.6.  

(a) A filing submitted under this article shall be
actuarially sound.

(b) (1) The health insurer shall contract with an independent
actuary or actuaries consistent with this section.

(2) A filing submitted under this article shall include a
certification by an independent actuary or actuarial firm that the
rate begin delete increase end delete begin insert change end insert is reasonable or unreasonable and, if
unreasonable, that the justification for the begin delete increase end delete begin insert change end insert is based
on accurate and sound actuarial assumptions and methodologies.
Unless PPACA requires a certification of actuarial soundness for
each large group health insurance policy, a filing submitted under
Section 10181.4 shall include a certification by an independent
actuary, as described in this section, that the aggregate or average
rate increase is based on accurate and sound actuarial assumptions
and methodologies.

(3) The actuary or actuarial firm acting under paragraph (2)
shall not be an affiliate or a subsidiary of, nor in any way owned
or controlled by, a health insurer or a trade association of health
insurers. A board member, director, officer, or employee of the
actuary or actuarial firm shall not serve as a board member,
director, or employee of a health insurer. A board member, director,
or officer of a health insurer or a trade association of health insurers
shall not serve as a board member, director, officer, or employee
of the actuary or actuarial firm.

(c) Nothing in this article shall be construed to permit the
commissioner to establish the rates charged insureds and
policyholders for covered health care services.

begin insert

begin insert SEC. 22. end insert   

end insert

begin insert Section 10181.7 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10181.7.  

(a) Notwithstanding Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code,
all information submitted under this article shall be made publicly
available by the department except as provided in subdivision (b).

(b) Any contracted rates between a health insurer and a provider
shall be deemed confidential information that shall not be made
public by the department and are exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
The contracted rates between a health insurer and a large group
shall be deemed confidential information that shall not be made
public by the department and are exempt from disclosure under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).

(c) All information submitted to the department under this article
shall be submitted electronically in order to facilitate review by
the department and the public.

(d) In addition, the department and the health insurer shall, at
a minimum, make the following information readily available to
the public on their Internet Web sites, in plain language and in a
manner and format specified by the department, except as provided
in subdivision (b). The information shall be made public for 60
days prior to the implementation of the rate begin delete increase end delete begin insert change end insert . The
information shall include:

(1) Justifications for any unreasonable rate begin delete increases end delete begin insert changes end insert ,
including all information and supporting documentation as to why
the rate begin delete increase end delete begin insert change end insert is justified.

(2) An insurer’s overall annual medical trend factor assumptions
in each rate filing for all benefits.

(3) An insurer’s actual costs, by aggregate benefit category to
include, hospital inpatient, hospital outpatient, physician services,
prescription drugs and other ancillary services, laboratory, and
radiology.

(4) The amount of the projected trend attributable to the use of
services, price inflation, or fees and risk for annual policy trends
by aggregate benefit category, such as hospital inpatient, hospital
outpatient, physician services, prescription drugs and other
ancillary services, laboratory, and radiology.

begin insert

begin insert SEC. 23. end insert   

end insert

begin insert Section 10181.11 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10181.11.  

(a) Whenever it appears to the department that any
person has engaged, or is about to engage, in any act or practice
constituting a violation of this article, including the filing of
inaccurate or unjustified rates or inaccurate or unjustified rate
information, the department may review rate filing to ensure
compliance with the law.

(b) The department may review other filings.

(c) The department shall accept and post to its Internet Web site
any public comment on a rate begin delete increase end delete begin insert change end insert submitted to the
department during the 60-day period described in subdivision (d)
of Section 10181.7.

(d) The department shall report to the Legislature at least
quarterly on all unreasonable rate filings.

(e) The department shall post on its Internet Web site any
begin delete changes end delete begin insert modifications end insert submitted by the insurer to the proposed
rate begin delete increase end delete begin insert change end insert , including any documentation submitted by
the insurer supporting those begin delete changes end delete begin insert modifications end insert .

(f) If the begin delete department finds end delete begin insert commissioner makes a decision end insert that
an unreasonable rate begin delete increase end delete begin insert change end insert is not justified or that a rate
filing contains inaccurate information, the department shall post
begin delete its finding end delete begin insert that decision end insert on its Internet Web site.

(g) Nothing in this article shall be construed to impair or impede
the department’s authority to administer or enforce any other
provision of this code.

begin insert

begin insert SEC. 24. end insert   

end insert

begin insert Section 10199.1 of the end insert begin insert Insurance Code end insert begin insert is amended
to read: end insert

10199.1.  

(a) No insurer or nonprofit hospital service plan or
administrator acting on its behalf shall terminate a group master
policy or contract providing hospital, medical, or surgical benefits,
increase premiums or charges therefor, reduce or eliminate benefits
thereunder, or restrict eligibility for coverage thereunder without
providing prior notice of that action. No such action shall become
effective unless written notice of the action was delivered by mail
to the last known address of the appropriate insurance producer
and the appropriate administrator, if any, at least 45 days prior to
the effective date of the action and to the last known address of
the group policyholder or group contractholder at least 60 days
prior to the effective date of the action. If nonemployee certificate
holders or employees of more than one employer are covered under
the policy or contract, written notice shall also be delivered by
mail to the last known address of each nonemployee certificate
holder or affected employer or, if the action does not affect all
employees and dependents of one or more employers, to the last
known address of each affected employee certificate holder, at
least 60 days prior to the effective date of the action.

(b) No holder of a master group policy or a master group
nonprofit hospital service plan contract or administrator acting on
its behalf shall terminate the coverage of, increase premiums or
charges for, or reduce or eliminate benefits available to, or restrict
eligibility for coverage of a covered person, employer unit, or class
of certificate holders covered under the policy or contract for
hospital, medical, or surgical benefits without first providing prior
notice of the action. No such action shall become effective unless
written notice was delivered by mail to the last known address of
each affected nonemployee certificate holder or employer, or if
the action does not affect all employees and dependents of one or
more employers, to the last known address of each affected
employee certificate holder, at least 60 days prior to the effective
date of the action.

(c) A health insurer that declines to offer coverage to or denies
enrollment for a large group applying for coverage begin delete or that offers
small group coverage at a rate that is higher than the standard
employee risk rate end delete shall, at the time of the denial begin delete or offer end delete of
coverage, provide the applicant with the specific reason or reasons
for the decision in writing, in clear, easily understandable language.

begin delete SEC. 3. end delete
begin insert SEC. 25. end insert   

Section 10753.05 of the Insurance Code is amended
to read:

10753.05.  

(a) No group or individual policy or contract or
certificate of group insurance or statement of group coverage
providing benefits to employees of small employers as defined in
this chapter shall be issued or delivered by a carrier subject to the
jurisdiction of the commissioner regardless of the situs of the
contract or master policyholder or of the domicile of the carrier
nor, except as otherwise provided in Sections 10270.91 and
10270.92, shall a carrier provide coverage subject to this chapter
until a copy of the form of the policy, contract, certificate, or
statement of coverage is filed with and approved by the
commissioner in accordance with Sections 10290 and 10291, and
the carrier has complied with the requirements of Section 10753.17.

(b) (1) On and after October 1, 2013, each carrier shall fairly
and affirmatively offer, market, and sell all of the carrier’s health
benefit plans that are sold to, offered through, or sponsored by,
small employers or associations that include small employers for
plan years on or after January 1, 2014, to all small employers in
each geographic region in which the carrier makes coverage
available or provides benefits.

(2) A carrier that offers qualified health plans through the
Exchange shall be deemed to be in compliance with paragraph (1)
with respect to health benefit plans offered through the Exchange
in those geographic regions in which the carrier offers plans
through the Exchange.

(3) A carrier shall provide enrollment periods consistent with
PPACA and described in Section 155.725 of Title 45 of the Code
of Federal Regulations. Commencing January 1, 2014, a carrier
shall provide special enrollment periods consistent with the special
enrollment periods described in Section 10965.3, to the extent
permitted by PPACA, except for the triggering events identified
in paragraphs (d)(3) and (d)(6) of Section 155.420 of Title 45 of
the Code of Federal Regulations with respect to health benefit
plans offered through the Exchange.

(4) Nothing in this section shall be construed to require an
association, or a trust established and maintained by an association
to receive a master insurance policy issued by an admitted insurer
and to administer the benefits thereof solely for association
members, to offer, market begin insert , end insert or sell a benefit plan design to those
who are not members of the association. However, if the
association markets, offers begin insert , end insert or sells a benefit plan design to those
who are not members of the association it is subject to the
requirements of this section. This shall apply to an association that
otherwise meets the requirements of paragraph (8) formed by
merger of two or more associations after January 1, 1992, if the
predecessor organizations had been in active existence on January
1, 1992, and for at least five years prior to that date and met the
requirements of paragraph (5).

(5) A carrier which (A) effective January 1, 1992, and at least
20 years prior to that date, markets, offers, or sells benefit plan
designs only to all members of one association and (B) does not
market, offer begin insert , end insert or sell any other individual, selected group, or group
policy or contract providing medical, hospital begin insert , end insert and surgical benefits
shall not be required to market, offer, or sell to those who are not
members of the association. However, if the carrier markets, offers begin insert , end insert
or sells any benefit plan design or any other individual, selected
group, or group policy or contract providing medical, hospital begin insert , end insert and
surgical benefits to those who are not members of the association
it is subject to the requirements of this section.

(6) Each carrier that sells health benefit plans to members of
one association pursuant to paragraph (5) shall submit an annual
statement to the commissioner which states that the carrier is selling
health benefit plans pursuant to paragraph (5) and which, for the
one association, lists all the information required by paragraph (7).

(7) Each carrier that sells health benefit plans to members of
any association shall submit an annual statement to the
commissioner which lists each association to which the carrier
sells health benefit plans, the industry or profession which is served
by the association, the association’s membership criteria, a list of
officers, the state in which the association is organized, and the
site of its principal office.

(8) For purposes of paragraphs (4) and (6), an association is a
nonprofit organization comprised of a group of individuals or
employers who associate based solely on participation in a
specified profession or industry, accepting for membership any
individual or small employer meeting its membership criteria,
which do not condition membership directly or indirectly on the
health or claims history of any person, which uses membership
dues solely for and in consideration of the membership and
membership benefits, except that the amount of the dues shall not
depend on whether the member applies for or purchases insurance
offered by the association, which is organized and maintained in
good faith for purposes unrelated to insurance, which has been in
active existence on January 1, 1992, and at least five years prior
to that date, which has a constitution and bylaws, or other
analogous governing documents which provide for election of the
governing board of the association by its members, which has
contracted with one or more carriers to offer one or more health
benefit plans to all individual members and small employer
members in this state. Health coverage through an association that
is not related to employment shall be considered individual
coverage pursuant to Section 144.102(c) of Title 45 of the Code
of Federal Regulations.

(c) On and after October 1, 2013, each carrier shall make
available to each small employer all health benefit plans that the
carrier offers or sells to small employers or to associations that
include small employers for plan years on or after January 1, 2014.
Notwithstanding subdivision (d) of Section 10753, for purposes
of this subdivision, companies that are affiliated companies or that
are eligible to file a consolidated income tax return shall be treated
as one carrier.

(d) Each carrier shall do all of the following:

(1) Prepare a brochure that summarizes all of its health benefit
plans and make this summary available to small employers, agents,
and brokers upon request. The summary shall include for each
plan information on benefits provided, a generic description of the
manner in which services are provided, such as how access to
providers is limited, benefit limitations, required copayments and
deductibles, an explanation of how creditable coverage is calculated
if a waiting period is imposed, and a telephone number that can
be called for more detailed benefit information. Carriers are
required to keep the information contained in the brochure accurate
and up to date, and, upon updating the brochure, send copies to
agents and brokers representing the carrier. Any entity that provides
administrative services only with regard to a health benefit plan
written or issued by another carrier shall not be required to prepare
a summary brochure which includes that benefit plan.

(2) For each health benefit plan, prepare a more detailed
evidence of coverage and make it available to small employers,
agents begin insert , end insert and brokers upon request. The evidence of coverage shall
contain all information that a prudent buyer would need to be aware
of in making selections of benefit plan designs. An entity that
provides administrative services only with regard to a health benefit
plan written or issued by another carrier shall not be required to
prepare an evidence of coverage for that health benefit plan.

(3) Provide copies of the current summary brochure to all agents
or brokers who represent the carrier and, upon updating the
brochure, send copies of the updated brochure to agents and brokers
representing the carrier for the purpose of selling health benefit
plans.

(4) Notwithstanding subdivision (c) of Section 10753, for
purposes of this subdivision, companies that are affiliated
companies or that are eligible to file a consolidated income tax
return shall be treated as one carrier.

(e) Every agent or broker representing one or more carriers for
the purpose of selling health benefit plans to small employers shall
do all of the following:

(1) When providing information on a health benefit plan to a
small employer but making no specific recommendations on
particular benefit plan designs:

(A) Advise the small employer of the carrier’s obligation to sell
to any small employer any of the health benefit plans it offers to
small employers, consistent with PPACA, and provide them, upon
request, with the actual rates that would be charged to that
employer for a given health benefit plan.

(B) Notify the small employer that the agent or broker will
procure rate and benefit information for the small employer on
any health benefit plan offered by a carrier for whom the agent or
broker sells health benefit plans.

(C) Notify the small employer that, upon request, the agent or
broker will provide the small employer with the summary brochure
required in paragraph (1) of subdivision (d) for any benefit plan
design offered by a carrier whom the agent or broker represents.

(D) Notify the small employer of the availability of coverage
and the availability of tax credits for certain employers consistent
with PPACA and state law, including any rules, regulations, or
guidance issued in connection therewith.

(2) When recommending a particular benefit plan design or
designs, advise the small employer that, upon request, the agent
will provide the small employer with the brochure required by
paragraph (1) of subdivision (d) containing the benefit plan design
or designs being recommended by the agent or broker.

(3) Prior to filing an application for a small employer for a
particular health benefit plan:

(A) For each of the health benefit plans offered by the carrier
whose health benefit plan the agent or broker is presenting, provide
the small employer with the benefit summary required in paragraph
(1) of subdivision (d) and the premium for that particular employer.

(B) Notify the small employer that, upon request, the agent or
broker will provide the small employer with an evidence of
coverage brochure for each health benefit plan the carrier offers.

(C) Obtain a signed statement from the small employer
acknowledging that the small employer has received the disclosures
required by this paragraph and Section 10753.16.

(f) No carrier, agent, or broker shall induce or otherwise
encourage a small employer to separate or otherwise exclude an
eligible employee from a health benefit plan which, in the case of
an eligible employee meeting the definition in paragraph (1) of
subdivision (f) of Section 10753, is provided in connection with
the employee’s employment or which, in the case of an eligible
employee as defined in paragraph (2) of subdivision (f) of Section
10753, is provided in connection with a guaranteed association.

(g) No carrier shall reject an application from a small employer
for a health benefit plan provided:

(1) The small employer as defined by subparagraph (A) of
paragraph (1) of subdivision (q) of Section 10753 offers health
benefits to 100 percent of its eligible employees as defined in
paragraph (1) of subdivision (f) of Section 10753. Employees who
waive coverage on the grounds that they have other group coverage
shall not be counted as eligible employees.

(2) The small employer agrees to make the required premium
payments.

(h) No carrier or agent or broker shall, directly or indirectly,
engage in the following activities:

(1) Encourage or direct small employers to refrain from filing
an application for coverage with a carrier because of the health
status, claims experience, industry, occupation, or geographic
location within the carrier’s approved service area of the small
employer or the small employer’s employees.

(2) Encourage or direct small employers to seek coverage from
another carrier because of the health status, claims experience,
industry, occupation, or geographic location within the carrier’s
approved service area of the small employer or the small
employer’s employees.

(3) Employ marketing practices or benefit designs that will have
the effect of discouraging the enrollment of individuals with
significant health needs or discriminate based on the individual’s
race, color, national origin, present or predicted disability, age,
sex, gender identity, sexual orientation, expected length of life,
degree of medical dependency, quality of life, or other health
conditions.

This subdivision shall be enforced in the same manner as Section
790.03, including through Sections 790.035 and 790.05.

(i) No carrier shall, directly or indirectly, enter into any contract,
agreement, or arrangement with an agent or broker that provides
for or results in the compensation paid to an agent or broker for a
health benefit plan to be varied because of the health status, claims
experience, industry, occupation, or geographic location of the
small employer or the small employer’s employees. This
subdivision shall not apply with respect to a compensation
arrangement that provides compensation to an agent or broker on
the basis of percentage of premium, provided that the percentage
shall not vary because of the health status, claims experience,
industry, occupation, or geographic area of the small employer.

(j) (1) A health benefit plan offered to a small employer, as
defined in Section 1304(b) of PPACA and in Section 10753, shall
not establish rules for eligibility, including continued eligibility,
of an individual, or dependent of an individual, to enroll under the
terms of the plan based on any of the following health status-related
factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding Section 10291.5, a carrier shall not require
an eligible employee or dependent to fill out a health assessment
or medical questionnaire prior to enrollment under a health benefit
plan. A carrier shall not acquire or request information that relates
to a health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(k) (1) A carrier shall consider as a single risk pool for rating
purposes in the small employer market the claims experience of
all insureds in all nongrandfathered small employer health benefit
plans offered by the carrier in this state begin delete , whether offered as health
care service plan contracts or health insurance policies, end delete begin insert and all
enrollees in all nongrandfathered small employer health care
service plan contracts subject to Article 3.16 (commencing with
Section 1357.500) of Chapter 2.2 of Division 2 of the Health and
Safety Code offered by a health care service plan licensed under
Chapter 2.2 (commencing with Section 1340) of Division 2 of the
Health and Safety Code that is a corporate affiliate, subsidiary,
or parent of the insurer, end insert including those insureds and enrollees
who enroll in coverage through the Exchange and insureds and
enrollees begin delete covered by the carrier end delete begin insert who enroll in coverage end insert outside of
the Exchange.

(2) At least each calendar year, and no more frequently than
each calendar quarter, a carrier shall establish an index rate for the
small employer market in the state based on the total combined
claims costs for providing essential health benefits, as defined
pursuant to Section 1302 of PPACA and Section 10112.27, within
the single risk pool required under paragraph (1). The index rate
shall be adjusted on a marketwide basis based on the total expected
marketwide payments and charges under the risk adjustment and
reinsurance programs established for the state pursuant to Sections
1343 and 1341 of PPACA and Exchange user fees, as described
in subdivision (d) of Section 156.80 of Title 45 of the Code of
Federal Regulations. The premium rate for all of the begin delete carrier’s end delete
nongrandfathered health benefit plans begin insert within the single risk pool
required under paragraph (1) end insert shall use the applicable index rate,
as adjusted for total expected marketwide payments and charges
under the risk adjustment and reinsurance programs established
for the state pursuant to Sections 1343 and 1341 of PPACA, subject
only to the adjustments permitted under paragraph (3).

(3) A carrier may vary premium rates for a particular
nongrandfathered health benefit plan from its index rate based
only on the following actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA. These additional benefits shall be pooled
with similar benefits within the single risk pool required under
paragraph (1) and the claims experience from those benefits shall
be utilized to determine rate variations for health benefit plans that
offer those benefits in addition to essential health benefits.

(D) Administrative costs, excluding any user fees required by
the Exchange.

(E) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(l) If a carrier enters into a contract, agreement, or other
arrangement with a third-party administrator or other entity to
provide administrative, marketing, or other services related to the
offering of health benefit plans to small employers in this state,
the third-party administrator shall be subject to this chapter.

(m) (1) Except as provided in paragraph (2), this section shall
become inoperative if Section 2702 of the federal Public Health
Service Act (42 U.S.C. Sec. 300gg-1), as added by Section 1201
of PPACA, is repealed, in which case, 12 months after the repeal,
carriers subject to this section shall instead be governed by Section
10705 to the extent permitted by federal law, and all references in
this chapter to this section shall instead refer to Section 10705,
except for purposes of paragraph (2).

(2) Paragraph (3) of subdivision (b) of this section shall remain
operative as it relates to health benefit plans offered through the
Exchange.

begin delete SEC. 4. end delete
begin insert SEC. 26. end insert   

Section 10965.3 of the Insurance Code is amended
to read:

10965.3.  

(a) (1) On and after October 1, 2013, a health insurer
shall fairly and affirmatively offer, market, and sell all of the
insurer’s health benefit plans that are sold in the individual market
for policy years on or after January 1, 2014, to all individuals and
dependents in each service area in which the insurer provides or
arranges for the provision of health care services. A health insurer
shall limit enrollment in individual health benefit plans to open
enrollment periods and special enrollment periods as provided in
subdivisions (c) and (d).

(2) A health insurer shall allow the policyholder of an individual
health benefit plan to add a dependent to the policyholder’s health
benefit plan at the option of the policyholder, consistent with the
open enrollment, annual enrollment, and special enrollment period
requirements in this section.

(b) An individual health benefit plan issued, amended, or
renewed on or after January 1, 2014, shall not impose any
preexisting condition provision upon any individual.

(c) (1) A health insurer shall provide an initial open enrollment
period from October 1, 2013, to March 31, 2014, inclusive, and
annual enrollment periods for plan years on or after January 1,
2015, from October 15 to December 7, inclusive, of the preceding
calendar year.

(2) Pursuant to Section 147.104(b)(2) of Title 45 of the Code
of Federal Regulations, for individuals enrolled in noncalendar-year
individual health plan contracts, a plan shall provide a limited open
enrollment period beginning on the date that is 30 calendar days
prior to the date the policy year ends in 2014.

(d) (1) Subject to paragraph (2), commencing January 1, 2014,
a health insurer shall allow an individual to enroll in or change
individual health benefit plans as a result of the following triggering
events:

(A) He or she or his or her dependent loses minimum essential
coverage. For purposes of this paragraph, begin delete both of end delete the following
definitions shall apply:

(i) “Minimum essential coverage” has the same meaning as that
term is defined in subsection (f) of Section 5000A of the Internal
Revenue Code (26 U.S.C. Sec. 5000A).

(ii) “Loss of minimum essential coverage” includes, but is not
limited to, loss of that coverage due to the circumstances described
in Section 54.9801-6(a)(3)(i) to (iii), inclusive, of Title 26 of the
Code of Federal Regulations and the circumstances described in
Section 1163 of Title 29 of the United States Code. “Loss of
minimum essential coverage” also includes loss of that coverage
for a reason that is not due to the fault of the individual.

(iii) “Loss of minimum essential coverage” does not include
loss of that coverage due to the individual’s failure to pay
premiums on a timely basis or situations allowing for a rescission,
subject to clause (ii) and Sections 10119.2 and 10384.17.

(B) He or she gains a dependent or becomes a dependent.

(C) He or she is mandated to be covered as a dependent pursuant
to a valid state or federal court order.

(D) He or she has been released from incarceration.

(E) His or her health coverage issuer substantially violated a
material provision of the health coverage contract.

(F) He or she gains access to new health benefit plans as a result
of a permanent move.

(G) He or she was receiving services from a contracting provider
under another health benefit plan, as defined in Section 10965 begin insert of
this code end insert or Section 1399.845 of the Health and Safety Code for
one of the conditions described in subdivision (a) of Section
10133.56 and that provider is no longer participating in the health
benefit plan.

(H) He or she demonstrates to the Exchange, with respect to
health benefit plans offered through the Exchange, or to the
department, with respect to health benefit plans offered outside
the Exchange, that he or she did not enroll in a health benefit plan
during the immediately preceding enrollment period available to
the individual because he or she was misinformed that he or she
was covered under minimum essential coverage.

(I) He or she is a member of the reserve forces of the United
States military returning from active duty or a member of the
California National Guard returning from active duty service under
Title 32 of the United States Code.

(J) With respect to individual health benefit plans offered
through the Exchange, in addition to the triggering events listed
in this paragraph, any other events listed in Section 155.420(d) of
Title 45 of the Code of Federal Regulations.

(2) With respect to individual health benefit plans offered
outside the Exchange, an individual shall have 60 days from the
date of a triggering event identified in paragraph (1) to apply for
coverage from a health care service plan subject to this section.
With respect to individual health benefit plans offered through the
Exchange, an individual shall have 60 days from the date of a
triggering event identified in paragraph (1) to select a plan offered
through the Exchange, unless a longer period is provided in Part
155 (commencing with Section 155.10) of Subchapter B of Subtitle
A of Title 45 of the Code of Federal Regulations.

(e) With respect to individual health benefit plans offered
through the Exchange, the effective date of coverage required
pursuant to this section shall be consistent with the dates specified
in Section 155.410 or 155.420 of Title 45 of the Code of Federal
Regulations, as applicable. A dependent who is a registered
domestic partner pursuant to Section 297 of the Family Code shall
have the same effective date of coverage as a spouse.

(f) With respect to an individual health benefit plan offered
outside the Exchange, the following provisions shall apply:

(1) After an individual submits a completed application form
for a plan, the insurer shall, within 30 days, notify the individual
of the individual’s actual premium charges for that plan established
in accordance with Section 10965.9. The individual shall have 30
days in which to exercise the right to buy coverage at the quoted
premium charges.

(2) With respect to an individual health benefit plan for which
an individual applies during the initial open enrollment period
described in subdivision (c), when the policyholder submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs earlier, by
December 15, 2013, coverage under the individual health benefit
plan shall become effective no later than January 1, 2014. When
that payment is delivered or postmarked within the first 15 days
of any subsequent month, coverage shall become effective no later
than the first day of the following month. When that payment is
delivered or postmarked between December 16, 2013, and
December 31, 2013, inclusive, or after the 15th day of any
subsequent month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(3) With respect to an individual health benefit plan for which
an individual applies during the annual open enrollment period
described in subdivision (c), when the individual submits a
premium payment, based on the quoted premium charges, and that
payment is delivered or postmarked, whichever occurs later, by
December 15, coverage shall become effective as of the following
January 1. When that payment is delivered or postmarked within
the first 15 days of any subsequent month, coverage shall become
effective no later than the first day of the following month. When
that payment is delivered or postmarked between December 16
and December 31, inclusive, or after the 15th day of any subsequent
month, coverage shall become effective no later than the first day
of the second month following delivery or postmark of the
payment.

(4) With respect to an individual health benefit plan for which
an individual applies during a special enrollment period described
in subdivision (d), the following provisions shall apply:

(A) When the individual submits a premium payment, based
on the quoted premium charges, and that payment is delivered or
postmarked, whichever occurs earlier, within the first 15 days of
the month, coverage under the plan shall become effective no later
than the first day of the following month. When the premium
payment is neither delivered nor postmarked until after the 15th
day of the month, coverage shall become effective no later than
the first day of the second month following delivery or postmark
of the payment.

(B) Notwithstanding subparagraph (A), in the case of a birth,
adoption, or placement for adoption, the coverage shall be effective
on the date of birth, adoption, or placement for adoption.

(C) Notwithstanding subparagraph (A), in the case of marriage
or becoming a registered domestic partner or in the case where a
qualified individual loses minimum essential coverage, the
coverage effective date shall be the first day of the month following
the date the insurer receives the request for special enrollment.

(g) (1) A health insurer shall not establish rules for eligibility,
including continued eligibility, of any individual to enroll under
the terms of an individual health benefit plan based on any of the
following factors:

(A) Health status.

(B) Medical condition, including physical and mental illnesses.

(C) Claims experience.

(D) Receipt of health care.

(E) Medical history.

(F) Genetic information.

(G) Evidence of insurability, including conditions arising out
of acts of domestic violence.

(H) Disability.

(I) Any other health status-related factor as determined by any
federal regulations, rules, or guidance issued pursuant to Section
2705 of the federal Public Health Service Act.

(2) Notwithstanding subdivision (c) of Section 10291.5, a health
insurer shall not require an individual applicant or his or her
dependent to fill out a health assessment or medical questionnaire
prior to enrollment under an individual health benefit plan. A health
insurer shall not acquire or request information that relates to a
health status-related factor from the applicant or his or her
dependent or any other source prior to enrollment of the individual.

(h) (1) A health insurer shall consider as a single risk pool for
rating purposes in the individual market the claims experience of
all insureds begin delete and enrollees end delete in all nongrandfathered individual health
benefit plans offered by that insurer in this state begin delete , whether offered
as health care service plan contracts or individual health insurance
policies end delete begin insert and all enrollees in all nongrandfathered individual health
benefit plans, as defined in Section 1399.845 of the Health and
Safety Code, offered in this state by a health care service plan
licensed under Chapter 2.2 (commencing with Section 1340) of
Division 2 of the Health and Safety Code that is a corporate
affiliate, subsidiary, or parent of the insurer end insert , including those
insureds begin insert and enrollees end insert who enroll in individual coverage through
the Exchange and insureds begin insert and enrollees end insert who enroll in individual
coverage outside the Exchange. Student health insurance coverage,
as such coverage is defined begin delete at end delete begin insert in end insert Section 147.145(a) of Title 45 of
the Code of Federal Regulations, shall not be included in a health
insurer’s single risk pool for individual coverage.

(2) Each calendar year, a health insurer shall establish an index
rate for the individual market in the state based on the total
combined claims costs for providing essential health benefits, as
defined pursuant to Section 1302 of PPACA, within the single risk
pool required under paragraph (1). The index rate shall be adjusted
on a marketwide basis based on the total expected marketwide
payments and charges under the risk adjustment and reinsurance
programs established for the state pursuant to Sections 1343 and
1341 of PPACA and Exchange user fees, as described in
subdivision (d) of Section 156.80 of Title 45 of the Code of Federal
Regulations. The premium rate for all of the begin delete health insurer’s end delete health
benefit plans in the individual market begin insert within the single risk pool
required under paragraph (1) end insert shall use the applicable index rate,
as adjusted for total expected marketwide payments and charges
under the risk adjustment and reinsurance programs established
for the state pursuant to Sections 1343 and 1341 of PPACA, subject
only to the adjustments permitted under paragraph (3).

(3) A health insurer may vary premium rates for a particular
health benefit plan from its index rate based only on the following
actuarially justified plan-specific factors:

(A) The actuarial value and cost-sharing design of the health
benefit plan.

(B) The health benefit plan’s provider network, delivery system
characteristics, and utilization management practices.

(C) The benefits provided under the health benefit plan that are
in addition to the essential health benefits, as defined pursuant to
Section 1302 of PPACA and Section 10112.27. These additional
benefits shall be pooled with similar benefits within the single risk
pool required under paragraph (1) and the claims experience from
those benefits shall be utilized to determine rate variations for
plans that offer those benefits in addition to essential health
benefits.

(D) With respect to catastrophic plans, as described in subsection
(e) of Section 1302 of PPACA, the expected impact of the specific
eligibility categories for those plans.

(E) Administrative costs, excluding any user fees required by
the Exchange.

(i) This section shall only apply with respect to individual health
benefit plans for policy years on or after January 1, 2014.

(j) This section shall not apply to begin delete an individual health benefit
plan that is end delete a grandfathered health plan.

(k) If Section 5000A of the Internal Revenue Code, as added
by Section 1501 of PPACA, is repealed or amended to no longer
apply to the individual market, as defined in Section 2791 of the
federal Public Health Service Act (42 U.S.C. Sec. begin delete 300gg-4), end delete
begin insert 300gg-91), end insert subdivisions (a), (b), and (g) shall become inoperative
12 months after the date of that repeal or amendment and individual
health care benefit plans shall thereafter be subject to Sections
10901.2, 10951, and 10953.

begin delete SEC. 5. end delete
begin insert SEC. 27. end insert   

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.