Bill Text: CA AB1305 | 2015-2016 | Regular Session | Chaptered
Bill Title: Limitations on cost sharing: family coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2015-10-08 - Chaptered by Secretary of State - Chapter 641, Statutes of 2015. [AB1305 Detail]
Download: California-2015-AB1305-Chaptered.html
BILL NUMBER: AB 1305 CHAPTERED
BILL TEXT
CHAPTER 641
FILED WITH SECRETARY OF STATE OCTOBER 8, 2015
APPROVED BY GOVERNOR OCTOBER 8, 2015
PASSED THE SENATE SEPTEMBER 9, 2015
PASSED THE ASSEMBLY SEPTEMBER 10, 2015
AMENDED IN SENATE SEPTEMBER 4, 2015
AMENDED IN SENATE JUNE 25, 2015
AMENDED IN ASSEMBLY MAY 5, 2015
INTRODUCED BY Assembly Member Bonta
FEBRUARY 27, 2015
An act to amend Sections 1367.006 and 1367.007 of the Health and
Safety Code, and to amend Sections 10112.28 and 10112.29 of the
Insurance Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
AB 1305, Bonta. Limitations on cost sharing: family coverage.
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 establishes annual limits on specified forms of cost sharing,
including deductibles, on all essential health benefits for
nongrandfathered individual and group health insurance coverage.
Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care and makes a willful
violation of the act a crime. Existing law also provides for the
regulation of health insurers by the Department of Insurance.
Existing law requires, for nongrandfathered products in the
individual or small group markets, a health care service plan
contract or health insurance policy, except a specialized health care
service plan or health insurance policy, that is issued, amended, or
renewed on or after January 1, 2015, to provide for a limit on
annual out-of-pocket expenses for all covered benefits that meet the
definition of essential health benefits, and requires the plan
contract or policy, for nongrandfathered products in the large group
market, to provide that limit for covered benefits to the extent that
the limit does not conflict with federal law or guidance, as
specified. Existing law prohibits this limit from exceeding the limit
described in a specified provision of federal law.
This bill would require, for family coverage, that an individual
within a family shall not have a maximum out-of-pocket limit that is
greater than the maximum out-of-pocket limit for individual coverage
for that product. The bill would require a plan contract or policy
and, commencing January 1, 2017, a large group market plan contract
or policy, for family coverage that includes a deductible, except a
high deductible health plan, that an individual within a family shall
not have a deductible that is greater than the deductible limit for
individual coverage for that product. The bill would require for a
plan contract or policy and, commencing January 1, 2017, for a large
group market health plan contract or policy, for family coverage that
includes a deductible and is a high deductible health plan, as
defined in federal law, to include a deductible for each individual
covered by the plan contract or policy that is equal to either the
amount set forth in a specified provision of federal law or the
deductible for individual coverage under the plan contract or policy,
whichever is greater. Because a willful violation of these
requirements by a health care service plan would be a crime, this
bill would impose a state-mandated local program.
Existing law prohibits the deductible under a small employer
health care service plan contract or small employer health insurance
policy that is offered, sold, or renewed on or after January 1, 2014,
from exceeding specified dollar amounts. Existing law requires those
dollar amounts to be indexed consistent with specified provisions of
the PPACA and any federal rules or guidance pursuant to those
provisions.
This bill would instead require those dollar amounts to be indexed
consistent with provisions of the PPACA that specify a formula for
calculating health plan premium adjustment percentages. Because a
willful violation of this requirement by a health care service plan
would be a crime, this bill would impose a state-mandated local
program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1367.006 of the Health and Safety Code is
amended to read:
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 1371.4.
(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 covered 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.
(3) For family coverage, an individual within a family shall not
have a maximum out-of-pocket limit that is greater than the maximum
out-of-pocket limit for individual coverage for that product.
(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) (1) (A) Except as provided in paragraph (2), if a health care
service plan contract for family coverage includes a deductible, an
individual within a family shall not have a deductible that is
greater than the deductible limit for individual coverage for that
product.
(B) Except as provided in paragraph (2), if a large group market
health care service plan contract for family coverage that is issued,
amended, or renewed on or after January 1, 2017, includes a
deductible, an individual within a family shall not have a deductible
that is more than the deductible limit for individual coverage for
that product.
(2) (A) If a health care service plan contract for family coverage
includes a deductible and is a high deductible health plan under the
definition set forth in Section 223(c)(2) of Title 26 of the United
States Code, the plan contract shall include a deductible for each
individual covered by the plan that is equal to either the amount set
forth in Section 223(c)(2)(A)(i)(II) of Title 26 of the United
States Code or the deductible for individual coverage under the plan
contract, whichever is greater.
(B) If a large group market health care service plan contract for
family coverage that is issued, amended, or renewed on or after
January 1, 2017, includes a deductible and is a high deductible
health plan under the definition set forth in Section 223(c)(2) of
Title 26 of the United States Code, the plan contract shall include a
deductible for each individual covered by the plan that is equal to
either the amount set forth in Section 223(c)(2)(A)(i)(II) of Title
26 of the United States Code or the deductible for individual
coverage under the plan contract, whichever is greater.
(h) 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.
(i) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
SEC. 2. Section 1367.007 of the Health and Safety Code is amended
to read:
1367.007. (a) (1) For a small employer health care service plan
contract offered, sold, or renewed on or after January 1, 2014, the
deductible under the plan shall not exceed:
(A) Two thousand dollars ($2,000) in the case of a plan contract
covering a single individual.
(B) Four thousand dollars ($4,000) in the case of any other plan
contract.
(2) The dollar amounts in this section shall be indexed consistent
with Section 1302(c)(4) of PPACA and any federal rules or guidance
pursuant to that section.
(3) The limitation in this subdivision shall be applied in a
manner that does not affect the actuarial value of any small employer
health care service plan contract.
(4) For small group products at the bronze level of coverage, as
defined in Section 1367.008, the department may permit plans to offer
a higher deductible in order to meet the actuarial value requirement
of the bronze level. In making this determination, the department
shall consider affordability of cost sharing for enrollees and shall
also consider whether enrollees may be deterred from seeking
appropriate care because of higher cost sharing.
(b) Nothing in this section shall be construed to allow a plan
contract to have a deductible that applies to preventive services as
defined in Section 1367.002.
(c) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
SEC. 3. Section 10112.28 of the Insurance Code is amended to read:
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.
(3) For family coverage, an individual within a family shall not
have a maximum out-of-pocket limit that is greater than the maximum
out-of-pocket limit for individual coverage for that product.
(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 10112.27.
(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 10112.27.
(g) (1) (A) Except as provided in paragraph (2), if a health
insurance policy for family coverage includes a deductible, an
individual within a family shall not have a deductible that is
greater than the deductible limit for individual coverage for that
product.
(B) Except as provided in paragraph (2), for a large group market
health insurance policy for family coverage that is issued, amended,
or renewed on or after January 1, 2017, includes a deductible, an
individual within a family shall not have a deductible that is
greater than the deductible limit for individual coverage for that
product.
(2) (A) If a health insurance policy for family coverage includes
a deductible and is a high deductible health plan under the
definition set forth in Section 223(c)(2) of Title 26 of the United
States Code, the policy shall include a deductible for each
individual covered by the policy that is equal to either the amount
set forth in Section 223(c)(2)(A)(i)(II) of Title 26 of the United
States Code or the deductible for individual coverage under the
policy, whichever is greater.
(B) If a large group market health insurance policy for family
coverage that is issued, amended, or renewed on or after January 1,
2017, includes a deductible and is a high deductible health plan
under the definition set forth in Section 223(c)(2) of Title 26 of
the United States Code, the policy shall include a deductible for
each individual covered by the policy that is equal to either the
amount set forth in Section 223(c)(2)(A)(i)(II) of Title 26 of the
United States Code or the deductible for individual coverage under
the policy, whichever is greater.
(h) 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.
(i) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
SEC. 4. Section 10112.29 of the Insurance Code is amended to read:
10112.29. (a) (1) For a small employer health insurance policy
offered, sold, or renewed on or after January 1, 2014, the deductible
under the policy shall not exceed:
(A) Two thousand dollars ($2,000) in the case of a policy covering
a single individual.
(B) Four thousand dollars ($4,000) in the case of any other
policy.
(2) The dollar amounts in this section shall be indexed consistent
with Section 1302(c)(4) of PPACA and any federal rules or guidance
pursuant to that section.
(3) The limitation in this subdivision shall be applied in a
manner that does not affect the actuarial value of any small employer
health insurance policy.
(4) For small group products at the bronze level of coverage, as
defined in Section 10112.295, the department may permit insurers to
offer a higher deductible in order to meet the actuarial value
requirement of the bronze level. In making this determination, the
department shall consider affordability of cost sharing for insureds
and shall also consider whether insureds may be deterred from seeking
appropriate care because of higher cost sharing.
(b) Nothing in this section shall be construed to allow a policy
to have a deductible that applies to preventive services as defined
in PPACA.
(c) This section shall not apply to multiple employer welfare
arrangements regulated pursuant to Article 4.7 (commencing with
Section 742.20) of Chapter 1 of Part 2 of Division 1 that provide
health care benefits to their members and that comply with small
group health reforms unless otherwise required by federal law or
guidance.
(d) "PPACA" means the federal Patient Protection and Affordable
Care Act (Public Law 111-148), as amended by the federal Health Care
and Education Reconciliation Act of 2010 (Public Law 111-152), and
any rules, regulations, or guidance issued thereunder.
SEC. 5. 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.
