Bill Text: CA SB161 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Stop-loss insurance coverage.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-10-01 - Chaptered by Secretary of State. Chapter 443, Statutes of 2013. [SB161 Detail]

Download: California-2013-SB161-Amended.html

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BILL NUMBER: SB 161	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 25, 2013

INTRODUCED BY   Senator Hernandez

                        FEBRUARY 1, 2013

   An act to add Article 5 (commencing with Section 10752) to Chapter
8 of Part 2 of Division 2 of the Insurance Code, relating to
insurance.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 161, as amended, Hernandez. Stop-loss insurance coverage.
   Existing law prohibits a person from transacting any class of
insurance business, including health insurance, in this state without
first being an admitted insurer. Under existing law, admission is
secured by procuring a certificate of authority from the Insurance
Commissioner. Existing law prohibits a health insurance policy from
being issued or delivered to any person in this state unless
specified requirements have been met, including that a copy of the
form and premium rates are filed with the commissioner. Under
existing law, if the commissioner notifies the health insurer that
the filed form does not comply with specified requirements, it is
unlawful for that health insurer to issue any health insurance policy
in that form.
   Existing law, with respect to small employer health insurance,
requires  a carrier   an insurer  providing
aggregate or specific stop-loss coverage or any other assumption of
risk with reference to a health benefit plan, as defined, to provide
that the plan meets specified requirements concerning preexisting
condition provisions, waiting or affiliation periods, and late
enrollees.
   Existing law, the federal Patient Protection and Affordable Care
Act (PPACA), commencing January 1, 2014, prohibits a group health
plan and a health insurance issuer offering group or individual
health insurance coverage from imposing any preexisting condition
exclusion with respect to the plan or coverage.
    This bill would  require   prohibit  a
stop-loss  carrier,   insurer,  as defined,
 to offer coverage to all employees and dependents of a
small employer to which it issues a stop-loss insurance policy and
would prohibit the carrier  from excluding any employee or
dependent on the basis of actual or expected health status-related
factors, as specified. Except as specified, the bill would require a
stop-loss  carrier   insurer  to renew, at
the option of the small employer, all stop-loss insurance policies.
The bill would prohibit a stop-loss insurance policy issued on or
after January 1, 2014, to a small employer from containing certain
individual or aggregate attachment points for a policy year or
providing direct coverage, as defined, of an  employee's
health claims   employee or his or her dependent  .
The bill would make a stop-loss  carrier  
insurer  in violation of these provisions subject to
administrative penalties and would  require those fine and
penalty moneys to be deposited in the General Fund and be available
upon appropriation by the Legislature   prohibit the act
from affecting the ongoing operations of multiple employer welfare
arrangements that provide health care benefits to their members on a
self-funded or partially self-funded basis and that comply with small
group health reforms  .
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Article 5 (commencing with Section 10752) is added to
Chapter 8 of Part 2 of Division 2 of the Insurance Code, to read:

      Article 5.  Stop-Loss Insurance


   10752.  As used in this article, the following definitions shall
apply:
   (a) "Attachment point" means the amount of health claims incurred
by a small employer in a policy year for its employees and their
dependents  , and covered by a stop-loss insurance policy, 
above which the stop-loss  carrier   insurer
 incurs a liability for payment.
   (1) "Individual attachment point" means the amount of health
claims incurred by a small employer in a policy year for an
individual employee or dependent of an employee  , and covered by
a stop-loss insurance policy,  above which the stop-loss
 carrier   insurer  incurs a liability for
payment  , under individual stop-loss coverage  . For
purposes of this article, "specific attachment point" has the same
meaning as "individual attachment point."
   (2) "Aggregate attachment point" means the  total  amount
of health claims incurred by a small employer in a policy year for
all covered employees and their dependents  , and covered by a
stop-loss insurance policy,  above which the stop-loss 
carrier   insurer  incurs a liability for payment
 under aggregate stop-loss coverage  .
   (b) "Dependent" means the spouse, registered domestic partner as
described in Section 297 of the Family Code, or child of an employee.

   (c) "Direct coverage" means that an insurance company assumes a
direct obligation to an employee under an insurance policy to pay or
indemnify the employee for health claims incurred by the employee or
the employee's dependents.
   (d) "Expected claims" means  , for the purposes of aggregate
stop-loss coverage,  the total amount of health claims that
 , in the absence of a stop-loss insurance policy or other
insurance, are projected to be incurred by a small employer for its
employees and their dependents.   is projected to be
incurred by a small   employer for its employees and their
dependents in a policy year. 
   (e) "Policy year" means the 12-month period that is designated as
the policy year  or policy period  for the stop-loss
insurance policy. If the stop-loss insurance policy does not
designate a policy year, the policy year is the year in which the
total amount of health claims incurred by a small employer for an
individual employee or dependent of an employee, or the aggregate
amount for all covered employees and their dependents, are added
together for the purposes of determining whether the  amount
of  claims  has   have  exceeded
the attachment point.
   (f) "Small employer" has the same meaning as defined in
subdivision (w) of Section 10700.
   (g) "Stop-loss  carrier"   insurer" 
means an insurance company  or other entity 
providing individual or aggregate stop-loss insurance coverage, 
or both,  or any other assumption of risk, to a small employer
for the health claims  of   it incurs for 
its employees and their dependents  , regardless of the situs
of the contract or master policyholder  .
   (h) "Stop-loss insurance policy" means a policy, contract,
certificate, or statement of coverage between a stop-loss 
carrier   insurer  and small employer providing
individual or aggregate stop-loss insurance coverage,  or both,
 or any other assumption of risk, to a small employer 
for the health claims   for the liability the small
employer incurs related to the covered health claims  of its
employees and their dependents  , regardless of the situs of
the contract or master policyholder  .
   10752.1.  A stop-loss  carrier   insurer
 shall  offer coverage to all employees and dependents
of employees of a small employer to which it issues a stop-loss
insurance policy and shall  not exclude any employee or
dependent on the basis of an actual or expected health status-related
factor. Health status-related factors include, but are not limited
to, any of the following: health status; medical condition, including
both physical and mental illnesses; claims experience; medical
history; receipt of health care; genetic information; disability;
evidence of insurability, including conditions arising out of acts of
domestic violence of the employee or dependent; or any other health
status-related factor as determined by the department.
   10752.2.  A stop-loss  carrier   insurer
 shall renew, at the option of the small employer, all stop-loss
insurance policies written, issued, administered, or renewed on or
after January 1, 2014, and all  small employer  stop-loss
insurance policies in force on or after the  January
1, 2014, except as follows:
   (a) (1) For nonpayment of the required premiums by the small
employer, if the small employer has been duly notified and billed for
the charge and at least a 30-day grace period has elapsed since the
date of notification  or, if longer, the period of time
required for notice and any other requirements pursuant to Section
2703, 2712, or 2742 of the federal Public Health Service Act (42
U.S.C. Sec. 300gg-2, 300gg-12, or 300gg-42) and any subsequent rules
or regulations has elapsed  .
   (2) A stop-loss  carrier   insurer 
shall continue to provide coverage as required by the small employer'
s policy during the grace period described in paragraph (1). 
This section does not affect or impair the small employer's or
carrier's other rights and responsibilities pursuant to the policy.
  Nothing in this section shall be construed to affect
or impair the small employer's or the stop-loss insurer's other
rights and responsibilities pursuant to the policy. 
   (b)  If   Where the stop-loss 
carrier   insurer  demonstrates fraud or an
intentional misrepresentation of material fact by the small employer
under the terms of the stop-loss insurance policy.
   (c)  If   Where  the stop-loss 
carrier   insurer  has been determined by the
commissioner to be financially impaired.
   (d)  If  Where  the stop-loss 
carrier   insurer  ceases to write, issue, or
administer new stop-loss insurance policies in this state; provided,
however, that the following conditions are satisfied:
   (1) Notice of the decision to cease writing, issuing, or
administering new or existing stop-loss insurance policies in this
state is provided to the commissioner, and to the small employer, at
least 180 days prior to the discontinuation of the coverage.
   (2) Stop-loss insurance policies subject to this article shall not
be canceled until 180 days after the date of the notice required
under paragraph (1). During that time, the stop-loss  carrier
  insurer  shall continue to comply with this
article.
   10752.3.  No stop-loss insurance policy issued on or after January
1, 2014, to a small employer shall contain any of the following
provisions:
   (a) An individual attachment point for a policy year that is less
than  ninety-five thousand dollars ($95,000)  
sixty-five thousand dollars ($65,000)  .
   (b) An aggregate attachment point for a policy year that is less
than the greater of one of the following:
   (1)  Nineteen thousand dollars ($19,000)  
Thirteen   thousand dollars ($13,000)  times the total
number of covered employees and dependents.
   (2) One hundred twenty percent of expected claims. 
   (3) Ninety-five thousand dollars ($95,000).  
   (3) Sixty-five thousand dollars ($65,000). 
   (c) A provision for direct coverage of an  employee's
health claims.   employee or dependent of an employee.

   10752.4.  The commissioner may adopt regulations as may be
necessary to carry out the purposes of this article. In adopting
regulations, the commissioner shall comply with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.
   10752.5.  A stop-loss  carrier   insurer
 that violates the provisions of this article is subject to the
remedies and administrative penalties applicable to  carriers
  insurers  in Sections 10718 and 10718.5.
 All fine and penalty moneys received pursuant to this
section shall be deposited in the General Fund and shall be available
for expenditure by the commissioner upon appropriation by the
Legislature.  
   10752.6.  Nothing in this article shall affect the ongoing
operations of 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 on a self-funded or partially self-funded basis and that
comply with small group health reforms. 
    10752.6.   10752.7.    The provisions
of this article are severable. If any provision of this article or
its application is held invalid, that invalidity shall not affect
other provisions or applications that can be given effect without the
invalid provision or application.