Bill Text: CA SB959 | 2013-2014 | Regular Session | Chaptered
Bill Title: Health care coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-09-25 - Chaptered by Secretary of State. Chapter 572, Statutes of 2014. [SB959 Detail]
Download: California-2013-SB959-Chaptered.html
BILL NUMBER: SB 959 CHAPTERED
BILL TEXT
CHAPTER 572
FILED WITH SECRETARY OF STATE SEPTEMBER 25, 2014
APPROVED BY GOVERNOR SEPTEMBER 25, 2014
PASSED THE SENATE AUGUST 22, 2014
PASSED THE ASSEMBLY AUGUST 21, 2014
AMENDED IN ASSEMBLY AUGUST 4, 2014
AMENDED IN ASSEMBLY JUNE 10, 2014
AMENDED IN SENATE MARCH 17, 2014
INTRODUCED BY Senator Hernandez
FEBRUARY 6, 2014
An act to amend Section 100503 of the Government Code, to amend
Sections 1357.500, 1357.503, 1366.6, 1367.005, 1367.006, 1374.21,
1385.03, 1385.11, 1389.25, and 1399.849 of the Health and Safety
Code, and to amend Sections 10112.27, 10112.28, 10112.3, 10113.9,
10181.3, 10181.11, 10199.1, 10753.05, and 10965.3 of the Insurance
Code, relating to health care coverage.
LEGISLATIVE COUNSEL'S DIGEST
SB 959, Hernandez. Health care coverage.
(1) 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 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 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 group market plans and to also consider as a
single risk pool the claims experience of all enrollees and insureds
in its nongrandfathered individual market plans. 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 require that the index rate also be adjusted based
on Exchange user fees, as specified under PPACA.
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 bronze levels of
coverage.
This bill would define the term "health benefit plan" for purposes
of the provisions governing nongrandfathered small employer health
care service plans. The 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.
(2) 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.
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.
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. Existing law also requires the plan or insurer to inform the
applicant about specified high risk pools, including the California
Major Risk Medical Insurance Program, and specifies that this
requirement does not apply when a plan or insurer rejects an
applicant for Medicare supplement coverage.
This bill would delete the requirement that the plan or insurer
provide the applicant with the reason for the denial or higher than
standard rate. The bill would require a plan or insurer to inform
specified applicants for a grandfathered health plan who are denied
or charged a higher than standard rate, and applicants for Medicare
supplement coverage who are denied due to a specified condition,
about the California Major Risk Medical Insurance Program and the
Exchange, as specified.
(3) 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 departments to include no more than 9 regions.
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 the geographic
regions correspond with those regions used by the plan to establish
premium rates.
(4) This bill would incorporate additional changes to Section
10753.05 of the Insurance Code proposed by SB 1034 that would become
operative if this bill and SB 1034 are both enacted and this bill is
enacted last.
(5) 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.
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 100503 of the Government Code, as amended by
Section 4 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read:
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, 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.
(e) Require, as a condition of participation in the individual
market of the Exchange, carriers to fairly and affirmatively offer,
market, and sell in the individual market of 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 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. The board may require carriers to offer additional products
within each of those 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.
SEC. 2. Section 100503 of the Government Code, as added by Section
5 of Chapter 5 of the First Extraordinary Session of the Statutes of
2013, is amended to read:
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, 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.
(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 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. The board may require carriers to offer additional
products within each of those 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.
SEC. 3. Section 1357.500 of the Health and Safety Code is amended
to read:
1357.500. As used in this
article, the following definitions shall apply:
(a) "Child" means a child described in Section 22775 of the
Government Code and subdivisions (n) to (p), inclusive, of Section
599.500 of Title 2 of the California Code of Regulations.
(b) "Dependent" means the spouse or registered domestic partner,
or child, of an eligible employee, subject to applicable terms of the
health care service plan contract covering the employee, and
includes dependents of guaranteed association members if the
association elects to include dependents under its health coverage at
the same time it determines its membership composition pursuant to
subdivision (m).
(c) "Eligible employee" means either of the following:
(1) Any permanent employee who is actively engaged on a full-time
basis in the conduct of the business of the small employer with a
normal workweek of an average of 30 hours per week over the course of
a month, at the small employer's regular places of business, who has
met any statutorily authorized applicable waiting period
requirements. The term includes sole proprietors or partners of a
partnership, if they are actively engaged on a full-time basis in the
small employer's business and included as employees under a health
care service plan contract of a small employer, but does not include
employees who work on a part-time, temporary, or substitute basis. It
includes any eligible employee, as defined in this paragraph, who
obtains coverage through a guaranteed association. Employees of
employers purchasing through a guaranteed association shall be deemed
to be eligible employees if they would otherwise meet the definition
except for the number of persons employed by the employer. Permanent
employees who work at least 20 hours but not more than 29 hours are
deemed to be eligible employees if all four of the following apply:
(A) They otherwise meet the definition of an eligible employee
except for the number of hours worked.
(B) The employer offers the employees health coverage under a
health benefit plan.
(C) All similarly situated individuals are offered coverage under
the health benefit plan.
(D) The employee must have worked at least 20 hours per normal
workweek for at least 50 percent of the weeks in the previous
calendar quarter. The health care service plan may request any
necessary information to document the hours and time period in
question, including, but not limited to, payroll records and employee
wage and tax filings.
(2) Any member of a guaranteed association as defined in
subdivision (m).
(d) "Exchange" means the California Health Benefit Exchange
created by Section 100500 of the Government Code.
(e) "In force business" means an existing health benefit plan
contract issued by the plan to a small employer.
(f) "Late enrollee" means an eligible employee or dependent who
has declined enrollment in a health benefit plan offered by a small
employer at the time of the initial enrollment period provided under
the terms of the health benefit plan consistent with the periods
provided pursuant to Section 1357.503 and who subsequently requests
enrollment in a health benefit plan of that small employer, except
where the employee or dependent qualifies for a special enrollment
period provided pursuant to Section 1357.503. It also means any
member of an association that is a guaranteed association as well as
any other person eligible to purchase through the guaranteed
association when that person has failed to purchase coverage during
the initial enrollment period provided under the terms of the
guaranteed association's plan contract consistent with the periods
provided pursuant to Section 1357.503 and who subsequently requests
enrollment in the plan, except where that member or person qualifies
for a special enrollment period provided pursuant to Section
1357.503.
(g) "New business" means a health care service plan contract
issued to a small employer that is not the plan's in force business.
(h) "Preexisting condition provision" means a contract provision
that excludes coverage for charges or expenses incurred during a
specified period following the enrollee's effective date of coverage,
as to a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during a specified period
immediately preceding the effective date of coverage. No health care
service plan shall limit or exclude coverage for any individual based
on a preexisting condition whether or not any medical advice,
diagnosis, care, or treatment was recommended or received before that
date.
(i) "Creditable coverage" means:
(1) Any individual or group policy, contract, or program that is
written or administered by a disability insurer, health care service
plan, fraternal benefits society, self-insured employer plan, or any
other entity, in this state or elsewhere, and that arranges or
provides medical, hospital, and surgical coverage not designed to
supplement other private or governmental plans. The term includes
continuation or conversion coverage but does not include accident
only, credit, coverage for onsite medical clinics, disability income,
Medicare supplement, long-term care, dental, vision, coverage issued
as a supplement to liability insurance, insurance arising out of a
workers' compensation or similar law, automobile medical payment
insurance, or insurance under which benefits are payable with or
without regard to fault and that is statutorily required to be
contained in any liability insurance policy or equivalent
self-insurance.
(2) The Medicare program pursuant to Title XVIII of the federal
Social Security Act (42 U.S.C. Sec. 1395 et seq.).
(3) The Medicaid Program pursuant to Title XIX of the federal
Social Security Act (42 U.S.C. Sec. 1396 et seq.).
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C. Chapter 55 (commencing with Section 1071) (Civilian
Health and Medical Program of the Uniformed Services (CHAMPUS)).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A health plan offered under 5 U.S.C. Chapter 89 (commencing
with Section 8901) (Federal Employees Health Benefits Program
(FEHBP)).
(8) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(I) of the Public Health Service Act,
as amended by Public Law 104-191, the Health Insurance Portability
and Accountability Act of 1996.
(9) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C. Sec. 2504(e)).
(10) Any other creditable coverage as defined by subsection (c) of
Section 2704 of Title XXVII of the federal Public Health Service Act
(42 U.S.C. Sec. 300gg-3(c)).
(j) "Rating period" means the period for which premium rates
established by a plan are in effect and shall be no less than 12
months from the date of issuance or renewal of the plan contract.
(k) (1) "Small employer" means any of the following:
(A) For plan years commencing on or after January 1, 2014, and on
or before December 31, 2015, any person, firm, proprietary or
nonprofit corporation, partnership, public agency, or association
that is actively engaged in business or service, that, on at least 50
percent of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 50,
eligible employees, the majority of whom were employed within this
state, that was not formed primarily for purposes of buying health
care service plan contracts, and in which a bona fide
employer-employee relationship exists. For plan years commencing on
or after January 1, 2016, any person, firm, proprietary or nonprofit
corporation, partnership, public agency, or association that is
actively engaged in business or service, that, on at least 50 percent
of its working days during the preceding calendar quarter or
preceding calendar year, employed at least one, but no more than 100,
eligible employees, the majority of whom were employed within this
state, that was not formed primarily for purposes of buying health
care service plan contracts, and in which a bona fide
employer-employee relationship exists. In determining whether to
apply the calendar quarter or calendar year test, a health care
service plan shall use the test that ensures eligibility if only one
test would establish eligibility. In determining the number of
eligible employees, companies that are affiliated companies and that
are eligible to file a combined tax return for purposes of state
taxation shall be considered one employer. Subsequent to the issuance
of a health care service plan contract to a small employer pursuant
to this article, and for the purpose of determining eligibility, the
size of a small employer shall be determined annually. Except as
otherwise specifically provided in this article, provisions of this
article that apply to a small employer shall continue to apply until
the plan contract anniversary following the date the employer no
longer meets the requirements of this definition. It includes any
small employer as defined in this paragraph who purchases coverage
through a guaranteed association, and any employer purchasing
coverage for employees through a guaranteed association. This
subparagraph shall be implemented to the extent consistent with
PPACA, except that the minimum requirement of one employee shall be
implemented only to the extent required by PPACA.
(B) Any guaranteed association, as defined in subdivision (l),
that purchases health coverage for members of the association.
(2) For plan years commencing on or after January 1, 2014, the
definition of an employer, for purposes of determining whether an
employer with one employee shall include sole proprietors, certain
owners of "S" corporations, or other individuals, shall be consistent
with Section 1304 of PPACA.
(l) "Guaranteed association" means 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 employer meeting its
membership criteria, and that (1) includes one or more small
employers as defined in subparagraph (A) of paragraph (1) of
subdivision (k), (2) does not condition membership directly or
indirectly on the health or claims history of any person, (3) 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 to the association, (4) is organized and maintained in good
faith for purposes unrelated to insurance, (5) has been in active
existence on January 1, 1992, and for at least five years prior to
that date, (6) has included health insurance as a membership benefit
for at least five years prior to January 1, 1992, (7) has a
constitution and bylaws, or other analogous governing documents that
provide for election of the governing board of the association by its
members, (8) offers any plan contract that is purchased to all
individual members and employer members in this state, (9) includes
any member choosing to enroll in the plan contracts offered to the
association provided that the member has agreed to make the required
premium payments, and (10) covers at least 1,000 persons with the
health care service plan with which it contracts. The requirement of
1,000 persons may be met if component chapters of a statewide
association contracting separately with the same carrier cover at
least 1,000 persons in the aggregate.
This subdivision applies regardless of whether a contract issued
by a plan is with an association, or a trust formed for or sponsored
by an association, to administer benefits for association members.
For purposes of this subdivision, an association formed by a
merger of two or more associations after January 1, 1992, and
otherwise meeting the criteria of this subdivision shall be deemed to
have been in active existence on January 1, 1992, if its predecessor
organizations had been in active existence on January 1, 1992, and
for at least five years prior to that date and otherwise met the
criteria of this subdivision.
(m) "Members of a guaranteed association" means any individual or
employer meeting the association's membership criteria if that person
is a member of the association and chooses to purchase health
coverage through the association. At the association's discretion, it
also may include employees of association members, association
staff, retired members, retired employees of members, and surviving
spouses and dependents of deceased members. However, if an
association chooses to include these persons as members of the
guaranteed association, the association shall make that election in
advance of purchasing a plan contract. Health care service plans may
require an association to adhere to the membership composition it
selects for up to 12 months.
(n) "Affiliation period" means a period that, under the terms of
the health care service plan contract, must expire before health care
services under the contract become effective.
(o) "Grandfathered health plan" has the meaning set forth in
Section 1251 of PPACA.
(p) "Nongrandfathered small employer health care service plan
contract" means a small employer health care service plan contract
that is not a grandfathered health plan.
(q) "Plan year" has the meaning set forth in Section 144.103 of
Title 45 of the Code of Federal Regulations.
(r) "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.
(s) "Small employer health care service plan contract" means a
health care service plan contract issued to a small employer.
(t) "Waiting period" means a period that is required to pass with
respect to an employee before the employee is eligible to be covered
for benefits under the terms of the contract.
(u) "Registered domestic partner" means a person who has
established a domestic partnership as described in Section 297 of the
Family Code.
(v) "Family" means the subscriber and his or her dependent or
dependents.
(w) "Health benefit plan" means a health care service plan
contract that provides medical, hospital, and surgical benefits for
the covered eligible employees of a small employer and their
dependents. The term does not include coverage of Medicare services
pursuant to contracts with the United States government, Medicare
supplement coverage, or coverage under a specialized health care
service plan contract.
SEC. 4. 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 benefit plans offered by the health care service plan in this
state, whether offered as health care service plan contracts or
health insurance policies, including those insureds and enrollees who
enroll in coverage through the Exchange and insureds and enrollees
covered by the health care service plan 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 nongrandfathered
small employer health benefit plans within the single risk pool
required under paragraph (1) shall use the applicable marketwide
adjusted index rate, 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.
SEC. 5. Section 1366.6 of the Health and Safety Code, as amended
by Section 8 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read:
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 1357.500.
(b) (1) Health care service plans participating in the individual
market of the Exchange shall fairly and affirmatively offer, market,
and sell in the individual market of 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. 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.
(2) The board established under Section 100500 of the Government
Code may require plans to sell additional products within each of the
levels of coverage identified in paragraph (1).
(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) (1) Commencing January 1, 2014, a health care service plan
shall, with respect to individual 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 individual plan contracts
that cover hospital, medical, or surgical benefits, only sell the
four levels of coverage contained in subsection (d) of Section 1302
of the federal act.
(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.
(e) Commencing January 1, 2014, a health care service plan that
does not participate in the Exchange shall, with respect to
individual or small employer 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 subsection (d) of Section 1302 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.
SEC. 6. Section 1366.6 of the Health and Safety Code, as added by
Section 9 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read:
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 1357.500.
(b) (1) Health care service plans participating in the individual
market of the Exchange shall fairly and affirmatively offer, market,
and sell in the individual market of 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. 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.
(2) The board established under Section 100500 of the Government
Code may require plans to sell additional products within each of the
levels of coverage identified in paragraph (1).
(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.
(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) (1) Commencing January 1, 2014, a health care service plan
shall, with respect to individual 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 individual plan contracts
that cover hospital, medical, or surgical benefits, only sell the
four levels of coverage contained in subsection (d) of Section 1302
of the federal act.
(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.
(e) Commencing January 1, 2014, a health care service plan that
does not participate in the Exchange shall, with respect to
individual or small employer 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 subdivision (d) of Section 1302 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.
SEC. 7. Section 1367.005 of the Health and Safety Code is amended
to read:
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 1357.500.
SEC. 8. 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.
(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.
SEC. 9. Section 1374.21 of the Health and Safety Code is amended
to read:
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 shall,
at the time of the denial of coverage, provide the applicant with the
specific reason or reasons for the decision in writing, in clear,
easily understandable language.
SEC. 10. Section 1385.03 of the Health and Safety Code is amended
to read:
1385.03. (a) 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.
(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 increase initially requested.
(14) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(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
increases in specific benefit categories in the geographic regions
listed in Sections 1357.512 and 1399.855. 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 increase 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.
SEC. 11. Section 1385.11 of the Health and Safety Code is amended
to read:
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 increase 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 changes
submitted by the plan to the proposed rate increase, including any
documentation submitted by the plan supporting those changes.
(f) If the director makes a decision that an unreasonable rate
increase is not justified or that a rate filing contains inaccurate
information, the department shall post that decision 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.
SEC. 12. Section 1389.25 of the Health and Safety Code is amended
to read:
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.
(b) (1) 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 15 days prior to
the start of the annual enrollment period applicable to the contract
or 60 days prior to the effective date of the contract renewal,
whichever occurs earlier in the calendar year.
(2) The written notice required pursuant to paragraph (1) shall be
delivered to the individual contractholder at his or her last
address known to the plan. 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.
(c) If a plan rejects a dependent of a subscriber applying to be
added to the subscriber's individual grandfathered health plan,
rejects an applicant for a Medicare supplement plan contract due to
the applicant having end-stage renal disease, or offers an individual
grandfathered health plan to an applicant at a rate that is higher
than the standard rate, the plan shall inform the applicant about the
California Major Risk Medical Insurance Program (MRMIP) (Part 6.5
(commencing with Section 12700) of Division 2 of the Insurance Code)
and about the new coverage options, and the potential for subsidized
coverage, through Covered California. The plan shall direct persons
seeking more information to MRMIP, Covered California, plan or policy
representatives, insurance agents, or an entity paid by Covered
California to assist with health coverage enrollment, such as a
navigator or an assister.
(d) 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.
(e) For purposes of this section, the following definitions shall
apply:
(1) "Covered California" means the California Health Benefit
Exchange established pursuant to Section 100500 of the Government
Code.
(2) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(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 pursuant to that law.
SEC. 13. 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, annual 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, an annual
enrollment period for the policy year beginning on January 1, 2015,
from November 15, 2014, to February 15, 2015, inclusive, and annual
enrollment periods for policy years beginning on or after January 1,
2016, 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 also 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 of
this code 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 insureds and all enrollees in all nongrandfathered
individual health benefit plans offered by that health care service
plan in this state, whether offered as health care service plan
contracts or individual health insurance policies, 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 health benefit plans in the individual market
within the single risk pool required under paragraph (1) shall use
the applicable marketwide adjusted index rate, 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 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. 300gg-91), subdivisions
(a), (b), and (g) shall become inoperative 12 months after that
repeal or amendment.
SEC. 14. Section 10112.27 of the Insurance Code is amended to
read:
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
insurance policy issued to a small employer, as defined in Section
10753.
SEC. 15. 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.
(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) 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.
SEC. 16. Section 10112.3 of the Insurance Code, as amended by
Section 11 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read:
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 10753.
(b) (1) Health insurers participating in the individual market of
the Exchange shall fairly and affirmatively offer, market, and sell
in the individual market of 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. 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.
(2) The board established under Section 100500 of the Government
Code may require insurers to sell additional products within each of
the levels of coverage identified in paragraph (1).
(3) This 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) (1) Commencing January 1, 2014, a health insurer shall, with
respect to individual policies 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 insurer that does not participate in the Exchange
shall, with respect to individual policies that cover hospital,
medical, or surgical benefits, only sell the four levels of coverage
contained in subsection (d) of Section 1302 of the federal act.
(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.
(e) Commencing January 1, 2014, a health insurer that does not
participate in the Exchange shall, with respect to individual or
small employer 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 subsection (d) of Section 1302 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.
SEC. 17. Section 10112.3 of the Insurance Code, as added by
Section 12 of Chapter 5 of the First Extraordinary Session of the
Statutes of 2013, is amended to read:
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 10753.
(b) (1) Health insurers participating in the individual market of
the Exchange shall fairly and affirmatively offer, market, and sell
in the individual market of 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. 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.
(2) The board established under Section 100500 of the Government
Code may require insurers to sell additional products within each of
the levels of coverage identified in paragraph (1).
(3) This 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) (1) Commencing January 1, 2014, a health insurer shall, with
respect to individual policies 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 insurer that does not participate in the Exchange
shall, with respect to individual policies that cover hospital,
medical, or surgical benefits, only sell the four levels of coverage
contained in subsection (d) of Section 1302 of the federal act.
(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.
(e) Commencing January 1, 2014, a health insurer that does not
participate in the Exchange shall, with respect to individual or
small employer 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 subsection (d) of Section 1302 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.
SEC. 18. Section 10113.9 of the Insurance Code is amended to read:
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.
(b) (1) 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 15 days
prior to the start of the annual enrollment period applicable to the
policy or 60 days prior to the effective date of the policy renewal,
whichever occurs earlier in the calendar year.
(2) The written notice required pursuant to paragraph (1) shall be
delivered to the individual policyholder at his or her last address
known to the insurer. 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.
(c) If an insurer rejects a dependent of a policyholder applying
to be added to the policyholder's individual grandfathered health
plan, rejects an applicant for a Medicare supplement policy due to
the applicant having end-stage renal disease, or offers an individual
grandfathered health plan to an applicant at a rate that is higher
than the standard rate, the insurer shall inform the applicant about
the California Major Risk Medical Insurance Program (MRMIP) (Part 6.5
(commencing with Section 12700) of Division 2) and about the new
coverage options, and the potential for subsidized coverage, through
Covered California. The insurer shall direct persons seeking more
information to MRMIP, Covered California, plan or policy
representatives, insurance agents, or an entity paid by Covered
California to assist with health coverage enrollment, such as a
navigator or an assister.
(d) 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.
(e) For purposes of this section, the following definitions shall
apply:
(1) "Covered California" means the California Health Benefit
Exchange established pursuant to Section 100500 of the Government
Code.
(2) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(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 pursuant to that law.
SEC. 19. Section 10181.3 of the Insurance Code is amended to read:
10181.3. (a) 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.
(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 increase initially requested.
(14) Review category: initial filing for new product, filing for
existing product, or resubmission.
(15) Average rate of increase.
(16) Effective date of rate increase.
(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 increases in specific benefit categories in the
geographic regions listed in Sections 10753.14 and 10965.9. 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 increase 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.
SEC. 20. Section 10181.11 of the Insurance Code is amended to
read:
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 increase 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 changes
submitted by the insurer to the proposed rate increase, including
any documentation submitted by the insurer supporting those changes.
(f) If the commissioner makes a decision that an unreasonable rate
increase is not justified or that a rate filing contains inaccurate
information, the department shall post that decision 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.
SEC. 21. Section 10199.1 of the Insurance Code is amended to read:
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 shall, at the time
of the denial of coverage, provide the applicant with the specific
reason or reasons for the decision in writing, in clear, easily
understandable language.
SEC. 22. 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, or sell a benefit plan design to those who
are not members of the association. However, if the association
markets, offers, 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, or sell any other individual, selected group, or group
policy or contract providing medical, hospital, 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, or sells any benefit plan design or any other individual,
selected group, or group policy or contract providing medical,
hospital, 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, 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, whether offered as health care
service plan contracts or health insurance policies, including those
insureds and enrollees who enroll in coverage through the Exchange
and insureds and enrollees covered by the carrier 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 nongrandfathered health benefit plans within the
single risk pool required under paragraph (1) shall use the
applicable marketwide adjusted index rate, 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.
SEC. 22.5. 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, or sell a benefit plan design to those who
are not members of the association. However, if the association
markets, offers, 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, or sell any other individual, selected group, or group
policy or contract providing medical, hospital, 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, or sells any benefit plan design or any other individual,
selected group, or group policy or contract providing medical,
hospital, 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 (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.
(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,
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, 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, whether offered as health care
service plan contracts or health insurance policies, including those
insureds and enrollees who enroll in coverage through the Exchange
and insureds and enrollees covered by the carrier 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 nongrandfathered health benefit plans within the
single risk pool required under paragraph (1) shall use the
applicable marketwide adjusted index rate, 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.
SEC. 23. 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, annual 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, an annual
enrollment period for the policy year beginning on January 1, 2015,
from November 15, 2014, to February 15, 2015, inclusive, and annual
enrollment periods for policy years beginning on or after January 1,
2016, 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 health insurer shall also 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, both of 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 of
this code 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 and enrollees in all nongrandfathered individual health
benefit plans offered by that insurer in this state, whether offered
as health care service plan contracts or individual health insurance
policies, including those insureds and enrollees who enroll in
individual coverage through the Exchange and insureds and enrollees
who enroll in individual coverage outside the Exchange. Student
health insurance coverage, as such coverage is defined in 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 health benefit plans in the individual market
within the single risk pool required under paragraph (1) shall use
the applicable marketwide adjusted index rate, 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 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. 300gg-91), 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.
SEC. 24. Section 22.5 of this bill incorporates amendments to
Section 10753.05 of the Insurance Code proposed by both this bill and
SB 1034. It shall only become operative if (1) both bills are
enacted and become effective on or before January 1, 2015, (2) each
bill amends Section 10753.05 of the Insurance Code, and (3) this bill
is enacted after SB 1034, in which case Section 22 of this bill
shall not become operative.
SEC. 25. 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.
