Bill Text: CA SB161 | 2013-2014 | Regular Session | Chaptered
Bill Title: Stop-loss insurance coverage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-10-01 - Chaptered by Secretary of State. Chapter 443, Statutes of 2013. [SB161 Detail]
Download: California-2013-SB161-Chaptered.html
BILL NUMBER: SB 161 CHAPTERED
BILL TEXT
CHAPTER 443
FILED WITH SECRETARY OF STATE OCTOBER 1, 2013
APPROVED BY GOVERNOR OCTOBER 1, 2013
PASSED THE SENATE AUGUST 30, 2013
PASSED THE ASSEMBLY AUGUST 26, 2013
AMENDED IN ASSEMBLY AUGUST 6, 2013
AMENDED IN ASSEMBLY JUNE 25, 2013
AMENDED IN SENATE MAY 28, 2013
AMENDED IN SENATE APRIL 25, 2013
INTRODUCED BY Senator Hernandez
FEBRUARY 1, 2013
An act to add Article 5 (commencing with Section 10752) to Chapter
8 of Part 2 of Division 2 of the Insurance Code, relating to
insurance.
LEGISLATIVE COUNSEL'S DIGEST
SB 161, Hernandez. Stop-loss insurance coverage.
Existing law prohibits a person from transacting any class of
insurance business, including health insurance, in this state without
first being an admitted insurer. Under existing law, admission is
secured by procuring a certificate of authority from the Insurance
Commissioner. Existing law prohibits a health insurance policy from
being issued or delivered to any person in this state unless
specified requirements have been met, including that a copy of the
form and premium rates are filed with the commissioner. Under
existing law, if the commissioner notifies the health insurer that
the filed form does not comply with specified requirements, it is
unlawful for that health insurer to issue any health insurance policy
in that form.
Existing law, with respect to small employer health insurance,
requires an insurer providing aggregate or specific stop-loss
coverage or any other assumption of risk with reference to a health
benefit plan, as defined, to provide that the plan meets specified
requirements concerning preexisting condition provisions, waiting or
affiliation periods, and late enrollees.
Existing law, the federal Patient Protection and Affordable Care
Act (PPACA), commencing January 1, 2014, prohibits a group health
plan and a health insurance issuer offering group or individual
health insurance coverage from imposing any preexisting condition
exclusion with respect to the plan or coverage.
This bill would prohibit a stop-loss insurer, as defined, from
excluding any employee or dependent on the basis of actual or
expected health status-related factors, as specified. Except as
specified, the bill would require a stop-loss insurer to renew, at
the option of the small employer, all stop-loss insurance policies.
The bill would prohibit a stop-loss insurance policy issued,
reissued, or renewed on or after January 1, 2014, and prior to
January 1, 2016, except as provided, to a small employer from
containing certain individual or aggregate attachment points for a
policy year or providing direct coverage, as defined, of an employee
or his or her dependent. The bill would require a stop-loss insurer
to report to the Department of Insurance, on April 1, 2014, and
annually thereafter, the number of small employer stop-loss policies
it had issued and in effect in the previous year, as specified. The
bill would make a stop-loss insurer in violation of these provisions
subject to administrative penalties and would prohibit the act from
affecting the ongoing operations of multiple employer welfare
arrangements that provide health care benefits to their members on a
self-funded or partially self-funded basis and that comply with small
group health reforms.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Article 5 (commencing with Section 10752) is added to
Chapter 8 of Part 2 of Division 2 of the Insurance Code, to read:
Article 5. Stop-Loss Insurance
10752. As used in this article, the following definitions shall
apply:
(a) "Attachment point" means the amount of health claims incurred
by a small employer in a policy year for its employees and their
dependents, and covered by a stop-loss insurance policy, above which
the stop-loss insurer incurs a liability for payment.
(1) "Individual attachment point" means the amount of health
claims incurred by a small employer in a policy year for an
individual employee or dependent of an employee, and covered by a
stop-loss insurance policy, above which the stop-loss insurer incurs
a liability for payment, under individual stop-loss coverage. For
purposes of this article, "specific attachment point" has the same
meaning as "individual attachment point."
(2) "Aggregate attachment point" means the total amount of health
claims incurred by a small employer in a policy year for all covered
employees and their dependents, and covered by a stop-loss insurance
policy, above which the stop-loss insurer incurs a liability for
payment under aggregate stop-loss coverage.
(b) "Dependent" means the spouse, registered domestic partner as
described in Section 297 of the Family Code, or child of an employee.
(c) "Direct coverage" means that an insurance company assumes a
direct obligation to an employee under an insurance policy to pay or
indemnify the employee for health claims incurred by the employee or
the employee's dependents.
(d) "Expected claims" means, for the purposes of aggregate
stop-loss coverage, the total amount of health claims that is
projected to be incurred by a small employer for its employees and
their dependents in a policy year.
(e) "Policy year" means the 12-month period that is designated as
the policy year or policy period for the stop-loss insurance policy.
If the stop-loss insurance policy does not designate a policy year,
the policy year is the year in which the total amount of health
claims incurred by a small employer for an individual employee or
dependent of an employee, or the aggregate amount for all covered
employees and their dependents, are added together for the purposes
of determining whether the claims have exceeded the attachment point.
(f) "Small employer" has the same meaning as defined in
subdivision (q) of Section 10753.
(g) "Stop-loss insurer" means an insurance company providing
individual or aggregate stop-loss insurance coverage, or both, or any
other assumption of risk, to a small employer for the health claims
it incurs for its employees and their dependents.
(h) "Stop-loss insurance policy" means a policy, contract,
certificate, or statement of coverage between a stop-loss insurer and
small employer providing individual or aggregate stop-loss insurance
coverage, or both, or any other assumption of risk, to a small
employer for the liability the small employer incurs related to the
covered health claims of its employees and their dependents.
10752.1. A stop-loss insurer shall not exclude any employee or
dependent on the basis of an actual or expected health status-related
factor. Health status-related factors include, but are not limited
to, any of the following: health status; medical condition, including
both physical and mental illnesses; claims experience; medical
history; receipt of health care; genetic information; disability;
evidence of insurability, including conditions arising out of acts of
domestic violence of the employee or dependent; or any other health
status-related factor as determined by the department.
10752.2. A stop-loss insurer shall renew, at the option of the
small employer, all stop-loss insurance policies written, issued,
administered, or renewed on or after January 1, 2014, and all small
employer stop-loss insurance policies in force on or after January 1,
2014, except as follows:
(a) (1) For nonpayment of the required premiums by the small
employer, if the small employer has been duly notified and billed for
the charge and at least a 30-day grace period has elapsed since the
date of notification.
(2) A stop-loss insurer shall continue to provide coverage as
required by the small employer's policy during the grace period
described in paragraph (1). Nothing in this section shall be
construed to affect or impair the small employer's or the stop-loss
insurer's other rights and responsibilities pursuant to the policy.
(b) Where the stop-loss insurer demonstrates fraud or an
intentional misrepresentation of material fact by the small employer
under the terms of the stop-loss insurance policy.
(c) Where the stop-loss insurer has been determined by the
commissioner to be financially impaired.
(d) Where the stop-loss insurer ceases to write, issue, or
administer new stop-loss insurance policies in this state; provided,
however, that the following conditions are satisfied:
(1) Notice of the decision to cease writing, issuing, or
administering new or existing stop-loss insurance policies in this
state is provided to the commissioner, and to the small employer, at
least 180 days prior to the discontinuation of the coverage.
(2) Stop-loss insurance policies subject to this article shall not
be canceled until 180 days after the date of the notice required
under paragraph (1). During that time, the stop-loss insurer shall
continue to comply with this article.
10752.3. A stop-loss insurance policy issued, reissued, or
renewed on or after January 1, 2014, and prior to January 1, 2016, to
a small employer shall not contain any of the following provisions:
(a) An individual attachment point for a policy year that is less
than thirty-five thousand dollars ($35,000).
(b) An aggregate attachment point for a policy year that is less
than the greater of one of the following:
(1) Five thousand dollars ($5,000) times the total number of group
members.
(2) One hundred twenty percent of expected claims.
(3) Thirty-five thousand dollars ($35,000).
(c) A provision for direct coverage of an employee or dependent of
an employee.
10752.4. A stop-loss insurance policy issued, reissued, or
renewed on or after January 1, 2016, to a small employer shall not
contain any of the following provisions:
(a) An individual attachment point for a policy year that is less
than forty thousand dollars ($40,000).
(b) An aggregate attachment point for a policy year that is less
than the greater of one of the following:
(1) Five thousand dollars ($5,000) times the total number of group
members.
(2) One hundred twenty percent of expected claims.
(3) Forty thousand dollars ($40,000).
(c) A provision for direct coverage of an employee or dependent of
an employee.
10752.43. Sections 10752.3 and 10752.4 do not apply to a
stop-loss insurance policy provided to a small employer that was in
effect prior to September 1, 2013. A stop-loss insurance policy that
was in effect prior to September 1, 2013, may be renewed or reissued,
or a stop-loss insurance policy may be issued by another stop-loss
insurer to maintain continuity of stop-loss coverage for a small
employer who had a stop-loss insurance policy in effect prior to
September 1, 2013, provided that a stop-loss policy issued to
maintain continuity of coverage shall have attachment points that are
the same as or higher than the attachment points that were in place
in the policy held by the small employer prior to September 1, 2013.
10752.46. On April 1, 2014, and on April 1 annually thereafter, a
stop-loss insurer shall report to the Department of Insurance the
number of small employer stop-loss policies it had issued and in
effect as of December 31 of the previous year. The information shall
include new policies issued and policies reissued or renewed in the
previous year for groups that have 1 to 50 employees and 51 to 100
employees.
10752.5. The commissioner may adopt regulations as may be
necessary to carry out the purposes of this article. In adopting
regulations, the commissioner shall comply with Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code.
10752.6. A stop-loss insurer that violates the provisions of this
article is subject to the remedies and administrative penalties
applicable to insurers in Sections 10718 and 10718.5.
10752.7. Nothing in this article shall affect the ongoing
operations of multiple employer welfare arrangements regulated
pursuant to Article 4.7 (commencing with Section 742.20) of Chapter 1
of Part 2 of Division 1 that provide health care benefits to their
members on a self-funded or partially self-funded basis and that
comply with small group health reforms.
10752.8. The provisions of this article are severable. If any
provision of this article or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.
