Bill Text: CA SB908 | 2015-2016 | Regular Session | Introduced

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

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Bill Title: Health care coverage: premium rate change: notice: other health coverage.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2016-09-23 - Chaptered by Secretary of State. Chapter 498, Statutes of 2016. [SB908 Detail]

Download: California-2015-SB908-Introduced.html

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BILL NUMBER: SB 908	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Hernandez

                        JANUARY 26, 2016

   An act to amend Sections 1374.21 and 1389.25 of the Health and
Safety Code, and to amend Sections 10113.9 and 10199.1 of the
Insurance Code, relating to health care coverage.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 908, as introduced, Hernandez. Health care coverage: premium
rate change: notice: other health coverage.
   Existing law, the Knox-Keene Health Care Service Plan Act of 1975,
provides for the licensure and regulation of health care service
plans by the Department of Managed Health Care, and makes a willful
violation of its provisions a crime. Existing law provides for the
licensure and regulation of health insurers by the Department of
Insurance.
   Existing law prohibits, among other things, a change in premium
rates for group health care service plan contracts and group health
insurance policies from becoming effective unless a written notice is
delivered as specified.
   This bill would require that if the Department of Managed Health
Care or the Department of Insurance determines that a group rate is
unreasonable or not justified, the contractholder or policyholder
would be notified by the health care service plan or health insurer
in writing of the determination, and the contractholder or
policyholder would be given 60 days to obtain health coverage from
the existing coverage provider or another provider. During the 60-day
period the contractholder or policyholder would continue to be
covered at the prior rate. The bill also would exempt these
circumstances from the requirement that an enrollment in or change of
health care service plan contract or health insurance policy be made
during an open, annual, or special enrollment period.
   Existing law prohibits, among other things, a change in premium
rates for individual health care service plan contracts and
individual health insurance policies from becoming effective unless a
written notice is delivered as specified. Existing law, subject to
certain provisions, requires a health care service plan or health
insurer to allow an individual to enroll in or change individual
health benefit plans as a result of specified triggering events for
the purposes of a special enrollment period.
   This bill would require that if the Department of Managed Health
Care or the Department of Insurance determines that an individual
rate is unreasonable or not justified, the contractholder or
policyholder would be notified by the health care service plan or
health insurer in writing of the determination, and the
contractholder or policyholder would be given 60 days to obtain
coverage from the existing coverage provider or another provider.
During the 60-day period the contractholder or policyholder would
continue to be covered at the prior rate.
   This bill would also revise obsolete references and make other
technical, nonsubstantive changes.
   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.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


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

  SECTION 1.  Section 1374.21 of the Health and Safety Code is
amended to read:
   1374.21.  (a) (1) A change in premium rates or changes in coverage
stated in a group health care service plan contract shall not 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.
   (2) The notice delivered pursuant to paragraph (1) for large group
health plans shall also include the following information:
   (A) Whether the rate proposed to be in effect is greater than the
average rate increase for individual market products negotiated by
the California Health Benefit Exchange for the most recent calendar
year for which the rates are final.
   (B) Whether the rate proposed to be in effect is greater than the
average rate increase negotiated by the Board of Administration of
the Public Employees' Retirement System for the most recent calendar
year for which the rates are final.
   (C) Whether the rate change includes any portion of the excise tax
paid by the health plan.
   (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. 
   (c) (1) Notwithstanding subdivision (b) of Section 1357.503, if
the department determines that a rate is unreasonable or not
justified, the plan shall notify the contractholder of this
determination and shall offer the contractholder coverage of no less
than 60 days in order for the contractholder to obtain other
coverage, including coverage from another health care service plan.
During the 60-day period, the prior rate shall remain in effect to
allow the purchaser the opportunity to obtain other coverage. 

   (2) The notification to the contractholder shall state the
following in 14-point type: 

   "The Department of Managed Health Care has determined that the
rate for this product is not reasonable or not justified. All health
coverage offered to employers like you is reviewed to determine
whether the rates are reasonable and justified. You have 60 days from
the date of this notice to obtain coverage from this health plan or
another health plan. During that time, the prior rate shall remain in
effect. For small group purchasers, contact Covered California at
www.coveredca.com for help in obtaining coverage." 

   (3) The notice shall also be provided to the solicitor for the
contractholder, if any, so that the solicitor may assist the
purchaser in finding other coverage. 
  SEC. 2.  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)
  (w)  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) (1) Notwithstanding subdivision (c) of Section 1399.849, if
the department determines that a rate is unreasonable or not
justified, the plan shall notify the contractholder of this
determination and shall offer the contractholder coverage of no less
than 60 days to obtain other coverage, including coverage from
another health care service plan. During the 60-day period, the prior
rate shall remain in effect to allow the purchaser the opportunity
to obtain other coverage.  
   (2) The notification to the contractholder shall state the
following in 14-point type: 

   "The Department of Managed Health Care has determined that the
rate for this product is not reasonable or not justified. All health
coverage offered to individuals like you is reviewed to determine
whether the rates are reasonable and justified. You have 60 days from
the date of this notice to obtain coverage from this health plan or
another health plan. During that time, the prior rate shall remain in
effect. You may also contact Covered California at www.coveredca.com
for help in obtaining coverage." 

   (3) The notice shall also be provided to the solicitor for the
contractholder, if any, so that the solicitor may assist the
purchaser in finding other coverage.  
   (4) The notice shall constitute a trigger event for purposes of
special enrollment, as defined in Section 1399.849.  
   (c) 
    (d)  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)   (Chapter 4
(commencing with Section 15870) of Part 3.3 of Division 9 of the
Welfare and Institutions Code)  and about the new coverage
 options,   options  and the potential for
subsidized  coverage,   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) 
    (e)  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) 
    (f)  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. 3.  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) (1) Notwithstanding subdivision (c) of Section 10965.3, if the
department determines that a rate is unreasonable or not justified,
the insurer shall notify the policyholder of this determination and
shall offer the policyholder coverage of no less than 60 days in
order to obtain other coverage, including coverage from another
health insurer. During the 60-day period, the prior rate shall remain
in effect to allow the purchaser the opportunity to obtain other
coverage.  
   (2) The notification to the policyholder shall state the following
in 14-point type: 

   "The Department of Insurance has determined that the rate for this
product is not reasonable or not justified. All health coverage
offered to individuals like you is reviewed to determine whether the
rates are reasonable and justified. You have 60 days from the date of
this notice to obtain coverage from this health insurer or another
health insurer. During that time, the prior rate shall remain in
effect. You may also contact Covered California at www.coveredca.com
for help in obtaining coverage." 

   (3) The notice shall also be provided to the solicitor for the
policyholder, if any, so that the solicitor may assist the purchaser
in finding other coverage.  
   (4) The notice shall constitute a trigger event for purposes of
special enrollment, as defined in Section 10965.3.  
   (c) 
    (d)  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)   (Chapter 4 (commencing with Section 15870)
of Part 3.3 of Division 9 of the Welfare and Institutions Code)
 and about the new coverage  options,  
options  and the potential for subsidized  coverage,
  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) 
    (e)  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) 
    (f)  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. 4.  Section 10199.1 of the Insurance Code is amended to read:
   10199.1.  (a) (1) An insurer or nonprofit hospital service plan or
administrator acting on its behalf shall not 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. The action shall not
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.
   (2) The notice delivered pursuant to paragraph (1) for large group
health insurance policies shall also include the following
information:
   (A) Whether the rate proposed to be in effect is greater than the
average rate increase for individual market products negotiated by
the California Health Benefit Exchange for the most recent calendar
year for which the rates are final.
   (B) Whether the rate proposed to be in effect is greater than the
average rate increase negotiated by the Board of Administration of
the Public Employees' Retirement System for the most recent calendar
year for which the rates are final.
   (C) Whether the rate change includes any portion of the excise tax
paid by the health insurer.
   (b) A holder of a master group policy or a master group nonprofit
hospital service plan contract or administrator acting on its behalf
shall not 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. The action shall not 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. 
   (d) (1) Notwithstanding paragraph (3) of subdivision (b) of
Section 10753.05, if the department determines that a rate is
unreasonable or not justified, the insurer shall notify the
policyholder of this determination and shall offer the policyholder
coverage of no less than 60 days in order for the policyholder to
obtain coverage from this health insurer or another health insurer.
During the 60-day period, the prior rate shall remain in effect to
allow the purchaser the opportunity to obtain other coverage,
including coverage from another health insurer.  
   (2) The notification to the policyholder shall state the following
in 14-point type: 

   "The Department of Insurance has determined that the rate for this
product is not reasonable or not justified. All health coverage
offered to employers like you is reviewed to determine whether the
rates are reasonable and justified. You have 60 days from the date of
this notice to obtain coverage from this health insurer or another
health insurer. During that time, the prior rate shall remain in
effect. For small group purchasers, contact Covered California at
www.coveredca.com for help in obtaining coverage." 

   (3) The notice shall also be provided to the solicitor for the
policyholder, if any, so that the solicitor may assist the purchaser
in finding other coverage. 
  SEC. 5.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.