1389.1. (a) The director shall not approve any plan contract unless
the director finds that the application conforms to both of the
following requirements:
(1) All applications for coverage which include health-related
questions shall contain clear and unambiguous questions designed to
ascertain the health condition or history of the applicant.
(2) The application questions related to an applicant's health
shall be based on medical information that is reasonable and
necessary for medical underwriting purposes. The application shall
include a prominently displayed notice that shall read:
"California law prohibits an HIV test from being required or used
by health care service plans as a condition of obtaining coverage."
(b) Nothing in this section shall authorize the director to
establish or require a single or standard application form for
application questions.
1389.2. At the request of the director, a health care service plan
shall provide a written statement of the actuarial basis for any
medical underwriting decision on any application form, or contract
issued or delivered to, or denied a resident of this state.
1389.21. (a) A health care service plan shall not rescind a plan
contract, or limit any provisions of a plan contract, once an
enrollee is covered under the contract unless the plan can
demonstrate that the enrollee has performed an act or practice
constituting fraud or made an intentional misrepresentation of
material fact as prohibited by the terms of the contract.
(b) If a plan intends to rescind a plan contract pursuant to
subdivision (a), the plan shall send a notice to the enrollee or
subscriber via regular certified mail at least 30 days prior to the
effective date of the rescission explaining the reasons for the
intended rescission and notifying the enrollee or subscriber of his
or her right to appeal that decision to the director pursuant to
subdivision (b) of Section 1365.
(c) Notwithstanding subdivision (a), Section 1365 or any other
provision of law, after 24 months following the issuance of a health
care service plan contract, a plan shall not rescind the plan
contract for any reason, and shall not cancel the plan contract,
limit any of the provisions of the plan contract, or raise premiums
on the plan contract due to any omissions, misrepresentations, or
inaccuracies in the application form, whether willful or not. Nothing
in this subdivision shall be construed to alter existing law that
otherwise applies to a health care service plan within the first 24
months following the issuance of a health care service plan contract.
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) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate, shall, at the time
of the denial or offer of coverage, provide the individual applicant
with the specific reason or reasons for the decision in writing in
clear, easily understandable language.
(2) 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 60 days prior to the effective
date of the contract renewal or the date on which the rate or
coverage changes. A notice of an increase in the premium rate shall
include the reasons for the rate increase.
(3) The written notice required pursuant to paragraph (2) shall be
delivered to the individual contractholder at his or her last
address known to the plan, at least 60 days prior to the effective
date of the change. 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.
(4) If a plan rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the plan shall inform the applicant
about the state's high-risk health insurance pool, the California
Major Risk Medical Insurance Program (MRMIP) (Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code), and the
federal temporary high risk pool established pursuant to Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code. The information provided to the applicant by the plan shall be
in accordance with standards developed by the department, in
consultation with the Managed Risk Medical Insurance Board, and shall
specifically include the toll-free telephone number and Internet Web
site address for MRMIP and the federal temporary high risk pool. The
requirement to notify applicants of the availability of MRMIP and
the federal temporary high risk pool shall not apply when a health
plan rejects an applicant for Medicare supplement coverage.
(c) 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.
1389.3. No health care service plan shall engage in the practice of
postclaims underwriting. For purposes of this section, "postclaims
underwriting" means the rescinding, canceling, or limiting of a plan
contract due to the plan's failure to complete medical underwriting
and resolve all reasonable questions arising from written information
submitted on or with an application before issuing the plan
contract. This section shall not limit a plan's remedies described in
subdivision (a) of Section 1389.21.
1389.4. (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan solicitors
or solicitor firms, provided that those materials include the
information required to be submitted by this section.
(d) Commencing January 1, 2011, the director shall post on the
department's Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific information
about rating and underwriting criteria and practices in the
individual market and information about the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700)
of Division 2 of the Insurance Code) and the federal temporary high
risk pool established pursuant to Part 6.6 (commencing with Section
12739.5) of Division 2 of the Insurance Code. The director shall
develop the information for the Internet Web site in consultation
with the Department of Insurance to enhance the consistency of
information provided to consumers. Information about individual
health coverage shall also include the following notification:
"Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.
1389.5. (a) This section shall apply to a health care service plan
that provides coverage under an individual plan contract that is
issued, amended, delivered, or renewed on or after January 1, 2007.
(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.
"Without medical underwriting" means that the health care service
plan shall not decline to offer coverage to, or deny enrollment of,
the individual or impose any preexisting condition exclusion on the
individual who transfers to another individual plan contract pursuant
to this section.
(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make the
ranking available upon request. The plan shall update the ranking
whenever a new benefit design for individual purchasers is approved.
(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this
section, at a minimum, when the plan changes the enrollee's premium
rate. Posting this information on the plan's Internet Web site shall
not constitute notice for purposes of this subdivision. The notice
shall adequately inform enrollees of the transfer rights provided
under this section, including information on the process to obtain
details about the individual plan contracts available to that
enrollee and advising that the enrollee may be unable to return to
his or her current individual plan contract if the enrollee transfers
to another individual plan contract.
(e) The requirements of this section shall not apply to the
following:
(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an individual
health benefit plan contract offered pursuant to Section 1366.35.
(2) An individual offered conversion coverage pursuant to Section
1373.6.
(3) Individual coverage under a specialized health care service
plan contract.
(4) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Division 9 of Part 3 of
the Welfare and Institutions Code.
(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code.
(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division 2 of
the Insurance Code.
(f) It is the intent of the Legislature that individuals shall
have more choice in their health coverage when health care service
plans guarantee the right of an individual to transfer to another
product based on the plan's own ranking system. The Legislature does
not intend for the department to review or verify the plan's ranking
for actuarial or other purposes.
1389.6. Compensation of a person or entity employed by, or
contracted with, a health care service plan shall not be based on, or
related in any way to, the number of contracts that the person or
entity has caused or recommended to be rescinded, canceled, or
limited, or the resulting cost savings to the health plan. A health
care service plan shall not set performance goals or quotas, or
provide compensation to any person or entity employed by, or
contracted with, the health care service plan, based on the number of
persons whose coverage is rescinded or any financial savings to the
health care service plan associated with rescission of coverage.
1389.7. (a) Every health care service plan that offers, issues, or
renews individual plan contracts shall offer to any individual, who
was covered under an individual plan contract that was rescinded, a
new individual plan contract, without medical underwriting, that
provides equal benefits. A health care service plan may also permit
an individual, who was covered under an individual plan contract that
was rescinded, to remain covered under that individual plan
contract, with a revised premium rate that reflects the number of
persons remaining on the plan contract.
(b) "Without medical underwriting" means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.
(c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons covered
on the new individual plan contract.
(d) Notwithstanding subdivision (a) and (b), if an individual was
subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.
(e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to coverage
provided under this section.
(f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.
(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
1389.8. (a) Notwithstanding any other provision of law, an agent,
broker, solicitor, solicitor firm, or representative who assists an
applicant in submitting an application to a health care service plan
has the duty to assist the applicant in providing answers to health
questions accurately and completely.
(b) An agent, broker, solicitor, solicitor firm, or representative
who assists an applicant in submitting an application to a health
care service plan shall attest on the written application to both of
the following:
(1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
(2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
(c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Managed Care Fund.
(d) A health care service plan application shall include a
statement advising declarants of the civil penalty authorized under
this section.
1389.1. (a) The director shall not approve any plan contract unless
the director finds that the application conforms to both of the
following requirements:
(1) All applications for coverage which include health-related
questions shall contain clear and unambiguous questions designed to
ascertain the health condition or history of the applicant.
(2) The application questions related to an applicant's health
shall be based on medical information that is reasonable and
necessary for medical underwriting purposes. The application shall
include a prominently displayed notice that shall read:
"California law prohibits an HIV test from being required or used
by health care service plans as a condition of obtaining coverage."
(b) Nothing in this section shall authorize the director to
establish or require a single or standard application form for
application questions.
1389.2. At the request of the director, a health care service plan
shall provide a written statement of the actuarial basis for any
medical underwriting decision on any application form, or contract
issued or delivered to, or denied a resident of this state.
1389.21. (a) A health care service plan shall not rescind a plan
contract, or limit any provisions of a plan contract, once an
enrollee is covered under the contract unless the plan can
demonstrate that the enrollee has performed an act or practice
constituting fraud or made an intentional misrepresentation of
material fact as prohibited by the terms of the contract.
(b) If a plan intends to rescind a plan contract pursuant to
subdivision (a), the plan shall send a notice to the enrollee or
subscriber via regular certified mail at least 30 days prior to the
effective date of the rescission explaining the reasons for the
intended rescission and notifying the enrollee or subscriber of his
or her right to appeal that decision to the director pursuant to
subdivision (b) of Section 1365.
(c) Notwithstanding subdivision (a), Section 1365 or any other
provision of law, after 24 months following the issuance of a health
care service plan contract, a plan shall not rescind the plan
contract for any reason, and shall not cancel the plan contract,
limit any of the provisions of the plan contract, or raise premiums
on the plan contract due to any omissions, misrepresentations, or
inaccuracies in the application form, whether willful or not. Nothing
in this subdivision shall be construed to alter existing law that
otherwise applies to a health care service plan within the first 24
months following the issuance of a health care service plan contract.
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) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate, shall, at the time
of the denial or offer of coverage, provide the individual applicant
with the specific reason or reasons for the decision in writing in
clear, easily understandable language.
(2) 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 60 days prior to the effective
date of the contract renewal or the date on which the rate or
coverage changes. A notice of an increase in the premium rate shall
include the reasons for the rate increase.
(3) The written notice required pursuant to paragraph (2) shall be
delivered to the individual contractholder at his or her last
address known to the plan, at least 60 days prior to the effective
date of the change. 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.
(4) If a plan rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the plan shall inform the applicant
about the state's high-risk health insurance pool, the California
Major Risk Medical Insurance Program (MRMIP) (Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code), and the
federal temporary high risk pool established pursuant to Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code. The information provided to the applicant by the plan shall be
in accordance with standards developed by the department, in
consultation with the Managed Risk Medical Insurance Board, and shall
specifically include the toll-free telephone number and Internet Web
site address for MRMIP and the federal temporary high risk pool. The
requirement to notify applicants of the availability of MRMIP and
the federal temporary high risk pool shall not apply when a health
plan rejects an applicant for Medicare supplement coverage.
(c) 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.
1389.3. No health care service plan shall engage in the practice of
postclaims underwriting. For purposes of this section, "postclaims
underwriting" means the rescinding, canceling, or limiting of a plan
contract due to the plan's failure to complete medical underwriting
and resolve all reasonable questions arising from written information
submitted on or with an application before issuing the plan
contract. This section shall not limit a plan's remedies described in
subdivision (a) of Section 1389.21.
1389.4. (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan solicitors
or solicitor firms, provided that those materials include the
information required to be submitted by this section.
(d) Commencing January 1, 2011, the director shall post on the
department's Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific information
about rating and underwriting criteria and practices in the
individual market and information about the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700)
of Division 2 of the Insurance Code) and the federal temporary high
risk pool established pursuant to Part 6.6 (commencing with Section
12739.5) of Division 2 of the Insurance Code. The director shall
develop the information for the Internet Web site in consultation
with the Department of Insurance to enhance the consistency of
information provided to consumers. Information about individual
health coverage shall also include the following notification:
"Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.
1389.5. (a) This section shall apply to a health care service plan
that provides coverage under an individual plan contract that is
issued, amended, delivered, or renewed on or after January 1, 2007.
(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.
"Without medical underwriting" means that the health care service
plan shall not decline to offer coverage to, or deny enrollment of,
the individual or impose any preexisting condition exclusion on the
individual who transfers to another individual plan contract pursuant
to this section.
(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make the
ranking available upon request. The plan shall update the ranking
whenever a new benefit design for individual purchasers is approved.
(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this
section, at a minimum, when the plan changes the enrollee's premium
rate. Posting this information on the plan's Internet Web site shall
not constitute notice for purposes of this subdivision. The notice
shall adequately inform enrollees of the transfer rights provided
under this section, including information on the process to obtain
details about the individual plan contracts available to that
enrollee and advising that the enrollee may be unable to return to
his or her current individual plan contract if the enrollee transfers
to another individual plan contract.
(e) The requirements of this section shall not apply to the
following:
(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an individual
health benefit plan contract offered pursuant to Section 1366.35.
(2) An individual offered conversion coverage pursuant to Section
1373.6.
(3) Individual coverage under a specialized health care service
plan contract.
(4) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Division 9 of Part 3 of
the Welfare and Institutions Code.
(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code.
(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division 2 of
the Insurance Code.
(f) It is the intent of the Legislature that individuals shall
have more choice in their health coverage when health care service
plans guarantee the right of an individual to transfer to another
product based on the plan's own ranking system. The Legislature does
not intend for the department to review or verify the plan's ranking
for actuarial or other purposes.
1389.6. Compensation of a person or entity employed by, or
contracted with, a health care service plan shall not be based on, or
related in any way to, the number of contracts that the person or
entity has caused or recommended to be rescinded, canceled, or
limited, or the resulting cost savings to the health plan. A health
care service plan shall not set performance goals or quotas, or
provide compensation to any person or entity employed by, or
contracted with, the health care service plan, based on the number of
persons whose coverage is rescinded or any financial savings to the
health care service plan associated with rescission of coverage.
1389.7. (a) Every health care service plan that offers, issues, or
renews individual plan contracts shall offer to any individual, who
was covered under an individual plan contract that was rescinded, a
new individual plan contract, without medical underwriting, that
provides equal benefits. A health care service plan may also permit
an individual, who was covered under an individual plan contract that
was rescinded, to remain covered under that individual plan
contract, with a revised premium rate that reflects the number of
persons remaining on the plan contract.
(b) "Without medical underwriting" means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.
(c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons covered
on the new individual plan contract.
(d) Notwithstanding subdivision (a) and (b), if an individual was
subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.
(e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to coverage
provided under this section.
(f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.
(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
1389.8. (a) Notwithstanding any other provision of law, an agent,
broker, solicitor, solicitor firm, or representative who assists an
applicant in submitting an application to a health care service plan
has the duty to assist the applicant in providing answers to health
questions accurately and completely.
(b) An agent, broker, solicitor, solicitor firm, or representative
who assists an applicant in submitting an application to a health
care service plan shall attest on the written application to both of
the following:
(1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
(2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
(c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Managed Care Fund.
(d) A health care service plan application shall include a
statement advising declarants of the civil penalty authorized under
this section.
1389.1. (a) The director shall not approve any plan contract unless
the director finds that the application conforms to both of the
following requirements:
(1) All applications for coverage which include health-related
questions shall contain clear and unambiguous questions designed to
ascertain the health condition or history of the applicant.
(2) The application questions related to an applicant's health
shall be based on medical information that is reasonable and
necessary for medical underwriting purposes. The application shall
include a prominently displayed notice that shall read:
"California law prohibits an HIV test from being required or used
by health care service plans as a condition of obtaining coverage."
(b) Nothing in this section shall authorize the director to
establish or require a single or standard application form for
application questions.
1389.2. At the request of the director, a health care service plan
shall provide a written statement of the actuarial basis for any
medical underwriting decision on any application form, or contract
issued or delivered to, or denied a resident of this state.
1389.21. (a) A health care service plan shall not rescind a plan
contract, or limit any provisions of a plan contract, once an
enrollee is covered under the contract unless the plan can
demonstrate that the enrollee has performed an act or practice
constituting fraud or made an intentional misrepresentation of
material fact as prohibited by the terms of the contract.
(b) If a plan intends to rescind a plan contract pursuant to
subdivision (a), the plan shall send a notice to the enrollee or
subscriber via regular certified mail at least 30 days prior to the
effective date of the rescission explaining the reasons for the
intended rescission and notifying the enrollee or subscriber of his
or her right to appeal that decision to the director pursuant to
subdivision (b) of Section 1365.
(c) Notwithstanding subdivision (a), Section 1365 or any other
provision of law, after 24 months following the issuance of a health
care service plan contract, a plan shall not rescind the plan
contract for any reason, and shall not cancel the plan contract,
limit any of the provisions of the plan contract, or raise premiums
on the plan contract due to any omissions, misrepresentations, or
inaccuracies in the application form, whether willful or not. Nothing
in this subdivision shall be construed to alter existing law that
otherwise applies to a health care service plan within the first 24
months following the issuance of a health care service plan contract.
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) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate, shall, at the time
of the denial or offer of coverage, provide the individual applicant
with the specific reason or reasons for the decision in writing in
clear, easily understandable language.
(2) 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 60 days prior to the effective
date of the contract renewal or the date on which the rate or
coverage changes. A notice of an increase in the premium rate shall
include the reasons for the rate increase.
(3) The written notice required pursuant to paragraph (2) shall be
delivered to the individual contractholder at his or her last
address known to the plan, at least 60 days prior to the effective
date of the change. 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.
(4) If a plan rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the plan shall inform the applicant
about the state's high-risk health insurance pool, the California
Major Risk Medical Insurance Program (MRMIP) (Part 6.5 (commencing
with Section 12700) of Division 2 of the Insurance Code), and the
federal temporary high risk pool established pursuant to Part 6.6
(commencing with Section 12739.5) of Division 2 of the Insurance
Code. The information provided to the applicant by the plan shall be
in accordance with standards developed by the department, in
consultation with the Managed Risk Medical Insurance Board, and shall
specifically include the toll-free telephone number and Internet Web
site address for MRMIP and the federal temporary high risk pool. The
requirement to notify applicants of the availability of MRMIP and
the federal temporary high risk pool shall not apply when a health
plan rejects an applicant for Medicare supplement coverage.
(c) 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.
1389.3. No health care service plan shall engage in the practice of
postclaims underwriting. For purposes of this section, "postclaims
underwriting" means the rescinding, canceling, or limiting of a plan
contract due to the plan's failure to complete medical underwriting
and resolve all reasonable questions arising from written information
submitted on or with an application before issuing the plan
contract. This section shall not limit a plan's remedies described in
subdivision (a) of Section 1389.21.
1389.4. (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
(b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
(c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan solicitors
or solicitor firms, provided that those materials include the
information required to be submitted by this section.
(d) Commencing January 1, 2011, the director shall post on the
department's Internet Web site, in a manner accessible and
understandable to consumers, general, noncompany specific information
about rating and underwriting criteria and practices in the
individual market and information about the California Major Risk
Medical Insurance Program (Part 6.5 (commencing with Section 12700)
of Division 2 of the Insurance Code) and the federal temporary high
risk pool established pursuant to Part 6.6 (commencing with Section
12739.5) of Division 2 of the Insurance Code. The director shall
develop the information for the Internet Web site in consultation
with the Department of Insurance to enhance the consistency of
information provided to consumers. Information about individual
health coverage shall also include the following notification:
"Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
(e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
(f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.
1389.5. (a) This section shall apply to a health care service plan
that provides coverage under an individual plan contract that is
issued, amended, delivered, or renewed on or after January 1, 2007.
(b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.
"Without medical underwriting" means that the health care service
plan shall not decline to offer coverage to, or deny enrollment of,
the individual or impose any preexisting condition exclusion on the
individual who transfers to another individual plan contract pursuant
to this section.
(c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make the
ranking available upon request. The plan shall update the ranking
whenever a new benefit design for individual purchasers is approved.
(d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this
section, at a minimum, when the plan changes the enrollee's premium
rate. Posting this information on the plan's Internet Web site shall
not constitute notice for purposes of this subdivision. The notice
shall adequately inform enrollees of the transfer rights provided
under this section, including information on the process to obtain
details about the individual plan contracts available to that
enrollee and advising that the enrollee may be unable to return to
his or her current individual plan contract if the enrollee transfers
to another individual plan contract.
(e) The requirements of this section shall not apply to the
following:
(1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an individual
health benefit plan contract offered pursuant to Section 1366.35.
(2) An individual offered conversion coverage pursuant to Section
1373.6.
(3) Individual coverage under a specialized health care service
plan contract.
(4) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Division 9 of Part 3 of
the Welfare and Institutions Code.
(5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code.
(6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division 2 of
the Insurance Code.
(f) It is the intent of the Legislature that individuals shall
have more choice in their health coverage when health care service
plans guarantee the right of an individual to transfer to another
product based on the plan's own ranking system. The Legislature does
not intend for the department to review or verify the plan's ranking
for actuarial or other purposes.
1389.6. Compensation of a person or entity employed by, or
contracted with, a health care service plan shall not be based on, or
related in any way to, the number of contracts that the person or
entity has caused or recommended to be rescinded, canceled, or
limited, or the resulting cost savings to the health plan. A health
care service plan shall not set performance goals or quotas, or
provide compensation to any person or entity employed by, or
contracted with, the health care service plan, based on the number of
persons whose coverage is rescinded or any financial savings to the
health care service plan associated with rescission of coverage.
1389.7. (a) Every health care service plan that offers, issues, or
renews individual plan contracts shall offer to any individual, who
was covered under an individual plan contract that was rescinded, a
new individual plan contract, without medical underwriting, that
provides equal benefits. A health care service plan may also permit
an individual, who was covered under an individual plan contract that
was rescinded, to remain covered under that individual plan
contract, with a revised premium rate that reflects the number of
persons remaining on the plan contract.
(b) "Without medical underwriting" means that the health care
service plan shall not decline to offer coverage to, or deny
enrollment of, the individual or impose any preexisting condition
exclusion on the individual who is issued a new individual plan
contract or remains covered under an individual plan contract
pursuant to this section.
(c) If a new individual plan contract is issued, the plan may
revise the premium rate to reflect only the number of persons covered
on the new individual plan contract.
(d) Notwithstanding subdivision (a) and (b), if an individual was
subject to a preexisting condition provision or a waiting or an
affiliation period under the individual plan contract that was
rescinded, the health care service plan may apply the same
preexisting condition provision or waiting or affiliation period in
the new individual plan contract. The time period in the new
individual plan contract for the preexisting condition provision or
waiting or affiliation period shall not be longer than the one in the
individual plan contract that was rescinded and the health care
service plan shall credit any time that the individual was covered
under the rescinded individual plan contract.
(e) The plan shall notify in writing all enrollees of the right to
coverage under an individual plan contract pursuant to this section,
at a minimum, when the plan rescinds the individual plan contract.
The notice shall adequately inform enrollees of the right to coverage
provided under this section.
(f) The plan shall provide 60 days for enrollees to accept the
offered new individual plan contract and this contract shall be
effective as of the effective date of the original plan contract and
there shall be no lapse in coverage.
(g) This section shall not apply to any individual whose
information in the application for coverage and related
communications led to the rescission.
1389.8. (a) Notwithstanding any other provision of law, an agent,
broker, solicitor, solicitor firm, or representative who assists an
applicant in submitting an application to a health care service plan
has the duty to assist the applicant in providing answers to health
questions accurately and completely.
(b) An agent, broker, solicitor, solicitor firm, or representative
who assists an applicant in submitting an application to a health
care service plan shall attest on the written application to both of
the following:
(1) That to the best of his or her knowledge, the information on
the application is complete and accurate.
(2) That he or she explained to the applicant, in
easy-to-understand language, the risk to the applicant of providing
inaccurate information and that the applicant understood the
explanation.
(c) If, in an attestation required by subdivision (b), a declarant
willfully states as true any material fact he or she knows to be
false, that person shall, in addition to any applicable penalties or
remedies available under current law, be subject to a civil penalty
of up to ten thousand dollars ($10,000). Any public prosecutor may
bring a civil action to impose that civil penalty. These penalties
shall be paid to the Managed Care Fund.
(d) A health care service plan application shall include a
statement advising declarants of the civil penalty authorized under
this section.
