10900. As used in this chapter:
(a) "Benefit plan design" means a specific health coverage policy
issued by a carrier to individuals, to trustees of associations that
cover individuals. It includes services covered and the levels of
copayment and deductibles, and it may include the professional
providers who are to provide those services and the sites where those
services are to be provided. A benefit plan design may also be an
integrated system for the financing and delivery of quality health
services that has significant incentives for the covered individuals
to use the system.
(b) "Carrier" means any disability insurance company or any other
entity that writes, issues, or administers health benefit plans, as
defined in subdivision (a) of Section 10198.6, that cover
individuals, regardless of the situs of the contract or master
policyholder.
(c) "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 plans. The term includes continuation or conversion
coverage but does not include accident only, credit, disability
income, Champus supplement, 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 federal Medicare program pursuant to Title XVIII of the
Social Security Act.
(3) The medicaid program pursuant to Title XIX of the Social
Security Act.
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C.A. Chapter 55 (commencing with Section 1071)
(CHAMPUS).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C.A. Chapter 89 (commencing
with Section 8901) (FEHBP).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(l) of the Public Health Service Act,
as amended by Public Law 104-191.
(10) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C.A. 2504(e)).
(d) "Dependent" means the spouse or child of an eligible
individual or other individual applying for coverage, subject to
applicable terms of the health benefit plan covering the eligible
person.
(e) "Federally eligible defined individual" means an individual
who as of the date on which the individual seeks coverage under this
part, (1) has 18 or more months of creditable coverage, and whose
most recent prior creditable coverage was under a group health plan,
a federal governmental plan maintained for federal employees, or a
governmental plan or church plan as defined in the federal Employee
Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1002), (2) is
not eligible for coverage under an employer-sponsored health benefit
plan, Medicare, or Medi-Cal, and has no other health insurance
coverage, (3) was not terminated from his or her most recent
creditable coverage due to nonpayment of premiums or fraud, and (4)
if offered continuation coverage under COBRA or Cal-COBRA, had
elected and exhausted such coverage.
(f) "In force business" means an existing health benefit plan
issued by a carrier to a federally eligible defined individual.
(g) "New business" means a health benefit plan issued to an
eligible individual that is not the carrier's in force business.
(h) "Preexisting condition provision" means a policy provision
that excludes coverage for charges and expenses incurred during a
specified period following the eligible individual's effective date,
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.
10901. Every carrier offering health benefit plans to individuals
shall comply with the provisions of this chapter and the rules
adopted thereunder.
10901.1. Nothing in this chapter shall be construed to preclude the
application of this chapter to either of the following: (a) an
association, trust, or other organization acting as a health care
service plan as defined under Section 1345, (b) an association,
trust, multiple employer welfare arrangement, or other organization
or person presenting information regarding a health benefit plan to
persons who may be interested in subscribing or enrolling in the
plan.
10901.2. (a) Commencing January 1, 2001, a carrier shall fairly and
affirmatively offer, market, and sell the health benefit plan
designs described in subdivision (d) of Section 10785 that are sold
to individuals or to associations that include individuals to all
federally eligible defined individuals in each geographic region in
which the carrier provides coverage for health care services. Each
carrier shall make available to each federally eligible defined
individual the identified health benefit plan designs which the plan
offers and sells to individuals or to associations that include
individuals.
(b) A carrier may not reject an application from a federally
eligible defined individual for a benefit plan design under the
following circumstances:
(1) The federally eligible defined individual as defined by
subdivision (e) of Section 10900 agrees to make the required premium
payments.
(2) The federally eligible defined individual, and his or her
dependents who are to be covered by the carrier, work or reside in
the service area in which the plan provides or otherwise arranges for
the provision of health care services.
(c) No carrier or agent or broker shall, directly or indirectly,
encourage or direct federally eligible defined individuals to refrain
from filing an application for coverage with a carrier because of
health status, claims experience, industry, occupation, receipt of
health care, genetic information, evidence of insurability, including
conditions arising out of acts of domestic violence, disability, or
geographic location provided that it is within the carrier's approved
service area.
(d) 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 a solicitor for
the sale of a health benefit plan design to be varied because of
health status, claims experience, industry, occupation, receipt of
health care, genetic information, evidence of insurability, including
conditions arising out of acts of domestic violence, disability, or
geographic location of the individual. 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 for the reasons
listed in this subdivision.
(e) 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 individuals in this state, the
third-party administrator shall be subject to this chapter.
10901.3. (a) (1) After the federally eligible defined individual
submits a completed application form for a health benefit plan, the
carrier shall, within 30 days, notify the individual of the
individual's actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
following amounts:
(A) For health benefit plans that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is of the
same age and resides in the same geographic area as the federally
eligible defined individual. However, for federally qualified
individuals who are between the ages of 60 and 64, inclusive, the
premium shall not exceed the average premium paid by a subscriber of
the Major Risk Medical Insurance Program who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual.
(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 and
64, inclusive, the premium shall not exceed 170 percent of the
standard premium charged to an individual who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual. The individual shall have 30 days in which to exercise
the right to buy coverage at the quoted premium rates.
(2) A carrier may adjust the premium based on family size, not to
exceed the following amounts:
(A) For health benefit plans that offer services through a
preferred provider arrangement, the average of the Major Risk Medical
Insurance Program rate for families of the same size that reside in
the same geographic area as the federally eligible defined
individual.
(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to a family
that is of the same size and resides in the same geographic area as
the federally eligible defined individual.
(b) When a federally eligible defined 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 shall begin no later than the first
day of the following month. When that payment is neither delivered or
postmarked until after the 15th day of a month, coverage shall
become effective no later than the first day of the second month
following delivery or postmark of the payment.
(c) During the first 30 days after the effective date of the
health benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change
within the first 15 days of a month, coverage under the new health
benefit plan shall become effective no later than the first day of
the following month. If an enrolled individual notified the carrier
of the change after the 15th day of a month, coverage under the
health benefit plan shall become effective no later than the first
day of the second month following notification.
10901.4. A carrier may not exclude any federally eligible defined
individual, or his or her dependents, who would otherwise be entitled
to health care services, on the basis of an actual or expected
health condition of that individual or dependent. No health benefit
plan may limit or exclude coverage for a specific federally eligible
defined individual, or his or her dependents, by type of illness,
treatment, medical condition, or accident.
10901.7. (a) The commissioner may require a carrier to discontinue
the offering of health benefit plans or the acceptance of
applications from any individual upon a determination by the
commissioner that the plan carrier does not have sufficient financial
viability, organization, and administrative capacity to assure the
delivery of health care services to its enrollees.
(b) The commissioner's determination shall follow an evaluation
that includes a certification by the commissioner that the acceptance
of an application or applications would place the carrier in a
financially impaired condition.
(c) A carrier that has not offered coverage or accepted
applications pursuant to this chapter shall not offer coverage or
accept applications for any individual until the commissioner has
determined that the carrier has ceased to be financially impaired.
10901.8. All health benefit plans offered to a federally eligible
defined individual shall be renewable with respect to the individual
and dependents at the option of the enrolled individual except in
cases of:
(a) Nonpayment of the required premiums.
(b) Fraud or misrepresentation by the enrolled individual.
(c) The carrier ceases to provide or arrange for the provision of
health care services for individual health benefit plan contracts in
this state, provided, however, that the following conditions are
satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in this state is provided to the commissioner
and to the contractholder.
(2) Individual health benefit plan contracts subject to this
chapter shall not be canceled for 180 days after the date of the
notice required under paragraph (1) and for that business of a
carrier that remains in force, any carrier that ceases to offer for
sale new individual health benefit plan contracts shall continue to
be governed by this article with respect to business conducted under
this chapter.
(3) A carrier that ceases to write new individual business in this
state after the effective date of this chapter shall be prohibited
from offering for sale new individual health benefit plan contracts
in this state for a period of three years from the date of the notice
to the commissioner.
(d) When a carrier withdraws a health benefit plan design from the
individual market, provided that a carrier makes available to
eligible individuals all health plan benefit designs that it makes
available to new individual business, and provided that premium for
the new health benefit plan complies with the renewal increase
requirements set forth in Section 10901.9.
10901.9. Commencing January 1, 2001, premiums for health benefit
plans offered, delivered, amended, or renewed by carriers shall be
subject to the following requirements:
(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is of the same age and resides in
the same geographic area as the federally eligible defined
individual. However, for federally qualified individuals who are
between the ages of 60 to 64, inclusive, the premium shall not exceed
the average premium paid by a subscriber of the Major Risk Medical
Insurance Program who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 to 64,
inclusive, the premium shall not exceed 170 percent of the standard
premium charged to an individual who is 59 years of age and resides
in the same geographic area as the federally eligible defined
individual.
(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is of the same age and resides in
the same geographic area as the federally eligible defined
individual. However, for federally qualified individuals who are
between the ages of 60 and 64, inclusive, the premium shall not
exceed the average premium paid by a subscriber of the Major Risk
Medical Insurance Program who is 59 years of age and resides in the
same geographic area as the federally eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 and
64, inclusive, the premium shall not exceed 170 percent of the
standard premium charged to an individual who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual. The premium effective on January 1, 2001, shall apply to
in force business at the earlier of either the time of renewal or
July 1, 2001.
(c) The premium applied to a federally eligible defined individual
may not increase by more than the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average increase in the premiums charged to a
subscriber of the Major Risk Medical Insurance Program who is of the
same age and resides in the same geographic area as the federally
eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, the increase in premiums charged to a nonfederally
qualified individual who is of the same age and resides in the same
geographic area as the federally defined eligible individual. The
premium for an eligible individual may not be modified more
frequently than every 12 months.
(2) For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall be
no greater than the premium applied in the prior rating period to
the discontinued contract.
10902. Carriers shall apply premiums consistently with respect to
all federally eligible defined individuals who apply for coverage.
10902.1. In connection with the offering for sale of any health
benefit plan designed to an individual, each carrier shall make a
reasonable disclosure, as part of its solicitation and sales
materials, of all individual contracts.
10902.2. Nothing in this chapter shall be construed to require a
health benefit plan to offer a contract to an individual if the
carrier does not otherwise offer contracts to individuals.
10902.3. (a) At least 20 business days prior to renewing or
amending a health benefit plan contract subject to this chapter, or
at least 20 business days prior to the initial offering of a health
benefit plan subject to this chapter, a carrier shall file a
statement with the commissioner in the same manner as required for
small employers as outlined in Section 10717. The statement shall
include a statement certifying that the carrier is in compliance with
subdivision (a) of Section 10901.3 and with Section 10901.9. Any
action by the commissioner, as permitted under Section 10717, to
disapprove, suspend, or postpone the plan's use of a carrier's health
benefit plan design shall be in writing, specifying the reasons the
health benefit plan does not comply with the requirements of this
chapter.
(b) Prior to making any changes in the premium, the carrier shall
file an amendment in the same manner as required for small employers
as outlined in Section 10717, and shall include a statement
certifying the carrier is in compliance with subdivision (a) of
Section 10901.3 and with Section 10901.9. All other changes to a
health benefit plan previously filed with the commissioner pursuant
to subdivision (a) shall be filed as an amendment in the same manner
as required for small employers as outlined in Section 10717.
10902.4. Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or method
to share in the financing of high-risk individuals. This mechanism
or method shall be established through a committee of all carriers
and health care service plans offering coverage to individuals by
July 1, 2002, and shall be implemented by January 1, 2003. If
carriers and health care service plans wish to establish a
risk-sharing mechanism but cannot agree on the terms and conditions
of such an agreement, the Managed Risk Medical Insurance Board shall
develop a risk-sharing mechanism or method by January 1, 2003, and it
shall be implemented by July 1, 2003.
10902.5. The commissioner may issue regulations that are necessary
to carry out the purposes of this chapter. Any rules and regulations
adopted pursuant to this chapter may be adopted as emergency
regulations in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
Until December 31, 2001, the adoption of these regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health and safety, or general welfare. The
regulations shall be enforced by the commissioner.
10902.6. This chapter shall apply to policies or contracts offered,
delivered, amended, or renewed on or after January 1, 2001.
10900. As used in this chapter:
(a) "Benefit plan design" means a specific health coverage policy
issued by a carrier to individuals, to trustees of associations that
cover individuals. It includes services covered and the levels of
copayment and deductibles, and it may include the professional
providers who are to provide those services and the sites where those
services are to be provided. A benefit plan design may also be an
integrated system for the financing and delivery of quality health
services that has significant incentives for the covered individuals
to use the system.
(b) "Carrier" means any disability insurance company or any other
entity that writes, issues, or administers health benefit plans, as
defined in subdivision (a) of Section 10198.6, that cover
individuals, regardless of the situs of the contract or master
policyholder.
(c) "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 plans. The term includes continuation or conversion
coverage but does not include accident only, credit, disability
income, Champus supplement, 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 federal Medicare program pursuant to Title XVIII of the
Social Security Act.
(3) The medicaid program pursuant to Title XIX of the Social
Security Act.
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C.A. Chapter 55 (commencing with Section 1071)
(CHAMPUS).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C.A. Chapter 89 (commencing
with Section 8901) (FEHBP).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(l) of the Public Health Service Act,
as amended by Public Law 104-191.
(10) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C.A. 2504(e)).
(d) "Dependent" means the spouse or child of an eligible
individual or other individual applying for coverage, subject to
applicable terms of the health benefit plan covering the eligible
person.
(e) "Federally eligible defined individual" means an individual
who as of the date on which the individual seeks coverage under this
part, (1) has 18 or more months of creditable coverage, and whose
most recent prior creditable coverage was under a group health plan,
a federal governmental plan maintained for federal employees, or a
governmental plan or church plan as defined in the federal Employee
Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1002), (2) is
not eligible for coverage under an employer-sponsored health benefit
plan, Medicare, or Medi-Cal, and has no other health insurance
coverage, (3) was not terminated from his or her most recent
creditable coverage due to nonpayment of premiums or fraud, and (4)
if offered continuation coverage under COBRA or Cal-COBRA, had
elected and exhausted such coverage.
(f) "In force business" means an existing health benefit plan
issued by a carrier to a federally eligible defined individual.
(g) "New business" means a health benefit plan issued to an
eligible individual that is not the carrier's in force business.
(h) "Preexisting condition provision" means a policy provision
that excludes coverage for charges and expenses incurred during a
specified period following the eligible individual's effective date,
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.
10901. Every carrier offering health benefit plans to individuals
shall comply with the provisions of this chapter and the rules
adopted thereunder.
10901.1. Nothing in this chapter shall be construed to preclude the
application of this chapter to either of the following: (a) an
association, trust, or other organization acting as a health care
service plan as defined under Section 1345, (b) an association,
trust, multiple employer welfare arrangement, or other organization
or person presenting information regarding a health benefit plan to
persons who may be interested in subscribing or enrolling in the
plan.
10901.2. (a) Commencing January 1, 2001, a carrier shall fairly and
affirmatively offer, market, and sell the health benefit plan
designs described in subdivision (d) of Section 10785 that are sold
to individuals or to associations that include individuals to all
federally eligible defined individuals in each geographic region in
which the carrier provides coverage for health care services. Each
carrier shall make available to each federally eligible defined
individual the identified health benefit plan designs which the plan
offers and sells to individuals or to associations that include
individuals.
(b) A carrier may not reject an application from a federally
eligible defined individual for a benefit plan design under the
following circumstances:
(1) The federally eligible defined individual as defined by
subdivision (e) of Section 10900 agrees to make the required premium
payments.
(2) The federally eligible defined individual, and his or her
dependents who are to be covered by the carrier, work or reside in
the service area in which the plan provides or otherwise arranges for
the provision of health care services.
(c) No carrier or agent or broker shall, directly or indirectly,
encourage or direct federally eligible defined individuals to refrain
from filing an application for coverage with a carrier because of
health status, claims experience, industry, occupation, receipt of
health care, genetic information, evidence of insurability, including
conditions arising out of acts of domestic violence, disability, or
geographic location provided that it is within the carrier's approved
service area.
(d) 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 a solicitor for
the sale of a health benefit plan design to be varied because of
health status, claims experience, industry, occupation, receipt of
health care, genetic information, evidence of insurability, including
conditions arising out of acts of domestic violence, disability, or
geographic location of the individual. 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 for the reasons
listed in this subdivision.
(e) 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 individuals in this state, the
third-party administrator shall be subject to this chapter.
10901.3. (a) (1) After the federally eligible defined individual
submits a completed application form for a health benefit plan, the
carrier shall, within 30 days, notify the individual of the
individual's actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
following amounts:
(A) For health benefit plans that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is of the
same age and resides in the same geographic area as the federally
eligible defined individual. However, for federally qualified
individuals who are between the ages of 60 and 64, inclusive, the
premium shall not exceed the average premium paid by a subscriber of
the Major Risk Medical Insurance Program who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual.
(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 and
64, inclusive, the premium shall not exceed 170 percent of the
standard premium charged to an individual who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual. The individual shall have 30 days in which to exercise
the right to buy coverage at the quoted premium rates.
(2) A carrier may adjust the premium based on family size, not to
exceed the following amounts:
(A) For health benefit plans that offer services through a
preferred provider arrangement, the average of the Major Risk Medical
Insurance Program rate for families of the same size that reside in
the same geographic area as the federally eligible defined
individual.
(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to a family
that is of the same size and resides in the same geographic area as
the federally eligible defined individual.
(b) When a federally eligible defined 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 shall begin no later than the first
day of the following month. When that payment is neither delivered or
postmarked until after the 15th day of a month, coverage shall
become effective no later than the first day of the second month
following delivery or postmark of the payment.
(c) During the first 30 days after the effective date of the
health benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change
within the first 15 days of a month, coverage under the new health
benefit plan shall become effective no later than the first day of
the following month. If an enrolled individual notified the carrier
of the change after the 15th day of a month, coverage under the
health benefit plan shall become effective no later than the first
day of the second month following notification.
10901.4. A carrier may not exclude any federally eligible defined
individual, or his or her dependents, who would otherwise be entitled
to health care services, on the basis of an actual or expected
health condition of that individual or dependent. No health benefit
plan may limit or exclude coverage for a specific federally eligible
defined individual, or his or her dependents, by type of illness,
treatment, medical condition, or accident.
10901.7. (a) The commissioner may require a carrier to discontinue
the offering of health benefit plans or the acceptance of
applications from any individual upon a determination by the
commissioner that the plan carrier does not have sufficient financial
viability, organization, and administrative capacity to assure the
delivery of health care services to its enrollees.
(b) The commissioner's determination shall follow an evaluation
that includes a certification by the commissioner that the acceptance
of an application or applications would place the carrier in a
financially impaired condition.
(c) A carrier that has not offered coverage or accepted
applications pursuant to this chapter shall not offer coverage or
accept applications for any individual until the commissioner has
determined that the carrier has ceased to be financially impaired.
10901.8. All health benefit plans offered to a federally eligible
defined individual shall be renewable with respect to the individual
and dependents at the option of the enrolled individual except in
cases of:
(a) Nonpayment of the required premiums.
(b) Fraud or misrepresentation by the enrolled individual.
(c) The carrier ceases to provide or arrange for the provision of
health care services for individual health benefit plan contracts in
this state, provided, however, that the following conditions are
satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in this state is provided to the commissioner
and to the contractholder.
(2) Individual health benefit plan contracts subject to this
chapter shall not be canceled for 180 days after the date of the
notice required under paragraph (1) and for that business of a
carrier that remains in force, any carrier that ceases to offer for
sale new individual health benefit plan contracts shall continue to
be governed by this article with respect to business conducted under
this chapter.
(3) A carrier that ceases to write new individual business in this
state after the effective date of this chapter shall be prohibited
from offering for sale new individual health benefit plan contracts
in this state for a period of three years from the date of the notice
to the commissioner.
(d) When a carrier withdraws a health benefit plan design from the
individual market, provided that a carrier makes available to
eligible individuals all health plan benefit designs that it makes
available to new individual business, and provided that premium for
the new health benefit plan complies with the renewal increase
requirements set forth in Section 10901.9.
10901.9. Commencing January 1, 2001, premiums for health benefit
plans offered, delivered, amended, or renewed by carriers shall be
subject to the following requirements:
(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is of the same age and resides in
the same geographic area as the federally eligible defined
individual. However, for federally qualified individuals who are
between the ages of 60 to 64, inclusive, the premium shall not exceed
the average premium paid by a subscriber of the Major Risk Medical
Insurance Program who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 to 64,
inclusive, the premium shall not exceed 170 percent of the standard
premium charged to an individual who is 59 years of age and resides
in the same geographic area as the federally eligible defined
individual.
(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is of the same age and resides in
the same geographic area as the federally eligible defined
individual. However, for federally qualified individuals who are
between the ages of 60 and 64, inclusive, the premium shall not
exceed the average premium paid by a subscriber of the Major Risk
Medical Insurance Program who is 59 years of age and resides in the
same geographic area as the federally eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 and
64, inclusive, the premium shall not exceed 170 percent of the
standard premium charged to an individual who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual. The premium effective on January 1, 2001, shall apply to
in force business at the earlier of either the time of renewal or
July 1, 2001.
(c) The premium applied to a federally eligible defined individual
may not increase by more than the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average increase in the premiums charged to a
subscriber of the Major Risk Medical Insurance Program who is of the
same age and resides in the same geographic area as the federally
eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, the increase in premiums charged to a nonfederally
qualified individual who is of the same age and resides in the same
geographic area as the federally defined eligible individual. The
premium for an eligible individual may not be modified more
frequently than every 12 months.
(2) For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall be
no greater than the premium applied in the prior rating period to
the discontinued contract.
10902. Carriers shall apply premiums consistently with respect to
all federally eligible defined individuals who apply for coverage.
10902.1. In connection with the offering for sale of any health
benefit plan designed to an individual, each carrier shall make a
reasonable disclosure, as part of its solicitation and sales
materials, of all individual contracts.
10902.2. Nothing in this chapter shall be construed to require a
health benefit plan to offer a contract to an individual if the
carrier does not otherwise offer contracts to individuals.
10902.3. (a) At least 20 business days prior to renewing or
amending a health benefit plan contract subject to this chapter, or
at least 20 business days prior to the initial offering of a health
benefit plan subject to this chapter, a carrier shall file a
statement with the commissioner in the same manner as required for
small employers as outlined in Section 10717. The statement shall
include a statement certifying that the carrier is in compliance with
subdivision (a) of Section 10901.3 and with Section 10901.9. Any
action by the commissioner, as permitted under Section 10717, to
disapprove, suspend, or postpone the plan's use of a carrier's health
benefit plan design shall be in writing, specifying the reasons the
health benefit plan does not comply with the requirements of this
chapter.
(b) Prior to making any changes in the premium, the carrier shall
file an amendment in the same manner as required for small employers
as outlined in Section 10717, and shall include a statement
certifying the carrier is in compliance with subdivision (a) of
Section 10901.3 and with Section 10901.9. All other changes to a
health benefit plan previously filed with the commissioner pursuant
to subdivision (a) shall be filed as an amendment in the same manner
as required for small employers as outlined in Section 10717.
10902.4. Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or method
to share in the financing of high-risk individuals. This mechanism
or method shall be established through a committee of all carriers
and health care service plans offering coverage to individuals by
July 1, 2002, and shall be implemented by January 1, 2003. If
carriers and health care service plans wish to establish a
risk-sharing mechanism but cannot agree on the terms and conditions
of such an agreement, the Managed Risk Medical Insurance Board shall
develop a risk-sharing mechanism or method by January 1, 2003, and it
shall be implemented by July 1, 2003.
10902.5. The commissioner may issue regulations that are necessary
to carry out the purposes of this chapter. Any rules and regulations
adopted pursuant to this chapter may be adopted as emergency
regulations in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
Until December 31, 2001, the adoption of these regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health and safety, or general welfare. The
regulations shall be enforced by the commissioner.
10902.6. This chapter shall apply to policies or contracts offered,
delivered, amended, or renewed on or after January 1, 2001.
10900. As used in this chapter:
(a) "Benefit plan design" means a specific health coverage policy
issued by a carrier to individuals, to trustees of associations that
cover individuals. It includes services covered and the levels of
copayment and deductibles, and it may include the professional
providers who are to provide those services and the sites where those
services are to be provided. A benefit plan design may also be an
integrated system for the financing and delivery of quality health
services that has significant incentives for the covered individuals
to use the system.
(b) "Carrier" means any disability insurance company or any other
entity that writes, issues, or administers health benefit plans, as
defined in subdivision (a) of Section 10198.6, that cover
individuals, regardless of the situs of the contract or master
policyholder.
(c) "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 plans. The term includes continuation or conversion
coverage but does not include accident only, credit, disability
income, Champus supplement, 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 federal Medicare program pursuant to Title XVIII of the
Social Security Act.
(3) The medicaid program pursuant to Title XIX of the Social
Security Act.
(4) Any other publicly sponsored program, provided in this state
or elsewhere, of medical, hospital, and surgical care.
(5) 10 U.S.C.A. Chapter 55 (commencing with Section 1071)
(CHAMPUS).
(6) A medical care program of the Indian Health Service or of a
tribal organization.
(7) A state health benefits risk pool.
(8) A health plan offered under 5 U.S.C.A. Chapter 89 (commencing
with Section 8901) (FEHBP).
(9) A public health plan as defined in federal regulations
authorized by Section 2701(c)(1)(l) of the Public Health Service Act,
as amended by Public Law 104-191.
(10) A health benefit plan under Section 5(e) of the Peace Corps
Act (22 U.S.C.A. 2504(e)).
(d) "Dependent" means the spouse or child of an eligible
individual or other individual applying for coverage, subject to
applicable terms of the health benefit plan covering the eligible
person.
(e) "Federally eligible defined individual" means an individual
who as of the date on which the individual seeks coverage under this
part, (1) has 18 or more months of creditable coverage, and whose
most recent prior creditable coverage was under a group health plan,
a federal governmental plan maintained for federal employees, or a
governmental plan or church plan as defined in the federal Employee
Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1002), (2) is
not eligible for coverage under an employer-sponsored health benefit
plan, Medicare, or Medi-Cal, and has no other health insurance
coverage, (3) was not terminated from his or her most recent
creditable coverage due to nonpayment of premiums or fraud, and (4)
if offered continuation coverage under COBRA or Cal-COBRA, had
elected and exhausted such coverage.
(f) "In force business" means an existing health benefit plan
issued by a carrier to a federally eligible defined individual.
(g) "New business" means a health benefit plan issued to an
eligible individual that is not the carrier's in force business.
(h) "Preexisting condition provision" means a policy provision
that excludes coverage for charges and expenses incurred during a
specified period following the eligible individual's effective date,
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.
10901. Every carrier offering health benefit plans to individuals
shall comply with the provisions of this chapter and the rules
adopted thereunder.
10901.1. Nothing in this chapter shall be construed to preclude the
application of this chapter to either of the following: (a) an
association, trust, or other organization acting as a health care
service plan as defined under Section 1345, (b) an association,
trust, multiple employer welfare arrangement, or other organization
or person presenting information regarding a health benefit plan to
persons who may be interested in subscribing or enrolling in the
plan.
10901.2. (a) Commencing January 1, 2001, a carrier shall fairly and
affirmatively offer, market, and sell the health benefit plan
designs described in subdivision (d) of Section 10785 that are sold
to individuals or to associations that include individuals to all
federally eligible defined individuals in each geographic region in
which the carrier provides coverage for health care services. Each
carrier shall make available to each federally eligible defined
individual the identified health benefit plan designs which the plan
offers and sells to individuals or to associations that include
individuals.
(b) A carrier may not reject an application from a federally
eligible defined individual for a benefit plan design under the
following circumstances:
(1) The federally eligible defined individual as defined by
subdivision (e) of Section 10900 agrees to make the required premium
payments.
(2) The federally eligible defined individual, and his or her
dependents who are to be covered by the carrier, work or reside in
the service area in which the plan provides or otherwise arranges for
the provision of health care services.
(c) No carrier or agent or broker shall, directly or indirectly,
encourage or direct federally eligible defined individuals to refrain
from filing an application for coverage with a carrier because of
health status, claims experience, industry, occupation, receipt of
health care, genetic information, evidence of insurability, including
conditions arising out of acts of domestic violence, disability, or
geographic location provided that it is within the carrier's approved
service area.
(d) 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 a solicitor for
the sale of a health benefit plan design to be varied because of
health status, claims experience, industry, occupation, receipt of
health care, genetic information, evidence of insurability, including
conditions arising out of acts of domestic violence, disability, or
geographic location of the individual. 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 for the reasons
listed in this subdivision.
(e) 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 individuals in this state, the
third-party administrator shall be subject to this chapter.
10901.3. (a) (1) After the federally eligible defined individual
submits a completed application form for a health benefit plan, the
carrier shall, within 30 days, notify the individual of the
individual's actual premium charges for that health benefit plan
design. In no case shall the premium charged for any health benefit
plan identified in subdivision (d) of Section 10785 exceed the
following amounts:
(A) For health benefit plans that offer services through a
preferred provider arrangement, the average premium paid by a
subscriber of the Major Risk Medical Insurance Program who is of the
same age and resides in the same geographic area as the federally
eligible defined individual. However, for federally qualified
individuals who are between the ages of 60 and 64, inclusive, the
premium shall not exceed the average premium paid by a subscriber of
the Major Risk Medical Insurance Program who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual.
(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 and
64, inclusive, the premium shall not exceed 170 percent of the
standard premium charged to an individual who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual. The individual shall have 30 days in which to exercise
the right to buy coverage at the quoted premium rates.
(2) A carrier may adjust the premium based on family size, not to
exceed the following amounts:
(A) For health benefit plans that offer services through a
preferred provider arrangement, the average of the Major Risk Medical
Insurance Program rate for families of the same size that reside in
the same geographic area as the federally eligible defined
individual.
(B) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to a family
that is of the same size and resides in the same geographic area as
the federally eligible defined individual.
(b) When a federally eligible defined 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 shall begin no later than the first
day of the following month. When that payment is neither delivered or
postmarked until after the 15th day of a month, coverage shall
become effective no later than the first day of the second month
following delivery or postmark of the payment.
(c) During the first 30 days after the effective date of the
health benefit plan, the individual shall have the option of changing
coverage to a different health benefit plan design offered by the
same carrier. If the individual notified the plan of the change
within the first 15 days of a month, coverage under the new health
benefit plan shall become effective no later than the first day of
the following month. If an enrolled individual notified the carrier
of the change after the 15th day of a month, coverage under the
health benefit plan shall become effective no later than the first
day of the second month following notification.
10901.4. A carrier may not exclude any federally eligible defined
individual, or his or her dependents, who would otherwise be entitled
to health care services, on the basis of an actual or expected
health condition of that individual or dependent. No health benefit
plan may limit or exclude coverage for a specific federally eligible
defined individual, or his or her dependents, by type of illness,
treatment, medical condition, or accident.
10901.7. (a) The commissioner may require a carrier to discontinue
the offering of health benefit plans or the acceptance of
applications from any individual upon a determination by the
commissioner that the plan carrier does not have sufficient financial
viability, organization, and administrative capacity to assure the
delivery of health care services to its enrollees.
(b) The commissioner's determination shall follow an evaluation
that includes a certification by the commissioner that the acceptance
of an application or applications would place the carrier in a
financially impaired condition.
(c) A carrier that has not offered coverage or accepted
applications pursuant to this chapter shall not offer coverage or
accept applications for any individual until the commissioner has
determined that the carrier has ceased to be financially impaired.
10901.8. All health benefit plans offered to a federally eligible
defined individual shall be renewable with respect to the individual
and dependents at the option of the enrolled individual except in
cases of:
(a) Nonpayment of the required premiums.
(b) Fraud or misrepresentation by the enrolled individual.
(c) The carrier ceases to provide or arrange for the provision of
health care services for individual health benefit plan contracts in
this state, provided, however, that the following conditions are
satisfied:
(1) Notice of the decision to cease new or existing individual
health benefit plans in this state is provided to the commissioner
and to the contractholder.
(2) Individual health benefit plan contracts subject to this
chapter shall not be canceled for 180 days after the date of the
notice required under paragraph (1) and for that business of a
carrier that remains in force, any carrier that ceases to offer for
sale new individual health benefit plan contracts shall continue to
be governed by this article with respect to business conducted under
this chapter.
(3) A carrier that ceases to write new individual business in this
state after the effective date of this chapter shall be prohibited
from offering for sale new individual health benefit plan contracts
in this state for a period of three years from the date of the notice
to the commissioner.
(d) When a carrier withdraws a health benefit plan design from the
individual market, provided that a carrier makes available to
eligible individuals all health plan benefit designs that it makes
available to new individual business, and provided that premium for
the new health benefit plan complies with the renewal increase
requirements set forth in Section 10901.9.
10901.9. Commencing January 1, 2001, premiums for health benefit
plans offered, delivered, amended, or renewed by carriers shall be
subject to the following requirements:
(a) The premium for new business for a federally eligible defined
individual shall not exceed the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is of the same age and resides in
the same geographic area as the federally eligible defined
individual. However, for federally qualified individuals who are
between the ages of 60 to 64, inclusive, the premium shall not exceed
the average premium paid by a subscriber of the Major Risk Medical
Insurance Program who is 59 years of age and resides in the same
geographic area as the federally eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 to 64,
inclusive, the premium shall not exceed 170 percent of the standard
premium charged to an individual who is 59 years of age and resides
in the same geographic area as the federally eligible defined
individual.
(b) The premium for in force business for a federally eligible
defined individual shall not exceed the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average premium paid by a subscriber of the Major
Risk Medical Insurance Program who is of the same age and resides in
the same geographic area as the federally eligible defined
individual. However, for federally qualified individuals who are
between the ages of 60 and 64, inclusive, the premium shall not
exceed the average premium paid by a subscriber of the Major Risk
Medical Insurance Program who is 59 years of age and resides in the
same geographic area as the federally eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, 170 percent of the standard premium charged to an
individual who is of the same age and resides in the same geographic
area as the federally eligible defined individual. However, for
federally qualified individuals who are between the ages of 60 and
64, inclusive, the premium shall not exceed 170 percent of the
standard premium charged to an individual who is 59 years of age and
resides in the same geographic area as the federally eligible defined
individual. The premium effective on January 1, 2001, shall apply to
in force business at the earlier of either the time of renewal or
July 1, 2001.
(c) The premium applied to a federally eligible defined individual
may not increase by more than the following amounts:
(1) For health benefit plans identified in subdivision (d) of
Section 10785 that offer services through a preferred provider
arrangement, the average increase in the premiums charged to a
subscriber of the Major Risk Medical Insurance Program who is of the
same age and resides in the same geographic area as the federally
eligible defined individual.
(2) For health benefit plans identified in subdivision (d) of
Section 10785 that do not offer services through a preferred provider
arrangement, the increase in premiums charged to a nonfederally
qualified individual who is of the same age and resides in the same
geographic area as the federally defined eligible individual. The
premium for an eligible individual may not be modified more
frequently than every 12 months.
(2) For a contract that a carrier has discontinued offering, the
premium applied to the first rating period of the new contract that
the federally eligible defined individual elects to purchase shall be
no greater than the premium applied in the prior rating period to
the discontinued contract.
10902. Carriers shall apply premiums consistently with respect to
all federally eligible defined individuals who apply for coverage.
10902.1. In connection with the offering for sale of any health
benefit plan designed to an individual, each carrier shall make a
reasonable disclosure, as part of its solicitation and sales
materials, of all individual contracts.
10902.2. Nothing in this chapter shall be construed to require a
health benefit plan to offer a contract to an individual if the
carrier does not otherwise offer contracts to individuals.
10902.3. (a) At least 20 business days prior to renewing or
amending a health benefit plan contract subject to this chapter, or
at least 20 business days prior to the initial offering of a health
benefit plan subject to this chapter, a carrier shall file a
statement with the commissioner in the same manner as required for
small employers as outlined in Section 10717. The statement shall
include a statement certifying that the carrier is in compliance with
subdivision (a) of Section 10901.3 and with Section 10901.9. Any
action by the commissioner, as permitted under Section 10717, to
disapprove, suspend, or postpone the plan's use of a carrier's health
benefit plan design shall be in writing, specifying the reasons the
health benefit plan does not comply with the requirements of this
chapter.
(b) Prior to making any changes in the premium, the carrier shall
file an amendment in the same manner as required for small employers
as outlined in Section 10717, and shall include a statement
certifying the carrier is in compliance with subdivision (a) of
Section 10901.3 and with Section 10901.9. All other changes to a
health benefit plan previously filed with the commissioner pursuant
to subdivision (a) shall be filed as an amendment in the same manner
as required for small employers as outlined in Section 10717.
10902.4. Carriers and health care service plans that offer
contracts to individuals may elect to establish a mechanism or method
to share in the financing of high-risk individuals. This mechanism
or method shall be established through a committee of all carriers
and health care service plans offering coverage to individuals by
July 1, 2002, and shall be implemented by January 1, 2003. If
carriers and health care service plans wish to establish a
risk-sharing mechanism but cannot agree on the terms and conditions
of such an agreement, the Managed Risk Medical Insurance Board shall
develop a risk-sharing mechanism or method by January 1, 2003, and it
shall be implemented by July 1, 2003.
10902.5. The commissioner may issue regulations that are necessary
to carry out the purposes of this chapter. Any rules and regulations
adopted pursuant to this chapter may be adopted as emergency
regulations in accordance with Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code.
Until December 31, 2001, the adoption of these regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health and safety, or general welfare. The
regulations shall be enforced by the commissioner.
10902.6. This chapter shall apply to policies or contracts offered,
delivered, amended, or renewed on or after January 1, 2001.
