12670. It is the intent of the Legislature to ensure that persons
covered by a group policy, who become ineligible for that coverage
have access to benefits pursuant to this part by requiring employers,
employee organizations, and other entities that provide that
coverage to their employees or members to also make available
conversion policies for those persons and to ensure that insurers as
herein defined offer conversion policies. The conversion policy shall
be the most popular preferred provider organization product offered
to residents of this state under the provisions of the federal Health
Insurance Portability and Accountability Act of 1996. In addition,
it is the intent of the Legislature to encourage the continuation of
group health coverage by requiring the entities herein defined to
make available continuation benefits for widows, widowers, divorced
spouses, and dependents who were covered by the group policy on the
date of termination of coverage.
12671. As used in this part, the following terms have the following
meanings:
(a) "Group policy" means a group health insurance policy providing
medical, hospital, surgical, major medical, or comprehensive medical
coverage issued by an insurer, a group contract issued by a hospital
service corporation, or medical, hospital, surgical, major medical,
or comprehensive medical coverage otherwise provided by a
policyholder to its employees or members, except for self-insurance
programs provided by employers that are not exempt from ERISA, as
specified in subdivision (i). For the purposes of this part, a group
policy not having an established annual renewal date shall be
considered renewed on each anniversary of its effective date.
(b) "Conversion coverage" means health insurance benefits
providing hospital, surgical, major medical, or comprehensive medical
coverage issued to an individual under a converted policy.
(c) "Converted policy" means a policy or contract providing
conversion coverage issued by an insurance company or by a hospital
service corporation, or individual hospital, surgical, major medical,
or comprehensive medical coverage otherwise provided by a
policyholder to its employees or members.
(d) "Insurer" means the entity issuing a group policy, an
individual or converted policy, a hospital service contract or an
employer or employee organization otherwise providing medical,
hospital, surgical, major medical, or comprehensive medical coverage
to its employees or members.
(e) "Insurance" refers to health insurance, major medical, or
comprehensive coverage paid by premium or contribution under a group
policy, a hospital service contract, or as otherwise provided by a
policyholder to its employees or members other than by self-insuring
except in the case of a plan that is exempt from ERISA, but does
include an employer plan that is exempt from ERISA as specified in
subdivision (i). "Insurance" does not include any of the following:
(1) Coverage provided solely as an accrued liability or by reason
of a disability extension.
(2) Medicare supplement insurance.
(3) Vision-only insurance.
(4) Dental-only insurance.
(5) CHAMPUS supplement insurance.
(6) Hospital indemnity insurance.
(7) Accident-only insurance.
(8) Short-term limited duration health insurance. "Short-term
limited duration health insurance" means individual health insurance
coverage that is offered by a licensed insurance company, intended to
be used as transitional or interim coverage to remain in effect for
not more than 185 days, that cannot be renewed or otherwise continued
for more than one additional period of not more than 185 days, and
that is not intended or marketed as health insurance coverage, a
health care service plan, or a health maintenance organization
subject to guaranteed issuance or guaranteed renewal pursuant to
relevant state or federal law.
(9) Specified disease insurance that does not pay benefits on a
fixed benefit, cash payment only basis.
(f) "Policyholder" means the holder of a group policy issued by an
insurer, a holder of a group contract issued by a hospital service
corporation or an employer, employee association, or other entity
otherwise providing medical, hospital, surgical, major medical, or
comprehensive medical coverage on a group basis to its employees or
members.
(g) "Premium" means contribution or other consideration paid or
payable for coverage under a group policy or converted policy.
(h) "Medicare" means Title XVIII of the United States Social
Security Act as added by the Social Security Amendments of 1965 or as
later amended or superseded.
(i) "Employer plan that is exempt from ERISA" means any employer
plan that, pursuant to the provisions of Section 1003 of Title 29 of
the United States Code, is not covered by or that is exempt from the
provisions of Subchapter I (commencing with Section 1001) of Chapter
18 of Title 29 of the United States Code, except that, in the case of
a governmental plan, it only includes a self-insured governmental
plan as defined in subdivision (j).
(j) "Self-insured governmental plan" means a self-insured plan
established or maintained for its employees by any public entity, as
defined in Section 811.2 of the Government Code, that is a
governmental plan as defined in subdivision (32) of Section 1002 of
Title 29 of the United States Code.
12672. Any group policy issued, amended, or renewed in this state
on or after January 1, 1983, which provides insurance for employees
or members on an expense-incurred or service basis, other than for a
specific disease or for accidental injuries only, shall contain a
provision that an employee or member whose coverage under the group
policy has been terminated for any reason except as provided in this
part, shall be entitled to have a converted policy issued to him or
her by the insurer under whose group policy he or she was covered,
without evidence of insurability, subject to the terms and conditions
of this part.
12673. Conversion coverage shall be required to be made available
to an employee or member unless such coverage under the group policy
terminates for one or more of the following reasons:
(a) The group policy or the policyholder's participation in the
group policy terminates and the insurance is replaced by similar
coverage under another group policy within 60 days of the date of
termination of the group coverage or the policyholder's
participation.
(b) The employee or member has failed to make any required payment
of the premium or contribution when due.
(c) The employee or member had not been continuously covered
during the three-month period immediately preceding the employee's or
member's termination of coverage.
12674. A converted policy shall be issued effective on the day
following the termination of coverage under the group policy if
written application and the first premium payment for the conversion
policy are made to the insurer not later than 31 days after the
termination of insurance, unless such requirements are waived in
writing by the insurer.
12675. The premium for the conversion coverage shall be determined
in accordance with the insurer's rates applicable to the age and
class of risk of each person to be covered and to the type and amount
of coverage provided.
12676. The conversion coverage shall cover the employee or member
and his or her dependents who were covered by the group policy on the
date of termination of coverage. At the option of the insurer, a
separate converted policy may be issued to cover any dependent.
12677. The insurer shall not be required to issue a converted
policy covering any person if such person is entitled to be covered
by Medicare.
12678. The insurer shall not be required to issue a converted
policy covering any person if any of the following exists:
(a) The person is covered for similar benefits by another
individual policy.
(b) The person is covered or is eligible to be covered for similar
benefits by another group policy.
(c) The person is covered or is eligible to be covered for similar
benefits under any arrangement of coverage for persons in a group
whether insured or uninsured.
12679. A converted policy may provide that the insurer may at any
time request information from any person covered thereunder as to
whether he or she is covered for the similar benefits described in
Section 12678. The converted policy shall provide that as of any
premium due date the insurer may refuse to renew the policy or the
coverage of any insured person for the following reasons only:
(a) Failure of the individual covered by the converted policy to
provide the requested information.
(b) Fraud or material misrepresentation by the individual covered
by the converted policy in applying for any benefits under the
converted policy.
(c) Eligibility of the individual covered by the converted policy
for coverage under Medicare or under any other state or federal law
providing for benefits similar to those provided by the converted
policy. As used in this section, "state or federal law" does not
include Chapter 7 (commencing with Section 14000) or Chapter 8
(commencing with Section 14200) of Part 3 of Division 9 of the
Welfare and Institutions Code, or Title XIX of the United States
Social Security Act.
(d) Nonpayment of premium.
(e) Coverage of the individual for similar benefits under another
individual policy.
(f) Eligibility of the individual covered by the converted policy
for coverage under any arrangement for coverage for persons in a
group whether insured or uninsured.
(g) Other reasons approved by the Insurance Commissioner.
12680. If conversion coverage is issued and benefits are also
provided to a person under Section 12678, the insurer may limit the
conversion benefits provided or available for such person so that
such conversion benefits together with benefits provided or available
from the sources referred to in Section 12678 shall not exceed 100
percent of the charges for covered benefits. Priority of any
coverages involved shall be determined by the effective dates, the
earlier one being first.
12681. An insurer shall not be required to issue a converted policy
providing benefits in excess of those provided under the group
policy from which conversion is made.
12682. The converted policy shall not exclude, as a preexisting
condition, any condition covered by the group policy. The converted
policy may provide for a reduction of its benefits by the amount of
any such benefits payable under the group policy after the individual'
s insurance terminates thereunder. The converted policy may also
provide that during the first policy year the benefits payable under
the converted policy, together with the benefits payable under the
group policy, shall not exceed those that would have been payable had
the individual's coverage under the group policy remained in effect.
12682.1. This section does not apply to a policy that primarily or
solely supplements Medicare. The commissioner may adopt rules
consistent with federal law to govern the discontinuance and
replacement of plan policies that primarily or solely supplement
Medicare.
(a) (1) Every group policy entered into, amended, or renewed on or
after September 1, 2003, that provides hospital, medical, or
surgical expense benefits for employees or members shall provide that
an employee or member whose coverage under the group policy has been
terminated by the employer shall be entitled to convert to nongroup
membership, without evidence of insurability, subject to the terms
and conditions of this section.
(2) If the health insurer provides coverage under an individual
health insurance policy, other than conversion coverage under this
part, it shall offer one of the two health insurance policies that
the insurer is required to offer to a federally eligible defined
individual pursuant to Section 10785. The health insurer shall
provide this coverage at the same rate established under Section
10901.3 for a federally eligible defined individual.
(3) If the health insurer does not provide coverage under an
individual health insurance policy, it shall offer a health benefit
plan contract that is the same as a health benefit contract offered
to a federally eligible defined individual pursuant to Section
1366.35. The health insurer shall offer the most popular preferred
provider organization plan that has the greatest number of enrolled
individuals for its type of plan as of January 1 of the prior year,
as reported by plans by January 31, 2003, and annually thereafter,
that provide coverage under an individual health care service plan
contract to the department or the Department of Managed Health Care.
A health insurer subject to this paragraph plan shall provide this
coverage with the same cost-sharing terms and at the same premium as
a health care service plan providing coverage to that individual
under an individual health care service plan contract pursuant to
Section 1399.805. The health insurer shall file the health benefit
plan contract it will offer, including the premium it will charge and
the cost-sharing terms of the contract, with the Department of
Insurance.
(b) A conversion policy shall not be required to be made available
to an employee or insured if termination of his or her coverage
under the group policy occurred for any of the following reasons:
(1) The group policy terminated or an employer's participation
terminated and the insurance is replaced by similar coverage under
another group policy within 15 days of the date of termination of the
group coverage or the employer's participation.
(2) The employee or insured failed to pay amounts due the health
insurer.
(3) The employee or insured was terminated by the health insurer
from the policy for good cause.
(4) The employee or insured knowingly furnished incorrect
information or otherwise improperly obtained the benefits of the
policy.
(5) The employer's hospital, medical, or surgical expense benefit
program is self-insured.
(c) A conversion policy is not required to be issued to any person
if any of the following facts are present:
(1) The person is covered by or is eligible for benefits under
Title XVIII of the United States Social Security Act.
(2) The person is covered by or is eligible for hospital, medical,
or surgical benefits under any arrangement of coverage for
individuals in a group, whether insured or self-insured.
(3) The person is covered for similar benefits by an individual
policy or contract.
(4) The person has not been continuously covered during the
three-month period immediately preceding that person's termination of
coverage.
(d) Benefits of a conversion policy shall meet the requirements
for benefits under this chapter.
(e) Unless waived in writing by the insurer, written application
and first premium payment for the conversion policy shall be made not
later than 63 days after termination from the group. A conversion
policy shall be issued by the insurer which shall be effective on the
day following the termination of coverage under the group contract
if the written application and the first premium payment for the
conversion contract are made to the insurer not later than 63 days
after the termination of coverage, unless these requirements are
waived in writing by the insurer.
(f) The conversion policy shall cover the employee or insured and
his or her dependents who were covered under the group policy on the
date of their termination from the group.
(g) A notification of the availability of the conversion coverage
shall be included in each evidence of coverage or other legally
required document explaining coverage. However, it shall be the sole
responsibility of the employer to notify its employees of the
availability, terms, and conditions of the conversion coverage which
responsibility shall be satisfied by notification within 15 days of
termination of group coverage. Group coverage shall not be deemed
terminated until the expiration of any continuation of the group
coverage. For purposes of this subdivision, the employer shall not be
deemed the agent of the insurer for purposes of notification of the
availability, terms, and conditions of conversion coverage.
(h) As used in this section, "hospital, medical, or surgical
benefits under state or federal law" do not include benefits under
Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing
with Section 14200) of Part 3 of Division 9 of the Welfare and
Institutions Code, or Title XIX of the United States Social Security
Act.
(i) This section shall become operative on September 1, 2003.
12683. Subject to the provisions and conditions of this part, if
the group policy from which conversion is made covers the employee or
member for basic hospital or surgical expense, the employee or
member shall be entitled to obtain a converted policy providing at
least the following minimum benefits:
(a) Plan A.
(1) Hospital room and board daily expense benefits up to two
hundred dollars ($200) for a duration of 70 days.
(2) Miscellaneous hospital expense benefits up to an amount of 10
times the hospital room and board daily expense benefits.
(3) Surgical expense benefits according to a surgical procedures
schedule consistent with those customarily offered by the insurer
under a group or individual health insurance policy and providing a
maximum benefit of four thousand eight hundred dollars ($4,800).
(b) Plan B--75 percent of the dollar amounts of Plan A.
(c) Plan C--50 percent of the dollar amounts of Plan A.
(d) The maximum dollar amount for Plan A's hospital room and board
daily expense and surgical benefit may be redetermined by the
Insurance Commissioner as to conversion coverage issued subsequent to
that redetermination. The redetermination shall not be made more
often than once in three years. The maximum dollar amount
redetermined by the commissioner for hospital room and board shall
not exceed 80 percent of the average semiprivate room rate then
charged in the state.
(e) Covered expenses under this section shall include benefits for
expense incurred by the employee, member, or spouse in connection
with pregnancy, provided that:
(1) The pregnancy commenced while covered under the group policy
from which conversion was made.
(2) The expense is of a type which would have been covered under
such group policy.
(3) The conversion policy is in force when the expense is
incurred.
12684. Subject to the provisions and conditions of this part, if
the group policy from which conversion is made provides the employee
or member with major medical or comprehensive medical insurance, the
employee or member shall be entitled to obtain a converted policy
providing comprehensive medical coverage providing at least the
following benefits:
(a) A payment per covered person for all covered medical expenses
incurred during the person's lifetime equal to one hundred thousand
dollars ($100,000); provided, however, that for treatment of mental
illness payment may be limited to ten thousand dollars ($10,000)
during the person's lifetime.
(b) Payment of benefits at the rate of 75 percent of covered
medical expenses; provided, however, that if coverage is provided for
expenses incurred for outpatient treatment of mental illness,
payment of benefits may be at the rate of 50 percent of such covered
expenses, and the insurer may limit the amount of covered expense for
each outpatient visit and the amount of benefits payable for
expenses incurred during each calendar year for that outpatient
treatment.
(c) A cash deductible for each benefit period at the option of the
insured of two hundred dollars ($200), five hundred dollars ($500),
or one thousand dollars ($1,000), but not less than the cash
deductible which applied to the insured under the group policy which
entitles him or her to a converted policy.
(d) Covered medical expenses shall include the charges for a
semiprivate hospital room and board, but need not exceed the lesser
of two hundred dollars ($200) per day or the hospital's most common
charge for a semiprivate room, covered expenses for intensive care
shall be at least two and one-half times the covered hospital room
and board charge. The maximum dollar amount for hospital room and
board daily covered expense may be redetermined by the commissioner
as to conversion coverage issued after the redetermination. That
redetermination shall not be made more often than once in three
years. The maximum dollar amount redetermined by the commissioner
shall not exceed the average semiprivate room rate then charged in
the state.
(e) Covered expenses under this section shall include benefits for
expense incurred by the employee, member, or spouse in connection
with pregnancy, provided that:
(1) The pregnancy commenced while covered under the group policy
from which conversion was made.
(2) The expense is of a type which would have been covered under
such group policy.
(3) The conversion policy is in force when the expense is
incurred.
(f) Covered expense under this section need not include expense
for dental or vision care, or other optional benefits not normally
offered by the insurer under a major medical or comprehensive medical
expense plan.
12685. The insurer may, at its option, offer alternative plans for
group health conversion in addition to those required by this part.
12686. (a) In the event coverage would be continued under a group
policy on an employee or member following his or her retirement prior
to the time he or she is or could be covered by Medicare, the
employee or member may elect, in lieu of the continuation of group
insurance, to have the same conversion rights as would apply had that
coverage terminated at retirement by reason of termination of
employment or membership.
(b) The converted policy may provide for reduction or termination
of coverage of any person upon his or her eligibility for coverage
under Medicare or under any other state or federal law providing for
benefits similar to those provided by the converted policy. As used
in this section, "state or federal law" does not include Chapter 7
(commencing with Section 14000) or Chapter 8 (commencing with Section
14200) of Part 3 of Division 9 of the Welfare and Institutions Code,
or Title XIX of the United States Social Security Act.
(c) Subject to the conditions set forth herein, the conversion
coverage shall also be available to:
(1) A covered dependent spouse and such children whose coverage
terminates under the group policy by reason of the death of the
employee or member, or a covered dependent spouse in the event such
person ceases to be a qualified family member by reason of the
termination of the marriage.
(2) A child, solely with respect to himself or herself, whose
coverage terminates because the child ceases to be a qualified family
member under the group policy.
(d) If the benefit levels required in Section 12683 or Section
12684 exceed the benefit levels provided under the group policy, the
converted policy may offer benefits which are substantially similar
to those provided under the group policy in lieu of those required in
Section 12683 or Section 12684.
(e) The insurer may elect to provide conversion coverage through a
group insurance policy issued for that purpose in lieu of an
individual policy.
(f) An insurer required by this part to provide conversion
coverage may provide such coverage through one or more other insurers
authorized to provide disability insurance coverage in this state.
12687. Notwithstanding any other provision in this part, whenever
an employee or member chooses among two or more conversion policies,
such choice shall be made within 31 days from the last date when the
employee or member was eligible for benefits under a group policy
from which conversion is available.
12688. Notwithstanding any provision in this part to the contrary,
a hospital service corporation or any insurer which customarily
offers individual conversion coverage on a service basis may, in lieu
of the expense incurred conversion coverage provided in Sections
12683 and 12684, make available conversion coverage on a service
basis which complies with the intent of this part as approved by the
commissioner.
12689. A notification of the conversion coverage shall be included
in each certificate of coverage or other legally required document
explaining coverage; provided, however, that it shall be the sole
responsibility of the policyholder to notify its employees or members
of the availability, terms and conditions of conversion coverage
which responsibility shall be satisfied by notification within 15
days of termination of group coverage. Group coverage shall not be
deemed terminated until the expiration of any continuation of the
group coverage. For purposes of this part, the policyholder shall not
be deemed to be the agent of the insurer for purposes of
notification of the availability, terms and conditions of conversion
coverage.
12690. Nothing in this part shall prohibit insurers from
establishing one or more pools from which the converted policies
provided for on this part may be issued.
12691. A converted policy which is delivered in a jurisdiction
other than this state may be in a form which could be delivered in
such jurisdiction as a converted policy had the group policy been
issued in such jurisdiction.
12692. On and after January 1, 1985, every insurer and nonprofit
hospital service plan issuing group disability insurance which covers
hospital, medical, or surgical expenses shall offer to group
policyholders a continuation benefit which, if selected, shall have a
duration of at least 90 days and which shall be offered
consecutively to any federal requirement for continuation benefits.
The terms and conditions shall include continuation benefit coverage
for widows, widowers, divorced or legally separated spouses, spouses
of covered employees becoming entitled to benefits under Title XVIII
of the Social Security Act, and their dependents, including dependent
children who cease to be dependent children under the plan, who were
covered by the group contract on the date of termination of
coverage. However, any existing provisions of law regarding
termination of a dependent child status shall not be affected by this
section.
The continuation of coverage shall be available only under the
following conditions:
(a) Those eligible remain within the State of California, although
the departure of a dependent child to another state shall not
invalidate the continuation provisions for any other family members.
(b) Those eligible do not marry or remarry, although the marriage
of any dependent child shall not invalidate the continuation
provisions for other family members.
(c) Those eligible are not eligible for any comparable state,
federal, or private group medical plan, although the eligibility of
any dependent child shall not invalidate the continuation provisions
for other family members.
(d) Those eligible do not find employment with an employer that
has a group plan of its own, even if the plan is less substantive,
although the entry into such an employee plan by a dependent child
shall not invalidate the continuation provisions for other family
members.
(e) The group policy is not terminated or the employer's
participation in the group policy is not terminated.
(f) Those eligible do not knowingly furnish incorrect information
or otherwise improperly obtain the benefits of the plan.
(g) The continuing individual shall pay the premium amount in the
manner specified in the group policy for both his or her share of the
premium and the group policyholder's share, if any.
(h) Eligible persons under this section shall be notified in the
same manner required for conversion notification pursuant to Section
12689. Every insurer shall communicate the availability of such
coverage to all group policyholders and to all prospective group
policyholders with whom they are negotiating.
12692.5. Notwithstanding any other provision of this part, Sections
12672, 12673, 12674, 12675, 12676, 12677, 12678, 12679, 12680,
12681, 12682, 12683, 12684, 12685, 12686, 12687, 12688, 12689, 12690,
12691, and 12692 shall not apply to a group policy that is issued,
amended, or renewed on or after September 1, 2003.
12670. It is the intent of the Legislature to ensure that persons
covered by a group policy, who become ineligible for that coverage
have access to benefits pursuant to this part by requiring employers,
employee organizations, and other entities that provide that
coverage to their employees or members to also make available
conversion policies for those persons and to ensure that insurers as
herein defined offer conversion policies. The conversion policy shall
be the most popular preferred provider organization product offered
to residents of this state under the provisions of the federal Health
Insurance Portability and Accountability Act of 1996. In addition,
it is the intent of the Legislature to encourage the continuation of
group health coverage by requiring the entities herein defined to
make available continuation benefits for widows, widowers, divorced
spouses, and dependents who were covered by the group policy on the
date of termination of coverage.
12671. As used in this part, the following terms have the following
meanings:
(a) "Group policy" means a group health insurance policy providing
medical, hospital, surgical, major medical, or comprehensive medical
coverage issued by an insurer, a group contract issued by a hospital
service corporation, or medical, hospital, surgical, major medical,
or comprehensive medical coverage otherwise provided by a
policyholder to its employees or members, except for self-insurance
programs provided by employers that are not exempt from ERISA, as
specified in subdivision (i). For the purposes of this part, a group
policy not having an established annual renewal date shall be
considered renewed on each anniversary of its effective date.
(b) "Conversion coverage" means health insurance benefits
providing hospital, surgical, major medical, or comprehensive medical
coverage issued to an individual under a converted policy.
(c) "Converted policy" means a policy or contract providing
conversion coverage issued by an insurance company or by a hospital
service corporation, or individual hospital, surgical, major medical,
or comprehensive medical coverage otherwise provided by a
policyholder to its employees or members.
(d) "Insurer" means the entity issuing a group policy, an
individual or converted policy, a hospital service contract or an
employer or employee organization otherwise providing medical,
hospital, surgical, major medical, or comprehensive medical coverage
to its employees or members.
(e) "Insurance" refers to health insurance, major medical, or
comprehensive coverage paid by premium or contribution under a group
policy, a hospital service contract, or as otherwise provided by a
policyholder to its employees or members other than by self-insuring
except in the case of a plan that is exempt from ERISA, but does
include an employer plan that is exempt from ERISA as specified in
subdivision (i). "Insurance" does not include any of the following:
(1) Coverage provided solely as an accrued liability or by reason
of a disability extension.
(2) Medicare supplement insurance.
(3) Vision-only insurance.
(4) Dental-only insurance.
(5) CHAMPUS supplement insurance.
(6) Hospital indemnity insurance.
(7) Accident-only insurance.
(8) Short-term limited duration health insurance. "Short-term
limited duration health insurance" means individual health insurance
coverage that is offered by a licensed insurance company, intended to
be used as transitional or interim coverage to remain in effect for
not more than 185 days, that cannot be renewed or otherwise continued
for more than one additional period of not more than 185 days, and
that is not intended or marketed as health insurance coverage, a
health care service plan, or a health maintenance organization
subject to guaranteed issuance or guaranteed renewal pursuant to
relevant state or federal law.
(9) Specified disease insurance that does not pay benefits on a
fixed benefit, cash payment only basis.
(f) "Policyholder" means the holder of a group policy issued by an
insurer, a holder of a group contract issued by a hospital service
corporation or an employer, employee association, or other entity
otherwise providing medical, hospital, surgical, major medical, or
comprehensive medical coverage on a group basis to its employees or
members.
(g) "Premium" means contribution or other consideration paid or
payable for coverage under a group policy or converted policy.
(h) "Medicare" means Title XVIII of the United States Social
Security Act as added by the Social Security Amendments of 1965 or as
later amended or superseded.
(i) "Employer plan that is exempt from ERISA" means any employer
plan that, pursuant to the provisions of Section 1003 of Title 29 of
the United States Code, is not covered by or that is exempt from the
provisions of Subchapter I (commencing with Section 1001) of Chapter
18 of Title 29 of the United States Code, except that, in the case of
a governmental plan, it only includes a self-insured governmental
plan as defined in subdivision (j).
(j) "Self-insured governmental plan" means a self-insured plan
established or maintained for its employees by any public entity, as
defined in Section 811.2 of the Government Code, that is a
governmental plan as defined in subdivision (32) of Section 1002 of
Title 29 of the United States Code.
12672. Any group policy issued, amended, or renewed in this state
on or after January 1, 1983, which provides insurance for employees
or members on an expense-incurred or service basis, other than for a
specific disease or for accidental injuries only, shall contain a
provision that an employee or member whose coverage under the group
policy has been terminated for any reason except as provided in this
part, shall be entitled to have a converted policy issued to him or
her by the insurer under whose group policy he or she was covered,
without evidence of insurability, subject to the terms and conditions
of this part.
12673. Conversion coverage shall be required to be made available
to an employee or member unless such coverage under the group policy
terminates for one or more of the following reasons:
(a) The group policy or the policyholder's participation in the
group policy terminates and the insurance is replaced by similar
coverage under another group policy within 60 days of the date of
termination of the group coverage or the policyholder's
participation.
(b) The employee or member has failed to make any required payment
of the premium or contribution when due.
(c) The employee or member had not been continuously covered
during the three-month period immediately preceding the employee's or
member's termination of coverage.
12674. A converted policy shall be issued effective on the day
following the termination of coverage under the group policy if
written application and the first premium payment for the conversion
policy are made to the insurer not later than 31 days after the
termination of insurance, unless such requirements are waived in
writing by the insurer.
12675. The premium for the conversion coverage shall be determined
in accordance with the insurer's rates applicable to the age and
class of risk of each person to be covered and to the type and amount
of coverage provided.
12676. The conversion coverage shall cover the employee or member
and his or her dependents who were covered by the group policy on the
date of termination of coverage. At the option of the insurer, a
separate converted policy may be issued to cover any dependent.
12677. The insurer shall not be required to issue a converted
policy covering any person if such person is entitled to be covered
by Medicare.
12678. The insurer shall not be required to issue a converted
policy covering any person if any of the following exists:
(a) The person is covered for similar benefits by another
individual policy.
(b) The person is covered or is eligible to be covered for similar
benefits by another group policy.
(c) The person is covered or is eligible to be covered for similar
benefits under any arrangement of coverage for persons in a group
whether insured or uninsured.
12679. A converted policy may provide that the insurer may at any
time request information from any person covered thereunder as to
whether he or she is covered for the similar benefits described in
Section 12678. The converted policy shall provide that as of any
premium due date the insurer may refuse to renew the policy or the
coverage of any insured person for the following reasons only:
(a) Failure of the individual covered by the converted policy to
provide the requested information.
(b) Fraud or material misrepresentation by the individual covered
by the converted policy in applying for any benefits under the
converted policy.
(c) Eligibility of the individual covered by the converted policy
for coverage under Medicare or under any other state or federal law
providing for benefits similar to those provided by the converted
policy. As used in this section, "state or federal law" does not
include Chapter 7 (commencing with Section 14000) or Chapter 8
(commencing with Section 14200) of Part 3 of Division 9 of the
Welfare and Institutions Code, or Title XIX of the United States
Social Security Act.
(d) Nonpayment of premium.
(e) Coverage of the individual for similar benefits under another
individual policy.
(f) Eligibility of the individual covered by the converted policy
for coverage under any arrangement for coverage for persons in a
group whether insured or uninsured.
(g) Other reasons approved by the Insurance Commissioner.
12680. If conversion coverage is issued and benefits are also
provided to a person under Section 12678, the insurer may limit the
conversion benefits provided or available for such person so that
such conversion benefits together with benefits provided or available
from the sources referred to in Section 12678 shall not exceed 100
percent of the charges for covered benefits. Priority of any
coverages involved shall be determined by the effective dates, the
earlier one being first.
12681. An insurer shall not be required to issue a converted policy
providing benefits in excess of those provided under the group
policy from which conversion is made.
12682. The converted policy shall not exclude, as a preexisting
condition, any condition covered by the group policy. The converted
policy may provide for a reduction of its benefits by the amount of
any such benefits payable under the group policy after the individual'
s insurance terminates thereunder. The converted policy may also
provide that during the first policy year the benefits payable under
the converted policy, together with the benefits payable under the
group policy, shall not exceed those that would have been payable had
the individual's coverage under the group policy remained in effect.
12682.1. This section does not apply to a policy that primarily or
solely supplements Medicare. The commissioner may adopt rules
consistent with federal law to govern the discontinuance and
replacement of plan policies that primarily or solely supplement
Medicare.
(a) (1) Every group policy entered into, amended, or renewed on or
after September 1, 2003, that provides hospital, medical, or
surgical expense benefits for employees or members shall provide that
an employee or member whose coverage under the group policy has been
terminated by the employer shall be entitled to convert to nongroup
membership, without evidence of insurability, subject to the terms
and conditions of this section.
(2) If the health insurer provides coverage under an individual
health insurance policy, other than conversion coverage under this
part, it shall offer one of the two health insurance policies that
the insurer is required to offer to a federally eligible defined
individual pursuant to Section 10785. The health insurer shall
provide this coverage at the same rate established under Section
10901.3 for a federally eligible defined individual.
(3) If the health insurer does not provide coverage under an
individual health insurance policy, it shall offer a health benefit
plan contract that is the same as a health benefit contract offered
to a federally eligible defined individual pursuant to Section
1366.35. The health insurer shall offer the most popular preferred
provider organization plan that has the greatest number of enrolled
individuals for its type of plan as of January 1 of the prior year,
as reported by plans by January 31, 2003, and annually thereafter,
that provide coverage under an individual health care service plan
contract to the department or the Department of Managed Health Care.
A health insurer subject to this paragraph plan shall provide this
coverage with the same cost-sharing terms and at the same premium as
a health care service plan providing coverage to that individual
under an individual health care service plan contract pursuant to
Section 1399.805. The health insurer shall file the health benefit
plan contract it will offer, including the premium it will charge and
the cost-sharing terms of the contract, with the Department of
Insurance.
(b) A conversion policy shall not be required to be made available
to an employee or insured if termination of his or her coverage
under the group policy occurred for any of the following reasons:
(1) The group policy terminated or an employer's participation
terminated and the insurance is replaced by similar coverage under
another group policy within 15 days of the date of termination of the
group coverage or the employer's participation.
(2) The employee or insured failed to pay amounts due the health
insurer.
(3) The employee or insured was terminated by the health insurer
from the policy for good cause.
(4) The employee or insured knowingly furnished incorrect
information or otherwise improperly obtained the benefits of the
policy.
(5) The employer's hospital, medical, or surgical expense benefit
program is self-insured.
(c) A conversion policy is not required to be issued to any person
if any of the following facts are present:
(1) The person is covered by or is eligible for benefits under
Title XVIII of the United States Social Security Act.
(2) The person is covered by or is eligible for hospital, medical,
or surgical benefits under any arrangement of coverage for
individuals in a group, whether insured or self-insured.
(3) The person is covered for similar benefits by an individual
policy or contract.
(4) The person has not been continuously covered during the
three-month period immediately preceding that person's termination of
coverage.
(d) Benefits of a conversion policy shall meet the requirements
for benefits under this chapter.
(e) Unless waived in writing by the insurer, written application
and first premium payment for the conversion policy shall be made not
later than 63 days after termination from the group. A conversion
policy shall be issued by the insurer which shall be effective on the
day following the termination of coverage under the group contract
if the written application and the first premium payment for the
conversion contract are made to the insurer not later than 63 days
after the termination of coverage, unless these requirements are
waived in writing by the insurer.
(f) The conversion policy shall cover the employee or insured and
his or her dependents who were covered under the group policy on the
date of their termination from the group.
(g) A notification of the availability of the conversion coverage
shall be included in each evidence of coverage or other legally
required document explaining coverage. However, it shall be the sole
responsibility of the employer to notify its employees of the
availability, terms, and conditions of the conversion coverage which
responsibility shall be satisfied by notification within 15 days of
termination of group coverage. Group coverage shall not be deemed
terminated until the expiration of any continuation of the group
coverage. For purposes of this subdivision, the employer shall not be
deemed the agent of the insurer for purposes of notification of the
availability, terms, and conditions of conversion coverage.
(h) As used in this section, "hospital, medical, or surgical
benefits under state or federal law" do not include benefits under
Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing
with Section 14200) of Part 3 of Division 9 of the Welfare and
Institutions Code, or Title XIX of the United States Social Security
Act.
(i) This section shall become operative on September 1, 2003.
12683. Subject to the provisions and conditions of this part, if
the group policy from which conversion is made covers the employee or
member for basic hospital or surgical expense, the employee or
member shall be entitled to obtain a converted policy providing at
least the following minimum benefits:
(a) Plan A.
(1) Hospital room and board daily expense benefits up to two
hundred dollars ($200) for a duration of 70 days.
(2) Miscellaneous hospital expense benefits up to an amount of 10
times the hospital room and board daily expense benefits.
(3) Surgical expense benefits according to a surgical procedures
schedule consistent with those customarily offered by the insurer
under a group or individual health insurance policy and providing a
maximum benefit of four thousand eight hundred dollars ($4,800).
(b) Plan B--75 percent of the dollar amounts of Plan A.
(c) Plan C--50 percent of the dollar amounts of Plan A.
(d) The maximum dollar amount for Plan A's hospital room and board
daily expense and surgical benefit may be redetermined by the
Insurance Commissioner as to conversion coverage issued subsequent to
that redetermination. The redetermination shall not be made more
often than once in three years. The maximum dollar amount
redetermined by the commissioner for hospital room and board shall
not exceed 80 percent of the average semiprivate room rate then
charged in the state.
(e) Covered expenses under this section shall include benefits for
expense incurred by the employee, member, or spouse in connection
with pregnancy, provided that:
(1) The pregnancy commenced while covered under the group policy
from which conversion was made.
(2) The expense is of a type which would have been covered under
such group policy.
(3) The conversion policy is in force when the expense is
incurred.
12684. Subject to the provisions and conditions of this part, if
the group policy from which conversion is made provides the employee
or member with major medical or comprehensive medical insurance, the
employee or member shall be entitled to obtain a converted policy
providing comprehensive medical coverage providing at least the
following benefits:
(a) A payment per covered person for all covered medical expenses
incurred during the person's lifetime equal to one hundred thousand
dollars ($100,000); provided, however, that for treatment of mental
illness payment may be limited to ten thousand dollars ($10,000)
during the person's lifetime.
(b) Payment of benefits at the rate of 75 percent of covered
medical expenses; provided, however, that if coverage is provided for
expenses incurred for outpatient treatment of mental illness,
payment of benefits may be at the rate of 50 percent of such covered
expenses, and the insurer may limit the amount of covered expense for
each outpatient visit and the amount of benefits payable for
expenses incurred during each calendar year for that outpatient
treatment.
(c) A cash deductible for each benefit period at the option of the
insured of two hundred dollars ($200), five hundred dollars ($500),
or one thousand dollars ($1,000), but not less than the cash
deductible which applied to the insured under the group policy which
entitles him or her to a converted policy.
(d) Covered medical expenses shall include the charges for a
semiprivate hospital room and board, but need not exceed the lesser
of two hundred dollars ($200) per day or the hospital's most common
charge for a semiprivate room, covered expenses for intensive care
shall be at least two and one-half times the covered hospital room
and board charge. The maximum dollar amount for hospital room and
board daily covered expense may be redetermined by the commissioner
as to conversion coverage issued after the redetermination. That
redetermination shall not be made more often than once in three
years. The maximum dollar amount redetermined by the commissioner
shall not exceed the average semiprivate room rate then charged in
the state.
(e) Covered expenses under this section shall include benefits for
expense incurred by the employee, member, or spouse in connection
with pregnancy, provided that:
(1) The pregnancy commenced while covered under the group policy
from which conversion was made.
(2) The expense is of a type which would have been covered under
such group policy.
(3) The conversion policy is in force when the expense is
incurred.
(f) Covered expense under this section need not include expense
for dental or vision care, or other optional benefits not normally
offered by the insurer under a major medical or comprehensive medical
expense plan.
12685. The insurer may, at its option, offer alternative plans for
group health conversion in addition to those required by this part.
12686. (a) In the event coverage would be continued under a group
policy on an employee or member following his or her retirement prior
to the time he or she is or could be covered by Medicare, the
employee or member may elect, in lieu of the continuation of group
insurance, to have the same conversion rights as would apply had that
coverage terminated at retirement by reason of termination of
employment or membership.
(b) The converted policy may provide for reduction or termination
of coverage of any person upon his or her eligibility for coverage
under Medicare or under any other state or federal law providing for
benefits similar to those provided by the converted policy. As used
in this section, "state or federal law" does not include Chapter 7
(commencing with Section 14000) or Chapter 8 (commencing with Section
14200) of Part 3 of Division 9 of the Welfare and Institutions Code,
or Title XIX of the United States Social Security Act.
(c) Subject to the conditions set forth herein, the conversion
coverage shall also be available to:
(1) A covered dependent spouse and such children whose coverage
terminates under the group policy by reason of the death of the
employee or member, or a covered dependent spouse in the event such
person ceases to be a qualified family member by reason of the
termination of the marriage.
(2) A child, solely with respect to himself or herself, whose
coverage terminates because the child ceases to be a qualified family
member under the group policy.
(d) If the benefit levels required in Section 12683 or Section
12684 exceed the benefit levels provided under the group policy, the
converted policy may offer benefits which are substantially similar
to those provided under the group policy in lieu of those required in
Section 12683 or Section 12684.
(e) The insurer may elect to provide conversion coverage through a
group insurance policy issued for that purpose in lieu of an
individual policy.
(f) An insurer required by this part to provide conversion
coverage may provide such coverage through one or more other insurers
authorized to provide disability insurance coverage in this state.
12687. Notwithstanding any other provision in this part, whenever
an employee or member chooses among two or more conversion policies,
such choice shall be made within 31 days from the last date when the
employee or member was eligible for benefits under a group policy
from which conversion is available.
12688. Notwithstanding any provision in this part to the contrary,
a hospital service corporation or any insurer which customarily
offers individual conversion coverage on a service basis may, in lieu
of the expense incurred conversion coverage provided in Sections
12683 and 12684, make available conversion coverage on a service
basis which complies with the intent of this part as approved by the
commissioner.
12689. A notification of the conversion coverage shall be included
in each certificate of coverage or other legally required document
explaining coverage; provided, however, that it shall be the sole
responsibility of the policyholder to notify its employees or members
of the availability, terms and conditions of conversion coverage
which responsibility shall be satisfied by notification within 15
days of termination of group coverage. Group coverage shall not be
deemed terminated until the expiration of any continuation of the
group coverage. For purposes of this part, the policyholder shall not
be deemed to be the agent of the insurer for purposes of
notification of the availability, terms and conditions of conversion
coverage.
12690. Nothing in this part shall prohibit insurers from
establishing one or more pools from which the converted policies
provided for on this part may be issued.
12691. A converted policy which is delivered in a jurisdiction
other than this state may be in a form which could be delivered in
such jurisdiction as a converted policy had the group policy been
issued in such jurisdiction.
12692. On and after January 1, 1985, every insurer and nonprofit
hospital service plan issuing group disability insurance which covers
hospital, medical, or surgical expenses shall offer to group
policyholders a continuation benefit which, if selected, shall have a
duration of at least 90 days and which shall be offered
consecutively to any federal requirement for continuation benefits.
The terms and conditions shall include continuation benefit coverage
for widows, widowers, divorced or legally separated spouses, spouses
of covered employees becoming entitled to benefits under Title XVIII
of the Social Security Act, and their dependents, including dependent
children who cease to be dependent children under the plan, who were
covered by the group contract on the date of termination of
coverage. However, any existing provisions of law regarding
termination of a dependent child status shall not be affected by this
section.
The continuation of coverage shall be available only under the
following conditions:
(a) Those eligible remain within the State of California, although
the departure of a dependent child to another state shall not
invalidate the continuation provisions for any other family members.
(b) Those eligible do not marry or remarry, although the marriage
of any dependent child shall not invalidate the continuation
provisions for other family members.
(c) Those eligible are not eligible for any comparable state,
federal, or private group medical plan, although the eligibility of
any dependent child shall not invalidate the continuation provisions
for other family members.
(d) Those eligible do not find employment with an employer that
has a group plan of its own, even if the plan is less substantive,
although the entry into such an employee plan by a dependent child
shall not invalidate the continuation provisions for other family
members.
(e) The group policy is not terminated or the employer's
participation in the group policy is not terminated.
(f) Those eligible do not knowingly furnish incorrect information
or otherwise improperly obtain the benefits of the plan.
(g) The continuing individual shall pay the premium amount in the
manner specified in the group policy for both his or her share of the
premium and the group policyholder's share, if any.
(h) Eligible persons under this section shall be notified in the
same manner required for conversion notification pursuant to Section
12689. Every insurer shall communicate the availability of such
coverage to all group policyholders and to all prospective group
policyholders with whom they are negotiating.
12692.5. Notwithstanding any other provision of this part, Sections
12672, 12673, 12674, 12675, 12676, 12677, 12678, 12679, 12680,
12681, 12682, 12683, 12684, 12685, 12686, 12687, 12688, 12689, 12690,
12691, and 12692 shall not apply to a group policy that is issued,
amended, or renewed on or after September 1, 2003.
12670. It is the intent of the Legislature to ensure that persons
covered by a group policy, who become ineligible for that coverage
have access to benefits pursuant to this part by requiring employers,
employee organizations, and other entities that provide that
coverage to their employees or members to also make available
conversion policies for those persons and to ensure that insurers as
herein defined offer conversion policies. The conversion policy shall
be the most popular preferred provider organization product offered
to residents of this state under the provisions of the federal Health
Insurance Portability and Accountability Act of 1996. In addition,
it is the intent of the Legislature to encourage the continuation of
group health coverage by requiring the entities herein defined to
make available continuation benefits for widows, widowers, divorced
spouses, and dependents who were covered by the group policy on the
date of termination of coverage.
12671. As used in this part, the following terms have the following
meanings:
(a) "Group policy" means a group health insurance policy providing
medical, hospital, surgical, major medical, or comprehensive medical
coverage issued by an insurer, a group contract issued by a hospital
service corporation, or medical, hospital, surgical, major medical,
or comprehensive medical coverage otherwise provided by a
policyholder to its employees or members, except for self-insurance
programs provided by employers that are not exempt from ERISA, as
specified in subdivision (i). For the purposes of this part, a group
policy not having an established annual renewal date shall be
considered renewed on each anniversary of its effective date.
(b) "Conversion coverage" means health insurance benefits
providing hospital, surgical, major medical, or comprehensive medical
coverage issued to an individual under a converted policy.
(c) "Converted policy" means a policy or contract providing
conversion coverage issued by an insurance company or by a hospital
service corporation, or individual hospital, surgical, major medical,
or comprehensive medical coverage otherwise provided by a
policyholder to its employees or members.
(d) "Insurer" means the entity issuing a group policy, an
individual or converted policy, a hospital service contract or an
employer or employee organization otherwise providing medical,
hospital, surgical, major medical, or comprehensive medical coverage
to its employees or members.
(e) "Insurance" refers to health insurance, major medical, or
comprehensive coverage paid by premium or contribution under a group
policy, a hospital service contract, or as otherwise provided by a
policyholder to its employees or members other than by self-insuring
except in the case of a plan that is exempt from ERISA, but does
include an employer plan that is exempt from ERISA as specified in
subdivision (i). "Insurance" does not include any of the following:
(1) Coverage provided solely as an accrued liability or by reason
of a disability extension.
(2) Medicare supplement insurance.
(3) Vision-only insurance.
(4) Dental-only insurance.
(5) CHAMPUS supplement insurance.
(6) Hospital indemnity insurance.
(7) Accident-only insurance.
(8) Short-term limited duration health insurance. "Short-term
limited duration health insurance" means individual health insurance
coverage that is offered by a licensed insurance company, intended to
be used as transitional or interim coverage to remain in effect for
not more than 185 days, that cannot be renewed or otherwise continued
for more than one additional period of not more than 185 days, and
that is not intended or marketed as health insurance coverage, a
health care service plan, or a health maintenance organization
subject to guaranteed issuance or guaranteed renewal pursuant to
relevant state or federal law.
(9) Specified disease insurance that does not pay benefits on a
fixed benefit, cash payment only basis.
(f) "Policyholder" means the holder of a group policy issued by an
insurer, a holder of a group contract issued by a hospital service
corporation or an employer, employee association, or other entity
otherwise providing medical, hospital, surgical, major medical, or
comprehensive medical coverage on a group basis to its employees or
members.
(g) "Premium" means contribution or other consideration paid or
payable for coverage under a group policy or converted policy.
(h) "Medicare" means Title XVIII of the United States Social
Security Act as added by the Social Security Amendments of 1965 or as
later amended or superseded.
(i) "Employer plan that is exempt from ERISA" means any employer
plan that, pursuant to the provisions of Section 1003 of Title 29 of
the United States Code, is not covered by or that is exempt from the
provisions of Subchapter I (commencing with Section 1001) of Chapter
18 of Title 29 of the United States Code, except that, in the case of
a governmental plan, it only includes a self-insured governmental
plan as defined in subdivision (j).
(j) "Self-insured governmental plan" means a self-insured plan
established or maintained for its employees by any public entity, as
defined in Section 811.2 of the Government Code, that is a
governmental plan as defined in subdivision (32) of Section 1002 of
Title 29 of the United States Code.
12672. Any group policy issued, amended, or renewed in this state
on or after January 1, 1983, which provides insurance for employees
or members on an expense-incurred or service basis, other than for a
specific disease or for accidental injuries only, shall contain a
provision that an employee or member whose coverage under the group
policy has been terminated for any reason except as provided in this
part, shall be entitled to have a converted policy issued to him or
her by the insurer under whose group policy he or she was covered,
without evidence of insurability, subject to the terms and conditions
of this part.
12673. Conversion coverage shall be required to be made available
to an employee or member unless such coverage under the group policy
terminates for one or more of the following reasons:
(a) The group policy or the policyholder's participation in the
group policy terminates and the insurance is replaced by similar
coverage under another group policy within 60 days of the date of
termination of the group coverage or the policyholder's
participation.
(b) The employee or member has failed to make any required payment
of the premium or contribution when due.
(c) The employee or member had not been continuously covered
during the three-month period immediately preceding the employee's or
member's termination of coverage.
12674. A converted policy shall be issued effective on the day
following the termination of coverage under the group policy if
written application and the first premium payment for the conversion
policy are made to the insurer not later than 31 days after the
termination of insurance, unless such requirements are waived in
writing by the insurer.
12675. The premium for the conversion coverage shall be determined
in accordance with the insurer's rates applicable to the age and
class of risk of each person to be covered and to the type and amount
of coverage provided.
12676. The conversion coverage shall cover the employee or member
and his or her dependents who were covered by the group policy on the
date of termination of coverage. At the option of the insurer, a
separate converted policy may be issued to cover any dependent.
12677. The insurer shall not be required to issue a converted
policy covering any person if such person is entitled to be covered
by Medicare.
12678. The insurer shall not be required to issue a converted
policy covering any person if any of the following exists:
(a) The person is covered for similar benefits by another
individual policy.
(b) The person is covered or is eligible to be covered for similar
benefits by another group policy.
(c) The person is covered or is eligible to be covered for similar
benefits under any arrangement of coverage for persons in a group
whether insured or uninsured.
12679. A converted policy may provide that the insurer may at any
time request information from any person covered thereunder as to
whether he or she is covered for the similar benefits described in
Section 12678. The converted policy shall provide that as of any
premium due date the insurer may refuse to renew the policy or the
coverage of any insured person for the following reasons only:
(a) Failure of the individual covered by the converted policy to
provide the requested information.
(b) Fraud or material misrepresentation by the individual covered
by the converted policy in applying for any benefits under the
converted policy.
(c) Eligibility of the individual covered by the converted policy
for coverage under Medicare or under any other state or federal law
providing for benefits similar to those provided by the converted
policy. As used in this section, "state or federal law" does not
include Chapter 7 (commencing with Section 14000) or Chapter 8
(commencing with Section 14200) of Part 3 of Division 9 of the
Welfare and Institutions Code, or Title XIX of the United States
Social Security Act.
(d) Nonpayment of premium.
(e) Coverage of the individual for similar benefits under another
individual policy.
(f) Eligibility of the individual covered by the converted policy
for coverage under any arrangement for coverage for persons in a
group whether insured or uninsured.
(g) Other reasons approved by the Insurance Commissioner.
12680. If conversion coverage is issued and benefits are also
provided to a person under Section 12678, the insurer may limit the
conversion benefits provided or available for such person so that
such conversion benefits together with benefits provided or available
from the sources referred to in Section 12678 shall not exceed 100
percent of the charges for covered benefits. Priority of any
coverages involved shall be determined by the effective dates, the
earlier one being first.
12681. An insurer shall not be required to issue a converted policy
providing benefits in excess of those provided under the group
policy from which conversion is made.
12682. The converted policy shall not exclude, as a preexisting
condition, any condition covered by the group policy. The converted
policy may provide for a reduction of its benefits by the amount of
any such benefits payable under the group policy after the individual'
s insurance terminates thereunder. The converted policy may also
provide that during the first policy year the benefits payable under
the converted policy, together with the benefits payable under the
group policy, shall not exceed those that would have been payable had
the individual's coverage under the group policy remained in effect.
12682.1. This section does not apply to a policy that primarily or
solely supplements Medicare. The commissioner may adopt rules
consistent with federal law to govern the discontinuance and
replacement of plan policies that primarily or solely supplement
Medicare.
(a) (1) Every group policy entered into, amended, or renewed on or
after September 1, 2003, that provides hospital, medical, or
surgical expense benefits for employees or members shall provide that
an employee or member whose coverage under the group policy has been
terminated by the employer shall be entitled to convert to nongroup
membership, without evidence of insurability, subject to the terms
and conditions of this section.
(2) If the health insurer provides coverage under an individual
health insurance policy, other than conversion coverage under this
part, it shall offer one of the two health insurance policies that
the insurer is required to offer to a federally eligible defined
individual pursuant to Section 10785. The health insurer shall
provide this coverage at the same rate established under Section
10901.3 for a federally eligible defined individual.
(3) If the health insurer does not provide coverage under an
individual health insurance policy, it shall offer a health benefit
plan contract that is the same as a health benefit contract offered
to a federally eligible defined individual pursuant to Section
1366.35. The health insurer shall offer the most popular preferred
provider organization plan that has the greatest number of enrolled
individuals for its type of plan as of January 1 of the prior year,
as reported by plans by January 31, 2003, and annually thereafter,
that provide coverage under an individual health care service plan
contract to the department or the Department of Managed Health Care.
A health insurer subject to this paragraph plan shall provide this
coverage with the same cost-sharing terms and at the same premium as
a health care service plan providing coverage to that individual
under an individual health care service plan contract pursuant to
Section 1399.805. The health insurer shall file the health benefit
plan contract it will offer, including the premium it will charge and
the cost-sharing terms of the contract, with the Department of
Insurance.
(b) A conversion policy shall not be required to be made available
to an employee or insured if termination of his or her coverage
under the group policy occurred for any of the following reasons:
(1) The group policy terminated or an employer's participation
terminated and the insurance is replaced by similar coverage under
another group policy within 15 days of the date of termination of the
group coverage or the employer's participation.
(2) The employee or insured failed to pay amounts due the health
insurer.
(3) The employee or insured was terminated by the health insurer
from the policy for good cause.
(4) The employee or insured knowingly furnished incorrect
information or otherwise improperly obtained the benefits of the
policy.
(5) The employer's hospital, medical, or surgical expense benefit
program is self-insured.
(c) A conversion policy is not required to be issued to any person
if any of the following facts are present:
(1) The person is covered by or is eligible for benefits under
Title XVIII of the United States Social Security Act.
(2) The person is covered by or is eligible for hospital, medical,
or surgical benefits under any arrangement of coverage for
individuals in a group, whether insured or self-insured.
(3) The person is covered for similar benefits by an individual
policy or contract.
(4) The person has not been continuously covered during the
three-month period immediately preceding that person's termination of
coverage.
(d) Benefits of a conversion policy shall meet the requirements
for benefits under this chapter.
(e) Unless waived in writing by the insurer, written application
and first premium payment for the conversion policy shall be made not
later than 63 days after termination from the group. A conversion
policy shall be issued by the insurer which shall be effective on the
day following the termination of coverage under the group contract
if the written application and the first premium payment for the
conversion contract are made to the insurer not later than 63 days
after the termination of coverage, unless these requirements are
waived in writing by the insurer.
(f) The conversion policy shall cover the employee or insured and
his or her dependents who were covered under the group policy on the
date of their termination from the group.
(g) A notification of the availability of the conversion coverage
shall be included in each evidence of coverage or other legally
required document explaining coverage. However, it shall be the sole
responsibility of the employer to notify its employees of the
availability, terms, and conditions of the conversion coverage which
responsibility shall be satisfied by notification within 15 days of
termination of group coverage. Group coverage shall not be deemed
terminated until the expiration of any continuation of the group
coverage. For purposes of this subdivision, the employer shall not be
deemed the agent of the insurer for purposes of notification of the
availability, terms, and conditions of conversion coverage.
(h) As used in this section, "hospital, medical, or surgical
benefits under state or federal law" do not include benefits under
Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing
with Section 14200) of Part 3 of Division 9 of the Welfare and
Institutions Code, or Title XIX of the United States Social Security
Act.
(i) This section shall become operative on September 1, 2003.
12683. Subject to the provisions and conditions of this part, if
the group policy from which conversion is made covers the employee or
member for basic hospital or surgical expense, the employee or
member shall be entitled to obtain a converted policy providing at
least the following minimum benefits:
(a) Plan A.
(1) Hospital room and board daily expense benefits up to two
hundred dollars ($200) for a duration of 70 days.
(2) Miscellaneous hospital expense benefits up to an amount of 10
times the hospital room and board daily expense benefits.
(3) Surgical expense benefits according to a surgical procedures
schedule consistent with those customarily offered by the insurer
under a group or individual health insurance policy and providing a
maximum benefit of four thousand eight hundred dollars ($4,800).
(b) Plan B--75 percent of the dollar amounts of Plan A.
(c) Plan C--50 percent of the dollar amounts of Plan A.
(d) The maximum dollar amount for Plan A's hospital room and board
daily expense and surgical benefit may be redetermined by the
Insurance Commissioner as to conversion coverage issued subsequent to
that redetermination. The redetermination shall not be made more
often than once in three years. The maximum dollar amount
redetermined by the commissioner for hospital room and board shall
not exceed 80 percent of the average semiprivate room rate then
charged in the state.
(e) Covered expenses under this section shall include benefits for
expense incurred by the employee, member, or spouse in connection
with pregnancy, provided that:
(1) The pregnancy commenced while covered under the group policy
from which conversion was made.
(2) The expense is of a type which would have been covered under
such group policy.
(3) The conversion policy is in force when the expense is
incurred.
12684. Subject to the provisions and conditions of this part, if
the group policy from which conversion is made provides the employee
or member with major medical or comprehensive medical insurance, the
employee or member shall be entitled to obtain a converted policy
providing comprehensive medical coverage providing at least the
following benefits:
(a) A payment per covered person for all covered medical expenses
incurred during the person's lifetime equal to one hundred thousand
dollars ($100,000); provided, however, that for treatment of mental
illness payment may be limited to ten thousand dollars ($10,000)
during the person's lifetime.
(b) Payment of benefits at the rate of 75 percent of covered
medical expenses; provided, however, that if coverage is provided for
expenses incurred for outpatient treatment of mental illness,
payment of benefits may be at the rate of 50 percent of such covered
expenses, and the insurer may limit the amount of covered expense for
each outpatient visit and the amount of benefits payable for
expenses incurred during each calendar year for that outpatient
treatment.
(c) A cash deductible for each benefit period at the option of the
insured of two hundred dollars ($200), five hundred dollars ($500),
or one thousand dollars ($1,000), but not less than the cash
deductible which applied to the insured under the group policy which
entitles him or her to a converted policy.
(d) Covered medical expenses shall include the charges for a
semiprivate hospital room and board, but need not exceed the lesser
of two hundred dollars ($200) per day or the hospital's most common
charge for a semiprivate room, covered expenses for intensive care
shall be at least two and one-half times the covered hospital room
and board charge. The maximum dollar amount for hospital room and
board daily covered expense may be redetermined by the commissioner
as to conversion coverage issued after the redetermination. That
redetermination shall not be made more often than once in three
years. The maximum dollar amount redetermined by the commissioner
shall not exceed the average semiprivate room rate then charged in
the state.
(e) Covered expenses under this section shall include benefits for
expense incurred by the employee, member, or spouse in connection
with pregnancy, provided that:
(1) The pregnancy commenced while covered under the group policy
from which conversion was made.
(2) The expense is of a type which would have been covered under
such group policy.
(3) The conversion policy is in force when the expense is
incurred.
(f) Covered expense under this section need not include expense
for dental or vision care, or other optional benefits not normally
offered by the insurer under a major medical or comprehensive medical
expense plan.
12685. The insurer may, at its option, offer alternative plans for
group health conversion in addition to those required by this part.
12686. (a) In the event coverage would be continued under a group
policy on an employee or member following his or her retirement prior
to the time he or she is or could be covered by Medicare, the
employee or member may elect, in lieu of the continuation of group
insurance, to have the same conversion rights as would apply had that
coverage terminated at retirement by reason of termination of
employment or membership.
(b) The converted policy may provide for reduction or termination
of coverage of any person upon his or her eligibility for coverage
under Medicare or under any other state or federal law providing for
benefits similar to those provided by the converted policy. As used
in this section, "state or federal law" does not include Chapter 7
(commencing with Section 14000) or Chapter 8 (commencing with Section
14200) of Part 3 of Division 9 of the Welfare and Institutions Code,
or Title XIX of the United States Social Security Act.
(c) Subject to the conditions set forth herein, the conversion
coverage shall also be available to:
(1) A covered dependent spouse and such children whose coverage
terminates under the group policy by reason of the death of the
employee or member, or a covered dependent spouse in the event such
person ceases to be a qualified family member by reason of the
termination of the marriage.
(2) A child, solely with respect to himself or herself, whose
coverage terminates because the child ceases to be a qualified family
member under the group policy.
(d) If the benefit levels required in Section 12683 or Section
12684 exceed the benefit levels provided under the group policy, the
converted policy may offer benefits which are substantially similar
to those provided under the group policy in lieu of those required in
Section 12683 or Section 12684.
(e) The insurer may elect to provide conversion coverage through a
group insurance policy issued for that purpose in lieu of an
individual policy.
(f) An insurer required by this part to provide conversion
coverage may provide such coverage through one or more other insurers
authorized to provide disability insurance coverage in this state.
12687. Notwithstanding any other provision in this part, whenever
an employee or member chooses among two or more conversion policies,
such choice shall be made within 31 days from the last date when the
employee or member was eligible for benefits under a group policy
from which conversion is available.
12688. Notwithstanding any provision in this part to the contrary,
a hospital service corporation or any insurer which customarily
offers individual conversion coverage on a service basis may, in lieu
of the expense incurred conversion coverage provided in Sections
12683 and 12684, make available conversion coverage on a service
basis which complies with the intent of this part as approved by the
commissioner.
12689. A notification of the conversion coverage shall be included
in each certificate of coverage or other legally required document
explaining coverage; provided, however, that it shall be the sole
responsibility of the policyholder to notify its employees or members
of the availability, terms and conditions of conversion coverage
which responsibility shall be satisfied by notification within 15
days of termination of group coverage. Group coverage shall not be
deemed terminated until the expiration of any continuation of the
group coverage. For purposes of this part, the policyholder shall not
be deemed to be the agent of the insurer for purposes of
notification of the availability, terms and conditions of conversion
coverage.
12690. Nothing in this part shall prohibit insurers from
establishing one or more pools from which the converted policies
provided for on this part may be issued.
12691. A converted policy which is delivered in a jurisdiction
other than this state may be in a form which could be delivered in
such jurisdiction as a converted policy had the group policy been
issued in such jurisdiction.
12692. On and after January 1, 1985, every insurer and nonprofit
hospital service plan issuing group disability insurance which covers
hospital, medical, or surgical expenses shall offer to group
policyholders a continuation benefit which, if selected, shall have a
duration of at least 90 days and which shall be offered
consecutively to any federal requirement for continuation benefits.
The terms and conditions shall include continuation benefit coverage
for widows, widowers, divorced or legally separated spouses, spouses
of covered employees becoming entitled to benefits under Title XVIII
of the Social Security Act, and their dependents, including dependent
children who cease to be dependent children under the plan, who were
covered by the group contract on the date of termination of
coverage. However, any existing provisions of law regarding
termination of a dependent child status shall not be affected by this
section.
The continuation of coverage shall be available only under the
following conditions:
(a) Those eligible remain within the State of California, although
the departure of a dependent child to another state shall not
invalidate the continuation provisions for any other family members.
(b) Those eligible do not marry or remarry, although the marriage
of any dependent child shall not invalidate the continuation
provisions for other family members.
(c) Those eligible are not eligible for any comparable state,
federal, or private group medical plan, although the eligibility of
any dependent child shall not invalidate the continuation provisions
for other family members.
(d) Those eligible do not find employment with an employer that
has a group plan of its own, even if the plan is less substantive,
although the entry into such an employee plan by a dependent child
shall not invalidate the continuation provisions for other family
members.
(e) The group policy is not terminated or the employer's
participation in the group policy is not terminated.
(f) Those eligible do not knowingly furnish incorrect information
or otherwise improperly obtain the benefits of the plan.
(g) The continuing individual shall pay the premium amount in the
manner specified in the group policy for both his or her share of the
premium and the group policyholder's share, if any.
(h) Eligible persons under this section shall be notified in the
same manner required for conversion notification pursuant to Section
12689. Every insurer shall communicate the availability of such
coverage to all group policyholders and to all prospective group
policyholders with whom they are negotiating.
12692.5. Notwithstanding any other provision of this part, Sections
12672, 12673, 12674, 12675, 12676, 12677, 12678, 12679, 12680,
12681, 12682, 12683, 12684, 12685, 12686, 12687, 12688, 12689, 12690,
12691, and 12692 shall not apply to a group policy that is issued,
amended, or renewed on or after September 1, 2003.
