Article 2 - Small Employer Carrier Requirements

California Insurance Code — §§ 10753.02-10753.18.7

Sections (13)

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

(a)This chapter shall apply only to nongrandfathered health benefit plans and only with respect to plan years commencing on or after January 1, 2014.

(b)All carriers writing, issuing, or administering health benefit plans that cover employees of small employers shall be subject to this chapter if any one of the following conditions are met:

(1)Any portion of the premium for any health benefit plan or benefits is paid by a small employer, or any covered individual is reimbursed,

whether through wage adjustments or otherwise, by a small employer for any portion of the premium.

(2)The health benefit plan is treated by the small employer or any of the covered individuals as part of a plan or program for the purposes of Section 106 or 162 of the Internal Revenue Code.

§ 10753.03

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

The commissioner shall have the authority to determine whether a health benefit plan is covered by this chapter, and to determine whether an employer is a small employer within the meaning of Section 10753.

§ 10753.04

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

The commissioner may issue regulations that are necessary to carry out the purposes of this chapter.

§ 10753.06

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

Every carrier shall file with the commissioner the reasonable participation requirements and employer contribution requirements that are to be included in its health benefit plans. Participation requirements shall be applied uniformly among all small employer groups, except that a carrier may vary application of minimum employer participation requirements by the size of the small employer group and whether the employer contributes 100 percent of the eligible employee’s premium. Employer contribution requirements shall not vary by employer size. A carrier shall not establish a participation requirement that (1) requires a person

who meets the definition of a dependent in subdivision (e) of Section 10753 to enroll as a dependent if he or she is otherwise eligible for coverage and wishes to enroll as an eligible employee and (2) allows a carrier to reject an otherwise eligible small employer because of the number of persons that waive coverage due to coverage through another employer. Members of an association eligible for health coverage eligible under subdivision

(s)of Section 10753 but not electing any health coverage through the association shall not be counted as eligible employees for purposes of determining whether the guaranteed association meets a carrier’s reasonable participation standards.

§ 10753.08

Repealed and added by Stats. 2014, Ch. 195, Sec. 13. (SB 1034) Effective January 1, 2015.

A health benefit plan shall not impose a preexisting condition provision or a waiting or affiliation period upon any individual.

§ 10753.09

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

Nothing in this chapter shall be construed as prohibiting a carrier from restricting enrollment of late enrollees to open enrollment periods provided under Section 10753.05 as authorized under Section 2702 of the federal Public Health Service Act.

§ 10753.11

Amended by Stats. 2013, 1st Ex. Sess., Ch. 1, Sec. 12. (AB 2 1x) Effective September 30, 2013.

(a)To the extent permitted by PPACA, a carrier shall not be required by the provisions of this chapter to do any of the following:

(1)Offer coverage to, or accept applications from, a small employer where the small employer is seeking coverage for eligible employees and dependents who do not live, work, or reside in a carrier’s service areas.

(2)(A) Offer coverage to, or accept applications from, a small employer for a benefits plan design within an area if the commissioner has found all of the following:

(i)The carrier will not have the capacity

within the area in its network of providers to deliver service adequately to the eligible employees and dependents of that employee because of its obligations to existing group contractholders and enrollees.

(ii) The carrier is applying this paragraph uniformly to all employers without regard to the claims experience of those employers, and their employees and dependents, or any health status-related factor relating to those employees and dependents.

(iii) The action is not unreasonable or clearly inconsistent with the intent of this chapter.

(B) A carrier that cannot offer coverage to small employers in a specific service area because it is lacking sufficient capacity as described in this paragraph may not offer coverage in the applicable area to new employer groups until the later of the following dates:

(i)The 181st day after the date that coverage is denied pursuant to this paragraph.

(ii) The date the carrier notifies the commissioner that it has regained capacity to deliver services to small employers, and certifies to the commissioner that from the date of the notice it will enroll all small groups requesting coverage from the carrier until the carrier has met the requirements of subdivision (g) of Section 10753.05.

(C) Subparagraph (B) shall not limit the carrier’s ability to renew coverage already in force or relieve the carrier of the responsibility to renew that coverage as described in Sections 10273.4 and 10753.13.

(D) Coverage offered within a service area after the period specified in subparagraph (B) shall be subject to the requirements of

this section.

§ 10753.12

Amended by Stats. 2013, 1st Ex. Sess., Ch. 1, Sec. 13. (AB 2 1x) Effective September 30, 2013.

(a)A carrier shall not be required to offer coverage or accept applications for benefit plan designs pursuant to this chapter where the carrier demonstrates to the satisfaction of the commissioner both of the following:

(1)The acceptance of an application or applications would place the carrier in a financially impaired condition.

(2)The carrier is applying this subdivision uniformly to all employers without regard to the claims experience of those employers and their employees and dependents or any health status-related factor relating to those employees and dependents.

(b)The commissioner’s determination under subdivision (a) 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 or group health benefit plan until the later of the following dates:

(1)The 181st day after the date that coverage is denied pursuant to this section.

(2)The date on which the carrier ceases to be financially impaired, as determined by the commissioner.

(d)Subdivision (c) shall not limit the carrier’s ability to renew coverage

already in force or relieve the carrier of the responsibility to renew that coverage as described in Sections 10273.4, 10273.6, and 10753.13.

(e)Coverage offered within a service area after the period specified in subdivision (c) shall be subject to the requirements of this section.

§ 10753.13

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

All health benefit plans subject to this chapter shall be renewable with respect to all eligible employees or dependents at the option of the policyholder, contractholder, or small employer except as follows:

(a)(1) For nonpayment of the required premiums by the policyholder, contractholder, or small employer, if the policyholder, contractholder, or small employer has been duly notified and billed for the charge and at least a 30-day grace period has elapsed since the date of notification or, if longer, the period of time required for notice

and any other requirements pursuant to Section 2703, 2712, or 2742 of the federal Public Health Service Act (42 U.S.C. Secs. 300gg-2, 300gg-12, and 300gg-42) and any subsequent rules or regulations has elapsed.

(2)An insurer shall continue to provide coverage as required by the policyholder’s, contractholder’s, or small employer’s policy during the period described in paragraph (1). Nothing in this section shall be construed to affect or impair the policyholder’s, contractholder’s, small employer’s, or insurer’s other rights and responsibilities pursuant to the subscriber contract.

(b)If the insurer demonstrates fraud or an intentional misrepresentation of material fact under the terms of the policy by the policyholder, contractholder, or small employer or, with respect to coverage of individual enrollees, the enrollees or their representative.

(c)Violation of a material contract provision relating to employer contribution or group participation rates by the policyholder, contractholder, or small employer.

(d)When the carrier ceases to write, issue, or administer new or existing grandfathered or nongrandfathered small employer health benefit plans in this state, provided, however, that the following conditions are satisfied:

(1)Notice of the decision to cease writing, issuing, or administering new or existing small employer health benefits plans in this state is provided to the commissioner, and to either the policyholder, contractholder, or small employer at least 180 days prior to the discontinuation of the coverage.

(2)Small employer health benefit plans subject to this chapter shall not

be canceled for 180 days after the date of the notice required under paragraph (1). For that business of a carrier that remains in force, any carrier that ceases to write, issue, or administer new or existing health benefit plans shall continue to be governed by this chapter.

(3)Except in the case where a certification has been approved pursuant to subdivision (l) of Section 10753.05 or the commissioner has made a determination pursuant to subdivision (a) of Section 10753.12, a carrier that ceases to write, issue, or administer new health benefit plans to

small employers in this state after the passage of this chapter shall be prohibited from writing, issuing, or administering new health benefit plans to small employers in this state for a period of five years from the date of notice to the commissioner.

(e)When a carrier withdraws a benefit plan design from the small employer market, provided that the carrier notifies all affected policyholders, contractholders, or small employers and the commissioner at least 90 days prior to the discontinuation of those contracts, and that the carrier makes available to the small employer all small employer benefit plan designs which it markets.

(f)If coverage is made available through a bona fide association pursuant to subdivision

(q)of Section 10753 or a guaranteed association pursuant to subdivision (r) of Section

10753, the membership of the employer or the individual, respectively, ceases, but only if that coverage is terminated under this subdivision uniformly without regard to any health status-related factor of covered individuals.

§ 10753.14

Amended by Stats. 2021, Ch. 764, Sec. 10. (SB 326) Effective January 1, 2022.

(a)The premium rate for a small employer health benefit plan issued, amended, or renewed on or after January 1, 2014, shall vary with respect to the particular coverage involved only by the following:

(1)Age, pursuant to the age bands established by the United States Secretary of Health and Human Services and the age rating curve established by the Centers for Medicare and Medicaid Services pursuant to Section 2701(a)(3) of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(a)(3)). Rates based on age shall be determined using the individual’s age as of the date of the plan issuance or renewal, as applicable, and shall not vary by more than three to one for like

individuals of different age who are 21 years of age or older as described in federal regulations adopted pursuant to Section 2701(a)(3) of the federal Public Health Service Act (42 U.S.C. Sec. 300gg(a)(3)).

(2)(A) Geographic region. The geographic regions for purposes of rating shall be the following:

(i)Region 1 shall consist of the Counties of Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tuolumne, and Yuba.

(ii) Region 2 shall consist of the Counties of Marin, Napa, Solano, and Sonoma.

(iii) Region 3 shall

consist of the Counties of El Dorado, Placer, Sacramento, and Yolo.

(iv) Region 4 shall consist of the City and County of San Francisco.

(v)Region 5 shall consist of the County of Contra Costa.

(vi) Region 6 shall consist of the County of Alameda.

(vii) Region 7 shall consist of the County of Santa Clara.

(viii) Region 8 shall consist of the County of San Mateo.

(ix) Region 9 shall consist of the Counties of Monterey, San Benito, and Santa Cruz.

(x)Region 10 shall consist of the Counties

of Mariposa, Merced, San Joaquin, Stanislaus, and Tulare.

(xi) Region 11 shall consist of the Counties of Fresno, Kings, and Madera.

(xii) Region 12 shall consist of the Counties of San Luis Obispo, Santa Barbara, and Ventura.

(xiii) Region 13 shall consist of the Counties of Imperial, Inyo, and Mono.

(xiv) Region 14 shall consist of the County of Kern.

(xv) Region 15 shall consist of the ZIP Codes in the County of Los Angeles starting with 906 to 912, inclusive, 915, 917, 918, and 935.

(xvi) Region 16 shall consist of the ZIP

Codes in the County of Los Angeles other than those identified in clause (xv).

(xvii) Region 17 shall consist of the Counties of Riverside and San Bernardino.

(xviii) Region 18 shall consist of the County of Orange.

(xix) Region 19 shall consist of the County of San Diego.

(B) No later than June 1, 2017, the department, in collaboration with the Exchange and the Department of Managed Health Care, shall review the geographic rating regions specified in this paragraph and the impacts of those regions on the health care coverage market in California, and submit a report to the appropriate policy committees of the Legislature. The requirement for submitting a

report imposed under this subparagraph is inoperative June 1, 2021, pursuant to Section 10231.5 of the Government Code.

(3)Whether the health benefit plan covers an individual or family, as described in PPACA.

(b)The rate for a health benefit plan subject to this section shall not vary by any factor not described in this section.

(c)The total premium charged to a small employer pursuant to this section shall be determined by summing the premiums of covered employees and dependents in accordance with Section 147.102(c)(1) of Title 45 of the Code of Federal Regulations.

(d)The rating period for rates subject to this section shall be no less than 12 months

from the date of issuance or renewal of the health benefit plan.

§ 10753.16

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

In connection with the offering for sale of a health benefit plan subject to this chapter to small employers:

Each carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of the following:

(a)The provisions concerning the carrier’s ability to change premium rates and the factors

that affect changes in premium rates. The carrier shall disclose that claims experience cannot be used.

(b)Provisions relating to the guaranteed issue of policies and contracts.

(c)A statement that no preexisting condition provisions shall be allowed.

(d)Provisions relating to the small employer’s right to apply for any health benefit plan written, issued, or administered by the carrier at the time of application for a new health benefit plan, or at the time of renewal of a health benefit plan.

(e)The availability, upon request, of a listing of all the carrier’s benefit plan designs offered, both

inside and outside the Exchange, including the rates for each benefit plan design.

§ 10753.17

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

(a)No carrier shall provide or renew coverage subject to this chapter until a statement has been filed with the commissioner listing all of the carrier’s health benefit plans currently in force that are offered or proposed to be offered for sale in this state, identified by form number, and, if previously approved by the commissioner, the date approved by the commissioner.

(b)No carrier shall issue, deliver, renew, or revise a health benefit plan lawfully provided pursuant to subdivision (a) until all of the following requirements are met:

(1)The carrier files with the commissioner a statement of the factors used to establish rates for the plan.

(2)Either:

(A)Thirty days expires after the statement is filed without written notice from the commissioner specifying the reasons for his or her opinion that the carrier’s rating factors do not comply with the requirements of this chapter.

(B)Prior to that time the commissioner gives the carrier written notice that the carrier’s rating factors as filed comply with the requirements of this chapter.

(c)If the commissioner notifies the carrier, in writing, that the carrier’s rating factors do not comply with the requirements of this chapter, specifying the reasons for his or her

opinion, it is unlawful for the carrier, at any time after the receipt of such notice, to utilize the noncomplying health benefit plan or rating factors in conjunction with the health benefit plans or benefit plan designs for which the filing was made.

(d)Each carrier shall maintain at its principal place of business copies of all information required to be filed with the commissioner pursuant to this section.

(e)Each carrier shall make the information and documentation described in this section available to the commissioner upon request.

(f)Nothing in this section shall be construed to permit the commissioner to establish or approve the rates charged to policyholders for health benefit plans.

§ 10753.18

Added by Stats. 2012, Ch. 852, Sec. 14. (AB 1083) Effective January 1, 2013.

(a)In addition to any other remedy permitted by law, the commissioner shall have the administrative authority to assess penalties against carriers, insurance producers, and other entities engaged in the business of insurance or other persons or entities for violations of this chapter.

(b)Upon a showing of a violation of this chapter in any civil action, a court may also assess the penalties described in this chapter, in addition to any other remedies provided by law.

(c)Any

production agent or other person or entity engaged in the business of insurance, other than a carrier, that violates this chapter is liable for administrative penalties of not more than two hundred fifty dollars ($250) for the first violation.

(d)Any production agent or other person or entity engaged in the business of insurance, other than a carrier, that engages in practices prohibited by this chapter a second or subsequent time, or who commits a knowing violation of this chapter, is liable for administrative penalties of not less than one thousand dollars ($1,000) and not more than two thousand five hundred dollars ($2,500) for each violation.

(e)Any carrier that violates this chapter is liable for administrative penalties of not more than two thousand five hundred dollars ($2,500) for the first violation and not more than five thousand dollars ($5,000) for each subsequent

violation.

(f)Any carrier that violates this chapter with a frequency that indicates a general business practice or commits a knowing violation of this chapter, is liable for administrative penalties of not less than fifteen thousand dollars ($15,000) and not more than one hundred thousand dollars ($100,000) for each violation.

(g)An act or omission that is inadvertent and that results in incorrect premium rates being charged to more than one policyholder shall be a single violation for the purpose of this section.