Carrier Requirements AB 1672

Insurance Company Requirements under AB 1672

AB 1672 provides guaranteed issue medical coverage to California Employer’s with 2 or more employees, even if just husband and wife, when both are working in the business.  See our Introduction Page for general details.

New Rules under Health Care Reform

AB 1083 (2012 Monning) Insurance Code §10753 et seq will update  AB 1672 to comply with Obamacare PPACA. I

Visit our new website http://healthreformquotes.com/small-business/ab-1083/requirements-10705/

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10705(j) Except in the case of a late insured, or for satisfaction of a preexisting condition clause in the case of initial coverage of an eligible employee, a disability insurer may not exclude any eligible employee or dependent who would otherwise be entitled to health care services on the basis of any of the following:

the health status,
the medical condition, including both physical and mental illnesses,
the claims experience,
the medical history,
the genetic information,
or the disability or evidence of insurability, including conditions arising out of acts of domestic violence of that employee or dependent.

No health benefit plan may limit or exclude coverage for a specific eligible employee or dependent by type of illness, treatment, medical condition, or accident, except for pre-existing conditions as permitted by Section 10198.7 or 10708.

   (k) If a carrier enters into a contract, agreement, or other arrangement with a third-party administrator or other entity to provide administrative, marketing, or other services related to the offering of health benefit plans to small employers in this state, the third-party administrator shall be subject to this chapter.
(l) (1) With respect to the obligation to provide coverage newly issued under subdivision (d), the carrier may cease enrolling new small employer groups and new eligible employees as defined by paragraph (2) of subdivision (f) of Section 10700 if it certifies to the commissioner that the number of eligible employees and dependents, of the employers newly enrolled or insured during the current calendar year by the carrier equals or exceeds:  (A) in the case of a carrier that administers any self-funded health benefits arrangement in California, 10 percent of the total number of eligible employees, or eligible employees and dependents, respectively, enrolled or insured in California by that carrier as of December 31 of the preceding year, or (B) in the case of a carrier that does not administer any self-funded health benefit arrangements in California, 8 percent of the total number of eligible employees, or eligible employees and dependents, respectively, enrolled or insured by the carrier in California as of December 31 of the preceding year.
(2) Certification shall be deemed approved if not disapproved within 45 days after submission to the commissioner.  If that certification is approved, the small employer carrier shall not offer coverage to any small employers under any health benefit plans
during the remainder of the current year.  If the certification is not approved, the carrier shall continue to issue coverage as required by subdivision (d) and be subject to administrative penalties as established in Section 10718.

10705.1.  (a) (AB 2059) Between July 26, 1993, and October 24, 1993, as well as 60 days prior to the expiration of an existing contract that expires prior to July 1, 1994, or, for contracts expiring after July 1, 1994, 60 days prior to July 1, 1994, an association that meets the definition of guaranteed association, as set forth in Section 10700, except for the requirement that 1,000 persons be covered, shall be entitled to purchase small employer health coverage as if the association were a guaranteed association, except that the coverage shall be guaranteed only for those members of an association, as defined in Section 10700, (1) who were receiving coverage or had successfully applied for coverage through the association as of June 30, 1993, (2) who were receiving coverage through the association as of December 31, 1992, and whose coverage lapsed at any time thereafter because the employment through which coverage was received ended or an employer’s contribution to health coverage ended, or (3) who were covered at any time between June 30, 1993, and July 1, 1994, under a contract that was in force on June 30 1993.
(b) An association obtaining health coverage for its members pursuant to this section shall otherwise be afforded all the rights of a guaranteed association under this chapter including, but not limited to, guaranteed renewability of coverage.
(c) No later than August 25, 1993, carriers that, at any time during the 1993 calendar year have provided coverage to associations that would be eligible for coverage under this section shall notify those associations of their rights under this section.  Ninety days prior to the expiration of a contract that expires prior to July 1, 1994, or, for contracts expiring after July 1, 1994, 90 days prior to July 1, 1994, carriers that have in force coverage with an association that would be eligible for coverage under this section shall notify the association of its rights under this section.

10706.  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 10700 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.

***If an employee loses group coverage, they are not a late enrollee, they qualify for Special Enrollment
Special Enrollment Late Enrollment Participation

Thus, if you lose your spouses coverage, you can apply on your employers coverage within 30 days and not have to wait for Open Enrollment.

Click here for more details on using Medi-Cal, Veterans, Medicare to exclude employees from coverage.
Other Credible Coverage

 Members of an association eligible for health coverage eligible under subdivision (z) of Section 10700 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.

10706.5.  (a) After a small employer submits a completed application, the carrier shall, within 30 days notify the employer of the employer’s actual rates in accordance with Section 10714.  The employer shall have 30 days in which to exercise the right to buy coverage at the quoted rates.
(b) When a small employer submits a premium payment, based on the quoted rates, and that payment is delivered or postmarked, whichever occurs earlier, within the first 15 days of a month, coverage shall become effective no later than the first day of the following month. When that payment is neither delivered nor postmarked until after the 15th day of a month, coverage shall become effective no later than the first day of the second month following delivery or postmark of the payment.

***We have found the Companies to be much more liberal than this.  Get your quote and email us for details.

(c) During the first 30 days of coverage, the small employer shall have the option of changing coverage to a different benefit plan design offered by the same carrier.  If a small employer notifies the carrier of the change within the first 15 days of a month, coverage under the new benefit plan design shall become effective no later than the first day of the following month.  If a small employer notifies the carrier of the change after the 15th day of a month, coverage under the new benefit plan design shall become effective no later than the first day of the second month following notification.

(d) All eligible employees and dependents listed on the small employer’s completed application shall be covered on the effective date of the health benefit plan.

10707.  Except in the case of a late enrollee, or for satisfaction of a preexisting condition clause in the case of initial coverage of an eligible employee, a carrier may not exclude any eligible employee or dependent who would otherwise be covered, on the basis of an actual or expected health condition of that employee or dependent. No health benefit plan may limit or exclude coverage for a specific eligible employee or dependent by type of illness, treatment, medical condition, or accident, except for preexisting conditions as permitted by Section 10708.

10708.  (a) Preexisting condition provisions of health benefit plans shall not exclude coverage for a period beyond six months following the individual’s effective date of coverage and may only relate to conditions for which medical advice, diagnosis, care, or treatment, including the use of prescription medications, was recommended by or received from a licensed health practitioner during the six months immediately preceding the effective date of coverage.
(b) A carrier that does not utilize a preexisting condition provision may impose a waiting or affiliation period, not to exceed 60 days, before the coverage issued subject to this chapter shall become effective.  During the waiting or affiliation period, the carrier is not required to provide health care benefits and no premiums shall be charged to the subscriber or enrollee.

(c) In determining whether a preexisting condition provision or a waiting period applies to any person, a plan shall credit the time the person was covered under creditable coverage, provided the person becomes eligible for coverage under the succeeding plan contract within 62 days of termination of prior coverage, exclusive of any waiting or affiliation period, and applies for coverage with the succeeding health benefit plan contract within the applicable enrollment period.  A plan shall also credit any time an eligible employee must wait before enrolling in the health benefit plan, including any post enrollment or employer-imposed waiting or affiliation period.  However, if a person’s employment has ended, the availability of health coverage offered through employment or sponsored by an employer has terminated, or an employer’s contribution toward health coverage has terminated, a plan shall credit the time the person was covered under creditable coverage if the person becomes eligible for health coverage offered through employment or sponsored by an employer within 180 days, exclusive of any waiting or affiliation period, and applies for coverage under the succeeding health benefit plan within the applicable enrollment period.

Health Reform §2708 42 US §300gg requires that Employees be eligible within 90 days.  DOL Guidance 2012-02 national underwriter.com Health Reform Facts Q & A 249

   (d) Group health benefit plans may not impose a preexisting conditions exclusion to the following:
(1) To a newborn individual, who, as of the last day of the 30-day period beginning with the date of birth, applied for coverage through the employer-sponsored plan.
(2) To a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning with the date of adoption or placement for adoption, is covered under creditable coverage and applies for coverage through the employer-sponsored plan.  This provision shall not apply if, for 63 continuous days, the child is not covered under any creditable coverage.
(3) To a condition relating to benefits for pregnancy or maternity care.

For more details & Federal Law links click here

   (e) A carrier providing aggregate or specific stop loss coverage or any other assumption of risk with reference to a health benefit plan shall provide that the plan meets all requirements of this section concerning preexisting condition provisions and waiting or affiliation periods.
(f) In addition to the preexisting condition exclusions authorized by subdivision (a) and the waiting or affiliation period authorized by subdivision (b), carriers providing coverage to a guaranteed association may impose on employers or individuals purchasing coverage who would not be eligible for guaranteed coverage if they were not purchasing through the association a waiting or affiliation period, not to exceed 60 days, before the coverage issued subject to this chapter shall become effective.  During the waiting or affiliation period, the carrier is not required to provide health
care benefits and no premiums shall be charged to the insured.

10709.  (a) No health benefit plan may exclude late enrollees from coverage for more than 12 months from the date of the late enrollee’s application for coverage.  No premiums shall be charged to the late enrollee until the exclusion period has ended.
(b) A carrier providing aggregate or specific stop loss coverage or any other assumption of risk with reference to a health benefit plan shall provide that the plan meets all requirements of this section concerning late enrollees.

See Definition 10700 L AB 1672

10711.  No carrier shall be required by the provisions of this chapter:
(a) To offer coverage to, or accept applications from, a small employer as defined in paragraph (1) of subdivision (w) of Section 10700, where the small employer is not physically located in a carrier’s approved service areas.
(b) To offer coverage to or accept applications from a small employer as defined in paragraph (2) of subdivision (w) of Section 10700 where the small employer is seeking coverage for eligible employees who do not work or reside in a carrier’s approved service areas.
(c) To include in a health benefits plan an otherwise eligible employee or dependent, when the eligible employee or dependent does not work or reside within a carrier’s approved service area, except as provided in Section 10702.1.
(d) To offer coverage to, or accept applications from, a small employer for a benefits plan design within an area if the commissioner has found that 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 contract holders and enrollees and that the action is not unreasonable or clearly inconsistent with the intent of this chapter.
A carrier that cannot offer coverage to small employers in a specific service area because it is lacking sufficient capacity may not offer coverage in the applicable area to new employer groups with
more than 50 eligible employees until 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 (h) of Section 10705.
(e) To offer coverage to a small employer, or an eligible employee as defined in paragraph (2) of subdivision (g) of Section 10700, who within 12 months of application for coverage terminated from a health benefit plan offered by the carrier.

10712.  (a) A carrier shall not be required to offer coverage or accept applications for benefit plan designs pursuant to this chapter where the commissioner determines that the acceptance of an application or applications would place the carrier in a financially impaired condition.
(b) The commissioner’s determination shall follow an evaluation that includes a certification by the commissioner that the acceptance of an application or applications would place the carrier in a financially impaired condition.
(c) A carrier that has not offered coverage or accepted applications pursuant to this chapter shall not offer coverage or accept applications for any individual or group health benefit plan until the commissioner has determined that the carrier has ceased to be financially impaired.

10713. (Guaranteed Renewable)  All health benefit plans written, issued, or administered by carriers on or after the effective date of this chapter, and all health benefit plans in force on or after the effective date of this chapter shall be renewable with respect to all eligible employees or dependents at the option of the policyholder, contract holder, or small employer except as follows:
(a) For nonpayment of the required premiums by the policyholder, contract holder, or small employer.
(b) For fraud or misrepresentation by the policyholder, contract holder, or small employer or, with respect to coverage of individual enrollees, the enrollees or their representative.
(c) For noncompliance with a carrier’s participation or employer contribution requirements at the time of renewal.
(d) When the carrier ceases to write, issue, or administer new 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, contract holder, 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 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 (h) of Section 10705 or the commissioner has made a determination pursuant to subdivision (a) of Section 10712, 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, contract holders, 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 and satisfies the requirements of paragraph (3) of subdivision (b) of Section 10714.

10714.  Premiums for benefit plan designs written, issued, or administered by carriers on or after the effective date of this act, shall be subject to the following requirements:
(a) (1) The premium for new business shall be determined for an eligible employee in a particular risk category after applying a risk adjustment factor to the carrier’s standard employee risk rates. The risk adjusted employee risk rate may not be more than 120 percent or less than 80 percent of the carrier’s applicable standard employee risk rate until July 1, 1996.  Effective July 1, 1996, the risk adjusted employee risk rate may not be more than 110 percent or less than 90 percent.
(2) The premium charged a small employer for new business shall be equal to the sum of the risk adjusted employee risk  rates.
(3) The standard employee risk rates applied to a small employer for new business shall be in effect for no less than six months. (AB 503)
(b) (1) The premium for in force business shall be determined for an eligible employee in a particular risk category after applying a risk adjustment factor to the carrier’s standard employee risk rates.   The risk adjusted employee risk rates may not be more than 120 percent or less than 80 percent of the carrier’s applicable standard employee risk rate until July 1, 1996.  Effective July 1, 1996, the risk adjusted employee risk rate may not be more than 110 percent or less than 90 percent.  The factor effective July 1, 1996, shall apply to in force business at the earlier of either the time of renewal or July 1, 1997.  The risk adjustment factor applied to a small employer may not increase by more than 10 percentage points from the risk adjustment factor applied in the prior rating period.  The risk adjustment factor for a small employer may not be modified more frequently than every 12 months.

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   (2) The premium charged a small employer for in force business shall be equal to the sum of the risk adjusted employee risk rates. The standard employee risk rates shall be in effect for no less than six months.
(3) For a benefit plan design that a carrier has discontinued offering, the risk adjustment factor applied to the standard employee risk rates for the first rating period of the new benefit plan design that the small employer elects to purchase shall be no greater than the risk adjustment factor applied in the prior rating period to the discontinued benefit plan design.  However, the risk adjusted employee rate may not be more than 120 percent or less than 80 percent of the carrier’s applicable standard employee risk rate until July 1, 1996.  Effective July 1, 1996, the risk adjusted employee risk rate may not be more than 110 percent or less than 90 percent. The factor effective July 1, 1996, shall apply to in force business at the earlier of either the time of renewal or July 1, 1997.  The risk adjustment factor for a small employer may not be modified more frequently than every 12 months.
(c) (1) For any small employer, a carrier may, with the consent of the small employer, establish composite employee and dependent rates for either new business or renewal of in force business.  The composite rates shall be determined as the average of the risk adjusted employee risk rates for the small employer, as determined in accordance with the requirements of subdivisions (a) and (b).  The sum of the composite rates so determined shall be equal to the sum of the risk adjusted employee risk rates for the small employer.
(2) The composite rates shall be used for all employees and dependents covered throughout a rating period of no less than six months, nor more than 12 months, except that a carrier may reserve the right to redetermine the composite rates if the enrollment under the health benefit plan changes by more than a specified percentage during the rating period.  Any redetermination of the composite rates shall be based on the same risk adjusted employee risk rates used to determine the initial composite rates for the rating period.  If a carrier reserves the right to redetermine the rates and the
enrollment changes more than the specified percentage, the carrier shall redetermine the composite rates if the re determine rates would result in a lower premium for the small employer.  A carrier reserving the right to redetermine the composite rates based upon a change in enrollment shall use the same specified percentage to measure that change with respect to all small employers electing composite rates.

10715.  Carriers shall apply standard employee risk rates consistently with respect to all small employers.

Start Here Code Fed Regulations Requirements 10705 - 10715 10716 - 10718.7 Requirements AB 1672 Small Employer Health Coverage for Insurance Companies California