AB 1672 10716 et seq

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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10716.  In connection with the offering for sale of any benefit plan design to small employers:
Each carrier shall make a reasonable disclosure, as part of its solicitation and sales materials, of the following:
(a) The extent to which the premium rates for a specified small employer are established or adjusted in part based upon the actual or expected variation in claims costs or actual or expected variation in health conditions of the employees and dependents of the small employer.
(b) The provisions concerning the carrier’s ability to change premium rates and the factors other than claim experience which affect changes in premium rates.
(c) Provisions relating to the guaranteed issue of policies and contracts.
(d) Provisions relating to the effect of any preexisting condition provision.
(e) Provisions relating to the small employer’s right to apply for any benefit plan design 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.
(f) The availability, upon request, of a listing of all the carrier’s benefit plan designs, including the rates for each benefit plan design.

10717.  (a) No carrier shall provide or renew coverage subject to this chapter until it has done all of the following:
(1) A statement has been filed with the commissioner listing all of the carrier’s benefit plan designs 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 as well as the standard employee risk rate for each risk category for each benefit plan design and the highest and lowest risk adjustment factors that the carrier intends to use in determining rates for each benefit plan design.  When filing a new benefit plan design pursuant to Section 10705, carriers may submit both the policy form and the standard employee risk rates for each risk category at the same time.
(2) Either:
(A) Thirty days expires after that statement is filed without written notice from the commissioner specifying the reasons for his or her opinion that the carrier’s risk categories or risk adjustment factors do no comply with the requirements of this chapter.
(B) Prior to that time the commissioner gives the carrier written notice that the carrier’s risk categories and risk adjustment factors as filed comply with the requirements of this chapter.
(b) No carrier shall issue, deliver, renew, or revise a benefit plan design lawfully provided pursuant to subdivision (a), and no carrier shall change the risk categories, risk adjustment factors, or standard employee risk rates for any benefit plan design until all of the following requirements are met:
(1) The carrier files with the commissioner a statement of the specific changes which the carrier proposes in the risk categories, risk adjustment factors, or standard employee risk rates.
(2) Either:
(A) Thirty days expires after such statement is filed without written notice from the commissioner specifying the reasons for his or her opinion that the carrier’s risk categories or risk adjustment 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 risk categories and risk adjustment factors as filed comply with the requirements of this chapter.
(c) Notwithstanding any provision to the contrary, when a carrier is changing the standard employee risk rates of a benefit plan design lawfully provided under (a) or (b) above but is not changing the risk categories or risk adjustment factors which have been previously authorized, the carrier need not comply with the requirements of paragraph (2) of subdivision (b), but instead shall submit the revised standard employee risk rates for the benefit plan design prior to offering or renewing the benefit plan design.
(d) When submitting filings under subdivision (a), (b), or (c), a carrier may also file with the commissioner at the time of the filings a statement of the standard employee risk rate for each risk category the carrier intends to use for each month in the 12 months subsequent to the date of the filing.  Once the requirements of the applicable subdivision (a), (b), or (c), have been met, these rates shall be used by the carrier for the 12-month period unless the carrier is otherwise informed by the commissioner in his or her response to the filings submitted under subdivision (a), (b), or (c), provided that any subsequent change in the standard employee risk rates charged by the carrier which differ from those previously filed with the commissioner must be newly filed in accordance with this subdivision and provided that the carrier does not change the risk categories or risk adjustment factors for the benefit plan design.
(e) If the commissioner notifies the carrier, in writing, that the carrier’s risk categories or risk adjustment 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, benefit plan design, risk categories, or risk adjustment factors in conjunction with the health benefit plans or benefit plan designs for which the filing was made.
(f) 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.
(g) Each carrier shall make the information and documentation described in this section available to the commissioner upon request.

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

10718.  (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.

10718.5.  (a) (1) In addition to any other remedy permitted by law, whenever the commissioner shall have reason to believe that any carrier, production agent, or other person or entity engaged in the business of insurance has violated this chapter, and that a proceeding by the commissioner in respect thereto would be in the interest of the public, the commissioner may issue and serve upon that entity an order to show cause containing a statement of the charges, a statement of the entity’s potential liability under this chapter, and a notice of a public hearing thereon before the Administrative Law Bureau of the department to be held at a time and place fixed therein, which shall not be less than 30 days after the service thereof, for the purpose of determining whether the commissioner should issue an order to that entity to pay the penalty imposed by this chapter and such order or orders as shall be reasonably necessary to correct, eliminate, or remedy the alleged violations of this chapter, including, but not limited to, an order to cease and desist from the specified violations of this chapter.
(2) The hearings provided by this subdivision shall be conducted in accordance with the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted therein.
(b) (1) Whenever it appears to the commissioner that irreparable loss and injury has occurred or may occur to an insured, employer, employee, or other member of the public because a carrier, production
agent, or other person or entity engaged in the business of insurance has violated this chapter, the commissioner may, before hearing, but after notice and opportunity to submit relevant information, issue and cause to be served upon the entity such order or orders as shall be reasonably necessary to correct, eliminate, or remedy the alleged violations of this chapter, including, but not limited to, an order requiring the entity to forthwith cease and desist from engaging further in the violations which are causing or may cause such irreparable injury.
(2) At the same time an order is served pursuant to paragraph (1) of this subdivision, the commissioner shall issue and also serve upon the person a notice of public hearing before the Administrative Law Bureau of the department to be held at a time and place fixed therein, which shall not be less than 30 days after the service thereof.
(3) The hearings provided by this subdivision shall be conducted in accordance with the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code, and the commissioner shall have all the powers granted therein.
(4) At any time prior to the commencement of a hearing as provided in this subdivision, the entity against which the commissioner has served an order may waive the hearing and have judicial review of the order by means of any remedy afforded by law without first exhausting administrative remedies or procedures.
(c) If, after hearing as provided by subdivision (a) or (b), the charges, or any of them, that an entity has violated this chapter are found to be justified, the commissioner shall issue and cause to be served upon that entity an order requiring that entity to pay the penalty imposed by this chapter and such order or orders as shall be reasonably necessary to correct, eliminate, or remedy the alleged violations of this chapter, including, but not limited to, an order to cease and desist from the specified violations of this chapter.
(d) In addition to any other penalty provided by law or the availability of any administrative procedure, if a carrier, after notice and hearing, is found to have violated this chapter knowingly or as a general business practice the commissioner may suspend the carrier’s certificate of authority to transact disability insurance.
The order of suspension shall prescribe the period of such suspension.  The proceedings shall be conducted in accordance with the Administrative Procedure Act, Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code and the commissioner shall have all the powers granted therein.

10718.55.  (a) Carriers may enter into contractual agreements with qualified associations, as defined in subdivision (b), under which these qualified associations may assume responsibility for performing specific administrative services, as defined in this section, for qualified association members.  Carriers that enter into agreements with qualified associations for assumption of administrative services shall establish uniform definitions for the administrative services that may be provided by a qualified association or its third-party administrator.  The carrier shall permit all qualified associations to assume one or more of these functions when the carrier determines the qualified association demonstrates that it has  the administrative capacity to assume these functions.
For the purposes of this section, administrative services provided by qualified associations or their third-party administrators shall be services pertaining to eligibility determination, enrollment, premium collection, sales, or claims administration on a per-claim basis that would otherwise be provided directly by the carrier or through a third-party administrator on a commission basis or an agent or solicitor workforce on a commission basis.
Each carrier that enters into an agreement with any qualified association for the provision of administrative services shall offer all qualified associations with which it contracts the same premium discounts for performing those services the carrier has permitted the qualified association or its third-party administrator to assume. The carrier shall apply these uniform discounts to the carrier’s risk adjusted employee risk rates after the carrier has determined the qualified association’s risk adjusted employee risk rates pursuant to Section 10714.  The carrier shall report to the department its schedule of discounts for each administrative service.
In no instance may a carrier provide discounts to qualified associations that are in any way intended to, or materially result in, a reduction in premium charges to the qualified association due to the health status of the membership of the qualified association. In addition to any other remedies available to the commissioner to enforce this chapter, the commissioner may declare a contract between a carrier and a qualified association for administrative services pursuant to this section null and void if the commissioner determines any discounts provided to the qualified association are intended to, or materially result in, a reduction in premium charges to the qualified association due to the health status of the membership of the qualified association.
(b) For the purposes of this section, a qualified association is a nonprofit corporation comprised of a group of individuals or employers who associate based solely on participation in a specified profession or industry, that conforms to all of the following requirements:
(1) It accepts for membership any individual or small employer meeting its membership criteria.
(2) It does not condition membership, directly or indirectly, on the health or claims history of any person.
(3) It uses membership dues solely for and in consideration of the membership and membership benefits, except that the amount of the dues shall not depend on whether the member applies for or purchases insurance offered by the association.
(4) It is organized and maintained in good faith for purposes unrelated to insurance.

Thus, one cannot just look around to join a group, only for the purpose of getting a better insurance rate.

(5) It existed on January 1, 1972, and has been in continuous existence since that date.
(6) It has a constitution and bylaws or other analogous governing documents that provide for election of the governing board of the association by its members.
(7) It offered, marketed, or sold health coverage to its members for 20 continuous years prior to January 1, 1993.
(8) It agrees to offer any plan contract only to association members.
(9) It agrees to include any member choosing to enroll in the plan contract offered by the association, provided that the member agrees to make required premium payments.
(10) It complies with all provisions of this article.
(11) It had at least 10,000 enrollees covered by association-sponsored plans immediately prior to enactment of Chapter 1128 of the Statutes of 1992.
(12) It applies any administrative cost at an equal rate to all members purchasing coverage through the qualified association.
(c) A qualified association shall comply with the requirements set forth in Section 10198.9.

10718.6.  (a) Notwithstanding the provisions of this chapter, any employer subject to a local living wage law or other legislation enacted by a local government that regulates the minimum hourly compensation of employees, whether mandatory or voluntary, shall be a small employer for purposes of obtaining coverage under this chapter.  This provision applies whether those employees are employed on a part-time or full-time basis.  For the purposes of this subdivision, part-time means employment of a permanent employee who works at least 20 hours but no more than 29 hours each week.
(b) If an employer described in subdivision (a) elects to provide health care coverage to those employees who are subject to the local living wage law or other local legislation regulating their minimum hourly compensation, the employer shall obtain that coverage under the provisions of this chapter subject to all of its requirements.
The employer may not obtain coverage under this chapter for other employees, unless either of the following applies:
(1) The employer is a small employer under a provision of this chapter other than subdivision (a).
(2) The employer satisfies both of the following conditions:
(A) The employer has within the prior 12 months provided coverage under this article for employees subject to a local living wage law or other local legislation regulating the minimum hourly compensation.
(B) The employer has 50 or fewer other employees to whom the employer has not previously offered coverage.
(c) Any coverage offered to an employee that qualifies under paragraph (2) of subdivision (b) shall be subject to all of the provisions of this article.
(d) A self-employed individual who is subject to a local living wage law or other local legislation regulating his or her minimum hourly compensation shall not be a small employer for purposes of this section.
(e) Notwithstanding the provisions of subdivision (b), if an employer provided health care coverage before January 1, 2003, to employees subject to a local living wage law or other local legislation regulating their minimum hourly compensation, the employer is not required to obtain that coverage under this chapter and is not eligible to obtain coverage under its provisions.
(f) This section shall remain in effect only until January 1, 2007, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2007, deletes or extends that date.

10718.7.  Notwithstanding any other provision of law, no provision of this chapter shall be construed to limit the applicability of any other provision of the Insurance Code unless such provision is in conflict with the requirements of this chapter.