Health care coverage: small employer groups.
(1) Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law provides for the regulation of individual, small employer, grandfathered small employer, and nongrandfathered small employer health care service plan contracts and health insurance policies, as defined.
Existing federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA), authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Under existing state law, the status of each distinct member of an association determines whether that member’s association coverage is individual, small group, or large group health coverage.
This bill, until January 1, 2026, would authorize an association of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association consistent with ERISA if certain requirements are met, including that the association is the sponsor of a MEWA that has offered a large group health care service plan contract since January 1, 2012, in connection with an employee welfare benefit plan under ERISA, provides a specified level of coverage, and includes coverage for common law employees, and their dependents, who are employed by an association member in the biomedical industry with operations in California. The bill would also require the association to be an organization with business and organizational purposes unrelated to the provision of health care benefits and would require the participating employers to have a commonality of interests from being in the same industry, as specified. The bill would require the large group health care service plan contract or health insurance policy to be treated as a single-risk-rated contract or policy that would not condition premium rates or eligibility on health status, as prescribed. The bill would require the association and the MEWA to file applications for registration with the appropriate department on or before June 1, 2022, and would impose specified coverage restrictions on an association and MEWA that fail to register or comply with the annual filing requirements imposed by the bill. The bill would repeal these provisions on January 1, 2026.
The bill, until January 1, 2026, would prohibit a health care service plan or health insurer, on and after June 1, 2022, from marketing, issuing, amending, renewing, or delivering large employer health care service plan or health insurance coverage to any association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the Department of Managed Health Care and the Department of Insurance to issue guidance to health care service plans and health insurers regarding these requirements, as specified. Because a violation of this prohibition by a health care service plan would be a crime, the bill would create a state-mandated local program.
(2) This bill would incorporate additional changes to Section 1357.503 of the Health and Safety Code and Section 10753.05 of the Insurance Code proposed by SB 255 and SB 326 to be operative only if this bill and SB 255, SB 326, or both are enacted and this bill is enacted last.
(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.