(a) A health care service plan providing coverage for
hospital, medical, or surgical benefits under an individual health
care service plan contract may not, with respect to a federally
eligible defined individual desiring to enroll in individual health
insurance coverage, decline to offer coverage to, or deny enrollment
of, the individual or impose any preexisting condition exclusion with
respect to the coverage.
(b) For purposes of this section, "federally eligible defined
individual" means an individual who, as of the date on which the
individual seeks coverage under this section, meets all of the
(1) Has had 18 or more months of creditable coverage, and whose
most recent prior creditable coverage was under a group health plan,
a federal governmental plan maintained for federal employees, or a
governmental plan or church plan as defined in the federal Employee
Retirement Income Security Act of 1974 (29 U.S.C. Sec. 1002).
(2) Is not eligible for coverage under a group health plan,
Medicare, or Medi-Cal, and does not have other health insurance
(3) Was not terminated from his or her most recent creditable
coverage due to nonpayment of premiums or fraud.
(4) If offered continuation coverage under COBRA or Cal-COBRA, has
elected and exhausted that coverage.
(c) Every health care service plan shall comply with applicable
federal statutes and regulations regarding the provision of coverage
to federally eligible defined individuals, including any relevant
(d) A health care service plan shall offer the following health
benefit plan contracts under this section that are designed for, made
generally available to, are actively marketed to, and enroll,
individuals: (1) either the two most popular products as defined in
Section 300gg-41(c)(2) of Title 42 of the United States Code and
Section 148.120(c)(2) of Title 45 of the Code of Federal Regulations
or (2) the two most representative products as defined in Section
300gg-41(c)(3) of the United States Code and Section 148.120(c)(3) of
Title 45 of the Code of Federal Regulations, as determined by the
plan in compliance with federal law. A health care service plan that
offers only one health benefit plan contract to individuals,
excluding health benefit plans offered to Medi-Cal or Medicare
beneficiaries, shall be deemed to be in compliance with this article
if it offers that health benefit plan contract to federally eligible
defined individuals in a manner consistent with this article.
(e) (1) In the case of a health care service plan that offers
health insurance coverage in the individual market through a network
plan, the plan may do both of the following:
(A) Limit the individuals who may be enrolled under that coverage
to those who live, reside, or work within the service area for the
(B) Within the service area of the plan, deny coverage to
individuals if the plan has demonstrated to the director that the
plan will not have the capacity to deliver services adequately to
additional individual enrollees because of its obligations to
existing group contractholders and enrollees and individual
enrollees, and that the plan is applying this paragraph uniformly to
individuals without regard to any health status-related factor of the
individuals and without regard to whether the individuals are
federally eligible defined individuals.
(2) A health care service plan, upon denying health insurance
coverage in any service area in accordance with subparagraph (B) of
paragraph (1), may not offer coverage in the individual market within
that service area for a period of 180 days after the coverage is
(f) (1) A health care service plan may deny health insurance
coverage in the individual market to a federally eligible defined
individual if the plan has demonstrated to the director both of the
(A) The plan does not have the financial reserves necessary to
underwrite additional coverage.
(B) The plan is applying this subdivision uniformly to all
individuals in the individual market and without regard to any health
status-related factor of the individuals and without regard to
whether the individuals are federally eligible defined individuals.
(2) A health care service plan, upon denying individual health
insurance coverage in any service area in accordance with paragraph
(1), may not offer that coverage in the individual market within that
service area for a period of 180 days after the date the coverage is
denied or until the issuer has demonstrated to the director that the
plan has sufficient financial reserves to underwrite additional
coverage, whichever is later.
(g) The requirement pursuant to federal law to furnish a
certificate of creditable coverage shall apply to health insurance
coverage offered by a health care service plan in the individual
market in the same manner as it applies to a health care service plan
in connection with a group health benefit plan.
(h) A health care service plan shall compensate a life agent or
fire and casualty broker-agent whose activities result in the
enrollment of federally eligible defined individuals in the same
manner and consistent with the renewal commission amounts as the plan
compensates life agents or fire and casualty broker-agents for other
enrollees who are not federally eligible defined individuals and who
are purchasing the same individual health benefit plan contract.
(i) Every health care service plan shall disclose as part of its
COBRA or Cal-COBRA disclosure and enrollment documents, an
explanation of the availability of guaranteed access to coverage
under the Health Insurance Portability and Accountability Act of
1996, including the necessity to enroll in and exhaust COBRA or
Cal-COBRA benefits in order to become a federally eligible defined
(j) No health care service plan may request documentation as to
whether or not a person is a federally eligible defined individual
other than is permitted under applicable federal law or regulations.
(k) This section shall not apply to coverage defined as excepted
benefits pursuant to Section 300gg(c) of Title 42 of the United
(l) This section shall apply to health care service plan contracts
offered, delivered, amended, or renewed on or after January 1, 2001.
(m) (1) This section shall be inoperative on January 1, 2014.
(2) If Section 5000A of the Internal Revenue Code, as added by
Section 1501 of PPACA, is repealed or amended to no longer apply to
the individual market, as defined in Section 2791 of the federal
Public Health Service Act (42 U.S.C. Section 300gg-91), this section
shall become operative on the date of that repeal or amendment.
(3) For purposes of this subdivision, "PPACA" means the federal
Patient Protection and Affordable Care Act (Public Law 111-148), as
amended by the federal Health Care Education and Reconciliation Act
of 2010 (Public Law 111-152), and any rules, regulations, or guidance
issued pursuant to that law.
(a) On and after January 1, 2014, a health care service
plan providing individual or group health care coverage shall provide
to enrollees or subscribers who cease to be enrolled in coverage a
notice informing them that they may be eligible for reduced-cost
coverage through the California Health Benefit Exchange established
under Title 22 (commencing with Section 100500) of the Government
Code or no-cost coverage through Medi-Cal. The notice shall include
information on obtaining coverage pursuant to those programs, shall
be in no less than 12-point type, and shall be developed by the
department, no later than July 1, 2013, in consultation with the
Department of Insurance and the California Health Benefit Exchange.
(b) The notice described in subdivision (a) may be incorporated
into or sent simultaneously with and in the same manner as any other
notices sent by the health care service plan.
(c) This section shall not apply with respect to a specialized
health care service plan contract or a Medicare supplemental plan