1373.6
. This section does not apply to a specialized health care
service plan contract or to a plan contract that primarily or solely
supplements Medicare. The director may adopt rules consistent with
federal law to govern the discontinuance and replacement of plan
contracts that primarily or solely supplement Medicare.
(a) (1) Every group contract entered into, amended, or renewed on
or after September 1, 2003, that provides hospital, medical, or
surgical expense benefits for employees or members shall provide that
an employee or member whose coverage under the group contract has
been terminated by the employer shall be entitled to convert to
nongroup membership, without evidence of insurability, subject to the
terms and conditions of this section.
(2) If the health care service plan provides coverage under an
individual health care service plan contract, other than conversion
coverage under this section, it shall offer one of the two plans that
it is required to offer to a federally eligible defined individual
pursuant to Section 1366.35. The plan shall provide this coverage at
the same rate established under Section 1399.805 for a federally
eligible defined individual. A health care service plan that is
federally qualified under the federal Health Maintenance Organization
Act (42 U.S.C. Sec. 300e et seq.) may charge a rate for the coverage
that is consistent with the provisions of that act.
(3) If the health care service plan does not provide coverage
under an individual health care service plan contract, it shall offer
a health benefit plan contract that is the same as a health benefit
contract offered to a federally eligible defined individual pursuant
to Section 1366.35. The health care service plan may offer either the
most popular health maintenance organization model plan or the most
popular preferred provider organization plan, each of which has the
greatest number of enrolled individuals for its type of plan as of
January 1 of the prior year, as reported by plans that provide
coverage under an individual health care service plan contract to the
department or the Department of Insurance by January 31, 2003, and
annually thereafter. A health care service plan subject to this
paragraph shall provide this coverage with the same cost-sharing
terms and at the same premium as a health care service plan providing
coverage to that individual under an individual health care service
plan contract pursuant to Section 1399.805. The health care service
plan shall file the health benefit plan it will offer, including the
premium it will charge and the cost-sharing terms of the plan, with
the Department of Managed Health Care.
(b) A conversion contract shall not be required to be made
available to an employee or member if termination of his or her
coverage under the group contract occurred for any of the following
reasons:
(1) The group contract terminated or an employer's participation
terminated and the group contract is replaced by similar coverage
under another group contract within 15 days of the date of
termination of the group coverage or the subscriber's participation.
(2) The employee or member failed to pay amounts due the health
care service plan.
(3) The employee or member was terminated by the health care
service plan from the plan for good cause.
(4) The employee or member knowingly furnished incorrect
information or otherwise improperly obtained the benefits of the
plan.
(5) The employer's hospital, medical, or surgical expense benefit
program is self-insured.
(c) A conversion contract is not required to be issued to any
person if any of the following facts are present:
(1) The person is covered by or is eligible for benefits under
Title XVIII of the United States Social Security Act.
(2) The person is covered by or is eligible for hospital, medical,
or surgical benefits under any arrangement of coverage for
individuals in a group, whether insured or self-insured.
(3) The person is covered for similar benefits by an individual
policy or contract.
(4) The person has not been continuously covered during the
three-month period immediately preceding that person's termination of
coverage.
(d) Benefits of a conversion contract shall meet the requirements
for benefits under this chapter.
(e) Unless waived in writing by the plan, written application and
first premium payment for the conversion contract shall be made not
later than 63 days after termination from the group. A conversion
contract shall be issued by the plan which shall be effective on the
day following the termination of coverage under the group contract if
the written application and the first premium payment for the
conversion contract are made to the plan not later than 63 days after
the termination of coverage, unless these requirements are waived in
writing by the plan.
(f) The conversion contract shall cover the employee or member and
his or her dependents who were covered under the group contract on
the date of their termination from the group.
(g) A notification of the availability of the conversion coverage
shall be included in each evidence of coverage. However, it shall be
the sole responsibility of the employer to notify its employees of
the availability, terms, and conditions of the conversion coverage
which responsibility shall be satisfied by notification within 15
days of termination of group coverage. Group coverage shall not be
deemed terminated until the expiration of any continuation of the
group coverage. For purposes of this subdivision, the employer shall
not be deemed the agent of the plan for purposes of notification of
the availability, terms, and conditions of conversion coverage.
(h) As used in this section, "hospital, medical, or surgical
benefits under state or federal law" do not include benefits under
Chapter 7 (commencing with Section 14000) or Chapter 8 (commencing
with Section 14200) of Part 3 of Division 9 of the Welfare and
Institutions Code, or Title XIX of the United States Social Security
Act.
(i) Every group contract entered into, amended, or renewed before
September 1, 2003, shall be subject to the provisions of this section
as it read prior to its amendment by Assembly Bill 1401 of the
2001-02 Regular Session.
(j) (1) On and after January 1, 2014, and except as provided in
paragraph (2), this section shall apply only to individual
grandfathered health plan contracts previously issued pursuant to
this section to federally eligible defined individuals.
(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), paragraph (1)
shall become inoperative on the date of that repeal or amendment.
(3) For purposes of this subdivision, the following definitions
apply:
(A) "Grandfathered health plan" has the same meaning as that term
is defined in Section 1251 of PPACA.
(B) "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.