SECTIONS 10785 - California Statutes

INSURANCE CODE

SECTION 10785

10785. (a) A disability insurer that covers hospital, medical, or
surgical expenses under an individual health benefit plan as defined
in subdivision (a) of Section 10198.6 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
following conditions:
(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
coverage.
(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 disability insurer that covers hospital, medical, or
surgical expenses shall comply with applicable federal statutes and
regulations regarding the provision of coverage to federally eligible
defined individuals, including any relevant application periods.
(d) A disability insurer shall offer the following health benefit
plans 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 insurer in
compliance with federal law. An insurer that offers only one health
benefit plan to individuals, excluding health benefit plans offered
to Medi-Cal or Medicare beneficiaries, shall be deemed to be in
compliance with this chapter if it offers that health benefit plan
contract to federally eligible defined individuals in a manner
consistent with this chapter.
(e) (1) In the case of a disability insurer that offers health
benefit plans in the individual market through a network plan, the
insurer 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
network plan.
(B) Within the service area covered by the health benefit plan,
deny coverage to individuals if the insurer has demonstrated to the
commissioner that the insured will not have the capacity to deliver
services adequately to additional individual insureds because of its
obligations to existing group policyholders, group contractholders
and insureds, and individual insureds, and that the insurer 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 disability insurer, upon denying health insurance coverage
in any service area in accordance with subparagraph (B) of paragraph
(1), may not offer health benefit plans through a network in the
individual market within that service area for a period of 180 days
after the coverage is denied.
(f) (1) A disability insurer may deny health insurance coverage in
the individual market to a federally eligible defined individual if
the insurer has demonstrated to the commissioner both of the
following:
(A) The insurer does not have the financial reserves necessary to
underwrite additional coverage.
(B) The insurer 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 disability insurer, 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 insurer has demonstrated to the commissioner that the
insurer 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 benefits
plans offered by a disability insurer in the individual market in the
same manner as it applies to an insurer in connection with a group
health benefit plan policy or group health benefit plan contract.
(h) A disability insurer 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 insurer
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.
(i) Every disability insurer 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 individual.
(j) No disability insurer 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
States Code.
(l) This section shall apply to policies or contracts offered,
delivered, amended, or renewed on or after January 1, 2001.