AB 1305: Limitations on cost sharing: family coverage.

Existing federal law, the federal Patient Protection and Affordable Care Act (PPACA), enacts various health care coverage market reforms that take effect January 1, 2014. Among other things, PPACA establishes annual limits on specified forms of cost sharing, including deductibles, on all essential health benefits for nongrandfathered individual and group health insurance coverage.

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 requires, for nongrandfathered products in the individual or small group markets, a health care service plan contract or health insurance policy, except a specialized health care service plan or health insurance policy, that is issued, amended, or renewed on or after January 1, 2015, to provide for a limit on annual out-of-pocket expenses for all covered benefits that meet the definition of essential health benefits, and requires the plan contract or policy, for nongrandfathered products in the large group market, to provide that limit for covered benefits to the extent that the limit does not conflict with federal law or guidance, as specified. Existing law prohibits this limit from exceeding the limit described in a specified provision of federal law.

This bill would require, for family coverage, that an individual within a family shall not have a maximum out-of-pocket limit that is greater than the maximum out-of-pocket limit for individual coverage for that product. The bill would require a plan contract or policy and, commencing January 1, 2017, a large group market plan contract or policy, for family coverage that includes a deductible, except a high deductible health plan, that an individual within a family shall not have a deductible that is greater than the deductible limit for individual coverage for that product. The bill would require for a plan contract or policy and, commencing January 1, 2017, for a large group market health plan contract or policy, for family coverage that includes a deductible and is a high deductible health plan, as defined in federal law, to include a deductible for each individual covered by the plan contract or policy that is equal to either the amount set forth in a specified provision of federal law or the deductible for individual coverage under the plan contract or policy, whichever is greater. Because a willful violation of these requirements by a health care service plan would be a crime, this bill would impose a state-mandated local program.

Existing law prohibits the deductible under a small employer health care service plan contract or small employer health insurance policy that is offered, sold, or renewed on or after January 1, 2014, from exceeding specified dollar amounts. Existing law requires those dollar amounts to be indexed consistent with specified provisions of the PPACA and any federal rules or guidance pursuant to those provisions.

This bill would instead require those dollar amounts to be indexed consistent with provisions of the PPACA that specify a formula for calculating health plan premium adjustment percentages. Because a willful violation of this requirement by a health care service plan would be a crime, this bill would impose a state-mandated local program.

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.

This bill would provide that no reimbursement is required by this act for a specified reason.