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• California Codes
  • California Health and Safety Code
    • HEALTH AND SAFETY CODE SECTION 1389.1-1389.5

1389.1.  (a) The director shall not approve any plan contract unless
the director finds that the application conforms to both of the
following requirements:
   (1) All applications for coverage which include health-related
questions shall contain clear and unambiguous questions designed to
ascertain the health condition or history of the applicant.
   (2) The application questions related to an applicant's health
shall be based on medical information that is reasonable and
necessary for medical underwriting purposes.  The  application shall
include a prominently displayed notice that shall read:
   "California law prohibits an HIV test from being required or used
by health care service plans as a condition of obtaining coverage."
   (b) Nothing in this section shall authorize the director to
establish or require a single or standard application form for
application questions.



1389.2.  At the request of the director, a health care service plan
shall provide a written statement of the actuarial basis for any
medical underwriting decision on any application form, or contract
issued or delivered to, or denied a resident of this state.




1389.25.  (a) (1) This section shall apply only to a full service
health care service plan offering health coverage in the individual
market in California and shall not apply to a specialized health care
service plan, a health care service plan contract in the Medi-Cal
program (Chapter 7 (commencing with Section 14000) of Part 3 of
Division 9 of the Welfare and Institutions Code), a health care
service plan conversion contract offered pursuant to Section 1373.6,
a health care service plan contract in the Healthy Families Program
(Part 6.2 (commencing with Section 12693) of Division 2 of the
Insurance Code), or a health care service plan contract offered to a
federally eligible defined individual under Article 4.6 (commencing
with Section 1366.35).
   (2) A local initiative, as defined in subdivision (v) of Section
53810 of Title 22 of the California Code of Regulations, that is
awarded a contract by the State Department of Health Services
pursuant to subdivision (b) of Section 53800 of Title 22 of the
California Code of Regulations, shall not be subject to this section
unless the plan offers coverage in the individual market to persons
not covered by Medi-Cal or the Healthy Families Program.
   (b) (1) A health care service plan that declines to offer coverage
or denies enrollment for an individual or his or her dependents
applying for individual coverage or that offers individual coverage
at a rate that is higher than the standard rate, shall provide the
individual applicant with the specific reason or reasons for the
decision in writing at the time of the denial or offer of coverage.
   (2)  No change in the premium rate or coverage for an individual
plan contract shall become effective unless the plan has delivered a
written notice of the change at least 30 days prior to the effective
date of the contract renewal or the date on which the rate or
coverage changes. A notice of an increase in the premium rate shall
include the reasons for the rate increase.
   (3) The written notice required pursuant to paragraph (2) shall be
delivered to the individual contractholder at his or her last
address known to the plan, at least 30 days prior to the effective
date of the change. The notice shall state in italics either the
actual dollar amount of the premium rate increase or the specific
percentage by which the current premium will be increased. The notice
shall describe in plain, understandable English any changes in the
plan design or any changes in benefits, including a reduction in
benefits or changes to waivers, exclusions, or conditions, and
highlight this information by printing it in italics. The notice
shall specify in a minimum of 10-point bold typeface, the reason for
a premium rate change or a change to the plan design or benefits.
   (4) If a plan rejects an applicant or the dependents of an
applicant for coverage or offers individual coverage at a rate that
is higher than the standard rate, the plan shall inform the applicant
about the state's high-risk health insurance pool, the California
Major Risk Medical Insurance Program (Part 6.5 (commencing with
Section 12700) of Division 2 of the Insurance Code). The information
provided to the applicant by the plan shall specifically include the
program's toll-free telephone number and its Internet Web site
address. The requirement to notify applicants of the availability of
the California Major Risk Medical Insurance Program shall not apply
when a health plan rejects an applicant for Medicare supplement
coverage.
   (c) A notice provided pursuant to this section is a private and
confidential communication and at the time of application, the plan
shall give the individual applicant the opportunity to designate the
address for receipt of the written notice in order to protect the
confidentiality of any personal or privileged information.



1389.3.  No health care service plan shall engage in the practice of
postclaims underwriting.  For purposes of this section, "postclaims
underwriting" means the rescinding, canceling, or limiting of a plan
contract due to the plan's failure to complete medical underwriting
and resolve all reasonable questions arising from written information
submitted on or with an application before issuing the plan
contract.  This section shall not limit a plan's remedies upon a
showing of willful misrepresentation.



1389.4.  (a) A full service health care service plan that issues,
renews, or amends individual health plan contracts shall be subject
to this section.
   (b) A health care service plan subject to this section shall have
written policies, procedures, or underwriting guidelines establishing
the criteria and process whereby the plan makes its decision to
provide or to deny coverage to individuals applying for coverage and
sets the rate for that coverage. These guidelines, policies, or
procedures shall assure that the plan rating and underwriting
criteria comply with Sections 1365.5 and 1389.1 and all other
applicable provisions of state and federal law.
   (c) On or before June 1, 2006, and annually thereafter, every
health care service plan shall file with the department a general
description of the criteria, policies, procedures, or guidelines the
plan uses for rating and underwriting decisions related to individual
health plan contracts, which means automatic declinable health
conditions, health conditions that may lead to a coverage decline,
height and weight standards, health history, health care utilization,
lifestyle, or behavior that might result in a decline for coverage
or severely limit the plan products for which they would be eligible.
A plan may comply with this section by submitting to the department
underwriting materials or resource guides provided to plan solicitors
or solicitor firms, provided that those materials include the
information required to be submitted by this section.
   (d) Commencing September 1, 2006, the director shall post on the
department's Web site, in a manner accessible and understandable to
consumers, general, noncompany specific information about rating and
underwriting criteria and practices in the individual market and
information about the Major Risk Medical Insurance Program. The
director shall develop the information for the Web site in
consultation with the Department of Insurance to enhance the
consistency of information provided to consumers. Information about
individual health coverage shall also include the following
notification:
   "Please examine your options carefully before declining group
coverage or continuation coverage, such as COBRA, that may be
available to you. You should be aware that companies selling
individual health insurance typically require a review of your
medical history that could result in a higher premium or you could be
denied coverage entirely."
   (e) Nothing in this section shall authorize public disclosure of
company specific rating and underwriting criteria and practices
submitted to the director.
   (f) This section shall not apply to a closed block of business, as
defined in Section 1367.15.



1389.5.  (a) This section shall apply to a health care service plan
that provides coverage under an individual plan contract that is
issued, amended, delivered, or renewed on or after January 1, 2007.
   (b) At least once each year, the health care service plan shall
permit an individual who has been covered for at least 18 months
under an individual plan contract to transfer, without medical
underwriting, to any other individual plan contract offered by that
same health care service plan that provides equal or lesser benefits,
as determined by the plan.
   "Without medical underwriting" means that the health care service
plan shall not decline to offer coverage to, or deny enrollment of,
the individual or impose any preexisting condition exclusion on the
individual who transfers to another individual plan contract pursuant
to this section.
   (c) The plan shall establish, for the purposes of subdivision (b),
a ranking of the individual plan contracts it offers to individual
purchasers and post the ranking on its Internet Web site or make the
ranking available upon request. The plan shall update the ranking
whenever a new benefit design for individual purchasers is approved.

   (d) The plan shall notify in writing all enrollees of the right to
transfer to another individual plan contract pursuant to this
section, at a minimum, when the plan changes the enrollee's premium
rate. Posting this information on the plan's Internet Web site shall
not constitute notice for purposes of this subdivision. The notice
shall adequately inform enrollees of the transfer rights provided
under this section, including information on the process to obtain
details about the individual plan contracts available to that
enrollee and advising that the enrollee may be unable to return to
his or her current individual plan contract if the enrollee transfers
to another individual plan contract.
   (e) The requirements of this section shall not apply to the
following:
   (1) A federally eligible defined individual, as defined in
subdivision (c) of Section 1399.801, who is enrolled in an individual
health benefit plan contract offered pursuant to Section 1366.35.
   (2) An individual offered conversion coverage pursuant to Section
1373.6.
   (3) Individual coverage under a specialized health care service
plan contract.
   (4) An individual enrolled in the Medi-Cal program pursuant to
Chapter 7 (commencing with Section 14000) of Division 9 of Part 3 of
the Welfare and Institutions Code.
   (5) An individual enrolled in the Access for Infants and Mothers
Program pursuant to Part 6.3 (commencing with Section 12695) of
Division 2 of the Insurance Code.
   (6) An individual enrolled in the Healthy Families Program
pursuant to Part 6.2 (commencing with Section 12693) of Division 2 of
the Insurance Code.
   (f) It is the intent of the Legislature that individuals shall
have more choice in their health coverage when health care service
plans guarantee the right of an individual to transfer to another
product based on the plan's own ranking system. The Legislature does
not intend for the department to review or verify the plan's ranking
for actuarial or other purposes.