Small employers: health reimbursement arrangements.

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, on and after October 1, 2013, a health care service plan or health insurer to fairly and affirmatively offer, market, and sell all of the plan's or insurer's small employer health benefit plans for plan years on or after January 1, 2014, to all small employers in each service area or geographic region in which the plan or insurer provides or arranges for health care services or benefits. Existing law requires a health care service plan or health insurer to fairly and affirmatively renew a grandfathered plan contract or health benefit plan with small employers. For nongrandfathered small employer health care service plan contracts or health insurance policies, existing law requires employer contributions toward health reimbursement accounts and health savings accounts to count toward the actuarial value of the product in the manner specified in federal rules and guidance. This bill would prohibit a health care service plan or health insurer from prohibiting the pairing of a specific health coverage product issued by a plan or insurer to a small employer with a health reimbursement arrangement or other employer-sponsored method for reimbursing employees for all or part of their deductibles, copayments, or other out-of-pocket medical expenses under the plan contract or policy. The bill would prohibit a plan or insurer from entering into a contract with a solicitor, or an agent or broker that results in compensation paid to a solicitor, or an agent or broker for the sale of a health care service plan contract or a health benefit plan to be varied because the small employer is or will implement a health reimbursement arrangement to supplement the benefits of the plan contract or health benefit plan for its employees. Because a willful violation of the bill's provisions 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.