This state law contains health coverage protections for people with disabilities and pre-existing conditions who work or change jobs, as well as other important provisions on health care.

HISTORY

This health insurance reform law focuses on small businesses. It took effect in 1993 under the California Insurance Code 10702.

DEFINING GROUP SIZE IN CALIFORNIA

This law states that an employer group will consist of 2 or more individuals and allows these individuals to enter the group health coverage marketplace. To establish a business group under AB 1672 protections, some insurance carriers may require proof of the business relationship of 2 or more individuals. Forms of proof, for example, may be a partnership agreement or Doing Business As Usual (DBA) filing for specified time periods.

USING CREDIT FROM PREVIOUS PRIVATE HEALTH COVERAGE

AB 1672 creates access to employer-sponsored and other group health coverage for those who have a pre-existing medical condition. This law clarifies that in California, a pre-existing medical condition is one for which the individual received treatment six months or less prior to enrollment in that group coverage. Medical treatment can include prescription medications and physician consultations.

Group coverage can exclude treatment for pre-existing medical conditions for certain periods of time called pre-existing condition exclusionary periods. AB 1672 eliminates pre-existing condition limitations only for group health insurance such as Preferred Provider Organizations (PPOs), Point of Service (POS), or Indemnity Plans. AB 1672 states that when these forms health coverage are offered through a group in California, such as employer-sponsored or association-affiliated, they cannot have more than a six month pre-existing condition exclusionary period.

The law provides that if an individual has had private medical coverage for six months or more without a gap (days of no coverage) of more than 180 days, the new plan must provide coverage from the effective date of eligibility.

Private medical coverage may be through a Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service (POS), or Indemnity Plans. Unlike HIPAA - a national health protection law - AB 1672 does not include Medi-Cal and Medicare as types of previous health coverage. Self Insured Trusts are not covered under AB 1672 health coverage protections.

For AB 1672 protections to apply, the individual must enroll during the initial enrollment period, unless the individual or family qualifies for special enrollment rights. Special enrollment rights may apply during open enrollment for individuals who did not enroll during the initial enrollment period because they had existing group health coverage at that time.

When an individual or dependants have lost or will lose coverage under the past health coverage plan, they may qualify to enroll in coverage during a special enrollment opportunity. The employee must request the special enrollment opportunity from the employer within 30 days after the date that the previous health coverage is exhausted or terminated.

ACCESS TO GROUP COVERAGE FOR SMALL EMPLOYERS

California’s AB 1672 gives small businesses and professional groups and associations (with 2 to 50 individuals) the capacity to provide affordable health coverage options in areas such as medical, dental, vision, and chiropractic.

In California, these health plans are currently offered and administered by a nonprofit, small-employer health insurance purchasing pool known as PacAdvantage. By combining the purchasing power of small California businesses and professional associations, an affordable choice of health insurance plans with full-service products and affordable co-payment levels is made available to small business employees or members. The PacAdvantage purchasing pool was formerly known as Health Insurance Plan of California (HIPC).