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 federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA) , authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Existing law authorizes an association of employers to offer a large group health care service plan contract, consistent with ERISA, if certain requirements are met. Until January 1, 2026, existing law also authorizes an association of employers to offer a large group health care service plan contract to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association is headquartered in this state, was established before March 23, 2010, and is the sponsor of a MEWA, and that the contract includes coverage of employees of an association member in the biomedical industry.
This bill would authorize an association of employers to offer a large group health care service plan contract to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a MEWA, and that the contract includes coverage of employees of an association member in the engineering, surveying, or design industry. The bill would require an association and MEWA to annually file evidence of ongoing compliance with those requirements in a manner specified by the department. This bill would require the department, on or before June 30, 2028, to provide the health policy committees of the Legislature with the most recent filings. The bill would require the department to conduct an analysis of the impacts of MEWAs on the small employer health insurance market, as specified, authorize the department to coordinate with the Department of Insurance for the analysis, require health care service plans, health insurers, and MEWAs to comply with requests for information, and require the department to post a report summarizing its analysis on its internet website on or before July 1, 2026. The bill, on or after June 1, 2025, would prohibit a plan from marketing, issuing, amending, renewing, or delivering large employer coverage to an association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the department to issue guidance to health care service plans regarding these requirements, as specified. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.
This bill would repeal these provisions on January 1, 2030.
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.

Statutes affected:
02/13/24 - Introduced: 127280.1 HSC
03/11/24 - Amended Assembly: 127280.1 HSC
AB 2434: 127280.1 HSC