California Health Insurance Policy Requirements

California has comprehensive health insurance regulations that often exceed federal requirements. Understanding these state-specific rules is essential for the licensing exam.

Regulatory Structure

California health coverage is regulated by two agencies:

Knox-Keene Health Care Service Plan Act

The Knox-Keene Act specifically regulates Health Maintenance Organizations (HMOs) in California:

• Requires DMHC licensure
• Sets standards for quality of care
• Requires adequate provider networks
• Mandates grievance and appeals processes
• Sets financial solvency requirements

Free Look Period

California provides a 10-day free look period for individual health insurance:

• Policyholder can return for full premium refund
• Begins when policy is delivered
• Applies to individual health policies
• Different from the 30-day period for life insurance

Exam Tip: Health insurance has a 10-day free look in California, while life insurance and annuities have 30 days.

Required Coverage

California mandates coverage for numerous benefits:

Essential Health Benefits

All individual and small group plans must cover:

1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorders
6. Prescription drugs
7. Rehabilitative services
8. Laboratory services
9. Preventive and wellness services
10. Pediatric services (including dental and vision)

Mental Health Parity

California's Mental Health Parity Act requires:

• Mental health benefits equal to medical benefits
• Same copays, deductibles, and limits
• Covers severe mental illness and substance use
• Applies to group and individual plans

Covered Conditions

• Schizophrenia
• Bipolar disorder
• Major depression
• Obsessive-compulsive disorder
• Panic disorder
• Autism spectrum disorders
• Substance use disorders

Pre-Existing Condition Protections

California prohibits pre-existing condition exclusions:

Covered California

Covered California is the state's health insurance marketplace:

• Only place to get premium subsidies
• Offers qualified health plans (QHPs)
• Open enrollment and special enrollment periods
• Administers Medi-Cal eligibility

Key Features

• Plans categorized by metal tiers (Bronze, Silver, Gold, Platinum)
• Premium tax credits based on income
• Cost-sharing reductions for Silver plans
• Special enrollment for qualifying life events

Guaranteed Issue and Renewal

California requires:

Guaranteed Issue

• Insurers must accept all applicants
• Cannot deny coverage based on health status
• Applies to individual and small group markets

Guaranteed Renewal

• Insurers cannot cancel coverage except for:
  • Non-payment of premium
  • Fraud or misrepresentation
  • Plan discontinuation (with notice)