73R9357 DLF-F
By Shields H.B. No. 1540
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to regulation of multiple employer welfare arrangements.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
1-5 amended by adding Article 21.58C to read as follows:
1-6 Art. 21.58C. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
1-7 Sec. 1. DEFINITIONS. In this article:
1-8 (1) "Board" means the State Board of Insurance.
1-9 (2) "Certificate" means a certificate issued under
1-10 this article to act as a multiple employer welfare arrangement.
1-11 (3) "Department" means the Texas Department of
1-12 Insurance.
1-13 (4) "Multiple employer welfare arrangement" means an
1-14 arrangement that:
1-15 (A) is established or maintained to offer or
1-16 provide to the employees of two or more employers, or the
1-17 beneficiaries of those employees, any benefit that may be provided
1-18 by a multiple employer welfare arrangement under 29 U.S.C.
1-19 Section 1002, including medical, surgical, or hospital benefits;
1-20 and
1-21 (B) qualifies as a multiple employer welfare
1-22 arrangement under 29 U.S.C. Section 1002.
1-23 Sec. 2. CERTIFICATE TO ACT AS MULTIPLE EMPLOYER WELFARE
1-24 ARRANGEMENT REQUIRED. A person may not act as a multiple employer
2-1 welfare arrangement unless the department has issued a certificate
2-2 to act as a multiple employer welfare arrangement to that person
2-3 under this article.
2-4 Sec. 3. POWERS AND DUTIES OF BOARD. (a) The board shall:
2-5 (1) prescribe application forms for issuance and
2-6 renewal of a certificate;
2-7 (2) adopt rules necessary for the administration of
2-8 this article; and
2-9 (3) take other action necessary for the enforcement of
2-10 this article.
2-11 (b) The board may prescribe forms for actuarial reports
2-12 submitted under this article.
2-13 (c) The board shall set application and renewal fees in
2-14 amounts that are reasonable and necessary to defray the cost of
2-15 administering this article.
2-16 Sec. 4. APPLICATION FOR CERTIFICATE. (a) An applicant for
2-17 issuance of a certificate must submit an application accompanied by
2-18 an actuarial report and the required fee.
2-19 (b) The department shall issue a certificate to an applicant
2-20 who satisfies the requirements of this section and Section 5 of
2-21 this article.
2-22 Sec. 5. REQUIREMENTS FOR CERTIFICATE. (a) To be eligible
2-23 for a certificate, the applicant must:
2-24 (1) be actuarially sound, as determined by the board
2-25 from the most recent actuarial report submitted by the applicant;
2-26 (2) hold a cash reserve in the amount recommended in
2-27 the most recent actuarial report submitted by the applicant; and
3-1 (3) maintain aggregate stop-loss insurance, in a form
3-2 approved by the board, providing coverage in an amount equal to at
3-3 least 125 percent of projected annual claims and maintain specific
3-4 stop-loss insurance, in a form approved by the board, providing
3-5 coverage in an amount equal to not more than five percent of
3-6 projected annual claims.
3-7 (b) Each member of the governing body of a multiple employer
3-8 welfare arrangement must be a representative of an employer
3-9 participating in that multiple employer welfare arrangement and may
3-10 not receive remuneration, other than reimbursement for actual
3-11 expenses incurred, for serving as a member of the governing body.
3-12 (c) An employer participating in a multiple employer welfare
3-13 arrangement must be a bona fide business, as determined by the
3-14 board, and may not have been formed for the sole purpose of
3-15 providing employee benefits.
3-16 Sec. 6. RENEWAL. (a) A certificate is valid for one year.
3-17 (b) A multiple employer welfare arrangement may apply to
3-18 renew the certificate by filing a renewal application accompanied
3-19 by an actuarial report and the required fee.
3-20 (c) The department shall renew the certificate if the
3-21 multiple employer welfare arrangement complies with this section
3-22 and Section 5 of this article.
3-23 Sec. 7. ACTUARIAL REPORTS. An actuarial report submitted
3-24 under this article must:
3-25 (1) be prepared and certified by an actuary who is not
3-26 an employee of the multiple employer welfare arrangement and who is
3-27 a fellow of the Society of Actuaries, a member of the American
4-1 Academy of Actuaries, or an enrolled actuary under the Employee
4-2 Retirement Income Security Act of 1979 (29 U.S.C. Section 1001 et
4-3 seq.);
4-4 (2) reflect the actuarial condition of the multiple
4-5 employer welfare arrangement as of a date that is not more than 30
4-6 days before the date on which the report is filed with the
4-7 department; and
4-8 (3) include a recommended cash reserve to be
4-9 maintained by the multiple employer welfare arrangement during the
4-10 following reporting year.
4-11 Sec. 8. FULLY INSURED MULTIPLE EMPLOYER WELFARE ARRANGEMENT
4-12 EXEMPT. (a) This article does not apply to a multiple employer
4-13 welfare arrangement that is fully insured for purposes of 29 U.S.C.
4-14 Section 1144(b)(6).
4-15 (b) A multiple employer welfare arrangement shall be
4-16 presumed fully insured for purposes of this article and Section
4-17 2(a)7(ii), Article 1.14-1, of this code, if a group master policy
4-18 of insurance is issued to the multiple employer welfare arrangement
4-19 funding the benefits offered by the multiple employer welfare
4-20 arrangement by a company licensed to act as an insurer in this
4-21 state and authorized to write the line or lines of insurance
4-22 contained within the group master policy of insurance issued to the
4-23 multiple employer welfare arrangement and certificates of insurance
4-24 evidencing coverage under the group master policy of insurance are
4-25 issued by the company to the individual participants in the
4-26 multiple employer welfare arrangement or if the multiple employer
4-27 welfare arrangement enters into a reinsurance treaty, contract, or
5-1 agreement with a company licensed to act as an insurer in this
5-2 state. The company entering into a reinsurance treaty, contract,
5-3 or agreement with a multiple employer welfare arrangement is
5-4 required (1) to be rated B+ or better by Best's Insurance Reports,
5-5 (2) to be possessed of at least ten million and no/100 dollars
5-6 ($10,000,000.00) of surplus in excess of required statutory
5-7 capital, (3) to have been authorized to act as an insurer by the
5-8 Texas Department of Insurance in this state for at least ten (10)
5-9 years, (4) to be possessed of assets at least equal to reserves
5-10 necessary to pay claims arising under the reinsurance treaty,
5-11 contract, or agreement issued to the multiple employer welfare
5-12 arrangement, (5) to act as the administrator of claims arising
5-13 under the benefit plan sponsored by the multiple employer welfare
5-14 arrangement to which the reinsurance treaty, contract, or agreement
5-15 is issued, (6) to pay premium tax in accordance with Article 4.11
5-16 of this code on the total monetary consideration received from the
5-17 multiple employer welfare arrangement by the company for the
5-18 issuance of the reinsurance treaty, contract, or agreement, and (7)
5-19 to include a provision in the reinsurance treaty, contract, or
5-20 agreement providing that in the event the multiple employer welfare
5-21 arrangement is unable to fund a portion of any claim retained by
5-22 the multiple employer welfare arrangement, the company will provide
5-23 the multiple employer welfare arrangement the funds necessary to
5-24 pay the portion of the claim retained by the multiple employer
5-25 welfare arrangement which is unfunded by the multiple employer
5-26 welfare arrangement. Further, the multiple employer welfare
5-27 arrangement reinsured by a reinsurance treaty, contract, or
6-1 agreement issued in accordance with this subsection may only
6-2 solicit participation in this state in the benefit plan offered by
6-3 the multiple employer welfare arrangement through insurance agents
6-4 licensed in this state and appointed to act as an agent in this
6-5 state by the company issuing the reinsurance treaty, contract, or
6-6 agreement to the multiple employer welfare arrangement. A multiple
6-7 employer welfare arrangement having a group master policy of
6-8 insurance issued to it or entering into a reinsurance treaty,
6-9 contract, or agreement in accordance with this subsection shall be
6-10 considered able to pay benefits in full when due.
6-11 SECTION 2. (a) This Act takes effect September 1, 1993,
6-12 and, except as provided by Subsection (b) of this section, applies
6-13 only to a multiple employer welfare arrangement operating on or
6-14 after January 1, 1994. The operation of a multiple employer
6-15 welfare arrangement before January 1, 1994, is subject to the law
6-16 as it existed immediately before the effective date of this Act,
6-17 and that law is continued in effect for that purpose.
6-18 (b) A multiple employer welfare arrangement that was
6-19 operating before January 1, 1994, and that continues to operate
6-20 after that date shall comply with the requirements of this Act not
6-21 later than January 1, 1996.
6-22 SECTION 3. The importance of this legislation and the
6-23 crowded condition of the calendars in both houses create an
6-24 emergency and an imperative public necessity that the
6-25 constitutional rule requiring bills to be read on three several
6-26 days in each house be suspended, and this rule is hereby suspended.