By: Shields H.B. No. 1540
73R2244 DLF-D
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. DEFINITIONS. In this Act:
1-5 (1) "Board" means the State Board of Insurance.
1-6 (2) "Certificate" means a certificate issued under
1-7 this Act to act as a multiple employer welfare arrangement.
1-8 (3) "Department" means the Texas Department of
1-9 Insurance.
1-10 (4) "Multiple employer welfare arrangement" means an
1-11 arrangement that:
1-12 (A) is established or maintained to offer or
1-13 provide to the employees of two or more employers, or the
1-14 beneficiaries of those employees, any benefit that may be provided
1-15 by a multiple employer welfare arrangement under 29 U.S.C. Sec.
1-16 1002, including medical, surgical, or hospital benefits; and
1-17 (B) qualifies as a multiple employer welfare
1-18 arrangement under 29 U.S.C. Sec. 1002.
1-19 SECTION 2. CERTIFICATE TO ACT AS MULTIPLE EMPLOYER WELFARE
1-20 ARRANGEMENT REQUIRED. A person may not act as a multiple employer
1-21 welfare arrangement unless the department has issued a certificate
1-22 to act as a multiple employer welfare arrangement to that person
1-23 under this Act.
1-24 SECTION 3. POWERS AND DUTIES OF BOARD. (a) The board
2-1 shall:
2-2 (1) prescribe application forms for issuance and
2-3 renewal of a certificate;
2-4 (2) adopt rules necessary for the administration of
2-5 this Act; and
2-6 (3) take other action necessary for the enforcement of
2-7 this Act.
2-8 (b) The board may prescribe forms for actuarial reports
2-9 submitted under this Act.
2-10 (c) The board shall set application and renewal fees in
2-11 amounts that are reasonable and necessary to defray the cost of
2-12 administering this Act.
2-13 SECTION 4. APPLICATION FOR CERTIFICATE. (a) An applicant
2-14 for issuance of a certificate must submit an application
2-15 accompanied by an actuarial report and the required fee.
2-16 (b) The department shall issue a certificate to an applicant
2-17 who satisfies the requirements of this section and Section 5 of
2-18 this Act.
2-19 SECTION 5. REQUIREMENTS FOR CERTIFICATE. (a) To be
2-20 eligible for a certificate, the applicant must:
2-21 (1) be actuarially sound, as determined by the board
2-22 from the most recent actuarial report submitted by the applicant;
2-23 (2) hold a cash reserve in the amount recommended in
2-24 the most recent actuarial report submitted by the applicant; and
2-25 (3) maintain aggregate stop-loss insurance, in a form
2-26 approved by the board, providing coverage in an amount equal to at
2-27 least 125 percent of projected annual claims and maintain specific
3-1 stop-loss insurance, in a form approved by the board, providing
3-2 coverage in an amount equal to not more than five percent of
3-3 projected annual claims.
3-4 (b) Each member of the governing body of a multiple employer
3-5 welfare arrangement must be a representative of an employer
3-6 participating in that multiple employer welfare arrangement and may
3-7 not receive remuneration, other than reimbursement for actual
3-8 expenses incurred, for serving as a member of the governing body.
3-9 (c) An employer participating in a multiple employer welfare
3-10 arrangement must be a bona fide business, as determined by the
3-11 board, and may not have been formed for the sole purpose of
3-12 providing employee benefits.
3-13 SECTION 6. RENEWAL. (a) A certificate is valid for one
3-14 year.
3-15 (b) A multiple employer welfare arrangement may apply to
3-16 renew the certificate by filing a renewal application accompanied
3-17 by an actuarial report and the required fee.
3-18 (c) The department shall renew the certificate if the
3-19 multiple employer welfare arrangement complies with this section
3-20 and Section 5 of this Act.
3-21 SECTION 7. ACTUARIAL REPORTS. An actuarial report submitted
3-22 under this Act must:
3-23 (1) be prepared and certified by an actuary who is not
3-24 an employee of the multiple employer welfare arrangement and who is
3-25 a fellow of the Society of Actuaries, a member of the American
3-26 Academy of Actuaries, or an enrolled actuary under the Employee
3-27 Retirement Income Security Act of 1979 (29 U.S.C. Sec. 1001 et
4-1 seq.);
4-2 (2) reflect the actuarial condition of the multiple
4-3 employer welfare arrangement as of a date that is not more than 30
4-4 days before the date on which the report is filed with the
4-5 department; and
4-6 (3) include a recommended cash reserve to be
4-7 maintained by the multiple employer welfare arrangement during the
4-8 following reporting year.
4-9 SECTION 8. FULLY INSURED MULTIPLE EMPLOYER WELFARE
4-10 ARRANGEMENT EXEMPT. This Act does not apply to a multiple employer
4-11 welfare arrangement that is fully insured for purposes of 29 U.S.C.
4-12 Sec. 1144(b)(6).
4-13 SECTION 9. TRANSITION. (a) This Act takes effect September
4-14 1, 1993, and, except as provided by Subsection (b) of this section,
4-15 applies only to a multiple employer welfare arrangement operating
4-16 on or after January 1, 1994. The operation of a multiple employer
4-17 welfare arrangement before January 1, 1994, is subject to the law
4-18 as it existed immediately before the effective date of this Act,
4-19 and that law is continued in effect for that purpose.
4-20 (b) A multiple employer welfare arrangement that was
4-21 operating before January 1, 1994, and that continues to operate
4-22 after that date shall comply with the requirements of this Act not
4-23 later than January 1, 1996.
4-24 SECTION 10. EMERGENCY. The importance of this legislation
4-25 and the crowded condition of the calendars in both houses create an
4-26 emergency and an imperative public necessity that the
4-27 constitutional rule requiring bills to be read on three several
5-1 days in each house be suspended, and this rule is hereby suspended.