73R9039 E
By Martin, McCall, Harris, et al. H.B. No. 2055
Substitute the following for H.B. No. 2055:
By Martin C.S.H.B. No. 2055
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to health insurance and health costs and the availability
1-3 of health insurance coverage for certain individuals and small
1-4 employers.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Insurance Code is amended by adding Chapter
1-7 26 to read as follows:
1-8 CHAPTER 26. HEALTH INSURANCE AVAILABILITY
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Art. 26.01. SHORT TITLE. This chapter may be cited as the
1-11 Small Employer Health Insurance Availability Act.
1-12 Art. 26.02. DEFINITIONS. In this chapter:
1-13 (1) "Affiliated employer" means a person connected by
1-14 commonality of ownership with a small employer. The term includes
1-15 a person that owns a small employer, shares directors with a small
1-16 employer, or is eligible to file a consolidated tax return with a
1-17 small employer.
1-18 (2) "Agent" means a person who may act as an agent for
1-19 the sale of a health benefit plan under a license issued under
1-20 Section 15 or 15A, Texas Health Maintenance Organization Act
1-21 (Article 20A.15 or 20A.15A, Vernon's Texas Insurance Code), or
1-22 under Subchapter A, Chapter 21, of this code.
1-23 (3) "Base premium rate" means, for each class of
2-1 business and for a specific rating period, the lowest premium rate
2-2 that is charged or that could be charged under a rating system for
2-3 that class of business by the small employer carrier to small
2-4 employers with similar case characteristics for small employer
2-5 health benefit plans with the same or similar coverage.
2-6 (4) "Board of directors" means the board of directors
2-7 of the Texas Health Reinsurance System.
2-8 (5) "Case characteristics" means, with respect to a
2-9 small employer, the geographic area in which that employer's
2-10 employees reside, the age and gender of the individual employees
2-11 and their dependents, the composition of the employees' families,
2-12 the appropriate industry classification as determined by the small
2-13 employer carrier, the number of employees and dependents, and other
2-14 objective criteria as established by the small employer carrier
2-15 that are considered by the small employer carrier in setting
2-16 premium rates for that small employer. The term does not include
2-17 claim experience, health status, duration of coverage since the
2-18 date of issuance of a health benefit plan, or whether a covered
2-19 person is or may become pregnant.
2-20 (6) "Class of business" means all small employers or a
2-21 separate grouping of small employers established under this
2-22 chapter.
2-23 (7) "Dependent" means:
2-24 (A) a spouse;
2-25 (B) a newborn child;
3-1 (C) a child under the age of 19 years;
3-2 (D) a child who is a full-time student under the
3-3 age of 22 years and who is financially dependent on the parent;
3-4 (E) a child of any age who is medically
3-5 certified as disabled and dependent on the parent; and
3-6 (F) any person who must be covered under:
3-7 (i) Section 3D or 3E, Article 3.51-6, of
3-8 this code; or
3-9 (ii) Section 2(L), Chapter 397, Acts of
3-10 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
3-11 Vernon's Texas Insurance Code).
3-12 (8) "Eligible employee" means an employee who works on
3-13 a full-time basis and who usually works at least 30 hours a week.
3-14 The term includes a sole proprietor, a partner, and an independent
3-15 contractor, if the sole proprietor, partner, or independent
3-16 contractor is included as an employee under a health benefit plan
3-17 of a small employer. The term does not include:
3-18 (A) an employee who works on a part-time,
3-19 temporary, or substitute basis or during a probationary period
3-20 established by the small employer of not more than six months after
3-21 the date employment begins; or
3-22 (B) an employee who is covered under:
3-23 (i) another health benefit plan; or
3-24 (ii) an employee welfare benefit plan that
3-25 provides health benefits and that is established in accordance with
4-1 the Employee Retirement Income Security Act of 1974 (29 U.S.C.
4-2 Section 1001 et seq.).
4-3 (9) "Health benefit plan" means a group, blanket, or
4-4 franchise insurance policy, a certificate issued under a group
4-5 policy, a group hospital service contract, or a group subscriber
4-6 contract or evidence of coverage issued by a health maintenance
4-7 organization that provides benefits for health care services. The
4-8 term does not include:
4-9 (A) accident-only insurance coverage;
4-10 (B) credit insurance coverage;
4-11 (C) disability insurance coverage;
4-12 (D) specified disease coverage or other limited
4-13 benefit policies;
4-14 (E) coverage of Medicare services under a
4-15 federal contract;
4-16 (F) Medicare supplement and Medicare Select
4-17 policies regulated in accordance with federal law;
4-18 (G) long-term care insurance coverage;
4-19 (H) coverage limited to dental care;
4-20 (I) coverage limited to care of vision;
4-21 (J) coverage provided by a single service health
4-22 maintenance organization;
4-23 (K) insurance coverage issued as a supplement to
4-24 liability insurance;
4-25 (L) insurance coverage arising out of a workers'
5-1 compensation system or similar statutory system;
5-2 (M) automobile medical payment insurance
5-3 coverage;
5-4 (N) jointly managed trusts authorized under 29
5-5 U.S.C. Section 141 et seq. that contain a plan of benefits for
5-6 employees that is negotiated in a collective bargaining agreement
5-7 governing wages, hours, and working conditions of the employees
5-8 that is authorized under 29 U.S.C. Section 157;
5-9 (O) hospital confinement indemnity coverage; or
5-10 (P) reinsurance contracts issued on a stop-loss,
5-11 quota-share, or similar basis.
5-12 (10) "Health carrier" means any entity authorized
5-13 under this code or another insurance law of this state that
5-14 provides health insurance or health benefits in this state,
5-15 including an insurance company, a group hospital service
5-16 corporation under Chapter 20 of this code, a health maintenance
5-17 organization under the Texas Health Maintenance Organization Act
5-18 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
5-19 premium company under Chapter 22 of this code.
5-20 (11) "Index rate" means, for each class of business as
5-21 to a rating period for small employers with similar case
5-22 characteristics, the arithmetic average of the applicable base
5-23 premium rate and corresponding highest premium rate.
5-24 (12) "Late enrollee" means an eligible employee or
5-25 dependent who requests enrollment in a small employer's health
6-1 benefit plan after the expiration of the initial enrollment period
6-2 established under the terms of the first plan for which that
6-3 employee or dependent was eligible through the small employer. An
6-4 eligible employee or dependent is not a late enrollee if:
6-5 (A) the individual:
6-6 (i) was covered under another employer
6-7 health benefit plan at the time the individual was eligible to
6-8 enroll;
6-9 (ii) states, at the time of the initial
6-10 eligibility, that coverage under another employer health benefit
6-11 plan was the reason for declining enrollment;
6-12 (iii) has lost coverage under another
6-13 employer health benefit plan as a result of the termination of
6-14 employment, the termination of the other plan's coverage, the death
6-15 of a spouse, or divorce; and
6-16 (iv) requests enrollment not later than
6-17 the 31st day after the date on which coverage under another
6-18 employer health benefit plan terminates;
6-19 (B) the individual is employed by an employer
6-20 who offers multiple health benefit plans and the individual elects
6-21 a different health benefit plan during an open enrollment period;
6-22 or
6-23 (C) a court has ordered coverage to be provided
6-24 for a spouse or minor child under a covered employee's plan and
6-25 request for enrollment is made not later than the 31st day after
7-1 issuance of the date on which the court order is issued.
7-2 (13) "New business premium rate" means, for each class
7-3 of business as to a rating period, the lowest premium rate that is
7-4 charged or offered or that could be charged or offered by the small
7-5 employer carrier to small employers with similar case
7-6 characteristics for newly issued small employer health benefit
7-7 plans that provide the same or similar coverage.
7-8 (14) "Person" means an individual, corporation,
7-9 partnership, association, or other private legal entity.
7-10 (15) "Plan of operation" means the plan of operation
7-11 of the system established under Article 26.55 of this code.
7-12 (16) "Preexisting condition provision" means a
7-13 provision that denies, excludes, or limits coverage as to a disease
7-14 or condition for a specified period after the effective date of
7-15 coverage.
7-16 (17) "Premium" means all amounts paid by a small
7-17 employer and eligible employees as a condition of receiving
7-18 coverage from a small employer carrier, including any fees or
7-19 other contributions associated with a health benefit plan.
7-20 (18) "Rating period" means a calendar period for which
7-21 premium rates established by a small employer carrier are assumed
7-22 to be in effect.
7-23 (19) "Reinsured carrier" means a small employer
7-24 carrier participating in the system.
7-25 (20) "Risk-assuming carrier" means a small employer
8-1 carrier that elects not to participate in the system.
8-2 (21) "Small employer" means a person that is actively
8-3 engaged in business and that, on at least 50 percent of its working
8-4 days during the preceding calendar quarter, employed at least three
8-5 but not more than 50 eligible employees, including the employees of
8-6 an affiliated employer, the majority of whom were employed in this
8-7 state.
8-8 (22) "Small employer carrier" means a health carrier,
8-9 to the extent that that carrier is offering, delivering, issuing
8-10 for delivery, or renewing health benefit plans subject to this
8-11 chapter under Article 26.06(a) of this code.
8-12 (23) "Small employer health benefit plan" means the
8-13 preventive and primary care benefit plan, the in-hospital benefit
8-14 plan, or the standard health benefit plan described by Subchapter E
8-15 of this chapter or any other health benefit plan offered to a small
8-16 employer in accordance with Article 26.42(d) of this code.
8-17 (24) "System" means the Texas Health Reinsurance
8-18 System established under Subchapter F of this chapter.
8-19 Art. 26.03. AFFILIATED CARRIERS. (a) For purposes of this
8-20 chapter, health carriers that are affiliates or that are eligible
8-21 to file a consolidated tax return are considered to be one carrier,
8-22 and a restriction imposed by this chapter applies as if the health
8-23 benefit plans delivered or issued for delivery to small employers
8-24 in this state by the affiliates were issued by one carrier.
8-25 (b) An affiliate that is a health maintenance organization
9-1 is considered to be a separate health carrier for purposes of this
9-2 chapter.
9-3 (c) In this article, "affiliate" has the meaning assigned by
9-4 Article 21.49-1 of this code.
9-5 Art. 26.04. RULES. The board shall adopt rules to implement
9-6 this chapter.
9-7 Art. 26.05. STATUTORY REFERENCES. A reference in this
9-8 chapter to a statutory provision applies to all reenactments,
9-9 revisions, or amendments of that statutory provision.
9-10 Art. 26.06. APPLICABILITY. (a) An individual or group
9-11 health benefit plan is subject to this chapter if it provides
9-12 health care benefits covering three or more eligible employees of a
9-13 small employer and if it meets any one of the following conditions:
9-14 (1) a portion of the premium or benefits is paid by or
9-15 on behalf of a small employer;
9-16 (2) a covered individual is reimbursed, whether
9-17 through wage adjustments or otherwise, by or on behalf of a small
9-18 employer for a portion of the premium; or
9-19 (3) the health benefit plan is treated by the employer
9-20 or by a covered individual as part of a plan or program for the
9-21 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
9-22 U.S.C. Section 106 or 162).
9-23 (b) Except as provided by Subsection (a) of this article,
9-24 this chapter does not apply to an individual health insurance
9-25 policy that is underwritten individually.
10-1 (c) Except as expressly provided in this chapter, a small
10-2 employer health benefit plan is not subject to a law that requires
10-3 coverage or the offer of coverage of a health care service or
10-4 benefit.
10-5 Art. 26.07. CERTIFICATION. (a) Not later than March 1 of
10-6 each year, each health carrier shall certify to the commissioner
10-7 whether, as of January 1 of that year, it is offering a health
10-8 benefit plan subject to this chapter under Article 26.06(a) of this
10-9 code.
10-10 (b) The certification shall list each other health insurance
10-11 coverage that:
10-12 (1) the health carrier is offering, delivering,
10-13 issuing for delivery, or renewing to or through small employers in
10-14 this state; and
10-15 (2) is not subject to this chapter because it is
10-16 listed as excluded from the definition of a health benefit plan
10-17 under Article 26.02 of this code.
10-18 (c) The certification shall include a statement that the
10-19 carrier is not offering or marketing to small employers as a health
10-20 benefit plan the coverage listed under Subsection (b) of this
10-21 article and that the health carrier is complying with this chapter
10-22 to the extent it is applicable to the carrier.
10-23 Art. 26.08. COST CONTAINMENT. (a) A small employer carrier
10-24 may use cost containment and managed care features in a small
10-25 employer health benefit plan, including:
11-1 (1) utilization review of health care services,
11-2 including review of the medical necessity of hospital and physician
11-3 services;
11-4 (2) case management, including discharge planning and
11-5 review of stays in hospitals or other health care facilities;
11-6 (3) selective contracting with hospitals, physicians,
11-7 and other health care providers;
11-8 (4) reasonable benefit differentials applicable to
11-9 health care providers that participate or do not participate in
11-10 restricted network arrangements;
11-11 (5) precertification or preauthorization for certain
11-12 covered services;
11-13 (6) coordination of benefits; and
11-14 (7) development of medically based screening criteria.
11-15 (b) A provision of a small employer health benefit plan that
11-16 provides for coordination of benefits must comply with this chapter
11-17 and guidelines established by the National Association of Insurance
11-18 Commissioners or its successor organization.
11-19 SUBCHAPTER B. PURCHASING COOPERATIVES
11-20 Art. 26.11. DEFINITIONS. In this subchapter:
11-21 (1) "Board of trustees" means the board of trustees of
11-22 the Texas cooperative.
11-23 (2) "Board of directors" means the board of directors
11-24 elected by a private purchasing cooperative.
11-25 (3) "Cooperative" means a purchasing cooperative
12-1 established under this subchapter.
12-2 (4) "Texas cooperative" means the Texas Health
12-3 Benefits Purchasing Cooperative established under Article 26.13 of
12-4 this code.
12-5 Art. 26.12. APPLICABILITY OF OTHER LAWS. Section 1(a),
12-6 Article 3.51-6, of this code, does not limit the type of group that
12-7 may be covered by a group health benefit plan issued through a
12-8 cooperative.
12-9 Art. 26.13. TEXAS HEALTH BENEFITS PURCHASING COOPERATIVE.
12-10 (a) The Texas Health Benefits Purchasing Cooperative is a
12-11 nonprofit organization established to make health care coverage
12-12 available to small employers and their eligible employees and
12-13 eligible employees' dependents.
12-14 (b) The Texas cooperative is administered by a six-member
12-15 board of trustees appointed by the governor with the advice and
12-16 consent of the senate. Two members must represent employers, two
12-17 members must represent employees, and two members must represent
12-18 the public. The executive director of the Texas Department of
12-19 Commerce shall serve as an ex officio member of the board of
12-20 trustees.
12-21 (c) The appointed members of the board of trustees serve
12-22 staggered six-year terms, with the terms of two members expiring
12-23 February 1 of each odd-numbered year.
12-24 (d) A member of the board of trustees may not be compensated
12-25 for serving on the board of trustees but is entitled to
13-1 reimbursement for actual expenses incurred in performing functions
13-2 as a member of the board of trustees as provided by the General
13-3 Appropriations Act.
13-4 (e) The board of trustees shall employ an executive
13-5 director. The executive director may hire other employees as
13-6 necessary.
13-7 (f) The board of trustees may develop regional subdivisions
13-8 of the Texas cooperative and may authorize each subdivision to
13-9 separately exercise the powers and duties of a cooperative.
13-10 (g) Salaries for employees of the Texas cooperative and
13-11 related costs may be paid from administrative fees collected from
13-12 employers and carriers or other sources of funding arranged by the
13-13 Texas cooperative.
13-14 (h) A member of the board of trustees, the executive
13-15 director, and an employee or agent of the Texas cooperative is not
13-16 liable for an act performed in good faith in the execution of
13-17 duties in connection with the Texas cooperative.
13-18 (i) The Texas cooperative may not use money appropriated by
13-19 the state to pay or otherwise subsidize any portion of the premium
13-20 for a small employer insured through the cooperative.
13-21 Art. 26.14. PRIVATE PURCHASING COOPERATIVE. (a) Two or
13-22 more small employers may form a cooperative for the purchase of
13-23 small employer health benefit plans. A cooperative must be
13-24 organized as a nonprofit corporation and has the rights and duties
13-25 provided by the Texas Non-Profit Corporation Act (Article 1396-1.01
14-1 et seq., Vernon's Texas Civil Statutes).
14-2 (b) The board of directors shall file annually with the
14-3 commissioner a statement of all amounts collected and expenses
14-4 incurred for each of the preceding three years.
14-5 Art. 26.15. POWERS AND DUTIES OF COOPERATIVES. (a) A
14-6 cooperative may:
14-7 (1) arrange for small employer health benefit plan
14-8 coverage for small employer groups who participate in the
14-9 cooperative by contracting with one or more small employer
14-10 carriers;
14-11 (2) collect premiums to cover the cost of:
14-12 (A) small employer health benefit plan coverage
14-13 purchased through the cooperative; and
14-14 (B) the cooperative's administrative expenses;
14-15 (3) contract with agents to market coverage issued
14-16 through the cooperative;
14-17 (4) establish administrative and accounting procedures
14-18 for the operation of the cooperative;
14-19 (5) establish criteria governing the eligibility of
14-20 small employer carriers or health care providers to participate in
14-21 the program;
14-22 (6) establish procedures under which an applicant for
14-23 or participant in coverage issued through the cooperative may have
14-24 a grievance reviewed by an impartial person;
14-25 (7) contract with a small employer carrier or
15-1 third-party administrator to provide administrative services to the
15-2 cooperative;
15-3 (8) contract with a small employer carrier for the
15-4 provision of services to small employers covered through the
15-5 cooperative;
15-6 (9) develop and implement a plan to maintain public
15-7 awareness of the cooperative and publicize the eligibility
15-8 requirements for, and the procedures for enrollment in coverage
15-9 through, the cooperative; and
15-10 (10) negotiate the premiums paid by its members.
15-11 (b) A cooperative may not self-insure or self-fund any
15-12 health benefit plan or portion of a plan.
15-13 (c) A cooperative shall comply with federal laws applicable
15-14 to cooperatives and health benefit plans issued through
15-15 cooperatives.
15-16 Art. 26.16. COOPERATIVE NOT INSURER. (a) A cooperative is
15-17 not an insurer and the employees of the cooperative are not
15-18 required to be licensed under Subchapter A, Chapter 21, of this
15-19 code.
15-20 (b) An agent or third-party administrator used and
15-21 compensated by the cooperative must be licensed as required by
15-22 Subchapter A, Chapter 21, of this code.
15-23 SUBCHAPTER C. GUARANTEED ISSUE AND RENEWABILITY
15-24 Art. 26.21. SMALL EMPLOYER HEALTH BENEFIT PLANS; EMPLOYER
15-25 ELECTION. (a) Each small employer carrier shall provide the small
16-1 employer health benefit plans without regard to claim experience,
16-2 health status, or medical history. Each small employer carrier
16-3 shall issue the plan chosen by the small employer to each small
16-4 employer that elects to be covered under that plan, agrees to make
16-5 the required premium payments, and agrees to satisfy the other
16-6 requirements of the plan.
16-7 (b) Coverage under a small employer health benefit plan is
16-8 not available to a small employer unless the small employer pays at
16-9 least 75 percent of the insurance premium for all of its eligible
16-10 employees for at least one of the small employer health benefit
16-11 plans selected by the small employer. The small employer may elect
16-12 to pay the premium cost for additional coverage. This chapter does
16-13 not require a small employer to purchase health insurance coverage
16-14 for the employer's employees.
16-15 (c) An eligible employee may obtain coverage in addition to
16-16 coverage purchased by the employer if at least 40 percent of the
16-17 eligible employees elect to obtain the same additional coverage.
16-18 The additional coverage may be paid for by the employer, the
16-19 employee, or both.
16-20 (d) The initial enrollment period for the employees and
16-21 their dependents must be at least 30 days.
16-22 (e) A new employee of a covered small employer and the
16-23 dependents of that employee may not be denied coverage if the
16-24 application for coverage is received by the small employer carrier
16-25 not later than the 31st day after the date on which the employment
17-1 begins.
17-2 (f) A late enrollee may be excluded from coverage for 18
17-3 months from the date of application or may be subject to an
17-4 18-month preexisting condition provision as described by Articles
17-5 26.49(b), (c), (d), and (e) of this code. If both a period of
17-6 exclusion from coverage and a preexisting condition provision are
17-7 applicable to a late enrollee, the combined period of exclusion may
17-8 not exceed 18 months from the date of the late application.
17-9 (g) A small employer carrier may not exclude any eligible
17-10 employee or dependent who would otherwise be covered under a small
17-11 employer group.
17-12 (h) A small employer health benefit plan issued by a small
17-13 employer carrier may not limit or exclude, by use of a rider or
17-14 amendment applicable to a specific individual, coverage by type of
17-15 illness, treatment, medical condition, or accident, except for
17-16 preexisting conditions or diseases as permitted under Article 26.49
17-17 of this code.
17-18 (i) A small employer health benefit plan may not limit or
17-19 exclude initial coverage of a newborn child of a covered employee.
17-20 Any coverage of a newborn child of an employee under this
17-21 subsection terminates on the 31st day after the date of the birth
17-22 of the child unless:
17-23 (1) dependent children are eligible for coverage; and
17-24 (2) notification of the birth and any required
17-25 additional premium are received by the small employer carrier not
18-1 later than the 30th day after the date of birth.
18-2 (j) If the Consolidated Omnibus Budget Reconciliation Act of
18-3 1985 (Pub. L. No. 99-272, 100 Stat. 222) does not require
18-4 continuation or conversion coverage for dependents of an employee,
18-5 a dependent who has been covered by that small employer for at
18-6 least one year or is under one year of age may elect to continue
18-7 coverage under a small employer health benefit plan, if the
18-8 dependent loses eligibility for coverage because of the death,
18-9 divorce, or retirement of the employee, as required by Section 3B,
18-10 Article 3.51-6, of this code.
18-11 Art. 26.22. GEOGRAPHIC SERVICE AREA. (a) A small employer
18-12 carrier is not required to offer or issue the small employer health
18-13 benefit plans:
18-14 (1) to a small employer that is not located within a
18-15 geographic service area of the small employer carrier;
18-16 (2) to an employee of a small employer who does not
18-17 reside or work in the geographic service area of the small employer
18-18 carrier; or
18-19 (3) to a small employer located within a geographic
18-20 service area with respect to which the small employer carrier
18-21 demonstrates to the satisfaction of the commissioner that the small
18-22 employer carrier reasonably anticipates that it will not have the
18-23 capacity to deliver services adequately because of obligations to
18-24 existing covered individuals.
18-25 (b) A small employer carrier that refuses to issue a small
19-1 employer health benefit plan in a geographic service area may not
19-2 offer a health benefit plan to a group of not more than 50
19-3 individuals in the affected service area before the fifth date of
19-4 the refusal.
19-5 (c) A small employer carrier must file each of its
19-6 geographic service areas with the commissioner. The commissioner
19-7 may disapprove the use of a geographic service area by a small
19-8 employer carrier.
19-9 (d) A small employer carrier that is unable to offer
19-10 coverage in a geographic service area in accordance with a
19-11 determination made by the commissioner under Subsection (a)(3) of
19-12 this article may not offer a small employer benefit plan in the
19-13 applicable geographic service area before the 180th day after the
19-14 later of:
19-15 (1) the date of the refusal; or
19-16 (2) the date the carrier demonstrates to the
19-17 satisfaction of the commissioner that it has regained the capacity
19-18 to deliver services to small employers in the geographic service
19-19 area.
19-20 (e) A small employer carrier is not required to provide
19-21 coverage to small employers for a period if the commissioner
19-22 determines that requiring the acceptance of small employers under
19-23 this subchapter during that period would place the small employer
19-24 carrier in a financially impaired condition.
19-25 Art. 26.23. RENEWABILITY OF COVERAGE; CANCELLATION. (a)
20-1 Except as provided by Article 26.24 of this code, a small employer
20-2 carrier shall renew the small employer health benefit plan for any
20-3 covered small employer at the option of the small employer, except
20-4 for:
20-5 (1) nonpayment of a premium as required by the terms
20-6 of the plan;
20-7 (2) fraud or misrepresentation of a material fact by
20-8 the small employer; or
20-9 (3) noncompliance with small employer health benefit
20-10 plan provisions.
20-11 (b) A small employer carrier may refuse to renew the
20-12 coverage of an eligible employee or dependent for fraud or
20-13 misrepresentation of a material fact by that individual.
20-14 (c) A small employer carrier may not cancel a small employer
20-15 health benefit plan except for the reasons specified for refusal to
20-16 renew under Subsection (a) of this article.
20-17 Art. 26.24. REFUSAL TO RENEW. (a) A small employer carrier
20-18 may elect to refuse to renew each small employer health benefit
20-19 plan delivered or issued for delivery by the small employer carrier
20-20 in this state or in a geographic service area approved under
20-21 Article 26.22 of this code. The small employer carrier must notify
20-22 the commissioner of the election not later than the 180th day
20-23 before the date coverage under the first small employer health
20-24 benefit plan terminates under this subsection.
20-25 (b) The small employer carrier must notify each affected
21-1 covered small employer not later than the 180th day before the date
21-2 on which coverage terminates for that small employer.
21-3 (c) A small employer carrier that elects under Subsection
21-4 (a) of this article to refuse to renew all small employer health
21-5 benefit plans in this state or in an approved geographic service
21-6 area may not write a new small employer health benefit plan in this
21-7 state or in the geographic service area, as applicable, before the
21-8 fifth anniversary of the date of notice to the commissioner under
21-9 Subsection (a) of this article.
21-10 SUBCHAPTER D. UNDERWRITING AND RATING
21-11 Art. 26.31. ESTABLISHMENT OF CLASSES OF BUSINESS. (a) A
21-12 small employer carrier may establish a separate class of business
21-13 only to reflect substantial differences in expected claim
21-14 experience or administrative costs related to the following
21-15 reasons:
21-16 (1) the small employer carrier uses more than one type
21-17 of system for the marketing and sale of small employer health
21-18 benefit plans to small employers;
21-19 (2) the small employer carrier has acquired a class of
21-20 business from another health carrier; or
21-21 (3) the small employer carrier provides coverage to
21-22 one or more employer-based association groups.
21-23 (b) A small employer carrier may establish up to nine
21-24 separate classes of business under this article.
21-25 (c) The commissioner may establish regulations to provide
22-1 for a period of transition in order for a small employer carrier to
22-2 come into compliance with Subsection (b) of this article in the
22-3 instance of acquisition of an additional class of business from
22-4 another small employer carrier.
22-5 (d) The commissioner may approve the establishment of
22-6 additional classes of business on application to the commissioner
22-7 and a finding by the commissioner that the establishment of
22-8 additional classes would enhance the efficiency and fairness of the
22-9 insurance market for small employers.
22-10 Art. 26.32. INDEX RATES. (a) The premium rates for a small
22-11 employer health benefit plan are subject to this article.
22-12 (b) The index rate for a rating period for any class of
22-13 business may not exceed the index rate for any other class of
22-14 business by more than 20 percent.
22-15 (c) For a class of business, the premium rates charged
22-16 during a rating period to small employers with similar case
22-17 characteristics for the same or similar coverage, or the rates that
22-18 could be charged to those employers under the rating system for
22-19 that class of business, may not vary from the index rate by more
22-20 than 25 percent.
22-21 Art. 26.33. PREMIUM RATES; ADJUSTMENTS. (a) The percentage
22-22 increase in the premium rate charged to a small employer for a new
22-23 rating period may not exceed the sum of:
22-24 (1) the percentage change in the new business premium
22-25 rate measured from the first day of the prior rating period to the
23-1 first day of the new rating period;
23-2 (2) any adjustment, not to exceed 15 percent annually
23-3 and adjusted pro rata for rating periods of less than one year, due
23-4 to the claim experience, health status, or duration of coverage of
23-5 the employees or dependents of the small employer as determined
23-6 from the small employer carrier's rate manual for the class of
23-7 business; and
23-8 (3) any adjustment due to change in coverage or change
23-9 in the case characteristics of the small employer as determined
23-10 from the small employer carrier's rate manual for the class of
23-11 business.
23-12 (b) Adjustments in premium rates for claim experience,
23-13 health status, or duration of coverage may not be charged to
23-14 individual employees or dependents. Such an adjustment must be
23-15 applied uniformly to the rates charged for all employees and
23-16 dependents of employees of the small employer.
23-17 (c) A health carrier may use the industry classification to
23-18 which a small employer belongs as a case characteristic in
23-19 establishing premium rates, but the highest rate factor associated
23-20 with any industry classification may not exceed the lowest rate
23-21 factor associated with any industry classification by more than 15
23-22 percent.
23-23 Art. 26.34. EFFECT OF PRIOR COVERAGE. For a health benefit
23-24 plan delivered or issued for delivery before September 1, 1993, a
23-25 premium rate for a rating period may exceed the ranges set forth in
24-1 Articles 26.32 and 26.33 of this code until September 1, 1995. The
24-2 percentage increase in the premium rate charged to a small employer
24-3 under this article for a new rating period may not exceed the sum
24-4 of:
24-5 (1) the percentage change in the new business premium
24-6 rate measured from the first day of the prior rating period to the
24-7 first day of the new rating period; and
24-8 (2) any adjustment due to change in coverage or change
24-9 in the case characteristics of the small employer as determined
24-10 from the small employer carrier's rate manual for the class of
24-11 business.
24-12 Art. 26.35. RATE ADJUSTMENT IN CLOSED PLAN. In the case of
24-13 a health benefit plan into which a small employer carrier is no
24-14 longer enrolling new small employers, the small employer carrier
24-15 shall use the percentage change in the base premium rate to adjust
24-16 rates under Articles 26.33(1) and 26.34(1) of this code. The
24-17 portion of change in rates computed under those subdivisions may
24-18 not exceed, on a percentage basis, the change in the new business
24-19 premium rate for the most similar health benefit plan into which
24-20 the small employer carrier is actively enrolling new small
24-21 employers.
24-22 Art. 26.36. PREMIUM RATES; NONDISCRIMINATION. (a) A small
24-23 employer carrier shall apply rating factors, including case
24-24 characteristics, consistently with respect to all small employers
24-25 in a class of business. Rating factors shall produce premiums for
25-1 identical groups that differ only by the amounts attributable to
25-2 plan design and that do not reflect differences due to the nature
25-3 of the groups assumed to select particular health benefit plans.
25-4 (b) A small employer carrier shall treat each health
25-5 benefit plan issued or renewed in the same calendar month as having
25-6 the same rating period.
25-7 (c) A small employer carrier may not use case
25-8 characteristics without the prior approval of the commissioner
25-9 other than the geographic area in which the small employer's
25-10 employees reside, the age and gender of the individual employees
25-11 and their dependents, the composition of the employees' families,
25-12 the appropriate industry classification, and the number of
25-13 employees and dependents.
25-14 (d) Premium rates for a small employer health benefit plan
25-15 must comply with the requirements of this chapter, notwithstanding
25-16 any assessments paid or payable by small employer carriers.
25-17 (e) The board may adopt rules to implement this article and
25-18 to ensure that rating practices used by small employer carriers are
25-19 consistent with the purposes of this chapter, including rules that
25-20 ensure that differences in rates charged for each small employer
25-21 health benefit plan are reasonable and reflect objective
25-22 differences in plan design.
25-23 (f) A small employer carrier may not transfer a small
25-24 employer involuntarily into or out of a class of business. A small
25-25 employer carrier may not offer to transfer a small employer into or
26-1 out of a class of business unless the offer is made to transfer all
26-2 small employers in that class of business without regard to case
26-3 characteristics, claim experience, health status, or duration of
26-4 coverage since the issuance of the health benefit plan.
26-5 Art. 26.37. RESTRICTED PROVIDER NETWORKS. For purposes of
26-6 this subchapter, a small employer health benefit plan may use a
26-7 restricted provider network to provide the benefits under the plan.
26-8 A plan that uses a restricted provider network does not provide
26-9 similar coverage to a small employer health benefit plan that does
26-10 not use a restricted provider network, if the use of the network
26-11 results in reduced premiums to the small employer or substantial
26-12 differences in claim costs.
26-13 Art. 26.38. HEALTH MAINTENANCE ORGANIZATION; APPROVED
26-14 HEALTH BENEFIT PLAN. The premium rates for a state-approved
26-15 health benefit plan offered by a health maintenance organization
26-16 under Article 26.48 of this code must be established in accordance
26-17 with formulas or schedules of charges filed with the department.
26-18 Art. 26.39. ENFORCEMENT. If the commissioner finds that a
26-19 small employer carrier subject to this chapter exceeds the
26-20 applicable rate established under this subchapter, the commissioner
26-21 may order restitution and assess penalties as provided by Section
26-22 7, Article 1.10, of this code.
26-23 Art. 26.40. DISCLOSURE. In connection with the offering for
26-24 sale of any small employer health benefit plan, each small employer
26-25 carrier shall make a reasonable disclosure, as part of its
27-1 solicitation and sales materials, of:
27-2 (1) the extent to which premium rates for a specific
27-3 small employer are established or adjusted based on the actual or
27-4 expected variation in claim costs or the actual or expected
27-5 variation in health status of the employees of the small employer
27-6 and their dependents;
27-7 (2) provisions concerning the small employer carrier's
27-8 right to change premium rates and the factors other than claim
27-9 experience that affect changes in premium rates;
27-10 (3) provisions relating to renewability of policies
27-11 and contracts; and
27-12 (4) any preexisting condition provision.
27-13 Art. 26.41. REPORTING REQUIREMENTS. (a) Compliance with
27-14 the underwriting and rating requirements of this chapter shall be
27-15 demonstrated through actuarial certification. Small employer
27-16 carriers offering a small employer health benefit plan shall file
27-17 annually with the commissioner an actuarial certification stating
27-18 that the underwriting and rating methods of the small employer
27-19 carrier:
27-20 (1) comply with accepted actuarial practices;
27-21 (2) are uniformly applied to each small employer
27-22 health benefit plan covering a small employer; and
27-23 (3) comply with the provisions of this chapter.
27-24 (b) Each small employer carrier shall maintain at its
27-25 principal place of business a complete and detailed description of
28-1 its rating practices and renewal underwriting practices, including
28-2 information and documentation that demonstrate that its rating
28-3 methods and practices are based on commonly accepted actuarial
28-4 assumptions and are in accordance with sound actuarial principles.
28-5 (c) A small employer carrier shall make the information and
28-6 documentation described in Subsection (b) of this article
28-7 available to the commissioner on request. Except in cases of
28-8 violations of this chapter, the information shall be considered
28-9 proprietary and trade secret information and shall not be subject
28-10 to disclosure by the commissioner to persons outside the department
28-11 except as agreed to by the small employer carrier or as ordered by
28-12 a court of competent jurisdiction.
28-13 SUBCHAPTER E. COVERAGE
28-14 Art. 26.42. SMALL EMPLOYER HEALTH BENEFIT PLANS. (a) A
28-15 small employer carrier shall offer the following three health
28-16 benefit plans:
28-17 (1) the preventive and primary care benefit plan;
28-18 (2) the in-hospital benefit plan; and
28-19 (3) the standard health benefit plan.
28-20 (b) A small employer carrier may offer to a small employer
28-21 additional benefit riders to the in-hospital benefit plan and the
28-22 standard health benefit plan.
28-23 (c) A small employer carrier may not offer to a small
28-24 employer benefit riders to the preventive and primary care benefit
28-25 plan except as provided by Article 26.45(d) of this code.
29-1 (d) Subject to the provisions of this chapter, a small
29-2 employer carrier may also offer to small employers any other health
29-3 benefit plan authorized under this code. Article 26.06(c) does not
29-4 apply to a health benefit plan offered to a small employer under
29-5 this subsection.
29-6 Art. 26.43. HEALTH BENEFIT PLAN COMMITTEE. The commissioner
29-7 shall appoint a health benefit plan committee composed of
29-8 representatives of insurers, small employers, employees of small
29-9 employers, health care providers, and agents authorized to market
29-10 health care benefit plans.
29-11 Art. 26.44. POLICY FORMS AND RIDERS. (a) The health
29-12 benefit plan committee shall approve policy forms for the
29-13 in-hospital benefit plan offered to a small employer. An insurer
29-14 may not use a policy form other than a policy form approved by the
29-15 committee to issue a small employer health benefit plan.
29-16 (b) The health benefit plan committee shall approve riders
29-17 to be offered to a small employer health benefit plan. Each rider
29-18 must describe the benefits provided under the rider and any limits
29-19 or deductible or copayment requirements. The committee may approve
29-20 as many riders as it considers appropriate to offer small employers
29-21 a wide range of benefit packages. An insurer may not use a rider
29-22 to a small employer health benefit plan other than a rider approved
29-23 by the committee.
29-24 Art. 26.45. PREVENTIVE AND PRIMARY CARE BENEFIT PLAN. (a)
29-25 The preventive and primary care benefit plan must include coverage
30-1 for the health services described by Subsections (b) and (c) of
30-2 this article when those services are provided by a physician,
30-3 physician assistant, advanced nurse practitioner, or another
30-4 licensed practitioner, including any practitioner required to be
30-5 covered under Article 21.52 of this code or under Section 2,
30-6 Chapter 397, Acts of the 54th Legislature, Regular Session, l955
30-7 (Article 3.70-2, Vernon's Texas Insurance Code).
30-8 (b) Coverage for the following preventive care must be
30-9 provided without copayment or deductible:
30-10 (1) childhood immunizations;
30-11 (2) Pap tests;
30-12 (3) mammography, as required by Section 2, Chapter
30-13 397, Acts of the 54th Legislature, Regular Session, l955 (Article
30-14 3.70-2, Vernon's Texas Insurance Code);
30-15 (4) colo-rectal screening;
30-16 (5) prostate cancer screening; and
30-17 (6) vision and hearing tests for children under 19
30-18 years of age.
30-19 (c) Coverage must include the following:
30-20 (1) outpatient hospital care and up to five days per
30-21 policy year of inpatient hospital care;
30-22 (2) medically necessary emergency care;
30-23 (3) pregnancy-related care, including prenatal and
30-24 postnatal care and high-risk pregnancy care;
30-25 (4) well-child care, as defined by the Texas
31-1 Department of Health based on the standards of the American Academy
31-2 of Pediatrics or its successor organization;
31-3 (5) outpatient clinic or office visits for treatment
31-4 of illness or injury;
31-5 (6) one physical examination per policy year;
31-6 (7) diagnostic examinations and laboratory and X-ray
31-7 services, with a limit of $5,000 per policy year;
31-8 (8) mental health services, including outpatient
31-9 evaluation, crisis intervention, and services for treatment of
31-10 serious mental illness as described by Section 1, Article 3.51-14,
31-11 of this code, for five days of inpatient services and 40 outpatient
31-12 visits per policy year;
31-13 (9) evaluation and treatment for the abuse of or
31-14 addiction to alcohol or drugs, for five days of inpatient services
31-15 and 40 outpatient visits per policy year;
31-16 (10) home health services, as defined by Section 1,
31-17 Article 3.70-3B, of this code subject to a maximum of 40 visits per
31-18 policy year; and
31-19 (11) rehabilitative services, including outpatient
31-20 diagnostic services and 40 outpatient treatment visits per policy
31-21 year.
31-22 (d) A preventive and primary care benefit plan may include a
31-23 rider for coverage of prescription drugs but may not include any
31-24 other rider.
31-25 (e) A preventive and primary care benefit plan must include
32-1 a total benefit cap of $15,000 per policy year.
32-2 (f) Except as provided by Subsection (b) of this article, a
32-3 preventive and primary care benefit plan may require a deductible
32-4 of not more than $250 per policy year and must pay at least 80
32-5 percent of covered charges after the deductible has been satisfied.
32-6 After an insured's copayments have reached $1,000 in a policy year,
32-7 the plan must pay 100 percent of covered charges for the remainder
32-8 of that policy year.
32-9 Art. 26.46. IN-HOSPITAL BENEFIT PLAN. (a) The in-hospital
32-10 benefit plan must include coverage for:
32-11 (1) diagnostic, treatment, and rehabilitative services
32-12 provided through inpatient hospital services; and
32-13 (2) outpatient care necessary as a follow-up to the
32-14 inpatient hospital services until the 90th day after the date of
32-15 discharge from the hospital.
32-16 (b) The in-hospital benefit plan is not subject to any law
32-17 requiring the reimbursement, use, or consideration of a specific
32-18 category of a licensed or certified health care practitioner.
32-19 (c) The in-hospital benefit plan must provide lifetime
32-20 benefits of $1 million and a total benefit cap of $100,000 per
32-21 policy year.
32-22 (d) The in-hospital benefit plan may include deductible and
32-23 copayment requirements.
32-24 (e) The in-hospital benefit plan may include a primary and
32-25 preventive care rider that includes the coverage required by
33-1 Article 26.45 of this code other than the coverage required by
33-2 Subsection (c)(1) of that article. The in-hospital benefit plan
33-3 may also include a supplementary accident benefit plan, but may not
33-4 include other riders or supplementary benefit plans.
33-5 Art. 26.47. STANDARD HEALTH BENEFIT PLAN. (a) The standard
33-6 health benefit plan shall include coverage for:
33-7 (1) health care services, including consulting and
33-8 referral services, provided by a physician, a physician assistant,
33-9 an advanced nurse practitioner, or another licensed practitioner,
33-10 including any practitioner required to be covered under Article
33-11 21.52 of this code or under Section 2, Chapter 397, Acts of the
33-12 54th Legislature, Regular Session, 1955 (Article 3.70-2, Vernon's
33-13 Texas Insurance Code);
33-14 (2) care in the following facilities:
33-15 (A) inpatient hospitals;
33-16 (B) outpatient hospitals;
33-17 (C) skilled nursing facilities, subject to a
33-18 maximum benefit of $10,000 per policy year; and
33-19 (D) hospice facilities, subject to a maximum
33-20 lifetime benefit of $10,000;
33-21 (3) medically necessary emergency care;
33-22 (4) pregnancy-related care, including prenatal and
33-23 postnatal care and high-risk pregnancy care;
33-24 (5) well-child care, as defined by the Texas
33-25 Department of Health based on the standards of the American Academy
34-1 of Pediatrics or its successor organization;
34-2 (6) outpatient clinic or office visits for treatment
34-3 of illness or injury;
34-4 (7) one physical examination per policy year;
34-5 (8) mental health services, including inpatient and
34-6 outpatient evaluation, crisis intervention, and other treatment for
34-7 serious mental illness as described by Section 1, Article 3.51-14,
34-8 of this code, and coverage described by Section 2(F), Chapter 397,
34-9 Acts of the 54th Legislature, 1955 (Article 3.70-2, Vernon's Texas
34-10 Insurance Code), and Article 3.72 of this code, subject to a limit
34-11 of:
34-12 (A) 90 days of inpatient psychiatric care per
34-13 policy year; and
34-14 (B) 40 outpatient visits per policy year,
34-15 subject to a maximum benefit of $100 for each visit;
34-16 (9) medical treatment and referral services for the
34-17 abuse of or addiction to alcohol or drugs, as required by Article
34-18 3.51-9 of this code;
34-19 (10) diagnostic examinations and laboratory and X-ray
34-20 services;
34-21 (11) physical therapy performed by a qualified
34-22 licensed physical therapist, occupational therapy performed by a
34-23 qualified licensed occupational therapist, or speech-language
34-24 therapy performed by a qualified licensed speech-language
34-25 pathologist, subject to a maximum benefit of $10,000 per policy
35-1 year;
35-2 (12) home health services as required by Article
35-3 3.70-3B of this code, subject to a maximum limit of $10,000 per
35-4 policy year; and
35-5 (13) prescription drugs, with not more than a 50
35-6 percent copayment.
35-7 (b) Coverage for the following preventive care must be
35-8 provided without copayment or deductible:
35-9 (1) childhood immunizations;
35-10 (2) Pap tests;
35-11 (3) mammography, as required by Section 2, Chapter
35-12 397, Acts of the 54th Legislature, Regular Session, l955 (Article
35-13 3.70-2, Vernon's Texas Insurance Code);
35-14 (4) colo-rectal screening;
35-15 (5) prostate cancer screening; and
35-16 (6) vision and hearing tests for children under 19
35-17 years of age.
35-18 (c) The standard health benefit plan shall provide lifetime
35-19 benefits of $1 million and a total benefit cap of at least $250,000
35-20 per policy year.
35-21 (d) Except for services excluded from deductible and
35-22 copayment requirements by Subsection (b) of this article, a
35-23 standard health benefit plan may include deductible and copayment
35-24 requirements.
35-25 (e) The board may adopt rules to implement this article.
36-1 Art. 26.48. HEALTH MAINTENANCE ORGANIZATION PLANS. Instead
36-2 of the small employer health benefit plans described by this
36-3 subchapter, a health maintenance organization may offer a
36-4 state-approved health benefit plan that complies with the
36-5 requirements of Title XI, Public Health Service Act (42 U.S.C.
36-6 Section 300e et seq.) and rules adopted under that Act.
36-7 Art. 26.49. PREEXISTING CONDITION PROVISIONS. (a) Except
36-8 as provided by Article 26.21(f) of this code, a preexisting
36-9 condition provision in a small employer health benefit plan may not
36-10 apply to expenses incurred after the first anniversary of the
36-11 effective date of coverage.
36-12 (b) A preexisting condition provision in a small employer
36-13 health benefit plan may not apply to coverage for a disease or
36-14 condition other than a disease or condition:
36-15 (1) for which medical advice, diagnosis, care, or
36-16 treatment was recommended or received during the six months before
36-17 the effective date of coverage; or
36-18 (2) that would have caused an ordinary, prudent person
36-19 to seek medical advice, diagnosis, care, or treatment during the
36-20 six months before the effective date of coverage.
36-21 (c) A preexisting condition provision in a small employer
36-22 health benefit plan may not apply to an individual who was
36-23 continuously covered for a minimum period of 12 months by a health
36-24 benefit plan that was in effect up to a date not more than two
36-25 months before the effective date of coverage under the small
37-1 employer health benefit plan.
37-2 (d) A preexisting condition provision may exclude coverage
37-3 for a pregnancy existing on the effective date of the coverage,
37-4 except as provided by Subsection (c) of this article.
37-5 (e) In determining whether a preexisting condition provision
37-6 applies to an individual covered by a small employer health benefit
37-7 plan, the small employer carrier shall credit the time the
37-8 individual was covered under a previous health benefit plan if the
37-9 previous coverage was in effect at any time during the 12 months
37-10 preceding the effective date of coverage under a small employer
37-11 health benefit plan. If the previous coverage was issued by a
37-12 health maintenance organization, any waiting period that applied
37-13 before that coverage became effective also shall be credited
37-14 against the preexisting condition provision period.
37-15 Art. 26.50. COORDINATION WITH FEDERAL LAW. The board by
37-16 rule may modify a small employer benefit plan described by this
37-17 subchapter or adopt a substitute for that plan to the extent
37-18 required to comply with federal law applicable to the plan. The
37-19 board shall use the Texas Health Benefits Purchasing Cooperative in
37-20 the implementation of this article.
37-21 SUBCHAPTER F. REINSURANCE
37-22 Art. 26.51. ELECTION TO BE RISK-ASSUMING OR REINSURED
37-23 CARRIER; NOTICE TO COMMISSIONER. (a) Each small employer carrier
37-24 shall notify the commissioner of the carrier's election to operate
37-25 as a risk-assuming carrier or a reinsured carrier. A small
38-1 employer carrier seeking to operate as a risk-assuming carrier
38-2 shall make an application under Article 26.52 of this code.
38-3 (b) A small employer carrier's election under Subsection (a)
38-4 of this article is effective until the fifth anniversary of the
38-5 election. The commissioner may permit a small employer carrier to
38-6 modify its decision at any time for good cause shown.
38-7 (c) The commissioner shall establish an application process
38-8 for small employer carriers seeking to change their status under
38-9 this article.
38-10 (d) A reinsured carrier that elects to change its status to
38-11 operate as a risk-assuming carrier may not continue to reinsure a
38-12 small employer health benefit plan with the system. The carrier
38-13 shall pay a prorated assessment based on business issued as a
38-14 reinsured carrier for any portion of the year that the business was
38-15 reinsured.
38-16 Art. 26.52. APPLICATION TO BECOME A RISK-ASSUMING CARRIER.
38-17 (a) A small employer carrier may apply to become a risk-assuming
38-18 carrier by filing an application with the commissioner in a form
38-19 and manner prescribed by the commissioner.
38-20 (b) In evaluating an application filed under Subsection (a)
38-21 of this article, the commissioner shall consider the small employer
38-22 carrier's:
38-23 (1) financial condition;
38-24 (2) history of rating and underwriting small employer
38-25 groups;
39-1 (3) commitment to market fairly to all small employers
39-2 in the state or in its established geographic service area; and
39-3 (4) experience managing the risk of small employer
39-4 groups.
39-5 (c) The commissioner shall provide public notice of an
39-6 application by a small employer carrier to be a risk-assuming
39-7 carrier and shall provide at least a 60-day period for public
39-8 comment before making a decision on the application. If the
39-9 application is not acted on before the 90th day after the date the
39-10 commissioner received the application, the carrier may request and
39-11 the commissioner shall grant a hearing.
39-12 (d) The commissioner, after notice and hearing, may rescind
39-13 the approval granted to a risk-assuming carrier under this article
39-14 if the commissioner finds that the carrier:
39-15 (1) is not financially able to support the assumption
39-16 of risk from issuing coverage to small employers without the
39-17 protection afforded by the system;
39-18 (2) has failed to market fairly to all small employers
39-19 in the state or its established geographic service area; or
39-20 (3) has failed to provide coverage to eligible small
39-21 employers.
39-22 Art. 26.53. TEXAS HEALTH REINSURANCE SYSTEM. (a) The Texas
39-23 Health Reinsurance System is created as a nonprofit entity.
39-24 (b) The system is administered by a board of directors and
39-25 operates subject to the supervision and control of the
40-1 commissioner.
40-2 Art. 26.54. BOARD OF DIRECTORS. (a) The board of directors
40-3 is composed of nine members appointed by the commissioner. The
40-4 commissioner or the commissioner's representative shall serve as an
40-5 ex officio member. Five members must be representatives of
40-6 reinsured carriers selected from individuals nominated by small
40-7 employer carriers in this state according to procedures developed
40-8 by the commissioner. Four members must represent the general
40-9 public. A member representing the general public may not be:
40-10 (1) an officer, director, or employee of an insurance
40-11 company, agency, agent, broker, solicitor, or adjuster or any other
40-12 business entity regulated by the department;
40-13 (2) a person required to register with the Texas
40-14 Ethics Commission under Chapter 305, Government Code; or
40-15 (3) related to a person described by Subdivision (1)
40-16 or (2) of this subsection within the second degree of affinity or
40-17 consanguinity.
40-18 (b) The members appointed by the commissioner serve two-year
40-19 terms. The terms expire on December 31 of each odd-numbered year.
40-20 A member's term continues until a successor is appointed.
40-21 (c) A member of the board of directors may not be
40-22 compensated for serving on the board of directors but is entitled
40-23 to reimbursement for actual expenses incurred in performing
40-24 functions as a member of the board of trustees as provided in the
40-25 General Appropriations Act.
41-1 (d) The board of directors is subject to the open meetings
41-2 law, Chapter 271, Acts of the 60th Legislature, Regular Session,
41-3 1967 (Article 6252-17, Vernon's Texas Civil Statutes), and the open
41-4 records law, Chapter 424, Acts of the 63rd Legislature, Regular
41-5 Session, 1973 (Article 6252-17a, Vernon's Texas Civil Statutes).
41-6 Art. 26.55. PLAN OF OPERATION. (a) Not later than the
41-7 180th day after the date on which a majority of the members of the
41-8 board of directors have been appointed, the board of directors
41-9 shall submit to the commissioner a plan of operation and thereafter
41-10 any amendments necessary or suitable to ensure the fair,
41-11 reasonable, and equitable administration of the system. The
41-12 commissioner, after notice and hearing, may approve the plan of
41-13 operation if the commissioner determines the plan is suitable to
41-14 ensure the fair, reasonable, and equitable administration of the
41-15 system and provides for the sharing of system gains or losses on an
41-16 equitable and proportionate basis in accordance with the provisions
41-17 of this subchapter. The plan of operation is effective on the
41-18 written approval of the commissioner.
41-19 (b) If the board of directors fails to timely submit a
41-20 suitable plan of operation, the commissioner, after notice and
41-21 hearing, shall adopt a temporary plan of operation. The
41-22 commissioner shall amend or rescind any plan adopted under this
41-23 subsection at the time a plan of operation is submitted by the
41-24 board of directors and approved by the commissioner.
41-25 (c) The plan of operation must:
42-1 (1) establish procedures for the handling and
42-2 accounting of system assets and money and for an annual fiscal
42-3 report to the commissioner;
42-4 (2) establish procedures for the selection of an
42-5 administering carrier or third-party administrator and establish
42-6 the powers and duties of that administering carrier or third-party
42-7 administrator;
42-8 (3) establish procedures for reinsuring risks in
42-9 accordance with the provisions of this article;
42-10 (4) establish procedures for collecting assessments
42-11 from reinsured carriers to fund claims and administrative expenses
42-12 incurred or estimated to be incurred by the system, including the
42-13 imposition of penalties for late payment of an assessment; and
42-14 (5) provide for any additional matters necessary for
42-15 the implementation and administration of the system.
42-16 Art. 26.56. POWERS AND DUTIES OF SYSTEM. The system has the
42-17 general powers and authority granted under the laws of this state
42-18 to insurance companies and health maintenance organizations
42-19 licensed to transact business, except that the system may not
42-20 directly issue health benefit plans. The system is exempt from all
42-21 taxes. The system may:
42-22 (1) enter into contracts necessary or proper to carry
42-23 out the provisions and purposes of this subchapter and may, with
42-24 the approval of the commissioner, enter into contracts with similar
42-25 programs of other states for the joint performance of common
43-1 functions or with persons or other organizations for the
43-2 performance of administrative functions;
43-3 (2) sue or be sued, including taking legal actions
43-4 necessary or proper to recover assessments and penalties for, on
43-5 behalf of, or against the system or a reinsured carrier;
43-6 (3) take legal action necessary to avoid the payment
43-7 of improper claims against the system;
43-8 (4) issue reinsurance contracts in accordance with the
43-9 requirements of this subchapter;
43-10 (5) establish guidelines, conditions, and procedures
43-11 for reinsuring risks under the plan of operation;
43-12 (6) establish actuarial functions as appropriate for
43-13 the operation of the system;
43-14 (7) assess reinsured carriers in accordance with the
43-15 provisions of Article 26.60 of this code and make advance interim
43-16 assessments as may be reasonable and necessary for organizational
43-17 and interim operating expenses, provided that any interim
43-18 assessments shall be credited as offsets against regular
43-19 assessments due after the close of the fiscal year;
43-20 (8) appoint appropriate legal, actuarial, and other
43-21 committees as necessary to provide technical assistance in the
43-22 operation of the system, policy and other contract design, and any
43-23 other function within the authority of the system; and
43-24 (9) borrow money for a period not to exceed one year
43-25 to effect the purposes of the system, provided that any notes or
44-1 other evidence of indebtedness of the system not in default shall
44-2 be legal investments for small employer carriers and may be carried
44-3 as admitted assets.
44-4 Art. 26.57. AUDIT BY STATE AUDITOR. (a) The state auditor
44-5 shall conduct annually a special audit of the system under Chapter
44-6 321, Government Code. The state auditor's report shall include a
44-7 financial audit and an economy and efficiency audit.
44-8 (b) The state auditor shall report the cost of each audit
44-9 conducted under this article to the board of directors and the
44-10 comptroller, and the board of directors shall remit that amount to
44-11 the comptroller for deposit to the general revenue fund.
44-12 Art. 26.58. REINSURANCE. (a) A small employer carrier may
44-13 reinsure risks covered under the small employer health benefit
44-14 plans with the system as provided by this article.
44-15 (b) The system shall reinsure the level of coverage provided
44-16 under the small employer health benefit plans.
44-17 (c) A small employer carrier may reinsure an entire small
44-18 employer group not later than the 60th day after the date on which
44-19 the group's coverage under the small employer health benefit plans
44-20 takes effect. A small employer carrier may reinsure an eligible
44-21 employee of a small employer or the employee's dependent not later
44-22 than the 60th day after the date on which that individual's
44-23 coverage takes effect. A newly eligible employee or dependent of a
44-24 reinsured small employer group or an individual covered under the
44-25 small employer health benefit plans may be reinsured not later than
45-1 the 60th day after the date on which that individual's coverage
45-2 takes effect.
45-3 (d) The system may not reimburse a reinsured carrier for the
45-4 claims of any reinsured individual until the carrier has incurred
45-5 an initial level of claims for that individual in a calendar year
45-6 of $5,000 for benefits covered by the system. In addition, the
45-7 reinsured carrier is responsible for 10 percent of the next $50,000
45-8 of benefit payments during a calendar year, and the system shall
45-9 reinsure the remainder. A reinsured carrier's liability to any
45-10 insured individual may not exceed a maximum of $10,000 in any one
45-11 calendar year for that individual.
45-12 (e) The board of directors annually shall adjust the initial
45-13 level of claims and the maximum to be retained by the carrier
45-14 established under Subsection (d) of this article to reflect
45-15 increases in costs and in use for small employer health benefit
45-16 plans in this state. The adjustment may not be less than the
45-17 annual change in the medical component of the Consumer Price Index
45-18 for All Urban Consumers published by the Bureau of Labor Statistics
45-19 of the United States Department of Labor unless the board of
45-20 directors proposes and the commissioner approves a lower adjustment
45-21 factor.
45-22 (f) A small employer carrier may terminate reinsurance with
45-23 the system for one or more of the reinsured employees or dependents
45-24 of employees of a small employer on a contract anniversary of the
45-25 small employer health benefit plans.
46-1 (g) Except as provided in the plan of operation, a reinsured
46-2 carrier shall apply consistently with respect to reinsured and
46-3 nonreinsured business all managed care procedures, including
46-4 utilization review, individual case management, preferred provider
46-5 provisions, and other managed care provisions or methods of
46-6 operation.
46-7 Art. 26.59. PREMIUM RATES. (a) As part of the plan of
46-8 operation, the board of directors shall adopt a method to determine
46-9 premium rates to be charged by the system for reinsuring small
46-10 employer groups and individuals under this subchapter.
46-11 (b) The method adopted must include classification systems
46-12 for small employer groups that reflect the variations in premium
46-13 rates allowed in this chapter and must provide for the development
46-14 of base reinsurance premium rates that reflect the allowable
46-15 variations. The base reinsurance premium rates shall be
46-16 established by the board of directors, subject to the approval of
46-17 the board, and shall be set at levels that reasonably approximate
46-18 the gross premiums charged to small employers by small employer
46-19 carriers for the small employer health benefit plans, adjusted to
46-20 reflect retention levels required under this subchapter. The board
46-21 of directors periodically shall review the method adopted under
46-22 this subsection, including the classification system and any rating
46-23 factors, to ensure that the method reasonably reflects the claim
46-24 experience of the system. The board of directors may propose
46-25 changes to the method. The changes are subject to the approval of
47-1 the board.
47-2 (c) An entire small employer group may be reinsured at a
47-3 rate that is 1-1/2 times the base reinsurance premium rate for that
47-4 group. An eligible employee of a small employer or the employee's
47-5 dependent covered under the small employer health benefit plans may
47-6 be reinsured at a rate that is five times the base reinsurance
47-7 premium rate for that individual.
47-8 (d) The board of directors may consider adjustments to the
47-9 premium rates charged by the system to reflect the use of effective
47-10 cost containment and managed care arrangements.
47-11 Art. 26.60. ASSESSMENTS. (a) Not later than March 1 of
47-12 each year, the board of directors shall determine and report to the
47-13 commissioner the system net loss for the previous calendar year,
47-14 including administrative expenses and incurred losses for the year,
47-15 taking into account investment income and other appropriate gains
47-16 and losses. Any net loss for the year must be recouped by
47-17 assessments on reinsured carriers. Each reinsured carrier's
47-18 assessment shall be determined annually by the board of directors
47-19 based on annual statements and other reports required by the board
47-20 of directors and filed with that board. The board of directors
47-21 shall establish, as part of the plan of operation, a formula by
47-22 which to make assessments against reinsured carriers. With the
47-23 approval of the commissioner, the board of directors may change the
47-24 assessment formula from time to time as appropriate. The board of
47-25 directors shall base the assessment formula on each reinsured
48-1 carrier's share of:
48-2 (1) the total premiums earned in the preceding
48-3 calendar year from the small employer health benefit plans
48-4 delivered or issued for delivery by reinsured carriers to small
48-5 employer groups in this state; and
48-6 (2) the premiums earned in the preceding calendar year
48-7 from newly issued small employer health benefit plans delivered or
48-8 issued for delivery during the calendar year by reinsured carriers
48-9 to small employer groups in this state.
48-10 (b) The formula established under Subsection (a) of this
48-11 article may not result in an assessment share for a reinsured
48-12 carrier that is less than 50 percent or more than 150 percent of an
48-13 amount based on the proportion of the total premium earned in the
48-14 preceding calendar year from the small employer health benefit
48-15 plans delivered or issued for delivery to small employer groups in
48-16 this state by that reinsured carrier to the total premiums earned
48-17 in the preceding calendar year from standard small employer health
48-18 benefit plans delivered or issued for delivery to small employer
48-19 groups in this state by all reinsured carriers. Premiums earned by
48-20 a reinsured carrier that are less than an amount determined by the
48-21 board of directors to justify the cost of collection of an
48-22 assessment based on those premiums may not be considered by the
48-23 board of directors in determining assessments.
48-24 (c) With the approval of the commissioner, the board of
48-25 directors may adjust the assessment formula for reinsured carriers
49-1 that are approved health maintenance organizations that are
49-2 federally qualified under Subchapter XI, Public Health Service Act
49-3 (42 U.S.C. Section 300e et seq.), to the extent that any
49-4 restrictions are imposed on those health maintenance organizations
49-5 that are not imposed on other health carriers.
49-6 Art. 26.61. EVALUATION OF SYSTEM. (a) Not later than March
49-7 1 of each year, the board of directors shall file with the
49-8 commissioner an estimate of the assessments necessary to fund the
49-9 losses for small employer groups incurred by the system during the
49-10 previous calendar year.
49-11 (b) If the board of directors determines that the necessary
49-12 assessments exceed five percent of the total premiums earned in the
49-13 previous calendar year from small employer health benefit plans
49-14 delivered or issued for delivery by reinsured carriers to small
49-15 employer groups in this state, the board of directors shall
49-16 evaluate the operation of the system and shall report its findings,
49-17 including any recommendations for changes to the plan of operation,
49-18 to the commissioner not later than April 1 of the year following
49-19 the calendar year in which the losses were incurred. The
49-20 evaluation must include an estimate of future assessments and must
49-21 consider the administrative costs of the system, the
49-22 appropriateness of the premiums charged, the level of insurer
49-23 retention under the system, and the costs of coverage for small
49-24 employer groups.
49-25 (c) If the board of directors fails to timely file a report,
50-1 the commissioner may evaluate the operations of the system and may
50-2 implement amendments to the plan of operation as considered
50-3 necessary by the commissioner to reduce future losses and
50-4 assessments.
50-5 (d) Reinsured carriers may not write small employer health
50-6 benefit plans on a guaranteed issue basis during a calendar year if
50-7 the assessment amount payable for the previous calendar year is at
50-8 least five percent of the total premiums earned in that calendar
50-9 year from small employer health benefit plans delivered or issued
50-10 for delivery by reinsured carriers in this state.
50-11 (e) Reinsured carriers may not write small employer health
50-12 benefit plans on a guaranteed issue basis after the board of
50-13 directors determines that the expected loss from the reinsurance
50-14 system for a year will exceed the total amount of assessments
50-15 payable at a rate of five percent of the total premiums earned for
50-16 the previous calendar year. Reinsured carriers may not resume
50-17 writing small employer health benefit plans on a guaranteed issue
50-18 basis until the board of directors determines that the expected
50-19 loss will be less than the maximum established by this subsection.
50-20 (f) The maximum assessment amount payable for a calendar
50-21 year may not exceed five percent of the total premiums earned in
50-22 the preceding calendar year from small employer health benefit
50-23 plans delivered or issued for delivery by reinsured carriers in
50-24 this state.
50-25 Art. 26.62. DEFERMENT OF ASSESSMENT. (a) A reinsured
51-1 carrier may petition the commissioner for a deferment in whole or
51-2 in part of an assessment imposed by the board of directors.
51-3 (b) The commissioner may defer all or part of the assessment
51-4 of a reinsured carrier if the commissioner determines that the
51-5 payment of the assessment would endanger the ability of the
51-6 reinsured carrier to fulfill its contractual obligations.
51-7 (c) If an assessment against a reinsured carrier is
51-8 deferred, the amount deferred shall be assessed against the other
51-9 reinsured carriers in a manner consistent with the basis for
51-10 assessment established by this subchapter.
51-11 (d) A reinsured carrier receiving a deferment is liable to
51-12 the system for the amount deferred and is prohibited from
51-13 marketing, delivering, or issuing for delivery a small employer
51-14 health benefit plan or reinsuring any individual or group with the
51-15 system until it pays the outstanding assessment.
51-16 SUBCHAPTER G. MARKETING
51-17 Art. 26.71. FAIR MARKETING. (a) Each small employer
51-18 carrier shall actively market the small employer health benefit
51-19 plan through properly licensed agents to eligible small employers
51-20 in this state. Each small employer purchasing a small employer
51-21 health benefit plan must affirm that the agent who sold the plan
51-22 offered and explained all three plans to that employer.
51-23 (b) The department shall require periodic demonstration by
51-24 small employer carriers and agents that those carriers and agents
51-25 are marketing or issuing small employer health benefit plans to
52-1 small employers in fulfillment of the purposes of this article.
52-2 (c) The department may require periodic reports by small
52-3 employer carriers and agents regarding small employer health
52-4 benefit plans issued by those carriers and agents. The reporting
52-5 requirements shall include information regarding case
52-6 characteristics and the numbers of small employer health benefit
52-7 plans in various categories that are marketed or issued to small
52-8 employers.
52-9 Art. 26.72. HEALTH STATUS AND CLAIMS EXPERIENCE; PROHIBITED
52-10 ACTS. (a) A small employer carrier or agent may not, directly or
52-11 indirectly:
52-12 (1) encourage or direct a small employer to refrain
52-13 from applying for coverage with the small employer carrier because
52-14 of health status or claim experience; or
52-15 (2) encourage or direct a small employer to seek
52-16 coverage from another health carrier because of health status or
52-17 claim experience.
52-18 (b) A small employer carrier may not, directly or
52-19 indirectly, enter into an agreement or arrangement with an agent
52-20 that provides for or results in the compensation paid to an agent
52-21 for the sale of the small employer health benefit plans to be
52-22 varied because of health status or claim experience.
52-23 (c) Subsection (b) of this article does not apply to an
52-24 arrangement that provides compensation to an agent on the basis of
52-25 percentage of premium, provided that the percentage may not vary
53-1 because of health status or claim experience.
53-2 (d) A small employer carrier or agent may not encourage a
53-3 small employer to exclude an eligible employee from health coverage
53-4 provided in connection with the employee's employment.
53-5 Art. 26.73. AGENTS. (a) A small employer carrier shall pay
53-6 the same commission, percentage of premium or other amount to an
53-7 agent for renewal of a small employer health benefit plan as the
53-8 carrier paid for original placement of the plan. Compensation for
53-9 renewal of a plan may be adjusted upward to reflect an increase in
53-10 the cost of living or similar factors.
53-11 (b) A small employer carrier may not terminate, fail to
53-12 renew, or limit its contract or agreement of representation with an
53-13 agent for any reason related to the health status or claim
53-14 experience of a small employer group placed by the agent with the
53-15 carrier.
53-16 Art. 26.74. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
53-17 REFUSAL TO RENEW. Denial by a small employer carrier of an
53-18 application for coverage from a small employer or a cancellation or
53-19 refusal to renew must be in writing and must state the reason or
53-20 reasons for the denial, cancellation, or refusal.
53-21 Art. 26.75. RULES. The board may adopt rules setting forth
53-22 additional standards to provide for the fair marketing and broad
53-23 availability of small employer health benefit plans to small
53-24 employers in this state.
53-25 Art. 26.76. VIOLATION. (a) A violation of Article 26.72 of
54-1 this code by a small employer carrier or an agent is an unfair
54-2 method of competition and an unfair or deceptive act or practice
54-3 under Article 21.21 of this code.
54-4 (b) If a small employer carrier enters into an agreement
54-5 with a third-party administrator to provide administrative,
54-6 marketing, or other services related to the offering of small
54-7 employer health benefit plans to small employers in this state, the
54-8 third-party administrator is subject to this subchapter.
54-9 SECTION 2. Subchapter E, Chapter 21, Insurance Code, is
54-10 amended by adding Article 21.52C to read as follows:
54-11 Art. 21.52C. UNIFORM CLAIM BILLING FORMS. (a) In this
54-12 article:
54-13 (1) "Health benefit plan" means a group, blanket, or
54-14 franchise insurance policy, a group hospital service contract, or a
54-15 group subscriber contract or evidence of coverage issued by a
54-16 health maintenance organization that provides benefits for health
54-17 care services.
54-18 (2) "Health carrier" means any entity authorized under
54-19 this code or another insurance law of this state that provides
54-20 health insurance or health benefits in this state, including an
54-21 insurance company, a group hospital service corporation under
54-22 Chapter 20 of this code, a health maintenance organization under
54-23 the Texas Health Maintenance Organization Act (Chapter 20A,
54-24 Vernon's Texas Insurance Code), and a stipulated premium company
54-25 authorized under Chapter 22 of this code.
55-1 (3) "Provider" means a person who provides health care
55-2 under a license issued by this state, including a person listed in
55-3 Section 2(B), Chapter 397, Acts of the 54th Legislature, Regular
55-4 Session, 1955 (Article 3.70-2, Vernon's Texas Insurance Code), or
55-5 in Article 21.52 of this code.
55-6 (b) A provider seeking payment or reimbursement under a
55-7 health benefit plan and the health carrier that issued that plan
55-8 must use uniform claim billing form UB-82/HCFA or HCFA 1500, or
55-9 their successors, as developed by the National Uniform Billing
55-10 Committee or its successor.
55-11 SECTION 3. Article 21.53A, Insurance Code, is amended by
55-12 adding Subsection (f) to read as follows:
55-13 (f) This article does not apply to a health benefit plan
55-14 offered to a small employer, as that term is defined by Article
55-15 26.02 of this code.
55-16 SECTION 4. Section 1(d)(3), Article 3.51-6, Insurance Code,
55-17 is amended to read as follows:
55-18 (3) Any insurer or group hospital service corporation
55-19 subject to Chapter 20, Insurance Code, who issues policies which
55-20 provide hospital, surgical, or major medical expense insurance or
55-21 any combination of these coverages on an expense incurred basis,
55-22 but not a policy which provides benefits for specified disease or
55-23 for accident only, shall provide a conversion or group continuation
55-24 privilege as required by this subsection. Any employee, member, or
55-25 dependent whose insurance under the group policy has been
56-1 terminated for any reason except involuntary termination for cause,
56-2 including discontinuance of the group policy in its entirety or
56-3 with respect to an insured class, and who has been continuously
56-4 insured under the group policy and under any group policy providing
56-5 similar benefits which it replaces for at least three consecutive
56-6 months immediately prior to termination shall be entitled to such
56-7 privilege as outlined in Paragraph (A), (B), or (C) below.
56-8 Involuntary termination for cause does not include termination for
56-9 any health-related cause.
56-10 (A)(i) An insurer shall offer to each employee,
56-11 member, or dependent a conversion policy without evidence of
56-12 insurability if written application for and payment of the first
56-13 premium is made not later than the 31st day after the date of the
56-14 termination. The converted policy shall provide the same coverage
56-15 and benefits as provided under the group policy or plan. The
56-16 lifetime maximum benefits shall be computed from the initial date
56-17 of the employee's, member's, or dependent's coverage with the
56-18 group. An employee, member, or dependent may elect lesser coverage
56-19 and benefits. <Coverage under an individual policy or group
56-20 conversion policy of accident and health insurance without evidence
56-21 of insurability if written application and payment of the first
56-22 premium is made within 31 days after such termination.> An
56-23 employee, member, or dependent shall not be entitled to have a
56-24 converted policy or plan issued if termination of the insurance
56-25 <under the group policy> occurred because: (aa) such person failed
57-1 to pay any required premium; or (bb) any discontinued group
57-2 coverage was replaced by similar group coverage within 31 days.
57-3 (ii) An insurer shall not be required to
57-4 issue a converted policy covering any person if: (aa) such person
57-5 is or could be covered by Medicare; (bb) such person is covered for
57-6 similar benefits by another hospital, surgical, medical, or major
57-7 medical expense insurance policy or hospital or medical service
57-8 subscriber contract or medical practice or other prepayment plan or
57-9 by any other plan or program; (cc) such person is eligible for
57-10 similar benefits whether or not covered therefor under any
57-11 arrangement of coverage for individuals in a group, whether on an
57-12 insured or uninsured basis; or (dd) similar benefits are provided
57-13 for or available to such person, pursuant to or in accordance with
57-14 the requirements of any state or federal law<; or (ee) the benefits
57-15 provided under the sources herein enumerated, together with the
57-16 benefits provided by the converted policy, would result in
57-17 overinsurance according to the insurer's standards. The insurer's
57-18 standards must bear some reasonable relationship to actual health
57-19 care costs in the area in which the insured lives at the time of
57-20 conversion and must be filed with the commissioner of insurance
57-21 prior to their use in denying coverage>. The board shall issue
57-22 rules and regulations to establish minimum standards for benefits
57-23 under policies issued pursuant to this subsection.
57-24 (B)(i) Policies subject to Paragraph (A) above
57-25 shall provide at the <insurer's> option of the employee, member, or
58-1 dependent in lieu of the requirements of Paragraph (A) continuation
58-2 of group coverage for employees or members and their eligible
58-3 dependents subject to the eligibility provisions of Paragraph (A).
58-4 (ii) Continuation of group coverage <need
58-5 not include dental, vision care, or prescription drug benefits and>
58-6 must be requested in writing within 21 days following the later of:
58-7 (aa) the date the group coverage would otherwise terminate; or (bb)
58-8 the date the employee is given notice of the right of continuation
58-9 by either the employer or the group policyholder.
58-10 (iii) In no event may the employee or
58-11 member elect continuation more than 31 days after the date of such
58-12 termination.
58-13 (iv) An employee or member electing
58-14 continuation must pay to the group policyholder or employer, on a
58-15 monthly basis in advance, the amount of contribution required by
58-16 the policyholder or employer, plus two percent of <but not more
58-17 than> the group rate for the insurance being continued under the
58-18 group policy on the due date of each payment.
58-19 (v) The employee's or member's written
58-20 election of continuation, together with the first contribution
58-21 required to establish contributions on a monthly basis in advance,
58-22 must be given to the policyholder or employer within 31 days of the
58-23 date coverage would otherwise terminate.
58-24 (vi) Continuation may not terminate until
58-25 the earliest of: (aa) six months after the date the election is
59-1 made; (bb) failure to make timely payments; (cc) the date on which
59-2 the group coverage terminates in its entirety; (dd) or one of the
59-3 conditions specified in items (aa) through (dd) <(ee)> of
59-4 Subparagraph (ii), Paragraph (A) above is met by the covered
59-5 individual.
59-6 (C) The insurer may elect to provide the
59-7 conversion coverage on an individual or group basis <group
59-8 insurance coverage in lieu of the issuance of a converted policy
59-9 under Paragraph (A) above>.
59-10 The premium for the converted policy issued under Paragraph
59-11 (A) of this subdivision shall <or the group coverage under
59-12 Paragraph (C) of this subdivision, should> be determined in
59-13 accordance with the insurer's table of premium rates for coverage
59-14 that was provided under the group policy or plan <applicable to the
59-15 age and class of risk of each person to be covered under that
59-16 policy and the type and amount of insurance provided>. The premium
59-17 may be based on the age and geographic location of each person to
59-18 be covered and the type of converted policy. The premium for the
59-19 same coverage and benefits under a converted policy may not exceed
59-20 200 percent of the premium determined in accordance with this
59-21 paragraph. The premium must be based on the type of converted
59-22 policy and the coverage provided by the policy.
59-23 SECTION 5. HEALTH INSURANCE ACCESS STUDY. (a) A
59-24 comprehensive study of guaranteed issue as a feature of health
59-25 insurance reform shall be conducted on behalf of the legislature.
60-1 The study shall be conducted by a committee composed of:
60-2 (1) two members of the senate appointed by the
60-3 lieutenant governor;
60-4 (2) two members of the house of representatives
60-5 appointed by the speaker of the house of representatives;
60-6 (3) a representative of the business community in this
60-7 state appointed by the lieutenant governor;
60-8 (4) a representative of the business community in this
60-9 state appointed by the speaker of the house of representatives; and
60-10 (5) a representative of the insurance industry jointly
60-11 appointed by the lieutenant governor and the speaker of the house
60-12 of representatives.
60-13 (b) The committee shall:
60-14 (1) investigate and evaluate the experience of other
60-15 jurisdictions in which guaranteed issue of health benefit plans has
60-16 been required;
60-17 (2) collect and evaluate data regarding the effect of
60-18 guaranteed issue requirements on health insurance availability and
60-19 accessibility; and
60-20 (3) collect and evaluate data regarding the effect of
60-21 guaranteed issue requirements on health insurance rates.
60-22 (c) Not later than January 1, 1995, the committee shall
60-23 prepare and present a report to the governor, lieutenant governor,
60-24 and speaker of the house of representatives.
60-25 (d) An appointment made under this section expires January
61-1 2, 1995.
61-2 SECTION 6. REINSURANCE STUDY. (a) The Texas Department of
61-3 Insurance shall initiate a comprehensive study into the future
61-4 solvency of the reinsurance system established by Subchapter F,
61-5 Chapter 26, Insurance Code, as added by this Act.
61-6 (b) The department shall review and analyze, from an
61-7 actuarial standpoint, the potential cost of catastrophic losses to
61-8 the system and recommend funding methods to adequately finance any
61-9 anticipated losses to the system. The department shall also
61-10 develop an actuarial model to assess the system's future operation.
61-11 The department shall fully investigate the experience of other
61-12 states with health reinsurance systems.
61-13 (c) The department shall report its findings to the
61-14 governor, lieutenant governor, and speaker of the house of
61-15 representatives not later than January 1, 1995.
61-16 SECTION 7. (a) Not later than November 1, 1993, each health
61-17 carrier subject to Chapter 26, Insurance Code, as added by this
61-18 Act, shall file a report with the commissioner that states the
61-19 carrier's gross premiums derived from health benefit plans
61-20 delivered, issued for delivery, or renewed to small employers in
61-21 1992.
61-22 (b) Not later than November 1, 1994, each health carrier
61-23 subject to Chapter 26, Insurance Code, as added by this Act, shall
61-24 file with the commissioner an update to the report required by
61-25 Subsection (a) of this section.
62-1 SECTION 8. Not later than July 1, 1995, a small employer
62-2 carrier subject to Chapter 26, Insurance Code, as added by this
62-3 Act, shall notify the commissioner of its initial election to
62-4 operate as a risk-assuming or reinsured carrier under Article
62-5 26.51, Insurance Code, as added by this Act.
62-6 SECTION 9. In making the initial appointments to the board
62-7 of trustees of the Texas Health Benefits Purchasing Cooperative
62-8 established under Subchapter B, Chapter 26, Insurance Code, as
62-9 added by this Act, the governor shall appoint two members for terms
62-10 expiring February 1, 1995, two members for terms expiring February
62-11 1, 1997, and two members for terms expiring February 1, 1999.
62-12 SECTION 10. (a) Except as otherwise provided by this
62-13 section, this Act takes effect September 1, 1993.
62-14 (b) Not later than December 1, 1993, the health benefit plan
62-15 committee appointed under Article 26.43, Insurance Code, as added
62-16 by this Act, shall adopt a policy form for the preventive and
62-17 primary care benefit plan, the in-hospital benefit plan, and the
62-18 standard health benefit plan. A health carrier is not required to
62-19 offer, deliver, or issue for delivery the preventive and primary
62-20 care benefit plan, the in-hospital benefit plan, and the standard
62-21 health benefit plan as required by Subchapter E, Chapter 26,
62-22 Insurance Code, as added by this Act, before January 1, 1994.
62-23 (c) Not later than July 1, 1994, the health benefit plan
62-24 committee appointed under Article 26.43, Insurance Code, as added
62-25 by this Act, shall adopt a policy form for each small employer
63-1 health benefit plan offered in accordance with Article 26.42(d),
63-2 Insurance Code, as added by this Act. A health carrier is not
63-3 required to use a policy form adopted by the committee for a health
63-4 benefit plan offered in accordance with that subsection that is
63-5 delivered or issued for delivery before August 1, 1994.
63-6 (d) The Texas Health Reinsurance System may not reinsure a
63-7 risk in accordance with Subchapter F, Chapter 26, Insurance Code,
63-8 as added by this Act, before September 1, 1995.
63-9 (e) Article 21.52C, Insurance Code, as added by this Act,
63-10 applies only to the use of a claim billing form on or after January
63-11 1, 1994.
63-12 (f) Section 1(d)(3), Article 3.51-6, Insurance Code, as
63-13 amended by this Act, applies only to conversion of a policy
63-14 delivered, issued for delivery, or renewed on or after January 1,
63-15 1994. Conversion of a policy that was delivered, issued for
63-16 delivery, or renewed before January 1, 1994, is governed by the law
63-17 in effect immediately before the effective date of this Act, and
63-18 that law is continued in effect for this purpose.
63-19 (g) Article 21.53A(f), Insurance Code, as added by this Act,
63-20 applies only to a health insurance policy that is delivered, issued
63-21 for delivery, or renewed on or after January 1, 1994. A health
63-22 insurance policy that is delivered, issued for delivery, or renewed
63-23 before January 1, 1994, is governed by the law as it existed
63-24 immediately before the effective date of this Act, and that law is
63-25 continued in effect for that purpose.
64-1 (h) Article 26.21(a), Insurance Code, as added by this Act,
64-2 is effective September 1, 1995.
64-3 SECTION 11. The importance of this legislation and the
64-4 crowded condition of the calendars in both houses create an
64-5 emergency and an imperative public necessity that the
64-6 constitutional rule requiring bills to be read on three several
64-7 days in each house be suspended, and this rule is hereby suspended.