By: Shelley S.B. No. 198
73R511 PB-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the creation and operation of a program to provide
1-3 access to health insurance for employees of small groups.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter E, Chapter 3, Insurance Code, is
1-6 amended by adding Article 3.50-7 to read as follows:
1-7 Art. 3.50-7. TEXAS SMALL EMPLOYER HEALTH INSURANCE ACCESS
1-8 PROGRAM
1-9 Sec. 1. DEFINITIONS. In this article:
1-10 (1) "Actuarial certification" means a written
1-11 statement by a member of the American Academy of Actuaries or by
1-12 another person acceptable to the commissioner that a small employer
1-13 carrier is in compliance with Section 3 of this article.
1-14 (2) "Affiliate" means a person who directly or
1-15 indirectly, through one or more intermediaries, controls, is
1-16 controlled by, or is under common control with a specified person.
1-17 (3) "Base premium rate" means, for each class of
1-18 business and for a specific rating period, the lowest premium rate
1-19 charged, or that could be charged under a rating system for that
1-20 class of business, by a small employer carrier to small employers
1-21 with similar case characteristics for health care benefit plans
1-22 with the same or similar coverage.
1-23 (4) "Basic plan" means a health care benefit plan for
1-24 small employers that meets the requirements of Section 4 of this
2-1 article.
2-2 (5) "Carrier" means an insurance company, group
2-3 hospital service corporation, health maintenance organization, or
2-4 other person who:
2-5 (A) provides a plan of health insurance or
2-6 health benefits; and
2-7 (B) is authorized by the Texas Department of
2-8 Insurance to transact accident and health insurance business in
2-9 this state.
2-10 (6) "Case characteristics" means the demographic or
2-11 other objective characteristics of a small employer, as determined
2-12 by a small employer carrier, that are considered by the small
2-13 employer carrier in setting premium rates for that small employer.
2-14 The term does not include claim experience, health status, or
2-15 duration of coverage since the date of issuance of a health care
2-16 benefit plan.
2-17 (7) "Class of business" means a distinct grouping of
2-18 small employers as shown on the records of a small employer
2-19 carrier.
2-20 (8) "Dependent" means the spouse or child of an
2-21 eligible employee as defined by any applicable terms of the health
2-22 care benefit plan covering that employee.
2-23 (9) "Employee" means an individual who provides
2-24 services for a small employer on a full-time basis for at least 30
2-25 hours a week. The term includes a partner, sole proprietor,
2-26 officer, director, or elected official who provides services for
2-27 the small employer on a full-time basis for at least 30 hours a
3-1 week.
3-2 (10) "Health care benefit plan" means a hospital or
3-3 medical insurance policy, a health, hospital, or medical service
3-4 corporation plan contract, or a health maintenance organization
3-5 subscriber contract. The term does not include:
3-6 (A) accident only insurance coverage;
3-7 (B) credit insurance coverage;
3-8 (C) disability insurance coverage;
3-9 (D) coverage of Medicare services under a
3-10 federal contract;
3-11 (E) long-term care insurance coverage;
3-12 (F) insurance coverage limited to dental care;
3-13 (G) insurance coverage limited to care of
3-14 vision;
3-15 (H) insurance coverage issued as a supplement to
3-16 liability insurance;
3-17 (I) insurance coverage arising out of a workers'
3-18 compensation system or similar statutory system;
3-19 (J) automobile medical payment insurance
3-20 coverage; or
3-21 (K) insurance coverage under which benefits are
3-22 payable without regard to fault and that is required by statute to
3-23 be included in a liability insurance policy or an analogous
3-24 self-insurance plan.
3-25 (11) "Index rate" means, for each class of business as
3-26 to a rating period for small employers with similar case
3-27 characteristics, the arithmetic average of the applicable base
4-1 premium rate and the corresponding highest premium rate.
4-2 (12) "Late enrollee" means an employee or dependent
4-3 who requests enrollment in a health care benefit plan of a small
4-4 employer after the expiration of the initial enrollment period set
4-5 under the terms of the health care benefit plan.
4-6 (13) "New business premium rate" means, for each class
4-7 of business as to a rating period, the premium rate charged or
4-8 offered by a small employer carrier to small employers with similar
4-9 case characteristics for newly issued health care benefit plans
4-10 that provide the same or similar coverage.
4-11 (14) "Person" means an individual, association,
4-12 corporation, partnership, or other public or private legal entity.
4-13 (15) "Preexisting condition provision" means a policy
4-14 or contract provision that excludes coverage for charges or
4-15 expenses incurred during a specified period following the effective
4-16 date of the coverage for:
4-17 (A) a condition that, during a specified period
4-18 preceding the effective date of the coverage, was manifested in
4-19 such manner as would cause an ordinarily prudent person to seek
4-20 medical advice, diagnosis, care, or treatment or a condition for
4-21 which medical advice, diagnosis, care, or treatment was recommended
4-22 or received; or
4-23 (B) a pregnancy existing on the effective date
4-24 of the coverage.
4-25 (16) "Program" means the Texas Small Employer Health
4-26 Insurance Access Program created under this article.
4-27 (17) "Rating period" means a calendar period
5-1 determined by a small employer carrier for which premium rates
5-2 established by that carrier are in effect.
5-3 (18) "Reinsuring carrier" means a small employer
5-4 carrier who participates in the system created under Section 21 of
5-5 this article.
5-6 (19) "Small employer" means a person that is actively
5-7 engaged in business and that, on at least 50 percent of its working
5-8 days during the preceding calendar year, employed at least four but
5-9 not more than 35 employees, the majority of whom were employed
5-10 within this state.
5-11 (20) "Small employer carrier" means a carrier that
5-12 offers a health care benefit plan that provides coverage for
5-13 employees of one or more small employers.
5-14 (21) "Standard plan" means a health care benefit plan
5-15 for small employers that meets the requirements of Section 5 of
5-16 this article.
5-17 (22) "System" means the Texas Small Employer Health
5-18 Reinsurance System created under Section 21 of this article.
5-19 Sec. 2. PROGRAM. (a) The Texas Small Employer Health
5-20 Insurance Access Program is created to:
5-21 (1) promote the availability of health insurance
5-22 coverage to small employers;
5-23 (2) prevent abusive rating practices;
5-24 (3) require disclosure of rating practices to
5-25 purchasers of insurance coverage;
5-26 (4) adopt rules for continuity of coverage; and
5-27 (5) reduce the number of uninsured individuals in this
6-1 state.
6-2 (b) Except as provided by Subsection (c) of this section, a
6-3 group health care benefit plan is under the program and is subject
6-4 to this article if:
6-5 (1) the plan provides health care benefits covering at
6-6 least one employee of a small employer; and
6-7 (2) the plan is treated by that employer or any
6-8 employee or dependent covered by the plan as part of:
6-9 (A) a group health plan subject to Section 106,
6-10 Internal Revenue Code of 1986 (26 U.S.C. Section 106);
6-11 (B) a cafeteria plan subject to Section 125,
6-12 Internal Revenue Code of 1986 (26 U.S.C. Section 125); or
6-13 (C) a group health plan subject to Section 162,
6-14 Internal Revenue Code of 1986 (26 U.S.C. Section 162).
6-15 (c) This article applies to a list-billed individual health
6-16 insurance policy. This article does not apply to an individual
6-17 health insurance policy that is underwritten individually.
6-18 (d) Until December 31, 1994, each small employer carrier
6-19 shall provide to a small employer either the basic plan or the
6-20 standard plan prescribed under Sections 4 and 5 of this article
6-21 without regard to claims experience, health status, or medical
6-22 history. The small employer is the policyholder. A health care
6-23 benefit plan may not be issued, sold, or offered for sale by any
6-24 carrier to a small employer except as provided by this article. A
6-25 small employer who desires coverage under the program for its
6-26 employees after December 31, 1994, is subject to normal
6-27 underwriting requirements. An employer who becomes a small
7-1 employer after December 31, 1994, has six months to seek coverage
7-2 under the program, after which normal underwriting requirements
7-3 apply to that employer.
7-4 (e) Except as provided by this article, a law requiring the
7-5 coverage of a health care service or benefit, the coverage of a
7-6 particular person or class of persons, specific contract
7-7 provisions, or the reimbursement, utilization, or consideration of
7-8 a specific category of health care practitioners or providers does
7-9 not apply to a health care benefit plan offered or delivered to a
7-10 small employer participating in the program.
7-11 (f) Except as provided by this article, a health care
7-12 benefit plan offered to a small employer is not subject to any law
7-13 that:
7-14 (1) inhibits a small employer carrier from contracting
7-15 with providers or groups of providers with respect to health care
7-16 services or benefits;
7-17 (2) imposes a restriction on a small employer
7-18 carrier's ability to negotiate with providers regarding the level
7-19 or method of reimbursing care or services provided under health
7-20 care benefit plans; or
7-21 (3) requires a small employer carrier to:
7-22 (A) include a specific provider or class of
7-23 providers in contracting for health care services or benefits; or
7-24 (B) exclude any class of provider that is
7-25 generally authorized by statute to provide the care.
7-26 (g) Plans operated under the program may not cover
7-27 experimental or investigative services or procedures or services or
8-1 supplies that are not medically necessary.
8-2 Sec. 3. HEALTH CARE BENEFIT PLANS; EMPLOYER ELECTION. (a)
8-3 Each small employer carrier approved by the commissioner to
8-4 participate in the program shall offer to small employers at least
8-5 two health care benefit plans. One plan must be the basic plan and
8-6 one plan must be the standard plan. Each small employer carrier
8-7 shall issue the plan chosen by the small employer to each small
8-8 employer that elects to be covered under one of those plans, agrees
8-9 to make the required premium payments, and agrees to satisfy the
8-10 other requirements of that plan.
8-11 (b) If the basic plan and the standard plan are rejected in
8-12 writing by a small employer, a small employer carrier may offer to
8-13 that small employer a health care benefit plan with more
8-14 comprehensive benefits than those contained in either the basic or
8-15 the standard plan, if the more comprehensive plan accepted by the
8-16 small employer is subject to the rating provisions of this article
8-17 and to Section 2(e) of this article.
8-18 (c) A small employer carrier is not required to offer
8-19 coverage or accept applications under this section if the
8-20 commissioner finds that the acceptance of an application would
8-21 place the small employer carrier in a financially impaired
8-22 condition. A small employer carrier that has not offered coverage
8-23 or accepted applications under this section may not offer coverage
8-24 or accept applications for any group health care benefit plan until
8-25 the expiration of 180 days after the date on which the commissioner
8-26 determines that the small employer carrier has ceased to be
8-27 financially impaired.
9-1 Sec. 4. BASIC HEALTH CARE BENEFIT PLAN REQUIREMENTS. (a)
9-2 The basic plan must have a deductible of $500 per covered
9-3 individual and $1,000 per family. A deductible is not applicable
9-4 to an immunization for a covered dependent child seven years of age
9-5 or younger or a mammography screening under Subsection (c) of this
9-6 section.
9-7 (b) An individual covered by the basic plan shall pay
9-8 coinsurance at a rate of 25 percent until an annual maximum amount
9-9 of $2,000 per individual or $4,000 per family is met.
9-10 (c) The basic plan must include coverage for:
9-11 (1) inpatient care in a hospital for an injury,
9-12 accident, or physical illness, including a mental illness or
9-13 chemical dependency, for not more than 21 days per calendar year;
9-14 (2) surgical services and physician services for care,
9-15 including psychiatric care or care for chemical dependency;
9-16 (3) outpatient hospital care;
9-17 (4) emergency care;
9-18 (5) maternity care;
9-19 (6) inpatient and outpatient radiology and laboratory
9-20 services;
9-21 (7) "well baby" examinations for a covered child until
9-22 the child is two years of age;
9-23 (8) immunizations for a covered child until the child
9-24 is eight years of age;
9-25 (9) one mammography screening per calendar year for a
9-26 covered woman 40 years of age or older; and
9-27 (10) services and supplies related to a lung, heart,
10-1 kidney, cornea, or liver transplant, not to exceed $100,000 per
10-2 calendar year.
10-3 (d) Coverage for surgical and physician services for
10-4 treatment for mental illness or chemical dependency may not exceed
10-5 $1,500 per calendar year.
10-6 (e) The basic plan must have a lifetime maximum benefit
10-7 amount per covered individual of $250,000.
10-8 (f) Instead of the deductible and coinsurance requirements
10-9 established under Subsections (a) and (b) of this section, a
10-10 managed care basic plan may use actuarially equivalent copayments.
10-11 Sec. 5. STANDARD HEALTH CARE BENEFIT PLAN REQUIREMENTS. (a)
10-12 The standard health care benefit plan must have a deductible of
10-13 $250 per covered individual and $750 per family. A deductible is
10-14 not applicable to an immunization for a covered dependent child
10-15 seven years of age or younger or a mammography screening under
10-16 Subsection (c) of this section.
10-17 (b) An individual covered by the standard plan shall pay
10-18 coinsurance at a rate of 20 percent until an annual maximum amount
10-19 of $1,500 per individual person or $3,000 per family is met.
10-20 (c) The standard plan must include coverage for:
10-21 (1) inpatient care in a hospital for an injury,
10-22 accident, or physical illness, including a mental illness or
10-23 chemical dependency, for not more than 45 days per calendar year;
10-24 (2) surgical services and physician services for care,
10-25 including psychiatric care or care for chemical dependency;
10-26 (3) outpatient hospital care;
10-27 (4) emergency care;
11-1 (5) maternity care;
11-2 (6) inpatient and outpatient radiology and laboratory
11-3 services;
11-4 (7) "well baby" examinations for a covered child until
11-5 the child is two years of age;
11-6 (8) immunizations for a covered child until the child
11-7 is eight years of age;
11-8 (9) one mammography screening per calendar year for a
11-9 covered woman 40 years of age or older; and
11-10 (10) services and supplies related to a heart, lung,
11-11 kidney, cornea, or liver transplant, not to exceed $100,000 per
11-12 calendar year.
11-13 (d) Coverage for surgical and physician services for
11-14 treatment for mental illness or chemical dependency may not exceed
11-15 $3,000 per calendar year.
11-16 (e) The standard plan must have a lifetime maximum benefit
11-17 amount per covered individual of $500,000.
11-18 (f) Instead of the deductible and coinsurance requirements
11-19 established under Subsections (a) and (b) of this section, a
11-20 managed care standard plan may use actuarially equivalent
11-21 copayments.
11-22 Sec. 6. PRESCRIPTION DRUGS COVERAGE. (a) The basic plan
11-23 may provide coverage for prescription drugs not to exceed $500 per
11-24 covered individual per calendar year.
11-25 (b) Except as provided by Subsection (c) of this section,
11-26 the standard plan may provide coverage for prescription drugs not
11-27 to exceed $1,500 per covered individual per calendar year.
12-1 (c) The standard plan may use a prescription drug card
12-2 program. If a prescription drug card program is used, the $1,500
12-3 maximum annual benefit amount under Subsection (b) of this section
12-4 does not apply.
12-5 Sec. 7. POWERS AND DUTIES OF DEPARTMENT; RULES. (a) The
12-6 State Board of Insurance shall, after notice and hearing, adopt
12-7 rules requiring:
12-8 (1) registration with the department by each carrier
12-9 intending to operate as a small employer carrier under this
12-10 article;
12-11 (2) publication by the department of a list of all
12-12 small employer carriers;
12-13 (3) a broadly publicized toll-free telephone number
12-14 for access by small employers to information concerning the
12-15 program; and
12-16 (4) registration by insurance agents intending to
12-17 operate as agents for health care benefit plans marketed or issued
12-18 to small employers under this article.
12-19 (b) The department shall require periodic demonstration by
12-20 small employer carriers and agents that those carriers and agents
12-21 are marketing or issuing health care benefit plans to small
12-22 employers in fulfillment of the purposes of this article.
12-23 (c) To the extent considered necessary by the commissioner
12-24 to ensure the fair distribution of high-risk individuals and groups
12-25 among carriers, the department may require periodic reports by
12-26 carriers and agents regarding health care benefit plans issued by
12-27 those carriers and agents. The reporting requirements shall be
13-1 limited to information regarding case characteristics and the
13-2 numbers of health care benefit plans in various categories that are
13-3 marketed or issued to small employers.
13-4 Sec. 8. POLICY FORMS. (a) The commissioner shall approve
13-5 policy forms for the basic plan and the standard plan.
13-6 (b) A small employer carrier may certify to the
13-7 commissioner, in the form and manner prescribed by the
13-8 commissioner, that the basic plans and the standard plans used by
13-9 that carrier are in substantial compliance with the approved policy
13-10 forms. On receipt by the commissioner of the certification, the
13-11 carrier may use the forms until, after notice and an opportunity
13-12 for a hearing, the commissioner disapproves their continued use.
13-13 Sec. 9. SMALL EMPLOYER DETERMINATION. In computing the
13-14 number of employees to establish whether a person is a small
13-15 employer, companies that are affiliated, or that file a combined
13-16 tax return for purposes of state taxation, are considered one
13-17 employer. After the issuance of a health care benefit plan to a
13-18 small employer under this article, the eligibility of a small
13-19 employer based on the number of employees shall be determined and
13-20 certified annually. Except as otherwise specifically provided, the
13-21 provisions of this article that apply to a small employer continue
13-22 to apply until the contract anniversary after the date on which the
13-23 employer no longer meets the definition of small employer.
13-24 Sec. 10. ESTABLISHMENT OF DISTINCT GROUPINGS OF SMALL
13-25 EMPLOYERS. (a) A small employer carrier may establish a distinct
13-26 grouping of small employers only on the basis that the applicable
13-27 health care benefit plans:
14-1 (1) are marketed and sold through persons who are not
14-2 participating in the marketing or sale of other distinct groupings
14-3 of small employers for the small employer carrier;
14-4 (2) have been acquired from another small employer
14-5 carrier as a distinct grouping of plans; or
14-6 (3) are provided through an association of small
14-7 employers, with a membership of not less than 15, that is formed
14-8 for purposes other than obtaining insurance coverage.
14-9 (b) In addition to the distinct groupings of small employers
14-10 authorized under Subsection (a) of this section, a small employer
14-11 carrier may establish not more than two additional groupings under
14-12 each of the subdivisions in Subsection (a) of this section on the
14-13 basis of underwriting criteria expected to produce substantial
14-14 variation in the health care costs.
14-15 (c) The commissioner may approve the establishment of
14-16 additional distinct groupings on application to the commissioner
14-17 and a finding by the commissioner that the establishment of
14-18 additional groupings would enhance the efficiency and fairness of
14-19 the insurance market for small employers.
14-20 Sec. 11. EMPLOYER INFORMATION PROVIDED TO CARRIER; COVERAGE;
14-21 LIST. (a) A small employer shall provide on request to its small
14-22 employer carrier reports and documentation regarding the number of
14-23 its employees and the hours and wages of those employees to
14-24 determine initial eligibility and ensure continued eligibility. A
14-25 small employer carrier may not request the information more than
14-26 four times each year.
14-27 (b) The small employer shall provide the small employer
15-1 carrier a coverage application card for each employee. An employee
15-2 who declines coverage because the employee or dependent is covered
15-3 under another group health plan shall certify that coverage on a
15-4 form prescribed by the small employer carrier.
15-5 (c) Coverage under the program is not available unless a
15-6 small employer submits an application and maintains coverage for at
15-7 least 75 percent of its employees. An employee who certifies
15-8 coverage under another group health plan is included in the
15-9 computation of the number of employees for the participation
15-10 requirement, except that coverage is not available under the
15-11 program unless at least three employees are actually covered by the
15-12 health benefit plan of the small employer.
15-13 Sec. 12. COST CONTAINMENT. (a) A small employer carrier
15-14 may use home health services, skilled nursing facilities,
15-15 outpatient surgery facilities, and other methods of reducing the
15-16 number and length of hospital admissions. A small employer carrier
15-17 using those methods may offer benefit incentives regarding
15-18 deductibles, coinsurance, and copayments.
15-19 (b) Both the basic plan and the standard plan may use cost
15-20 containment provisions, including:
15-21 (1) precertification of covered services;
15-22 (2) preauthorization for specified services;
15-23 (3) the requirement of a second opinion before
15-24 surgery;
15-25 (4) concurrent utilization review and management;
15-26 (5) discharge planning;
15-27 (6) large case management;
16-1 (7) coordination of benefits in compliance with
16-2 guidelines established by the National Association of Insurance
16-3 Commissioners; and
16-4 (8) managed care and point of service and preferred
16-5 provider arrangements.
16-6 Sec. 13. REQUIREMENTS RELATING TO ENROLLMENT PERIODS. (a)
16-7 The initial enrollment period for a health care benefit plan under
16-8 the program must be at least 30 days.
16-9 (b) An employee or dependent is not a late enrollee if that
16-10 individual:
16-11 (1) was covered under another employer health care
16-12 benefit plan at the time the individual was eligible to enroll in a
16-13 health care benefit plan under the program;
16-14 (2) declined coverage under the program during the
16-15 initial enrollment period and certified during the initial
16-16 enrollment period that coverage under another employer health care
16-17 benefit plan was the reason for declining coverage under the
16-18 program;
16-19 (3) lost coverage under another employer health care
16-20 benefit plan as a result of termination of employment, termination
16-21 of the other plan's coverage, death of a spouse, or divorce; and
16-22 (4) requests enrollment in a health care benefit plan
16-23 under the program not later than the 30th day after the date of
16-24 termination of the coverage provided under another employer health
16-25 care benefit plan.
16-26 Sec. 14. PREEXISTING CONDITION REQUIREMENTS. (a) A
16-27 preexisting condition provision in a small employer health care
17-1 benefit plan may not exclude coverage for a period longer than 12
17-2 months after the effective date of the coverage, and may only
17-3 relate to:
17-4 (1) a condition manifested in such a manner as would
17-5 cause an ordinarily prudent person to seek medical advice,
17-6 diagnosis, care, or treatment;
17-7 (2) a condition for which medical advice, diagnosis,
17-8 care, or treatment was recommended or received during the six
17-9 months preceding the effective date of the coverage; or
17-10 (3) a pregnancy existing on the effective date of the
17-11 coverage.
17-12 (b) In determining whether a preexisting condition provision
17-13 applies to an employee or dependent, each health care benefit plan
17-14 must credit the time the person was covered under a previous
17-15 employer-based health care benefit plan if:
17-16 (1) the previous coverage was continuous; and
17-17 (2) a gap in coverage did not occur between the
17-18 coverage under the previous plan and employment with the small
17-19 employer.
17-20 (c) For purposes of this section, the use of a prescription
17-21 drug or the renewal of a prescription constitutes the receipt of
17-22 medical advice and medical treatment.
17-23 Sec. 15. ELIGIBILITY CONDITIONS. (a) A new employee of a
17-24 small employer may not be denied coverage if the application is
17-25 received by the small employer carrier not later than the 31st day
17-26 after the date on which the employment begins.
17-27 (b) A small employer who participates in the program shall
18-1 pay at least 75 percent of the insurance premium for the employee's
18-2 coverage. A small employer who pays the entire amount of the
18-3 premium may require a waiting period for coverage not to exceed 30
18-4 days after the first day of the month following the date of
18-5 employment. An employee of a small employer who pays less than the
18-6 entire amount of the premium shall have an effective date of
18-7 coverage of not later than the first day of the next month
18-8 following the date of employment.
18-9 (c) A small employer may provide coverage for eligible
18-10 dependents of the employee. Eligible dependents include the
18-11 employee's spouse or children. If a small employer allows coverage
18-12 of a child, the coverage may not exclude or limit coverage of the
18-13 child solely because the child is adopted. A dependent may not be
18-14 covered before the effective date of the employee's coverage.
18-15 (d) A small employer plan may not limit or exclude initial
18-16 coverage of a newborn, natural child of the employee, except that
18-17 the plan may require that the employee cover the employee's spouse
18-18 and children as a condition precedent to coverage of a newborn
18-19 child. Any coverage of a newborn, natural child of an employee
18-20 under this subsection terminates on the 31st day after the birth
18-21 date of the child unless:
18-22 (1) dependent children are eligible for coverage; and
18-23 (2) timely application and any required additional
18-24 premium is received by the insurer not later than the 31st day
18-25 after the date of birth.
18-26 (e) If the Consolidated Omnibus Budget Reconciliation Act of
18-27 1985, as amended (Pub. L. No. 99-272, 100 Stat. 222), is not
19-1 applicable to a small employer, a dependent who has been covered by
19-2 that small employer for at least one year or is younger than one
19-3 year of age may elect to continue coverage with the small employer
19-4 if the dependent loses eligibility for coverage because of the
19-5 death, divorce, or retirement of the employee. The continuation is
19-6 conditioned on notice to the small employer, not later than the
19-7 30th day after the death, divorce, or retirement date, of the
19-8 intent to continue the coverage and the timely payment of the
19-9 applicable premium to the small employer. The small employer may
19-10 require a dependent to pay a monthly fee not to exceed $10 for
19-11 administrative costs. The continuation coverage continues until:
19-12 (1) the dependent fails to pay the required premium
19-13 not later than the 10th day after the date on which the premium is
19-14 due;
19-15 (2) the dependent obtains other group health insurance
19-16 or is covered by Medicare;
19-17 (3) a period of three years has elapsed since the
19-18 death, divorce, or retirement of the employee; or
19-19 (4) the employer is no longer eligible to participate
19-20 in the program.
19-21 (f) A new employee must apply for coverage not later than
19-22 the 31st day after the date of the employment. A late enrollee may
19-23 be excluded from coverage for 24 months from the date of
19-24 application or may be subject to a 24-month preexisting condition
19-25 exclusion. If both a period of exclusion from coverage and a
19-26 preexisting condition exclusion are applicable to a late enrollee,
19-27 the combined period of exclusion may not exceed 24 months from the
20-1 date of the late application.
20-2 (g) Small employer carrier requirements for minimum
20-3 participation of employees and minimum employer contributions in
20-4 determining whether to accept a small employer group shall be
20-5 applied uniformly among all small employer groups with the same
20-6 number of eligible employees applying for coverage or receiving
20-7 coverage from the small employer carrier. A small employer carrier
20-8 may vary application of minimum participation requirements and
20-9 minimum employer contribution requirements only by the size of the
20-10 small employer group. This subsection may not be construed to
20-11 reduce the minimum employer contribution of 75 percent of the
20-12 employee premium or three covered employees.
20-13 Sec. 16. DISCLOSURE REQUIREMENTS; ANNUAL CERTIFICATION. (a)
20-14 Each small employer carrier that offers for sale any health care
20-15 benefit plan to a small employer shall make a reasonable
20-16 disclosure, as part of its solicitation and sales materials, of:
20-17 (1) the extent to which premium rates for a specified
20-18 small employer are established or adjusted in part based on the
20-19 actual or expected variation in claims costs or the health
20-20 condition of the employees and dependents of the small employer;
20-21 (2) provisions concerning the small employer carrier's
20-22 right to change premium rates and the factors, including case
20-23 characteristics, that affect changes in premium rates;
20-24 (3) a description of the class of business to which
20-25 the small employer is assigned, including the applicable grouping
20-26 of plans;
20-27 (4) provisions relating to termination of coverage;
21-1 and
21-2 (5) provisions relating to the effect of any
21-3 preexisting condition.
21-4 (b) Each small employer carrier shall maintain at its
21-5 principal place of business a complete and detailed description of
21-6 its rating practices and renewal underwriting practices, including
21-7 information and documentation that demonstrate that its rating
21-8 methods and practices are based on commonly accepted actuarial
21-9 assumptions and are in accordance with sound actuarial principles.
21-10 The small employer carrier shall make the information and
21-11 documentation available to the commissioner on request. The
21-12 information is proprietary trade secret information and is not
21-13 subject to disclosure by the commissioner to persons outside of the
21-14 department except as agreed to by the small employer carrier or as
21-15 ordered by a court of competent jurisdiction.
21-16 (c) Each small employer carrier shall file with the
21-17 commissioner annually on or before March 15 an actuarial
21-18 certification certifying that the carrier is in compliance with
21-19 this article and that the rating methods of the small employer
21-20 carrier are actuarially sound. A copy of the certification shall
21-21 be retained by the small employer carrier at its principal place of
21-22 business. A person who performs an actuarial certification shall
21-23 review the appropriate records of a small employer carrier and
21-24 shall examine the actuarial assumptions and methods used by the
21-25 small employer carrier in establishing premium rates for applicable
21-26 health care benefit plans.
21-27 Sec. 17. HEALTH MAINTENANCE ORGANIZATIONS. (a) A health
22-1 maintenance organization is not required to offer coverage or
22-2 accept applications under Section 3 of this article for:
22-3 (1) a small employer who is not physically located in
22-4 the health maintenance organization's approved service areas;
22-5 (2) an employee who does not work or reside within the
22-6 health maintenance organization's approved service areas; or
22-7 (3) an area in which the health maintenance
22-8 organization reasonably anticipates and demonstrates to the
22-9 satisfaction of the commissioner that it will not have the ability
22-10 in its network of providers to deliver adequate service to the
22-11 members of those small employer groups because of obligations to
22-12 existing group contract holders and enrollees.
22-13 (b) A health maintenance organization that is unable to
22-14 offer coverage under Subsection (a)(3) of this section may not
22-15 offer coverage in the affected area to new employer groups with
22-16 more than 35 eligible employees or to small employer groups until
22-17 the expiration of 180 days after:
22-18 (1) the date of the refusal to provide coverage; or
22-19 (2) the date on which the health maintenance
22-20 organization notifies the commissioner that it has regained the
22-21 ability to deliver adequate services to small employer groups.
22-22 Sec. 18. TERMINATION OF COVERAGE. (a) A health care
22-23 benefit plan under the program may not be terminated by the small
22-24 employer carrier except:
22-25 (1) for nonpayment of the required premiums or
22-26 contributions toward the premiums by the policyholder or employer;
22-27 (2) for fraud or misrepresentation by the
23-1 policyholder, contract holder, or employer;
23-2 (3) for noncompliance with renewability provisions
23-3 approved by the commissioner;
23-4 (4) if the number of enrollees covered under the
23-5 health care benefit plan is less than the number or percentage of
23-6 employees required by this article; or
23-7 (5) for noncompliance with the carrier's employer
23-8 contribution requirements.
23-9 (b) Coverage under a health care benefit plan of an employee
23-10 or dependent may not be terminated except:
23-11 (1) for nonpayment of a required premium or
23-12 contribution;
23-13 (2) for fraud or misrepresentation; or
23-14 (3) for misuse of a provider network provision or a
23-15 prescription drug program.
23-16 (c) A small employer carrier may cease to renew all plans
23-17 provided to a particular class of business if notice is provided to
23-18 all affected small employers and to the commissioner at least 90
23-19 days before the date of termination of the coverage. A small
23-20 employer carrier that exercises its right to terminate all plans
23-21 for a class of business may not:
23-22 (1) establish a new class of business before the
23-23 expiration of five years after the termination date without the
23-24 prior approval of the commissioner; or
23-25 (2) transfer or otherwise provide coverage to a
23-26 terminated small employer from the terminated class of business
23-27 unless the small employer carrier offers to transfer or provide
24-1 coverage to all affected small employers and eligible employees and
24-2 dependents without regard to case characteristics, claim
24-3 experience, health status, or duration of coverage.
24-4 (d) If a health maintenance organization does business in
24-5 the small employer market in one service area of the state, the
24-6 termination requirements under this section apply to the operations
24-7 of that health maintenance organization in that service area.
24-8 (e) Except as provided by Section 15(e) of this article,
24-9 termination of an employee's coverage terminates the coverage of
24-10 that employee's dependents.
24-11 Sec. 19. PREMIUM RATE LIMITATIONS. (a) The premium rates
24-12 for a health care benefit plan subject to this article are subject
24-13 to this section.
24-14 (b) The index rate for a rating period for any class of
24-15 business may not exceed the index rate for any other class of
24-16 business by more than 20 percent.
24-17 (c) For a class of business, the premium rates charged
24-18 during a rating period to small employers with similar case
24-19 characteristics for the same or similar coverage, or the rates that
24-20 could be charged to those employers under the rating system for
24-21 that class of business, may not vary from the index rate by more
24-22 than 25 percent of the index rate.
24-23 (d) The percentage increase in the premium rate charged to a
24-24 small employer for a new rating period may not exceed the sum of:
24-25 (1) the percentage change in the new business premium
24-26 rate measured from the first day of the prior rating period to the
24-27 first day of the new rating period;
25-1 (2) any adjustment, not to exceed 15 percent annually
25-2 and adjusted pro rata for rating periods of less than one year, due
25-3 to the claim experience, health status, or duration of coverage of
25-4 the employees or dependents of the small employer as determined
25-5 from the small employer carrier's rate manual for the class of
25-6 business; and
25-7 (3) any adjustment due to change in coverage or change
25-8 in the case characteristics of the small employer as determined
25-9 from the small employer carrier's rate manual for the class of
25-10 business.
25-11 (e) If a small employer carrier uses an industry
25-12 classification as a case characteristic in establishing premium
25-13 rates, the rate factor associated with the industry classification
25-14 may not vary from the arithmetic average of the rate factors
25-15 associated with all industry classifications by more than 15
25-16 percent of that average.
25-17 (f) A small employer carrier shall apply rating factors,
25-18 including case characteristics, consistently with respect to all
25-19 small employers in a class of business. Rating factors must
25-20 produce premiums for identical groups that differ only by the
25-21 amounts attributable to plan design and that do not reflect
25-22 differences due to the nature of the groups assumed to select
25-23 particular health care benefit plans. A small employer carrier
25-24 shall treat each health care benefit plan issued or renewed in the
25-25 same calendar month as having the same rating period.
25-26 (g) A small employer carrier may not transfer a small
25-27 employer involuntarily into or out of a class of business. A small
26-1 employer carrier may not offer to transfer a small employer into or
26-2 out of a class of business unless the offer is made to transfer all
26-3 small employers in that class of business without regard to case
26-4 characteristics, claim experience, health status, or duration of
26-5 coverage since the issuance of the coverage.
26-6 (h) For purposes of this section, a health care benefit plan
26-7 that uses a restricted provider network may not be considered
26-8 similar coverage to a health care benefit plan that does not use
26-9 such a network.
26-10 (i) A small employer plan may not use case characteristics,
26-11 other than benefit plan design, age, sex, industry, geographic
26-12 area, family composition, and group size, without the prior
26-13 approval of the commissioner.
26-14 (j) For a health care benefit plan issued before September
26-15 1, 1993, a premium rate for a rating period may exceed the ranges
26-16 set forth in Subsections (b) and (c) of this section until
26-17 September 1, 1998. In that case, the percentage increase in the
26-18 premium rate charged to a small employer in that class of business
26-19 for a new rating period may not exceed the sum of the percentage
26-20 change in the new business premium rate measured from the first day
26-21 of the prior rating period to the first day of the new rating
26-22 period, and any adjustment due to change in coverage or change in
26-23 the case characteristics of the small employer as determined from
26-24 the carrier's rate manual for the class of business. This
26-25 subsection expires September 30, 1998.
26-26 Sec. 20. STUDY; RATE REVISIONS. (a) The commissioner shall
26-27 conduct a study for submission to the legislature and the State
27-1 Board of Insurance of the effectiveness of this article and may
27-2 recommend further improvements to achieve greater stability,
27-3 accessibility, and affordability in the small employer marketplace
27-4 in that study. The commissioner shall submit the study not later
27-5 than September 1, 1996.
27-6 (b) If, in conducting the study, the commissioner finds that
27-7 a further reduction in the rate limitations under Section 19 of
27-8 this article will not have a deleterious impact on the
27-9 accessibility and affordability of health coverage to small
27-10 employers, the commissioner shall recommend revised limitations and
27-11 transition rules for their implementation to the board. If the
27-12 board concurs with the commissioner's recommendation, the
27-13 commissioner and board shall take appropriate steps to notify all
27-14 small employer carriers and implement the recommendation.
27-15 (c) This section expires September 30, 1996.
27-16 Sec. 21. TEXAS SMALL EMPLOYER HEALTH REINSURANCE SYSTEM.
27-17 (a) The Texas Small Employer Health Reinsurance System is created.
27-18 The system is a nonprofit entity.
27-19 (b) The system is administered by a board of directors and
27-20 shall operate subject to the supervision and control of the
27-21 commissioner.
27-22 (c) The board of directors is composed of nine members,
27-23 eight persons appointed by the governor plus the commissioner or
27-24 the commissioner's designated representative, who serves as an ex
27-25 officio member. In selecting the members of the board, the
27-26 governor shall include representatives of small employers and small
27-27 employer carriers and other individuals determined to be qualified
28-1 by the commissioner. At least five members must be representatives
28-2 of reinsuring carriers and shall be selected from individuals
28-3 nominated by small employer carriers in this state according to
28-4 procedures and guidelines developed by the commissioner. The
28-5 directors appointed by the governor serve two-year terms. The
28-6 terms expire on December 31 of each odd-numbered year. A member's
28-7 term continues until a successor is appointed and qualifies.
28-8 (d) If the system becomes eligible for additional financing
28-9 under Subsection (v) of this section, the board of directors shall
28-10 be expanded to include two additional ex officio members, one each
28-11 representing the treasurer and the comptroller. The expansion of
28-12 the board under this subsection shall continue for the period that
28-13 the program continues to be eligible for the additional financing.
28-14 (e) Not later than November 1, 1993, each small employer
28-15 carrier shall file a report with the commissioner that states the
28-16 carrier's net health insurance premiums derived from health care
28-17 benefit plans delivered or issued for delivery to small employers
28-18 in this state during the previous calendar year.
28-19 (f) Not later than the 180th day after the date on which a
28-20 majority of the board of directors has qualified, the board shall
28-21 submit to the commissioner a plan of operation and thereafter any
28-22 amendments necessary or suitable to ensure the fair, reasonable,
28-23 and equitable administration of the system. The commissioner may,
28-24 after notice and hearing, approve the plan of operation if the
28-25 commissioner determines the plan is suitable to ensure the fair,
28-26 reasonable, and equitable administration of the system and provides
28-27 for the sharing of system gains or losses on an equitable and
29-1 proportionate basis in accordance with the provisions of this
29-2 section. The plan of operation is effective on the written
29-3 approval of the commissioner.
29-4 (g) If the board of directors fails to timely submit a
29-5 suitable plan of operation, the commissioner shall, after notice
29-6 and hearing, adopt a temporary plan of operation. The commissioner
29-7 shall amend or rescind any plan adopted under this subsection at
29-8 the time a plan of operation is submitted by the board and approved
29-9 by the commissioner.
29-10 (h) The plan of operation must:
29-11 (1) establish procedures for the handling and
29-12 accounting of system assets and money and for an annual fiscal
29-13 reporting to the commissioner;
29-14 (2) establish procedures for the selection of an
29-15 administering carrier and establish the powers and duties of that
29-16 administering carrier;
29-17 (3) establish procedures for reinsuring risks in
29-18 accordance with the provisions of this section;
29-19 (4) establish procedures for collecting assessments
29-20 from reinsuring carriers to fund claims and administrative expenses
29-21 incurred or estimated to be incurred by the system, including the
29-22 imposition of an interest penalty for late payment of an
29-23 assessment; and
29-24 (5) provide for any additional matters necessary for
29-25 the implementation and administration of the system.
29-26 (i) The system has the general powers and authority granted
29-27 under the laws of this state to insurance companies and health
30-1 maintenance organizations licensed to transact business, except
30-2 that the system may not issue health care benefit plans directly to
30-3 groups or individuals. The system is exempt from all taxes. The
30-4 system may:
30-5 (1) enter into contracts necessary or proper to carry
30-6 out the provisions and purposes of this section and may, with the
30-7 approval of the commissioner, enter into contracts with similar
30-8 programs of other states for the joint performance of common
30-9 functions or with persons or other organizations for the
30-10 performance of administrative functions;
30-11 (2) sue or be sued, including taking legal actions
30-12 necessary or proper to recover assessments and penalties for, on
30-13 behalf of, or against the system or a reinsuring carrier;
30-14 (3) take legal action necessary to avoid the payment
30-15 of improper claims against the system;
30-16 (4) define the health care benefit plans for which
30-17 reinsurance will be provided, and issue reinsurance policies, in
30-18 accordance with the requirements of this section;
30-19 (5) establish rules, conditions, and procedures for
30-20 reinsuring risks under the system;
30-21 (6) establish actuarial functions as appropriate for
30-22 the operation of the system;
30-23 (7) assess reinsuring carriers in accordance with the
30-24 provisions of Subsection (s) of this section and make advance
30-25 interim assessments as may be reasonable and necessary for
30-26 organizational and interim operating expenses, provided that any
30-27 interim assessments shall be credited as offsets against any
31-1 regular assessments due following the close of the fiscal year;
31-2 (8) appoint appropriate legal, actuarial, and other
31-3 committees as necessary to provide technical assistance in the
31-4 operation of the system, policy and other contract design, and any
31-5 other function within the authority of the system; and
31-6 (9) borrow money to effect the purposes of the system,
31-7 provided that any notes or other evidence of indebtedness of the
31-8 system not in default shall be legal investments for carriers and
31-9 may be carried as admitted assets.
31-10 (j) A small employer carrier may reinsure with the system as
31-11 provided by this subsection. With respect to a basic plan or a
31-12 standard plan, the system shall reinsure the level of coverage
31-13 provided. With respect to other plans, the system shall reinsure
31-14 up to the level of coverage provided in a basic or standard plan.
31-15 A small employer carrier may reinsure an entire employer group not
31-16 later than the 60th day after the date on which the group's
31-17 coverage under a health care benefit plan takes effect. A small
31-18 employer carrier may reinsure an eligible employee or dependent not
31-19 later than the 60th day after the date on which the coverage with
31-20 the small employer takes effect. A newly eligible employee or
31-21 dependent of the reinsured small employer may be reinsured not
31-22 later than the 60th day after the date on which that person's
31-23 coverage takes effect.
31-24 (k) The system may not reimburse a reinsuring carrier with
31-25 respect to the claims of a reinsured employee or dependent until
31-26 the carrier has incurred an initial level of claims for that
31-27 employee or dependent in a calendar year of $5,000 for benefits
32-1 covered by the system. In addition, the reinsuring carrier is
32-2 responsible for 10 percent of the next $50,000 of benefit payments
32-3 during a calendar year, and the system shall reinsure the
32-4 remainder. A reinsuring carrier's liability under this subsection
32-5 may not exceed a maximum of $10,000 in any one calendar year with
32-6 respect to any reinsured individual.
32-7 (l) The board of directors annually shall adjust the initial
32-8 level of claims and the maximum to be retained by the carrier
32-9 established under Subsection (k) of this section to reflect
32-10 increases in costs and utilization within the standard market for
32-11 health care benefit plans within this state. The adjustment may
32-12 not be less than the annual change in the medical component of the
32-13 Consumer Price Index for All Urban Consumers published by the
32-14 Bureau of Labor Statistics of the United States Department of
32-15 Labor, unless the board proposes and the commissioner approves a
32-16 lower adjustment factor.
32-17 (m) A small employer carrier may terminate reinsurance with
32-18 the system for one or more of the reinsured employees or dependents
32-19 of a small employer on any contract anniversary of the health care
32-20 benefit plan.
32-21 (n) A reinsuring carrier shall apply consistently with
32-22 respect to reinsured and nonreinsured business all managed care and
32-23 claims handling techniques, including utilization review,
32-24 individual case management, preferred provider provisions, and
32-25 other managed care provisions or methods of operation.
32-26 (o) As part of the plan of operation, the board of directors
32-27 shall adopt a method to determine premium rates to be charged by
33-1 the system for reinsuring small employers and individuals under
33-2 this section. The method adopted must include a classification
33-3 system for small employers that reflects the types of case
33-4 characteristics commonly used by small employer carriers in this
33-5 state, and must provide for the development of base reinsurance
33-6 premium rates that shall be multiplied by the factors set forth in
33-7 Subsection (p) of this section to determine the premium rates for
33-8 the system. The base reinsurance premium rates shall be
33-9 established by the board, subject to the approval of the
33-10 commissioner, and shall be set at levels that reasonably
33-11 approximate the gross premiums charged to small employers by small
33-12 employer carriers for health care benefit plans with benefits
33-13 similar to those provided by the standard plan, adjusted to reflect
33-14 retention levels required under this article. The board
33-15 periodically shall review the method adopted under this subsection,
33-16 including the classification system and any rating factors, to
33-17 ensure that the method reasonably reflects the claims experience of
33-18 the system. The board may propose changes to the method. The
33-19 changes are subject to the approval of the commissioner.
33-20 (p) An entire small employer group may be reinsured at a
33-21 rate that is one and one-half times the base reinsurance premium
33-22 rate for that group. An eligible employee or dependent may be
33-23 reinsured at a rate that is five times the base reinsurance premium
33-24 rate for that individual.
33-25 (q) The board of directors may consider adjustments to the
33-26 premium rates charged by the system to reflect the use of effective
33-27 cost containment and managed care arrangements.
34-1 (r) If a health care benefit plan for a small employer is
34-2 entirely or partially reinsured with the system, the premium
34-3 charged to the small employer for any rating period for the
34-4 coverage issued must meet the premium rate limitations established
34-5 under Section 19 of this article.
34-6 (s) Not later than March 1 of each year, the board of
34-7 directors shall determine and report to the commissioner the system
34-8 net loss for the previous calendar year, including administrative
34-9 expenses and incurred losses for the year, taking into account
34-10 investment income and other appropriate gains and losses. Any net
34-11 loss for the year must be recouped by assessments of reinsuring
34-12 carriers. Each reinsuring carrier's assessment shall be determined
34-13 annually by the board based on annual statements and other reports
34-14 required by the board and filed with the board. The board shall
34-15 establish, as part of the plan of operation, a formula by which to
34-16 make assessments against reinsuring carriers. With the approval of
34-17 the commissioner, the board may change the assessment formula from
34-18 time to time as appropriate. The board shall base the assessment
34-19 formula on each reinsuring carrier's share of:
34-20 (1) the total premiums earned in the preceding
34-21 calendar year from health care benefit plans delivered or issued
34-22 for delivery by reinsuring carriers to small employers in this
34-23 state; and
34-24 (2) the premiums earned in the preceding calendar year
34-25 from newly issued health care benefit plans delivered or issued for
34-26 delivery during the calendar year by reinsuring carriers to small
34-27 employers in this state.
35-1 (t) The formula established under Subsection (s) of this
35-2 section may not result in an assessment share for a reinsuring
35-3 carrier that is less than 50 percent or more than 150 percent of an
35-4 amount based on the proportion of the total premium earned in the
35-5 preceding calendar year from health care benefit plans delivered or
35-6 issued for delivery to small employers in this state by that
35-7 reinsuring carrier to the total premiums earned in the preceding
35-8 calendar year from health care benefit plans delivered or issued
35-9 for delivery to small employers in this state by all reinsuring
35-10 carriers. Premiums earned by a reinsuring carrier that are less
35-11 than an amount determined by the board of directors to justify the
35-12 cost of collection of an assessment based on those premiums shall
35-13 not be considered by the board in determining assessments.
35-14 (u) With the approval of the commissioner, the board of
35-15 directors may adjust the assessment formula for reinsuring carriers
35-16 that are approved health maintenance organizations that are
35-17 federally qualified under Subchapter XI, Public Health Service Act
35-18 (42 U.S.C. Section 300e et seq.) to the extent that any
35-19 restrictions are imposed on those health maintenance organizations
35-20 that are not imposed on other small employer carriers.
35-21 (v) Not later than March 1 of each year, the board of
35-22 directors shall file with the commissioner an estimate of the
35-23 assessments necessary to fund the losses incurred by the system
35-24 during the previous calendar year. If the board determines that
35-25 the necessary assessments exceed five percent of the total premiums
35-26 earned in the previous calendar year from health care benefit plans
35-27 delivered or issued for delivery by reinsuring carriers to small
36-1 employers in this state, the board shall evaluate the operation of
36-2 the system and shall report its findings, including any
36-3 recommendations for changes to the plan of operation, to the
36-4 commissioner not later than the 90th day after December 31st of the
36-5 calendar year in which the losses were incurred. The evaluation
36-6 must include an estimate of future assessments and must consider
36-7 the administrative costs of the system, the appropriateness of the
36-8 premiums charged, the level of insurer retention under the system,
36-9 and the costs of coverage for small employers. If the board fails
36-10 to timely file a report, the commissioner may evaluate the
36-11 operations of the system and may implement amendments to the plan
36-12 of operation as considered necessary by the commissioner to reduce
36-13 future losses and assessments. If assessments in each of two
36-14 consecutive calendar years exceed the amount specified by this
36-15 subsection, the system is eligible to receive additional financing
36-16 from the general revenue of the state as provided by Subsection (w)
36-17 of this section.
36-18 (w) The amount of additional financing to be provided to the
36-19 system is equal to the amount by which total assessments in the
36-20 preceding two calendar years exceed five percent of the total
36-21 premiums earned during that period from small employers from health
36-22 care benefit plans delivered or issued for delivery in this state
36-23 by reinsuring carriers. If the system has received additional
36-24 financing from the general revenue of the state in either of the
36-25 two previous calendar years, the amount of that additional
36-26 financing shall be subtracted from the amount of total assessments.
36-27 Additional financing received by the system under this subsection
37-1 shall be distributed to reinsuring carriers in proportion to the
37-2 assessments paid by those carriers during the preceding two
37-3 calendar years. If assessments exceed the net losses of the
37-4 system, the excess amount shall be held in an interest-bearing
37-5 account and used by the board of directors to offset future losses
37-6 or to reduce system premiums. In this subsection, "future losses"
37-7 includes reserves for incurred but not reported claims.
37-8 (x) A reinsuring carrier may petition the commissioner for a
37-9 deferment in whole or in part of an assessment imposed by the board
37-10 of directors. The commissioner may defer all or part of the
37-11 assessment of a reinsuring carrier if the commissioner determines
37-12 that the payment of the assessment would place the reinsuring
37-13 carrier in a financially impaired condition. If an assessment
37-14 against a reinsuring carrier is deferred, the amount deferred shall
37-15 be assessed against the other participating carriers in a manner
37-16 consistent with the basis for assessment established by this
37-17 section. The reinsuring carrier receiving the deferment is liable
37-18 to the system for the amount deferred and is prohibited from
37-19 reinsuring any individual or group with the system until it pays
37-20 the outstanding assessment.
37-21 (y) Participation in the system as a reinsuring carrier, the
37-22 establishment of rates, forms, or procedures, or any other joint or
37-23 collective action required by this article may not be the basis of
37-24 any criminal or civil liability or penalty against the system or
37-25 its reinsuring carriers, either jointly or separately.
37-26 (z) The board of directors, as part of the plan of
37-27 operation, shall develop standards setting forth the manner and
38-1 levels of compensation to be paid for the sale of basic and
38-2 standard health care benefit plans. In establishing the standards,
38-3 the board shall consider:
38-4 (1) the need to ensure the broad availability of
38-5 coverages;
38-6 (2) the objectives of the system;
38-7 (3) the time and effort expended in placing the
38-8 coverage;
38-9 (4) the need to provide continuing service to the
38-10 small employer;
38-11 (5) the levels of compensation used in the industry;
38-12 and
38-13 (6) the overall costs of coverage to small employers
38-14 selecting those plans.
38-15 SECTION 2. The commissioner of insurance shall approve
38-16 policy forms under Section 8, Article 3.50-7, Insurance Code, as
38-17 added by this Act, not later than December 1, 1993.
38-18 SECTION 3. This Act takes effect September 1, 1993.
38-19 SECTION 4. The importance of this legislation and the
38-20 crowded condition of the calendars in both houses create an
38-21 emergency and an imperative public necessity that the
38-22 constitutional rule requiring bills to be read on three several
38-23 days in each house be suspended, and this rule is hereby suspended.