By: Sibley S.B. No. 217
73R1276 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to purchase of group health coverage through funds
1-3 established by certain small employers.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 1(a) and (b), Article 3.51-6, Insurance
1-6 Code, are amended to read as follows:
1-7 (a) Group accident and health insurance is hereby defined to
1-8 be that form of accident, sickness, or accident and sickness
1-9 insurance covering groups of persons as provided in Subdivisions
1-10 (1) through (7) <(6)> below:
1-11 (1) under a policy issued to an employer or trustees
1-12 of a fund established by an employer, who shall be deemed the
1-13 policyholder, insuring employees of such employer for the benefit
1-14 of persons other than the employer. The term "employees" as used
1-15 herein shall be deemed to include the officers, managers, and
1-16 employees of the employer, the individual proprietor, or partner if
1-17 the employer is an individual proprietor or partnership, the
1-18 officers, managers, and employees of subsidiary or affiliated
1-19 corporations, the individual proprietors, partners, and employees
1-20 of individuals and firms, if the business of the employer and such
1-21 individual or firm is under common control through stock ownership,
1-22 contract, or otherwise, and retired employees. A policy issued to
1-23 insure employees of a public body may provide that the term
1-24 "employees" shall include elected or appointed officials. The
2-1 policy may provide that the term "employees" shall include the
2-2 trustees or their employees, or both, if their duties are
2-3 principally connected with such trusteeship;
2-4 (2) under a policy issued to an association, including
2-5 but not limited to a labor union or organizations of such unions,
2-6 membership corporations organized or holding a certificate of
2-7 authority under the Texas Non-Profit Corporation Act (Article
2-8 1396-1.01 et seq., Vernon's Texas Civil Statutes), and cooperatives
2-9 and corporations subject to the supervision and control of the Farm
2-10 Credit Administration of the United States of America, and which
2-11 association shall have a constitution and bylaws, which has been
2-12 organized and has had an active existence for at least two years,
2-13 and which is maintained in good faith for purposes other than that
2-14 of obtaining insurance, to insure members, employees, or employees
2-15 of members (active and retired for the benefit of persons other
2-16 than the association or its officers or trustees);
2-17 (3) under a policy issued to the trustees of a fund
2-18 established by two or more employers in the same or related
2-19 industry or by one or more labor unions or by one or more employers
2-20 and one or more labor unions or by an association as defined in (2)
2-21 above, which trustees shall be deemed the policyholder, to insure
2-22 employees of the employers or members of the unions or such
2-23 association, or employees or members of such association for the
2-24 benefit of persons other than the employers or the unions or such
2-25 association. The term "employees" as used herein may include the
2-26 officers, managers, and employees of the employer, retired
2-27 employees, and the individual proprietor or partners if the
3-1 employer is an individual proprietor or partnership. The policy
3-2 may provide that the term "employees" shall include the trustees or
3-3 their employees, or both, if their duties are principally connected
3-4 with such trusteeship;
3-5 (4) under a policy issued to any person or
3-6 organization to which a policy of group life insurance may be
3-7 issued or delivered in this state to insure any class or classes of
3-8 individuals that could be insured under such group life policy;
3-9 (5) under a policy issued by an insurer to a trustee
3-10 of a fund, which shall be deemed to be the policyholder, to insure
3-11 former employees, former members, their spouses, former spouses,
3-12 and their dependents, who were previously insured by such insurer
3-13 under a policy issued to any of the groups provided for in this
3-14 article;
3-15 (6) under a policy issued to the trustee of a fund
3-16 established by two or more small employers, to insure employees of
3-17 the employers. The small employers may be in unrelated industries.
3-18 The trustee is the policyholder of a policy under this subdivision.
3-19 The policy may provide that the term "employees" includes the
3-20 trustee and the employees of the trustee, the officers, managers,
3-21 and retired employees of the employers, and, if an employer is a
3-22 partnership or sole proprietorship, the partners or proprietor of
3-23 the employer; or
3-24 (7) under a policy issued to cover any other group
3-25 subject to the following requirements:
3-26 (A) No such group health insurance policy shall
3-27 be delivered in this state unless the Commissioner of Insurance
4-1 finds that:
4-2 (i) the issuance of such group policy is
4-3 not contrary to the best interest of the public;
4-4 (ii) the issuance of the group policy
4-5 would result in economies of acquisition or administration; and
4-6 (iii) the benefits are reasonable in
4-7 relation to the premiums charged.
4-8 (B) No such group health insurance coverage may
4-9 be offered in this state by an insurer under a policy issued in
4-10 another state unless this state or another state having
4-11 requirements substantially similar to those contained in
4-12 Subparagraphs (i), (ii), and (iii) of Paragraph (A) of this
4-13 subdivision has made a determination that such requirements have
4-14 been met.
4-15 (C) The premium for the policy shall be paid
4-16 either from the policyholder's funds or from funds contributed by
4-17 the covered persons, or from both.
4-18 (b) The spouse and dependents of employees or members,
4-19 including a dependent grandchild of an employee or member who is
4-20 less than 21 years old and living with and in the household of the
4-21 employee or member, referred to in Subdivisions (a)(1) through
4-22 (a)(7) <(a)(6)> of this section may be included within the coverage
4-23 provided in a group policy.
4-24 SECTION 2. Section 1(d)(1), Article 3.51-6, Insurance Code,
4-25 is amended to read as follows:
4-26 (d)(1) No group policy of accident, health, or accident and
4-27 health insurance, including group contracts issued by companies
5-1 subject to Chapter 20, Insurance Code, as amended, shall be
5-2 delivered or issued for delivery in this state which does not
5-3 conform to the requirements and definitions set forth in
5-4 Subdivisions (a)(1) through (a)(7) <(a)(6)> of this section.
5-5 SECTION 3. Section 1, Article 3.51-6, Insurance Code, is
5-6 amended by adding Subsection (g) to read as follows:
5-7 (g) In this section, "small employer" means a person, firm,
5-8 corporation, partnership, or association actively engaged in
5-9 business that, on at least 50 percent of its working days during
5-10 the calendar year preceding the date on which coverage under a
5-11 group accident and health insurance policy begins, employed at
5-12 least three and not more than 50 employees.
5-13 SECTION 4. The Texas Health Maintenance Organization Act
5-14 (Chapter 20A, Vernon's Texas Insurance Code) is amended by adding
5-15 Section 14A to read as follows:
5-16 Sec. 14A. GROUP COVERAGE FOR SMALL EMPLOYERS. (a) A health
5-17 maintenance organization may issue a group contract to the trustee
5-18 of a fund established by two or more small employers to provide
5-19 coverage to employees of the employers. The small employers may be
5-20 in unrelated industries.
5-21 (b) The trustee is the holder of a group contract issued
5-22 under this subdivision.
5-23 (c) A group contract issued to a fund under this section may
5-24 provide coverage to:
5-25 (1) the trustee and the employees of the trustee;
5-26 (2) the officers, managers, and retired employees of
5-27 the small employers;
6-1 (3) if a small employer is a partnership, the partners
6-2 of the employer; and
6-3 (4) if a small employer is a sole proprietorship, the
6-4 proprietor of the employer.
6-5 (d) In this section, "small employer" means a person, firm,
6-6 corporation, partnership, or association actively engaged in
6-7 business that, on at least 50 percent of its working days during
6-8 the calendar year preceding the date on which coverage issued by a
6-9 health maintenance organization begins, employed at least three and
6-10 not more than 50 employees.
6-11 SECTION 5. This Act takes effect September 1, 1993, and
6-12 applies only to a group accident and health insurance policy and to
6-13 a group contract issued by a health maintenance organization that
6-14 is delivered, issued for delivery, or renewed on or after January
6-15 1, 1994. A policy or contract that is delivered, issued for
6-16 delivery, or renewed before January 1, 1994, is governed by the law
6-17 as it existed immediately before the effective date of this Act,
6-18 and that law is continued in effect for that purpose.
6-19 SECTION 6. The importance of this legislation and the
6-20 crowded condition of the calendars in both houses create an
6-21 emergency and an imperative public necessity that the
6-22 constitutional rule requiring bills to be read on three several
6-23 days in each house be suspended, and this rule is hereby suspended.