By Shields, et al. H.B. No. 129 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to medical savings accounts; providing a penalty. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. DEFINITIONS. In this Act: 1-5 (1) "Account" means a medical savings account 1-6 established under this Act. 1-7 (2) "Account administrator" means a person qualified 1-8 to act as an account administrator under Section 3 of this Act. 1-9 (3) "Account holder" means: 1-10 (A) an employee of an employer if the employer 1-11 contributes to a medical savings account on that employee's behalf; 1-12 or 1-13 (B) an individual who makes contributions to a 1-14 medical savings account on the individual's own behalf. 1-15 (4) "Dependent" means: 1-16 (A) the spouse of an account holder; 1-17 (B) a child of an account holder who is: 1-18 (i) under 19 years of age, including a 1-19 newborn child; 1-20 (ii) under 23 years of age and enrolled as 1-21 a full-time student at an accredited institution of higher 1-22 education; or 1-23 (iii) medically certified as mentally or 1-24 physically disabled and who is financially dependent on the account 2-1 holder; or 2-2 (C) any person who must be covered under: 2-3 (i) Section 3D or 3E, Article 3.51-6, 2-4 Insurance Code; or 2-5 (ii) Section 2(L), Chapter 397, Acts of 2-6 the 54th Legislature, Regular Session, 1955 (Article 3.70-2, 2-7 Vernon's Texas Insurance Code). 2-8 (5) "Health plan" means any plan that provides 2-9 benefits for health care services or for medical or surgical 2-10 expenses incurred as a result of accident or sickness including: 2-11 (A) an individual, group, blanket, or franchise 2-12 insurance policy; 2-13 (B) an evidence of coverage issued by a health 2-14 maintenance organization under the Texas Health Maintenance 2-15 Organization Act (Chapter 20A, Vernon's Texas Insurance Code); 2-16 (C) a group hospital service contract issued by 2-17 a group hospital service corporation under Chapter 20, Insurance 2-18 Code; or 2-19 (D) an employer-funded health benefit plan, 2-20 including a self-insured health benefit plan. 2-21 (6) "Person" means an individual, corporation, 2-22 government or governmental subdivision or agency, business trust, 2-23 estate, trust, partnership, association, or any other legal entity. 2-24 (7) "Program" means a medical savings account program 2-25 established under this Act. 2-26 SECTION 2. ACCOUNT AUTHORIZED. (a) An individual may 2-27 establish a medical savings account program for the benefit of the 3-1 individual and the individual's dependents. An employer may 3-2 establish a medical savings account program for the benefit of the 3-3 employer's employees and the employees' dependents. 3-4 (b) A program established under this section must provide 3-5 for: 3-6 (1) the contribution into a medical savings account by 3-7 the account holder or by the employer on behalf of the account 3-8 holder; and 3-9 (2) an account administrator to manage the medical 3-10 savings account. 3-11 (c) The program may provide for a health plan to provide 3-12 coverage for each account holder and the dependents of the account 3-13 holder. 3-14 (d) An employer that establishes a medical savings account 3-15 program and that does not provide a health plan as specified in 3-16 Subsection (c) of this section shall make an annual contribution of 3-17 at least $1,000 for the benefit of each employee who is an account 3-18 holder. 3-19 (e) An employer that offers a program shall inform each 3-20 employee in writing of the federal tax consequences of the 3-21 contributions made by the employer before making a contribution on 3-22 behalf of that employee. 3-23 (f) An employer that provides a health plan as specified in 3-24 Subsection (c) of this section shall make an annual contribution of 3-25 at least $250 to the account of each employee who is an account 3-26 holder. 3-27 (g) An account under this Act must be a separate account 4-1 that is federally insured or administered by a fidelity-bonded 4-2 administrator. 4-3 (h) For purposes of Chapter 61, Labor Code, the term 4-4 "wages," as defined by Section 61.001, Labor Code, includes a 4-5 contribution required to be made by an employer to a medical 4-6 savings account under this section or under an agreement between 4-7 the employer and the employee. 4-8 SECTION 3. ACCOUNT ADMINISTRATOR. (a) The following 4-9 persons may act as an account administrator under this Act: 4-10 (1) a bank, savings and loan association, savings 4-11 bank, or credit union chartered under the laws of this state or the 4-12 United States; 4-13 (2) a trust company authorized to act as a fiduciary; 4-14 (3) an insurance company authorized to do business in 4-15 this state under Chapter 3, Insurance Code, a group hospital 4-16 service corporation authorized to do business in this state under 4-17 Chapter 20, Insurance Code, or a health maintenance organization 4-18 authorized to do business in this state under the Texas Health 4-19 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance 4-20 Code); 4-21 (4) a third-party administrator holding a certificate 4-22 of authority issued under Article 21.07-6, Insurance Code; 4-23 (5) a certified public accountant licensed by the 4-24 Texas State Board of Public Accountancy; or 4-25 (6) an employer that: 4-26 (A) operates a self-insured health plan under 4-27 the Employee Retirement Income Security Act of 1974 (29 U.S.C. 5-1 Section 1001 et seq.); or 5-2 (B) participates in the medical savings account 5-3 program established under this Act. 5-4 (b) If the account administrator is not an employer under 5-5 Subsection (a)(6) of this section, the account administrator may 5-6 charge a fee. The amount of the fee may not exceed 10 percent of 5-7 the amount deposited to the account in a year and shall be 5-8 established by an agreement between the account administrator and 5-9 the employer or account holder. 5-10 (c) The account administrator is the fiduciary of the 5-11 account holder. 5-12 SECTION 4. IDENTIFICATION CARDS. (a) The account 5-13 administrator shall issue to the account holder an identification 5-14 card indicating: 5-15 (1) the name of the account holder and any dependent 5-16 of the account holder for whom eligible expenses may be paid under 5-17 the program; 5-18 (2) the name, address, and phone number of the account 5-19 administrator; and 5-20 (3) whether or not the account holder is covered by a 5-21 health plan that is qualified for purposes of Section 9 of this 5-22 Act. 5-23 (b) The account administrator shall issue a duplicate 5-24 identification card to each dependent of an account holder for whom 5-25 eligible expenses may be paid under the program. 5-26 SECTION 5. USE OF ACCOUNT; PENALTY. (a) The account 5-27 administrator shall use money in an account for either or both of 6-1 the following purposes: 6-2 (1) to pay eligible medical expenses of the account 6-3 holder or the account holder's dependents or to reimburse the 6-4 account holder for these expenses; or 6-5 (2) to purchase a health plan that provides benefits 6-6 for the account holder and the account holder's dependents. 6-7 (b) A medical expense is eligible for payment or 6-8 reimbursement under Subsection (a) of this section if: 6-9 (1) it is a medical expense described under Section 6-10 213(d), Internal Revenue Code (26 U.S.C. Section 213(d)); and 6-11 (2) payment or reimbursement for the expense is not 6-12 otherwise provided for under any health plan or other insurance 6-13 policy, including a motor vehicle or workers' compensation 6-14 insurance policy. 6-15 (c) An account holder commits an offense if the account 6-16 holder: 6-17 (1) submits a false, deceptive, or misleading claim to 6-18 an account administrator to obtain reimbursement for an expense 6-19 that the account holder knows is not reimbursable under Subsection 6-20 (a)(1) of this section; or 6-21 (2) knowingly seeks or obtains reimbursement for an 6-22 expense that was not incurred by the account holder. 6-23 (d) An offense under Subsection (c) of this section is a 6-24 Class C misdemeanor. 6-25 (e) When an employer provides a health plan as specified in 6-26 Section 2(c) of this Act, an employee may withdraw up to 90 percent 6-27 of the balance in his or her account for any purpose other than a 7-1 purpose described in Subsection (a) of this section only on the 7-2 last business day of the account administrator's business year. 7-3 SECTION 6. PROMPT PAYMENT OF CLAIMS. (a) Except as 7-4 provided by Subsection (b) of this section, the account 7-5 administrator shall pay a claim that is eligible for payment from 7-6 the account not later than the 30th day after the date the claim is 7-7 submitted to the account administrator. 7-8 (b) The account administrator may request documents 7-9 necessary to verify whether a claim is eligible for payment from 7-10 the account. If the account administrator makes a request under 7-11 this subsection, the account administrator shall pay a claim that 7-12 is eligible for payment from the account not later than the 30th 7-13 day after the date the documents are received by the account 7-14 administrator. 7-15 SECTION 7. EMPLOYER ADVANCES. (a) If, in any month, an 7-16 account holder or a dependent of an account holder incurs a medical 7-17 expense that is eligible for payment or reimbursement under Section 7-18 5(a) of this Act from an account established by an employer and 7-19 that exceeds the amount of money in the account, the employer may 7-20 advance to the employee the amount necessary to cover the expenses. 7-21 (b) An advance under this section shall be made free of 7-22 interest. 7-23 (c) An employee on whose behalf an advance is made under 7-24 this section is liable to the employer for the amount of the 7-25 advance, and the employer who made the advance may set off the 7-26 amount of the advance against future contributions to the account. 7-27 SECTION 8. MANDATED BENEFITS LAWS INAPPLICABLE TO HEALTH 8-1 PLAN FOR EMPLOYER PROGRAM. (a) Except as provided by Subsection 8-2 (b) of this section, a health plan, including a health benefit plan 8-3 that is qualified for purposes of Section 9 of this Act, is not 8-4 subject to a law that requires coverage or the offer of coverage of 8-5 a specific health care service or benefit if the health plan is: 8-6 (1) purchased by an employer under Section 2(c) of 8-7 this Act in conjunction with the establishment of a medical savings 8-8 account program for the benefit of the employer's employees and the 8-9 employees' dependents; or 8-10 (2) purchased under Section 5(a)(2) of this Act by the 8-11 account administrator of a medical savings account program 8-12 established by an employer for the benefit of the employer's 8-13 employees and the employees' dependents. 8-14 (b) A health plan described by Subsection (a) of this 8-15 section is subject to Chapter 26, Insurance Code, to the extent 8-16 that chapter would otherwise be applicable to the plan. 8-17 SECTION 9. QUALIFIED HEALTH PLAN; ACCESS TO SERVICES. (a) 8-18 A hospital or emergency clinic may not refuse to provide services 8-19 to an individual on the basis of that individual's ability to pay 8-20 for the services if the individual presents an identification card 8-21 issued under Section 4 of this Act that indicates the person is 8-22 covered by a qualified health plan. 8-23 (b) A hospital may delay providing services to an individual 8-24 for a period of not longer than 24 hours to contact the account 8-25 administrator to confirm the individual's participation in a 8-26 program. The hospital may not delay the provision of services 8-27 needed on an emergency basis under this subsection. 9-1 (c) The Texas Department of Health may suspend or revoke, in 9-2 the manner provided by Section 241.053, Health and Safety Code, the 9-3 license of a hospital that fails to comply with this section. 9-4 (d) A health plan is qualified for purposes of this section 9-5 if the plan is subject to an annual deductible of not more than 9-6 $2,000 for each individual covered under the plan. 9-7 SECTION 10. DEATH OF ACCOUNT HOLDER. (a) On the death of 9-8 the account holder, the account administrator shall transfer the 9-9 account to a dependent of the account holder named as a successor 9-10 account holder by the account holder in the agreement establishing 9-11 the account. If the agreement does not designate a successor 9-12 account holder, the account administrator shall pay to the estate 9-13 of the deceased account holder any money in the account, including 9-14 any interest on the account. 9-15 (b) If an account is transferred to a successor account 9-16 holder under this section, the account administrator shall continue 9-17 to administer the account for the benefit of the dependents of the 9-18 original account holder. 9-19 (c) A successor account holder may contribute to the 9-20 account. If an account established by an employer is transferred 9-21 to a successor account holder, the employer's obligation to 9-22 contribute to the account is terminated. 9-23 (d) An account administrator shall make the transfer or 9-24 payment required by Subsection (a) of this section not later than 9-25 the 30th day after the date on which the account administrator 9-26 receives proof of the death of the account holder. 9-27 SECTION 11. TRANSFER OF ACCOUNT. (a) On the request of the 10-1 account holder, the account administrator shall pay any money in 10-2 the account, including interest earned on the account, to another 10-3 account established under this Act for the benefit of the account 10-4 holder. 10-5 (b) If the account holder ceases to be employed by an 10-6 employer who has established a program under this Act, the 10-7 administrator shall, not later than the 60th day after the account 10-8 holder's last day of employment, pay any money in the account, 10-9 including interest earned on the account: 10-10 (1) to the account holder; or 10-11 (2) at the option of the account holder, to the credit 10-12 of another account established under this Act for the benefit of 10-13 the account holder. 10-14 (c) The account administrator may not pay money in the 10-15 account to the credit of an account established by an employer of 10-16 an account holder unless the employer agrees to the transfer. 10-17 (d) The account administrator of an account established by 10-18 an employer may retain and continue to administer the account for 10-19 the benefit of an account holder whose employment with the employer 10-20 has terminated if, not later than the 30th day after the account 10-21 holder's last day of employment, the account holder requests that 10-22 the account administrator do so. 10-23 SECTION 12. APPLICABILITY AND SCOPE. This Act applies only 10-24 to any medical savings account program which is established on or 10-25 after September 1, 1995. 10-26 SECTION 13. EMERGENCY. The importance of this legislation 10-27 and the crowded condition of the calendars in both houses create an 11-1 emergency and an imperative public necessity that the 11-2 constitutional rule requiring bills to be read on three several 11-3 days in each house be suspended, and this rule is hereby suspended, 11-4 and that this Act take effect and be in force from and after its 11-5 passage, and it is so enacted.