H.B. No. 369
1-1 AN ACT
1-2 relating to the operation and funding of small employer health
1-3 benefit plans.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 26.02, Insurance Code, is amended by
1-6 amending Subdivisions (8), (12), and (23) and by adding Subdivision
1-7 (25) to read as follows:
1-8 (8) "Eligible employee" means an employee who works on
1-9 a full-time basis and who usually works at least 30 hours a week.
1-10 The term includes a sole proprietor, a partner, and an independent
1-11 contractor, if the sole proprietor, partner, or independent
1-12 contractor is included as an employee under a health benefit plan
1-13 of a small employer. The term does not include:
1-14 (A) an employee who works on a part-time,
1-15 temporary, seasonal, or substitute basis; or
1-16 (B) an employee who is covered under:
1-17 (i) another health benefit plan; <or>
1-18 (ii) a self-funded or self-insured <an>
1-19 employee welfare benefit plan that provides health benefits and
1-20 that is established in accordance with the Employee Retirement
1-21 Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
1-22 (iii) the Medicaid program if the employee
1-23 elects not to be covered;
2-1 (iv) another federal program, including
2-2 the CHAMPUS program or Medicare program, if the employee elects not
2-3 to be covered; or
2-4 (v) a benefit plan established in another
2-5 country if the employee elects not to be covered.
2-6 (12) "Late enrollee" means an eligible employee or
2-7 dependent who requests enrollment in a small employer's health
2-8 benefit plan after the expiration of the initial enrollment period
2-9 established under the terms of the first plan for which that
2-10 employee or dependent was eligible through the small employer or
2-11 after the expiration of an open enrollment period under Article
2-12 26.21(h) of this code. An eligible employee or dependent is not a
2-13 late enrollee if:
2-14 (A) the individual:
2-15 (i) was covered under another employer
2-16 health benefit plan at the time the individual was eligible to
2-17 enroll;
2-18 (ii) declines in writing, at the time of
2-19 the initial eligibility, stating that coverage under another
2-20 employer health benefit plan was the reason for declining
2-21 enrollment;
2-22 (iii) has lost coverage under another
2-23 employer health benefit plan as a result of the termination of
2-24 employment, the termination of the other plan's coverage, the death
2-25 of a spouse, or divorce; and
3-1 (iv) requests enrollment not later than
3-2 the 31st day after the date on which coverage under another
3-3 employer health benefit plan terminates;
3-4 (B) the individual is employed by an employer
3-5 who offers multiple health benefit plans and the individual elects
3-6 a different health benefit plan during an open enrollment period;
3-7 or
3-8 (C) a court has ordered coverage to be provided
3-9 for a spouse or minor child under a covered employee's plan and
3-10 request for enrollment is made not later than the 31st day after
3-11 issuance of the date on which the court order is issued.
3-12 (23) "Small employer health benefit plan" means a plan
3-13 developed by the commissioner under <the preventive and primary
3-14 care benefit plan, the in-hospital benefit plan, or the standard
3-15 health benefit plan described by> Subchapter E of this chapter or
3-16 any other health benefit plan offered to a small employer in
3-17 accordance with Article 26.42(c) or 26.48 <(d)> of this code.
3-18 (25) "Point-of-service contract" means a benefit plan
3-19 offered through a health maintenance organization that:
3-20 (A) includes corresponding indemnity benefits in
3-21 addition to benefits relating to out-of-area or emergency services
3-22 provided through insurers or group hospital service corporations;
3-23 and
3-24 (B) permits the insured to obtain coverage under
3-25 either the health maintenance organization conventional plan or the
4-1 indemnity plan as determined in accordance with the terms of the
4-2 contract.
4-3 SECTION 2. Articles 26.06(a) and (b), Insurance Code, are
4-4 amended to read as follows:
4-5 (a) An individual or group health benefit plan is subject to
4-6 this chapter if it provides health care benefits covering three or
4-7 more eligible employees of a small employer and if it meets any one
4-8 of the following conditions:
4-9 (1) a portion of the premium or benefits is paid by
4-10 <or on behalf of> a small employer; or
4-11 (2) <a covered individual is reimbursed, whether
4-12 through wage adjustments or otherwise, by or on behalf of a small
4-13 employer for a portion of the premium; or>
4-14 <(3)> the health benefit plan is treated by the
4-15 employer or by a covered individual as part of a plan or program
4-16 for the purposes of Section 106 or 162, Internal Revenue Code of
4-17 1986 (26 U.S.C. Section 106 or 162).
4-18 (b) Except as provided by Subsection (a) of this article,
4-19 this chapter does not apply to an individual health insurance
4-20 policy that is subject to individual underwriting, even if the
4-21 premium is remitted through a payroll deduction method
4-22 <underwritten individually>.
4-23 SECTION 3. Article 26.14, Insurance Code, is amended to read
4-24 as follows:
4-25 Art. 26.14. PRIVATE PURCHASING COOPERATIVE. (a) Two or
5-1 more small employers may form a cooperative for the purchase of
5-2 small employer health benefit plans. A cooperative must be
5-3 organized as a nonprofit corporation and has the rights and duties
5-4 provided by the Texas Non-Profit Corporation Act (Article 1396-1.01
5-5 et seq., Vernon's Texas Civil Statutes).
5-6 (b) On receipt of a certificate of incorporation or
5-7 certificate of authority from the secretary of state, the
5-8 cooperative shall file written notification of the receipt of the
5-9 certificate and a copy of the cooperative's organizational
5-10 documents with the commissioner.
5-11 (c) The board of directors shall file annually with the
5-12 commissioner a statement of all amounts collected and expenses
5-13 incurred for each of the preceding three years.
5-14 (d) A purchasing cooperative or a member of the board of
5-15 directors, the executive director, or an employee or agent of a
5-16 purchasing cooperative is not liable for:
5-17 (1) an act performed in good faith in the execution of
5-18 duties in connection with the purchasing cooperative; or
5-19 (2) an independent action of a small employer
5-20 insurance carrier or a person who provides health care services
5-21 under a health benefit plan.
5-22 SECTION 4. Article 26.21, Insurance Code, is amended to read
5-23 as follows:
5-24 Art. 26.21. SMALL EMPLOYER HEALTH BENEFIT PLANS; EMPLOYER
5-25 ELECTION. (a) Each small employer carrier shall provide the small
6-1 employer health benefit plans without regard to claim experience,
6-2 health status, or medical history. Each small employer carrier
6-3 shall issue the plan chosen by the small employer to each small
6-4 employer that elects to be covered under that plan<, agrees to make
6-5 the required premium payments,> and agrees to satisfy the other
6-6 requirements of the plan.
6-7 (b) This article does not impose a statutory mandate of an
6-8 employer contribution to the premium paid to the small employer
6-9 carrier. However, the small employer carrier may require an
6-10 employer contribution in accordance with the carrier's usual and
6-11 customary practices on all employer group health insurance plans in
6-12 this state. The premium contribution level shall be applied
6-13 uniformly to each small employer offered or issued coverage by the
6-14 small employer carrier in this state. If two or more small
6-15 employer carriers participate in a purchasing cooperative
6-16 established under Article 26.14 of this code, the carrier may use
6-17 the contribution requirement established by the purchasing
6-18 cooperative for policies marketed by the cooperative. <Coverage
6-19 under a small employer health benefit plan is not available to a
6-20 small employer unless the small employer pays at least 75 percent
6-21 of the insurance premium for its eligible employees who elect to be
6-22 covered by at least one of the small employer health benefit plans
6-23 selected by the small employer.> Coverage is available under a
6-24 small employer health benefit plan if at least 75 <90> percent of a
6-25 small employer's eligible employees elect to be covered.
7-1 (c) If a small employer offers multiple health benefit
7-2 plans, the collective enrollment of all of those plans must be at
7-3 least 75 percent of the small employer's eligible employees or, if
7-4 applicable, the lower participation level offered by the small
7-5 employer carrier under Subsection (d) of this article. A small
7-6 employer carrier may elect not to offer health benefit plans to a
7-7 small employer who offers multiple health benefit plans if such
7-8 plans are to be provided by more than one carrier and the small
7-9 employer carrier would have less than 75 percent of the small
7-10 employer's eligible employees enrolled in the small employer
7-11 carrier's health benefit plan unless the coverage is provided
7-12 through a purchasing cooperative. A small employer who elects to
7-13 make contributions for payment of the premium is not required to
7-14 pay any amount with respect to an employee who elects not to be
7-15 covered. The small employer may elect to pay the premium cost for
7-16 additional coverage. This chapter does not require a small
7-17 employer to purchase health insurance coverage for the employer's
7-18 employees.
7-19 (d) A small employer carrier may offer small employer health
7-20 benefit plans to a small employer even if less than 75 percent of
7-21 the eligible employees of that employer elect to be covered if the
7-22 small employer carrier permits the same percentage of participation
7-23 as a qualifying percentage for each small employer benefit plan
7-24 offered by that carrier in this state. A small employer carrier
7-25 may offer small employer health benefit plans to a small employer
8-1 even if the employer's participation level is less than the small
8-2 employer carrier's qualifying participation level established in
8-3 accordance with this article if:
8-4 (1) the small employer obtains a written waiver for
8-5 each eligible employee who declines coverage under a health plan
8-6 offered to the small employer ensuring that the eligible employee
8-7 was not induced or pressured into declining coverage because of the
8-8 employee's risk characteristics; and
8-9 (2) the small employer carrier accepts or rejects the
8-10 entire group of eligible employees that choose to participate and
8-11 excludes only those employees that have declined coverage, provided
8-12 that the carrier may underwrite the group of eligible employees
8-13 that do not decline coverage <(c) An eligible employee may obtain
8-14 coverage in addition to coverage purchased by the employer if at
8-15 least 40 percent of the eligible employees elect to obtain the same
8-16 additional coverage. Subject to insurability, any number of
8-17 eligible employees may otherwise obtain coverage in addition to
8-18 coverage purchased by the employer. The additional coverage may be
8-19 paid for by the employer, the employee, or both>.
8-20 (e) A small employer carrier may not provide coverage to a
8-21 small employer or the employees of a small employer under
8-22 Subsection (d)(2) of this article if the health carrier or an agent
8-23 for the health carrier knows that the small employer has induced or
8-24 pressured an eligible employee or the employee's dependents to
8-25 decline coverage because of an individual's risk characteristics.
9-1 (f) A small employer carrier, an employer, or an agent may
9-2 not use the provisions of Subsection (d)(2) of this article to
9-3 circumvent the requirements of this chapter.
9-4 (g) Except as otherwise provided by this chapter, a small
9-5 employer carrier may not establish a separate class or classes of
9-6 business for small employers.
9-7 (h) <(d)> The initial enrollment period for the employees
9-8 and their dependents must be at least 31 <30> days, with a 31-day
9-9 open enrollment period provided annually.
9-10 (i) <(e)> A small employer may establish a waiting period
9-11 during which a new employee is not eligible for coverage. A
9-12 waiting period established as provided by this subsection may not
9-13 exceed 90 days from the first day of employment.
9-14 (j) <(f)> A new employee of a covered small employer and the
9-15 dependents of that employee may not be denied coverage if the
9-16 application for coverage is received by the small employer carrier
9-17 not later than the 31st day after the date on which the employment
9-18 begins or on completion of a waiting period established by the
9-19 employer under Subsection (i) of this article.
9-20 (k) <(g)> A late enrollee may be excluded from coverage
9-21 until the next annual open enrollment period and <for 18 months
9-22 from the date of application or> may be subject to a 12-month
9-23 preexisting condition provision as described by Article <Articles>
9-24 26.49<(b), (c), (d), and (e)> of this code. <If both a period of
9-25 exclusion from coverage and a preexisting condition provision are
10-1 applicable to a late enrollee, the combined period of exclusion may
10-2 not exceed 18 months from the date of the late application.>
10-3 (l) <(h)> A small employer carrier may not exclude any
10-4 eligible employee or dependent, including a late enrollee, who
10-5 would otherwise be covered under a small employer group.
10-6 (m) <(i)> A small employer health benefit plan issued by a
10-7 small employer carrier may not limit or exclude, by use of a rider
10-8 or amendment applicable to a specific individual, coverage by type
10-9 of illness, treatment, medical condition, or accident, except for
10-10 preexisting conditions or diseases as permitted under Article 26.49
10-11 of this code.
10-12 (n) <(j)> A small employer health benefit plan may not limit
10-13 or exclude initial coverage of a newborn child of a covered
10-14 employee. Any coverage of a newborn child of an employee under
10-15 this subsection terminates on the 32nd <31st> day after the date of
10-16 the birth of the child unless:
10-17 (1) dependent children are eligible for coverage; and
10-18 (2) notification of the birth and any required
10-19 additional premium are received by the small employer carrier not
10-20 later than the 31st <30th> day after the date of birth.
10-21 (o) <(k)> If the Consolidated Omnibus Budget Reconciliation
10-22 Act of 1985 (Pub. L. No. 99-272, 100 Stat. 222) does not require
10-23 continuation or conversion coverage for dependents of an employee,
10-24 a dependent who has been covered by that small employer for at
10-25 least one year or is under one year of age may elect to continue
11-1 coverage under a small employer health benefit plan, if the
11-2 dependent loses eligibility for coverage because of the death,
11-3 divorce, or retirement of the employee, as required by Section 3B,
11-4 Article 3.51-6, of this code.
11-5 SECTION 5. Article 26.31, Insurance Code, is amended by
11-6 adding Subsections (e) and (f) to read as follows:
11-7 (e) A small employer carrier may not establish a separate
11-8 class of business based on participation requirements.
11-9 (f) A small employer carrier may not establish a separate
11-10 class of business based on whether the coverage provided to a small
11-11 employer group is provided on a guaranteed issue basis or is
11-12 subject to underwriting or proof of insurability.
11-13 SECTION 6. Article 26.38, Insurance Code, is amended to read
11-14 as follows:
11-15 Art. 26.38. HEALTH MAINTENANCE ORGANIZATION; APPROVED HEALTH
11-16 BENEFIT PLAN. (a) The premium rates for a state-approved health
11-17 benefit plan offered by a health maintenance organization under
11-18 Article 26.48 of this code must be established in accordance with
11-19 formulas or schedules of charges filed with the department.
11-20 (b) A health maintenance organization that participates in a
11-21 purchasing cooperative that provides employees of small employers a
11-22 choice of benefit plans, that has established a separate class of
11-23 business as provided by Article 26.31 of this code, and that has
11-24 established a separate line of business as provided under Article
11-25 26.48(a) of this code and Title XIII, Public Health Service Act (42
12-1 U.S.C. Section 300e et seq.) may use rating methods in accordance
12-2 with this subchapter that are used by other small employer carriers
12-3 participating in the same cooperative, including rating by age and
12-4 gender.
12-5 SECTION 7. Article 26.42, Insurance Code, is amended to read
12-6 as follows:
12-7 Art. 26.42. SMALL EMPLOYER HEALTH BENEFIT PLANS. (a) A
12-8 small employer carrier shall offer the following two <three> health
12-9 benefit plans as adopted by the commissioner:
12-10 (1) the catastrophic <preventive and primary> care
12-11 benefit plan; and
12-12 (2) the basic coverage <in-hospital> benefit plan<;
12-13 and>
12-14 <(3) the standard health benefit plan>.
12-15 (b) A small employer carrier may offer to a small employer
12-16 additional benefit riders to either of the <standard health>
12-17 benefit plans <plan>.
12-18 (c) <A small employer carrier may not offer to a small
12-19 employer benefit riders to:>
12-20 <(1) the preventive and primary care benefit plan,
12-21 except as provided by Article 26.45(d) of this code; or>
12-22 <(2) the in-hospital benefit plan, except as provided
12-23 by Article 26.46(e) of this code.>
12-24 <(d)> Subject to the provisions of this chapter, a small
12-25 employer carrier may also offer to small employers any other health
13-1 benefit plan authorized under this code. Article 26.06(c) does not
13-2 apply to a health benefit plan offered to a small employer under
13-3 this subsection.
13-4 SECTION 8. Article 26.43(a), Insurance Code, is amended to
13-5 read as follows:
13-6 (a) The commissioner shall promulgate the benefits section
13-7 of the catastrophic care <preventive and primary> benefit plan
13-8 and<,> the basic coverage <in-hospital> benefit plan<, and the
13-9 standard health benefit plan> policy forms in accordance with
13-10 Article 26.44A of this code and shall develop prototype policies
13-11 for each of the benefit plans. For all other portions of these
13-12 policy forms, a small employer carrier shall comply with Article
13-13 3.42 of this code as it relates to policy form approval and with
13-14 the Texas Health Maintenance Organization Act (Article 20A.01 et
13-15 seq., Vernon's Texas Insurance Code) as it relates to approval of
13-16 an evidence of coverage. A small employer carrier may not offer
13-17 these <three> benefit plans through a policy form or evidence of
13-18 coverage that does not comply with this chapter <article>.
13-19 SECTION 9. Subchapter E, Chapter 26, Insurance Code, is
13-20 amended by adding Article 26.44A to read as follows:
13-21 Art. 26.44A. BENEFIT PLANS. (a) The commissioner by rule
13-22 shall establish the coverage requirements for the catastrophic care
13-23 benefit plan and the basic coverage benefit plan. The commissioner
13-24 shall develop prototype policies for use by small employer carriers
13-25 that include all contractual provisions required to produce an
14-1 entire contract in accordance with this article and this code.
14-2 (b) Coverage under the catastrophic care benefit plan must
14-3 be designed to provide necessary coverage in the event of
14-4 catastrophic illness or injury. The commissioner shall establish
14-5 deductibles and coinsurance requirements at levels that permit
14-6 options for the insured to obtain affordable catastrophic coverage.
14-7 (c) The commissioner by rule shall establish coverage
14-8 requirements for the basic coverage benefit plan. Coverage under
14-9 the basic coverage benefit plan must be designed to provide basic
14-10 hospital, medical, and surgical coverages. Benefits under the plan
14-11 are limited to basic care requirements for illness and injury.
14-12 (d) The benefits provisions of the benefit plan policies
14-13 must include the following:
14-14 (1) all required or applicable definitions;
14-15 (2) a list of any exclusions or limitations to
14-16 coverage;
14-17 (3) a description of covered services required under
14-18 the plan; and
14-19 (4) the deductible and coinsurance options that are
14-20 required or permitted under the plan.
14-21 SECTION 10. Subchapter E, Chapter 26, Insurance Code, is
14-22 amended by adding Article 26.44B to read as follows:
14-23 Art. 26.44B. ALCOHOL AND SUBSTANCE ABUSE BENEFITS. If the
14-24 small employer basic coverage benefit plan developed by the
14-25 commissioner includes coverage for alcohol and substance abuse
15-1 benefits, the employees of a small employer group may accept and
15-2 small employer carriers may offer the basic coverage benefit plan
15-3 without providing coverage for alcohol and substance abuse benefits
15-4 if:
15-5 (1) at least 50 percent of the employees waive in
15-6 writing the benefits and indicate in writing that they have
15-7 undergone alcoholism or substance abuse treatment or counseling
15-8 within the last three years; and
15-9 (2) the exclusion from coverage of alcohol and
15-10 substance abuse applies to only those employees.
15-11 SECTION 11. Article 26.48, Insurance Code, is amended to
15-12 read as follows:
15-13 Art. 26.48. HEALTH MAINTENANCE ORGANIZATION PLANS. (a)
15-14 Instead of the small employer health benefit plans described by
15-15 this subchapter, a health maintenance organization may offer:
15-16 (1) a state-approved health benefit plan that complies
15-17 with the requirements of Title XIII <XI>, Public Health Service Act
15-18 (42 U.S.C. Section 300e et seq.) and rules adopted under that Act;
15-19 (2) a plan developed by the commissioner under Article
15-20 26.44A of this code and additional benefit riders to the plan; or
15-21 (3) a point-of-service contract in connection with an
15-22 insurance carrier that includes optional coverage for out-of-area
15-23 services, emergency care, or out-of-network care.
15-24 (b) A contract offered by an insurance carrier under
15-25 Subsection (a)(3) of this article is subject to all provisions of
16-1 this chapter unless specifically exempted. The insurance carrier
16-2 with which the health maintenance organization contracts for a
16-3 point-of-service contract is not required to otherwise make
16-4 available the benefit plans adopted under Subchapter E of this
16-5 chapter if the insurance carrier's small employer products are
16-6 limited to the point-of-service contract.
16-7 SECTION 12. Article 26.49, Insurance Code, is amended to
16-8 read as follows:
16-9 Art. 26.49. PREEXISTING CONDITION AND WAITING PERIOD
16-10 PROVISIONS. (a) A <Except as provided by Article 26.21(g) of this
16-11 code, a> preexisting condition provision in a small employer health
16-12 benefit plan may not apply to expenses incurred on or after the
16-13 expiration of the 12 months following <first anniversary of> the
16-14 initial effective date of coverage of the enrollee or late
16-15 enrollee.
16-16 (b) A preexisting condition provision in a small employer
16-17 health benefit plan may not apply to coverage for a disease or
16-18 condition other than a disease or condition<:>
16-19 <(1)> for which medical advice, diagnosis, care, or
16-20 treatment was recommended or received during the six months before
16-21 the effective date of coverage<; or>
16-22 <(2) that would have caused an ordinary, prudent
16-23 person to seek medical advice, diagnosis, care, or treatment during
16-24 the six months before the effective date of coverage>.
16-25 (c) A preexisting condition provision in a small employer
17-1 health benefit plan may not apply to an individual who was
17-2 continuously covered for a minimum period of 12 months by a health
17-3 benefit plan that was in effect up to a date not more than 60 days
17-4 before the effective date of coverage under the small employer
17-5 health benefit plan, excluding any waiting period.
17-6 (d) <A preexisting condition provision may exclude coverage
17-7 for a pregnancy existing on the effective date of the coverage,
17-8 except as provided by Subsection (c) of this article.>
17-9 <(e)> In determining whether a preexisting condition
17-10 provision applies to an individual covered by a small employer
17-11 health benefit plan, the small employer carrier shall credit the
17-12 time the individual was covered under a previous health benefit
17-13 plan if the previous coverage was in effect at any time during the
17-14 12 months preceding the effective date of coverage under a small
17-15 employer health benefit plan. If the previous coverage was issued
17-16 by a health maintenance organization, any waiting period that
17-17 applied before that coverage became effective also shall be
17-18 credited against the preexisting condition provision period.
17-19 (e) A carrier that does not use a preexisting condition
17-20 provision in any of its health benefit plans may impose an
17-21 affiliation period. For purposes of this subsection, "affiliation
17-22 period" means a period not to exceed 90 days for new enrollees and
17-23 not to exceed 180 days for late enrollees during which premiums are
17-24 not collected and the issued coverage is not effective.
17-25 (f) Subsection (e) of this article does not preclude
18-1 application of any waiting period applicable to all new enrollees
18-2 under the health benefit plan. However, any carrier-imposed
18-3 waiting period may not exceed 90 days and must be used in lieu of a
18-4 preexisting condition provision.
18-5 SECTION 13. Article 26.54, Insurance Code, is amended by
18-6 adding Subsection (e) to read as follows:
18-7 (e) There is no liability on the part of, and no cause of
18-8 action of any nature arises against, a member of the board of
18-9 directors for action or omission performed in good faith in the
18-10 performance of powers and duties under this subchapter.
18-11 SECTION 14. Article 26.71, Insurance Code, is amended to
18-12 read as follows:
18-13 Art. 26.71. FAIR MARKETING. (a) Each small employer
18-14 carrier shall market the small employer health benefit plan through
18-15 properly licensed agents to eligible small employers in this state.
18-16 Each small employer purchasing a small employer health benefit plan
18-17 shall be given a summary of the benefit plans established by the
18-18 commissioner under Subchapter E of this chapter. The commissioner
18-19 shall prescribe the format of the summary. The <must affirm that
18-20 the> agent shall offer and explain each of the plans to the small
18-21 employer on inquiry and request by the small <who sold the plan
18-22 offered and explained all three plans to that> employer.
18-23 (b) <The department may require periodic demonstration by
18-24 small employer carriers and agents that those carriers and agents
18-25 are marketing or issuing small employer health benefit plans to
19-1 small employers in fulfillment of the purposes of this article.>
19-2 <(c)> The department may require periodic reports by small
19-3 employer carriers and agents regarding small employer health
19-4 benefit plans issued by those carriers and agents. The reporting
19-5 requirements shall include information regarding case
19-6 characteristics and the numbers of small employer health benefit
19-7 plans in various categories that are marketed or issued to small
19-8 employers.
19-9 SECTION 15. Article 26.75, Insurance Code, is amended to
19-10 read as follows:
19-11 Art. 26.75. RULES. The commissioner <board> may adopt rules
19-12 setting forth additional standards to provide for the fair
19-13 marketing and broad availability of small employer health benefit
19-14 plans to small employers in this state.
19-15 SECTION 16. Section 1(d)(3)(A)(i), Article 3.51-6, Insurance
19-16 Code, is amended to read as follows:
19-17 (i) An insurer shall first offer to each
19-18 employee, member, or dependent a conversion policy without evidence
19-19 of insurability if written application for and payment of the first
19-20 premium is made not later than the 31st day after the date of the
19-21 termination. The converted policy shall provide similar <the same>
19-22 coverage and benefits as provided under the group policy or plan.
19-23 The lifetime maximum benefits shall be computed from the initial
19-24 date of the employee's, member's, or dependent's coverage with the
19-25 group. An insurer shall offer and an employee, member, or
20-1 dependent may elect lesser coverage and benefits. An employee,
20-2 member, or dependent shall not be entitled to have a converted
20-3 policy or plan issued if termination of the insurance occurred
20-4 because: (aa) such person failed to pay any required premium; or
20-5 (bb) any discontinued group coverage was replaced by similar group
20-6 coverage within 31 days.
20-7 SECTION 17. Articles 26.45, 26.46, 26.47, and 26.47A,
20-8 Insurance Code, are repealed effective June 1, 1996.
20-9 SECTION 18. The commissioner of insurance shall develop and
20-10 adopt rules establishing small employer health benefit plans under
20-11 Subchapter E, Chapter 26, Insurance Code, as amended by this Act,
20-12 not later than January 1, 1996.
20-13 SECTION 19. (a) Each small employer health benefit plan,
20-14 including prototype plans developed by the commissioner of
20-15 insurance, under Chapter 26, Insurance Code, as amended by this
20-16 Act, shall be offered, delivered, or issued for delivery to small
20-17 employers beginning June 1, 1996.
20-18 (b) A small employer health benefit plan issued before
20-19 September 1, 1993, is governed by the law in effect immediately
20-20 before September 1, 1993, except that on and after September 1,
20-21 1995, those plans are subject to the provisions of Subchapter D,
20-22 Chapter 26, Insurance Code, as amended by this Act.
20-23 (c) A small employer health benefit plan issued on or after
20-24 September 1, 1993, but before June 1, 1996, must comply with
20-25 Chapter 26, Insurance Code, as amended by this Act, beginning on
21-1 the first renewal date of the health benefit plan following June 1,
21-2 1996.
21-3 (d) Article 26.38, Insurance Code, as amended by this Act,
21-4 applies to small employer health benefit plans offered, issued, or
21-5 issued for delivery on or after September 1, 1995.
21-6 (e) Article 3.51-6, Insurance Code, as amended by this Act,
21-7 applies only to a health benefit plan offered, delivered, or issued
21-8 for delivery on or after June 1, 1996.
21-9 SECTION 20. This Act takes effect September 1, 1995.
21-10 SECTION 21. The importance of this legislation and the
21-11 crowded condition of the calendars in both houses create an
21-12 emergency and an imperative public necessity that the
21-13 constitutional rule requiring bills to be read on three several
21-14 days in each house be suspended, and this rule is hereby suspended.