By Averitt H.B. No. 369
A BILL TO BE ENTITLED
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 Subsections (8), (12), and (23) and by adding Subsection
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;
1-18 (ii) a<n> self-funded or self-insured
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 (12) "Late enrollee" means an eligible employee or
1-23 dependent who requests enrollment in a small employer's health
2-1 benefit plan after the expiration of the initial enrollment period
2-2 established under the terms of the first plan for which that
2-3 employee or dependent was eligible through the small employer or
2-4 after the expiration of an open enrollment period under Article
2-5 26.21(d) of this code. An eligible employee or dependent is not a
2-6 late enrollee if:
2-7 (A) the individual:
2-8 (i) was covered under another employer
2-9 health benefit plan at the time the individual was eligible to
2-10 enroll;
2-11 (ii) declines in writing, at the time of
2-12 the initial eligibility, stating that coverage under another
2-13 employer health benefit plan was the reason for declining
2-14 enrollment;
2-15 (iii) has lost coverage under another
2-16 employer health benefit plan as a result of the termination of
2-17 employment, the termination of the other plan's coverage, the death
2-18 of a spouse, or divorce; and
2-19 (iv) requests enrollment not later than
2-20 the 31st day after the date on which coverage under another
2-21 employer health benefit plan terminates;
2-22 (B) the individual is employed by an employer
2-23 who offers multiple health benefit plans and the individual elects
2-24 a different health benefit plan during an open enrollment period;
2-25 or
3-1 (C) a court has ordered coverage to be provided
3-2 for a spouse or minor child under a covered employee's plan and
3-3 request for enrollment is made not later than the 31st day after
3-4 issuance of the date on which the court order is issued.
3-5 (23) "Small employer health benefit plan" means any
3-6 plan <the preventive and primary care benefit plan, the in hospital
3-7 benefit plan, or the standard health benefit plan> developed by the
3-8 Benefits Plan Committee and approved by the Commissioner as
3-9 described by Subchapter E of this chapter or any other health
3-10 benefit plan offered to a small employer in accordance with Article
3-11 26.42(d) of this code, except as otherwise provided.
3-12 (25) "Point-of-Service contract" means a health
3-13 maintenance organization benefit plan offered with corresponding
3-14 indemnity benefits in addition to those relating to out-of-area or
3-15 emergency services, provided through insurers or group hospital
3-16 service corporations. Point-of-service contracts permit the
3-17 insured to obtain coverage under either the health maintenance
3-18 organization conventional plan or the indemnity plan as determined
3-19 in accordance with the provisions of the contracts.
3-20 SECTION 2. Article 26.06(a), Insurance Code, is amended to
3-21 read as follows: (a) An individual or group health benefit plan is
3-22 subject to this chapter if it provides health care benefits
3-23 covering three or more eligible employees of a small employer and
3-24 if it meets any one of the following conditions:
3-25 (1) a portion of the premium or benefits is paid by or
4-1 on behalf of a small employer;
4-2 (2) a covered individual may be <is> reimbursed,
4-3 whether or through wage adjustment or otherwise, by or on behalf of
4-4 a small employer for a portion of the premium; or
4-5 (3) the health benefit plan is treated by the employer
4-6 or by a covered individual as part of a plan or program for the
4-7 purposes of Section 106 162, Internal Revenue Code of 1986 (26
4-8 U.S.C. Section 106 or 162).
4-9 SECTION 3. Article 26.14, Insurance Code, is amended to read
4-10 as follows: (a) Two or more small employers may form a cooperative
4-11 for the purchase of small employer health benefit plans. A
4-12 cooperative must be organized as a nonprofit corporation and has
4-13 the rights and duties provided by the Texas Non-Profit Corporation
4-14 Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes).
4-15 (b) Once a cooperative has been approved as a non-profit
4-16 corporation under the Texas Non-Profit Corporation Act, such
4-17 cooperative shall file written notification of such approval and a
4-18 copy of the cooperative's organizational documents with the
4-19 commissioner.
4-20 (c) <(b)> The board of directors shall file annually with the
4-21 commissioner a statement of all amounts collected and expenses
4-22 incurred for each of the preceding three years.
4-23 SECTION 4. Article 26.21, Insurance Code, is amended by
4-24 amending Subsections (a), (b), (d), (f), (g), and (j) and by adding
4-25 Subsections (1) and (m) to read as follows:
5-1 (a) Each small employer carrier shall provide the small
5-2 employer health benefit plans without regard to claim experience,
5-3 health status, or medical history. Each small employer carrier
5-4 shall issue the plan chosen by the small employer to each small
5-5 employer that elects to be covered under that plan <, agrees to
5-6 make the required premium payments,> and agrees to satisfy the
5-7 other requirements of the plan.
5-8 (b) A small employer is not required to pay the insurance
5-9 premium for coverage under a small employer health benefit plan
5-10 offered under this chapter but may make voluntary contributions for
5-11 all or part of the premium. Except as provided by Subsection (1)
5-12 of this sections, coverage <Coverage under a small employer health
5-13 benefit plan is not available to a small employer unless the small
5-14 employer pays at least 75 percent of the insurance premium for its
5-15 eligible employees who elect to be covered by at least one of the
5-16 small employer health benefit plans selected by the small employer.
5-17 Coverage> is available under a small employer health benefit plan
5-18 if at least 75 <90> percent of a small employer's eligible
5-19 employees elect to be covered. In the event a small employer
5-20 offers multiple health benefits plans including but not limited to
5-21 a health maintenance organization contract, the collective
5-22 enrollment of all plans must be at least 75 percent or if
5-23 applicable, the lower participation level offered by the small
5-24 employer carrier. A small employer who elects to make
5-25 contributions for payment for the premium is not required to pay
6-1 any amount with respect to an employee who elects not to be
6-2 covered. The small employer may elect to pay the premium cost for
6-3 additional coverage. This chapter does not require a small
6-4 employer to purchase health insurance coverage for the employer's
6-5 employees.
6-6 (d) The initial enrollment period for the employees and
6-7 their dependents must be at least three months, with a one-month
6-8 open enrollment period provided annually. <30 days>.
6-9 (1) A small employer carrier may offer small employer
6-10 health benefit plans to a small employer even if less than 75
6-11 percent of the eligible employees of that employer elect to be
6-12 covered. A small employer carrier that allows a smaller percentage
6-13 of eligible employees to participate in a plan must permit that
6-14 percentage of participation as a qualifying percentage for each
6-15 small employer benefit plan offered by that carrier in this state.
6-16 (f) A new employee of a covered small employer and the
6-17 dependents of that employee may not be denied coverage if the
6-18 application for coverage is received by the small employer carrier
6-19 not later than three months <the 31st day> after the date on which
6-20 the employment begins or during the one month annual open
6-21 enrollment period.
6-22 (g) A late enrollee may be excluded from coverage <for> until
6-23 the next annual open enrollment period <18 months from the date of
6-24 application> or may be subject to a 12 month preexisting condition
6-25 provision as described by Articles 26.49(b), (c), (d) and (e) of
7-1 this code. If both a period of exclusion from coverage and a
7-2 preexisting condition provision are applicable to a late enrollee,
7-3 the combined period of exclusion may not exceed 18 months from the
7-4 date of the late application.
7-5 (j) A small employer health benefit plan may not limit or
7-6 exclude initial coverage of a newborn child of a covered employee.
7-7 Any coverage of a newborn child of an employee under this
7-8 subsection terminates on the 31st day after the date of birth of
7-9 the child unless:
7-10 (1) dependent children are eligible for coverage; and
7-11 (2) <(1)> notification of the birth and any required
7-12 additional premium are received by the small employer carrier not
7-13 later than the <30th> 31st day after the date of birth.
7-14 SECTION 5. Article 26.42(a), (b) and (c), Insurance Code,
7-15 are amended as follows:
7-16 (a) A small employer carrier shall offer the following
7-17 two <three> health benefit plans:
7-18 (1) the catastrophic care plan; <the preventive and
7-19 primary care benefit plan;> and
7-20 (2) the basic coverage plan. <the in hospital benefit
7-21 plan; and>
7-22 <(3) the standard health benefit plan.>
7-23 (b) A small employer carrier may offer to a small employer
7-24 additional benefit riders to either <the standard> health benefit
7-25 plan.
8-1 <(c) A small employer carrier may not offer to a small
8-2 employer benefit riders to:>
8-3 <(1) the preventive and primary care benefit plan,
8-4 except as provided by Article 26.45(d) of this code; or>
8-5 <(2) the in hospital benefit plan, except as provided
8-6 by Article 26.46(c) of this code.>
8-7 SECTION 6. Articles 26.31 through 26.41, Insurance Code, are
8-8 deleted and replaced with the following language:
8-9 (Insert)
8-10 SECTION 7. Article 26.43(a), Insurance Code, is amended as
8-11 follows: (a) The Benefit Planning Committee <commissioner> shall
8-12 develop the benefits section of the catastrophic care plan and the
8-13 basic coverage plan <preventive and primary benefit plan, the in
8-14 hospital benefit plan, and the standard health benefit plan> policy
8-15 forms in accordance with the provisions of Article 26.45 of this
8-16 code for approval by the commissioner. For all other portions of
8-17 these policy forms, a small employer carrier shall comply with
8-18 Article 3.42 of this code as it relates to policy form approval. A
8-19 small employer carrier may not offer these two <three> benefit
8-20 plans through a policy form that does not comply with this article.
8-21 SECTION 7. Article 26.45, Insurance Code, is deleted and
8-22 replaced to read as follows:
8-23 (a) A Benefits Planning Committee shall be established for
8-24 the purpose of developing the benefit sections of the promulgated
8-25 benefit plans defined in Articles 26.42 and 26.43(a).
9-1 (b) The committee shall be composed of:
9-2 (1) a representative of the business community in this
9-3 state appointed by the lieutenant governor;
9-4 (2) a representative of the business community in this
9-5 state appointed by speaker of the house of representatives;
9-6 (3) a representative of the insurance industry
9-7 appointed by the lieutenant governor;
9-8 (4) a representative of the insurance industry
9-9 appointed by the speaker of the house of representatives;
9-10 (5) a representative of agents who write health
9-11 insurance appointed by the lieutenant governor;
9-12 (6) a representative of agents who write health
9-13 insurance appointed by the speaker of the house of representatives;
9-14 (7) a representative of health care providers
9-15 appointed by the lieutenant governor;
9-16 (8) a representative of health care providers
9-17 appointed by the speaker of the house of representatives;
9-18 (9) a representative of consumer groups appointed by
9-19 the lieutenant governor;
9-20 (10) a representative of consumer groups appointed by
9-21 the speaker of the house of representatives.
9-22 (11) the commissioner or the commissioner's
9-23 representative shall serve as an ex officio member; and
9-24 (12) a representative from the Office of Public
9-25 Insurance Counsel shall serve as an ex officio member.
10-1 (c) A member of the committee is entitled to reimbursement
10-2 for expenses incurred in carrying out official duties as a member
10-3 of the committee at the rate specified in the General
10-4 Appropriations Act.
10-5 (d) The committee shall develop the benefits provisions for
10-6 the catastrophic care plan and for the basic coverage plan, and
10-7 shall develop prototype policies for each of the benefit plans
10-8 defined in this chapter.
10-9 (1) Benefits for the catastrophic care plan shall be
10-10 developed and designed to provide necessary coverage in the event
10-11 of catastrophic illness or injury. The deductibles and coinsurance
10-12 levels shall be set out to permit options for the insured to obtain
10-13 affordable catastrophic coverage. The benefits provisions shall
10-14 include the following:
10-15 (i) all required or applicable
10-16 definitions;
10-17 (ii) exclusions or limitations to
10-18 coverage;
10-19 (iii) required covered services sections
10-20 of the benefit plans;
10-21 (iv) permitted and/or required deductible
10-22 and coinsurance options.
10-23 (2) Benefits for the basic coverage plan shall be
10-24 developed and designed to provide basic hospital, medical, and
10-25 surgical coverages. The benefits shall be limited to basic care
11-1 requirements for illness and injury. The benefits provisions shall
11-2 include the following:
11-3 (i) all required or applicable
11-4 definitions;
11-5 (ii) exclusions or limitations to
11-6 coverage;
11-7 (iii) required covered services sections
11-8 of the benefit plans;
11-9 (iv) permitted and/or required deductible
11-10 and coinsurance options.
11-11 (3) The prototype policies developed for use by small
11-12 employer carriers shall include all contractual provisions required
11-13 to produce an entire contract in accordance with this article and
11-14 this code.
11-15 (e) The committee shall prepare and present its defined
11-16 benefits provisions and prototype policies for each of the benefit
11-17 plans to the commissioner not later than November 1, 1995 for final
11-18 approval. Upon approval by the commissioner, the prototype
11-19 policies shall be available for use by any small employer carrier.
11-20 (f) at the request of the committee, the Texas Department of
11-21 Insurance shall provide staff as necessary to carry out the duties
11-22 of the committee.
11-23 (g) The operating expenses of the committee shall be paid
11-24 from available funds of the legislature.
11-25 (h) As requested by the senate, house of representatives, or
12-1 the commissioner, the committee shall periodically reevaluate the
12-2 benefit plans for continued appropriateness and acceptability.
12-3 SECTION 8. Articles 26.46, 26.47, and 26.47A, Insurance
12-4 Code, are repealed in their entirety once the commissioner has
12-5 approved the prototype policies developed by the committee.
12-6 SECTION 8. Article 26.48, Insurance Code, is amended to read
12-7 as follows:
12-8 Instead of the small employer health benefit plan described
12-9 by this subchapter, a health maintenance organization may offer:
12-10 (a) a state-approved health benefit plan that complies with
12-11 the requirements of Title X Public Health Service Act (42 U.S.C.
12-12 Section 300et seq.) and rules adopted under that Act.
12-13 (b) a state-approved prototype plan as developed by the
12-14 Benefits Planning Committee established by Article 26.45; or
12-15 (c) a point of service contract in connection with an
12-16 insurance carrier including optional coverage for out-of-area
12-17 services, emergency care, or out-of-network care. The contract
12-18 offered by the insurance carrier shall be subject to all provisions
12-19 of this chapter except as otherwise noted. The insurance company
12-20 with which the HMO contracts for a point-of-service contract is not
12-21 required to otherwise make available the prototype policies
12-22 addressed in Subchapter E so long as the insurance carrier's small
12-23 employer products are limited to the point of service contract.
12-24 SECTION 9. Article 26.71(a) and (b), Insurance Code, are
12-25 amended to read as follows: (a) Each small employer carrier shall
13-1 market the small employer health benefit plan through property
13-2 licensed agents to eligible small employers in this state. Each
13-3 small employer purchasing a small employer health benefit plan
13-4 shall be given a summary of the two benefit plans described in
13-5 Subchapter E. <affirm that the agent who sold the plan offered and
13-6 explained all three plans to that employer>. The format of the
13-7 summary shall be prescribed by the Commissioner. The agent shall
13-8 offer and explain each of the plans to the small employer upon
13-9 inquiry or request by the small employer.
13-10 <(b) The department may require periodic demonstration by
13-11 the small employer carriers and agents that those carriers and
13-12 agents are marketing or issuing small employer health benefit plans
13-13 to small employers in fulfillment of the purposes of this article.>
13-14 (b) <(e)> The department may require periodic reports by small
13-15 employer carriers and agents regarding small employer health
13-16 benefit plans issued by those carriers and agents. The reporting
13-17 requirements shall include information regarding case
13-18 characteristics and the numbers of small employer health benefit
13-19 plans in various categories that are marketed or issued to small
13-20 employers.
13-21 SECTION 10. Article 26.75, Insurance Code, is amended to
13-22 read as follows:
13-23 Art. 26.75. RULES. (a) The commissioner <board> may adopt
13-24 rules setting forth additional standards to provide for the fair
13-25 marketing and broad availability of small employer health benefit
14-1 plans to small employers in this state.
14-2 SECTION 11. This Act takes effect January 1, 1996, and
14-3 applies only to a small employer benefit plan that is delivered,
14-4 issued for delivery, or renewed on or after January 1, 1996. A
14-5 plan that is delivered, issued for delivery, or renewed before
14-6 January 1, 1996, is governed by the law in effect immediately
14-7 before the effective date of this Act, and that law is continued
14-8 in effect for that purpose.
14-9 SECTION 12. The importance of this legislation and the
14-10 crowded condition of the calendars in both houses create an
14-11 emergency and an imperative public necessity that the
14-12 constitutional rule requiring bills to be read on three several
14-13 days in each house be suspended, and this rule is hereby suspended.