1-1 AN ACT
1-2 relating to health insurance portability and availability and the
1-3 implementation of certain federal reforms relating to health
1-4 insurance portability and availability.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 PART 1. HEALTH INSURANCE PORTABILITY AND AVAILABILITY;
1-7 GENERAL PROVISIONS; SMALL EMPLOYERS
1-8 SECTION 1.01. Article 26.01, Insurance Code, is amended to
1-9 read as follows:
1-10 Art. 26.01. SHORT TITLE. This chapter may be cited as the
1-11 [Small Employer] Health Insurance Portability and Availability Act.
1-12 SECTION 1.02. Article 26.02, Insurance Code, is amended to
1-13 read as follows:
1-14 Art. 26.02. DEFINITIONS. In this chapter:
1-15 (1) "Affiliation period" means a period that, under
1-16 the terms of the coverage offered by a health maintenance
1-17 organization, must expire before the coverage becomes effective.
1-18 During an affiliation period:
1-19 (A) a health maintenance organization is not
1-20 required to provide health care services or benefits to the
1-21 participant or beneficiary; and
1-22 (B) a premium may not be charged to the
1-23 participant or beneficiary. ["Affiliated employer" means a person
1-24 connected by commonality of ownership with a small employer. The
2-1 term includes a person that owns a small employer, shares directors
2-2 with a small employer, or is eligible to file a consolidated tax
2-3 return with a small employer.]
2-4 (2) "Agent" means a person who may act as an agent for
2-5 the sale of a health benefit plan under a license issued under
2-6 Section 15 or 15A, Texas Health Maintenance Organization Act
2-7 (Article 20A.15 or 20A.15A, Vernon's Texas Insurance Code), or
2-8 under Subchapter A, Chapter 21, of this code.
2-9 (3) "Base premium rate" means, for each class of
2-10 business and for a specific rating period, the lowest premium rate
2-11 that is charged or that could be charged under a rating system for
2-12 that class of business by the small employer carrier to small
2-13 employers with similar case characteristics for small employer
2-14 health benefit plans with the same or similar coverage.
2-15 (4) "Board of directors" means the board of directors
2-16 of the Texas Health Reinsurance System.
2-17 (5) "Case characteristics" means, with respect to a
2-18 small employer, the geographic area in which that employer's
2-19 employees reside, the age and gender of the individual employees
2-20 and their dependents, the appropriate industry classification as
2-21 determined by the small employer carrier, the number of employees
2-22 and dependents, and other objective criteria as established by the
2-23 small employer carrier that are considered by the small employer
2-24 carrier in setting premium rates for that small employer. The term
2-25 does not include [claim experience,] health status related factors,
2-26 duration of coverage since the date of issuance of a health
2-27 benefit plan, or whether a covered person is or may become
3-1 pregnant.
3-2 (6) "Class of business" means all small employers or a
3-3 separate grouping of small employers established under this
3-4 chapter.
3-5 (7) "Creditable coverage" means coverage described by
3-6 Article 26.035 of this code.
3-7 (8) "Dependent" means:
3-8 (A) a spouse;
3-9 (B) a newborn child;
3-10 (C) a child under the age of 19 years;
3-11 (D) a child who is a full-time student under the
3-12 age of 23 years and who is financially dependent on the parent;
3-13 (E) a child of any age who is medically
3-14 certified as disabled and dependent on the parent; [and]
3-15 (F) any person who must be covered under:
3-16 (i) Section 3D or 3E, Article 3.51-6, of
3-17 this code; or
3-18 (ii) Section 2(L), Chapter 397, Acts of
3-19 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
3-20 Vernon's Texas Insurance Code); and
3-21 (G) any other child included as an eligible
3-22 dependent under an employer's benefit plan.
3-23 (9) [(8)] "Eligible employee" means an employee who
3-24 works on a full-time basis and who usually works at least 30 hours
3-25 a week. The term also includes a sole proprietor, a partner, and
3-26 an independent contractor, if the sole proprietor, partner, or
3-27 independent contractor is included as an employee under a health
4-1 benefit plan of a small or large employer. The term does not
4-2 include:
4-3 (A) an employee who works on a part-time,
4-4 temporary, seasonal, or substitute basis; or
4-5 (B) an employee who is covered under:
4-6 (i) another health benefit plan;
4-7 (ii) a self-funded or self-insured
4-8 employee welfare benefit plan that provides health benefits and
4-9 that is established in accordance with the Employee Retirement
4-10 Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
4-11 (iii) the Medicaid program if the employee
4-12 elects not to be covered;
4-13 (iv) another federal program, including
4-14 the CHAMPUS program or Medicare program, if the employee elects not
4-15 to be covered; or
4-16 (v) a benefit plan established in another
4-17 country if the employee elects not to be covered.
4-18 (10) [(9)] "Health benefit plan" means a group,
4-19 blanket, or franchise insurance policy, a certificate issued under
4-20 a group policy, a group hospital service contract, or a group
4-21 subscriber contract or evidence of coverage issued by a health
4-22 maintenance organization that provides benefits for health care
4-23 services. The term does not include:
4-24 (A) accident-only or disability income insurance
4-25 or a combination of accident-only and disability income insurance
4-26 [coverage];
4-27 (B) credit-only [credit] insurance [coverage];
5-1 (C) disability insurance coverage;
5-2 (D) coverage for a specified disease or illness
5-3 [coverage or other limited benefit policies];
5-4 (E) [coverage of] Medicare services under a
5-5 federal contract;
5-6 (F) Medicare supplement and Medicare Select
5-7 policies regulated in accordance with federal law;
5-8 (G) long-term care [insurance] coverage or
5-9 benefits, nursing home care coverage or benefits, home health care
5-10 coverage or benefits, community-based care coverage or benefits,
5-11 or any combination of those coverages or benefits;
5-12 (H) coverage that provides limited-scope
5-13 [limited to] dental or [care;]
5-14 [(I) coverage limited to care of] vision
5-15 benefits;
5-16 (I) [(J)] coverage provided by a single service
5-17 health maintenance organization;
5-18 (J) [(K) insurance] coverage issued as a
5-19 supplement to liability insurance;
5-20 (K) [(L) insurance coverage arising out of a]
5-21 workers' compensation [system] or similar insurance [statutory
5-22 system];
5-23 (L) [(M)] automobile medical payment insurance
5-24 coverage;
5-25 (M) [(N)] jointly managed trusts authorized
5-26 under 29 U.S.C. Section 141 et seq. that contain a plan of
5-27 benefits for employees that is negotiated in a collective
6-1 bargaining agreement governing wages, hours, and working conditions
6-2 of the employees that is authorized under 29 U.S.C. Section 157;
6-3 (N) [(O)] hospital [confinement] indemnity or
6-4 other fixed indemnity insurance [coverage]; [or]
6-5 (O) [(P)] reinsurance contracts issued on a
6-6 stop-loss, quota-share, or similar basis;
6-7 (P) short-term major medical contracts;
6-8 (Q) liability insurance, including general
6-9 liability insurance and automobile liability insurance;
6-10 (R) other coverage that is:
6-11 (i) similar to the coverage described by
6-12 this subdivision under which benefits for medical care are
6-13 secondary or incidental to other insurance benefits; and
6-14 (ii) specified in federal regulations;
6-15 (S) coverage for on-site medical clinics; or
6-16 (T) coverage that provides other limited
6-17 benefits specified by federal regulations.
6-18 (11) [(10)] "Health carrier" means any entity
6-19 authorized under this code or another insurance law of this state
6-20 that provides health insurance or health benefits in this state,
6-21 including an insurance company, a group hospital service
6-22 corporation under Chapter 20 of this code, a health maintenance
6-23 organization under the Texas Health Maintenance Organization Act
6-24 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
6-25 premium company under Chapter 22 of this code.
6-26 (12) "Health status related factor" means:
6-27 (A) health status;
7-1 (B) medical condition, including both physical
7-2 and mental illness;
7-3 (C) claims experience;
7-4 (D) receipt of health care;
7-5 (E) medical history;
7-6 (F) genetic information;
7-7 (G) evidence of insurability, including
7-8 conditions arising out of acts of family violence; and
7-9 (H) disability.
7-10 (13) [(11)] "Index rate" means, for each class of
7-11 business as to a rating period for small employers with similar
7-12 case characteristics, the arithmetic average of the applicable base
7-13 premium rate and corresponding highest premium rate.
7-14 (14) "Large employer" means an employer who employed
7-15 an average of at least 51 eligible employees on business days
7-16 during the preceding calendar year and who employs at least two
7-17 eligible employees on the first day of the plan year. For purposes
7-18 of this definition, a partnership is the employer of a partner. A
7-19 large employer includes a governmental entity subject to Section 1,
7-20 Chapter 123, Acts of the 60th Legislature, Regular Session, 1967
7-21 (Article 3.51-3, Vernon's Texas Insurance Code), or Article 3.51-1,
7-22 3.51-2, 3.51-4, 3.51-5, or 3.51-5A of this code that otherwise
7-23 meets the requirements of this section and elects to be treated as
7-24 a large employer.
7-25 (15) "Large employer carrier" means a health carrier,
7-26 to the extent that carrier is offering, delivering, issuing for
7-27 delivery, or renewing health benefit plans subject to Subchapter H
8-1 of this chapter.
8-2 (16) "Large employer health benefit plan" means a
8-3 health benefit plan offered to a large employer.
8-4 (17) [(12)] "Late enrollee" means any [an eligible]
8-5 employee or dependent eligible for enrollment who requests
8-6 enrollment in a small or large employer's health benefit plan after
8-7 the expiration of the initial enrollment period established under
8-8 the terms of the first plan for which that employee or dependent
8-9 was eligible through the small or large employer or after the
8-10 expiration of an open enrollment period under Article 26.21(h) or
8-11 26.83 of this code. An [eligible] employee or dependent is not a
8-12 late enrollee if:
8-13 (A) the individual:
8-14 (i) was covered under another [employer]
8-15 health benefit plan or self-funded employer health benefit plan at
8-16 the time the individual was eligible to enroll;
8-17 (ii) declines in writing, at the time of
8-18 the initial eligibility, stating that coverage under another
8-19 [employer] health benefit plan or self-funded employer health
8-20 benefit plan was the reason for declining enrollment;
8-21 (iii) has lost coverage under another
8-22 [employer] health benefit plan or self-funded employer health
8-23 benefit plan as a result of:
8-24 (a) the termination of
8-25 employment;
8-26 (b) the reduction in the
8-27 number of hours of employment;
9-1 (c) [,] the termination of
9-2 the other plan's coverage;
9-3 (d) the termination of
9-4 contributions toward the premium made by the employer; or
9-5 (e) [,] the death of a
9-6 spouse[,] or divorce; and
9-7 (iv) requests enrollment not later than
9-8 the 31st day after the date on which coverage under the other
9-9 [another employer] health benefit plan or self-funded employer
9-10 health benefit plan terminates;
9-11 (B) the individual is employed by an employer
9-12 who offers multiple health benefit plans and the individual elects
9-13 a different health benefit plan during an open enrollment period;
9-14 [or]
9-15 (C) a court has ordered coverage to be provided
9-16 for a spouse [or minor child] under a covered employee's plan and
9-17 request for enrollment is made not later than the 31st day after
9-18 [issuance of] the date on which the court order is issued; or
9-19 (D) a court has ordered coverage to be provided
9-20 for a child under a covered employee's plan and the request for
9-21 enrollment is made not later than the 31st day after the date on
9-22 which the employer receives the court order.
9-23 (18) [(13)] "New business premium rate" means, for
9-24 each class of business as to a rating period, the lowest premium
9-25 rate that is charged or offered or that could be charged or offered
9-26 by the small employer carrier to small employers with similar case
9-27 characteristics for newly issued small employer health benefit
10-1 plans that provide the same or similar coverage.
10-2 (19) "Participation criteria" means any criteria or
10-3 rules established by a large employer to determine the employees
10-4 who are eligible for enrollment, including continued enrollment,
10-5 under the terms of a health benefit plan. Such criteria or rules
10-6 may not be based on health status related factors.
10-7 (20) [(14)] "Person" means an individual, corporation,
10-8 partnership, [association,] or other [private] legal entity.
10-9 (21) [(15)] "Plan of operation" means the plan of
10-10 operation of the system established under Article 26.55 of this
10-11 code.
10-12 (22) "Point-of-service contract" means a benefit plan
10-13 offered through a health maintenance organization that:
10-14 (A) includes corresponding indemnity benefits in
10-15 addition to benefits relating to out-of-area or emergency services
10-16 provided through insurers or group hospital service corporations;
10-17 and
10-18 (B) permits the insured to obtain coverage under
10-19 either the health maintenance organization conventional plan or the
10-20 indemnity plan as determined in accordance with the terms of the
10-21 contract.
10-22 (23) [(16)] "Preexisting condition provision" means a
10-23 provision that denies, excludes, or limits coverage as to a disease
10-24 or condition for a specified period after the effective date of
10-25 coverage.
10-26 (24) [(17)] "Premium" means all amounts paid by a
10-27 small or large employer and eligible employees as a condition of
11-1 receiving coverage from a small or large employer carrier,
11-2 including any fees or other contributions associated with a health
11-3 benefit plan.
11-4 (25) [(18)] "Rating period" means a calendar period
11-5 for which premium rates established by a small employer carrier are
11-6 assumed to be in effect.
11-7 (26) [(19)] "Reinsured carrier" means a small employer
11-8 carrier participating in the system.
11-9 (27) [(20)] "Risk-assuming carrier" means a small
11-10 employer carrier that elects not to participate in the system.
11-11 (28) [(21)] "Small employer" means an employer who
11-12 employed an average of at least two but not more than 50 eligible
11-13 employees on business days during the preceding calendar year and
11-14 who employs at least two eligible employees on the first day of the
11-15 plan year. For purposes of this definition, a partnership is the
11-16 employer of a partner. A small employer includes a governmental
11-17 entity subject to Section 1, Chapter 123, Acts of the 60th
11-18 Legislature, Regular Session, 1967 (Article 3.51-3, Vernon's Texas
11-19 Insurance Code), or Article 3.51-1, 3.51-2, 3.51-4, 3.51-5, or
11-20 3.51-5A of this code that otherwise meets the requirements of this
11-21 section and elects to be treated as a small employer [a person that
11-22 is actively engaged in business and that, on at least 50 percent of
11-23 its working days during the preceding calendar year, employed at
11-24 least three but not more than 50 eligible employees, including the
11-25 employees of an affiliated employer, the majority of whom were
11-26 employed in this state].
11-27 (29) [(22)] "Small employer carrier" means a health
12-1 carrier, to the extent that that carrier is offering, delivering,
12-2 issuing for delivery, or renewing health benefit plans subject to
12-3 Subchapters C-G of this chapter under Article 26.06(a) of this
12-4 code.
12-5 (30) [(23)] "Small employer health benefit plan" means
12-6 a plan developed by the commissioner under Subchapter E of this
12-7 chapter or any other health benefit plan offered to a small
12-8 employer in accordance with Article 26.42(c) or 26.48 of this
12-9 code.
12-10 (31) [(24)] "System" means the Texas Health
12-11 Reinsurance System established under Subchapter F of this chapter.
12-12 (32) "Waiting period" means a period established by an
12-13 employer that must pass before an individual who is a potential
12-14 enrollee in a health benefit plan is eligible to be covered for
12-15 benefits.
12-16 [(25) "Point-of-service contract" means a benefit plan
12-17 offered through a health maintenance organization that:]
12-18 [(A) includes corresponding indemnity benefits
12-19 in addition to benefits relating to out-of-area or emergency
12-20 services provided through insurers or group hospital service
12-21 corporations; and]
12-22 [(B) permits the insured to obtain coverage
12-23 under either the health maintenance organization conventional plan
12-24 or the indemnity plan as determined in accordance with the terms of
12-25 the contract.]
12-26 SECTION 1.03. Subchapter A, Chapter 26, Insurance Code, is
12-27 amended by adding Articles 26.035 and 26.036 to read as follows:
13-1 Art. 26.035. CREDITABLE COVERAGE. (a) An individual's
13-2 coverage is creditable for purposes of this chapter if the coverage
13-3 is provided under:
13-4 (1) a self-funded or self-insured employee welfare
13-5 benefit plan that provides health benefits and that is established
13-6 in accordance with the Employee Retirement Income Security Act of
13-7 1974 (29 U.S.C. Section 1001 et seq.);
13-8 (2) a group health benefit plan provided by a health
13-9 insurance carrier or health maintenance organization;
13-10 (3) an individual health insurance policy or evidence
13-11 of coverage;
13-12 (4) Part A or Part B of Title XVIII of the Social
13-13 Security Act (42 U.S.C. Section 1395c et seq.);
13-14 (5) Title XIX of the Social Security Act (42 U.S.C.
13-15 Section 1396 et seq.), other than coverage consisting solely of
13-16 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
13-17 (6) Chapter 55, Title 10, United States Code (10
13-18 U.S.C. Section 1071 et seq.);
13-19 (7) a medical care program of the Indian Health
13-20 Service or of a tribal organization;
13-21 (8) a state or political subdivision health benefits
13-22 risk pool;
13-23 (9) a health plan offered under Chapter 89, Title 5,
13-24 United States Code (5 U.S.C. Section 8901 et seq.);
13-25 (10) a public health plan as defined by federal
13-26 regulations; or
13-27 (11) a health benefit plan under Section 5(e), Peace
14-1 Corps Act (22 U.S.C. Section 2504(e)).
14-2 (b) Creditable coverage does not include:
14-3 (1) accident-only or disability income insurance, or a
14-4 combination of accident-only and disability income insurance;
14-5 (2) coverage issued as a supplement to liability
14-6 insurance;
14-7 (3) liability insurance, including general liability
14-8 insurance and automobile liability insurance;
14-9 (4) workers' compensation or similar insurance;
14-10 (5) automobile medical payment insurance;
14-11 (6) credit-only insurance;
14-12 (7) coverage for on-site medical clinics;
14-13 (8) other coverage that is:
14-14 (A) similar to the coverage described by this
14-15 subsection under which benefits for medical care are secondary or
14-16 incidental to other insurance benefits; and
14-17 (B) specified in federal regulations;
14-18 (9) coverage that provides limited-scope dental or
14-19 vision benefits;
14-20 (10) long-term care coverage or benefits, nursing home
14-21 care coverage or benefits, home health care coverage or benefits,
14-22 community-based care coverage or benefits, or any combination of
14-23 those coverages or benefits;
14-24 (11) coverage that provides other limited benefits
14-25 specified by federal regulations;
14-26 (12) coverage for a specified disease or illness;
14-27 (13) hospital indemnity or other fixed indemnity
15-1 insurance; or
15-2 (14) Medicare supplemental health insurance as defined
15-3 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
15-4 1395ss), coverage supplemental to the coverage provided under
15-5 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071
15-6 et seq.), and similar supplemental coverage provided under a group
15-7 plan.
15-8 Art. 26.036. SCHOOL DISTRICT ELECTION. (a) An independent
15-9 school district may elect to participate in the small employer
15-10 market without regard to the number of eligible employees of the
15-11 independent school district.
15-12 (b) An independent school district that elects to
15-13 participate in the small employer market under this article is
15-14 treated as a small employer under this chapter for all purposes.
15-15 SECTION 1.04. Article 26.04, Insurance Code, is amended to
15-16 read as follows:
15-17 Art. 26.04. RULES. The commissioner [board] shall adopt
15-18 rules as necessary to implement this chapter and to meet the
15-19 minimum requirements of federal law and regulations.
15-20 SECTION 1.05. Article 26.06, Insurance Code, is amended to
15-21 read as follows:
15-22 Art. 26.06. APPLICABILITY. (a) An individual or group
15-23 health benefit plan is subject to Subchapters C-G of this chapter
15-24 if it provides health care benefits covering two [three] or more
15-25 eligible employees of a small employer and if [it meets any one of
15-26 the following conditions]:
15-27 (1) a portion of the premium or benefits is paid by a
16-1 small employer; or
16-2 (2) the health benefit plan is treated by the employer
16-3 or by a covered individual as part of a plan or program for the
16-4 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
16-5 U.S.C. Section 106 or 162).
16-6 (b) For an employer who was not in existence throughout the
16-7 calendar year preceding the year in which the determination of
16-8 whether the employer is a small employer is made, the determination
16-9 is based on the average number of eligible employees the employer
16-10 reasonably expects to employ on business days in the calendar year
16-11 in which the determination is made.
16-12 (c) Except as provided by Subsection (a) of this article,
16-13 this chapter does not apply to an individual health insurance
16-14 policy that is subject to individual underwriting, even if the
16-15 premium is remitted through a payroll deduction method.
16-16 (d) [(c)] Except as expressly provided in this chapter, a
16-17 small employer health benefit plan is not subject to a law that
16-18 requires coverage or the offer of coverage of a health care service
16-19 or benefit.
16-20 SECTION 1.06. Article 26.13(a), Insurance Code, is amended
16-21 to read as follows:
16-22 (a) The Texas Health Benefits Purchasing Cooperative is a
16-23 nonprofit organization established to make health care coverage
16-24 available to small and large employers and their eligible employees
16-25 and eligible employees' dependents.
16-26 SECTION 1.07. Articles 26.14(a) and (d), Insurance Code, are
16-27 amended to read as follows:
17-1 (a) Two or more small or large employers may form a
17-2 cooperative for the purchase of small or large employer health
17-3 benefit plans. A cooperative must be organized as a nonprofit
17-4 corporation and has the rights and duties provided by the Texas
17-5 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
17-6 Texas Civil Statutes).
17-7 (d) A purchasing cooperative or a member of the board of
17-8 directors, the executive director, or an employee or agent of a
17-9 purchasing cooperative is not liable for:
17-10 (1) an act performed in good faith in the execution of
17-11 duties in connection with the purchasing cooperative; or
17-12 (2) an independent action of a small or large employer
17-13 insurance carrier or a person who provides health care services
17-14 under a health benefit plan.
17-15 SECTION 1.08. Articles 26.15(a) and (b), Insurance Code, are
17-16 amended to read as follows:
17-17 (a) A cooperative:
17-18 (1) shall arrange for small or large employer health
17-19 benefit plan coverage for small or large employer groups who
17-20 participate in the cooperative by contracting with small or large
17-21 employer carriers who meet the criteria established by Subsection
17-22 (b) of this article;
17-23 (2) shall collect premiums to cover the cost of:
17-24 (A) small or large employer health benefit plan
17-25 coverage purchased through the cooperative; and
17-26 (B) the cooperative's administrative expenses;
17-27 (3) may contract with agents to market coverage issued
18-1 through the cooperative;
18-2 (4) shall establish administrative and accounting
18-3 procedures for the operation of the cooperative;
18-4 (5) shall establish procedures under which an
18-5 applicant for or participant in coverage issued through the
18-6 cooperative may have a grievance reviewed by an impartial person;
18-7 (6) may contract with a small or large employer
18-8 carrier or third-party administrator to provide administrative
18-9 services to the cooperative;
18-10 (7) shall contract with small or large employer
18-11 carriers for the provision of services to small or large employers
18-12 covered through the cooperative;
18-13 (8) shall develop and implement a plan to maintain
18-14 public awareness of the cooperative and publicize the eligibility
18-15 requirements for, and the procedures for enrollment in coverage
18-16 through, the cooperative; and
18-17 (9) may negotiate the premiums paid by its members.
18-18 (b) A cooperative may contract only with small or large
18-19 employer carriers who desire to offer coverage through the
18-20 cooperative and who demonstrate:
18-21 (1) that the carrier is a health carrier or health
18-22 maintenance organization licensed and in good standing with the
18-23 department;
18-24 (2) the capacity to administer the health benefit
18-25 plans;
18-26 (3) the ability to monitor and evaluate the quality
18-27 and cost effectiveness of care and applicable procedures;
19-1 (4) the ability to conduct utilization management and
19-2 applicable procedures and policies;
19-3 (5) the ability to assure enrollees adequate access to
19-4 health care providers, including adequate numbers and types of
19-5 providers;
19-6 (6) a satisfactory grievance procedure and the ability
19-7 to respond to enrollees' calls, questions, and complaints; and
19-8 (7) financial capacity, either through financial
19-9 solvency standards as applied by the commissioner or through
19-10 appropriate reinsurance or other risk-sharing mechanisms.
19-11 SECTION 1.09. Articles 26.21(a), (h), (k), and (n),
19-12 Insurance Code, are amended to read as follows:
19-13 (a) Each small employer carrier shall provide the small
19-14 employer health benefit plans without regard to [claim experience,]
19-15 health status related factors[, or medical history]. Each small
19-16 employer carrier shall issue the plan chosen by the small employer
19-17 to each small employer that elects to be covered under that plan
19-18 and agrees to satisfy the other requirements of the plan.
19-19 (h) The initial enrollment period for the employees and
19-20 their dependents must be at least 31 days, with a 31-day open
19-21 enrollment period provided annually. Such enrollment period shall
19-22 consist of an entire calendar month, beginning on the first day of
19-23 the month and ending on the last day of the month. If the month is
19-24 February, the period shall last through March 2.
19-25 (k) A late enrollee may be excluded from coverage until the
19-26 next annual open enrollment period and may be subject to a 12-month
19-27 preexisting condition provision as described by Article 26.49 of
20-1 this code. The period during which a preexisting condition
20-2 provision is imposed may not exceed 18 months from the date of the
20-3 initial application.
20-4 (n) A small employer health benefit plan may not limit or
20-5 exclude initial coverage of a newborn child of a covered employee.
20-6 Any coverage of a newborn child of an employee under this
20-7 subsection terminates on the 32nd day after the date of the birth
20-8 of the child unless[:]
20-9 [(1) dependent children are eligible for coverage; and]
20-10 [(2)] notification of the birth and any required
20-11 additional premium are received by the small employer carrier not
20-12 later than the 31st day after the date of birth.
20-13 SECTION 1.10. Subchapter C, Chapter 26, Insurance Code, is
20-14 amended by adding Article 26.21A to read as follows:
20-15 Art. 26.21A. COVERAGE FOR ADOPTED CHILDREN. (a) A small
20-16 employer health benefit plan may not limit or exclude initial
20-17 coverage of an adopted child of an insured. A child is considered
20-18 to be the child of an insured if the insured is a party in a suit
20-19 in which the adoption of the child by the insured is sought.
20-20 (b) The adopted child of an insured may be enrolled, at the
20-21 option of the insured, within either:
20-22 (1) 31 days after the insured is a party in a suit for
20-23 adoption; or
20-24 (2) 31 days of the date the adoption is final.
20-25 (c) Coverage of an adopted child of an employee under this
20-26 article terminates unless notification of the adoption and any
20-27 required additional premiums are received by the small employer
21-1 carrier not later than either:
21-2 (1) the 31st day after the insured becomes a party in
21-3 a suit in which the adoption of the child by the insured is sought;
21-4 or
21-5 (2) the 31st day after the date of the adoption.
21-6 SECTION 1.11. Articles 26.22(a) and (e), Insurance Code, are
21-7 amended to read as follows:
21-8 (a) A small employer carrier is not required to offer or
21-9 issue the small employer health benefit plans:
21-10 (1) to a small employer that is not located within a
21-11 geographic service area of the small employer carrier;
21-12 (2) to an employee of a small employer who neither
21-13 resides nor works in the geographic service area of the small
21-14 employer carrier; or
21-15 (3) to a small employer located within a geographic
21-16 service area with respect to which the small employer carrier
21-17 demonstrates to the satisfaction of the commissioner that:
21-18 (A) the small employer carrier reasonably
21-19 anticipates that it will not have the capacity to deliver services
21-20 adequately because of obligations to existing covered individuals;
21-21 and
21-22 (B) the small employer carrier is acting
21-23 uniformly without regard to claims experience of the employer or
21-24 any health status related factor of employees or dependents or new
21-25 employees or dependents who may become eligible for the coverage.
21-26 (e) If the commissioner determines that requiring the
21-27 acceptance of small employers under this subchapter would place a
22-1 small employer carrier in a financially impaired condition and that
22-2 the small employer carrier is acting uniformly without regard to
22-3 the claims experience of the small employer or any health status
22-4 related factors of employees or dependents or new employees or
22-5 dependents who may become eligible for the coverage, the small
22-6 employer carrier shall [is] not offer [required to provide]
22-7 coverage to small employers until the later of:
22-8 (1) the 180th day after the date the commissioner
22-9 makes the determination; or
22-10 (2) the date the commissioner determines that
22-11 accepting small employers would not place the small employer
22-12 carrier in a financially impaired condition [for a period to be set
22-13 by the commissioner].
22-14 SECTION 1.12. Articles 26.23(a) and (b), Insurance Code, are
22-15 amended to read as follows:
22-16 (a) Except as provided by Article 26.24 of this code, a
22-17 small employer carrier shall renew the small employer health
22-18 benefit plan for any covered small employer, at the option of the
22-19 small employer, unless [except for]:
22-20 (1) [nonpayment of] a premium has not been paid as
22-21 required by the terms of the plan;
22-22 (2) the small employer has committed fraud or
22-23 intentional misrepresentation of a material fact [by the small
22-24 employer]; [or]
22-25 (3) the [noncompliance with] small employer has not
22-26 complied with the terms of the health benefit plan;
22-27 (4) no enrollee in connection with the plan resides or
23-1 works in the service area of the small employer carrier or in the
23-2 area for which the small employer carrier is authorized to do
23-3 business; or
23-4 (5) membership of an employer in an association
23-5 terminates, but only if coverage is terminated uniformly without
23-6 regard to a health status related factor of a covered individual
23-7 [provisions].
23-8 (b) A small employer carrier may refuse to renew the
23-9 coverage of an eligible employee or dependent for fraud or
23-10 intentional misrepresentation of a material fact by that
23-11 individual.
23-12 SECTION 1.13. Article 26.24, Insurance Code, is amended by
23-13 amending Subsection (a) and adding Subsection (d) to read as
23-14 follows:
23-15 (a) A small employer carrier may elect to refuse to renew
23-16 all [each] small employer health benefit plans [plan] delivered or
23-17 issued for delivery by the small employer carrier in this state or
23-18 in a geographic service area approved under Article 26.22 of this
23-19 code. The small employer carrier shall [must] notify the
23-20 commissioner of the election not later than the 180th day before
23-21 the date coverage under the first small employer health benefit
23-22 plan terminates under this subsection.
23-23 (d) A small employer carrier may elect to discontinue a
23-24 particular type of small employer coverage only if the small
23-25 employer carrier:
23-26 (1) provides notice to each employer of the
23-27 discontinuation before the 90th day preceding the date of the
24-1 discontinuation of the coverage;
24-2 (2) offers to each employer the option to purchase
24-3 other small employer coverage offered by the small employer carrier
24-4 at the time of the discontinuation; and
24-5 (3) acts uniformly without regard to the claims
24-6 experience of the employer or any health status related factors of
24-7 employees or dependents or new employees or dependents who may
24-8 become eligible for the coverage.
24-9 SECTION 1.14. Article 26.25, Insurance Code, is amended to
24-10 read as follows:
24-11 Art. 26.25. NOTICE TO COVERED PERSONS. (a) Not later than
24-12 the 30th day before the date on which termination of coverage is
24-13 effective, a small employer carrier that cancels or refuses to
24-14 renew coverage under a small employer health benefit plan under
24-15 Article 26.23 or 26.24 of this code shall notify the small employer
24-16 of the cancellation or refusal to renew. It is the responsibility
24-17 of the small employer to notify enrollees of the cancellation or
24-18 refusal to renew the coverage.
24-19 (b) The notice provided to a small employer by a small
24-20 employer carrier under this article is in addition to any other
24-21 notice required by Article 26.23 or 26.24 of this code.
24-22 SECTION 1.15. Article 26.33, Insurance Code, is amended by
24-23 adding Subsection (d) to read as follows:
24-24 (d) A small employer carrier may establish premium
24-25 discounts, rebates, or a reduction in otherwise applicable
24-26 copayments or deductibles in return for adherence to programs of
24-27 health promotion and disease prevention. A discount, rebate, or
25-1 reduction established under this subsection does not violate
25-2 Section 4(8), Article 21.21, of this code.
25-3 SECTION 1.16. Article 26.40, Insurance Code, is amended to
25-4 read as follows:
25-5 Art. 26.40. DISCLOSURE. (a) In connection with the
25-6 offering for sale of any small employer health benefit plan, each
25-7 small employer carrier and each agent shall make a reasonable
25-8 disclosure, as part of its solicitation and sales materials, of:
25-9 (1) the extent to which premium rates for a specific
25-10 small employer are established or adjusted based on the actual or
25-11 expected variation in claim costs or the actual or expected
25-12 variation in health status of the employees of the small employer
25-13 and their dependents;
25-14 (2) provisions concerning the small employer carrier's
25-15 right to change premium rates and the factors other than claim
25-16 experience that affect changes in premium rates;
25-17 (3) provisions relating to renewability of policies
25-18 and contracts; and
25-19 (4) any preexisting condition provision.
25-20 (b) Each small employer carrier shall disclose on request by
25-21 a small employer the benefits and premiums available under all
25-22 small employer coverage for which the employer is qualified.
25-23 (c) A small employer carrier is not required to disclose any
25-24 information to a small employer that is proprietary or trade secret
25-25 information under applicable law.
25-26 (d) Information provided under this article to small
25-27 employers must be provided in a manner that is understandable by
26-1 the average small employer and sufficient to reasonably inform
26-2 small employers of their rights and obligations under a small
26-3 employer health benefit plan.
26-4 SECTION 1.17. Article 26.49, Insurance Code, is amended to
26-5 read as follows:
26-6 Art. 26.49. PREEXISTING CONDITION PROVISIONS. (a) A
26-7 preexisting condition provision in a small employer health benefit
26-8 plan may not apply to expenses incurred on or after the expiration
26-9 of the 12 months following the initial effective date of coverage
26-10 of the enrollee or late enrollee.
26-11 (b) A preexisting condition provision in a small employer
26-12 health benefit plan may not apply to coverage for a disease or
26-13 condition other than a disease or condition for which medical
26-14 advice, diagnosis, care, or treatment was recommended or received
26-15 during the six months before the earlier of:
26-16 (1) the effective date of coverage; or
26-17 (2) the first day of the waiting period.
26-18 (c) A small employer carrier shall not treat genetic
26-19 information as a preexisting condition described by Subsection (b)
26-20 of this article in the absence of a diagnosis of the condition
26-21 related to the information.
26-22 (d) A small employer carrier shall not treat a pregnancy as
26-23 a preexisting condition described by Subsection (b) of this
26-24 article.
26-25 (e) A preexisting condition provision in a small employer
26-26 health benefit plan may not apply to an individual who was
26-27 continuously covered for an aggregate [a minimum] period of 12
27-1 months under creditable coverage [by a health benefit plan] that
27-2 was in effect up to a date not more than 63 [60] days before the
27-3 effective date of coverage under the small employer health benefit
27-4 plan, excluding any waiting period.
27-5 (f) [(d)] In determining whether a preexisting condition
27-6 provision applies to an individual covered by a small employer
27-7 health benefit plan, the small employer carrier shall credit the
27-8 time the individual was covered under creditable coverage [a
27-9 previous health benefit plan] if the previous coverage was in
27-10 effect at any time during the 12 months preceding the effective
27-11 date of coverage under a small employer health benefit plan. If
27-12 the previous coverage was issued under [by] a health benefit plan
27-13 [maintenance organization], any waiting period that applied before
27-14 that coverage became effective also shall be credited against the
27-15 preexisting condition provision period.
27-16 (g) A health maintenance organization may impose an
27-17 affiliation period if the period is applied uniformly without
27-18 regard to any health status related factor. The affiliation period
27-19 shall not exceed two months for an enrollee, other than a late
27-20 enrollee, and shall not exceed 90 days for a late enrollee. An
27-21 affiliation period under a plan shall run concurrently with any
27-22 applicable waiting period under the plan. The health maintenance
27-23 organization must credit an affiliation period to any preexisting
27-24 condition provision period. A health maintenance organization may
27-25 use an alternative method approved by the commissioner to address
27-26 adverse selection.
27-27 [(e) A carrier that does not use a preexisting condition
28-1 provision in any of its health benefit plans may impose an
28-2 affiliation period. For purposes of this subsection, "affiliation
28-3 period" means a period not to exceed 90 days for new enrollees and
28-4 not to exceed 180 days for late enrollees during which premiums are
28-5 not collected and the issued coverage is not effective.]
28-6 (h) This [(f) Subsection (e) of this] article does not
28-7 preclude application of any waiting period applicable to all new
28-8 enrollees under the health benefit plan. [However, any
28-9 carrier-imposed waiting period may not exceed 90 days and must be
28-10 used in lieu of a preexisting condition provision.]
28-11 SECTION 1.18. The headings to Subchapters C, D, E, F, and G,
28-12 Chapter 26, Insurance Code, are amended to read as follows:
28-13 SUBCHAPTER C. GUARANTEED ISSUE AND RENEWABILITY OF SMALL
28-14 EMPLOYER HEALTH BENEFIT PLANS
28-15 SUBCHAPTER D. UNDERWRITING AND RATING OF SMALL EMPLOYER
28-16 HEALTH BENEFIT PLANS
28-17 SUBCHAPTER E. COVERAGE UNDER SMALL EMPLOYER HEALTH
28-18 BENEFIT PLANS
28-19 SUBCHAPTER F. REINSURANCE FOR SMALL EMPLOYER HEALTH
28-20 BENEFIT PLANS
28-21 SUBCHAPTER G. MARKETING OF SMALL EMPLOYER HEALTH
28-22 BENEFIT PLANS
28-23 PART 2. PROVISIONS APPLICABLE TO LARGE EMPLOYERS
28-24 SECTION 2.01. Chapter 26, Insurance Code, is amended by
28-25 adding Subchapter H to read as follows:
28-26 SUBCHAPTER H. LARGE EMPLOYER HEALTH BENEFIT PLANS
28-27 Art. 26.81. APPLICABILITY. (a) An individual or group
29-1 health benefit plan is subject to this subchapter if the plan
29-2 provides health care benefits to eligible employees of a large
29-3 employer and if:
29-4 (1) a portion of the premium or benefits is paid by a
29-5 large employer; or
29-6 (2) the health benefit plan is treated by the employer
29-7 or by a covered individual as part of a plan or program for the
29-8 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
29-9 U.S.C. Section 106 or 162).
29-10 (b) For an employer who was not in existence throughout the
29-11 calendar year preceding the year in which the determination of
29-12 whether the employer is a large employer is made, the determination
29-13 is based on the average number of eligible employees the employer
29-14 reasonably expects to employ on business days in the calendar year
29-15 in which the determination is made.
29-16 (c) Except as provided by Subsection (a) of this article,
29-17 this subchapter does not apply to an individual health insurance
29-18 policy that is subject to individual underwriting, even if the
29-19 premium is remitted through payroll deduction.
29-20 Art. 26.82. CERTIFICATION. Not later than March 1 of each
29-21 year, each health carrier shall certify to the commissioner
29-22 whether, as of January 1 of that year, it is offering a health
29-23 benefit plan subject to this subchapter under Article 26.81 of this
29-24 code.
29-25 Art. 26.83. COVERAGE REQUIREMENTS. (a) A large employer
29-26 carrier may refuse to provide coverage to a large employer in
29-27 accordance with the carrier's underwriting standards and criteria.
30-1 However, on issuance of a health benefit plan to a large employer,
30-2 each large employer carrier shall provide coverage to the employees
30-3 who meet the participation criteria established by the large
30-4 employer without regard to an individual's health status related
30-5 factors. The participation criteria may not be based on health
30-6 status related factors.
30-7 (b) The large employer carrier shall accept or reject the
30-8 entire group of individuals who meet the participation criteria
30-9 established by the employer and who choose coverage and may exclude
30-10 only those employees or dependents who have declined coverage. The
30-11 carrier may charge premiums in accordance with Article 26.89 of
30-12 this code to the group of employees or dependents who meet the
30-13 participation criteria established by the employer and who do not
30-14 decline coverage.
30-15 (c) The large employer carrier shall obtain a written waiver
30-16 for each employee who meets the participation criteria and who
30-17 declines coverage under the health plan offered to a large
30-18 employer. The waiver must ensure that the employee was not induced
30-19 or pressured into declining coverage because of the employee's
30-20 health status related factors.
30-21 (d) A large employer carrier may not provide coverage to a
30-22 large employer or the employees of a large employer if the carrier
30-23 or an agent for the carrier knows that the large employer has
30-24 induced or pressured an employee who meets the participation
30-25 criteria or a dependent of the employee to decline coverage because
30-26 of that individual's health status related factors.
30-27 (e) A large employer carrier may require a large employer to
31-1 meet minimum contribution or participation requirements as a
31-2 condition of issuance and renewal in accordance with the carrier's
31-3 usual and customary practices for all employer health benefit plans
31-4 in this state. The participation requirements may determine the
31-5 percentage of individuals that must be enrolled in the plan in
31-6 accordance with the participation criteria established by the
31-7 employer. Those requirements must be stated in the contract and
31-8 must be applied uniformly to each large employer offered or issued
31-9 coverage by the large employer carrier in this state.
31-10 (f) The initial enrollment period for employees meeting the
31-11 participation criteria must be at least 31 days, with a 31-day
31-12 annual open enrollment period. Such enrollment period shall
31-13 consist of an entire calendar month, beginning on the first day of
31-14 the month and ending on the last day of the month. If the month is
31-15 February, the period shall last through March 2.
31-16 (g) If dependent coverage is offered to enrollees under a
31-17 large employer health benefit plan, the initial enrollment period
31-18 for the dependents must be at least 31 days, with a 31-day annual
31-19 open enrollment period.
31-20 (h) A large employer may establish a waiting period during
31-21 which a new employee is not eligible for coverage. The employer
31-22 shall determine the duration of the waiting period.
31-23 (i) A new employee who meets the participation criteria of a
31-24 covered large employer may not be denied coverage if the
31-25 application for coverage is received by the large employer not
31-26 later than the 31st day after the later of:
31-27 (1) the date on which the employment begins; or
32-1 (2) the date on which the waiting period established
32-2 under Subsection (h) of this article expires.
32-3 (j) If dependent coverage is offered to the enrollees under
32-4 a large employer health benefit plan, a dependent of a new employee
32-5 who meets the participation criteria established by the large
32-6 employer may not be denied coverage if the application for coverage
32-7 is received by the large employer not later than the 31st day after
32-8 the later of:
32-9 (1) the date on which the employment begins;
32-10 (2) the date on which the waiting period established
32-11 under Subsection (h) of this article expires; or
32-12 (3) the date on which the dependent becomes eligible
32-13 for enrollment.
32-14 (k) A late enrollee may be excluded from coverage until the
32-15 next annual open enrollment period and may be subject to a 12-month
32-16 preexisting condition provision as described by Article 26.90 of
32-17 this code. The period during which a preexisting condition
32-18 provision applies may not exceed 18 months from the date of the
32-19 initial application.
32-20 (l) A large employer carrier may not exclude any employee
32-21 who meets the participation criteria or an eligible dependent,
32-22 including a late enrollee, who would otherwise be covered under a
32-23 large employer group.
32-24 (m) A large employer health benefit plan may not, by use of
32-25 a rider or amendment applicable to a specific individual, limit or
32-26 exclude coverage by type of illness, treatment, medical condition,
32-27 or accident, except for a preexisting condition permitted under
33-1 Article 26.90 of this code.
33-2 Art. 26.84. DEPENDENT CHILDREN. (a) A large employer
33-3 health benefit plan may not limit or exclude initial coverage of a
33-4 newborn child of a covered employee. Any coverage of a newborn
33-5 child of a covered employee under this subsection terminates on the
33-6 32nd day after the date of the birth of the child unless:
33-7 (1) dependent children are eligible for coverage under
33-8 the large employer health benefit plan; and
33-9 (2) notification of the birth and any required
33-10 additional premium are received by the large employer carrier not
33-11 later than the 31st day after the date of birth.
33-12 (b) If dependent children are eligible for coverage under
33-13 the large employer health benefit plan, a large employer health
33-14 benefit plan may not limit or exclude initial coverage of an
33-15 adopted child of an insured. A child is considered to be the child
33-16 of an insured if the insured is a party in a suit in which the
33-17 adoption of the child by the insured is sought.
33-18 (c) If dependent children are eligible for coverage under
33-19 the large employer health benefit plan an adopted child of an
33-20 insured may be enrolled, at the option of the insured, within
33-21 either:
33-22 (1) 31 days after the insured is a party in a suit for
33-23 adoption; or
33-24 (2) 31 days of the date the adoption is final.
33-25 (d) Coverage of an adopted child of an employee under this
33-26 article terminates unless notification of the adoption and any
33-27 required additional premiums are received by the large employer
34-1 carrier not later than either:
34-2 (1) the 31st day after the insured becomes a party in
34-3 a suit in which the adoption of the child by the insured is sought;
34-4 or
34-5 (2) the 31st day after the date of the adoption.
34-6 Art. 26.85. GEOGRAPHIC SERVICE AREA. (a) A large employer
34-7 carrier is not required to offer or issue the large employer health
34-8 benefit plans to:
34-9 (1) a large employer that is not located within a
34-10 geographic service area of the large employer carrier;
34-11 (2) an employee of a large employer who neither
34-12 resides nor works in the geographic service area of the large
34-13 employer carrier; or
34-14 (3) a large employer located within a geographic
34-15 service area with respect to which the large employer carrier
34-16 demonstrates to the satisfaction of the commissioner that the large
34-17 employer carrier:
34-18 (A) reasonably anticipates that it will not have
34-19 the capacity to deliver services adequately because of obligations
34-20 to existing covered individuals; and
34-21 (B) is acting uniformly without regard to the
34-22 claims experience of the large employer or any health status
34-23 related factor of employees or dependents or new employees or
34-24 dependents who may become eligible for the coverage.
34-25 (b) A large employer carrier that is unable to offer
34-26 coverage in a geographic service area in accordance with a
34-27 determination made by the commissioner under Subsection (a)(3) of
35-1 this article may not offer large employer benefit plans in the
35-2 applicable service area before the 180th day after the later of:
35-3 (1) the date of the refusal; or
35-4 (2) the date the carrier demonstrates to the
35-5 satisfaction of the commissioner that it has regained the capacity
35-6 to deliver services to large employers in the geographic service
35-7 area.
35-8 (c) If the commissioner determines that requiring the
35-9 acceptance of large employers under this subchapter would place a
35-10 large employer carrier in a financially impaired condition and that
35-11 the large employer carrier is acting uniformly without regard to
35-12 claims experience of the large employer or any health status
35-13 related factors of employees or dependents or new employees or
35-14 dependents who may become eligible for the coverage, the large
35-15 employer carrier may not offer coverage to large employers until
35-16 the later of:
35-17 (1) the 180th day after the date the commissioner
35-18 makes the determination; or
35-19 (2) the date the commissioner determines that
35-20 accepting large employers would not place the large employer
35-21 carrier in a financially impaired condition.
35-22 (d) A large employer carrier must file each of its
35-23 geographic service areas with the commissioner. The commissioner
35-24 may disapprove the use of a geographic service area by a large
35-25 employer carrier.
35-26 Art. 26.86. RENEWABILITY OF COVERAGE; CANCELLATION.
35-27 (a) Except as provided by Article 26.87 of this code, a large
36-1 employer carrier shall renew the large employer health benefit
36-2 plans for a covered large employer, at the option of the large
36-3 employer, unless:
36-4 (1) a premium has not been paid as required by the
36-5 terms of the plan;
36-6 (2) the large employer has committed fraud or
36-7 intentional misrepresentation of a material fact;
36-8 (3) the large employer has not complied with the terms
36-9 of the health benefit plan;
36-10 (4) no enrollee in connection with the plan resides or
36-11 works in the service area of the large employer carrier or in the
36-12 area for which the large employer carrier is authorized to do
36-13 business; or
36-14 (5) membership of an employer in an association
36-15 terminates, but only if coverage is terminated uniformly without
36-16 regard to a health status related factor of a covered individual.
36-17 (b) A large employer carrier may refuse to renew the
36-18 coverage of an eligible employee or dependent for fraud or
36-19 intentional misrepresentation of a material fact by that
36-20 individual.
36-21 (c) A large employer carrier may not cancel a large employer
36-22 health benefit plan except for the reasons specified for refusal to
36-23 renew under Subsection (a) of this article. A large employer
36-24 carrier may not cancel the coverage of an eligible employee or
36-25 dependent except for the reasons specified for refusal to renew
36-26 under Subsection (b) of this article.
36-27 Art. 26.87. REFUSAL TO RENEW. (a) A large employer carrier
37-1 may elect to refuse to renew all large employer health benefit
37-2 plans delivered or issued for delivery by the large employer
37-3 carrier in this state or in a geographic service area approved
37-4 under Article 26.85 of this code. The large employer carrier shall
37-5 notify the commissioner of the election not later than the 180th
37-6 day before the date coverage under the first large employer health
37-7 benefit plan terminates under this subsection.
37-8 (b) The large employer carrier shall notify each affected
37-9 covered large employer not later than the 180th day before the date
37-10 on which coverage terminates for that large employer.
37-11 (c) A large employer carrier that elects under Subsection
37-12 (a) of this article to refuse to renew all large employer health
37-13 benefit plans in this state or in an approved geographic service
37-14 area may not write a new large employer health benefit plan in this
37-15 state or in the geographic service area, as applicable, before the
37-16 fifth anniversary of the date on which notice is delivered to the
37-17 commissioner under Subsection (a) of this article.
37-18 (d) A large employer carrier may elect to discontinue a
37-19 particular type of large employer coverage only if the large
37-20 employer carrier:
37-21 (1) provides notice to each employer of the
37-22 discontinuation before the 90th day preceding the date of the
37-23 discontinuation of the coverage;
37-24 (2) offers to each employer the option to purchase
37-25 other large employer coverage offered by the large employer carrier
37-26 at the time of the discontinuation; and
37-27 (3) acts uniformly without regard to the claims
38-1 experience of the employer or any health status related factors of
38-2 employees or dependents or new employees or dependents who may
38-3 become eligible for the coverage.
38-4 Art. 26.88. NOTICE TO COVERED PERSONS. (a) Not later than
38-5 the 30th day before the date on which termination of coverage is
38-6 effective, a large employer carrier that cancels or refuses to
38-7 renew coverage under a large employer health benefit plan under
38-8 Article 26.86 or 26.87 of this code shall notify the large employer
38-9 of the cancellation or refusal to renew. It is the responsibility
38-10 of the large employer to notify enrollees of the cancellation or
38-11 refusal to renew the coverage.
38-12 (b) The notice provided to a large employer by a large
38-13 employer carrier under this article is in addition to any other
38-14 notice required by Article 26.86 or 26.87 of this code.
38-15 Art. 26.89. PREMIUM RATES; ADJUSTMENTS. (a) A large
38-16 employer carrier may not charge an adjustment to premium rates for
38-17 individual employees or dependents for health status related
38-18 factors or duration of coverage. Any adjustment must be applied
38-19 uniformly to the rates charged for all employees and dependents of
38-20 employees of the large employer. This subsection does not restrict
38-21 the amount that a large employer may be charged for coverage.
38-22 (b) A large employer carrier may establish premium
38-23 discounts, rebates, or a reduction in otherwise applicable
38-24 copayments or deductibles in return for adherence to programs of
38-25 health promotion and disease prevention. A discount, rebate, or
38-26 reduction established under this subsection does not violate
38-27 Section 4(8), Article 21.21, of this code.
39-1 Art. 26.90. PREEXISTING CONDITION PROVISIONS. (a) A
39-2 preexisting condition provision in a large employer health benefit
39-3 plan may not apply to an expense incurred on or after the
39-4 expiration of the 12 months following the initial effective date of
39-5 coverage of the enrollee or late enrollee.
39-6 (b) A preexisting condition provision in a large employer
39-7 health benefit plan may not apply to coverage for a disease or
39-8 condition other than a disease or condition for which medical
39-9 advice, diagnosis, care, or treatment was recommended or received
39-10 during the six months before the earlier of:
39-11 (1) the effective date of coverage; or
39-12 (2) the first day of the waiting period.
39-13 (c) A large employer carrier shall not treat genetic
39-14 information as a preexisting condition described by Subsection (b)
39-15 of this article in the absence of a diagnosis of the condition
39-16 related to the information.
39-17 (d) A large employer carrier shall not treat a pregnancy as
39-18 a preexisting condition described by Subsection (b) of this
39-19 article.
39-20 (e) A preexisting condition provision in a large employer
39-21 health benefit plan shall not apply to an individual who was
39-22 continuously covered for an aggregate period of 12 months under
39-23 creditable coverage that was in effect up to a date not more than
39-24 63 days before the effective date of coverage under the large
39-25 employer health benefit plan, excluding any waiting period.
39-26 (f) In determining whether a preexisting condition provision
39-27 applies to an individual covered by a large employer health benefit
40-1 plan, the large employer carrier shall credit the time the
40-2 individual was covered under creditable coverage if the previous
40-3 coverage was in effect at any time during the 12 months preceding
40-4 the effective date of coverage under a large employer health
40-5 benefit plan. If the previous coverage was issued under a health
40-6 benefit plan, any waiting period shall also be credited to the
40-7 preexisting condition provision period.
40-8 (g) A health maintenance organization may impose an
40-9 affiliation period if the period is applied uniformly without
40-10 regard to any health status related factor. The affiliation period
40-11 shall not exceed two months for an enrollee, other than a late
40-12 enrollee, and shall not exceed 90 days for a late enrollee. An
40-13 affiliation period under a plan shall run concurrently with any
40-14 applicable waiting period under the plan. The health maintenance
40-15 organization must credit an affiliation period to any preexisting
40-16 condition provision period. A health maintenance organization may
40-17 use an alternative method approved by the commissioner to address
40-18 adverse selection.
40-19 (h) This article does not preclude application of any
40-20 waiting period applicable to all new enrollees under the health
40-21 benefit plan.
40-22 Art. 26.91. FAIR MARKETING. (a) On request, each large
40-23 employer purchasing health benefit plans shall be given a summary
40-24 of all plans for which the employer is eligible.
40-25 (b) The department may require periodic reports by large
40-26 employer carriers and agents regarding the large employer health
40-27 benefit plans issued by those carriers. The reporting requirements
41-1 must require information regarding the number of large employer
41-2 health benefit plans in various categories that are marketed or
41-3 issued to large employers and must comply with federal law and
41-4 regulations.
41-5 Art. 26.92. HEALTH STATUS AND CLAIMS EXPERIENCE; PROHIBITED
41-6 ACTS. A large employer carrier or agent may not encourage a large
41-7 employer to exclude an employee, meeting the participation
41-8 criteria, from health coverage provided in connection with the
41-9 employee's employment.
41-10 Art. 26.93. AGENTS. A large employer carrier may not
41-11 terminate, fail to renew, or limit its contract or agreement of
41-12 representation with an agent because of any health status related
41-13 factors of a large employer group placed by the agent with the
41-14 carrier.
41-15 Art. 26.94. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
41-16 REFUSAL TO RENEW. Denial by a large employer carrier of an
41-17 application for coverage from a large employer carrier or
41-18 cancellation or refusal to renew must be in writing and must state
41-19 the reason or reasons for the denial, cancellation, or refusal.
41-20 Art. 26.95. THIRD-PARTY ADMINISTRATOR. If a large employer
41-21 carrier enters into an agreement with a third-party administrator
41-22 to provide administrative, marketing, or other services related to
41-23 the offering of large employer health benefit plans to large
41-24 employers in this state, the third-party administrator is subject
41-25 to this subchapter.
41-26 PART 3. CERTIFICATION OF COVERAGE
41-27 SECTION 3.01. Subchapter E, Chapter 21, Insurance Code, is
42-1 amended by adding Article 21.52G to read as follows:
42-2 Art. 21.52G. CERTIFICATION AND DISCLOSURE OF COVERAGE UNDER
42-3 HEALTH BENEFIT PLAN
42-4 Sec. 1. DEFINITIONS. In this article:
42-5 (1) "Creditable coverage" means creditable coverage
42-6 described by Section 3 of this article.
42-7 (2) "Health benefit plan" means a plan subject to this
42-8 article under Section 2 of this article.
42-9 Sec. 2. HEALTH BENEFIT PLAN. This article applies to a
42-10 health benefit plan that:
42-11 (1) provides benefits for medical or surgical expenses
42-12 incurred as a result of a health condition, accident, or sickness,
42-13 including:
42-14 (A) an individual, group, blanket, or franchise
42-15 insurance policy or insurance agreement, a group hospital service
42-16 contract, or an individual or group evidence of coverage that is
42-17 offered by:
42-18 (i) an insurance company;
42-19 (ii) a group hospital service corporation
42-20 operating under Chapter 20 of this code;
42-21 (iii) a fraternal benefit society
42-22 operating under Chapter 10 of this code;
42-23 (iv) a stipulated premium insurance
42-24 company operating under Chapter 22 of this code; or
42-25 (v) a health maintenance organization
42-26 operating under the Texas Health Maintenance Organization Act
42-27 (Chapter 20A, Vernon's Texas Insurance Code); or
43-1 (B) to the extent permitted by the Employee
43-2 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
43-3 seq.), a health benefit plan that is offered by:
43-4 (i) a multiple employer welfare
43-5 arrangement as defined by Section 3, Employee Retirement Income
43-6 Security Act of 1974 (29 U.S.C. Section 1002), and operating under
43-7 Article 3.95-1 et seq. of this code; or
43-8 (ii) another analogous benefit
43-9 arrangement;
43-10 (2) is offered by an approved nonprofit health
43-11 corporation that is certified under Section 5.01(a), Medical
43-12 Practice Act (Article 4495b, Vernon's Texas Civil Statutes), and
43-13 that holds a certificate of authority issued by the commissioner
43-14 under Article 21.52F of this code; or
43-15 (3) is offered by any other entity not licensed under
43-16 this code or another insurance law of this state that contracts
43-17 directly for health care services on a risk-sharing basis,
43-18 including an entity that contracts for health care services on a
43-19 capitation basis.
43-20 Sec. 3. CREDITABLE COVERAGE. (a) An individual's coverage
43-21 is creditable for purposes of this article if the coverage is
43-22 provided under:
43-23 (1) a self-funded or self-insured employee welfare
43-24 benefit plan that provides health benefits and that is established
43-25 in accordance with the Employee Retirement Income Security Act of
43-26 1974 (29 U.S.C. Section 1001 et seq.);
43-27 (2) a group health benefit plan provided by a health
44-1 insurance carrier or health maintenance organization;
44-2 (3) an individual health insurance policy or evidence
44-3 of coverage;
44-4 (4) Part A or Part B of Title XVIII of the Social
44-5 Security Act (42 U.S.C. Section 1395c et seq.);
44-6 (5) Title XIX of the Social Security Act (42 U.S.C.
44-7 Section 1396 et seq.), other than coverage consisting solely of
44-8 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
44-9 (6) Chapter 55, Title 10, United States Code (10
44-10 U.S.C. Section 1071 et seq.);
44-11 (7) a medical care program of the Indian Health
44-12 Service or of a tribal organization;
44-13 (8) a state health benefits risk pool;
44-14 (9) a health plan offered under Chapter 89, Title 5,
44-15 United States Code (5 U.S.C. Section 8901 et seq.);
44-16 (10) a public health plan as defined by federal
44-17 regulations; or
44-18 (11) a health benefit plan under Section 5(e), Peace
44-19 Corps Act (22 U.S.C. Section 2504(e)).
44-20 (b) Creditable coverage does not include:
44-21 (1) accident-only or disability income insurance, or a
44-22 combination of accident-only and disability income insurance;
44-23 (2) coverage issued as a supplement to liability
44-24 insurance;
44-25 (3) liability insurance, including general liability
44-26 insurance and automobile liability insurance;
44-27 (4) workers' compensation or similar insurance;
45-1 (5) automobile medical payment insurance;
45-2 (6) credit-only insurance;
45-3 (7) coverage for on-site medical clinics;
45-4 (8) other coverage that is:
45-5 (A) similar to the coverage described in this
45-6 subsection under which benefits for medical care are secondary or
45-7 incidental to other insurance benefits; and
45-8 (B) specified in federal regulations;
45-9 (9) coverage that provides limited-scope dental or
45-10 vision benefits;
45-11 (10) long-term care coverage or benefits, nursing home
45-12 care coverage or benefits, home health care coverage or benefits,
45-13 community-based care coverage or benefits, or any combination of
45-14 those coverages or benefits;
45-15 (11) coverage that provides other limited benefits
45-16 specified by federal regulations;
45-17 (12) coverage for a specified disease or illness;
45-18 (13) hospital indemnity or other fixed indemnity
45-19 insurance; or
45-20 (14) Medicare supplemental health insurance as defined
45-21 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
45-22 1395ss), coverage supplemental to the coverage provided under
45-23 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
45-24 seq.), and similar supplemental coverage provided under a group
45-25 plan.
45-26 Sec. 4. CERTIFICATION OF COVERAGE. Each issuer of a health
45-27 benefit plan shall provide a certification of coverage, in
46-1 accordance with the standards the commissioner adopts by rule, as
46-2 necessary to determine the period of applicable creditable coverage
46-3 of health benefit plans.
46-4 Sec. 5. RULES. The commissioner shall adopt rules as
46-5 necessary to implement this article and related provisions of this
46-6 code and to meet the minimum requirements of federal law and
46-7 regulations.
46-8 PART 4. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
46-9 SECTION 4.01. Article 3.95-1, Insurance Code, is amended to
46-10 read as follows:
46-11 Art. 3.95-1. DEFINITIONS. In this subchapter:
46-12 (1) "Board" means the Texas Department [State Board]
46-13 of Insurance or the commissioner, as appropriate.
46-14 (2) "Commissioner" means the commissioner of
46-15 insurance.
46-16 (3) "Creditable coverage" means coverage described by
46-17 Article 3.95-1.5 of this code.
46-18 (4) "Employee welfare benefit plan" has the meaning
46-19 assigned by Section 3(1) of the Employee Retirement Income Security
46-20 Act of 1974 (29 U.S.C. Section 1002(1)).
46-21 (5) [(4)] "Fully insured multiple employer welfare
46-22 arrangement" means a multiple employer welfare arrangement that
46-23 provides benefits to its participating employees and beneficiaries
46-24 for which 100 percent of the liability has been assumed by an
46-25 insurance company authorized to do business in this state.
46-26 (6) "Health benefit plan" means a health benefit plan
46-27 described by Article 3.95-1.6 of this code.
47-1 (7) "Health status related factor" means:
47-2 (A) health status;
47-3 (B) medical condition, including both physical
47-4 and mental illness;
47-5 (C) claims experience;
47-6 (D) receipt of health care;
47-7 (E) medical history;
47-8 (F) genetic information;
47-9 (G) evidence of insurability, including
47-10 conditions arising out of acts of family violence; and
47-11 (H) disability.
47-12 (8) "Late-participating employee" means an employee
47-13 described by Article 3.95-1.7 of this code.
47-14 (9) [(5)] "Multiple employer welfare arrangement" has
47-15 the meaning assigned by Section 3(40) of the Employee Retirement
47-16 Income Security Act of 1974 (29 U.S.C. Section 1002(40)) to
47-17 describe an entity which meets either or both of the following
47-18 criteria:
47-19 (A) one or more of the employer members in the
47-20 multiple employer welfare arrangement is either domiciled in this
47-21 state or has its principal headquarters or principal administrative
47-22 office in this state; or
47-23 (B) the multiple employer welfare arrangement
47-24 solicits an employer that is domiciled in this state or has its
47-25 principal headquarters or principal administrative office in this
47-26 state.
47-27 (10) "Participation criteria" means any criteria or
48-1 rules established by an employer to determine the employees who are
48-2 eligible for enrollment, including continued enrollment, under the
48-3 terms of a health benefit plan. Such criteria or rules may not be
48-4 based on health status related factors.
48-5 (11) "Preexisting condition provision" means a
48-6 provision that denies, excludes, or limits coverage for a disease
48-7 or condition for a specified period after the effective date of
48-8 coverage.
48-9 (12) "Waiting period" means a period established by a
48-10 multiple employer welfare arrangement that must pass before an
48-11 individual who is a potential participating employee in a health
48-12 benefit plan is eligible to be covered for benefits.
48-13 SECTION 4.02. Subchapter I, Chapter 3, Insurance Code, is
48-14 amended by adding Articles 3.95-1.5, 3.95-1.6, and 3.95-1.7 to read
48-15 as follows:
48-16 Art. 3.95-1.5. CREDITABLE COVERAGE. (a) An individual's
48-17 coverage is creditable for purposes of this subchapter if the
48-18 coverage is provided under:
48-19 (1) a self-funded or self-insured employee welfare
48-20 benefit plan that provides health benefits and that is established
48-21 in accordance with the Employee Retirement Income Security Act of
48-22 1974 (29 U.S.C. Section 1001 et seq.);
48-23 (2) a group health benefit plan provided by a health
48-24 insurance carrier or health maintenance organization;
48-25 (3) an individual health insurance policy or evidence
48-26 of coverage;
48-27 (4) Part A or Part B of Title XVIII of the Social
49-1 Security Act (42 U.S.C. Section 1395c et seq.);
49-2 (5) Title XIX of the Social Security Act (42 U.S.C.
49-3 Section 1396 et seq.), other than coverage consisting solely of
49-4 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
49-5 (6) Chapter 55, Title 10, United States Code (10
49-6 U.S.C. Section 1071 et seq.);
49-7 (7) a medical care program of the Indian Health
49-8 Service or of a tribal organization;
49-9 (8) a state health benefits risk pool;
49-10 (9) a health plan offered under Chapter 89, Title 5,
49-11 United States Code (5 U.S.C. Section 8901 et seq.);
49-12 (10) a public health plan as defined by federal
49-13 regulations; or
49-14 (11) a health benefit plan under Section 5(e), Peace
49-15 Corps Act (22 U.S.C. Section 2504(e)).
49-16 (b) Creditable coverage does not include:
49-17 (1) accident-only or disability income insurance, or a
49-18 combination of accident-only and disability income insurance;
49-19 (2) coverage issued as a supplement to liability
49-20 insurance;
49-21 (3) liability insurance, including general liability
49-22 insurance and automobile liability insurance;
49-23 (4) workers' compensation or similar insurance;
49-24 (5) automobile medical payment insurance;
49-25 (6) credit-only insurance;
49-26 (7) coverage for on-site medical clinics;
49-27 (8) other coverage that is:
50-1 (A) similar to the coverage described by this
50-2 subsection under which benefits for medical care are secondary or
50-3 incidental to other insurance benefits; and
50-4 (B) specified in federal regulations;
50-5 (9) coverage that provides limited-scope dental or
50-6 vision benefits;
50-7 (10) long-term care coverage or benefits, nursing home
50-8 care coverage or benefits, home health care coverage or benefits,
50-9 community-based care coverage or benefits, or any combination of
50-10 those coverages or benefits;
50-11 (11) coverage that provides other limited benefits
50-12 specified by federal regulations;
50-13 (12) coverage for a specified disease or illness;
50-14 (13) hospital indemnity or other fixed indemnity
50-15 insurance; or
50-16 (14) Medicare supplemental health insurance as defined
50-17 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
50-18 1395ss), coverage supplemental to the coverage provided under
50-19 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071
50-20 et seq.), and similar supplemental coverage provided under a group
50-21 plan.
50-22 Art. 3.95-1.6. HEALTH BENEFIT PLAN. (a) For purposes of
50-23 this subchapter, the term "health benefit plan" includes any plan
50-24 that provides benefits for health care services.
50-25 (b) A health benefit plan does not include:
50-26 (1) accident-only or disability income insurance or a
50-27 combination of accident-only and disability income insurance;
51-1 (2) credit-only insurance;
51-2 (3) disability insurance;
51-3 (4) coverage for a specified disease or illness;
51-4 (5) Medicare services under a federal contract;
51-5 (6) Medicare supplement and Medicare Select policies
51-6 regulated in accordance with federal law;
51-7 (7) long-term care coverage or benefits, nursing home
51-8 care coverage or benefits, home health care coverage or benefits,
51-9 community-based care coverage or benefits, or any combination of
51-10 those coverages or benefits;
51-11 (8) coverage that provides limited-scope dental or
51-12 vision benefits;
51-13 (9) coverage provided by a single service health
51-14 maintenance organization;
51-15 (10) coverage issued as a supplement to liability
51-16 insurance;
51-17 (11) workers' compensation or similar insurance;
51-18 (12) automobile medical payment insurance coverage;
51-19 (13) jointly managed trusts authorized under 29 U.S.C.
51-20 Section 141 et seq. that contain a plan of benefits for employees
51-21 that is negotiated in a collective bargaining agreement governing
51-22 wages, hours, and working conditions of the employees that is
51-23 authorized under 29 U.S.C. Section 157;
51-24 (14) hospital indemnity or other fixed indemnity
51-25 insurance;
51-26 (15) reinsurance contracts issued on a stop-loss,
51-27 quota-share, or similar basis;
52-1 (16) short-term major medical contracts;
52-2 (17) liability insurance, including general liability
52-3 insurance and automobile liability insurance;
52-4 (18) other insurance coverage that is:
52-5 (A) similar to the coverage described by this
52-6 subsection under which benefits for medical care are secondary or
52-7 incidental to other insurance benefits; and
52-8 (B) specified in federal regulations;
52-9 (19) coverage for on-site medical clinics; or
52-10 (20) coverage that provides other limited benefits
52-11 specified by federal regulations.
52-12 Art. 3.95-1.7. LATE-PARTICIPATING EMPLOYEE. (a) An
52-13 individual is a late-participating employee if the individual:
52-14 (1) is an employee or dependent eligible for
52-15 enrollment; and
52-16 (2) requests enrollment in a participating employer's
52-17 health benefit plan after the expiration of the initial enrollment
52-18 period established under the terms of the first plan for which that
52-19 employee or dependent was eligible through the participating
52-20 employer and after the expiration of an open enrollment period
52-21 under Article 3.95-4.1 of this code.
52-22 (b) An individual is not a late-participating employee if:
52-23 (1) the individual:
52-24 (A) was covered under another health benefit
52-25 plan or self-funded employer health benefit plan at the time the
52-26 individual was eligible to enroll;
52-27 (B) declines in writing, at the time of the
53-1 initial eligibility, stating that coverage under another health
53-2 benefit plan or self-funded employer health benefit plan was the
53-3 reason for declining enrollment;
53-4 (C) has lost coverage under another health
53-5 benefit plan or self-funded employer health benefit plan as a
53-6 result of:
53-7 (i) the termination of employment;
53-8 (ii) the reduction in the number of hours
53-9 of employment;
53-10 (iii) the termination of the other plan's
53-11 coverage;
53-12 (iv) the termination of contributions
53-13 toward the premium made by the employer; or
53-14 (v) the death of a spouse or divorce; and
53-15 (D) requests enrollment not later than the 31st
53-16 day after the date on which coverage under the other health benefit
53-17 plan or self-funded employer health benefit plan terminates;
53-18 (2) the individual is employed by an employer who
53-19 offers multiple health benefit plans and the individual elects a
53-20 different health benefit plan during an open enrollment period;
53-21 (3) a court has ordered coverage to be provided for a
53-22 spouse under a covered employee's plan and request for enrollment
53-23 is made not later than the 31st day after the date the court order
53-24 is issued; or
53-25 (4) a court has ordered coverage to be provided for a
53-26 child under a covered employee's plan and the request for
53-27 enrollment is made not later than the 31st day after the date the
54-1 employer receives the court order.
54-2 SECTION 4.03. Subchapter I, Chapter 3, Insurance Code, is
54-3 amended by adding Articles 3.95-4.1 through 3.95-4.10 to read as
54-4 follows:
54-5 Art. 3.95-4.1. COVERAGE REQUIREMENTS. (a) A multiple
54-6 employer welfare arrangement may refuse to provide coverage to an
54-7 employer in accordance with the multiple employer welfare
54-8 arrangement's underwriting standards and criteria. However, on
54-9 issuance of coverage to an employer, each multiple employer welfare
54-10 arrangement shall provide coverage to the employees who meet the
54-11 participation criteria established by the terms of the plan
54-12 document without regard to an individual's health status related
54-13 factors. The participation criteria may not be based on health
54-14 status related factors.
54-15 (b) The multiple employer welfare arrangement shall accept
54-16 or reject the entire group of individuals who meet the
54-17 participation criteria and who choose coverage and may exclude
54-18 only those employees or dependents who have declined coverage. The
54-19 multiple employer welfare arrangement may charge premiums in
54-20 accordance with Article 3.95-4.6 of this code to the group of
54-21 employees or dependents who meet the participation criteria and who
54-22 do not decline coverage.
54-23 (c) The multiple employer welfare arrangement shall obtain a
54-24 written waiver for each employee who meets the participation
54-25 criteria and who declines coverage under a health plan offered to
54-26 an employer. The waiver must ensure that the employee was not
54-27 induced or pressured into declining coverage because of the
55-1 employee's health status related factors.
55-2 (d) A multiple employer welfare arrangement may not provide
55-3 coverage to an employer or the employees of an employer if the
55-4 multiple employer welfare arrangement or an agent for the multiple
55-5 employer welfare arrangement knows that the employer has induced or
55-6 pressured an employee who meets the participation criteria or a
55-7 dependent of the employee to decline coverage because of that
55-8 individual's health status related factors.
55-9 (e) A multiple employer welfare arrangement may require an
55-10 employer to meet minimum contribution or participation requirements
55-11 as a condition of issuance and renewal in accordance with the
55-12 terms of the multiple employer welfare arrangement's plan document.
55-13 Those requirements shall be stated in the plan document and shall
55-14 be applied uniformly to each employer offered or issued coverage by
55-15 the multiple employer welfare arrangement in this state.
55-16 (f) The initial enrollment period for employees meeting the
55-17 participation criteria must be at least 31 days, with a 31-day
55-18 annual open enrollment period. Such enrollment period shall
55-19 consist of an entire calendar month, beginning on the first day of
55-20 the month and ending on the last day of the month. If the month is
55-21 February, the period shall last through March 2.
55-22 (g) If dependent coverage is offered to participating
55-23 employees under the terms of a multiple employer welfare
55-24 arrangement's plan document, the initial enrollment period for the
55-25 dependents must be at least 31 days, with a 31-day annual open
55-26 enrollment period.
55-27 (h) A multiple employer welfare arrangement may establish a
56-1 waiting period during which a new employee is not eligible for
56-2 coverage in accordance with the terms of the plan document.
56-3 (i) A new employee who meets the participation criteria may
56-4 not be denied coverage if the application for coverage is received
56-5 by the multiple employer welfare arrangement not later than the
56-6 31st day after the later of:
56-7 (1) the date on which the employment begins; or
56-8 (2) the date on which the waiting period established
56-9 under this article expires.
56-10 (j) If dependent coverage is offered under the terms of a
56-11 multiple employer welfare arrangement's plan document, a dependent
56-12 of a new employee meeting the participation criteria established
56-13 by the multiple employer welfare arrangement may not be denied
56-14 coverage if the application for coverage is received by the
56-15 multiple employer welfare arrangement not later than the 31st day
56-16 after the later of:
56-17 (1) the date on which the employment begins;
56-18 (2) the date on which the waiting period established
56-19 under this article expires; or
56-20 (3) the date on which the dependent becomes eligible
56-21 for enrollment.
56-22 (k) A late-participating employee may be excluded from
56-23 coverage until the next annual open enrollment period and may be
56-24 subject to a 12-month preexisting condition provision as described
56-25 by Article 3.95-4.8 of this code. The period during which a
56-26 preexisting condition provision applies may not exceed 18 months
56-27 from the date of the initial application.
57-1 (l) A multiple employer welfare arrangement may not exclude
57-2 an employee who meets the participation criteria or an eligible
57-3 dependent, including a late-participating employee, who would
57-4 otherwise be covered.
57-5 (m) A multiple employer welfare arrangement's plan document
57-6 may not, by use of a rider or amendment applicable to a specific
57-7 individual, limit or exclude coverage by type of illness,
57-8 treatment, medical condition, or accident, except for preexisting
57-9 conditions as permitted under Article 3.95-4.8 of this code.
57-10 Art. 3.95-4.2. DEPENDENT CHILDREN. (a) A multiple employer
57-11 welfare arrangement's plan document may not limit or exclude
57-12 initial coverage of a newborn child of a participating employee.
57-13 Any coverage of a newborn child of a participating employee under
57-14 this subsection terminates on the 32nd day after the date of the
57-15 birth of the child unless:
57-16 (1) dependent children are eligible for coverage under
57-17 the multiple employer welfare arrangement's plan document; and
57-18 (2) notification of the birth and any required
57-19 additional premium are received by the multiple employer welfare
57-20 arrangement not later than the 31st day after the date of birth.
57-21 (b) If dependent children are eligible for coverage under
57-22 the terms of a multiple employer welfare arrangement's plan
57-23 document, the plan document may not limit or exclude initial
57-24 coverage of an adopted child of a participating employee. A child
57-25 is considered to be the child of a participating employee if the
57-26 participating employee is a party in a suit in which the adoption
57-27 of the child by the participating employee is sought.
58-1 (c) If dependent children are eligible for coverage under
58-2 the terms of a multiple employer welfare arrangement's plan
58-3 document, an adopted child of a participating employee may be
58-4 enrolled, at the option of the participating employee, within
58-5 either:
58-6 (1) 31 days after the participating employee is a
58-7 party in a suit for adoption; or
58-8 (2) 31 days of the date the adoption is final.
58-9 (d) Coverage of an adopted child of an employee under this
58-10 article terminates unless notification of the adoption and any
58-11 required additional premiums are received by the multiple employer
58-12 welfare arrangement not later than either:
58-13 (1) the 31st day after the participating employee
58-14 becomes a party in a suit in which the adoption of the child by the
58-15 participating employee is sought; or
58-16 (2) the 31st day after the date of the adoption.
58-17 Art. 3.95-4.3. RENEWABILITY OF COVERAGE; CANCELLATION.
58-18 (a) Except as provided by Article 3.95-4.4 of this code, a
58-19 multiple employer welfare arrangement shall renew the health
58-20 benefit plan, at the option of the employer, unless:
58-21 (1) a contribution has not been paid as required by
58-22 the terms of the plan;
58-23 (2) the employer has committed fraud or intentional
58-24 misrepresentation of a material fact;
58-25 (3) the employer has not complied with the terms of
58-26 the health benefit plan document;
58-27 (4) the plan is ceasing to offer any coverage in a
59-1 geographic area; or
59-2 (5) there has been a failure to:
59-3 (A) meet the terms of an applicable collective
59-4 bargaining agreement or other agreement requiring or authorizing
59-5 contributions to the plan;
59-6 (B) renew the agreement; or
59-7 (C) employ employees covered by the agreement.
59-8 (b) A multiple employer welfare arrangement may refuse to
59-9 renew the coverage of a participating employee or dependent for
59-10 fraud or intentional misrepresentation of a material fact by that
59-11 individual.
59-12 (c) A multiple employer welfare arrangement may not cancel a
59-13 health benefit plan except for the reasons specified for refusal to
59-14 renew under Subsection (a) of this article. A multiple employer
59-15 welfare arrangement may not cancel the coverage of a participating
59-16 employee or dependent except for the reasons specified for refusal
59-17 to renew under Subsection (b) of this article.
59-18 Art. 3.95-4.4. REFUSAL TO RENEW. (a) A multiple employer
59-19 welfare arrangement may elect to refuse to renew all health benefit
59-20 plans delivered or issued for delivery by the multiple employer
59-21 welfare arrangement in this state. The multiple employer welfare
59-22 arrangement shall notify the commissioner of the election not later
59-23 than the 180th day before the date coverage under the first health
59-24 benefit plan terminates under this subsection.
59-25 (b) The multiple employer welfare arrangement shall notify
59-26 each affected employer not later than the 180th day before the date
59-27 on which coverage terminates for that employer.
60-1 (c) A multiple employer welfare arrangement that elects
60-2 under Subsection (a) of this article to refuse to renew all health
60-3 benefit plans in this state may not write a health benefit plan in
60-4 this state before the fifth anniversary of the date on which notice
60-5 is delivered to the commissioner under Subsection (a) of this
60-6 article.
60-7 (d) A multiple employer welfare arrangement may elect to
60-8 discontinue a plan only if the multiple employer welfare
60-9 arrangement:
60-10 (1) provides notice to each employer of the
60-11 discontinuation before the 90th day preceding the date of the
60-12 discontinuation of the plan;
60-13 (2) offers to each employer the option to purchase
60-14 another plan offered by the multiple employer welfare arrangement;
60-15 and
60-16 (3) acts uniformly without regard to the claims
60-17 experience of the employer or any health status related factor of
60-18 participating employees or dependents or new employees or
60-19 dependents who may become eligible for the coverage.
60-20 Art. 3.95-4.5. NOTICE TO COVERED PERSONS. (a) Not later
60-21 than the 30th day before the date on which termination of coverage
60-22 is effective, a multiple employer welfare arrangement that cancels
60-23 or refuses to renew coverage under a health benefit plan under
60-24 Article 3.95-4.3 or 3.95-4.4 of this code shall notify the employer
60-25 of the cancellation or refusal to renew. It is the responsibility
60-26 of the employer to notify participating employees of the
60-27 cancellation or refusal to renew the coverage.
61-1 (b) The notice provided under this article is in addition to
61-2 any other notice required by Article 3.95-4.3 or 3.95-4.4 of this
61-3 code.
61-4 Art. 3.95-4.6. PREMIUM RATES; ADJUSTMENTS. (a) A multiple
61-5 employer welfare arrangement may not charge an adjustment to
61-6 premium rates for individual employees or dependents for health
61-7 status related factors or duration of coverage. Any adjustment
61-8 must be applied uniformly to the rates charged for all
61-9 participating employees and dependents of participating employees
61-10 of the employer. This subsection does not restrict the amount that
61-11 an employer may be charged for coverage.
61-12 (b) A multiple employer welfare arrangement may establish
61-13 premium discounts, rebates, or a reduction in otherwise applicable
61-14 copayments or deductibles in return for adherence to programs of
61-15 health promotion and disease prevention. A discount, rebate, or
61-16 reduction established under this subsection does not violate
61-17 Section 4(8), Article 21.21, of this code.
61-18 Art. 3.95-4.7. FAIR MARKETING. (a) On request, each
61-19 employer purchasing health benefit plans shall be given a summary
61-20 of the plans for which the employer is eligible.
61-21 (b) The department may require periodic reports by multiple
61-22 employer welfare arrangements and agents regarding the health
61-23 benefit plans issued by the multiple employer welfare arrangements.
61-24 The reporting requirements shall comply with federal law and
61-25 regulations.
61-26 Art. 3.95-4.8. PREEXISTING CONDITION PROVISIONS. (a) A
61-27 preexisting condition provision in a multiple employer welfare
62-1 arrangement's plan document may not apply to an expense incurred on
62-2 or after the expiration of the 12 months following the initial
62-3 effective date of coverage of the participating employee,
62-4 dependent, or late-participating employee.
62-5 (b) A preexisting condition provision in a multiple employer
62-6 welfare arrangement's plan document may not apply to coverage for a
62-7 disease or condition other than a disease or condition for which
62-8 medical advice, diagnosis, care, or treatment was recommended or
62-9 received during the six months before the earlier of:
62-10 (1) the effective date of coverage; or
62-11 (2) the first day of the waiting period.
62-12 (c) A multiple employer welfare arrangement shall not treat
62-13 genetic information as a preexisting condition described by
62-14 Subsection (b) of this article in the absence of a diagnosis of the
62-15 condition related to the information.
62-16 (d) A multiple employer welfare arrangement shall not treat
62-17 a pregnancy as a preexisting condition described by Subsection (b)
62-18 of this article.
62-19 (e) A preexisting condition provision in a multiple employer
62-20 welfare arrangement's plan document may not apply to an individual
62-21 who was continuously covered for an aggregate period of 12 months
62-22 under creditable coverage that was in effect up to a date not more
62-23 than 63 days before the effective date of coverage under the health
62-24 benefit plan, excluding any waiting period.
62-25 (f) In determining whether a preexisting condition provision
62-26 applies to an individual covered by a multiple employer welfare
62-27 arrangement's plan document, the multiple employer welfare
63-1 arrangement shall credit the time the individual was covered under
63-2 previous creditable coverage if the previous coverage was in effect
63-3 at any time during the 12 months preceding the effective date of
63-4 coverage under the multiple employer welfare arrangement. If the
63-5 previous coverage was issued under a health benefit plan, any
63-6 waiting period shall also be credited to the preexisting condition
63-7 provision period.
63-8 (g) This article does not preclude application of any
63-9 waiting period applicable to all new participating employees under
63-10 the health benefit plan in accordance with the terms of the
63-11 multiple employer welfare arrangement's plan document.
63-12 Art. 3.95-4.9. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
63-13 REFUSAL TO RENEW. Denial by a multiple employer welfare
63-14 arrangement of an application for coverage from an employer or
63-15 cancellation or refusal to renew must be in writing and must state
63-16 the reason or reasons for the denial, cancellation, or refusal.
63-17 Art. 3.95-4.10. THIRD-PARTY ADMINISTRATOR. If a multiple
63-18 employer welfare arrangement enters into an agreement with a
63-19 third-party administrator to provide administrative, marketing, or
63-20 other services related to the offering of health benefit plans to
63-21 employers in this state, the third-party administrator is subject
63-22 to this subchapter.
63-23 SECTION 4.04. Article 3.95-8, Insurance Code, is amended by
63-24 amending Subsection (a) and adding Subsection (e) to read as
63-25 follows:
63-26 (a) Each multiple employer welfare arrangement transacting
63-27 business in this state shall file the following with the
64-1 commissioner on forms approved by the commissioner:
64-2 (1) within 90 days of the end of the fiscal year,
64-3 financial statements audited by a certified public accountant;
64-4 [and]
64-5 (2) within 90 days of the end of the fiscal year, an
64-6 actuarial opinion prepared and certified by an actuary who is not
64-7 an employee of the multiple employer welfare arrangement and who is
64-8 a fellow of the Society of Actuaries, a member of the American
64-9 Academy of Actuaries, or an enrolled actuary under the Employee
64-10 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
64-11 seq.); and
64-12 (3) any modified terms of a plan document along with a
64-13 certification from the trustees that any changes are in compliance
64-14 with the minimum requirements of this subchapter. The actuarial
64-15 opinion shall include:
64-16 (A) a description of the actuarial soundness of
64-17 the multiple employer welfare arrangement, including any
64-18 recommended actions that the multiple employer welfare arrangement
64-19 should take to improve its actuarial soundness;
64-20 (B) the recommended amount of cash reserves the
64-21 multiple employer welfare arrangement should maintain which shall
64-22 not be less than the greater of 20 percent of the total
64-23 contributions in the preceding plan year or 20 percent of the total
64-24 estimated contributions for the current plan year; cash reserves
64-25 shall be calculated with proper actuarial regard for known claims,
64-26 paid and outstanding, a history of incurred but not reported
64-27 claims, claims handling expenses, unearned premium, an estimate for
65-1 bad debts, a trend factor, and a margin for error; cash reserves
65-2 required by this article shall be maintained in cash or federally
65-3 guaranteed obligations of less than five-year maturity that have a
65-4 fixed or recoverable principal amount or such other investments as
65-5 the commissioner or board may authorize by rule; and
65-6 (C) the recommended level of specific and
65-7 aggregate stop-loss insurance the multiple employer welfare
65-8 arrangement should maintain.
65-9 (e) If the commissioner determines that a multiple employer
65-10 welfare arrangement does not comply with the requirements
65-11 established in this subchapter, the commissioner may order the
65-12 multiple employer welfare arrangement to correct the deficiencies.
65-13 If the multiple employer welfare arrangement does not initiate
65-14 immediate corrective action, the commissioner may take any action
65-15 against the multiple employer welfare arrangement that is
65-16 authorized by this code.
65-17 SECTION 4.05. Article 3.95-15, Insurance Code, is amended
65-18 by amending the article heading and Subsection (a) to read as
65-19 follows:
65-20 Art. 3.95-15. PROCEEDINGS BEFORE COMMISSIONER [THE BOARD] OF
65-21 INSURANCE; RULES. (a) The commissioner [board] may, on notice and
65-22 opportunity for all interested persons to be heard, issue such
65-23 rules, regulations, and orders as are reasonably necessary to
65-24 augment and carry out the provisions of this subchapter. The
65-25 commissioner shall adopt rules as necessary to meet the minimum
65-26 requirements of federal law and regulations.
66-1 PART 5. EFFECTIVE DATE; TRANSITION; EMERGENCY
66-2 SECTION 5.01. This Act applies only to an insurance policy,
66-3 evidence of coverage, contract, or other document establishing
66-4 coverage under a health benefit plan that is delivered, issued for
66-5 delivery, or renewed on or after the effective date of this Act. An
66-6 insurance policy, evidence of coverage, contract, or other
66-7 document establishing coverage under a health benefit plan that is
66-8 delivered, issued for delivery, or renewed before the effective
66-9 date of this Act is governed by the law as it existed immediately
66-10 before that date, and that law is continued in effect for that
66-11 purpose.
66-12 SECTION 5.02. This Act takes effect July 1, 1997.
66-13 SECTION 5.03. The importance of this legislation and the
66-14 crowded condition of the calendars in both houses create an
66-15 emergency and an imperative public necessity that the
66-16 constitutional rule requiring bills to be read on three several
66-17 days in each house be suspended, and this rule is hereby suspended,
66-18 and that this Act take effect and be in force according to its
66-19 terms, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1212 was passed by the House on April
18, 1997, by the following vote: Yeas 138, Nays 0, 1 present, not
voting; that the House refused to concur in Senate amendments to
H.B. No. 1212 on May 13, 1997, and requested the appointment of a
conference committee to consider the differences between the two
houses; and that the House adopted the conference committee report
on H.B. No. 1212 on May 28, 1997, by the following vote: Yeas 135,
Nays 0, 1 present, not voting; and that the House adopted H.C.R.
No. 340 authorizing certain corrections in H.B. No. 1212 on June 2,
1997, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1212 was passed by the Senate, with
amendments, on May 10, 1997, by the following vote: Yeas 30, Nays
0; at the request of the House, the Senate appointed a conference
committee to consider the differences between the two houses; and
that the Senate adopted the conference committee report on H.B. No.
1212 on May 26, 1997, by the following vote: Yeas 31, Nays 0; and
that the Senate adopted H.C.R. No. 340 authorizing certain
corrections in H.B. No. 1212 on June 2, 1997, by a viva-voce vote.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor