By Averitt H.B. No. 1212
75R5407 DLF-F
A BILL TO BE ENTITLED
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 benefit
2-27 plan, or whether a covered person is or may become pregnant.
3-1 (6) "Class of business" means all small employers or a
3-2 separate grouping of small employers established under this
3-3 chapter.
3-4 (7) "Creditable coverage" means coverage described by
3-5 Article 26.035 of this code.
3-6 (8) "Dependent" means:
3-7 (A) a spouse;
3-8 (B) a newborn child;
3-9 (C) a child under the age of 19 years;
3-10 (D) a child who is a full-time student under the
3-11 age of 23 years and who is financially dependent on the parent;
3-12 (E) a child of any age who is medically
3-13 certified as disabled and dependent on the parent; [and]
3-14 (F) any person who must be covered under:
3-15 (i) Section 3D or 3E, Article 3.51-6, of
3-16 this code; or
3-17 (ii) Section 2(L), Chapter 397, Acts of
3-18 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
3-19 Vernon's Texas Insurance Code); or
3-20 (G) any other person included as an eligible
3-21 dependent under an employer's benefit plan.
3-22 (9) [(8)] "Eligible employee" means an employee who
3-23 works on a full-time basis and who usually works at least 30 hours
3-24 a week. The term also includes a sole proprietor, a partner, and
3-25 an independent contractor, if the sole proprietor, partner, or
3-26 independent contractor is included as an employee under a health
3-27 benefit plan of a small or large employer. The term does not
4-1 include:
4-2 (A) an employee who works on a part-time,
4-3 temporary, seasonal, or substitute basis; or
4-4 (B) an employee who is covered under:
4-5 (i) another health benefit plan;
4-6 (ii) a self-funded or self-insured
4-7 employee welfare benefit plan that provides health benefits and
4-8 that is established in accordance with the Employee Retirement
4-9 Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
4-10 (iii) the Medicaid program if the employee
4-11 elects not to be covered;
4-12 (iv) another federal program, including
4-13 the CHAMPUS program or Medicare program, if the employee elects not
4-14 to be covered; or
4-15 (v) a benefit plan established in another
4-16 country if the employee elects not to be covered.
4-17 (10) [(9)] "Health benefit plan" means a group,
4-18 blanket, or franchise insurance policy, a certificate issued under
4-19 a group policy, a group hospital service contract, or a group
4-20 subscriber contract or evidence of coverage issued by a health
4-21 maintenance organization that provides benefits for health care
4-22 services. The term does not include:
4-23 (A) accident-only or disability income insurance
4-24 or a combination of accident-only and disability income insurance
4-25 [coverage];
4-26 (B) credit-only [credit] insurance [coverage];
4-27 (C) disability insurance coverage;
5-1 (D) coverage for a specified disease or illness
5-2 [coverage or other limited benefit policies];
5-3 (E) [coverage of] Medicare services under a
5-4 federal contract;
5-5 (F) Medicare supplement and Medicare Select
5-6 policies regulated in accordance with federal law;
5-7 (G) long-term care [insurance] coverage or
5-8 benefits, nursing home care coverage or benefits, home health care
5-9 coverage or benefits, community-based care coverage or benefits, or
5-10 any combination of those coverages or benefits;
5-11 (H) coverage that provides limited-scope
5-12 [limited to] dental or [care;]
5-13 [(I) coverage limited to care of] vision
5-14 benefits;
5-15 (I) [(J)] coverage provided by a single service
5-16 health maintenance organization;
5-17 (J) [(K) insurance] coverage issued as a
5-18 supplement to liability insurance;
5-19 (K) [(L) insurance coverage arising out of a]
5-20 workers' compensation [system] or similar insurance [statutory
5-21 system];
5-22 (L) [(M)] automobile medical payment insurance
5-23 coverage;
5-24 (M) [(N)] jointly managed trusts authorized
5-25 under 29 U.S.C. Section 141 et seq. that contain a plan of
5-26 benefits for employees that is negotiated in a collective
5-27 bargaining agreement governing wages, hours, and working conditions
6-1 of the employees that is authorized under 29 U.S.C. Section 157;
6-2 (N) [(O)] hospital [confinement] indemnity or
6-3 other fixed indemnity insurance [coverage]; [or]
6-4 (O) [(P)] reinsurance contracts issued on a
6-5 stop-loss, quota-share, or similar basis;
6-6 (P) short-term major medical contracts;
6-7 (Q) liability insurance, including general
6-8 liability insurance and automobile liability insurance;
6-9 (R) other coverage that is:
6-10 (i) similar to the coverage described by
6-11 this subdivision under which benefits for medical care are
6-12 secondary or incidental to other insurance benefits; and
6-13 (ii) specified in federal regulations;
6-14 (S) coverage for on-site medical clinics; or
6-15 (T) coverage that provides other limited
6-16 benefits specified by federal regulations.
6-17 (11) [(10)] "Health carrier" means any entity
6-18 authorized under this code or another insurance law of this state
6-19 that provides health insurance or health benefits in this state,
6-20 including an insurance company, a group hospital service
6-21 corporation under Chapter 20 of this code, a health maintenance
6-22 organization under the Texas Health Maintenance Organization Act
6-23 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
6-24 premium company under Chapter 22 of this code.
6-25 (12) "Health status related factor" means:
6-26 (A) health status;
6-27 (B) medical condition, including both physical
7-1 and mental illness;
7-2 (C) claims experience;
7-3 (D) receipt of health care;
7-4 (E) medical history;
7-5 (F) genetic information;
7-6 (G) evidence of insurability, including
7-7 conditions arising out of acts of family violence; and
7-8 (H) disability.
7-9 (13) [(11)] "Index rate" means, for each class of
7-10 business as to a rating period for small employers with similar
7-11 case characteristics, the arithmetic average of the applicable base
7-12 premium rate and corresponding highest premium rate.
7-13 (14) "Large employer" means an employer who employed
7-14 an average of at least 51 eligible employees on business days
7-15 during the preceding calendar year and who employs at least two
7-16 eligible employees on the first day of the plan year. For purposes
7-17 of this definition, a partnership is the employer of a partner.
7-18 (15) "Large employer carrier" means a health carrier,
7-19 to the extent that carrier is offering, delivering, issuing for
7-20 delivery, or renewing health benefit plans subject to Subchapter H
7-21 of this chapter.
7-22 (16) "Large employer health benefit plan" means a
7-23 health benefit plan offered to a large employer.
7-24 (17) [(12)] "Late enrollee" means any [an eligible]
7-25 employee or dependent eligible for enrollment who requests
7-26 enrollment in a small or large employer's health benefit plan after
7-27 the expiration of the initial enrollment period established under
8-1 the terms of the first plan for which that employee or dependent
8-2 was eligible through the small or large employer or after the
8-3 expiration of an open enrollment period under Article 26.21(h) or
8-4 26.83 of this code. An [eligible] employee or dependent is not a
8-5 late enrollee if:
8-6 (A) the individual:
8-7 (i) was covered under another [employer]
8-8 health benefit plan or self-funded employer health benefit plan at
8-9 the time the individual was eligible to enroll;
8-10 (ii) declines in writing, at the time of
8-11 the initial eligibility, stating that coverage under another
8-12 [employer] health benefit plan or self-funded employer health
8-13 benefit plan was the reason for declining enrollment;
8-14 (iii) has lost coverage under another
8-15 [employer] health benefit plan or self-funded employer health
8-16 benefit plan as a result of:
8-17 (a) the termination of
8-18 employment;
8-19 (b) the reduction in the
8-20 number of hours of employment;
8-21 (c)[,] the termination of
8-22 the other plan's coverage;
8-23 (d) the termination of
8-24 contributions toward the premium made by the employer; or
8-25 (e)[,] the death of a
8-26 spouse[,] or divorce; and
8-27 (iv) requests enrollment not later than
9-1 the 31st day after the date on which coverage under the other
9-2 [another employer] health benefit plan or self-funded employer
9-3 health benefit plan terminates;
9-4 (B) the individual is employed by an employer
9-5 who offers multiple health benefit plans and the individual elects
9-6 a different health benefit plan during an open enrollment period;
9-7 [or]
9-8 (C) a court has ordered coverage to be provided
9-9 for a spouse [or minor child] under a covered employee's plan and
9-10 request for enrollment is made not later than the 31st day after
9-11 [issuance of] the date on which the court order is issued; or
9-12 (D) a court has ordered coverage to be provided
9-13 for a child under a covered employee's plan and the request for
9-14 enrollment is made not later than the 31st day after the date on
9-15 which the employer receives notice of the court order.
9-16 (18) [(13)] "New business premium rate" means, for
9-17 each class of business as to a rating period, the lowest premium
9-18 rate that is charged or offered or that could be charged or offered
9-19 by the small employer carrier to small employers with similar case
9-20 characteristics for newly issued small employer health benefit
9-21 plans that provide the same or similar coverage.
9-22 (19) "Participation criteria" means any criteria or
9-23 rules established by a large employer to determine the employees
9-24 who are eligible for enrollment, including continued enrollment,
9-25 under the terms of a health benefit plan.
9-26 (20) [(14)] "Person" means an individual, corporation,
9-27 partnership, [association,] or other [private] legal entity.
10-1 (21) [(15)] "Plan of operation" means the plan of
10-2 operation of the system established under Article 26.55 of this
10-3 code.
10-4 (22) "Point-of-service contract" means a benefit plan
10-5 offered through a health maintenance organization that:
10-6 (A) includes corresponding indemnity benefits in
10-7 addition to benefits relating to out-of-area or emergency services
10-8 provided through insurers or group hospital service corporations;
10-9 and
10-10 (B) permits the insured to obtain coverage under
10-11 either the health maintenance organization conventional plan or the
10-12 indemnity plan as determined in accordance with the terms of the
10-13 contract.
10-14 (23) [(16)] "Preexisting condition provision" means a
10-15 provision that denies, excludes, or limits coverage as to a disease
10-16 or condition for a specified period after the effective date of
10-17 coverage.
10-18 (24) [(17)] "Premium" means all amounts paid by a
10-19 small or large employer and eligible employees as a condition of
10-20 receiving coverage from a small or large employer carrier,
10-21 including any fees or other contributions associated with a health
10-22 benefit plan.
10-23 (25) [(18)] "Rating period" means a calendar period
10-24 for which premium rates established by a small employer carrier are
10-25 assumed to be in effect.
10-26 (26) [(19)] "Reinsured carrier" means a small employer
10-27 carrier participating in the system.
11-1 (27) [(20)] "Risk-assuming carrier" means a small
11-2 employer carrier that elects not to participate in the system.
11-3 (28) [(21)] "Small employer" means an employer who
11-4 employed an average of at least two but not more than 50 eligible
11-5 employees on business days during the preceding calendar year and
11-6 who employs at least two eligible employees on the first day of the
11-7 plan year. For purposes of this definition, a partnership is the
11-8 employer of a partner [a person that is actively engaged in
11-9 business and that, on at least 50 percent of its working days
11-10 during the preceding calendar year, employed at least three but not
11-11 more than 50 eligible employees, including the employees of an
11-12 affiliated employer, the majority of whom were employed in this
11-13 state].
11-14 (29) [(22)] "Small employer carrier" means a health
11-15 carrier, to the extent that that carrier is offering, delivering,
11-16 issuing for delivery, or renewing health benefit plans subject to
11-17 Subchapters C-G of this chapter under Article 26.06(a) of this
11-18 code.
11-19 (30) [(23)] "Small employer health benefit plan" means
11-20 a plan developed by the commissioner under Subchapter E of this
11-21 chapter or any other health benefit plan offered to a small
11-22 employer in accordance with Article 26.42(c) or 26.48 of this code.
11-23 (31) [(24)] "System" means the Texas Health
11-24 Reinsurance System established under Subchapter F of this chapter.
11-25 (32) "Waiting period" means a period established by an
11-26 employer that must pass before an individual who is a potential
11-27 enrollee in a health benefit plan is eligible to be covered for
12-1 benefits.
12-2 [(25) "Point-of-service contract" means a benefit plan
12-3 offered through a health maintenance organization that:]
12-4 [(A) includes corresponding indemnity benefits
12-5 in addition to benefits relating to out-of-area or emergency
12-6 services provided through insurers or group hospital service
12-7 corporations; and]
12-8 [(B) permits the insured to obtain coverage
12-9 under either the health maintenance organization conventional plan
12-10 or the indemnity plan as determined in accordance with the terms of
12-11 the contract.]
12-12 SECTION 1.03. Subchapter A, Chapter 26, Insurance Code, is
12-13 amended by adding Articles 26.035 and 26.036 to read as follows:
12-14 Art. 26.035. CREDITABLE COVERAGE. (a) An individual's
12-15 coverage is creditable for purposes of this chapter if the coverage
12-16 is provided under:
12-17 (1) a self-funded or self-insured employee welfare
12-18 benefit plan that provides health benefits and that is established
12-19 in accordance with the Employee Retirement Income Security Act of
12-20 1974 (29 U.S.C. Section 1001 et seq.);
12-21 (2) a group health benefit plan provided by a health
12-22 insurance carrier or health maintenance organization;
12-23 (3) an individual health insurance policy or evidence
12-24 of coverage;
12-25 (4) Part A or Part B of Title XVIII of the Social
12-26 Security Act (42 U.S.C. Section 1395c et seq.);
12-27 (5) Title XIX of the Social Security Act (42 U.S.C.
13-1 Section 1396 et seq.), other than coverage consisting solely of
13-2 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
13-3 (6) Chapter 55, Title 10, United States Code (10
13-4 U.S.C. Section 1071 et seq.);
13-5 (7) a medical care program of the Indian Health
13-6 Service or of a tribal organization;
13-7 (8) a state health benefits risk pool;
13-8 (9) a health plan offered under Chapter 89, Title 5,
13-9 United States Code (5 U.S.C. Section 8901 et seq.);
13-10 (10) a public health plan as defined by federal
13-11 regulations; or
13-12 (11) a health benefit plan under Section 5(e), Peace
13-13 Corps Act (22 U.S.C. Section 2504(e)).
13-14 (b) Creditable coverage does not include:
13-15 (1) accident-only or disability income insurance, or a
13-16 combination of accident-only and disability income insurance;
13-17 (2) coverage issued as a supplement to liability
13-18 insurance;
13-19 (3) liability insurance, including general liability
13-20 insurance and automobile liability insurance;
13-21 (4) workers' compensation or similar insurance;
13-22 (5) automobile medical payment insurance;
13-23 (6) credit-only insurance;
13-24 (7) coverage for on-site medical clinics;
13-25 (8) other coverage that is:
13-26 (A) similar to the coverage described by this
13-27 subsection under which benefits for medical care are secondary or
14-1 incidental to other insurance benefits; and
14-2 (B) specified in federal regulations;
14-3 (9) coverage that provides limited-scope dental or
14-4 vision benefits;
14-5 (10) long-term care coverage or benefits, nursing home
14-6 care coverage or benefits, home health care coverage or benefits,
14-7 community-based care coverage or benefits, or any combination of
14-8 those coverages or benefits;
14-9 (11) coverage that provides other limited benefits
14-10 specified by federal regulations;
14-11 (12) coverage for a specified disease or illness;
14-12 (13) hospital indemnity or other fixed indemnity
14-13 insurance; or
14-14 (14) Medicare supplemental health insurance as defined
14-15 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
14-16 1395ss), coverage supplemental to the coverage provided under
14-17 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
14-18 seq.), and similar supplemental coverage provided under a group
14-19 plan.
14-20 Art. 26.036. SCHOOL DISTRICT ELECTION. (a) An independent
14-21 school district may elect to participate in the small employer
14-22 market without regard to the number of eligible employees of the
14-23 independent school district.
14-24 (b) An independent school district that elects to
14-25 participate in the small employer market under this article is
14-26 treated as a small employer under this chapter for all purposes.
14-27 SECTION 1.04. Article 26.04, Insurance Code, is amended to
15-1 read as follows:
15-2 Art. 26.04. RULES. The commissioner [board] shall adopt
15-3 rules to implement this chapter and to meet the minimum
15-4 requirements of federal law and regulations.
15-5 SECTION 1.05. Article 26.06, Insurance Code, is amended to
15-6 read as follows:
15-7 Art. 26.06. APPLICABILITY. (a) An individual or group
15-8 health benefit plan is subject to Subchapters C-G of this chapter
15-9 if it provides health care benefits covering two [three] or more
15-10 eligible employees of a small employer and if [it meets any one of
15-11 the following conditions]:
15-12 (1) a portion of the premium or benefits is paid by a
15-13 small employer; or
15-14 (2) the health benefit plan is treated by the employer
15-15 or by a covered individual as part of a plan or program for the
15-16 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
15-17 U.S.C. Section 106 or 162).
15-18 (b) For an employer who was not in existence throughout the
15-19 calendar year preceding the year in which the determination of
15-20 whether the employer is a small employer is made, the determination
15-21 is based on the average number of eligible employees the employer
15-22 reasonably expects to employ on business days in the calendar year
15-23 in which the determination is made.
15-24 (c) Except as provided by Subsection (a) of this article,
15-25 this chapter does not apply to an individual health insurance
15-26 policy that is subject to individual underwriting, even if the
15-27 premium is remitted through a payroll deduction method.
16-1 (d) [(c)] Except as expressly provided in this chapter, a
16-2 small employer health benefit plan is not subject to a law that
16-3 requires coverage or the offer of coverage of a health care service
16-4 or benefit.
16-5 SECTION 1.06. Articles 26.14(a) and (d), Insurance Code, are
16-6 amended to read as follows:
16-7 (a) Two or more small employers may form a cooperative for
16-8 the purchase of small employer health benefit plans. Two or more
16-9 large employers may form a cooperative for the purchase of large
16-10 employer health benefit plans. A cooperative must be organized as
16-11 a nonprofit corporation and has the rights and duties provided by
16-12 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
16-13 Vernon's Texas Civil Statutes).
16-14 (d) A purchasing cooperative or a member of the board of
16-15 directors, the executive director, or an employee or agent of a
16-16 purchasing cooperative is not liable for:
16-17 (1) an act performed in good faith in the execution of
16-18 duties in connection with the purchasing cooperative; or
16-19 (2) an independent action of a small or large employer
16-20 insurance carrier or a person who provides health care services
16-21 under a health benefit plan.
16-22 SECTION 1.07. Articles 26.15(a) and (b), Insurance Code, are
16-23 amended to read as follows:
16-24 (a) A cooperative:
16-25 (1) shall arrange for small or large employer health
16-26 benefit plan coverage for small or large employer groups who
16-27 participate in the cooperative by contracting with small or large
17-1 employer carriers who meet the criteria established by Subsection
17-2 (b) of this article;
17-3 (2) shall collect premiums to cover the cost of:
17-4 (A) small or large employer health benefit plan
17-5 coverage purchased through the cooperative; and
17-6 (B) the cooperative's administrative expenses;
17-7 (3) may contract with agents to market coverage issued
17-8 through the cooperative;
17-9 (4) shall establish administrative and accounting
17-10 procedures for the operation of the cooperative;
17-11 (5) shall establish procedures under which an
17-12 applicant for or participant in coverage issued through the
17-13 cooperative may have a grievance reviewed by an impartial person;
17-14 (6) may contract with a small or large employer
17-15 carrier or third-party administrator to provide administrative
17-16 services to the cooperative;
17-17 (7) shall contract with small or large employer
17-18 carriers for the provision of services to small or large employers
17-19 covered through the cooperative;
17-20 (8) shall develop and implement a plan to maintain
17-21 public awareness of the cooperative and publicize the eligibility
17-22 requirements for, and the procedures for enrollment in coverage
17-23 through, the cooperative; and
17-24 (9) may negotiate the premiums paid by its members.
17-25 (b) A cooperative may contract only with small or large
17-26 employer carriers who desire to offer coverage through the
17-27 cooperative and who demonstrate:
18-1 (1) that the carrier is a health carrier or health
18-2 maintenance organization licensed and in good standing with the
18-3 department;
18-4 (2) the capacity to administer the health benefit
18-5 plans;
18-6 (3) the ability to monitor and evaluate the quality
18-7 and cost effectiveness of care and applicable procedures;
18-8 (4) the ability to conduct utilization management and
18-9 applicable procedures and policies;
18-10 (5) the ability to assure enrollees adequate access to
18-11 health care providers, including adequate numbers and types of
18-12 providers;
18-13 (6) a satisfactory grievance procedure and the ability
18-14 to respond to enrollees' calls, questions, and complaints; and
18-15 (7) financial capacity, either through financial
18-16 solvency standards as applied by the commissioner or through
18-17 appropriate reinsurance or other risk-sharing mechanisms.
18-18 SECTION 1.08. Article 26.21, Insurance Code, is amended by
18-19 amending Subsections (a), (k), and (n) to read as follows:
18-20 (a) Each small employer carrier shall provide the small
18-21 employer health benefit plans without regard to [claim experience,]
18-22 health status related factors[, or medical history]. Each small
18-23 employer carrier shall issue the plan chosen by the small employer
18-24 to each small employer that elects to be covered under that plan
18-25 and agrees to satisfy the other requirements of the plan.
18-26 (k) A late enrollee may be excluded from coverage until the
18-27 next annual open enrollment period and may be subject to a 12-month
19-1 preexisting condition provision as described by Article 26.49 of
19-2 this code. The period during which a preexisting condition
19-3 provision is imposed may not exceed 18 months from the date of the
19-4 initial application.
19-5 (n) A small employer health benefit plan may not limit or
19-6 exclude initial coverage of a newborn child of a covered employee.
19-7 Any coverage of a newborn child of an employee under this
19-8 subsection terminates on the 32nd day after the date of the birth
19-9 of the child unless[:]
19-10 [(1) dependent children are eligible for coverage; and]
19-11 [(2)] notification of the birth and any required
19-12 additional premium are received by the small employer carrier not
19-13 later than the 31st day after the date of birth.
19-14 SECTION 1.09. Subchapter C, Chapter 26, Insurance Code, is
19-15 amended by adding Article 26.21A to read as follows:
19-16 Art. 26.21A. COVERAGE FOR ADOPTED CHILDREN. (a) A small
19-17 employer health benefit plan may not limit or exclude initial
19-18 coverage of an adopted child of an insured. A child is considered
19-19 to be the child of an insured if the insured is a party in a suit
19-20 in which the adoption of the child by the insured is sought.
19-21 (b) An adopted child is enrolled on the date the insured
19-22 becomes a party in the suit. Coverage of an adopted child under
19-23 this subsection terminates on the 32nd day after the date the
19-24 insured becomes a party in the suit unless notice of the adoption
19-25 and any required additional premium are received by the small
19-26 employer carrier not later than the 31st day after that date.
19-27 (c) An adopted child who is not enrolled in the plan by the
20-1 date the adoption becomes final is enrolled on that date. Coverage
20-2 of an adopted child under this subsection terminates on the 32nd
20-3 day after the date the adoption becomes final unless notice of the
20-4 adoption and any required additional premium are received by the
20-5 small employer carrier not later than the 31st day after that date.
20-6 SECTION 1.10. Articles 26.22(a) and (e), Insurance Code, are
20-7 amended to read as follows:
20-8 (a) A small employer carrier is not required to offer or
20-9 issue the small employer health benefit plans:
20-10 (1) to a small employer that is not located within a
20-11 geographic service area of the small employer carrier;
20-12 (2) to an employee of a small employer who neither
20-13 resides nor works in the geographic service area of the small
20-14 employer carrier; or
20-15 (3) to a small employer located within a geographic
20-16 service area with respect to which the small employer carrier
20-17 demonstrates to the satisfaction of the commissioner that:
20-18 (A) the small employer carrier reasonably
20-19 anticipates that it will not have the capacity to deliver services
20-20 adequately because of obligations to existing covered individuals;
20-21 and
20-22 (B) the small employer carrier is acting
20-23 uniformly without regard to claims experience of the employer or
20-24 any health status related factor of employees or dependents or new
20-25 employees or dependents who may become eligible for the coverage.
20-26 (e) If the commissioner determines that requiring the
20-27 acceptance of small employers under this subchapter would place a
21-1 small employer carrier in a financially impaired condition and that
21-2 the small employer carrier is acting uniformly without regard to
21-3 the claims experience of the small employer or any health status
21-4 related factors of employees or dependents or new employees or
21-5 dependents who may become eligible for the coverage, the small
21-6 employer carrier may [is] not offer [required to provide] coverage
21-7 to small employers until the later of:
21-8 (1) the 180th day after the date the commissioner
21-9 makes the determination; or
21-10 (2) the date the commissioner determines that
21-11 accepting small employers would not place the small employer
21-12 carrier in a financially impaired condition [for a period to be set
21-13 by the commissioner].
21-14 SECTION 1.11. Articles 26.23(a) and (b), Insurance Code, are
21-15 amended to read as follows:
21-16 (a) Except as provided by Article 26.24 of this code, a
21-17 small employer carrier shall renew the small employer health
21-18 benefit plan for any covered small employer, at the option of the
21-19 small employer, unless[, except for]:
21-20 (1) [nonpayment of] a premium has not been paid as
21-21 required by the terms of the plan;
21-22 (2) the small employer has committed fraud or
21-23 intentional misrepresentation of a material fact [by the small
21-24 employer]; [or]
21-25 (3) the [noncompliance with] small employer has not
21-26 complied with the terms of the health benefit plan;
21-27 (4) no enrollee in connection with the plan resides or
22-1 works in the service area of the small employer carrier or in the
22-2 area for which the small employer carrier is authorized to do
22-3 business; or
22-4 (5) membership of an employer in an association
22-5 terminates, but only if coverage is terminated uniformly without
22-6 regard to a health status related factor of a covered individual
22-7 [provisions].
22-8 (b) A small employer carrier may refuse to renew the
22-9 coverage of an eligible employee or dependent for fraud or
22-10 intentional misrepresentation of a material fact by that
22-11 individual.
22-12 SECTION 1.12. Article 26.24, Insurance Code, is amended by
22-13 amending Subsection (a) and adding Subsection (d) to read as
22-14 follows:
22-15 (a) A small employer carrier may elect to refuse to renew
22-16 all [each] small employer health benefit plans [plan] delivered or
22-17 issued for delivery by the small employer carrier in this state or
22-18 in a geographic service area approved under Article 26.22 of this
22-19 code. The small employer carrier shall [must] notify the
22-20 commissioner of the election not later than the 180th day before
22-21 the date coverage under the first small employer health benefit
22-22 plan terminates under this subsection.
22-23 (d) A small employer carrier may elect to discontinue a
22-24 particular type of small employer coverage only if the small
22-25 employer carrier:
22-26 (1) provides notice to each employer of the
22-27 discontinuation before the 90th day preceding the date of the
23-1 discontinuation of the coverage;
23-2 (2) offers to each employer the option to purchase
23-3 other small employer coverage offered by the small employer carrier
23-4 at the time of the discontinuation; and
23-5 (3) acts uniformly without regard to the claims
23-6 experience of the employer or any health status related factors of
23-7 employees or dependents or new employees or dependents who may
23-8 become eligible for the coverage.
23-9 SECTION 1.13. Article 26.25, Insurance Code, is amended to
23-10 read as follows:
23-11 Art. 26.25. NOTICE TO COVERED PERSONS. (a) Not later than
23-12 the 30th day before the date on which termination of coverage is
23-13 effective, a small employer carrier that cancels or refuses to
23-14 renew coverage under a small employer health benefit plan under
23-15 Article 26.23 or 26.24 of this code shall notify the small employer
23-16 of the cancellation or refusal to renew. It is the responsibility
23-17 of the small employer to notify enrollees of the cancellation or
23-18 refusal to renew the coverage.
23-19 (b) The notice provided to a small employer by a small
23-20 employer carrier under this article is in addition to any other
23-21 notice required by Article 26.23 or 26.24 of this code.
23-22 SECTION 1.14. Article 26.33, Insurance Code, is amended by
23-23 adding Subsection (d) to read as follows:
23-24 (d) A small employer carrier may establish premium
23-25 discounts, rebates, or a reduction in otherwise applicable
23-26 copayments or deductibles in return for adherence to programs of
23-27 health promotion and disease prevention. A discount, rebate, or
24-1 reduction established under this subsection does not violate
24-2 Section 4(8), Article 21.21, of this code.
24-3 SECTION 1.15. Article 26.40, Insurance Code, is amended to
24-4 read as follows:
24-5 Art. 26.40. DISCLOSURE. (a) In connection with the
24-6 offering for sale of any small employer health benefit plan, each
24-7 small employer carrier and each agent shall make a reasonable
24-8 disclosure, as part of its solicitation and sales materials, of:
24-9 (1) the extent to which premium rates for a specific
24-10 small employer are established or adjusted based on the actual or
24-11 expected variation in claim costs or the actual or expected
24-12 variation in health status of the employees of the small employer
24-13 and their dependents;
24-14 (2) provisions concerning the small employer carrier's
24-15 right to change premium rates and the factors other than claim
24-16 experience that affect changes in premium rates;
24-17 (3) provisions relating to renewability of policies
24-18 and contracts; and
24-19 (4) any preexisting condition provision.
24-20 (b) Each small employer carrier shall disclose on request by
24-21 a small employer the benefits and premiums available under all
24-22 small employer coverage for which the employer is qualified.
24-23 (c) A small employer carrier is not required to disclose any
24-24 information to a small employer that is proprietary or trade secret
24-25 information under applicable law.
24-26 (d) Information provided under this article to small
24-27 employers must be provided in a manner that is understandable by
25-1 the average small employer and sufficient to reasonably inform
25-2 small employers of their rights and obligations under a small
25-3 employer health benefit plan.
25-4 SECTION 1.16. Article 26.49, Insurance Code, is amended to
25-5 read as follows:
25-6 Art. 26.49. PREEXISTING CONDITION PROVISIONS. (a) A
25-7 preexisting condition provision in a small employer health benefit
25-8 plan may not apply to expenses incurred on or after the expiration
25-9 of the 12 months following the initial effective date of coverage
25-10 of the enrollee or late enrollee.
25-11 (b) A preexisting condition provision in a small employer
25-12 health benefit plan may not apply to coverage for a disease or
25-13 condition other than a disease or condition for which medical
25-14 advice, diagnosis, care, or treatment was recommended or received
25-15 during the six months before the earlier of:
25-16 (1) the effective date of coverage; or
25-17 (2) the first day of the waiting period.
25-18 (c) A small employer carrier may not treat genetic
25-19 information as a preexisting condition described by Subsection (b)
25-20 of this article in the absence of a diagnosis of the condition
25-21 related to the information.
25-22 (d) A small employer carrier may not treat a pregnancy as a
25-23 preexisting condition described by Subsection (b) of this article.
25-24 (e) A preexisting condition provision in a small employer
25-25 health benefit plan may not apply to an individual who was
25-26 continuously covered for an aggregate [a minimum] period of 12
25-27 months under creditable coverage [by a health benefit plan] that
26-1 was in effect up to a date not more than 63 [60] days before the
26-2 effective date of coverage under the small employer health benefit
26-3 plan, excluding any waiting period.
26-4 (f) [(d)] In determining whether a preexisting condition
26-5 provision applies to an individual covered by a small employer
26-6 health benefit plan, the small employer carrier shall credit the
26-7 time the individual was covered under creditable coverage [a
26-8 previous health benefit plan] if the previous coverage was in
26-9 effect at any time during the 12 months preceding the effective
26-10 date of coverage under a small employer health benefit plan. If
26-11 the previous coverage was issued under [by] a health benefit plan
26-12 [maintenance organization], any waiting period that applied before
26-13 that coverage became effective also shall be credited against the
26-14 preexisting condition provision period.
26-15 (g) A health maintenance organization may impose an
26-16 affiliation period if the period is applied uniformly without
26-17 regard to any health status related factor. The affiliation period
26-18 may not exceed two months for an enrollee, other than a late
26-19 enrollee, and may not exceed 90 days for a late enrollee. An
26-20 affiliation period under a plan must run concurrently with any
26-21 applicable waiting period under the plan. The health maintenance
26-22 organization must credit an affiliation period to any preexisting
26-23 condition provision period. A health maintenance organization may
26-24 use an alternative method approved by the commissioner to address
26-25 adverse selection.
26-26 [(e) A carrier that does not use a preexisting condition
26-27 provision in any of its health benefit plans may impose an
27-1 affiliation period. For purposes of this subsection, "affiliation
27-2 period" means a period not to exceed 90 days for new enrollees and
27-3 not to exceed 180 days for late enrollees during which premiums are
27-4 not collected and the issued coverage is not effective.]
27-5 (h) This [(f) Subsection (e) of this] article does not
27-6 preclude application of any waiting period applicable to all new
27-7 enrollees under the health benefit plan. [However, any
27-8 carrier-imposed waiting period may not exceed 90 days and must be
27-9 used in lieu of a preexisting condition provision.]
27-10 SECTION 1.17. The headings to Subchapters C, D, E, F, and G,
27-11 Chapter 26, Insurance Code, are amended to read as follows:
27-12 SUBCHAPTER C. GUARANTEED ISSUE AND RENEWABILITY OF SMALL
27-13 EMPLOYER HEALTH BENEFIT PLANS
27-14 SUBCHAPTER D. UNDERWRITING AND RATING OF SMALL EMPLOYER
27-15 HEALTH BENEFIT PLANS
27-16 SUBCHAPTER E. COVERAGE UNDER SMALL EMPLOYER HEALTH
27-17 BENEFIT PLANS
27-18 SUBCHAPTER F. REINSURANCE FOR SMALL EMPLOYER HEALTH
27-19 BENEFIT PLANS
27-20 SUBCHAPTER G. MARKETING OF SMALL EMPLOYER HEALTH
27-21 BENEFIT PLANS
27-22 PART 2. PROVISIONS APPLICABLE TO LARGE EMPLOYERS
27-23 SECTION 2.01. Chapter 26, Insurance Code, is amended by
27-24 adding Subchapter H to read as follows:
27-25 SUBCHAPTER H. LARGE EMPLOYER HEALTH BENEFIT PLANS
27-26 Art. 26.81. APPLICABILITY. (a) An individual or group
27-27 health benefit plan is subject to this subchapter if the plan
28-1 provides health care benefits to eligible employees of a large
28-2 employer and if:
28-3 (1) a portion of the premium or benefits is paid by a
28-4 large employer; or
28-5 (2) the health benefit plan is treated by the employer
28-6 or by a covered individual as part of a plan or program for the
28-7 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
28-8 U.S.C. Section 106 or 162).
28-9 (b) For an employer who was not in existence throughout the
28-10 calendar year preceding the year in which the determination of
28-11 whether the employer is a large employer is made, the determination
28-12 is based on the average number of eligible employees the employer
28-13 reasonably expects to employ on business days in the calendar year
28-14 in which the determination is made.
28-15 (c) Except as provided by Subsection (a) of this article,
28-16 this subchapter does not apply to an individual health insurance
28-17 policy that is subject to individual underwriting, even if the
28-18 premium is remitted through payroll deduction.
28-19 Art. 26.82. CERTIFICATION. (a) Not later than March 1 of
28-20 each year, each health carrier shall certify to the commissioner
28-21 whether, as of January 1 of that year, it is offering a health
28-22 benefit plan subject to this subchapter under Article 26.81 of this
28-23 code.
28-24 (b) The certification must include a statement that the
28-25 health carrier is not offering or marketing to large employers any
28-26 coverage that is not a health benefit plan and that the carrier is
28-27 complying with this subchapter to the extent it is applicable to
29-1 the carrier.
29-2 Art. 26.83. COVERAGE REQUIREMENTS. (a) A large employer
29-3 carrier may refuse to provide coverage to a large employer in
29-4 accordance with the carrier's underwriting standards and criteria.
29-5 However, on issuance of a health benefit plan to a large employer,
29-6 each large employer carrier shall provide coverage to the employees
29-7 who meet the participation criteria established by the large
29-8 employer without regard to an individual's health status related
29-9 factors. The participation criteria may not be based on health
29-10 status related factors.
29-11 (b) The large employer carrier shall accept or reject the
29-12 entire group of individuals who meet the participation criteria
29-13 established by the employer and who choose coverage and may exclude
29-14 only those employees or dependents who have declined coverage. The
29-15 carrier may charge premiums in accordance with Article 26.89 of
29-16 this code to the group of employees or dependents who meet the
29-17 participation criteria established by the employer and who do not
29-18 decline coverage.
29-19 (c) The large employer carrier shall obtain a written waiver
29-20 for each employee who meets the participation criteria and who
29-21 declines coverage under the health plan offered to a large
29-22 employer. The waiver must ensure that the employee was not induced
29-23 or pressured into declining coverage because of the employee's
29-24 health status related factors.
29-25 (d) A large employer carrier may not provide coverage to a
29-26 large employer or the employees of a large employer if the carrier
29-27 or an agent for the carrier knows that the large employer has
30-1 induced or pressured an employee who meets the participation
30-2 criteria or a dependent of the employee to decline coverage because
30-3 of that individual's health status related factors.
30-4 (e) A large employer carrier may require a large employer to
30-5 meet minimum contribution or participation requirements as a
30-6 condition of issuance and renewal in accordance with the carrier's
30-7 usual and customary practices for all employer health benefit plans
30-8 in this state. Those requirements must be stated in the contract
30-9 and must be applied uniformly to each large employer offered or
30-10 issued coverage by the large employer carrier in this state.
30-11 (f) The initial enrollment period for employees meeting the
30-12 participation criteria must be at least 31 days, with a 31-day
30-13 annual open enrollment period.
30-14 (g) If dependent coverage is offered to enrollees under a
30-15 large employer health benefit plan, the initial enrollment period
30-16 for the dependents must be at least 31 days, with a 31-day annual
30-17 open enrollment period.
30-18 (h) A large employer may establish a waiting period during
30-19 which a new employee is not eligible for coverage. The employer
30-20 shall determine the duration of the waiting period.
30-21 (i) A new employee who meets the participation criteria of a
30-22 covered large employer may not be denied coverage if the
30-23 application for coverage is received by the large employer not
30-24 later than the 31st day after the later of:
30-25 (1) the date on which the employment begins; or
30-26 (2) the date on which the waiting period established
30-27 under Subsection (h) of this article expires.
31-1 (j) If dependent coverage is offered to the enrollees under
31-2 a large employer health benefit plan, a dependent of a new employee
31-3 who meets the participation criteria established by the large
31-4 employer may not be denied coverage if the application for coverage
31-5 is received by the large employer not later than the 31st day after
31-6 the later of:
31-7 (1) the date on which the employment begins;
31-8 (2) the date on which the waiting period established
31-9 under Subsection (h) of this article expires; or
31-10 (3) the date on which the dependent becomes eligible
31-11 for enrollment.
31-12 (k) A late enrollee may be excluded from coverage until the
31-13 next annual open enrollment period and may be subject to a 12-month
31-14 preexisting condition provision as described by Article 26.90 of
31-15 this code. The period during which a preexisting condition
31-16 provision applies may not exceed 18 months from the date of the
31-17 initial application.
31-18 (l) A large employer carrier may not exclude any employee
31-19 who meets the participation criteria or an eligible dependent,
31-20 including a late enrollee, who would otherwise be covered under a
31-21 large employer group.
31-22 (m) A large employer health benefit plan may not, by use of
31-23 a rider or amendment applicable to a specific individual, limit or
31-24 exclude coverage by type of illness, treatment, medical condition,
31-25 or accident, except for a preexisting condition permitted under
31-26 Article 26.90 of this code.
31-27 Art. 26.84. DEPENDENT CHILDREN. (a) A large employer
32-1 health benefit plan may not limit or exclude initial coverage of a
32-2 newborn child of a covered employee. Any coverage of a newborn
32-3 child of a covered employee under this subsection terminates on the
32-4 32nd day after the date of the birth of the child unless:
32-5 (1) dependent children are eligible for coverage under
32-6 the large employer health benefit plan; and
32-7 (2) notification of the birth and any required
32-8 additional premium are received by the large employer carrier not
32-9 later than the 31st day after the date of birth.
32-10 (b) If dependent children are eligible for coverage under
32-11 the large employer health benefit plan, a large employer health
32-12 benefit plan may not limit or exclude initial coverage of an
32-13 adopted child of an insured. A child is considered to be the child
32-14 of an insured if the insured is a party in a suit in which the
32-15 adoption of the child by the insured is sought.
32-16 (c) An adopted child is enrolled on the date the insured
32-17 becomes a party in the suit. Coverage of an adopted child under
32-18 this subsection terminates on the 32nd day after the date the
32-19 insured becomes a party in the suit unless notice of the adoption
32-20 and any required additional premium are received by the large
32-21 employer carrier not later than the 31st day after that date.
32-22 (d) An adopted child who is not enrolled in the plan by the
32-23 date the adoption becomes final is enrolled on that date. Coverage
32-24 of an adopted child under this subsection terminates on the 32nd
32-25 day after the date the adoption becomes final unless notice of the
32-26 adoption and any required additional premium are received by the
32-27 large employer carrier not later than the 31st day after that date.
33-1 Art. 26.85. GEOGRAPHIC SERVICE AREA. (a) A large employer
33-2 carrier is not required to offer or issue the large employer health
33-3 benefit plans to:
33-4 (1) a large employer that is not located within a
33-5 geographic service area of the large employer carrier;
33-6 (2) an employee of a large employer who neither
33-7 resides nor works in the geographic service area of the large
33-8 employer carrier; or
33-9 (3) a large employer located within a geographic
33-10 service area with respect to which the large employer carrier
33-11 demonstrates to the satisfaction of the commissioner that the large
33-12 employer carrier:
33-13 (A) reasonably anticipates that it will not have
33-14 the capacity to deliver services adequately because of obligations
33-15 to existing covered individuals; and
33-16 (B) is acting uniformly without regard to the
33-17 claims experience of the large employer or any health status
33-18 related factor of employees or dependents or new employees or
33-19 dependents who may become eligible for the coverage.
33-20 (b) A large employer carrier that is unable to offer
33-21 coverage in a geographic service area in accordance with a
33-22 determination made by the commissioner under Subsection (a)(3) of
33-23 this article may not offer large employer benefit plans in the
33-24 applicable service area before the 180th day after the later of:
33-25 (1) the date of the refusal; or
33-26 (2) the date the carrier demonstrates to the
33-27 satisfaction of the commissioner that it has regained the capacity
34-1 to deliver services to large employers in the geographic service
34-2 area.
34-3 (c) If the commissioner determines that requiring the
34-4 acceptance of large employers under this subchapter would place a
34-5 large employer carrier in a financially impaired condition and that
34-6 the large employer carrier is acting uniformly without regard to
34-7 the claims experience of the large employer or any health status
34-8 related factors of employees or dependents or new employees or
34-9 dependents who may become eligible for the coverage, the large
34-10 employer carrier may not offer coverage to large employers until
34-11 the later of:
34-12 (1) the 180th day after the date the commissioner
34-13 makes the determination; or
34-14 (2) the date the commissioner determines that
34-15 accepting large employers would not place the large employer
34-16 carrier in a financially impaired condition.
34-17 (d) A large employer carrier must file each of its
34-18 geographic service areas with the commissioner. The commissioner
34-19 may disapprove the use of a geographic service area by a large
34-20 employer carrier.
34-21 Art. 26.86. RENEWABILITY OF COVERAGE; CANCELLATION.
34-22 (a) Except as provided by Article 26.87 of this code, a large
34-23 employer carrier shall renew the large employer health benefit
34-24 plans for a covered large employer, at the option of the large
34-25 employer, unless:
34-26 (1) a premium has not been paid as required by the
34-27 terms of the plan;
35-1 (2) the large employer has committed fraud or
35-2 intentional misrepresentation of a material fact;
35-3 (3) the large employer has not complied with the terms
35-4 of the health benefit plan;
35-5 (4) no enrollee in connection with the plan resides or
35-6 works in the service area of the large employer carrier or in the
35-7 area for which the large employer carrier is authorized to do
35-8 business; or
35-9 (5) membership of an employer in an association
35-10 terminates, but only if coverage is terminated uniformly without
35-11 regard to a health status related factor of a covered individual.
35-12 (b) A large employer carrier may refuse to renew the
35-13 coverage of an eligible employee or dependent for fraud or
35-14 intentional misrepresentation of a material fact by that
35-15 individual.
35-16 (c) A large employer carrier may not cancel a large employer
35-17 health benefit plan except for the reasons specified for refusal to
35-18 renew under Subsection (a) of this article. A large employer
35-19 carrier may not cancel the coverage of an eligible employee or
35-20 dependent except for the reasons specified for refusal to renew
35-21 under Subsection (b) of this article.
35-22 Art. 26.87. REFUSAL TO RENEW. (a) A large employer carrier
35-23 may elect to refuse to renew all large employer health benefit
35-24 plans delivered or issued for delivery by the large employer
35-25 carrier in this state or in a geographic service area approved
35-26 under Article 26.85 of this code. The large employer carrier shall
35-27 notify the commissioner of the election not later than the 180th
36-1 day before the date coverage under the first large employer health
36-2 benefit plan terminates under this subsection.
36-3 (b) The large employer carrier shall notify each affected
36-4 covered large employer not later than the 180th day before the date
36-5 on which coverage terminates for that large employer.
36-6 (c) A large employer carrier that elects under Subsection
36-7 (a) of this article to refuse to renew all large employer health
36-8 benefit plans in this state or in an approved geographic service
36-9 area may not write a new large employer health benefit plan in this
36-10 state or in the geographic service area, as applicable, before the
36-11 fifth anniversary of the date on which notice is delivered to the
36-12 commissioner under Subsection (a) of this article.
36-13 (d) A large employer carrier may elect to discontinue a
36-14 particular type of large employer coverage only if the large
36-15 employer carrier:
36-16 (1) provides notice to each employer of the
36-17 discontinuation before the 90th day preceding the date of the
36-18 discontinuation of the coverage;
36-19 (2) offers to each employer the option to purchase
36-20 other large employer coverage offered by the large employer carrier
36-21 at the time of the discontinuation; and
36-22 (3) acts uniformly without regard to the claims
36-23 experience of the employer or any health status related factors of
36-24 employees or dependents or new employees or dependents who may
36-25 become eligible for the coverage.
36-26 Art. 26.88. NOTICE TO COVERED PERSONS. (a) Not later than
36-27 the 30th day before the date on which termination of coverage is
37-1 effective, a large employer carrier that cancels or refuses to
37-2 renew coverage under a large employer health benefit plan under
37-3 Article 26.86 or 26.87 of this code shall notify the large employer
37-4 of the cancellation or refusal to renew. It is the responsibility
37-5 of the large employer to notify enrollees of the cancellation or
37-6 refusal to renew the coverage.
37-7 (b) The notice provided to a large employer by a large
37-8 employer carrier under this article is in addition to any other
37-9 notice required by Article 26.86 or 26.87 of this code.
37-10 Art. 26.89. PREMIUM RATES; ADJUSTMENTS. (a) A large
37-11 employer carrier may not charge an adjustment to premium rates for
37-12 individual employees or dependents for health status related
37-13 factors or duration of coverage. Any adjustment must be applied
37-14 uniformly to the rates charged for all employees and dependents of
37-15 employees of the large employer. This subsection does not restrict
37-16 the amount that a large employer may be charged for coverage.
37-17 (b) A large employer carrier may establish premium
37-18 discounts, rebates, or a reduction in otherwise applicable
37-19 copayments or deductibles in return for adherence to programs of
37-20 health promotion and disease prevention. A discount, rebate, or
37-21 reduction established under this subsection does not violate
37-22 Section 4(8), Article 21.21, of this code.
37-23 Art. 26.90. PREEXISTING CONDITION PROVISIONS. (a) A
37-24 preexisting condition provision in a large employer health benefit
37-25 plan may not apply to an expense incurred on or after the
37-26 expiration of the 12 months following the initial effective date of
37-27 coverage of the enrollee or late enrollee.
38-1 (b) A preexisting condition provision in a large employer
38-2 health benefit plan may not apply to coverage for a disease or
38-3 condition other than a disease or condition for which medical
38-4 advice, diagnosis, care, or treatment was recommended or received
38-5 during the six months before the earlier of:
38-6 (1) the effective date of coverage; or
38-7 (2) the first day of the waiting period.
38-8 (c) A large employer carrier may not treat genetic
38-9 information as a preexisting condition described by Subsection (b)
38-10 of this article in the absence of a diagnosis of the condition
38-11 related to the information.
38-12 (d) A large employer carrier may not treat a pregnancy as a
38-13 preexisting condition described by Subsection (b) of this article.
38-14 (e) A preexisting condition provision in a large employer
38-15 health benefit plan may not apply to an individual who was
38-16 continuously covered for an aggregate period of 12 months under
38-17 creditable coverage that was in effect up to a date not more than
38-18 63 days before the effective date of coverage under the large
38-19 employer health benefit plan, excluding any waiting period.
38-20 (f) In determining whether a preexisting condition provision
38-21 applies to an individual covered by a large employer health benefit
38-22 plan, the large employer carrier shall credit the time the
38-23 individual was covered under creditable coverage if the previous
38-24 coverage was in effect at any time during the 12 months preceding
38-25 the effective date of coverage under a large employer health
38-26 benefit plan. If the previous coverage was issued under a health
38-27 benefit plan, any waiting period shall also be credited to the
39-1 preexisting condition provision period.
39-2 (g) A health maintenance organization may impose an
39-3 affiliation period if the period is applied uniformly without
39-4 regard to any health status related factor. The affiliation period
39-5 may not exceed two months for an enrollee, other than a late
39-6 enrollee, and may not exceed 90 days for a late enrollee. An
39-7 affiliation period under a plan must run concurrently with any
39-8 applicable waiting period under the plan. The health maintenance
39-9 organization must credit an affiliation period to any preexisting
39-10 condition provision period. A health maintenance organization may
39-11 use an alternative method approved by the commissioner to address
39-12 adverse selection.
39-13 (h) This article does not preclude application of any
39-14 waiting period applicable to all new enrollees under the health
39-15 benefit plan.
39-16 Art. 26.91. FAIR MARKETING. (a) On request, each large
39-17 employer purchasing health benefit plans shall be given a summary
39-18 of all plans for which the employer is eligible.
39-19 (b) The department may require periodic reports by large
39-20 employer carriers and agents regarding the large employer health
39-21 benefit plans issued by those carriers. The reporting requirements
39-22 must require information regarding the number of large employer
39-23 health benefit plans in various categories that are marketed or
39-24 issued to large employers and must comply with federal law and
39-25 regulations.
39-26 Art. 26.92. HEALTH STATUS AND CLAIMS EXPERIENCE; PROHIBITED
39-27 ACTS. (a) A large employer carrier or agent may not, directly or
40-1 indirectly, enter into an agreement or arrangement with an agent
40-2 that provides for, or results in, the compensation paid to an agent
40-3 for the sale of the large employer health benefit plans to vary
40-4 because of the claims experience of the large employer or because
40-5 of health status related factors of the employees or dependents of
40-6 the large employer.
40-7 (b) Subsection (a) of this article does not apply to an
40-8 arrangement that provides compensation to an agent on the basis of
40-9 percentage of premium, provided that the percentage may not vary
40-10 because of the claims experience of the large employer or because
40-11 of health status related factors of the employees or dependents of
40-12 the large employer.
40-13 (c) A large employer carrier or agent may not encourage a
40-14 large employer to exclude an eligible employee from health coverage
40-15 provided in connection with the employee's employment.
40-16 Art. 26.93. AGENTS. (a) A large employer carrier shall pay
40-17 the same commission, percentage of premium, or other amount to an
40-18 agent for renewal of a large employer health benefit plan as the
40-19 carrier paid for the original placement of the plan. Compensation
40-20 for renewal of a plan may not be adjusted upward to reflect an
40-21 increase in the cost of living or similar factors.
40-22 (b) A large employer carrier may not terminate, fail to
40-23 renew, or limit its contract or agreement of representation with an
40-24 agent because of any health status related factors of a large
40-25 employer group placed by the agent with the carrier.
40-26 Art. 26.94. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
40-27 REFUSAL TO RENEW. Denial by a large employer carrier of an
41-1 application for coverage from a large employer carrier or
41-2 cancellation or refusal to renew must be in writing and must state
41-3 the reason or reasons for the denial, cancellation, or refusal.
41-4 Art. 26.95. THIRD-PARTY ADMINISTRATOR. If a large employer
41-5 carrier enters into an agreement with a third-party administrator
41-6 to provide administrative, marketing, or other services related to
41-7 the offering of large employer health benefit plans to large
41-8 employers in this state, the third-party administrator is subject
41-9 to this subchapter.
41-10 PART 3. CERTIFICATION OF COVERAGE
41-11 SECTION 3.01. Subchapter E, Chapter 21, Insurance Code, is
41-12 amended by adding Article 21.52G to read as follows:
41-13 Art. 21.52G. CERTIFICATION AND DISCLOSURE OF COVERAGE UNDER
41-14 HEALTH BENEFIT PLAN
41-15 Sec. 1. DEFINITIONS. In this article:
41-16 (1) "Creditable coverage" means creditable coverage
41-17 described by Section 3 of this article.
41-18 (2) "Health benefit plan" means a plan subject to this
41-19 article under Section 2 of this article.
41-20 Sec. 2. HEALTH BENEFIT PLAN. This article applies to a
41-21 health benefit plan that:
41-22 (1) provides benefits for medical or surgical expenses
41-23 incurred as a result of a health condition, accident, or sickness,
41-24 including:
41-25 (A) an individual, group, blanket, or franchise
41-26 insurance policy or insurance agreement, a group hospital service
41-27 contract, or an individual or group evidence of coverage that is
42-1 offered by:
42-2 (i) an insurance company;
42-3 (ii) a group hospital service corporation
42-4 operating under Chapter 20 of this code;
42-5 (iii) a fraternal benefit society
42-6 operating under Chapter 10 of this code;
42-7 (iv) a stipulated premium insurance
42-8 company operating under Chapter 22 of this code; or
42-9 (v) a health maintenance organization
42-10 operating under the Texas Health Maintenance Organization Act
42-11 (Chapter 20A, Vernon's Texas Insurance Code); or
42-12 (B) to the extent permitted by the Employee
42-13 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
42-14 seq.), a health benefit plan that is offered by:
42-15 (i) a multiple employer welfare
42-16 arrangement as defined by Section 3, Employee Retirement Income
42-17 Security Act of 1974 (29 U.S.C. Section 1002) and operating under
42-18 Article 3.95-1 et seq. of this code; or
42-19 (ii) another analogous benefit
42-20 arrangement;
42-21 (2) is offered by an approved nonprofit health
42-22 corporation that is certified under Section 5.01(a), Medical
42-23 Practice Act (Article 4495b, Vernon's Texas Civil Statutes), and
42-24 that holds a certificate of authority issued by the commissioner
42-25 under Article 21.52F of this code; or
42-26 (3) is offered by any other entity not licensed under
42-27 this code or another insurance law of this state that contracts
43-1 directly for health care services on a risk-sharing basis,
43-2 including an entity that contracts for health care services on a
43-3 capitation basis.
43-4 Sec. 3. CREDITABLE COVERAGE. (a) An individual's coverage
43-5 is creditable for purposes of this article if the coverage is
43-6 provided under:
43-7 (1) a self-funded or self-insured employee welfare
43-8 benefit plan that provides health benefits and that is established
43-9 in accordance with the Employee Retirement Income Security Act of
43-10 1974 (29 U.S.C. Section 1001 et seq.);
43-11 (2) a group health benefit plan provided by a health
43-12 insurance carrier or health maintenance organization;
43-13 (3) an individual health insurance policy or evidence
43-14 of coverage;
43-15 (4) Part A or Part B of Title XVIII of the Social
43-16 Security Act (42 U.S.C. Section 1395c et seq.);
43-17 (5) Title XIX of the Social Security Act (42 U.S.C.
43-18 Section 1396 et seq.), other than coverage consisting solely of
43-19 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
43-20 (6) Chapter 55, Title 10, United States Code (10
43-21 U.S.C. Section 1071 et seq.);
43-22 (7) a medical care program of the Indian Health
43-23 Service or of a tribal organization;
43-24 (8) a state health benefits risk pool;
43-25 (9) a health plan offered under Chapter 89, Title 5,
43-26 United States Code (5 U.S.C. Section 8901 et seq.);
43-27 (10) a public health plan as defined by federal
44-1 regulations; or
44-2 (11) a health benefit plan under Section 5(e), Peace
44-3 Corps Act (22 U.S.C. Section 2504(e)).
44-4 (b) Creditable coverage does not include:
44-5 (1) accident-only or disability income insurance, or a
44-6 combination of accident-only and disability income insurance;
44-7 (2) coverage issued as a supplement to liability
44-8 insurance;
44-9 (3) liability insurance, including general liability
44-10 insurance and automobile liability insurance;
44-11 (4) workers' compensation or similar insurance;
44-12 (5) automobile medical payment insurance;
44-13 (6) credit-only insurance;
44-14 (7) coverage for on-site medical clinics;
44-15 (8) other coverage that is:
44-16 (A) similar to the coverage described in this
44-17 subsection under which benefits for medical care are secondary or
44-18 incidental to other insurance benefits; and
44-19 (B) specified in federal regulations;
44-20 (9) coverage that provides limited-scope dental or
44-21 vision benefits;
44-22 (10) long-term care coverage or benefits, nursing home
44-23 care coverage or benefits, home health care coverage or benefits,
44-24 community-based care coverage or benefits, or any combination of
44-25 those coverages or benefits;
44-26 (11) coverage that provides other limited benefits
44-27 specified by federal regulations;
45-1 (12) coverage for a specified disease or illness;
45-2 (13) hospital indemnity or other fixed indemnity
45-3 insurance; or
45-4 (14) Medicare supplemental health insurance as defined
45-5 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
45-6 1395ss), coverage supplemental to the coverage provided under
45-7 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
45-8 seq.), and similar supplemental coverage provided under a group
45-9 plan.
45-10 Sec. 4. CERTIFICATION OF COVERAGE. Each issuer of a health
45-11 benefit plan shall provide a certification of coverage, in
45-12 accordance with the standards the commissioner adopts by rule, as
45-13 necessary to determine the period of applicable creditable coverage
45-14 of health benefit plans.
45-15 Sec. 5. RULES. The commissioner shall adopt rules as
45-16 necessary to implement this article and related provisions of this
45-17 code and to meet the minimum requirements of federal law and
45-18 regulations.
45-19 PART 4. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
45-20 SECTION 4.01. Article 3.95-1, Insurance Code, is amended to
45-21 read as follows:
45-22 Art. 3.95-1. DEFINITIONS. In this subchapter:
45-23 (1) "Board" means the Texas Department [State Board]
45-24 of Insurance or the commissioner, as appropriate.
45-25 (2) "Commissioner" means the commissioner of
45-26 insurance.
45-27 (3) "Creditable coverage" means coverage described by
46-1 Article 3.95-1.5 of this code.
46-2 (4) "Employee welfare benefit plan" has the meaning
46-3 assigned by Section 3(1) of the Employee Retirement Income Security
46-4 Act of 1974 (29 U.S.C. Section 1002(1)).
46-5 (5) [(4)] "Fully insured multiple employer welfare
46-6 arrangement" means a multiple employer welfare arrangement that
46-7 provides benefits to its participating employees and beneficiaries
46-8 for which 100 percent of the liability has been assumed by an
46-9 insurance company authorized to do business in this state.
46-10 (6) "Health benefit plan" means a health benefit plan
46-11 described by Article 3.95-1.6 of this code.
46-12 (7) "Health status related factor" means:
46-13 (A) health status;
46-14 (B) medical condition, including both physical
46-15 and mental illness;
46-16 (C) claims experience;
46-17 (D) receipt of health care;
46-18 (E) medical history;
46-19 (F) genetic information;
46-20 (G) evidence of insurability, including
46-21 conditions arising out of acts of family violence; and
46-22 (H) disability.
46-23 (8) "Late-participating employee" means an employee
46-24 described by Article 3.95-1.7 of this code.
46-25 (9) [(5)] "Multiple employer welfare arrangement" has
46-26 the meaning assigned by Section 3(40) of the Employee Retirement
46-27 Income Security Act of 1974 (29 U.S.C. Section 1002(40)) to
47-1 describe an entity which meets either or both of the following
47-2 criteria:
47-3 (A) one or more of the employer members in the
47-4 multiple employer welfare arrangement is either domiciled in this
47-5 state or has its principal headquarters or principal administrative
47-6 office in this state; or
47-7 (B) the multiple employer welfare arrangement
47-8 solicits an employer that is domiciled in this state or has its
47-9 principal headquarters or principal administrative office in this
47-10 state.
47-11 (10) "Participation criteria" means any criteria or
47-12 rules established by a multiple employer welfare arrangement to
47-13 determine the employees who are eligible for enrollment, including
47-14 continued enrollment, under the terms of a health benefit plan.
47-15 (11) "Preexisting condition provision" means a
47-16 provision that denies, excludes, or limits coverage for a disease
47-17 or condition for a specified period after the effective date of
47-18 coverage.
47-19 (12) "Waiting period" means a period established by a
47-20 multiple employer welfare arrangement that must pass before an
47-21 individual who is a potential participating employee in a health
47-22 benefit plan is eligible to be covered for benefits.
47-23 SECTION 4.02. Subchapter I, Chapter 3, Insurance Code, is
47-24 amended by adding Articles 3.95-1.5, 3.95-1.6, and 3.95-1.7 to read
47-25 as follows:
47-26 Art. 3.95-1.5. CREDITABLE COVERAGE. (a) An individual's
47-27 coverage is creditable for purposes of this subchapter if the
48-1 coverage is provided under:
48-2 (1) a self-funded or self-insured employee welfare
48-3 benefit plan that provides health benefits and that is established
48-4 in accordance with the Employee Retirement Income Security Act of
48-5 1974 (29 U.S.C. Section 1001 et seq.);
48-6 (2) a group health benefit plan provided by a health
48-7 insurance carrier or health maintenance organization;
48-8 (3) an individual health insurance policy or evidence
48-9 of coverage;
48-10 (4) Part A or Part B of Title XVIII of the Social
48-11 Security Act (42 U.S.C. Section 1395c et seq.);
48-12 (5) Title XIX of the Social Security Act (42 U.S.C.
48-13 Section 1396 et seq.), other than coverage consisting solely of
48-14 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
48-15 (6) Chapter 55, Title 10, United States Code (10
48-16 U.S.C. Section 1071 et seq.);
48-17 (7) a medical care program of the Indian Health
48-18 Service or of a tribal organization;
48-19 (8) a state health benefits risk pool;
48-20 (9) a health plan offered under Chapter 89, Title 5,
48-21 United States Code (5 U.S.C. Section 8901 et seq.);
48-22 (10) a public health plan as defined by federal
48-23 regulations; or
48-24 (11) a health benefit plan under Section 5(e), Peace
48-25 Corps Act (22 U.S.C. Section 2504(e)).
48-26 (b) Creditable coverage does not include:
48-27 (1) accident-only or disability income insurance, or a
49-1 combination of accident-only and disability income insurance;
49-2 (2) coverage issued as a supplement to liability
49-3 insurance;
49-4 (3) liability insurance, including general liability
49-5 insurance and automobile liability insurance;
49-6 (4) workers' compensation or similar insurance;
49-7 (5) automobile medical payment insurance;
49-8 (6) credit-only insurance;
49-9 (7) coverage for on-site medical clinics;
49-10 (8) other coverage that is:
49-11 (A) similar to the coverage described by this
49-12 subsection under which benefits for medical care are secondary or
49-13 incidental to other insurance benefits; and
49-14 (B) specified in federal regulations;
49-15 (9) coverage that provides limited-scope dental or
49-16 vision benefits;
49-17 (10) long-term care coverage or benefits, nursing home
49-18 care coverage or benefits, home health care coverage or benefits,
49-19 community-based care coverage or benefits, or any combination of
49-20 those coverages or benefits;
49-21 (11) coverage that provides other limited benefits
49-22 specified by federal regulations;
49-23 (12) coverage for a specified disease or illness;
49-24 (13) hospital indemnity or other fixed indemnity
49-25 insurance; or
49-26 (14) Medicare supplemental health insurance as defined
49-27 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
50-1 1395ss), coverage supplemental to the coverage provided under
50-2 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
50-3 seq.), and similar supplemental coverage provided under a group
50-4 plan.
50-5 Art. 3.95-1.6. HEALTH BENEFIT PLAN. (a) For purposes of
50-6 this subchapter, the term "health benefit plan" includes any plan
50-7 that provides benefits for health care services.
50-8 (b) A health benefit plan does not include:
50-9 (1) accident-only or disability income insurance or a
50-10 combination of accident-only and disability income insurance;
50-11 (2) credit-only insurance;
50-12 (3) disability insurance;
50-13 (4) coverage for a specified disease or illness;
50-14 (5) Medicare services under a federal contract;
50-15 (6) Medicare supplement and Medicare Select policies
50-16 regulated in accordance with federal law;
50-17 (7) long-term care coverage or benefits, nursing home
50-18 care coverage or benefits, home health care coverage or benefits,
50-19 community-based care coverage or benefits, or any combination of
50-20 those coverages or benefits;
50-21 (8) coverage that provides limited-scope dental or
50-22 vision benefits;
50-23 (9) coverage provided by a single service health
50-24 maintenance organization;
50-25 (10) coverage issued as a supplement to liability
50-26 insurance;
50-27 (11) workers' compensation or similar insurance;
51-1 (12) automobile medical payment insurance coverage;
51-2 (13) jointly managed trusts authorized under 29 U.S.C.
51-3 Section 141 et seq. that contain a plan of benefits for employees
51-4 that is negotiated in a collective bargaining agreement governing
51-5 wages, hours, and working conditions of the employees that is
51-6 authorized under 29 U.S.C. Section 157;
51-7 (14) hospital indemnity or other fixed indemnity
51-8 insurance;
51-9 (15) reinsurance contracts issued on a stop-loss,
51-10 quota-share, or similar basis;
51-11 (16) short-term major medical contracts;
51-12 (17) liability insurance, including general liability
51-13 insurance and automobile liability insurance;
51-14 (18) other insurance coverage that is:
51-15 (A) similar to the coverage described by this
51-16 subsection under which benefits for medical care are secondary or
51-17 incidental to other insurance benefits; and
51-18 (B) specified in federal regulations;
51-19 (19) coverage for on-site medical clinics; or
51-20 (20) coverage that provides other limited benefits
51-21 specified by federal regulations.
51-22 Art. 3.95-1.7. LATE-PARTICIPATING EMPLOYEE. (a) An
51-23 individual is a late-participating employee if the individual:
51-24 (1) is an employee or dependent eligible for
51-25 enrollment; and
51-26 (2) requests enrollment in a participating employer's
51-27 health benefit plan after the expiration of the initial enrollment
52-1 period established under the terms of the first plan for which that
52-2 employee or dependent was eligible through the participating
52-3 employer and after the expiration of an open enrollment period
52-4 under Article 3.95-4.1 of this code.
52-5 (b) An individual is not a late-participating employee if:
52-6 (1) the individual:
52-7 (A) was covered under another health benefit
52-8 plan or self-funded employer health benefit plan at the time the
52-9 individual was eligible to enroll;
52-10 (B) declines in writing, at the time of the
52-11 initial eligibility, stating that coverage under another health
52-12 benefit plan or self-funded employer health benefit plan was the
52-13 reason for declining enrollment;
52-14 (C) has lost coverage under another health
52-15 benefit plan or self-funded employer health benefit plan as a
52-16 result of:
52-17 (i) the termination of employment;
52-18 (ii) the reduction in the number of hours
52-19 of employment;
52-20 (iii) the termination of the other plan's
52-21 coverage;
52-22 (iv) the termination of contributions
52-23 toward the premium made by the employer; or
52-24 (v) the death of a spouse or divorce; and
52-25 (D) requests enrollment not later than the 31st
52-26 day after the date on which coverage under the other health benefit
52-27 plan or self-funded employer health benefit plan terminates;
53-1 (2) the individual is employed by an employer who
53-2 offers multiple health benefit plans and the individual elects a
53-3 different health benefit plan during an open enrollment period;
53-4 (3) a court has ordered coverage to be provided for a
53-5 spouse under a covered employee's plan and request for enrollment
53-6 is made not later than the 31st day after the date the court order
53-7 is issued; or
53-8 (4) a court has ordered coverage to be provided for a
53-9 child under a covered employee's plan and the request for
53-10 enrollment is made not later than the 31st day after the date the
53-11 employer receives notice of the court order.
53-12 SECTION 4.03. Subchapter I, Chapter 3, Insurance Code, is
53-13 amended by adding Articles 3.95-4.1 through 3.95-4.10 to read as
53-14 follows:
53-15 Art. 3.95-4.1. COVERAGE REQUIREMENTS. (a) A multiple
53-16 employer welfare arrangement may refuse to provide coverage to an
53-17 employer in accordance with the multiple employer welfare
53-18 arrangement's underwriting standards and criteria. However, on
53-19 issuance of coverage to an employer, each multiple employer welfare
53-20 arrangement shall provide coverage to the employees who meet the
53-21 participation criteria established by the terms of the plan
53-22 document without regard to an individual's health status related
53-23 factors. The participation criteria may not be based on health
53-24 status related factors.
53-25 (b) The multiple employer welfare arrangement shall accept
53-26 or reject the entire group of individuals who meet the
53-27 participation criteria and who choose coverage and may exclude only
54-1 those employees or dependents who have declined coverage. The
54-2 multiple employer welfare arrangement may charge premiums in
54-3 accordance with Article 3.95-4.6 of this code to the group of
54-4 employees or dependents who meet the participation criteria and who
54-5 do not decline coverage.
54-6 (c) The multiple employer welfare arrangement shall obtain a
54-7 written waiver for each employee who meets the participation
54-8 criteria and who declines coverage under a health plan offered to
54-9 an employer. The waiver must ensure that the employee was not
54-10 induced or pressured into declining coverage because of the
54-11 employee's health status related factors.
54-12 (d) A multiple employer welfare arrangement may not provide
54-13 coverage to an employer or the employees of an employer if the
54-14 multiple employer welfare arrangement or an agent for the multiple
54-15 employer welfare arrangement knows that the employer has induced or
54-16 pressured an employee who meets the participation criteria or a
54-17 dependent of the employee to decline coverage because of that
54-18 individual's health status related factors.
54-19 (e) A multiple employer welfare arrangement may require an
54-20 employer to meet minimum contribution or participation requirements
54-21 as a condition of issuance and renewal in accordance with the
54-22 terms of the multiple employer welfare arrangement's plan document.
54-23 Those requirements must be stated in the plan document and must be
54-24 applied uniformly to each employer offered or issued coverage by
54-25 the multiple employer welfare arrangement in this state.
54-26 (f) The initial enrollment period for employees meeting the
54-27 participation criteria must be at least 31 days, with a 31-day
55-1 annual open enrollment period.
55-2 (g) If dependent coverage is offered to participating
55-3 employees under the terms of a multiple employer welfare
55-4 arrangement's plan document, the initial enrollment period for the
55-5 dependents must be at least 31 days, with a 31-day annual open
55-6 enrollment period.
55-7 (h) A multiple employer welfare arrangement may establish a
55-8 waiting period during which a new employee is not eligible for
55-9 coverage in accordance with the terms of the plan document.
55-10 (i) A new employee who meets the participation criteria may
55-11 not be denied coverage if the application for coverage is received
55-12 by the multiple employer welfare arrangement not later than the
55-13 31st day after the later of:
55-14 (1) the date on which the employment begins; or
55-15 (2) the date on which the waiting period established
55-16 under this article expires.
55-17 (j) If dependent coverage is offered under the terms of a
55-18 multiple employer welfare arrangement's plan document, a dependent
55-19 of a new employee meeting the participation criteria established
55-20 by the multiple employer welfare arrangement may not be denied
55-21 coverage if the application for coverage is received by the
55-22 multiple employer welfare arrangement not later than the 31st day
55-23 after the later of:
55-24 (1) the date on which the employment begins;
55-25 (2) the date on which the waiting period established
55-26 under this article expires; or
55-27 (3) the date on which the dependent becomes eligible
56-1 for enrollment.
56-2 (k) A late-participating employee may be excluded from
56-3 coverage until the next annual open enrollment period and may be
56-4 subject to a 12-month preexisting condition provision as described
56-5 by Article 3.95-4.8 of this code. The period during which a
56-6 preexisting condition provision applies may not exceed 18 months
56-7 from the date of the initial application.
56-8 (l) A multiple employer welfare arrangement may not exclude
56-9 an employee who meets the participation criteria or an eligible
56-10 dependent, including a late-participating employee, who would
56-11 otherwise be covered.
56-12 (m) A multiple employer welfare arrangement's plan document
56-13 may not, by use of a rider or amendment applicable to a specific
56-14 individual, limit or exclude coverage by type of illness,
56-15 treatment, medical condition, or accident, except for preexisting
56-16 conditions as permitted under Article 3.95-4.8 of this code.
56-17 Art. 3.95-4.2. DEPENDENT CHILDREN. (a) A multiple employer
56-18 welfare arrangement's plan document may not limit or exclude
56-19 initial coverage of a newborn child of a participating employee.
56-20 Any coverage of a newborn child of a participating employee under
56-21 this subsection terminates on the 32nd day after the date of the
56-22 birth of the child unless:
56-23 (1) dependent children are eligible for coverage under
56-24 the multiple employer welfare arrangement's plan document; and
56-25 (2) notification of the birth and any required
56-26 additional premium are received by the multiple employer welfare
56-27 arrangement not later than the 31st day after the date of birth.
57-1 (b) If dependent children are eligible for coverage under
57-2 the terms of a multiple employer welfare arrangement's plan
57-3 document, the plan document may not limit or exclude initial
57-4 coverage of an adopted child of a participating employee. A child
57-5 is considered to be the child of a participating employee if the
57-6 participating employee is a party in a suit in which the adoption
57-7 of the child by the participating employee is sought.
57-8 (c) An adopted child is enrolled on the date the
57-9 participating employee becomes a party in the suit. Coverage of an
57-10 adopted child under this subsection terminates on the 32nd day
57-11 after the date the participating employee becomes a party in the
57-12 suit unless notice of the adoption and any required additional
57-13 premium are received by the multiple employer welfare arrangement
57-14 not later than the 31st day after that date.
57-15 (d) An adopted child who is not enrolled in the plan by the
57-16 date the adoption becomes final is enrolled on that date. Coverage
57-17 of an adopted child under this subsection terminates on the 32nd
57-18 day after the date the adoption becomes final unless notice of the
57-19 adoption and any required additional premium are received by the
57-20 multiple employer welfare arrangement not later than the 31st day
57-21 after that date.
57-22 Art. 3.95-4.3. RENEWABILITY OF COVERAGE; CANCELLATION.
57-23 (a) Except as provided by Article 3.95-4.4 of this code, a
57-24 multiple employer welfare arrangement shall renew the health
57-25 benefit plan, at the option of the employer, unless:
57-26 (1) a contribution has not been paid as required by
57-27 the terms of the plan;
58-1 (2) the employer has committed fraud or intentional
58-2 misrepresentation of a material fact;
58-3 (3) the employer has not complied with the terms of
58-4 the health benefit plan document;
58-5 (4) the plan is ceasing to offer any coverage in a
58-6 geographic area; or
58-7 (5) there has been a failure to:
58-8 (A) meet the terms of an applicable collective
58-9 bargaining agreement or other agreement requiring or authorizing
58-10 contributions to the plan;
58-11 (B) renew the agreement; or
58-12 (C) employ employees covered by the agreement.
58-13 (b) A multiple employer welfare arrangement may refuse to
58-14 renew the coverage of a participating employee or dependent for
58-15 fraud or intentional misrepresentation of a material fact by that
58-16 individual.
58-17 (c) A multiple employer welfare arrangement may not cancel a
58-18 health benefit plan except for the reasons specified for refusal to
58-19 renew under Subsection (a) of this article. A multiple employer
58-20 welfare arrangement may not cancel the coverage of a participating
58-21 employee or dependent except for the reasons specified for refusal
58-22 to renew under Subsection (b) of this article.
58-23 Art. 3.95-4.4. REFUSAL TO RENEW. (a) A multiple employer
58-24 welfare arrangement may elect to refuse to renew all health benefit
58-25 plans delivered or issued for delivery by the multiple employer
58-26 welfare arrangement in this state. The multiple employer welfare
58-27 arrangement shall notify the commissioner of the election not later
59-1 than the 180th day before the date coverage under the first health
59-2 benefit plan terminates under this subsection.
59-3 (b) The multiple employer welfare arrangement shall notify
59-4 each affected employer not later than the 180th day before the date
59-5 on which coverage terminates for that employer.
59-6 (c) A multiple employer welfare arrangement that elects
59-7 under Subsection (a) of this article to refuse to renew all health
59-8 benefit plans in this state may not write a health benefit plan in
59-9 this state before the fifth anniversary of the date on which notice
59-10 is delivered to the commissioner under Subsection (a) of this
59-11 article.
59-12 (d) A multiple employer welfare arrangement may elect to
59-13 discontinue a plan only if the multiple employer welfare
59-14 arrangement:
59-15 (1) provides notice to each employer of the
59-16 discontinuation before the 90th day preceding the date of the
59-17 discontinuation of the plan;
59-18 (2) offers to each employer the option to purchase
59-19 another plan offered by the multiple employer welfare arrangement;
59-20 and
59-21 (3) acts uniformly without regard to the claims
59-22 experience of the employer or any health status related factor of
59-23 participating employees or dependents or new employees or
59-24 dependents who may become eligible for the coverage.
59-25 Art. 3.95-4.5. NOTICE TO COVERED PERSONS. (a) Not later
59-26 than the 30th day before the date on which termination of coverage
59-27 is effective, a multiple employer welfare arrangement that cancels
60-1 or refuses to renew coverage under a health benefit plan under
60-2 Article 3.95-4.3 or 3.95-4.4 of this code shall notify the employer
60-3 of the cancellation or refusal to renew. It is the responsibility
60-4 of the employer to notify participating employees of the
60-5 cancellation or refusal to renew the coverage.
60-6 (b) The notice provided under this article is in addition to
60-7 any other notice required by Article 3.95-4.3 or 3.95-4.4 of this
60-8 code.
60-9 Art. 3.95-4.6. PREMIUM RATES; ADJUSTMENTS. (a) A multiple
60-10 employer welfare arrangement may not charge an adjustment to
60-11 premium rates for individual employees or dependents for health
60-12 status related factors or duration of coverage. Any adjustment
60-13 must be applied uniformly to the rates charged for all
60-14 participating employees and dependents of participating employees
60-15 of the employer. This subsection does not restrict the amount that
60-16 an employer may be charged for coverage.
60-17 (b) A multiple employer welfare arrangement may establish
60-18 premium discounts, rebates, or a reduction in otherwise applicable
60-19 copayments or deductibles in return for adherence to programs of
60-20 health promotion and disease prevention. A discount, rebate, or
60-21 reduction established under this subsection does not violate
60-22 Section 4(8), Article 21.21, of this code.
60-23 Art. 3.95-4.7. FAIR MARKETING. (a) On request, each
60-24 employer purchasing health benefit plans shall be given a summary
60-25 of the plans for which the employer is eligible.
60-26 (b) The department may require periodic reports by multiple
60-27 employer welfare arrangements and agents regarding the health
61-1 benefit plans issued by the multiple employer welfare arrangements.
61-2 The reporting requirements must comply with federal law and
61-3 regulations.
61-4 Art. 3.95-4.8. PREEXISTING CONDITION PROVISIONS. (a) A
61-5 preexisting condition provision in a multiple employer welfare
61-6 arrangement's plan document may not apply to an expense incurred on
61-7 or after the expiration of the 12 months following the initial
61-8 effective date of coverage of the participating employee or
61-9 late-participating employee.
61-10 (b) A preexisting condition provision in a multiple employer
61-11 welfare arrangement's plan document may not apply to coverage for a
61-12 disease or condition other than a disease or condition for which
61-13 medical advice, diagnosis, care, or treatment was recommended or
61-14 received during the six months before the earlier of:
61-15 (1) the effective date of coverage; or
61-16 (2) the first day of the waiting period.
61-17 (c) A multiple employer welfare arrangement may not treat
61-18 genetic information as a preexisting condition described by
61-19 Subsection (b) of this article in the absence of a diagnosis of the
61-20 condition related to the information.
61-21 (d) A multiple employer welfare arrangement may not treat a
61-22 pregnancy as a preexisting condition described by Subsection (b) of
61-23 this article.
61-24 (e) A preexisting condition provision in a multiple employer
61-25 welfare arrangement's plan document may not apply to an individual
61-26 who was continuously covered for an aggregate period of 12 months
61-27 under creditable coverage that was in effect up to a date not more
62-1 than 63 days before the effective date of coverage under the health
62-2 benefit plan, excluding any waiting period.
62-3 (f) In determining whether a preexisting condition provision
62-4 applies to an individual covered by a multiple employer welfare
62-5 arrangement's plan document, the multiple employer welfare
62-6 arrangement shall credit the time the individual was covered under
62-7 previous creditable coverage if the previous coverage was in effect
62-8 at any time during the 12 months preceding the effective date of
62-9 coverage under the multiple employer welfare arrangement. If the
62-10 previous coverage was issued under a health benefit plan, any
62-11 waiting period shall also be credited to the preexisting condition
62-12 provision period.
62-13 (g) This article does not preclude application of any
62-14 waiting period applicable to all new participating employees under
62-15 the health benefit plan in accordance with the terms of the
62-16 multiple employer welfare arrangement's plan document.
62-17 Art. 3.95-4.9. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
62-18 REFUSAL TO RENEW. Denial by a multiple employer welfare
62-19 arrangement of an application for coverage from an employer or
62-20 cancellation or refusal to renew must be in writing and must state
62-21 the reason or reasons for the denial, cancellation, or refusal.
62-22 Art. 3.95-4.10. THIRD-PARTY ADMINISTRATOR. If a multiple
62-23 employer welfare arrangement enters into an agreement with a
62-24 third-party administrator to provide administrative, marketing, or
62-25 other services related to the offering of health benefit plans to
62-26 employers in this state, the third-party administrator is subject
62-27 to this subchapter.
63-1 SECTION 4.04. Article 3.95-8, Insurance Code, is amended by
63-2 amending Subsection (a) and adding Subsection (e) to read as
63-3 follows:
63-4 (a) Each multiple employer welfare arrangement transacting
63-5 business in this state shall file the following with the
63-6 commissioner on forms approved by the commissioner:
63-7 (1) within 90 days of the end of the fiscal year,
63-8 financial statements audited by a certified public accountant;
63-9 [and]
63-10 (2) within 90 days of the end of the fiscal year, an
63-11 actuarial opinion prepared and certified by an actuary who is not
63-12 an employee of the multiple employer welfare arrangement and who is
63-13 a fellow of the Society of Actuaries, a member of the American
63-14 Academy of Actuaries, or an enrolled actuary under the Employee
63-15 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
63-16 seq.); and
63-17 (3) any modified terms of a plan document along with a
63-18 certification from the trustees that any changes are in compliance
63-19 with the minimum requirements of this subchapter. The actuarial
63-20 opinion shall include:
63-21 (A) a description of the actuarial soundness of
63-22 the multiple employer welfare arrangement, including any
63-23 recommended actions that the multiple employer welfare arrangement
63-24 should take to improve its actuarial soundness;
63-25 (B) the recommended amount of cash reserves the
63-26 multiple employer welfare arrangement should maintain which shall
63-27 not be less than the greater of 20 percent of the total
64-1 contributions in the preceding plan year or 20 percent of the total
64-2 estimated contributions for the current plan year; cash reserves
64-3 shall be calculated with proper actuarial regard for known claims,
64-4 paid and outstanding, a history of incurred but not reported
64-5 claims, claims handling expenses, unearned premium, an estimate for
64-6 bad debts, a trend factor, and a margin for error; cash reserves
64-7 required by this article shall be maintained in cash or federally
64-8 guaranteed obligations of less than five-year maturity that have a
64-9 fixed or recoverable principal amount or such other investments as
64-10 the commissioner or board may authorize by rule; and
64-11 (C) the recommended level of specific and
64-12 aggregate stop-loss insurance the multiple employer welfare
64-13 arrangement should maintain.
64-14 (e) If the commissioner determines that a multiple employer
64-15 welfare arrangement does not comply with the requirements
64-16 established in this subchapter, the commissioner may order the
64-17 multiple employer welfare arrangement to correct the deficiencies.
64-18 If the multiple employer welfare arrangement does not initiate
64-19 immediate corrective action, the commissioner may take any action
64-20 against the multiple employer welfare arrangement that is
64-21 authorized by this code.
64-22 SECTION 4.05. Article 3.95-15, Insurance Code, is amended to
64-23 read as follows:
64-24 Art. 3.95-15. PROCEEDINGS BEFORE COMMISSIONER [THE BOARD] OF
64-25 INSURANCE; RULES. (a) The commissioner [board] may, on notice and
64-26 opportunity for all interested persons to be heard, issue such
64-27 rules, regulations, and orders as are reasonably necessary to
65-1 augment and carry out the provisions of this subchapter. The
65-2 commissioner shall adopt rules as necessary to meet the minimum
65-3 requirements of federal law and regulations.
65-4 (b) [A person affected by a final ruling or action of the
65-5 commissioner under this subchapter is entitled to have that ruling
65-6 or action reviewed by the board by submitting an application to the
65-7 board as provided by Subsection (d) of Article 1.04 of this code.
65-8 Appeal of the commissioner's ruling or action to the board does not
65-9 operate as a stay of the ruling or action except as otherwise
65-10 ordered by the board on application by the appellant.]
65-11 [(c)] A person affected by the commissioner's [board's]
65-12 order may appeal that order by filing suit in a district court in
65-13 Travis County under [pursuant to Subsection (f) of] Article 1.04 of
65-14 this code.
65-15 PART 5. CONFORMING AMENDMENTS
65-16 SECTION 5.01. Section 3D, Article 3.51-6, Insurance Code, is
65-17 amended by adding Subsection (d) to read as follows:
65-18 (d) This section does not apply to a health insurance policy
65-19 subject to Article 26.21A or 26.84 of this code.
65-20 SECTION 5.02. Subsection (K), Section 2, Chapter 397, Acts
65-21 of the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
65-22 Vernon's Texas Insurance Code), is amended to read as follows:
65-23 (K) An accident and sickness insurance policy that provides
65-24 coverage for the immediate family or children of a person insured
65-25 under the policy may not exclude from coverage or limit coverage to
65-26 a child of the insured solely because the child is adopted. For
65-27 the purposes of this subsection, a child is considered to be the
66-1 child of an insured if the insured is a party in a suit in which
66-2 the adoption of the child by the insured is sought. This Subsection
66-3 (K) does not apply to an accident and sickness insurance policy
66-4 subject to Article 26.21A or 26.84, Insurance Code.
66-5 PART 6. EFFECTIVE DATE; TRANSITION; EMERGENCY
66-6 SECTION 6.01. This Act applies only to an insurance policy,
66-7 evidence of coverage, contract, or other document establishing
66-8 coverage under a health benefit plan that is delivered, issued for
66-9 delivery, or renewed on or after the effective date of this Act. An
66-10 insurance policy, evidence of coverage, contract, or other
66-11 document establishing coverage under a health benefit plan that is
66-12 delivered, issued for delivery, or renewed before the effective
66-13 date of this Act is governed by the law as it existed immediately
66-14 before that date, and that law is continued in effect for that
66-15 purpose.
66-16 SECTION 6.02. This Act takes effect July 1, 1997.
66-17 SECTION 6.03. The importance of this legislation and the
66-18 crowded condition of the calendars in both houses create an
66-19 emergency and an imperative public necessity that the
66-20 constitutional rule requiring bills to be read on three several
66-21 days in each house be suspended, and this rule is hereby suspended,
66-22 and that this Act take effect and be in force according to its
66-23 terms, and it is so enacted.