1-1 By: Averitt (Senate Sponsor - Sibley) H.B. No. 1212
1-2 (In the Senate - Received from the House April 21, 1997;
1-3 April 22, 1997, read first time and referred to Committee on
1-4 Economic Development; May 6, 1997, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 8, Nays
1-6 0; May 6, 1997, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1212 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to health insurance portability and availability and the
1-11 implementation of certain federal reforms relating to health
1-12 insurance portability and availability.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 PART 1. HEALTH INSURANCE PORTABILITY AND AVAILABILITY;
1-15 GENERAL PROVISIONS; SMALL EMPLOYERS
1-16 SECTION 1.01. Article 26.01, Insurance Code, is amended to
1-17 read as follows:
1-18 Art. 26.01. SHORT TITLE. This chapter may be cited as the
1-19 [Small Employer] Health Insurance Portability and Availability Act.
1-20 SECTION 1.02. Article 26.02, Insurance Code, is amended to
1-21 read as follows:
1-22 Art. 26.02. DEFINITIONS. In this chapter:
1-23 (1) "Affiliation period" means a period that, under
1-24 the terms of the coverage offered by a health maintenance
1-25 organization, must expire before the coverage becomes effective.
1-26 During an affiliation period:
1-27 (A) a health maintenance organization is not
1-28 required to provide health care services or benefits to the
1-29 participant or beneficiary; and
1-30 (B) a premium may not be charged to the
1-31 participant or beneficiary. ["Affiliated employer" means a person
1-32 connected by commonality of ownership with a small employer. The
1-33 term includes a person that owns a small employer, shares directors
1-34 with a small employer, or is eligible to file a consolidated tax
1-35 return with a small employer.]
1-36 (2) "Agent" means a person who may act as an agent for
1-37 the sale of a health benefit plan under a license issued under
1-38 Section 15 or 15A, Texas Health Maintenance Organization Act
1-39 (Article 20A.15 or 20A.15A, Vernon's Texas Insurance Code), or
1-40 under Subchapter A, Chapter 21, of this code.
1-41 (3) "Base premium rate" means, for each class of
1-42 business and for a specific rating period, the lowest premium rate
1-43 that is charged or that could be charged under a rating system for
1-44 that class of business by the small employer carrier to small
1-45 employers with similar case characteristics for small employer
1-46 health benefit plans with the same or similar coverage.
1-47 (4) "Board of directors" means the board of directors
1-48 of the Texas Health Reinsurance System.
1-49 (5) "Case characteristics" means, with respect to a
1-50 small employer, the geographic area in which that employer's
1-51 employees reside, the age and gender of the individual employees
1-52 and their dependents, the appropriate industry classification as
1-53 determined by the small employer carrier, the number of employees
1-54 and dependents, and other objective criteria as established by the
1-55 small employer carrier that are considered by the small employer
1-56 carrier in setting premium rates for that small employer. The term
1-57 does not include [claim experience,] health status related factors,
1-58 duration of coverage since the date of issuance of a health benefit
1-59 plan, or whether a covered person is or may become pregnant.
1-60 (6) "Class of business" means all small employers or a
1-61 separate grouping of small employers established under this
1-62 chapter.
1-63 (7) "Creditable coverage" means coverage described by
1-64 Article 26.035 of this code.
2-1 (8) "Dependent" means:
2-2 (A) a spouse;
2-3 (B) a newborn child;
2-4 (C) a child under the age of 19 years;
2-5 (D) a child who is a full-time student under the
2-6 age of 23 years and who is financially dependent on the parent;
2-7 (E) a child of any age who is medically
2-8 certified as disabled and dependent on the parent; [and]
2-9 (F) any person who must be covered under:
2-10 (i) Section 3D or 3E, Article 3.51-6, of
2-11 this code; or
2-12 (ii) Section 2(L), Chapter 397, Acts of
2-13 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
2-14 Vernon's Texas Insurance Code); and
2-15 (G) any other child included as an eligible
2-16 dependent under an employer's benefit plan.
2-17 (9) [(8)] "Eligible employee" means an employee who
2-18 works on a full-time basis and who usually works at least 30 hours
2-19 a week. The term also includes a sole proprietor, a partner, and
2-20 an independent contractor, if the sole proprietor, partner, or
2-21 independent contractor is included as an employee under a health
2-22 benefit plan of a small or large employer. The term does not
2-23 include:
2-24 (A) an employee who works on a part-time,
2-25 temporary, seasonal, or substitute basis; or
2-26 (B) an employee who is covered under:
2-27 (i) another health benefit plan;
2-28 (ii) a self-funded or self-insured
2-29 employee welfare benefit plan that provides health benefits and
2-30 that is established in accordance with the Employee Retirement
2-31 Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.);
2-32 (iii) the Medicaid program if the employee
2-33 elects not to be covered;
2-34 (iv) another federal program, including
2-35 the CHAMPUS program or Medicare program, if the employee elects not
2-36 to be covered; or
2-37 (v) a benefit plan established in another
2-38 country if the employee elects not to be covered.
2-39 (10) [(9)] "Health benefit plan" means a group,
2-40 blanket, or franchise insurance policy, a certificate issued under
2-41 a group policy, a group hospital service contract, or a group
2-42 subscriber contract or evidence of coverage issued by a health
2-43 maintenance organization that provides benefits for health care
2-44 services. The term does not include:
2-45 (A) accident-only or disability income insurance
2-46 or a combination of accident-only and disability income insurance
2-47 [coverage];
2-48 (B) credit-only [credit] insurance [coverage];
2-49 (C) disability insurance coverage;
2-50 (D) coverage for a specified disease or illness
2-51 [coverage or other limited benefit policies];
2-52 (E) [coverage of] Medicare services under a
2-53 federal contract;
2-54 (F) Medicare supplement and Medicare Select
2-55 policies regulated in accordance with federal law;
2-56 (G) long-term care [insurance] coverage or
2-57 benefits, nursing home care coverage or benefits, home health care
2-58 coverage or benefits, community-based care coverage or benefits, or
2-59 any combination of those coverages or benefits;
2-60 (H) coverage that provides limited-scope
2-61 [limited to] dental or [care;]
2-62 [(I) coverage limited to care of] vision
2-63 benefits;
2-64 (I) [(J)] coverage provided by a single service
2-65 health maintenance organization;
2-66 (J) [(K) insurance] coverage issued as a
2-67 supplement to liability insurance;
2-68 (K) [(L) insurance coverage arising out of a]
2-69 workers' compensation [system] or similar insurance [statutory
3-1 system];
3-2 (L) [(M)] automobile medical payment insurance
3-3 coverage;
3-4 (M) [(N)] jointly managed trusts authorized
3-5 under 29 U.S.C. Section 141 et seq. that contain a plan of benefits
3-6 for employees that is negotiated in a collective bargaining
3-7 agreement governing wages, hours, and working conditions of the
3-8 employees that is authorized under 29 U.S.C. Section 157;
3-9 (N) [(O)] hospital [confinement] indemnity or
3-10 other fixed indemnity insurance [coverage]; [or]
3-11 (O) [(P)] reinsurance contracts issued on a
3-12 stop-loss, quota-share, or similar basis;
3-13 (P) short-term major medical contracts;
3-14 (O) liability insurance, including general
3-15 liability insurance and automobile liability insurance;
3-16 (R) other coverage that is:
3-17 (i) similar to the coverage described by
3-18 this subdivision under which benefits for medical care are
3-19 secondary or incidental to other insurance benefits; and
3-20 (ii) specified in federal regulations;
3-21 (S) coverage for on-site medical clinics; or
3-22 (T) coverage that provides other limited
3-23 benefits specified by federal regulations.
3-24 (11) [(10)] "Health carrier" means any entity
3-25 authorized under this code or another insurance law of this state
3-26 that provides health insurance or health benefits in this state,
3-27 including an insurance company, a group hospital service
3-28 corporation under Chapter 20 of this code, a health maintenance
3-29 organization under the Texas Health Maintenance Organization Act
3-30 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
3-31 premium company under Chapter 22 of this code.
3-32 (12) "Health status related factor" means:
3-33 (A) health status;
3-34 (B) medical condition, including both physical
3-35 and mental illness;
3-36 (C) claims experience;
3-37 (D) receipt of health care;
3-38 (E) medical history;
3-39 (F) genetic information;
3-40 (G) evidence of insurability, including
3-41 conditions arising out of acts of family violence; and
3-42 (H) disability.
3-43 (13) [(11)] "Index rate" means, for each class of
3-44 business as to a rating period for a small employers with similar
3-45 case characteristics, the arithmetic average of the applicable base
3-46 premium rate and corresponding highest premium rate.
3-47 (14) "Large employer" means an employer who employed
3-48 an average of at least 51 eligible employees on business days
3-49 during the preceding calendar year and who employs at least two
3-50 eligible employees on the first day of the plan year. For purposes
3-51 of this definition, a partnership is the employer of a partner. A
3-52 large employer includes a governmental entity subject to Section 1,
3-53 Chapter 123, Acts of the 60th Legislature, Regular Session, 1967
3-54 (Article 3.51-3, Vernon's Texas Insurance Code), or Article 3.51-1,
3-55 3.51-2, 3.51-4, 3.51-5, or 3.51-5A of this code that otherwise
3-56 meets the requirements of this section and elects to be treated as
3-57 a large employer.
3-58 (15) "Large employer carrier" means a health carrier,
3-59 to the extent that carrier is offering, delivering, issuing for
3-60 delivery, or renewing health benefit plans subject to Subchapter H
3-61 of this chapter.
3-62 (16) "Large employer health benefit plan" means a
3-63 health benefit plan offered to a large employer.
3-64 (17) [(12)] "Late enrollee" means any [an eligible]
3-65 employee or dependent eligible for enrollment who requests
3-66 enrollment in a small or large employer's health benefit plan after
3-67 the expiration of the initial enrollment period established under
3-68 the terms of the first plan for which that employee or dependent
3-69 was eligible through the small or large employer or after the
4-1 expiration of an open enrollment period under Article 26.21(h) or
4-2 26.83 of this code. An [eligible] employee or dependent is not a
4-3 late enrollee if:
4-4 (A) the individual:
4-5 (i) was covered under another [employer]
4-6 health benefit plan or self-funded employer health benefit plan at
4-7 the time the individual was eligible to enroll;
4-8 (ii) declines in writing, at the time of
4-9 the initial eligibility, stating that coverage under another
4-10 [employer] health benefit plan or self-funded employer health
4-11 benefit plan was the reason for declining enrollment;
4-12 (iii) has lost coverage under another
4-13 [employer] health benefit plan or self-funded employer health
4-14 benefit plan as a result of:
4-15 (a) the termination of
4-16 employment;
4-17 (b) the reduction in the
4-18 number of hours of employment;
4-19 (c) [,] the termination of
4-20 the other plan's coverage;
4-21 (d) the termination of
4-22 contributions toward the premium made by the employer; or
4-23 (e) [,] the death of a
4-24 spouse[,] or divorce; and
4-25 (iv) requests enrollment not later than
4-26 the 31st day after the date on which coverage under the other
4-27 [another employer] health benefit plan or self-funded employer
4-28 health benefit plan terminates;
4-29 (B) the individual is employed by an employer
4-30 who offers multiple health benefit plans and the individual elects
4-31 a different health benefit plan during an open enrollment period;
4-32 [or]
4-33 (C) a court has ordered coverage to be provided
4-34 for a spouse [or minor child] under a covered employee's plan and
4-35 request for enrollment is made not later than the 31st day after
4-36 [issuance of] the date on which the court order is issued; or
4-37 (D) a court has ordered coverage to be provided
4-38 for a child under a covered employee's plan and the request for
4-39 enrollment is made not later than the 31st day after the date on
4-40 which the employer receives the court order.
4-41 (18) [(13)] "New business premium rate" means, for
4-42 each class of business as to a rating period, the lowest premium
4-43 rate that is charged or offered or that could be charged or offered
4-44 by the small employer carrier to small employers with similar case
4-45 characteristics for newly issued small employer health benefit
4-46 plans that provide the same or similar coverage.
4-47 (19) "Participation criteria" means any criteria or
4-48 rules established by a large employer to determine the employees
4-49 who are eligible for enrollment, including continued enrollment,
4-50 under the terms of a health benefit plan. Such criteria or rules
4-51 may not be based on health status related factors.
4-52 (20) [(14)] "Person" means an individual, corporation,
4-53 partnership, [association,] or other [private] legal entity.
4-54 (21) [(15)] "Plan of operation" means the plan of
4-55 operation of the system established under Article 26.55 of this
4-56 code.
4-57 (22) "Point-of-service contract" means a benefit plan
4-58 offered through a health maintenance organization that:
4-59 (A) includes corresponding indemnity benefits in
4-60 addition to benefits relating to out-of-area or emergency services
4-61 provided through insurers or group hospital service corporations;
4-62 and
4-63 (B) permits the insured to obtain coverage under
4-64 either the health maintenance organization conventional plan or the
4-65 indemnity plan as determined in accordance with the terms of the
4-66 contract.
4-67 (23) [(16)] "Preexisting condition provision" means a
4-68 provision that denies, excludes, or limits coverage as to a disease
4-69 or condition for a specified period after the effective date of
5-1 coverage.
5-2 (24) (([17)] "Premium" means all amounts paid by a
5-3 small or large employer and eligible employees as a condition of
5-4 receiving coverage from a small or large employer carrier,
5-5 including any fees or other contributions associated with a health
5-6 benefit plan.
5-7 (25) [(18)] "Rating period" means a calendar period or
5-8 which premium rates established by a small employer carrier are
5-9 assumed to be in effect.
5-10 (26) [(19)] "Reinsured carrier" means a small employer
5-11 carrier participating in the system.
5-12 (27) [(20)] "Risk-assuming carrier" means a small
5-13 employer carrier that elects not to participate in the system.
5-14 (28) [(21)] "Small employer" means an employer who
5-15 employed an average of at least two but not more than 50 eligible
5-16 employees on business days during the preceding calendar year and
5-17 who employs at least two eligible employees on the first day of the
5-18 plan year. For purposes of this definition, a partnership is the
5-19 employer of a partner. A small employer includes a governmental
5-20 entity subject to Section 1, Chapter 123, Acts of the 60th
5-21 Legislature, Regular Session, 1967 (Article 3.51-3, Vernon's Texas
5-22 Insurance Code), or Article 3.51-1, 3.51-2, 3.51-4, 3.51-5, or
5-23 3.51-5A of this code that otherwise meets the requirements of this
5-24 section and elects to be treated as a small employer [a person that
5-25 is actively engaged in business and that, on at least 50 percent of
5-26 its working days during the preceding calendar year, employed at
5-27 least three but not more than 50 eligible employees, including the
5-28 employees of an affiliated employer, the majority of whom were
5-29 employed in this state].
5-30 (29) [(22)] "Small employer carrier" means a health
5-31 carrier, to the extent that that carrier is offering, delivering,
5-32 issuing for delivery, or renewing health benefit plans subject to
5-33 subchapters C-G of this chapter under Article 26.06(a) of this
5-34 code.
5-35 (30) [(23)] "Small employer health benefit plan" means
5-36 a plan developed by the commissioner under Subchapter E of this
5-37 chapter or any other health benefit plan offered to a small
5-38 employer in accordance with Article 26.42(c) or 26.48 of this code.
5-39 (31) [(24)] "System" means the Texas Health
5-40 Reinsurance System established under Subchapter F of this chapter.
5-41 (32) "Waiting period" means a period established by an
5-42 employer that must pass before an individual who is a potential
5-43 enrollee in a health benefit plan is eligible to be covered for
5-44 benefits.
5-45 [(25) "Point-of-service contract" means a benefit plan
5-46 offered through a health maintenance organization that:]
5-47 [(A) includes corresponding indemnity benefits
5-48 in addition to benefits relating to out-of-area or emergency
5-49 services provided through insurers or group hospital service
5-50 corporations; and]
5-51 [(B) permits the insured to obtain coverage
5-52 under either the health maintenance organization conventional plan
5-53 or the indemnity plan as determined in accordance with the terms of
5-54 the contract.]
5-55 SECTION 1.03. Subchapter A, Chapter 26, Insurance Code, is
5-56 amended by adding Articles 26.035 and 26.036 to read as follows:
5-57 Art. 26.035. CREDITABLE COVERAGE. (a) An individual's
5-58 coverage is creditable for purposes of this chapter if the coverage
5-59 is provided under:
5-60 (1) a self-funded or self-insured employee welfare
5-61 benefit plan that provides health benefits and that is established
5-62 in accordance with the Employee Retirement income Security Act of
5-63 1974 (29 U.S.C. Section 1001 et seq.);
5-64 (2) a group health benefit plan provided by a health
5-65 insurance carrier or health maintenance organization;
5-66 (3) an individual health insurance policy or evidence
5-67 of coverage;
5-68 (4) Part A or Part B of Title XVIII of the Social
5-69 Security Act (42 U.S.C. Section 1395c et seq.);
6-1 (5) Title XIX of the Social Security Act (42 U.S.C.
6-2 Section 1396 et seq.), other than coverage consisting solely of
6-3 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
6-4 (6) Chapter 55, Title 10, United States Code (10
6-5 U.S.C. Section 1071 et seq.);
6-6 (7) a medical care program of the Indian Health
6-7 Service or of a tribal organization;
6-8 (8) a state health benefits risk pool;
6-9 (9) a health plan offered under Chapter 89, Title 5,
6-10 United States Code (5 U.S.C. Section 8901 et seq.);
6-11 (10) a public health plan as defined by federal
6-12 regulations; or
6-13 (11) a health benefit plan under Section 5(e), Peace
6-14 Corps Act (22 U.S.C. Section 2504(e)).
6-15 (b) Creditable coverage does not include:
6-16 (1) accident-only or disability income insurance, or a
6-17 combination of accident-only and disability income insurance;
6-18 (2) coverage issued as a supplement to liability
6-19 insurance;
6-20 (3) liability insurance, including general liability
6-21 insurance and automobile liability insurance;
6-22 (4) workers' compensation or similar insurance;
6-23 (5) automobile medical payment insurance;
6-24 (6) credit-only insurance;
6-25 (7) coverage for on-site medical clinics;
6-26 (8) other coverage that is:
6-27 (A) similar to the coverage described by this
6-28 subsection under which benefits for medical care are secondary or
6-29 incidental to other insurance benefits; and
6-30 (B) specified in federal regulations;
6-31 (9) coverage that provides limited-scope dental or
6-32 vision benefits;
6-33 (10) long-term care coverage or benefits, nursing home
6-34 care coverage or benefits, home health care coverage or benefits,
6-35 community-based care coverage or benefits, or any combination of
6-36 those coverages or benefits;
6-37 (11) coverage that provides other limited benefits
6-38 specified by federal regulations;
6-39 (12) coverage for a specified disease or illness;
6-40 (13) hospital indemnity or other fixed indemnity
6-41 insurance; or
6-42 (14) Medicare supplemental health insurance as defined
6-43 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
6-44 1395ss), coverage supplemental to the coverage provided under
6-45 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
6-46 seq.), and similar supplemental coverage provided under a group
6-47 plan.
6-48 Art. 26.036. SCHOOL DISTRICT ELECTION. (a) An independent
6-49 school district may elect to participate in the small employer
6-50 market without regard to the number of eligible employees of the
6-51 independent school district.
6-52 (b) An independent school district that elects to
6-53 participate in the small employer market under this Article is
6-54 treated as a small employer under this chapter for all purposes.
6-55 SECTION 1.04. Article 26.04, Insurance Code, is amended to
6-56 read as follows:
6-57 Art. 26.04. RULES. The commissioner [board] shall adopt
6-58 rules as necessary to implement this chapter and to meet the
6-59 minimum requirements of federal law and regulations.
6-60 SECTION 1.05. Article 26.06, Insurance Code, is amended to
6-61 read as follows:
6-62 Art. 26.06. APPLICABILITY. (a) An individual or group
6-63 health benefit plan is subject to Subchapters C-G of this chapter
6-64 if it provides health care benefits covering two [three] or more
6-65 eligible employees of a small employer and if [it meets any one of
6-66 the following conditions]:
6-67 (1) a portion of the premium or benefits is paid by a
6-68 small employer; or
6-69 (2) the health benefit plan is treated by the employer
7-1 or by a covered individual as part of a plan or program for the
7-2 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
7-3 U.S.C. Section 106 or 162).
7-4 (b) For an employer who was not in existence throughout the
7-5 calendar year preceding the year in which the determination of
7-6 whether the employer is a small employer is made, the determination
7-7 is based on the average number of eligible employees the employer
7-8 reasonably expects to employ on business days in the calendar year
7-9 in which the determination is made.
7-10 (c) Except as provided by Subsection (a) of this article,
7-11 this chapter does not apply to an individual health insurance
7-12 policy that is subject to individual underwriting, even if the
7-13 premium is remitted through a payroll addiction method.
7-14 (d) [(c)] Except as expressly provided in this chapter, a
7-15 small employer health benefit plan is not subject to a law that
7-16 requires coverage or the offer of coverage of a health care service
7-17 or benefit.
7-18 SECTION 1.06. Article 26.13(a), Insurance Code, is amended
7-19 to read as follows:
7-20 Art. 26.13. TEXAS HEALTH BENEFITS PURCHASING COOPERATIVE.
7-21 (a) The Texas Health benefits Purchasing Cooperative is a
7-22 nonprofit organization established to make health care coverage
7-23 available to small and large employers and their eligible employees
7-24 and eligible employees' dependents.
7-25 SECTION 1.07. Articles 26.14(a) and (d), Insurance Code, are
7-26 amended to read as follows:
7-27 (a) Two or more small or large employers may form a
7-28 cooperative for the purchase of small or large employer health
7-29 benefit plans. A cooperative must be organized as a nonprofit
7-30 cooperation and has the rights and duties provided by the Texas
7-31 Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's
7-32 Texas Civil Statutes).
7-33 (d) A purchasing cooperative or a member of the board of
7-34 directors, the executive director, or an employee or agent of a
7-35 purchasing cooperative is not liable for:
7-36 (1) an act performed in good faith in the execution of
7-37 duties in connection with the purchasing cooperative; or
7-38 (2) an independent action of a small or large employer
7-39 insurance carrier or a person who provides health care services
7-40 under a health benefit plan.
7-41 SECTION 1.08. Articles 26.15(a) and (b), Insurance Code, are
7-42 amended to read as follows:
7-43 (a) A cooperative:
7-44 (1) shall arrange for small or large employer health
7-45 benefit plan coverage for small or large employer groups who
7-46 participate in the cooperative by contracting with small or large
7-47 employer carriers who meet the criteria established by Subsection
7-48 (b) of this article;
7-49 (2) shall collect premiums to cover the cost of:
7-50 (A) small or large employer health benefit plan
7-51 coverage purchased through the cooperative; and
7-52 (B) the cooperative's administrative expenses;
7-53 (3) may contract with agents to market coverage issued
7-54 through the cooperative;
7-55 (4) shall establish administrative and accounting
7-56 procedures for the operation of the cooperative;
7-57 (5) shall establish procedures under which an
7-58 applicant for or participant in coverage issued through the
7-59 cooperative may have a grievance reviewed by an impartial person;
7-60 (6) may contract with a small or large employer
7-61 carrier or third-party administrator to provide administrative
7-62 services to the cooperative;
7-63 (7) shall contract with small or large employer
7-64 carriers for the provision of services to small or large employers
7-65 covered through the cooperative;
7-66 (8) shall develop and implement a plan to maintain
7-67 public awareness of the cooperative and publicize the eligibility
7-68 requirements for, and the procedures for enrollment in coverage
7-69 through, the cooperative; and
8-1 (9) may negotiate the premiums paid by its members.
8-2 (b) A cooperative may contract only with small or large
8-3 employer carriers who desire to offer coverage through the
8-4 cooperative and who demonstrate:
8-5 (1) that the carrier is a health carrier or health
8-6 maintenance organization licensed and in good standing with the
8-7 department;
8-8 (2) the capacity to administer the health benefit
8-9 plans;
8-10 (3) the ability to monitor and evaluate the quality
8-11 and cost effectiveness of care and applicable procedures;
8-12 (4) the ability to conduct utilization management and
8-13 applicable procedures and policies;
8-14 (5) the ability to assure enrollees adequate access to
8-15 health care providers, including adequate numbers and types of
8-16 providers;
8-17 (6) a satisfactory grievance procedure and the ability
8-18 to respond to enrollees' calls, questions, and complaints; and
8-19 (7) financial capacity, either through financial
8-20 solvency standards as applied by the commissioner or through
8-21 appropriate reinsurance or other risk-sharing mechanisms.
8-22 SECTION 1.09. Articles 26.21(a), (h), (k), and (n),
8-23 Insurance Code, are amended to read as follows:
8-24 (a) Each small employer carrier shall provide the small
8-25 employer health benefit plans without regard to [claim experience,]
8-26 health status related factors [, or medical history]. Each small
8-27 employer carrier shall issue the plan chosen by the small employer
8-28 to each small employer that elects to be covered under that plan
8-29 and agrees to satisfy the other requirements of the plan.
8-30 (h) The initial enrollment period for the employees and
8-31 their dependents must be at least 31 days, with a 31-day open
8-32 enrollment period provided annually. Such enrollment period shall
8-33 consist of an entire calendar month, beginning on the the first day
8-34 of the month and ending on the last day of the month. If the month
8-35 is February, the period shall last through March 2nd.
8-36 (k) A late enrollee may be excluded from coverage until the
8-37 next annual open enrollment period and may be subject to a 12-month
8-38 preexisting condition provision as described by Article 26.49 of
8-39 this code. The period during which a preexisting condition
8-40 provision is imposed may not exceed 18 months from the date of the
8-41 initial application.
8-42 (n) A small employer health benefit plan may not limit or
8-43 exclude initial coverage of a newborn child of a covered employee.
8-44 Any coverage of a newborn child of an employee under this
8-45 subsection terminates on the 32nd day after the date of the birth
8-46 of the child unless[:]
8-47 [(1) dependent children are eligible for coverage; and]
8-48 [(2)] notification of the birth and any required
8-49 additional premium are received by the small employer carrier not
8-50 later than the 31st day after the date of birth.
8-51 SECTION 1.10. Subchapter C, Chapter 26, Insurance Code, is
8-52 amended by adding Article 26.21A to read as follows:
8-53 Art. 26.21A. COVERAGE FOR ADOPTED CHILDREN. (a) A small
8-54 employer health benefit plan may not limit or exclude initial
8-55 coverage of an adopted child of an insured. A child is considered
8-56 to be the child of an insured if the insured is a party in a suit
8-57 in which the adoption of the child by the insured is sought.
8-58 (b) The adopted child of an insured may be enrolled, at the
8-59 option of the insured, within either:
8-60 (1) 31 days after the insured is a party in a suit for
8-61 adoption; or
8-62 (2) 31 days of the date the adoption is final.
8-63 (c) Coverage of an adopted child of an employee under this
8-64 article terminates unless notification of the adoption and any
8-65 required additional premiums are received by the small employer
8-66 carrier not later than either:
8-67 (1) the 31st day after the insured becomes a party in
8-68 a suit in which the adoption of the child by the insured is sought;
8-69 or
9-1 (2) the 31st day after the date of the adoption.
9-2 SECTION 1.11. Articles 26.22(a) and (e), Insurance Code, are
9-3 amended to read as follows:
9-4 (a) A small employer carrier is not required to offer or
9-5 issue the small employer health benefit plans:
9-6 (1) to a small employer that is not located within a
9-7 geographic service area of the small employer carrier;
9-8 (2) to an employee of a small employer who neither
9-9 resides nor works in the geographic service area of the small
9-10 employer carrier; or
9-11 (3) to a small employer located within a geographic
9-12 service area with respect to which the small employer carrier
9-13 demonstrates to the satisfaction of the commissioner that:
9-14 (A) the small employer carrier reasonably
9-15 anticipates that it will not have the capacity to deliver services
9-16 adequately because of obligations to existing covered individuals;
9-17 and
9-18 (B) the small employer carrier is acting
9-19 uniformly without regard to claims experience of the employer or
9-20 any health status related factor of employees or dependents or new
9-21 employees or dependents who may become eligible for the coverage.
9-22 (e) If the commissioner determines that requiring the
9-23 acceptance of small employers under this subchapter would place a
9-24 small employer carrier in a financially impaired condition and that
9-25 the small employer carrier is acting uniformly without regard to
9-26 the claims experience of the small employer or any health status
9-27 related factors of employees or dependents or new employees or
9-28 dependents who may become eligible for the coverage, the small
9-29 employer carrier shall [is] not offer [required to provide]
9-30 coverage to small employers until the later of:
9-31 (1) the 180th day after the date the commissioner
9-32 makes the determination; or
9-33 (2) the date the commissioner determines that
9-34 accepting small employers would not place the small employer
9-35 carrier in a financially impaired condition [for a period to be set
9-36 by the commissioner].
9-37 SECTION 1.12. Articles 26.23(a) and (b), Insurance Code, are
9-38 amended to read as follows:
9-39 (a) Except as provided by Article 26.24 of this code, a
9-40 small employer carrier shall renew the small employer health
9-41 benefit plan for any covered small employer, at the option of the
9-42 small employer, unless[, except for]:
9-43 (1) [nonpayment of] a premium has not been paid as
9-44 required by the terms of the plan;
9-45 (2) the small employer has committed fraud or
9-46 intentional misrepresentation of a material fact [by the small
9-47 employer]; [or]
9-48 (3) the [noncompliance with] small employer has not
9-49 complied with the terms of the health benefit plan;
9-50 (4) no enrollee in connection with the plan resides or
9-51 works in the service area of the small employer carrier or in the
9-52 area for which the small employer carrier is authorized to do
9-53 business; or
9-54 (5) membership of an employer in an association
9-55 terminates, but only if coverage is terminated uniformly without
9-56 regard to a health status related factor of a covered individual
9-57 [provisions].
9-58 (b) A small employer carrier may refuse to renew the
9-59 coverage of an eligible employee or dependent for fraud or
9-60 intentional misrepresentation of a material fact by that
9-61 individual.
9-62 SECTION 1.13. Article 26.24, Insurance Code, is amended by
9-63 amending Subsection (a) and adding Subsection (d) to read as
9-64 follows:
9-65 (a) A small employer carrier may elect to refuse to renew
9-66 all [each] small employer health benefit plans [plan] delivered or
9-67 issued for delivery by the small employer carrier in this state or
9-68 in a geographic service area approved under Article 26.22 of this
9-69 code. The small employer carrier shall [must] notify the
10-1 commissioner of the election not later than the 180th day before
10-2 the date coverage under the first small employer health benefit
10-3 plan terminates under this subsection.
10-4 (d) A small employer carrier may elect to discontinue a
10-5 particular type of small employer coverage only if the small
10-6 employer carrier:
10-7 (1) provides notice to each employer of the
10-8 discontinuation before the 90th day preceding the date of the
10-9 discontinuation of the coverage;
10-10 (2) offers to each employer the option to purchase
10-11 other small employer coverage offered by the small employer carrier
10-12 at the time of the discontinuation; and
10-13 (3) acts uniformly without regard to the claims
10-14 experience of the employer or any health status related factors of
10-15 employees or dependents or new employees or dependents who may
10-16 become eligible for the coverage.
10-17 SECTION 1.14. Article 26.25, Insurance Code, is amended to
10-18 read as follows:
10-19 Art. 26.25. NOTICE TO COVERED PERSONS. (a) Not later than
10-20 the 30th day before the date on which termination of coverage is
10-21 effective, a small employer carrier that cancels or refuses to
10-22 renew coverage under a small employer health benefit plan under
10-23 Article 26.23 or 26.24 of this code shall notify the small employer
10-24 of the cancellation or refusal to renew. It is the responsibility
10-25 of the small employer to notify enrollees of the cancellation or
10-26 refusal to renew the coverage.
10-27 (b) The notice provided to a small employer by a small
10-28 employer carrier under this article is in addition to any other
10-29 notice required by Article 26.23 or 26.24 of this code.
10-30 SECTION 1.15. Article 26.33, Insurance Code, is amended by
10-31 adding Subsection (d) to read as follows:
10-32 (d) A small employer carrier may establish premium
10-33 discounts, rebates, or a reduction in otherwise applicable
10-34 copayments or deductibles in return for adherence to programs of
10-35 health promotion and disease prevention. A discount, rebate, or
10-36 reduction established under this subsection does not violate
10-37 Section 4(8), Article 21.21, of this code.
10-38 SECTION 1.16. Article 26.40, Insurance Code, is amended to
10-39 read as follows:
10-40 Art. 26.40. DISCLOSURE. (a) In connection with the
10-41 offering for sale of any small employer health benefit plan, each
10-42 small employer carrier and each agent shall make a reasonable
10-43 disclosure, as part of its solicitation and sales materials, of:
10-44 (1) the extent to which premium rates for a specific
10-45 small employer are established or adjusted based on the actual or
10-46 expected variation in claim costs or the actual or expected
10-47 variation in health status of the employees of the small employer
10-48 and their dependents;
10-49 (2) provisions concerning the small employer carrier's
10-50 right to change premium rates and the factors other than claim
10-51 experience that affect changes in premium rates;
10-52 (3) provisions relating to renewability of policies
10-53 and contracts; and
10-54 (4) any preexisting condition provision.
10-55 (b) Each small employer carrier shall disclose on request by
10-56 a small employer the benefits and premiums available under all
10-57 small employer coverage for which the employer is qualified.
10-58 (c) A small employer carrier is not required to disclose any
10-59 information to a small employer that is proprietary or trade secret
10-60 information under applicable law.
10-61 (d) Information provided under this article to small
10-62 employers must be provided in a manner that is understandable by
10-63 the average small employer and sufficient to reasonably inform
10-64 small employers of their rights and obligations under a small
10-65 employer health benefit plan.
10-66 SECTION 1.17. Article 26.49, Insurance Code, is amended to
10-67 read as follows:
10-68 Art. 26.49. PREEXISTING CONDITION PROVISIONS. (a) A
10-69 preexisting condition provision in a small employer health benefit
11-1 plan may not apply to expenses incurred on or after the expiration
11-2 of the 12 months following the initial effective date of coverage
11-3 of the enrollee or late enrollee.
11-4 (b) A preexisting condition provision in a small employer
11-5 health benefit plan may not apply to coverage for a disease or
11-6 condition other than a disease or condition for which medical
11-7 advice, diagnosis, care, or treatment was recommended or received
11-8 during the six months before the earlier of:
11-9 (1) the effective date of coverage; or
11-10 (2) the first day of the waiting period.
11-11 (c) A small employer carrier shall not treat genetic
11-12 information as a preexisting condition described by Subsection (b)
11-13 of this article in the absence of a diagnosis of the condition
11-14 related to the information.
11-15 (d) A small employer carrier shall not treat a pregnancy as
11-16 a preexisting condition described by Subsection (b) of this
11-17 article.
11-18 (e) A preexisting condition provision in a small employer
11-19 health benefit plan may not apply to an individual who was
11-20 continuously covered for an aggregate [a minimum] period of 12
11-21 months under creditable coverage [by a health benefit plan] that
11-22 was in effect up to a date not more than 110 [60] days before the
11-23 effective date of coverage under the small employer health benefit
11-24 plan, excluding any waiting period.
11-25 (f) [(d)] In determining whether a preexisting condition
11-26 provision applies to an individual covered by a small employer
11-27 health benefit plan, the small employer carrier shall credit the
11-28 time the individual was covered under creditable coverage [a
11-29 previous health benefit plan] if the previous coverage was in
11-30 effect at any time during the 12 months preceding the effective
11-31 date of coverage under a small employer health benefit plan. If
11-32 the previous coverage was issued under [by] a health benefit plan
11-33 [maintenance organization], any waiting period that applied before
11-34 that coverage became effective also shall be credited against the
11-35 preexisting condition provision period.
11-36 (g) A health maintenance organization may impose an
11-37 affiliation period if the period is applied uniformly without
11-38 regard to any health status related factor. The affiliation period
11-39 shall not exceed two months for an enrollee, other than a late
11-40 enrollee, and shall not exceed 90 days for a late enrollee. An
11-41 affiliation period under a plan shall run concurrently with any
11-42 applicable waiting period under the plan. The health maintenance
11-43 organization must credit an affiliation period to any preexisting
11-44 condition provision period. A health maintenance organization may
11-45 use an alternative method approved by the commissioner to address
11-46 adverse selection.
11-47 [(e) A carrier that does not use a preexisting condition
11-48 provision in any of its health benefit plans may impose an
11-49 affiliation period. For purposes of this subsection, "affiliation
11-50 period" means a period not to exceed 90 days for new enrollees and
11-51 not to exceed 180 days for late enrollees during which premiums
11-52 are not collected and the issued coverage is not
11-53 effective.]
11-54 (h) This [(f) Subsection (e) of this] article does not
11-55 preclude application of any waiting period applicable to all new
11-56 enrollees under the health benefit plan. [However, any
11-57 carrier-imposed waiting period may not exceed 90 days and must be
11-58 used in lieu of a preexisting condition provision.]
11-59 SECTION 1.18. The headings to Subchapters C, D, E, F, and G,
11-60 Chapter 26, Insurance Code, are amended to read as follows:
11-61 SUBCHAPTER C. GUARANTEED ISSUE AND RENEWABILITY OF SMALL
11-62 EMPLOYER HEALTH BENEFIT PLANS
11-63 SUBCHAPTER D. UNDERWRITING AND RATING OF SMALL EMPLOYER
11-64 HEALTH BENEFIT PLANS
11-65 SUBCHAPTER E. COVERAGE UNDER SMALL EMPLOYER HEALTH
11-66 BENEFIT PLANS
11-67 SUBCHAPTER F. REINSURANCE FOR SMALL EMPLOYER HEALTH
11-68 BENEFIT PLANS
12-1 SUBCHAPTER G. MARKETING OF SMALL EMPLOYER HEALTH
12-2 BENEFIT PLANS
12-3 PART 2. PROVISIONS APPLICABLE TO LARGE EMPLOYERS
12-4 SECTION 2.01. Chapter 26, Insurance Code, is amended by
12-5 adding Subchapter H to read as follows:
12-6 SUBCHAPTER H. LARGE EMPLOYER HEALTH BENEFIT PLANS
12-7 Art. 26.81. APPLICABILITY. (a) An individual or group
12-8 health benefit plan is subject to this subchapter if the plan
12-9 provides health care benefits to eligible employees of a large
12-10 employer and if:
12-11 (1) a portion of the premium or benefits is paid by a
12-12 large employer; or
12-13 (2) the health benefit plan is treated by the employer
12-14 or by a covered individual as part of a plan or program for the
12-15 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
12-16 U.S.C. Section 106 or 162).
12-17 (b) For an employer who was not in existence throughout the
12-18 calendar year preceding the year in which the determination of
12-19 whether the employer is a large employer is made, the determination
12-20 is based on the average number of eligible employees the employer
12-21 reasonably expects to employ on business days in the calendar year
12-22 in which the determination is made.
12-23 (c) Except as provided by Subsection (a) of this article,
12-24 this subchapter does not apply to an individual health insurance
12-25 policy that is subject to individual underwriting, even if the
12-26 premium is remitted through payroll deduction.
12-27 Art. 26.82. CERTIFICATION. Not later than March 1 of each
12-28 year, each health carrier shall certify to the commissioner
12-29 whether, as of January 1 of that year, it is offering a health
12-30 benefit plan subject to this subchapter under Article 26.81 of this
12-31 code.
12-32 Art. 26.83. COVERAGE REQUIREMENTS. (a) A large employer
12-33 carrier may refuse to provide coverage to a large employer in
12-34 accordance with the carrier's underwriting standards and criteria.
12-35 However, on issuance of a health benefit plan to a large employer,
12-36 each large employer carrier shall provide coverage to the employees
12-37 who meet the participation criteria established by the large
12-38 employer without regard to an individual's health status related
12-39 factors. The participation criteria may not be based on health
12-40 status related factors.
12-41 (b) The large employer carrier shall accept or reject the
12-42 entire group of individuals who meet the participation criteria
12-43 established by the employer and who choose coverage and may exclude
12-44 only those employees or dependents who have declined coverage. The
12-45 carrier may charge premiums in accordance with Article 26.89 of
12-46 this code to the group of employees or dependents who meet the
12-47 participation criteria established by the employer and who do not
12-48 decline coverage.
12-49 (c) The large employer carrier shall obtain a written waiver
12-50 for each employee who meets the participation criteria and who
12-51 declines coverage under the health plan offered to a large
12-52 employer. The waiver must ensure that the employee was not induced
12-53 or pressured into declining coverage because of the employee's
12-54 health status related factors.
12-55 (d) A large employer carrier may not provide coverage to a
12-56 large employer or the employees of a large employer if the carrier
12-57 or an agent for the carrier knows that the large employer has
12-58 induced or pressured an employee who meets the participation
12-59 criteria or a dependent of the employee to decline coverage because
12-60 of that individual's health status related factors.
12-61 (e) A large employer carrier may require a large employer to
12-62 meet minimum contribution or participation requirements as a
12-63 condition of issuance and renewal in accordance with the carrier's
12-64 usual and customary practices for all employer health benefit plans
12-65 in this state. The participation requirements may determine the
12-66 percentage of individuals that must be enrolled in the plan in
12-67 accordance with participation criteria established by the employer.
12-68 Those requirements must be stated in the contract and must be
12-69 applied uniformly to each large employer offered or issued coverage
13-1 by the large employer carrier in this state.
13-2 (f) The initial enrollment period for employees meeting the
13-3 participation criteria must be at least 31 days, with a 31-day
13-4 annual open enrollment period. Such enrollment period shall
13-5 consist of an entire calendar month, beginning on the first day of
13-6 the month and ending on the last day of the month. If the month is
13-7 February, the period shall last through March 2nd.
13-8 (g) If dependent coverage is offered to enrollees under a
13-9 large employer health benefit plan, the initial enrollment period
13-10 for the dependents must be at least 31 days, with a 31-day annual
13-11 open enrollment period.
13-12 (h) A large employer may establish a waiting period during
13-13 which a new employee is not eligible for coverage. The employer
13-14 shall determine the duration of the waiting period.
13-15 (i) A new employee who meets the participation criteria of a
13-16 covered large employer may not be denied coverage if the
13-17 application for coverage is received by the large employer not
13-18 later than the 31st day after the later of:
13-19 (1) the date on which the employment begins; or
13-20 (2) the date on which the waiting period established
13-21 under Subsection (h) of this article expires.
13-22 (j) If dependent coverage is offered to the enrollees under
13-23 a large employer health benefit plan, a dependent of a new employee
13-24 who meets the participation criteria established by the large
13-25 employer may not be denied coverage if the application for coverage
13-26 is received by the large employer not later than the 31st day after
13-27 the later of:
13-28 (1) the date on which the employment begins;
13-29 (2) the date on which the waiting period established
13-30 under Subsection (h) of this article expires; or
13-31 (3) the date on which the dependent becomes eligible
13-32 for enrollment.
13-33 (k) A late enrollee may be excluded from coverage until the
13-34 next annual open enrollment period and may be subject to a 12-month
13-35 preexisting condition provision as described by Article 26.90 of
13-36 this code. The period during which a preexisting condition
13-37 provision applies may not exceed 18 months from the date of the
13-38 initial application.
13-39 (l) A large employer carrier may not exclude any employee
13-40 who meets the participation criteria or an eligible dependent,
13-41 including a late enrollee, who would otherwise be covered under a
13-42 large employer group.
13-43 (m) A large employer health benefit plan may not, by use of
13-44 a rider or amendment applicable to a specific individual, limit or
13-45 exclude coverage by type of illness, treatment, medical condition,
13-46 or accident, except for a preexisting condition permitted under
13-47 Article 26.90 of this code.
13-48 Art. 26.84. DEPENDENT CHILDREN. (a) A large employer
13-49 health benefit plan may not limit or exclude initial coverage of a
13-50 newborn child of a covered employee. Any coverage of a newborn
13-51 child of a covered employee under this subsection terminates on the
13-52 32nd day after the date of the birth of the child unless:
13-53 (1) dependent children are eligible for coverage under
13-54 the large employer health benefit plan; and
13-55 (2) notification of the birth and any required
13-56 additional premium are received by the large employer carrier not
13-57 later than the 31st day after the date of birth.
13-58 (b) If dependent children are eligible for coverage under
13-59 the large employer health benefit plan, a large employer health
13-60 benefit plan may not limit or exclude initial coverage of an
13-61 adopted child of an insured. A child is considered to be the child
13-62 of an insured if the insured is a party in a suit in which the
13-63 adoption of the child by the insured is sought.
13-64 (c) If dependent children are eligible for coverage under
13-65 the large employer health benefit plan an adopted child of an
13-66 insured may be enrolled, at the option of the insured, within
13-67 either:
13-68 (1) 31 days after the insured is a party in a suit for
13-69 adoption; or
14-1 (2) 31 days of the date the adoption is final.
14-2 (d) Coverage of an adopted child of an employee under this
14-3 article terminates unless notification of the adoption and any
14-4 required additional premiums are received by the large employer
14-5 carrier not later than either:
14-6 (1) the 31st day after the insured becomes a party in
14-7 a suit in which the adoption of the child by the insured is sought;
14-8 or
14-9 (2) the 31st day after the date of the adoption.
14-10 Art. 26.85. GEOGRAPHIC SERVICE AREA. (a) A large employer
14-11 carrier is not required to offer or issue the large employer health
14-12 benefit plans to:
14-13 (1) a large employer that is not located within a
14-14 geographic service area of the large employer carrier;
14-15 (2) an employee of a large employer who neither
14-16 resides nor works in the geographic service area of the large
14-17 employer carrier; or
14-18 (3) a large employer located within a geographic
14-19 service area with respect to which the large employer carrier
14-20 demonstrates to the satisfaction of the commissioner that the large
14-21 employer carrier:
14-22 (A) reasonably anticipates that it will not have
14-23 the capacity to deliver services adequately because of obligations
14-24 to existing covered individuals; and
14-25 (B) is acting uniformly without regard to the
14-26 claims experience of the large employer or any health status
14-27 related factor of employees or dependents or new employees or
14-28 dependents who may become eligible for the coverage.
14-29 (b) A large employer carrier that is unable to offer
14-30 coverage in a geographic service area in accordance with a
14-31 determination made by the commissioner under Subsection (a)(3) of
14-32 this article may not offer large employer benefit plans in the
14-33 applicable service area before the 180th day after the later of:
14-34 (1) the date of the refusal; or
14-35 (2) the date the carrier demonstrates to the
14-36 satisfaction of the commissioner that it has regained the capacity
14-37 to deliver services to large employers in the geographic service
14-38 area.
14-39 (c) If the commissioner determines that requiring the
14-40 acceptance of large employers under this subchapter would place a
14-41 large employer carrier in a financially impaired condition and that
14-42 the large employer carrier is acting uniformly without regard to
14-43 claims experience of the large employer or any health status
14-44 related factors of employees or dependents or new employees or
14-45 dependents who may become eligible for the coverage, the large
14-46 employer carrier may not offer coverage to large employers until
14-47 the later of:
14-48 (1) the 180th day after the date the commissioner
14-49 makes the determination; or
14-50 (2) the date the commissioner determines that
14-51 accepting large employers would not place the large employer
14-52 carrier in a financially impaired condition.
14-53 (d) A large employer carrier must file each of its
14-54 geographic service areas with the commissioner. The commissioner
14-55 may disapprove the use of a geographic service area by a large
14-56 employer carrier.
14-57 Art. 26.86. RENEWABILITY OF COVERAGE; CANCELLATION.
14-58 (a) Except as provided by Article 26.87 of this code, a large
14-59 employer carrier shall renew the large employer health benefit
14-60 plans for a covered large employer, at the option of the large
14-61 employer, unless:
14-62 (1) a premium has not been paid as required by the
14-63 terms of the plan;
14-64 (2) the large employer has committed fraud or
14-65 intentional misrepresentation of a material fact;
14-66 (3) the large employer has not complied with the terms
14-67 of the health benefit plan;
14-68 (4) no enrollee in connection with the plan resides or
14-69 works in the service area of the large employer carrier or in the
15-1 area for which the large employer carrier is authorized to do
15-2 business; or
15-3 (5) membership of an employer in an association
15-4 terminates, but only if coverage is terminated uniformly without
15-5 regard to a health status related factor of a covered individual.
15-6 (b) A large employer carrier may refuse to renew the
15-7 coverage of an eligible employee or dependent for fraud or
15-8 intentional misrepresentation of a material fact by that
15-9 individual.
15-10 (c) A large employer carrier may not cancel a large employer
15-11 health benefit plan except for the reasons specified for refusal to
15-12 renew under Subsection (a) of this article. A large employer
15-13 carrier may not cancel the coverage of an eligible employee or
15-14 dependent except for the reasons specified for refusal to renew
15-15 under Subsection (b) of this article.
15-16 Art. 26.87. REFUSAL TO RENEW. (a) A large employer carrier
15-17 may elect to refuse to renew all large employer health benefit
15-18 plans delivered or issued for delivery by the large employer
15-19 carrier in this state or in a geographic service area approved
15-20 under Article 26.85 of this code. The large employer carrier shall
15-21 notify the commissioner of the election not later than the 180th
15-22 day before the date coverage under the first large employer health
15-23 benefit plan terminates under this subsection.
15-24 (b) The large employer carrier shall notify each affected
15-25 covered large employer not later than the 180th day before the date
15-26 on which coverage terminates for that large employer.
15-27 (c) A large employer carrier that elects under Subsection
15-28 (a) of this article to refuse to renew all large employer health
15-29 benefit plans in this state or in an approved geographic service
15-30 area may not write a new large employer health benefit plan in this
15-31 state or in the geographic service are, as applicable, before the
15-32 fifty anniversary of the date on which notice is delivered to the
15-33 commissioner under Subsection (a) of this article.
15-34 (d) A large employer carrier may elect to discontinue a
15-35 particular type of large employer coverage only if the large
15-36 employer carrier:
15-37 (1) provides notice to each employer of the
15-38 discontinuation before the 90th day preceding the date of the
15-39 discontinuation of the coverage;
15-40 (2) offers to each employer the option to purchase
15-41 other large employer coverage offered by the large employer carrier
15-42 at the time of the discontinuation; and
15-43 (3) acts uniformly without regard to the claims
15-44 experience of the employer or any health status related factors of
15-45 employees or dependents or new employees or dependents who may
15-46 become eligible for the coverage.
15-47 Art. 26.88. NOTICE TO COVERED PERSONS. (a) Not later than
15-48 the 30th day before the date on which termination of coverage is
15-49 effective, a large employer carrier that cancels or refuses to
15-50 renew coverage under a large employer health benefit plan under
15-51 Article 26.86 or 26.87 of this code shall notify the large employer
15-52 of the cancellation or refusal to renew. It is the responsibility
15-53 of the large employer to notify enrollees of the cancellation or
15-54 refusal to renew the coverage.
15-55 (b) The notice provided to a large employer by a large
15-56 employer carrier under this article is in addition to any other
15-57 notice required by Article 26.86 or 26.87 of this code.
15-58 Art. 26.89. PREMIUM RATES; ADJUSTMENTS. (a) A large
15-59 employer carrier may not charge an adjustment to premium rates for
15-60 individual employees or dependents for health status related
15-61 factors or duration of coverage. Any adjustment must be applied
15-62 uniformly to the rates charged for all employees and dependents of
15-63 employees of the large employer. This subsection does not restrict
15-64 the amount that a large employer may be charged for
15-65 coverage.
15-66 (b) A large employer carrier may establish premium
15-67 discounts, rebates, or a reduction in otherwise applicable
15-68 copayments or deductibles in return for adherence to programs of
15-69 health promotion and disease prevention. A discount, rebate, or
16-1 reduction established under this subsection does not violate
16-2 Section 4(8), Article 21.21, of this code.
16-3 Art. 26.90. PREEXISTING CONDITION PROVISIONS. (a) A
16-4 preexisting condition provision in a large employer health benefit
16-5 plan may not apply to an expense incurred on or after the
16-6 expiration of the 12 months following the initial effective date of
16-7 coverage of the enrollee or late enrollee.
16-8 (b) A preexisting condition provision in a large employer
16-9 health benefit plan may not apply to coverage for a disease or
16-10 condition other than a disease or condition for which medical
16-11 advice, diagnosis, care, or treatment was recommended or received
16-12 during the six months before the earlier of:
16-13 (1) the effective date of coverage; or
16-14 (2) the first day of the waiting period.
16-15 (c) A large employer carrier shall not treat genetic
16-16 information as a preexisting condition described by Subsection (b)
16-17 of this article in the absence of a diagnosis of the condition
16-18 related to the information.
16-19 (d) A large employer carrier shall not treat a pregnancy as
16-20 a preexisting condition described by Subsection (b) of this
16-21 article.
16-22 (e) A preexisting condition provision in a large employer
16-23 health benefit plan shall not apply to an individual who was
16-24 continuously covered for an aggregate period of 12 months under
16-25 creditable coverage that was in effect up to a date not more than
16-26 63 days before the effective day of coverage under the large
16-27 employer health benefit plan, excluding any waiting period.
16-28 (f) In determining whether a preexisting condition provision
16-29 applies to an individual covered by a large employer health benefit
16-30 plan, the large employer carrier shall credit the time the
16-31 individual was covered under creditable coverage if the previous
16-32 coverage was in effect at any time during the 12 months preceding
16-33 the effective date of coverage under a large employer health
16-34 benefit plan. If the previous coverage was issued under a health
16-35 benefit plan, any waiting period shall also be credited to the
16-36 preexisting condition provision period.
16-37 (g) A health maintenance organization may impose an
16-38 affiliation period if the period is applied uniformly without
16-39 regard to any health status related factor. The affiliation period
16-40 shall not exceed two months for an enrollee, other than a late
16-41 enrollee, and shall not exceed 90 days for a late enrollee. An
16-42 affiliation period under a plan shall run concurrently with any
16-43 applicable waiting period under the plan. The health maintenance
16-44 organization must credit an affiliation period to any preexisting
16-45 condition provision period. A health maintenance organization may
16-46 use an alternative method approved by the commissioner to address
16-47 adverse selection.
16-48 (h) This article does not preclude application of any
16-49 waiting period applicable to all new enrollees under the health
16-50 benefit plan.
16-51 Art. 26.91. FAIR MARKETING. (a) On request, each large
16-52 employer purchasing health benefit plans shall be given a summary
16-53 of all plans for which the employer is eligible.
16-54 (b) The department may require periodic reports by large
16-55 employer carriers and agents regarding the large employer health
16-56 benefit plans issued by those carriers. The reporting requirements
16-57 must require information regarding the number of large employer
16-58 health benefit plans in various categories that are marketed or
16-59 issued to large employers and must comply with federal law and
16-60 regulations.
16-61 Art. 26.92. HEALTH STATUS AND CLAIMS EXPERIENCE; PROHIBITED
16-62 ACTS. A large employer carrier or agent may not encourage a large
16-63 employer to exclude an employee, meeting the participation
16-64 criteria, from health coverage provided in connection with the
16-65 employee's employment.
16-66 Art. 26.93. AGENTS. A large employer carrier may not
16-67 terminate, fail to renew, or limit its contract or agreement of
16-68 representation with an agent because of any health status related
16-69 factors of a large employer group placed by the agent with the
17-1 carrier.
17-2 Art. 26.94. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
17-3 REFUSAL TO RENEW. Denial by a large employer carrier of an
17-4 application for coverage from a large employer carrier or
17-5 cancellation or refusal to renew must be in writing and must state
17-6 the reason or reasons for the denial, cancellation, or refusal.
17-7 Art. 26.95. THIRD-PARTY ADMINISTRATOR. If a large employer
17-8 carrier enters into an agreement with a third-party administrator
17-9 to provide administrative, marketing, or other services related to
17-10 the offering of large employer health benefit plans to large
17-11 employers in this state, the third-party administrator is subject
17-12 to this subchapter.
17-13 PART 3. CERTIFICATION OF COVERAGE
17-14 SECTION 3.01. Subchapter E, Chapter 21, Insurance Code, is
17-15 amended by adding Article 21.52G to read as follows:
17-16 Art. 21.52G. CERTIFICATION AND DISCLOSURE OF COVERAGE UNDER
17-17 HEALTH BENEFIT PLAN
17-18 Sec. 1. DEFINITIONS. In this article:
17-19 (1) "Creditable coverage" means creditable coverage
17-20 described by Section 3 of this article.
17-21 (2) "Health benefit plan" means a plan subject to this
17-22 article under Section 2 of this article.
17-23 Sec. 2. HEALTH BENEFIT PLAN. This article applies to a
17-24 health benefit plan that:
17-25 (1) provides benefits for medical or surgical expenses
17-26 incurred as a result of a health condition, accident, or sickness,
17-27 including:
17-28 (A) an individual, group, blanket, or franchise
17-29 insurance policy or insurance agreement, a group hospital service
17-30 contract, or an individual or group evidence of coverage that is
17-31 offered by:
17-32 (i) an insurance company;
17-33 (ii) a group hospital service corporation
17-34 operating under Chapter 20 of this code;
17-35 (iii) a fraternal benefit society
17-36 operating under Chapter 10 of this code;
17-37 (iv) a stipulated premium insurance
17-38 company operating under Chapter 22 of this code; or
17-39 (v) a health maintenance organization
17-40 operating under the Texas Health Maintenance Organization Act
17-41 (Chapter 20A, Vernon's Texas Insurance Code); or
17-42 (B) to the extent permitted by the Employee
17-43 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
17-44 seq.), a health benefit plan that is offered by:
17-45 (i) a multiple employer welfare
17-46 arrangement as defined by Section 3, Employee Retirement Income
17-47 Security Act of 1974 (29 U.S.C. Section 1002), and operating under
17-48 Article 3.95-1 et seq. of this code; or
17-49 (ii) another analogous benefit
17-50 arrangement;
17-51 (2) is offered by an approved nonprofit health
17-52 corporation that is certified under Section 5.01(a), Medical
17-53 Practice Act (Article 4495b, Vernon's Texas Civil Statutes), and
17-54 that holds a certificate of authority issued by the commissioner
17-55 under Article 21.52F of this code; or
17-56 (3) is offered by any other entity not licensed under
17-57 this code or another insurance law of this state that contracts
17-58 directly for health care services on a risk-sharing basis,
17-59 including an entity that contracts for health care services on a
17-60 capitation basis.
17-61 Sec. 3. CREDITABLE COVERAGE. (a) An individual's coverage
17-62 is creditable for purposes of this article if the coverage is
17-63 provided under:
17-64 (1) a self-funded or self-insured employee welfare
17-65 benefit plan that provides health benefits and that is established
17-66 in accordance with the Employee Retirement Income Security Act of
17-67 1974 (29 U.S.C. Section 1001 et seq.);
17-68 (2) a group health benefit plan provided by a health
17-69 insurance carrier or health maintenance organization;
18-1 (3) an individual health insurance policy or evidence
18-2 of coverage;
18-3 (4) Part A or Part B of Title XVIII of the Social
18-4 Security Act (42 U.S.C. Section 1395c et seq.);
18-5 (5) Title XIX of the Social Security Act (42 U.S.C.
18-6 Section 1396 et seq.), other than coverage consisting solely of
18-7 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
18-8 (6) Chapter 55, Title 10, United States Code (10
18-9 U.S.C. Section 1071 et seq.);
18-10 (7) a medical care program of the Indian Health
18-11 Service or of a tribal organization;
18-12 (8) a state health benefits risk pool;
18-13 (9) a health plan offered under Chapter 89, Title 5,
18-14 United States Code (5 U.S.C. Section 8901 et seq.);
18-15 (10) a public health plan as defined by federal
18-16 regulations; or
18-17 (11) a health benefit plan under Section 5(e), Peace
18-18 Corps Act (22 U.S.C. Section 2504(e)).
18-19 (b) Creditable coverage does not include:
18-20 (1) accident-only or disability income insurance, or a
18-21 combination of accident-only and disability income insurance;
18-22 (2) coverage issued as a supplement to liability
18-23 insurance;
18-24 (3) liability insurance, including general liability
18-25 insurance and automobile liability insurance;
18-26 (4) workers' compensation or similar insurance;
18-27 (5) automobile medical payment insurance;
18-28 (6) credit-only insurance;
18-29 (7) coverage for on-site medical clinics;
18-30 (8) other coverage that is:
18-31 (A) similar to the coverage described in this
18-32 subsection under which benefits for medical care are secondary or
18-33 incidental to other insurance benefits; and
18-34 (B) specified in federal regulations;
18-35 (9) coverage that provides limited-scope dental or
18-36 vision benefits;
18-37 (10) long-term care coverage or benefits, nursing home
18-38 care coverage or benefits, home health care coverage or benefits,
18-39 community-based care coverage or benefits, or any combination of
18-40 those coverages or benefits;
18-41 (11) coverage that provides other limited benefits
18-42 specified by federal regulations;
18-43 (12) coverage for a specified disease or illness;
18-44 (13) hospital indemnity or other fixed indemnity
18-45 insurance; or
18-46 (14) Medicare supplemental health insurance as defined
18-47 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
18-48 1395ss), coverage supplemental to the coverage provided under
18-49 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
18-50 seq.), and similar supplemental coverage provided under a group
18-51 plan.
18-52 Sec. 4. CERTIFICATION OF COVERAGE. Each issuer of a health
18-53 benefit plan shall provide a certification of coverage, in
18-54 accordance with the standards the commissioner adopts by rule, as
18-55 necessary to determine the period of applicable creditable coverage
18-56 of health benefit plans.
18-57 Sec. 5. RULES. The commissioner shall adopt rules as
18-58 necessary to implement this article and related provisions of this
18-59 code and to meet the minimum requirements of federal law and
18-60 regulations.
18-61 PART 4. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
18-62 SECTION 4.01. Article 3.95-1, Insurance Code, is amended to
18-63 read as follows:
18-64 Art. 3.95-1. DEFINITIONS. In this subchapter:
18-65 (1) "Board" means the Texas Department [State Board]
18-66 of Insurance or the commissioner, as appropriate.
18-67 (2) "Commissioner" means the commissioner of
18-68 insurance.
18-69 (3) "Creditable coverage" means coverage described by
19-1 Article 3.95-1.5 of this code.
19-2 (4) "Employee welfare benefit plan" has the meaning
19-3 assigned by Section 3(1) of the Employee Retirement Income Security
19-4 Act of 1974 (29 U.S.C. Section 1002(1)).
19-5 (5) [(4)] "Fully insured multiple employer welfare
19-6 arrangement" means a multiple employer welfare arrangement that
19-7 provides benefits to its participating employees and beneficiaries
19-8 for which 100 percent of the liability has been assumed by an
19-9 insurance company authorized to do business in this state.
19-10 (6) "Health benefit plan" means a health benefit plan
19-11 described by Article 3.95-1.6 of this code.
19-12 (7) "Health status related factor" means:
19-13 (A) health status;
19-14 (B) medical condition, including both physical
19-15 and mental illness;
19-16 (C) claims experience;
19-17 (D) receipt of health care;
19-18 (E) medical history;
19-19 (F) genetic information;
19-20 (G) evidence of insurability, including
19-21 conditions arising out of acts of family violence; and
19-22 (H) disability.
19-23 (8) "Late-participating employee" means an employee
19-24 described by Article 3.95-1.7 of this code.
19-25 (9) [(5)] "Multiple employer welfare arrangement" has
19-26 the meaning assigned by Section 3(40) of the Employee Retirement
19-27 Income Security Act of 1974 (29 U.S.C. Section 1002(40)) to
19-28 describe an entity which meets either or both of the following
19-29 criteria:
19-30 (A) one or more of the employer members in the
19-31 multiple employer welfare arrangement is either domiciled in this
19-32 state or has its principal headquarters or principal administrative
19-33 office in this state; or
19-34 (B) the multiple employer welfare arrangement
19-35 solicits an employer that is domiciled in this state or has its
19-36 principal headquarters or principal administrative office in this
19-37 state.
19-38 (10) "Participation criteria" means any criteria or
19-39 rules established by a large employer to determine the employees
19-40 who are eligible for enrollment, including continued enrollment,
19-41 under the terms of a health benefit plan. Such criteria or rules
19-42 may not be based on health status related factors.
19-43 (11) "Preexisting condition provision" means a
19-44 provision that denies, excludes, or limits coverage for a disease
19-45 or condition for a specified period after the effective date of
19-46 coverage.
19-47 (12) "Waiting period" means a period established by a
19-48 multiple employer welfare arrangement that must pass before an
19-49 individual who is a potential participating employee in a health
19-50 benefit plan is eligible to be covered for benefits.
19-51 SECTION 4.02. Subchapter I, Chapter 3, Insurance Code, is
19-52 amended by adding Articles 3.95-1.5, 3.95-1.6, and 3.95-1.7 to read
19-53 as follows:
19-54 Art. 3.95-1.5. CREDITABLE COVERAGE. (a) An individual's
19-55 coverage is creditable for purposes of this subchapter if the
19-56 coverage is provided under:
19-57 (1) a self-funded or self-insured employee welfare
19-58 benefit plan that provides health benefits and that is established
19-59 in accordance with the Employee Retirement Income Security Act of
19-60 1974 (29 U.S.C. Section 1001 et seq.);
19-61 (2) a group health benefit plan provided by a health
19-62 insurance carrier or health maintenance organization;
19-63 (3) an individual health insurance policy or evidence
19-64 of coverage;
19-65 (4) Part A or Part B of Title XVIII of the Social
19-66 Security Act (42 U.S.C. Section 1395c et seq.);
19-67 (5) Title XIX of the Social Security Act (42 U.S.C.
19-68 Section 1396 et seq.), other than coverage consisting solely of
19-69 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
20-1 (6) Chapter 55, Title 10, United States Code (10
20-2 U.S.C. Section 1071 et seq.);
20-3 (7) a medical care program of the Indian Health
20-4 Service or of a tribal organization;
20-5 (8) a state health benefits risk pool;
20-6 (9) a health plan offered under Chapter 89, Title 5,
20-7 United States Code (5 U.S.C. Section 8901 et seq.);
20-8 (10) a public health plan as defined by federal
20-9 regulations; or
20-10 (11) a health benefit plan under Section 5(e), Peace
20-11 Corps Act (22 U.S.C. Section 2504(e)).
20-12 (b) Creditable coverage does not include:
20-13 (1) accident-only or disability income insurance, or a
20-14 combination of accident-only and disability income insurance;
20-15 (2) coverage issued as a supplement to liability
20-16 insurance;
20-17 (3) liability insurance, including general liability
20-18 insurance and automobile liability insurance;
20-19 (4) workers' compensation or similar insurance;
20-20 (5) automobile medical payment insurance;
20-21 (6) credit-only insurance;
20-22 (7) coverage for on-site medical clinics;
20-23 (8) other coverage that is:
20-24 (A) similar to the coverage described by this
20-25 subsection under which benefits for medical care are secondary or
20-26 incidental to other insurance benefits; and
20-27 (B) specified in federal regulations;
20-28 (9) coverage that provides limited-scope dental or
20-29 vision benefits;
20-30 (10) long-term care coverage or benefits, nursing home
20-31 care coverage or benefits, home health care coverage or benefits,
20-32 community-based care coverage or benefits, or any combination of
20-33 those coverages or benefits;
20-34 (11) coverage that provides other limited benefits
20-35 specified by federal regulations;
20-36 (12) coverage for a specified disease or illness;
20-37 (13) hospital indemnity or other fixed indemnity
20-38 insurance; or
20-39 (14) Medicare supplemental health insurance as defined
20-40 under Section 1882(g)(1), Social Security Act (42 U.S.C. Section
20-41 1395ss), coverage supplemental to the coverage provided under
20-42 Chapter 55, Title 10, United States Code (10 U.S.C. Section 1071 et
20-43 seq.), and similar supplemental coverage provided under a group
20-44 plan.
20-45 Art. 3.95-1.6. HEALTH BENEFIT PLAN. (a) For purposes of
20-46 this subchapter, the term "health benefit plan" includes any plan
20-47 that provides benefits for health care services.
20-48 (b) A health benefit plan does not include:
20-49 (1) accident-only or disability income insurance or a
20-50 combination of accident-only and disability income insurance;
20-51 (2) credit-only insurance;
20-52 (3) disability insurance;
20-53 (4) coverage for a specified disease or illness;
20-54 (5) Medicare services under a federal contract;
20-55 (6) Medicare supplement and Medicare Select policies
20-56 regulated in accordance with federal law;
20-57 (7) long-term care coverage or benefits, nursing home
20-58 care coverage or benefits, home health care coverage or benefits,
20-59 community-based care coverage or benefits, or any combination of
20-60 those coverages or benefits;
20-61 (8) coverage that provides limited-scope dental or
20-62 vision benefits;
20-63 (9) coverage provided by a single service health
20-64 maintenance organization;
20-65 (10) coverage issued as a supplement to liability
20-66 insurance;
20-67 (11) workers' compensation or similar insurance;
20-68 (12) automobile medical payment insurance coverage;
20-69 (13) jointly managed trusts authorized under 29 U.S.C.
21-1 Section 141 et seq. that contain a plan of benefits for employees
21-2 that is negotiated in a collective bargaining agreement governing
21-3 wages, hours, and working conditions of the employees that is
21-4 authorized under 29 U.S.C. Section 157;
21-5 (14) hospital indemnity or other fixed indemnity
21-6 insurance;
21-7 (15) reinsurance contracts issued on a stop-loss,
21-8 quota-share, or similar basis;
21-9 (16) short-term major medical contracts;
21-10 (17) liability insurance, including general liability
21-11 insurance and automobile liability insurance;
21-12 (18) other insurance coverage that is:
21-13 (A) similar to the coverage described by this
21-14 subsection under which benefits for medical care are secondary or
21-15 incidental to other insurance benefits; and
21-16 (B) specified in federal regulations;
21-17 (19) coverage for on-site medical clinics; or
21-18 (20) coverage that provides other limited benefits
21-19 specified by federal regulations.
21-20 Art. 3.95-1.7. LATE-PARTICIPATING EMPLOYEE. (a) An
21-21 individual is a late-participating employee if the individual:
21-22 (1) is an employee or dependent eligible for
21-23 enrollment; and
21-24 (2) requests enrollment in a participating employer's
21-25 health benefit plan after the expiration of the initial enrollment
21-26 period established under the terms of the first plan for which that
21-27 employee or dependent was eligible through the participating
21-28 employer and after the expiration of an open enrollment period
21-29 under Article 3.95-4.1 of this code.
21-30 (b) An individual is not a late-participating employee if:
21-31 (1) the individual:
21-32 (A) was covered under another health benefit
21-33 plan or self-funded employer health benefit plan at the time the
21-34 individual was eligible to enroll;
21-35 (B) declines in writing, at the time of the
21-36 initial eligibility, stating that coverage under another health
21-37 benefit plan or self-funded employer health benefit plan was the
21-38 reason for declining enrollment;
21-39 (C) has lost coverage under another health
21-40 benefit plan or self-funded employer health benefit plan as a
21-41 result of:
21-42 (i) the termination of employment;
21-43 (ii) the reduction in the number of hours
21-44 of employment;
21-45 (iii) the termination of the other plan's
21-46 coverage;
21-47 (iv) the termination of contributions
21-48 toward the premium made by the employer; or
21-49 (v) the death of a spouse or divorce; and
21-50 (D) requests enrollment not later than the 31st
21-51 day after the date on which coverage under the other health benefit
21-52 plan or self-funded employer health benefit plan terminates;
21-53 (2) the individual is employed by an employer who
21-54 offers multiple health benefit plans and the individual elects a
21-55 different health benefit plan during an open enrollment period;
21-56 (3) a court has ordered coverage to be provided for a
21-57 spouse under a covered employee's plan and request for enrollment
21-58 is made not later than the 31st day after the date the court order
21-59 is issued; or
21-60 (4) a court has ordered coverage to be provided for a
21-61 child under a covered employee's plan and the request for
21-62 enrollment is made not later than the 31st day after the date the
21-63 employer receives the court order.
21-64 SECTION 4.03. Subchapter I, Chapter 3, Insurance Code, is
21-65 amended by adding Article 3.95-4.1 through 3.95-4.10 to read as
21-66 follows:
21-67 Art. 3.95-4.1. COVERAGE REQUIREMENTS. (a) A multiple
21-68 employer welfare arrangement may refuse to provide coverage to an
21-69 employer in accordance with the multiple employer welfare
22-1 arrangement's underwriting standards and criteria. However, on
22-2 issuance of coverage to an employer, each multiple employer welfare
22-3 arrangement shall provide coverage to the employees who meet the
22-4 participation criteria established by the terms of the plan
22-5 document without regard to an individual's health status related
22-6 factors. The participation criteria may not be based on health
22-7 status related factors.
22-8 (b) The multiple employer welfare arrangement shall accept
22-9 or reject the entire group of individuals who meet the
22-10 participation criteria and who choose coverage and may exclude only
22-11 those employees or dependents who have declined coverage. The
22-12 multiple employer welfare arrangement may charge premiums in
22-13 accordance with Article 3.95-4.6 of this code to the group of
22-14 employees or dependents who meet the participation criteria and who
22-15 do not decline coverage.
22-16 (c) The multiple employer welfare arrangement shall obtain a
22-17 written waiver for each employee who meets the participation
22-18 criteria and who declines coverage under a health plan offered to
22-19 an employer. The waiver must ensure that the employee was not
22-20 induced or pressured into declining coverage because of the
22-21 employee's health status related factors.
22-22 (d) A multiple employer welfare arrangement may not provide
22-23 coverage to an employer or the employees of an employer if the
22-24 multiple employer welfare arrangement or an agent for the multiple
22-25 employer welfare arrangement knows that the employer has induced or
22-26 pressured an employee who meets the participation criteria or a
22-27 dependent of the employee to decline coverage because of that
22-28 individual's health status related factors.
22-29 (e) A multiple employer welfare arrangement may require an
22-30 employer to meet minimum contribution or participation requirements
22-31 as a condition of issuance and renewal in accordance with the terms
22-32 of the multiple employer welfare arrangement's plan document.
22-33 Those requirements shall be stated in the plan document and shall
22-34 be applied uniformly to each employer offered or issued coverage by
22-35 the multiple employer welfare arrangement in this state.
22-36 (f) The initial enrollment period for employees meeting the
22-37 participation criteria must be at least 31 days, with a 31-day
22-38 annual open enrollment period. Such enrollment period shall
22-39 consist of an entire calendar month, beginning on the first day of
22-40 the month and ending on the last day of the month. If the month is
22-41 February, the period shall last through March 2nd.
22-42 (g) If dependent coverage is offered to participating
22-43 employees under the terms of a multiple employer welfare
22-44 arrangement's plan document, the initial enrollment period for the
22-45 dependents must be at least 31 days, with a 31-day annual open
22-46 enrollment period.
22-47 (h) A multiple employer welfare arrangement may establish a
22-48 waiting period during which a new employee is not eligible for
22-49 coverage in accordance with the terms of the plan document.
22-50 (i) A new employee who meets the participation criteria may
22-51 not be denied coverage if the application for coverage is received
22-52 by the multiple employer welfare arrangement not later than the
22-53 31st day after the later of:
22-54 (1) the date on which the employment begins; or
22-55 (2) the date on which the waiting period established
22-56 under this article expires.
22-57 (j) If dependent coverage is offered under the terms of a
22-58 multiple employer welfare arrangement's plan document, a dependent
22-59 of a new employee meeting the participation criteria established by
22-60 the multiple employer welfare arrangement may not be denied
22-61 coverage if the application for coverage is received by the
22-62 multiple employer welfare arrangement not later than the 31st day
22-63 after the later of:
22-64 (1) the date on which the employment begins;
22-65 (2) the date on which the waiting period established
22-66 under this article expires; or
22-67 (3) the date on which the dependent becomes eligible
22-68 for enrollment.
22-69 (k) A late-participating employee may be excluded from
23-1 coverage until the next annual open enrollment period and may be
23-2 subject to a 12-month preexisting condition provision as described
23-3 by Article 3.95-4.8 of this code. The period during which a
23-4 preexisting condition provision applies may not exceed 18 months
23-5 from the date of the initial application.
23-6 (l) A multiple employer welfare arrangement may not exclude
23-7 an employee who meets the participation criteria or an eligible
23-8 dependent, including a late-participating employee, who would
23-9 otherwise be covered.
23-10 (m) A multiple employer welfare arrangement's plan document
23-11 may not, by use of a rider or amendment applicable to a specific
23-12 individual, limit or exclude coverage by type of illness,
23-13 treatment, medical condition, or accident, except for preexisting
23-14 conditions as permitted under Article 3.95-4.8 of this code.
23-15 Art. 3.95-4.2. DEPENDENT CHILDREN. (a) A multiple employer
23-16 welfare arrangement's plan document may not limit or exclude
23-17 initial coverage of a newborn child of a participating employee.
23-18 Any coverage of a newborn child of a participating employee under
23-19 this subsection terminates on the 32nd day after the date of the
23-20 birth of the child unless:
23-21 (1) dependent children are eligible for coverage under
23-22 the multiple employer welfare arrangement's plan document; and
23-23 (2) notification of the birth and any required
23-24 additional premium are received by the multiple employer welfare
23-25 arrangement not later than the 31st day after the date of birth.
23-26 (b) If dependent children are eligible for coverage under
23-27 the terms of a multiple employer welfare arrangement's plan
23-28 document, the plan document may not limit or exclude initial
23-29 coverage of an adopted child of a participating employee. A child
23-30 is considered to be the child of a participating employee if the
23-31 participating employee is a party in a suit in which the adoption
23-32 of the child by the participating employee is sought.
23-33 (c) If dependent children are eligible for coverage under
23-34 the terms of a multiple employer welfare arrangement's plan
23-35 document, an adopted child of a participating employee may be
23-36 enrolled, at the option of the participating employee, within
23-37 either:
23-38 (1) 31 days after the participating employee is a
23-39 party in a suit for adoption; or
23-40 (2) 31 days of the date the adoption is final.
23-41 (d) Coverage of an adopted child of an employee under this
23-42 article terminates unless notification of the adoption and any
23-43 required additional premiums are received by the multiple employer
23-44 welfare arrangement not later than either:
23-45 (1) the 31st day after the participating employee
23-46 becomes a party in a suit in which the adoption of the child by the
23-47 participating employee is sought; or
23-48 (2) the 31st day after the date of the adoption.
23-49 Art. 3.95-4.3. RENEWABILITY OF COVERAGE; CANCELLATION.
23-50 (a) Except as provided by Article 3.95-4.4 of this code, a
23-51 multiple employer welfare arrangement shall renew the health
23-52 benefit plan, at the option of the employer, unless:
23-53 (1) a contribution has not been paid as required by
23-54 the terms of the plan;
23-55 (2) the employer has committed fraud or intentional
23-56 misrepresentation of a material fact;
23-57 (3) the employer has not complied with the terms of
23-58 the health benefit plan document;
23-59 (4) the plan is ceasing to offer any coverage in a
23-60 geographic area; or
23-61 (5) there has been a failure to:
23-62 (A) meet the terms of an applicable collective
23-63 bargaining agreement or other agreement requiring or authorizing
23-64 contributions to the plan;
23-65 (B) renew the agreement; or
23-66 (C) employ employees covered by the agreement.
23-67 (b) A multiple employer welfare arrangement may refuse to
23-68 renew the coverage of a participating employee or dependent for
23-69 fraud or intentional misrepresentation of a material fact by that
24-1 individual.
24-2 (c) A multiple employer welfare arrangement may not cancel a
24-3 health benefit plan except for the reasons specified for refusal to
24-4 renew under Subsection (a) of this article. A multiple employer
24-5 welfare arrangement may not cancel the coverage of a participating
24-6 employee or dependent except for the reasons specified for refusal
24-7 to renew under Subsection (b) of this article.
24-8 Art. 3.95-4.4. REFUSAL TO RENEW. (a) A multiple employer
24-9 welfare arrangement may elect to refuse to renew all health benefit
24-10 plans delivered or issued for delivery by the multiple employer
24-11 welfare arrangement in this state. The multiple employer welfare
24-12 arrangement shall notify the commissioner of the election not later
24-13 than the 180th day before the date coverage under the first health
24-14 benefit plan terminates under this subsection.
24-15 (b) The multiple employer welfare arrangement shall notify
24-16 each affected employer not later than the 180th day before the date
24-17 on which coverage terminates for that employer.
24-18 (c) A multiple employer welfare arrangement that elects
24-19 under Subsection (a) of this article to refuse to renew all health
24-20 benefit plans in this state may not write a health benefit plan in
24-21 this state before the fifth anniversary of the date on which notice
24-22 is delivered to the commissioner under Subsection (a) of this
24-23 article.
24-24 (d) A multiple employer welfare arrangement may elect to
24-25 discontinue a plan only if the multiple employer welfare
24-26 arrangement:
24-27 (1) provides notice to each employer of the
24-28 discontinuation before the 90th day preceding the date of the
24-29 discontinuation of the plan;
24-30 (2) offers to each employer the option to purchase
24-31 another plan offered by the multiple employer welfare arrangement;
24-32 and
24-33 (3) acts uniformly without regard to the claims
24-34 experience of the employer or any health status related factor of
24-35 participating employees or dependents or new employees or
24-36 dependents who may become eligible for the coverage.
24-37 Art. 3.95-4.5. NOTICE TO COVERED PERSONS. (a) Not later
24-38 than the 30th day before the date on which termination of coverage
24-39 is effective, a multiple employer welfare arrangement that cancels
24-40 or refuses to renew coverage under a health benefit plan under
24-41 Article 3.95-4.3 or 3.95-4.4 of this code shall notify the employer
24-42 of the cancellation or refusal to renew. It is the responsibility
24-43 of the employer to notify participating employees of the
24-44 cancellation or refusal to renew the coverage.
24-45 (b) The notice provided under this article is in addition to
24-46 any other notice required by Article 3.95-4.3 or 3.95-4.4 of this
24-47 code.
24-48 Art. 3.95-4.6. PREMIUM RATES; ADJUSTMENTS. (a) A multiple
24-49 employer welfare arrangement may not charge an adjustment to
24-50 premium rates for individual employees or dependents for health
24-51 status related factors or duration of coverage. Any adjustment
24-52 must be applied uniformly to the rates charged for all
24-53 participating employees and dependents of participating employees
24-54 of the employer. This subsection does not restrict the amount that
24-55 an employer may be charged for coverage.
24-56 (b) A multiple employer welfare arrangement may establish
24-57 premium discounts, rebates, or a reduction in otherwise applicable
24-58 copayments or deductibles in return for adherence to programs of
24-59 health promotion and disease prevention. A discount, rebate, or
24-60 reduction established under this subsection does not violate
24-61 Section 4(8), Article 21.21, of this code.
24-62 Art. 3.95-4.7. FAIR MARKETING. (a) On request, each
24-63 employer purchasing health benefit plans shall be given a summary
24-64 of the plans for which the employer is eligible.
24-65 (b) The department may require periodic reports by multiple
24-66 employer welfare arrangements and agents regarding the health
24-67 benefit plans issued by the multiple employer welfare arrangements.
24-68 The reporting requirements shall comply with federal law and
24-69 regulations.
25-1 Art. 3.95-4.8. PREEXISTING CONDITION PROVISIONS. (a) A
25-2 preexisting condition provision in a multiple employer welfare
25-3 arrangement's plan document may not apply to an expense incurred on
25-4 or after the expiration of the 12 months following the initial
25-5 effective date of coverage of the participating employee,
25-6 dependent, or late-participating employee.
25-7 (b) A preexisting condition provision in a multiple employer
25-8 welfare arrangement's plan document may not apply to coverage for a
25-9 disease or condition other than a disease or condition for which
25-10 medical advice, diagnosis, care, or treatment was recommended or
25-11 received during the six months before the earlier of:
25-12 (1) the effective date of coverage; or
25-13 (2) the first day of the waiting period.
25-14 (c) A multiple employer welfare arrangement shall not treat
25-15 genetic information as a preexisting condition described by
25-16 Subsection (b) of this article in the absence of a diagnosis of the
25-17 condition related to the information.
25-18 (d) A multiple employer welfare arrangement shall not treat
25-19 a pregnancy as a preexisting condition described by Subsection (b)
25-20 of this article.
25-21 (e) A preexisting condition provision in a multiple employer
25-22 welfare arrangement's plan document may not apply to an individual
25-23 who was continuously covered for an aggregate period of 12 months
25-24 under creditable coverage that was in effect up to a date not more
25-25 than 63 days before the effective date of coverage under the health
25-26 benefit plan, excluding any waiting period.
25-27 (f) In determining whether a preexisting condition provision
25-28 applies to an individual covered by a multiple employer welfare
25-29 arrangement's plan document, the multiple employer welfare
25-30 arrangement shall credit the time the individual was covered under
25-31 previous creditable coverage if the previous coverage was in effect
25-32 at any time during the 12 months preceding the effective date of
25-33 coverage under the multiple employer welfare arrangement. If the
25-34 previous coverage was issued under a health benefit plan, any
25-35 waiting period shall also be credited to the preexisting condition
25-36 provision period.
25-37 (g) This article does not preclude application of any
25-38 waiting period applicable to all new participating employees under
25-39 the health benefit plan in accordance with the terms of the
25-40 multiple employer welfare arrangement's plan document.
25-41 Art. 3.95-4.9. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
25-42 REFUSAL TO RENEW. Denial by a multiple employer welfare
25-43 arrangement of an application for coverage from an employer or
25-44 cancellation or refusal to renew must be in writing and must state
25-45 the reason or reasons for the denial, cancellation, or refusal.
25-46 Art. 3.95-4.10. THIRD-PARTY ADMINISTRATOR. If a multiple
25-47 employer welfare arrangement enters into an agreement with a
25-48 third-party administrator to provide administrative, marketing, or
25-49 other services related to the offering of health benefit plans to
25-50 employers in this state, the third-party administrator is subject
25-51 to this subchapter.
25-52 SECTION 4.04. Article 3.95-8, Insurance Code, is amended by
25-53 amending Subsection (a) and adding Subsection (e) to read as
25-54 follows:
25-55 (a) Each multiple employer welfare arrangement transacting
25-56 business in this state shall file the following with the
25-57 commissioner on forms approved by the commissioner:
25-58 (1) within 90 days of the end of the fiscal year,
25-59 financial statements audited by a certified public accountant;
25-60 [and]
25-61 (2) within 90 days of the end of the fiscal year, an
25-62 actuarial opinion prepared and certified by an actuary who is not
25-63 an employee of the multiple employer welfare arrangement and who is
25-64 a fellow of the Society of Actuaries, a member of the American
25-65 Academy of Actuaries, or an enrolled actuary under the Employee
25-66 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
25-67 seq.); and
25-68 (3) any modified terms of a plan document along with a
25-69 certification from the trustees that any changes are in compliance
26-1 with the minimum requirements of this subchapter. The actuarial
26-2 opinion shall include:
26-3 (A) a description of the actuarial soundness of
26-4 the multiple employer welfare arrangement, including any
26-5 recommended actions that the multiple employer welfare arrangement
26-6 should take to improve its actuarial soundness;
26-7 (B) the recommended amount of cash reserves the
26-8 multiple employer welfare arrangement should maintain which shall
26-9 not be less than the greater of 20 percent of the total
26-10 contributions in the preceding plan year or 20 percent of the total
26-11 estimated contributions for the current plan year; cash reserves
26-12 shall be calculated with proper actuarial regard for known claims,
26-13 paid and outstanding, a history of incurred but not reported
26-14 claims, claims handling expenses, unearned premium, an estimate for
26-15 bad debts, a trend factor, and a margin for error; cash reserves
26-16 required by this article shall be maintained in cash or federally
26-17 guaranteed obligations of less than five-year maturity that have a
26-18 fixed or recoverable principal amount or such other investments as
26-19 the commissioner or board may authorize by rule; and
26-20 (C) the recommended level of specific and
26-21 aggregate stop-loss insurance the multiple employer welfare
26-22 arrangement should maintain.
26-23 (e) If the commissioner determines that a multiple employer
26-24 welfare arrangement does not comply with the requirements
26-25 established in this subchapter, the commissioner may order the
26-26 multiple employer welfare arrangement to correct the deficiencies.
26-27 If the multiple employer welfare arrangement does not initiate
26-28 immediate corrective action, the commissioner may take any action
26-29 against the multiple employer welfare arrangement that is
26-30 authorized by this code.
26-31 SECTION 4.05. Article 3.95-15, Insurance Code, is amended by
26-32 amending the article heading and Subsection (a) to read as follows:
26-33 Art. 3.95-15. PROCEEDINGS BEFORE COMMISSIONER [THE BOARD] OF
26-34 INSURANCE; RULES. (a) The commissioner [board] may, on notice and
26-35 opportunity for all interested persons to be heard, issue such
26-36 rules, regulations, and orders as are reasonably necessary to
26-37 augment and carry out the provisions of this subchapter. The
26-38 commissioner shall adopt rules as necessary to meet the minimum
26-39 requirements of federal law and regulations.
26-40 PART 5. EFFECTIVE DATE; TRANSITION; EMERGENCY
26-41 SECTION 5.01. This Act applies only to an insurance policy,
26-42 evidence of coverage, contract, or other document establishing
26-43 coverage under a health benefit plan that is delivered, issued for
26-44 delivery, or renewed on or after the effective date of this Act.
26-45 An insurance policy, evidence of coverage, contract, or other
26-46 document establishing coverage under a health benefit plan that is
26-47 delivered, issued for delivery, or renewed before the effective
26-48 date of this Act is governed by the law as it existed immediately
26-49 before that date, and that law is continued in effect for that
26-50 purpose.
26-51 SECTION 5.02. This Act takes effect July 1, 1997.
26-52 SECTION 5.03. The importance of this legislation and the
26-53 crowded condition of the calendars in both houses create an
26-54 emergency and an imperative public necessity that the
26-55 constitutional rule requiring bills to be read on three several
26-56 days in each house be suspended, and this rule is hereby suspended,
26-57 and that this Act take effect and be in force according to its
26-58 terms, and it is so enacted.
26-59 * * * * *