SRC-MWN H.B. 949 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 949
By: Averitt (Fraser)
Business & Commerce
5/11/2001
Engrossed


DIGEST AND PURPOSE 

Currently, the Texas Administrative Code states that if a small employer
carrier varies the rates of small employer plans based on group size, the
highest rate factor is prohibited from exceeding the lowest rate factor by
more than 20 percent. However, this rule is difficult to enforce. The
Insurance Code contains no enabling statute for this rule and some small
employer carriers are using certain risk characteristics as the basis for
varying small employer premiums by a substantial premium percent. H.B. 949
codifies the 20 percent rating corridor rule and requires the risk load for
a particular small employer group to reflect the risk characteristics of
the group. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, agency, or institution.  

SECTION BY SECTION ANALYSIS

H.B. 949 amends the Insurance Code to prohibit a small employer carrier
from directly or indirectly using as a criteria for establishing a separate
class of business the number of employees and dependents of a small
employer or, except when the small employer carrier provides coverage to
one or more employer-based association groups, the trade or occupation of
the employees of a small employer or the industry or type of business of
the small employer.  

Furthermore, the bill requires small employer carriers to develop premium
rates for each small employer group through a two-step process set forth in
the bill. The bill requires the risk load assessed to a particular group to
reflect the risk characteristics of the group. The bill authorizes a small
employer carrier to use the number of employees and dependents of a small
employer as a case characteristic in establishing premium rates for the
group and prohibits the highest rate factor associated with a
classification based on the number of employees and dependents of a small
employer from exceeding by more than 20 percent the lowest rate factor
associated with a classification based on the number of employees and
dependents of a small employer. 

Effective date: September 1, 2001.