HBA-NRS H.B. 949 77(R)BILL ANALYSIS


Office of House Bill AnalysisH.B. 949
By: Averitt
Insurance
7/19/2001
Enrolled



BACKGROUND AND PURPOSE 

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 was difficult to enforce. Prior to the
77th Legislature, the Insurance Code contained no enabling statute for this
rule and some small employer carriers were using certain risk
characteristics as the basis for varying small employer premiums by a
substantial premium percent. House Bill 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

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 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.