By Lucio                                               S.B. No. 744
         77R1955 MXM-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to certain fully insured multiple employer welfare
 1-3     arrangements.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Chapter 3, Insurance Code, is amended by adding
 1-6     Subchapter K to read as follows:
 1-7       SUBCHAPTER K.  ASSOCIATION HEALTH PLANS THAT ARE FULLY INSURED
 1-8                   MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
 1-9           Art. 3.97-1.  DEFINITIONS.  In this subchapter:
1-10                 (1)  "Employee welfare benefit plan" has the meaning
1-11     assigned by Section 3(1) of the Employee Retirement Income Security
1-12     Act of 1974 (29 U.S.C. Section 1002(1)).
1-13                 (2)  "Multiple employer welfare arrangement" has the
1-14     meaning assigned by Section 3(40) of the Employee Retirement Income
1-15     Security Act of 1974 (29 U.S.C. Section 1002(40)).
1-16           Art. 3.97-2.  FORMATION; REQUIREMENT OF FULL INSURANCE.  Two
1-17     or more employees or employers may form an association under this
1-18     subchapter to provide an employee welfare benefit plan through a
1-19     fully insured multiple employer welfare arrangement. The
1-20     arrangement must provide to its participating employees and
1-21     beneficiaries benefits for which 100 percent of the liability has
1-22     been assumed by an insurer authorized to do business in this state.
1-23           Art. 3.97-3.  INSURER REQUIREMENTS. (a)  The association
1-24     shall choose an insurer to:
 2-1                 (1)  assume the liability under the multiple employer
 2-2     welfare arrangement as required under Article 3.97-2 of this code;
 2-3     and
 2-4                 (2)  act as the third party administrator for the plan.
 2-5           (b)  The insurer must:
 2-6                 (1)  be rated at least B+ by the A. M. Best Company;
 2-7     and
 2-8                 (2)  maintain an unencumbered surplus of at least
 2-9     $25,000,000.
2-10           Art. 3.97-4.  INSURER LIABLE FOR UNPAID CLAIMS.  The insurer
2-11     is directly liable to the participating employee or beneficiary
2-12     under the employee welfare benefit plan for any claims made by the
2-13     employee or beneficiary.
2-14           SECTION 2. The heading to Subchapter I, Chapter 3, Insurance
2-15     Code, is amended to read as follows:
2-16       SUBCHAPTER I.  MULTIPLE EMPLOYER WELFARE ARRANGEMENTS THAT ARE
2-17                              NOT FULLY INSURED
2-18           SECTION 3.  This Act takes effect immediately if it receives
2-19     a vote of two-thirds of all the members elected to each house, as
2-20     provided by Section 39, Article III, Texas Constitution.  If this
2-21     Act does not receive the vote necessary for immediate effect, this
2-22     Act takes effect September 1, 2001.