1-1 By: Sibley S.B. No. 990
1-2 (In the Senate - Filed February 28, 2001; March 1, 2001, read
1-3 first time and referred to Committee on Business and Commerce;
1-4 March 8, 2001, reported favorably by the following vote: Yeas 6,
1-5 Nays 0; March 8, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the applicability of the Health Insurance Portability
1-9 and Availability Act.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Subdivisions (10) through (32), Article 26.02,
1-12 Insurance Code, are amended to read as follows:
1-13 (10) "Employee" means any individual employed by an
1-14 employer.
1-15 (11) "Health benefit plan" means a group, blanket, or
1-16 franchise insurance policy, a certificate issued under a group
1-17 policy, a group hospital service contract, or a group subscriber
1-18 contract or evidence of coverage issued by a health maintenance
1-19 organization that provides benefits for health care services. The
1-20 term does not include:
1-21 (A) accident-only or disability income insurance
1-22 or a combination of accident-only and disability income insurance;
1-23 (B) credit-only insurance;
1-24 (C) disability insurance coverage;
1-25 (D) coverage for a specified disease or illness;
1-26 (E) Medicare services under a federal contract;
1-27 (F) Medicare supplement and Medicare Select
1-28 policies regulated in accordance with federal law;
1-29 (G) long-term care coverage or benefits, nursing
1-30 home care coverage or benefits, home health care coverage or
1-31 benefits, community-based care coverage or benefits, or any
1-32 combination of those coverages or benefits;
1-33 (H) coverage that provides limited-scope dental
1-34 or vision benefits;
1-35 (I) coverage provided by a single service health
1-36 maintenance organization;
1-37 (J) coverage issued as a supplement to liability
1-38 insurance;
1-39 (K) workers' compensation or similar insurance;
1-40 (L) automobile medical payment insurance
1-41 coverage;
1-42 (M) jointly managed trusts authorized under 29
1-43 U.S.C. Section 141 et seq. that contain a plan of benefits for
1-44 employees that is negotiated in a collective bargaining agreement
1-45 governing wages, hours, and working conditions of the employees
1-46 that is authorized under 29 U.S.C. Section 157;
1-47 (N) hospital indemnity or other fixed indemnity
1-48 insurance;
1-49 (O) reinsurance contracts issued on a stop-loss,
1-50 quota-share, or similar basis;
1-51 (P) short-term major medical contracts;
1-52 (Q) liability insurance, including general
1-53 liability insurance and automobile liability insurance;
1-54 (R) other coverage that is:
1-55 (i) similar to the coverage described by
1-56 this subdivision under which benefits for medical care are
1-57 secondary or incidental to other insurance benefits; and
1-58 (ii) specified in federal regulations;
1-59 (S) coverage for on-site medical clinics; or
1-60 (T) coverage that provides other limited
1-61 benefits specified by federal regulations.
1-62 (12) [(11)] "Health carrier" means any entity
1-63 authorized under this code or another insurance law of this state
1-64 that provides health insurance or health benefits in this state,
2-1 including an insurance company, a group hospital service
2-2 corporation under Chapter 20 of this code, a health maintenance
2-3 organization under the Texas Health Maintenance Organization Act
2-4 (Chapter 20A, Vernon's Texas Insurance Code), and a stipulated
2-5 premium company under Chapter 22 of this code.
2-6 (13) [(12)] "Health status related factor" means:
2-7 (A) health status;
2-8 (B) medical condition, including both physical
2-9 and mental illness;
2-10 (C) claims experience;
2-11 (D) receipt of health care;
2-12 (E) medical history;
2-13 (F) genetic information;
2-14 (G) evidence of insurability, including
2-15 conditions arising out of acts of family violence; and
2-16 (H) disability.
2-17 (14) [(13)] "Index rate" means, for each class of
2-18 business as to a rating period for small employers with similar
2-19 case characteristics, the arithmetic average of the applicable base
2-20 premium rate and corresponding highest premium rate.
2-21 (15) [(14)] "Large employer" means an employer who
2-22 employed an average of at least 51 eligible employees on business
2-23 days during the preceding calendar year and who employs at least
2-24 two [eligible] employees on the first day of the plan year. For
2-25 purposes of this definition, a partnership is the employer of a
2-26 partner. A large employer includes a governmental entity subject
2-27 to Section 1, Chapter 123, Acts of the 60th Legislature, Regular
2-28 Session, 1967 (Article 3.51-3, Vernon's Texas Insurance Code), or
2-29 Article 3.51-1, 3.51-2, 3.51-4, 3.51-5, or 3.51-5A of this code
2-30 that otherwise meets the requirements of this section [and elects
2-31 to be treated as a large employer].
2-32 (16) [(15)] "Large employer carrier" means a health
2-33 carrier, to the extent that carrier is offering, delivering,
2-34 issuing for delivery, or renewing health benefit plans subject to
2-35 Subchapter H of this chapter.
2-36 (17) [(16)] "Large employer health benefit plan" means
2-37 a health benefit plan offered to a large employer.
2-38 (18) [(17)] "Late enrollee" means any employee or
2-39 dependent eligible for enrollment who requests enrollment in a
2-40 small or large employer's health benefit plan after the expiration
2-41 of the initial enrollment period established under the terms of the
2-42 first plan for which that employee or dependent was eligible
2-43 through the small or large employer or after the expiration of an
2-44 open enrollment period under Article 26.21(h) or 26.83 of this
2-45 code. An employee or dependent eligible for enrollment is not a
2-46 late enrollee if:
2-47 (A) the individual:
2-48 (i) was covered under another health
2-49 benefit plan or self-funded employer health benefit plan at the
2-50 time the individual was eligible to enroll;
2-51 (ii) declines in writing, at the time of
2-52 the initial eligibility, stating that coverage under another health
2-53 benefit plan or self-funded employer health benefit plan was the
2-54 reason for declining enrollment;
2-55 (iii) has lost coverage under another
2-56 health benefit plan or self-funded employer health benefit plan as
2-57 a result of:
2-58 (a) the termination of employment;
2-59 (b) the reduction in the number of
2-60 hours of employment;
2-61 (c) the termination of the other
2-62 plan's coverage;
2-63 (d) the termination of contributions
2-64 toward the premium made by the employer; or
2-65 (e) the death of a spouse or
2-66 divorce; and
2-67 (iv) requests enrollment not later than
2-68 the 31st day after the date on which coverage under the other
2-69 health benefit plan or self-funded employer health benefit plan
3-1 terminates;
3-2 (B) the individual is employed by an employer
3-3 who offers multiple health benefit plans and the individual elects
3-4 a different health benefit plan during an open enrollment period;
3-5 (C) a court has ordered coverage to be provided
3-6 for a spouse under a covered employee's plan and request for
3-7 enrollment is made not later than the 31st day after the date on
3-8 which the court order is issued; [or]
3-9 (D) a court has ordered coverage to be provided
3-10 for a child under a covered employee's plan and the request for
3-11 enrollment is made not later than the 31st day after the date on
3-12 which the employer receives the court order; or
3-13 (E) the individual is a child of a covered
3-14 employee who has lost coverage under Title XIX of the Social
3-15 Security Act (42 U.S.C. Section 1396 et seq.), other than coverage
3-16 consisting solely of benefits under Section 1928 of that Act (42
3-17 U.S.C. Section 1396s), or under Chapter 62, Health and Safety Code,
3-18 and the request for enrollment is made not later than the 31st day
3-19 after the date on which the child loses coverage.
3-20 (19) [(18)] "New business premium rate" means, for
3-21 each class of business as to a rating period, the lowest premium
3-22 rate that is charged or offered or that could be charged or offered
3-23 by the small employer carrier to small employers with similar case
3-24 characteristics for newly issued small employer health benefit
3-25 plans that provide the same or similar coverage.
3-26 (20) [(19)] "Participation criteria" means any
3-27 criteria or rules established by a large employer to determine the
3-28 employees who are eligible for enrollment, including continued
3-29 enrollment, under the terms of a health benefit plan. Such
3-30 criteria or rules may not be based on health status related
3-31 factors.
3-32 (21) [(20)] "Person" means an individual, corporation,
3-33 partnership, or other legal entity.
3-34 (22) [(21)] "Plan of operation" means the plan of
3-35 operation of the system established under Article 26.55 of this
3-36 code.
3-37 (23) [(22)] "Point-of-service contract" means a
3-38 benefit plan offered through a health maintenance organization
3-39 that:
3-40 (A) includes corresponding indemnity benefits in
3-41 addition to benefits relating to out-of-area or emergency services
3-42 provided through insurers or group hospital service corporations;
3-43 and
3-44 (B) permits the insured to obtain coverage under
3-45 either the health maintenance organization conventional plan or the
3-46 indemnity plan as determined in accordance with the terms of the
3-47 contract.
3-48 (24) [(23)] "Preexisting condition provision" means a
3-49 provision that denies, excludes, or limits coverage as to a disease
3-50 or condition for a specified period after the effective date of
3-51 coverage.
3-52 (25) [(24)] "Premium" means all amounts paid by a
3-53 small or large employer and eligible employees as a condition of
3-54 receiving coverage from a small or large employer carrier,
3-55 including any fees or other contributions associated with a health
3-56 benefit plan.
3-57 (26) [(25)] "Rating period" means a calendar period
3-58 for which premium rates established by a small employer carrier are
3-59 assumed to be in effect.
3-60 (27) [(26)] "Reinsured carrier" means a small employer
3-61 carrier participating in the system.
3-62 (28) [(27)] "Risk-assuming carrier" means a small
3-63 employer carrier that elects not to participate in the system.
3-64 (29) [(28)] "Small employer" means an employer who
3-65 employed an average of at least two employees but not more than 50
3-66 eligible employees on business days during the preceding calendar
3-67 year and who employs at least two [eligible] employees on the first
3-68 day of the plan year. For purposes of this definition, a
3-69 partnership is the employer of a partner. A small employer
4-1 includes a governmental entity subject to Section 1, Chapter 123,
4-2 Acts of the 60th Legislature, Regular Session, 1967 (Article
4-3 3.51-3, Vernon's Texas Insurance Code), or Article 3.51-1, 3.51-2,
4-4 3.51-4, 3.51-5, or 3.51-5A of this code that otherwise meets the
4-5 requirements of this section [and elects to be treated as a small
4-6 employer].
4-7 (30) [(29)] "Small employer carrier" means a health
4-8 carrier, to the extent that that carrier is offering, delivering,
4-9 issuing for delivery, or renewing health benefit plans subject to
4-10 Subchapters C-G of this chapter under Article 26.06(a) of this
4-11 code.
4-12 (31) [(30)] "Small employer health benefit plan" means
4-13 a plan developed by the commissioner under Subchapter E of this
4-14 chapter or any other health benefit plan offered to a small
4-15 employer in accordance with Article 26.42(c) or 26.48 of this code.
4-16 (32) [(31)] "System" means the Texas Health
4-17 Reinsurance System established under Subchapter F of this chapter.
4-18 (33) [(32)] "Waiting period" means a period
4-19 established by an employer that must pass before an individual who
4-20 is a potential enrollee in a health benefit plan is eligible to be
4-21 covered for benefits.
4-22 SECTION 2. Subsection (a), Article 26.035, Insurance Code,
4-23 is amended to read as follows:
4-24 (a) An individual's coverage is creditable for purposes of
4-25 this chapter if the coverage is provided under:
4-26 (1) a self-funded or self-insured employee welfare
4-27 benefit plan that provides health benefits and that is established
4-28 in accordance with the Employee Retirement Income Security Act of
4-29 1974 (29 U.S.C. Section 1001 et seq.);
4-30 (2) a group health benefit plan provided by a health
4-31 insurance carrier or health maintenance organization;
4-32 (3) an individual health insurance policy or evidence
4-33 of coverage;
4-34 (4) Part A or Part B of Title XVIII of the Social
4-35 Security Act (42 U.S.C. Section 1395c et seq.);
4-36 (5) Title XIX of the Social Security Act (42 U.S.C.
4-37 Section 1396 et seq.), other than coverage consisting solely of
4-38 benefits under Section 1928 of that Act (42 U.S.C. Section 1396s);
4-39 (6) Chapter 55, Title 10, United States Code (10
4-40 U.S.C. Section 1071 et seq.);
4-41 (7) a medical care program of the Indian Health
4-42 Service or of a tribal organization;
4-43 (8) a state or political subdivision health benefits
4-44 risk pool;
4-45 (9) a health plan offered under Chapter 89, Title 5,
4-46 United States Code (5 U.S.C. Section 8901 et seq.);
4-47 (10) a public health plan as defined by federal
4-48 regulations; [or]
4-49 (11) a health benefit plan under Section 5(e), Peace
4-50 Corps Act (22 U.S.C. Section 2504(e)); or
4-51 (12) short term limited duration coverage.
4-52 SECTION 3. Subsections (a) and (b), Article 26.06, Insurance
4-53 Code, are amended to read as follows:
4-54 (a) An individual or group health benefit plan is subject to
4-55 Subchapters C-G of this chapter if it provides health care benefits
4-56 covering two or more eligible employees of a small employer and if:
4-57 (1) a portion of the premium or benefits is paid by a
4-58 small employer; [or]
4-59 (2) the health benefit plan is treated by the employer
4-60 or by a covered individual as part of a plan or program for the
4-61 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
4-62 U.S.C. Section 106 or 162); or
4-63 (3) the health benefit plan is an employee welfare
4-64 benefit plan under 29 C.F.R. Section 2510.3-1(j).
4-65 (b) For an employer who was not in existence throughout the
4-66 calendar year preceding the year in which the determination of
4-67 whether the employer is a small employer is made, the determination
4-68 is based on the average number of employees and eligible employees
4-69 the employer reasonably expects to employ on business days in the
5-1 calendar year in which the determination is made.
5-2 SECTION 4. Subsections (b) and (e), Article 26.22, Insurance
5-3 Code, are amended to read as follows:
5-4 (b) A small employer carrier that refuses to issue a small
5-5 employer health benefit plan in a geographic service area may not
5-6 offer a health benefit plan to a small employer [group of not more
5-7 than 50 individuals] in the affected service area before the fifth
5-8 anniversary of the date of the refusal.
5-9 (e) If the commissioner determines that requiring the
5-10 acceptance of small employers under this subchapter would place a
5-11 small employer carrier in a financially impaired condition and that
5-12 the small employer carrier is acting uniformly without regard to
5-13 the claims experience of the small employer or any health status
5-14 related factors of eligible employees or dependents or new
5-15 employees or dependents who may become eligible for the coverage,
5-16 the small employer carrier shall not offer coverage to small
5-17 employers until the later of:
5-18 (1) the 180th day after the date the commissioner
5-19 makes the determination; or
5-20 (2) the date the commissioner determines that
5-21 accepting small employers would not place the small employer
5-22 carrier in a financially impaired condition.
5-23 SECTION 5. Subsections (b) and (c), Article 26.23, Insurance
5-24 Code, are amended to read as follows:
5-25 (b) A small employer carrier may refuse to renew the
5-26 coverage of a covered [an eligible] employee or dependent for fraud
5-27 or intentional misrepresentation of a material fact by that
5-28 individual.
5-29 (c) A small employer carrier may not cancel a small employer
5-30 health benefit plan except for the reasons specified for refusal to
5-31 renew under Subsection (a) of this article. A small employer
5-32 carrier may not cancel the coverage of a covered [an eligible]
5-33 employee or dependent except for the reasons specified for refusal
5-34 to renew under Subsection (b) of this article.
5-35 SECTION 6. Subsection (a), Article 26.81, Insurance Code, is
5-36 amended to read as follows:
5-37 (a) An individual or group health benefit plan is subject to
5-38 this subchapter if the plan provides health care benefits to
5-39 eligible employees of a large employer and if:
5-40 (1) a portion of the premium or benefits is paid by a
5-41 large employer; [or]
5-42 (2) the health benefit plan is treated by the employer
5-43 or by a covered individual as part of a plan or program for the
5-44 purposes of Section 106 or 162, Internal Revenue Code of 1986 (26
5-45 U.S.C. Section 106 or 162); or
5-46 (3) the health benefit plan is an employee welfare
5-47 benefit plan under 29 C.F.R. Section 2510.3-1(j).
5-48 SECTION 7. Subsection (b), Section 3, Article 21.53F,
5-49 Insurance Code, as added by Chapter 832, Acts of the 75th
5-50 Legislature, Regular Session, 1997, is amended to read as follows:
5-51 (b) This article does not apply to:
5-52 (1) a plan that provides coverage:
5-53 (A) only for a specified disease or other
5-54 limited benefit;
5-55 (B) only for accidental death or dismemberment;
5-56 (C) for wages or payments in lieu of wages for a
5-57 period during which an employee is absent from work because of
5-58 sickness or injury;
5-59 (D) as a supplement to liability insurance;
5-60 (E) for credit insurance;
5-61 (F) only for dental or vision care; or
5-62 (G) only for indemnity for hospital confinement;
5-63 (2) [a small employer health benefit plan written
5-64 under Chapter 26 of this code;]
5-65 [(3)] a Medicare supplemental policy as defined by
5-66 Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
5-67 (3) [(4)] workers' compensation insurance coverage;
5-68 (4) [(5)] medical payment insurance issued as part of
5-69 a motor vehicle insurance policy; or
6-1 (5) [(6)] a long-term care policy, including a nursing
6-2 home fixed indemnity policy, unless the commissioner determines
6-3 that the policy provides benefit coverage so comprehensive that the
6-4 policy is a health benefit plan as described by Subsection (a) of
6-5 this section.
6-6 SECTION 8. This Act takes effect September 1, 2001, and
6-7 applies only to a health benefit plan that is delivered, issued for
6-8 delivery, or renewed on or after January 1, 2002. A plan that is
6-9 delivered, issued for delivery, or renewed before January 1, 2002,
6-10 is governed by the law as it existed immediately before the
6-11 effective date of this Act, and that law is continued in effect for
6-12 that purpose.
6-13 * * * * *