78R7593 KCR-D

By:  Taylor                                                       H.B. No. 2736



A BILL TO BE ENTITLED

AN ACT

relating to the exclusion of certain employees from small employer 
health benefit plans.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 10(b), Article 3.77, Insurance Code, is 
amended to read as follows:
	(b)  Any individual who is and continues to be a resident, as 
defined by Section 2(17)(A) of this article, and who is a citizen of 
the United States or has been a permanent resident of the United 
States for at least three continuous years is eligible for coverage 
from the pool if the individual provides to the pool:
		(1)  a notice of rejection or refusal to issue 
substantially similar individual insurance for health reasons by 
one insurer, other than a rejection or refusal by an insurer 
offering only stop-loss, excess loss, or reinsurance coverage;
		(2)  a certification from an agent or salaried 
representative of an insurer, on a form developed by the board and 
approved by the commissioner, that states that the agent or 
salaried representative is unable to obtain substantially similar 
individual insurance for the individual with any state-licensed 
insurer that the agent or salaried representative represents 
because the individual will be declined for coverage as a result of 
a medical condition of the individual under the underwriting 
guidelines of the insurer;
		(3)  an offer to issue substantially similar individual 
insurance only with conditional riders;
		(4)  a refusal by an insurer to issue substantially 
similar individual insurance except at a rate exceeding the pool 
rate;  [or]
		(5)  diagnosis of the individual with one of the 
medical or health conditions listed by the board under Section 6(c) 
of this article and for which a person shall be eligible for pool 
coverage; or
		(6)  a certification from the individual's employer 
that the individual is excluded from health benefit plan coverage 
under Article 26.21B of this code.
	SECTION 2.  Subchapter C, Chapter 26, Insurance Code, is 
amended by adding Article 26.21B to read as follows:
	Art. 26.21B.  EXCLUSION OF CERTAIN EMPLOYEES AND DEPENDENTS.  
(a)  Notwithstanding Article 26.21 of this code, a small employer 
may elect not to include an employee or a dependent of an employee 
in a small employer health benefit plan if including the employee or 
dependent in the plan would substantially increase the premium paid 
for the entire group covered by the plan.
	(b)  A small employer who elects to exclude an employee or 
dependent from the employer's health benefit plan under Subsection 
(a) must:
		(1)  pay any premium the excluded employee or dependent 
must pay to receive health insurance under Article 3.77 of this 
code; and
		(2)  provide an excluded employee or dependent with the 
certification required by Section 10(b)(6), Article 3.77, of this 
code.
	(c)  Subsection (b) of this article applies to coverage for a 
dependent only if the small employer health benefit plan provides 
coverage to dependents.  Subsection (b)(1) of this article applies 
to coverage for a dependent only if the small employer pays the 
premium cost for other dependents under the small employer health 
benefit plan.
	(d)  An employee excluded from a small employer health 
benefit plan under this article is not considered an employee of the 
small employer only for the purposes of determining the 75 percent 
participation requirement of Article 26.21.
	(e)  The commissioner shall adopt rules specifying, by 
amount or percentage, what constitutes a substantial increase in 
premium for purposes of Subsection (a) of this article.
	SECTION 3.  This Act takes effect September 1, 2003, and 
applies only to a small employer health benefit plan that is 
delivered, issued for delivery, or renewed on or after January 1, 
2004.  A small employer health benefit plan that is delivered, 
issued for delivery, or renewed before January 1, 2004, is governed 
by the law as it existed immediately before the effective date of 
this Act, and the former law is continued in effect for that 
purpose.