78R4998 PB-F

By:  Averitt                                                      S.B. No. 466



A BILL TO BE ENTITLED

AN ACT

relating to reinsurance requirements for certain small employer 
health benefit plans.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Articles 26.02(28)-(34), Insurance Code, as 
amended by Chapters 608 and 823, Acts of the 77th Legislature, 
Regular Session, 2001, are reenacted and amended to read as 
follows:
		(28)  "Risk characteristic" means:                                            
			(A)  a health status related factor;                                         
			(B)  the duration of coverage; or                                            
			(C)  any characteristic similar to a 
characteristic described by Paragraph (A) or (B) of this 
subdivision that is related to the health status or experience of a 
small employer group or of any member of a small employer group.
		[(28)  "Risk-assuming carrier" means a small employer 
carrier that elects not to participate in the system.]
		(29)  "Risk load" means the percentage above the 
applicable base premium rate a small employer carrier charges to a 
small employer to reflect the risk characteristics associated with 
that particular small employer group.
		(30)  [(29)]  "Small employer" means an employer who 
employed an average of at least two employees but not more than 50 
eligible employees on business days during the preceding calendar 
year and who employs at least two employees on the first day of the 
plan year.  For purposes of this definition, a partnership is the 
employer of a partner.  A small employer includes a governmental 
entity subject to Section 1, Chapter 123, Acts of the 60th 
Legislature, Regular Session, 1967 (Article 3.51-3, Vernon's Texas 
Insurance Code), or Article 3.51-1, 3.51-2, 3.51-4, 3.51-5, or 
3.51-5A of this code that otherwise meets the requirements of this 
section.
		(31)  [(30)]  "Small employer carrier" means a health 
carrier, to the extent that that carrier is offering, delivering, 
issuing for delivery, or renewing health benefit plans subject to 
Subchapters C-G of this chapter under Article 26.06(a) of this 
code.
		(32)  [(31)]  "Small employer health benefit plan" 
means a plan developed by the commissioner under Subchapter E of 
this chapter or any other health benefit plan offered to a small 
employer in accordance with Article 26.42(c) or 26.48 of this code.
		(33)  [(32)]  "System" means the Texas Health 
Reinsurance System established under Subchapter F of this chapter.
		(34)  [(33)]  "Waiting period" means a period 
established by an employer that must pass before an individual who 
is a potential enrollee in a health benefit plan is eligible to be 
covered for benefits.
	SECTION 2.  Articles 26.58(a), (c), and (g), Insurance Code, 
are amended to read as follows:
	(a)  A small employer carrier shall [may] reinsure risks 
covered under the small employer health benefit plans with the 
system as provided by this article.
	(c)  A small employer carrier shall [may] reinsure:
		(1)  an entire small employer group not later than the 
60th day after the date on which the group's coverage under the 
small employer health benefit plans takes effect;
		(2)  [.  A small employer carrier may reinsure] an 
eligible employee of a small employer or the employee's dependent 
not later than the 60th day after the date on which that 
individual's coverage takes effect; and
		(3)  a [.  A] newly eligible employee or dependent of a 
reinsured small employer group or an individual covered under the 
small employer health benefit plans [may be reinsured] not later 
than the 60th day after the date on which that individual's coverage 
takes effect.
	(g)  Except as provided in the plan of operation, a reinsured 
carrier shall apply consistently with respect to reinsured [and 
nonreinsured] business all managed care procedures, including 
utilization review, individual case management, preferred provider 
provisions, and other managed care provisions or methods of 
operation.
	SECTION 3.  The following laws are repealed:                                   
		(1)  Article 26.51, Insurance Code;                                           
		(2)  Article 26.52, Insurance Code; and                                       
		(3)  Article 26.58(f), Insurance Code.                                        
	SECTION 4.  This Act takes effect September 1, 2003, and  
applies only to an insurance policy, contract, or evidence of 
coverage delivered, issued for delivery, or renewed on or after 
January 1, 2004.  A policy, contract, or evidence of coverage 
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 that law is continued in effect for 
that purpose.