By: Williams S.B. No. 1637

(In the Senate - Filed March 8, 2007; March 21, 2007, read first time and referred to Committee on State Affairs; April 25, 2007, reported favorably by the following vote: Yeas 8, Nays 0; April 25, 2007, sent to printer.)

A BILL TO BE ENTITLED

AN ACT

relating to a small employer health benefit plan premium assistance program.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 1501, Insurance Code, is amended by adding Subchapter I to read as follows:

SUBCHAPTER I. SMALL EMPLOYER PREMIUM ASSISTANCE PROGRAM

Sec. 1501.401. DEFINITION. In this subchapter, "program" means the small employer premium assistance program.

Sec. 1501.402. PROGRAM ESTABLISHED. (a) The department shall implement a small employer premium assistance program to provide financial assistance for the purchase of small employer health benefit plans by small employers.

(b) The department may limit premium payment assistance provided or enrollment under the program to the levels supported by available funding.

Sec. 1501.403. ELIGIBILITY FOR PROGRAM. (a) To be eligible for premium assistance under the program, a small employer:

(1) must employ an average of at least two employees but not more than 25 eligible employees:

(A) on business days during the calendar year preceding the year in which application for participation or renewal of participation in the program is made; or

(B) as determined in the manner described by Section 1501.011(a);

(2) may not have offered health benefit plan coverage to the employer's employees during the 12-month period preceding the date of application; and

(3) must pay at least 50 percent of the premium of each eligible employee's coverage.

(b) A small employer is not eligible for premium assistance under the program if the average annual compensation of the employer's employees, excluding the owner of the small employer, exceeds 300 percent of the federal poverty level, as determined under rules adopted by the commissioner, based on the federal Office of Management and Budget poverty index.

Sec. 1501.404. APPLICATION PROCESS. (a) A small employer may apply to participate in the program in accordance with procedures established by the department.

(b) An applicant employer must provide documentation to verify the applicant's eligibility for the program, including wage information.

Sec. 1501.405. ENROLLMENT. (a) The department shall allocate available opportunities for enrollment in the program to geographic regions of the state based on the percentage of the state's small employers located in each region, as determined by the department.

(b) Within a geographic region, the department shall enroll applicants in the program in the order in which the completed applications are received.

Sec. 1501.406. RENEWAL. Enrollment in the program is valid for a period of one year and may be renewed in accordance with procedures established by the department.

Sec. 1501.407. AMOUNT OF PREMIUM ASSISTANCE. (a) Subject to Subsection (b), the amount of the premium assistance payment for a small employer receiving assistance from the program is $50 for each employee for each month.

(b) The amount of the premium assistance payment for each employee for each month is reduced annually, on renewal, in increments of $15.

Sec. 1501.408. PURCHASE OF SMALL EMPLOYER HEALTH BENEFIT PLAN. A small employer participating in the program shall use the premium assistance to purchase and maintain coverage under a small employer health benefit plan. The small employer may select any small employer health benefit plan available in the small employer market in this state.

Sec. 1501.409. VERIFICATION OF USE OF PREMIUM ASSISTANCE. (a) The department shall verify that small employers participating in the program use premium assistance to purchase and maintain a small employer health benefit plan.

(b) A small employer that fails to use premium assistance as required by this subchapter is liable to the department for the amount of premium assistance provided to the employer that is not used as required by this subchapter.

Sec. 1501.410. RULES. The commissioner, in accordance with Subchapter A, Chapter 36, shall adopt rules necessary to implement this subchapter.

SECTION 2. Subdivision (16), Section 1501.002, Insurance Code, is amended to read as follows:

(16) "Small employer health benefit plan issuer" means a health benefit plan issuer, to the extent that the issuer is offering, delivering, issuing for delivery, or renewing health benefit plans subject to Subchapters C-I [C-H].

SECTION 3. Section 1501.003, Insurance Code, is amended to read as follows:

Sec. 1501.003. APPLICABILITY: SMALL EMPLOYER HEALTH BENEFIT PLANS. An individual or group health benefit plan is a small employer health benefit plan subject to Subchapters C-I [C-H] if it provides health care benefits covering two or more eligible employees of a small employer and:

(1) the employer pays a portion of the premium or benefits;

(2) the employer or a covered individual treats the health benefit plan as part of a plan or program for purposes of Section 106 or 162, Internal Revenue Code of 1986 (26 U.S.C. Section 106 or 162); or

(3) the health benefit plan is an employee welfare benefit plan under 29 C.F.R. Section 2510.3-1(j).

SECTION 4. The commissioner of insurance shall adopt rules as necessary to implement Subchapter I, Chapter 1501, Insurance Code, as added by this Act, not later than December 1, 2007, with initial enrollment in the small employer premium assistance program established by that subchapter beginning on January 1, 2008.

SECTION 5. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2007.

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