Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 26.
SMALL EMPLOYER HEALTH INSURANCE REGULATIONS
The Commissioner of Insurance adopts amendments to §§26.4
- 26.11, 26.13, 26.15, 26.16, 26.18 - 26.20, 26.22, 26.24, 26.26, 26.301 -
26.309, 26.311, 26.312, and new §26.14 and §26.27, concerning small
and large employer health insurance regulations. Sections 26.4, 26.7, 26.9,
26.11, 26.13, 26.20, 26.304, 26.306, and 26.307 are adopted with changes to
the proposed text as published in the November 12, 2004, issue of the
This adoption is necessary to implement House Bills 1211, 1217, and 2969
and Senate Bill 881, enacted by the 76th Legislature (1999); House Bills 471,
949, 1440, 1676, and 2382 and Senate Bill 990, enacted by the 77th Legislature
(2001); and House Bills 897 and 1446, and Senate Bills 10 and 541, enacted
by the 78th Legislature (2003). The referenced bills amended provisions of
Insurance Code, Chapter 26, to provide for the availability and affordability
of health insurance for small and large employers; to conform Texas law with
updates to the federal Health Insurance Portability and Accountability Act
of 1996 (HIPAA); and to clarify the scope and meaning of certain provisions
in the rules. In conjunction with the adopted amendments and new sections,
the department is repealing existing §26.14 and §26.27, which is
published elsewhere in this issue of the
Texas Register
. Along with the drafting of language to effect the statutory changes
previously mentioned, some non-substantive style and grammatical changes were
included to enhance the clarity and readability of the rules.
The department changed §26.4(12) to clarify requirements relating
to dependents 25 years of age or older. The department changed §26.4(15)
to state more specifically the circumstances under which a carrier must cover
a sole proprietor, partner, or independent contractor who does not otherwise
qualify as an eligible employee. The department changed §26.7(c) to specify
an employer's responsibility to produce documents evidencing employer/employee
status. The department changed §26.9 to clarify a carrier's obligation
regarding creditable coverage where a waiting period is involved. The department
changed §26.13 to focus the new provision more precisely on objectionable
acts as well as to broaden the scope to include renewal, and to make the timeframe
for an insurer to provide premium rate quotes to employers more workable for
both insurers and employers in their contract negotiations. The department
changed §26.20 to outline clearly the reporting requirements for consumer
choice health benefit plans issued to employer groups. The department changed §26.304(c)
to specify an employer's responsibility to produce documents evidencing employer/employee
status. The department changed §26.306 to clarify a carrier's obligation
regarding creditable coverage where a waiting period is involved. The department
changed §26.307 to focus the new provision more precisely on objectionable
acts as well as to broaden the scope to include renewal.
Section 26.4 amends existing definitions and adds new definitions of terms
relating to small and large employer health coverage. Section 26.5 expands
the scope of the chapter in compliance with HIPAA, and clarifies requirements
relating to minimum group size. Section 26.6 revises procedures and deadlines
and adds new procedures for filing certain certifications. Section 26.7 clarifies
that health carriers may require proof of status as a small employer, provides
examples of reasonable and appropriate supporting documentation, and redefines
open enrollment periods in compliance with recent state legislation. Section
26.8 contains minor changes in compliance with HIPAA as well as new language
explaining a health carrier's option to terminate coverage due to group size
violations. Section 26.9 makes clarifying changes to language and the example
relating to the application of preexisting conditions. Section 26.10 replaces
the term "group size" with "the number of employees and dependents of a small
employer." Section 26.11 revises procedures for filing proposed changes to
rating methodology, amends the procedure for developing and retaining rate
manuals in accordance with recent legislation, replaces the term "group size"
with "the number of employees and dependents of a small employer" in reference
to limits on disparity in rate factors, and requires use of uniform terms
for obtaining information relating to a small employer group. Adopted §26.13
updates references to changes in forms; revises the requirement regarding
offers of standard benefit plans, including a requirement that small employers
must affirm an offer of the plans; prohibits carriers from discriminating
between small employer groups when obtaining information; changes the term
"price quote" to "premium rate quote" and sets out procedures for providing
premium rate quotes; revises the requirement for eliciting information regarding
whether a plan is subject to Insurance Code Chapter 26, Subchapters A - G;
and prohibits retaliation against an agent related to the agent's request
that the carrier issue or renew coverage to a small employer. Section 26.14
sets out requirements for offers of plans; revises continuation and conversion
requirements to conform to new legislation; and contains minor technical changes
in compliance with HIPAA. Section 26.14 contains some provisions from the §26.14
adopted for repeal. Section 26.15 allows nonrenewal of plans not in compliance
with minimum group size requirements, and deletes requirements for conversion
provisions. Section 26.16 adds a subsection clarifying that carriers are subject
to all applicable withdrawal and discontinuation requirements. Section 26.18
revises requirements relating to the election to be a risk-assuming or reinsured
carrier and clarifies requirements for renewal of that election or application
at the end of the election period. Section 26.19 revises and clarifies requirements
related to filing certifications, and revises format requirements for accident
and health policy filings. Section 26.20 clarifies a carrier's obligation
to complete certain forms and revises previous reporting requirements in light
of new requirements to offer consumer choice health benefit plans instead
of prototype policies. Section 26.22 clarifies that March 1 of each year is
the deadline for Private Purchasing Cooperatives to file their statements
of amounts collected and expenses incurred, and changes the reference to a
form that must be filed. Section 26.24 reflects organizational changes within
the department. Section 26.26 updates statutory references due to recodification.
Section 26.27 provides notice as to how required forms may be obtained.
Section 26.301 expands the scope of this chapter in compliance with HIPAA
as well as clarifying requirements relating to minimum group size and a carrier's
option to terminate coverage due to violation of minimum group size requirements.
Section 26.302 revises procedures and deadlines and adds new procedures for
filing certain certifications. Section 26.303 makes minor amendments to comply
with HIPAA and adds language allowing termination for noncompliance with minimum
group size requirements. Section 26.304 clarifies that health carriers may
require proof of status as a large employer and provides examples of reasonable
and appropriate supporting documentation. Section 26.305 redefines open enrollment
periods in compliance with recent state legislation. Section 26.306 clarifies
that the 12 month limitation on preexisting condition provisions may not apply
with regard to certain late enrollees and clarifies language and the example
relating to the application of preexisting conditions. Section 26.307 revises
the requirement for eliciting information regarding whether a plan is subject
to Insurance Code Chapter 26, Subchapters A, C and H, and prohibits retaliation
against an agent related to the agent's request that the carrier issue or
renew coverage to a large employer. Section 26.308 allows nonrenewal of plans
not in compliance with minimum group size requirements. Section 26.309 clarifies
the notification requirements of health carriers withdrawing from the large
employer market. Throughout the sections, including §§26.9, 26.11,
26.306, 26.311 and 26.312, the department made minor changes for clarification;
to correct form, grammar, and citations; and to update examples and references
to form numbers.
General: A commenter states that the legal framework governing the small
employer market is highly complex, and contends that the more complex the
requirements become, the less the true marketplace governs insurance. The
commenter also states that the more complexity in regulation, the less likely
it will be that new entrants will begin offering coverage. The commenter requests
that the department keep the marketplace in mind to help encourage availability
of coverage.
Agency Response: The department was created by the Texas Legislature, and
its duties derive from statute. Section 31.002 of the Insurance Code, for
example, requires the department to regulate the business of insurance in
this state, and accordingly the department takes marketplace conditions into
account in every discretionary decision. The statute continues, however, by
specifically requiring the department to execute the laws of the state regarding
insurance and insurance companies. Moreover, §31.021 requires the commissioner
to administer and enforce the insurance laws of this state, as well as other
laws granting jurisdiction or applicable to the department or the commissioner.
The great majority of the proposed changes fall within this legislative direction--administering
and enforcing the insurance laws of this state. The department, however, is
always monitoring access to health benefit plan coverage and is always open
to actions which will increase that access, no matter their source or nature.
§26.4(12): A commenter is concerned about the amendment to the definition
of "dependent," which includes a child who is a full-time student age 25 or
older as described in Insurance Code Article 21.24-2. The commenter is concerned
that the definition may be interpreted to require continued coverage of all
full-time students over 25, and asks for clarification that the reference
to this statute applies only if full-time students over age 25 are to be covered
by the health benefit plan.
Agency Response: Insurance Code Article 21.24-2 does not mandate coverage
for full-time students over the age of 25. It sets out certain requirements
of a health benefit plan that conditions coverage for a child 25 years of
age or older on the child's being a full-time student at an educational institution.
The department has substituted "as required by" for "described in" to clarify
this point.
§26.4(15): Some commenters request that the department revise the
definition of "Eligible Employee" to include an owner or employee who works
on a full time basis.
Agency Response: The department declines to make this change. An owner
of a business is an employee if he has legal status as an employee. To deem
him an employee in all cases, regardless of the relevant facts, would create
a class not authorized by Insurance Code Article 26.02. Note that under the
definition of eligible employee, certain classes of owners (i.e. sole proprietors
and partners) may still be entitled to coverage regardless of their status
as an "eligible employee." See Commissioner's Bulletin B-0043-04 for more
detail.
§26.4(15): Several commenters request language clarifying the requirements
for coverage of a sole proprietor, partner, or independent contractor who
does not usually work 30 hours per week and thus qualify as an eligible employee.
Some commenters request specific language indicating that there must be two
other employees covered to qualify such employees for coverage. Another commenter
notes that the proposed amendment to the definition makes irrelevant the number
of hours an independent contractor, sole proprietor or partner works weekly.
The commenter states that this qualification creates an internal inconsistency
in the definition and may reduce the meaning of the term, with regard to these
three classes of individuals, to someone who works only on a sporadic basis,
which could promote fraud.
Some commenters suggest that the department should not amend the definition
of "Eligible Employee" and instead should add a new section to specifically
address sole proprietors, independent contractors, or partners. One commenter
urges that the proposed revision could be interpreted to conflict with Commissioner's
Bulletin B-0043-04 and require coverage of an employer with only one eligible
employee and one non-working sole proprietor.
Agency Response: The department agrees with commenters and has added language
to clarify that an employer plan must cover at least two other eligible employees
before it must cover a sole proprietor, partner, or independent contractor
who does not otherwise qualify as an eligible employee. The department believes
the amendment addresses this issue sufficiently and declines to add a separate
section to address the rights of these individuals.
The number of hours an independent contractor, sole proprietor or partner
works weekly is irrelevant to the individual's status as an eligible employee,
but the amendment to the definition does not create that result. While an
employee must generally be full-time and usually work 30 hours per week to
be eligible, the legislature has deemed these three classes of individuals
eligible solely because they are included in the health benefit plan of a
small or large employer. The statute does not make them subject to the 30
hour per week requirement, nor does it suggest an alternative standard. Regardless
of the consequences the commenter suggests, the department does not have discretion
to alter this legislative directive.
§26.4(18): A commenter seeks clarification of the meaning of family
history and queried why it is related to genetic information. Another commenter
asserts that use of family history information is generally considered subjective
in nature and contends that the use of family history appears to contradict
Insurance Code Article 21.73, which specifically requires genetic information
to be based upon scientific determination or testing; both of which are purely
objective findings. Another commenter suggests that including family history
in this definition is beyond the statute.
A commenter points out that the terms "risk characteristic" and "risk load,"
in Article 26.02(29) and (30) do not include genetic information as does the
proposed amendment to 28 TAC §26.4. The proposed exclusion of "genetic
information" in these terms is incompatible with the definition of "risk characteristic,"
which relies on the definition of "health status related factor," in Article
26.02(13)(F), which itself specifically includes genetic information. Also,
as written, Article 26.32(d) permits a carrier to adjust the second step premium
rate by the "risk load" of the particular group. Article 26.02(30), as noted
above, defines "risk load" to include genetic information due to the ultimate
use of the definition's reliance upon the meaning of "health status related
factor."
Another commenter urges adoption of the proposed amended definition because
the commenter believes that the statute clearly contemplates that genetic
information is not limited to results of a genetic test but also includes
the "presence or absence in an individual of a genetic characteristic."
Agency Response: Insurance Code Article 26.04 directs the commissioner
to adopt rules as necessary to meet the minimum requirements of federal law
and regulations. HIPAA interim regulations include "family histories" within
the definition of genetic information at 45 CFR §144.103; 29 CFR §2590.701-2;
and 26 CFR §54.9801-2T. Accordingly, the department declines to make
the change the commenters suggest.
Staff proposed the changes to the definitions of "risk characteristic"
and "risk load" consistent with the enactment of Article 21.73, which prohibits
a group health benefit plan issuer from using genetic information to reject,
deny, limit, cancel, refuse to renew, increase the premiums for, or otherwise
adversely affect eligibility for or coverage under a group health benefit
plan. Accordingly, the department declines to change the language that was
proposed for these definitions.
§26.4(42) and §26.13(e): Regarding the proposed definition of
"Premium Rate Quote" and the requirements of §26.13(e) regarding issuance
of a premium rate quote, a commenter observes that the industry practice is
to give an initial premium estimate pending completion of the application
and enrollment forms. Another commenter points out that many employers request
such an estimate before deciding to complete the required application and
employee health questionnaires necessary for a formal quote, but suggests
that the proposed new definition implies that the quote given will be the
final premium rate for the policy. The commenter requests that Texas Department
of Insurance clarify whether the new definition and revised provisions would
prohibit the practice of providing preliminary quotes and whether such a preliminary
quote would be subject to the deadlines for response in the proposed regulation.
Another commenter urges that the deadline of five business days for requesting
the documents and information necessary to issue a binding quote is not adequate.
The commenter asserts that although a carrier can underwrite the majority
of cases based on employee enrollment forms and the employer application,
some cases require the review of medical records and other information to
underwrite and price the case accurately. The commenter states that the carrier
may not be able to identify the addition information needed until it has reviewed
the documents it received from the employer, at which point the carrier would
request the additional information or documents. Once the carrier obtains
the additional information, it may adjust the premium rate adequately to reflect
the appropriate risk.
The commenter is concerned that the new language suggests that the carrier
would have only one opportunity to request the required information and would,
after receipt of the information, have to issue a final premium rate for the
policy. This quote necessarily would be based on the partial information the
carrier had been able to obtain and would most likely result in a higher rate
than might otherwise apply due to the carrier acting to protect against the
potential of unknown health conditions. The commenter suggests that rates
could be lower if carriers have sufficient time to ascertain the actual health
and composition of the group.
The commenter recommends changing the time period in which a carrier must
request additional information and documents to at least 15 business days
from the date of the carrier's receipt of a request for a formal rate quote
and changing the deadline for the final quote to be given to 10 business days
from the date the complete information is received.
Agency Response: The proposed definition of "premium rate quote" uses the
language "offers and will accept to make coverage effective." The department
understands the cited industry practice of providing preliminary estimates
for the convenience of prospective customers and does not intend to disrupt
the good faith use of that practice. At the same time, gathering the information
needed for a formal rate quote should be expeditious and predictable, and
the carrier must communicate to a prospective customer when it is presenting
a quote that the prospective customer can rely on as the price that will effect
coverage. To address the concern that carriers might quote unnecessarily high
prices because of the timeframes in the proposal, the department has adopted
changes to §26.13(e) to clarify that a small employer carrier shall provide
a premium rate quote within 15 business days of receiving a small employer's
completed application for coverage and individual enrollment forms; that the
carrier may request certain additional information necessary to provide the
premium rate quote; that such request tolls the running of the 15-day period
until receipt of the requested additional information; and that a small employer
carrier may provide an estimated cost of coverage so long as the carrier makes
clear that the estimate is not a premium rate quote.
§26.4: A commenter suggests that the department should adopt definitions
for "private purchasing cooperative" and "small employer health coalition."
The commenter also notes that the term "Health Group Cooperative" is not defined
and suggested adding a definition stating it is a group formed under 28 TAC §26.401
and indicating the necessary elements for the definition.
Agency Response: Although the commenter notes that the rule does not specifically
define these terms, Article 26.02(32-a) defines "small employer health coalition."
The statutes which create and govern private purchasing cooperatives and health
group cooperatives, primarily Articles 26.14 and 26.14A, also provide meaning
for these terms. The department has not seen evidence of confusion as to the
meaning of these terms to the extent that adding definitions for them in the
rule would be useful. The department therefore declines to define them but
will continue to monitor the cooperative market and address these issues in
the future as needed.
§26.6(c)(1) and (2); §26.302: Commenters note the proposal requires
a map of geographic service areas and requested that the adopted regulations
not require an actual map of the state of Texas, when the service area for
a carrier is the entire state. Another commenter requests that the department
clarify the requirement that a carrier list zip codes would not apply when
the service area is the entire state.
Agency Response: While the proposal alters the language of the section,
the department notes that the existing rule already contains the requirement
to provide a map in certain circumstances, as well as an exemption from providing
additional documentation if the service area comprises the entire state. "Other
documentation" includes both the required map and the required list of ZIP
codes, thus the rule--existing or as proposed--does not require either when
the geographic service area is the entire state. The department thus declines
to revise the rule in response to this comment.
§26.7(c) and §26.304(c): One commenter suggests that the examples
of information requests that were included in the proposal should include
all of the information a carrier may request under the health group cooperatives/coalitions
requirements to avoid the appearance of a conflict. Another commenter believes
the language of the proposal could be interpreted to mean that production
of any single document on the example list will be sufficient to prove status
as a small employer. The commenter emphasizes that an invoice alone is not
sufficient to verify legitimate employer status, and believes that an incorrect
interpretation of the rule could promote fraud by non-employers attempting
to obtain employer coverage. The commenter recommends revising the section
to state, "A small employer carrier may not condition the issuance of coverage
on an employer's production of a particular document, where the employer can
otherwise provide information requested by the small employer carrier in accordance
with this section."
Agency Response: The adopted rule includes language changes that address
the commenters’ concerns about documents evidencing employer/employee
status. With regard to the information a carrier may request to determine
whether a cooperative exists, Article 26.14 sets out a specific list of documents
that an entity must obtain to qualify as a cooperative. Accordingly, the department
does not believe it is necessary to relist those documents in this provision.
§26.9(a)(14): A commenter believes that existing rules are not clear
about how to administer partial credits for creditable coverage when the member
is subject to a waiting period and requests that the department add another
example that addresses waiting periods.
Agency Response: The example the commenter submitted would begin the preexisting
condition exclusion period at the end of the waiting period. Federal law states
that where a plan imposes a waiting period, the waiting period runs concurrently
with any preexisting condition exclusion period. HIPAA interim rules, p. 16897.
The department thus declines to include the submitted example.
To illustrate this principle, assume an individual with six months of creditable
coverage enrolls in his new employer's plan on January 1, 2005; that the plan
imposes a 90-day waiting period; and that the carrier imposes a 12-month preexisting
condition exclusion.
The waiting period and preexisting condition exclusion period both begin
to run concurrently on January 1, 2005, and the waiting period expires on
April 2, 2005. The effective date of coverage is April 3, 2005. The preexisting
condition exclusion period must by law expire no later than December 31, 2005,
so reducing it by six months for the employee's credit will cause it to end
on June 30, 2005.
In reviewing the rule in response to the comment, the department noted
some inconsistency in the rule's treatment of these situations, as well as
with the use of the term "effective date." Section 26.4(14) defines "effective
date" to be the first day of coverage under a health benefit plan, or, if
there is a waiting period, the first day of the waiting period. In response
to the comment and to comply with federal law, the department has revised
the rule in several places. First, the department revised §26.9 to add
a new paragraph (3), which is substantively the same provision that governs
large employer plans at §26.306(b). These provisions prohibit a preexisting
condition provision in an employer health benefit plan generally from applying
to expenses incurred on or after the expiration of the 12 months following
the initial effective date of coverage. As the rule defines effective date,
that 12 month period begins to run on the first day of any waiting period.
The department has also deleted the term "initial" from §26.306(b) as
it is redundant. There is only one effective date of coverage. If there is
no waiting period, it is the actual effective date of coverage. If there is
a waiting period, it is the first day of the waiting period.
While the department is not changing these provisions, it is important
to clarify the effect of §26.9(a)(13) and §26.306(g). These two
provisions also use the term effective date, and they require a carrier to
credit the time an individual was covered under creditable coverage if the
previous coverage was in effect at any time during the 12 months preceding
that effective date. The department has heard reports that some carriers are
dating the 12 month look-back period from the first day after the waiting
period expires. Where a plan includes a waiting period, this 12-month look-back
period must date from the first day of the waiting period.
The other change the department has made to the rule involves the six-month
period prior to the effective date of coverage which a carrier may examine
to determine whether an individual has a preexisting condition. Consistent
with the other applications discussed previously, this period begins on the
effective date of coverage, and the department has revised §26.9(a)(9)
and §26.306(c) to eliminate duplicative language and express this standard
consistent with the rule's definition of "effective date." The previous rule
defined a six-month period before the earlier of the (A) effective date of
coverage; or (B) the first day of the waiting period. Since the rule defines
effective date to be the earlier of these two dates, this repetition is unnecessary
and the department has revised the rule in these two places to reflect only
the term "effective date."
§26.11(d): A commenter notes that Chapter 26 throughout references
group size as being the total number of employees and dependents, queries
whether a carrier must count dependents when determining the employer's group
size, and if so, seeks explanation as to how this requirement correlates with
the statutory definitions of a small and large employer.
Agency Response: The changes to the rule reflect changes in terminology
made by statute regarding particular calculations such as case characteristics.
The usage of this new phrase in both rule and statute does not affect the
determination of whether an employer is a small or large employer.
§26.13(d): Commenters suggest that the proposed requirement that carriers
obtain a signature regarding the offer of a consumer choice plan is duplicative,
as the consumer choice regulation already requires a carrier to obtain affirmation
that it offered the employer a plan with mandates, and creates a new and unnecessary
administrative burden on the carrier.
Agency Response: The department disagrees because this provision merely
references the existing requirement in the consumer choice plan regulation.
It does not add a new requirement, nor does it require a second signature.
The department thus declines to make the change the commenter requests.
§26.13(k): A commenter observes that the proposal adds a requirement
that the carrier determine if the employer's plan is an ERISA plan, which
appears to require resubmission of all small employer application forms for
this change. The commenter requests removal of this language because it creates
an administrative burden on the carriers.
Agency Response: The department believes that the addition of Insurance
Code Article 26.06(a)(3) created the requirement for a carrier to determine
if an employer's plan is an ERISA plan and thus declines to make the change
the commenter requests.
§26.13(n) and §26.307(g): A commenter expresses concern that
proposed subsection (n) is overly broad and could be interpreted to prohibit
termination of an agent for a valid reason. The commenter requests that the
department insert "except for a violation of applicable law" after "any reason."
Another commenter notes that the current statute and regulation clearly
specify the wrongful acts of terminating an agent or nonrenewing the agent's
contract--which are very specific actions that leave no room for interpretation.
The commenter requests that the department provide examples of what it believes
constitute "any other negative action," phrased in a manner to include such
examples without limiting the actions to the stated examples.
Another commenter believes this proposed language is overly broad and could
be interpreted to prohibit termination of an agent for valid reasons including
but not limited to violation of applicable insurance laws or misconduct by
an agent. The commenter recommends that the department delete the phrase "any
reason related to" from the regulation. The commenter believes the regulation
so revised would still prohibit a carrier from terminating an agent for requesting
the carrier to issue a health benefit plan, while at the same time providing
carriers the ability to terminate an agent for illegal and/or inappropriate
conduct.
Agency Response: The department agrees with commenters regarding the scope
of the proposal and has deleted the phrase "any reason related to" from the
adopted rule. To give the rule greater effect, the department has also added
the term "or renew" following "issue" in both provisions. With regard to what
constitutes "any other negative action," the listed examples fairly represent
common types of negative action, but others may arise on a case-by-case basis.
The department intends the rule to give effect to the spirit of Article 26.72,
i.e., a negative action would include an action having an adverse effect on
an agent that would tend to reduce access to small employer health benefit
plans. While the department declines to provide additional examples of what
constitutes "any other negative action," the department will continue to monitor
agent and carrier relationships and address this issue in the future as needed.
§26.15 and §26.308: A commenter requests that the department
revise these sections, which address renewability of coverage for small and
large employer plans, to allow insurers to make changes to plan benefits as
long as changes are made on a uniform and consistent basis. The commenter
states that the department's interpretation of the HIPAA guaranteed renewability
provision is burdensome on the industry because it requires indefinite maintenance
of multiple plan designs. The commenter contends that carriers typically develop
new products every several years in order to keep benefit plans affordable
and to maintain competitiveness, and that allowing carriers to keep policy
designs consistent among existing and new policyholders allows for easier
administration and claims adjudication.
Agency Response: Insurance Code Article 26.23 precludes the change requested
by the commenter. Moreover, authorizing carriers to unilaterally alter the
terms of contracts would significantly dilute the meaning and importance of
guaranteed renewability. The department also notes that Article 26.23 does
not require a carrier to indefinitely maintain multiple plan designs, nor
prevent it from keeping policy designs consistent among existing and new policyholders.
The statute merely requires it to obtain policyholder approval to make such
changes. Should a carrier be unable to obtain policyholder approval, Article
26.24 also provides the carrier the ability to keep policy designs consistent.
§26.20(b)(3): A commenter objects to the proposal that would require
the filing of copies of the three most popular consumer choice plans with
the annual small employer filing, based on the sheer number of pages for such
copies. The commenter also objects to the requirement to identify the three
most popular consumer choice plans and the number of employers and employees
covered by each. The commenter believes that revealing that information would
put a carrier, particularly one that has devoted considerable time, resources
and expense to developing consumer choice plans, at a competitive disadvantage,
asserting that if a company's information is readily available through Texas
Department of Insurance, a competitor could save the expense and time of development
and merely duplicate the first company's most popular plan. The commenter
suggests that, in the alternative, the rule require the filing of one of a
company's three most popular plans, with a copy of the form, but without the
number of employers or employees covered under that plan.
Agency Response: The department has changed the rule to require a copy
of the exact certificate of coverage for each of the three most frequently
issued consumer choice plans. Carriers that wish the department to treat the
filing as confidential should indicate that preference with the filing.
§26.303: A commenter suggests that since this provision applies to
large employers, the subsection (k) reference to the small employer group
rule §26.5(a) could lead to confusion. The commenter requests that the
department clarify in the adoption order that the minimum size requirement
in this subsection applies to large employer groups.
Agency Response: While the minimum size requirement in §26.5(a) applies
specifically to small employer groups, §26.202 incorporates that requirement
by reference and applies it to large employer groups as well. While the odds
of a large employer falling below the minimum group size requirement are considerably
less than the odds of a two-eligible employee group doing so, the possibility
exists nonetheless. Since federal law requires renewal of a large employer's
plan even if the group's size drops below 51 eligible employees, it is important
to clarify that there is a minimum threshold which large employers and small
employers alike must meet to continue to qualify for coverage.
For--Office of Public Insurance Counsel.
For, with changes--American Medical Security; Long, Burner, Parks and DeLargy;
Scott & White Health Plan; Texas Association of Health Plans; Texas Association
of Life and Health Insurers; Unicare, Inc., Humana, Inc., and several individuals,
some of whom are insurance agents.
Subchapter A. SMALL EMPLOYER HEALTH INSURANCE PORTABILITY AND AVAILABILITY ACT REGULATIONS
28 TAC §§26.4 - 26.11, 26.13 - 26.16, 26.18 - 26.20, 26.22, 26.24, 26.26, 26.27
The amendments and new sections are adopted under Insurance
Code Article 26.04, HIPAA, and Insurance Code §36.001. Chapter 26 of
the Insurance Code implements provisions regarding small and large employers
which were necessary to comply with the federal requirements contained in
HIPAA. Article 26.04 requires the commissioner to adopt rules as necessary
to implement the Insurance Code, Chapter 26, and to meet the minimum requirements
of federal law and regulations which, for small and large employer health
carriers, are contained in HIPAA. Federal agencies have adopted regulations
implementing HIPAA as follows: Department of the Treasury, 26 CFR Part 54;
Department of Labor, 29 CFR Part 2590; and Department of Health and Human
Services, 45 CFR Part 144 and Part 146. As identified in the Introduction,
portions of the Federal Regulations are included in these rules as necessary
to meet the minimum requirements of federal law. Section 36.001 provides that
the Commissioner of Insurance may adopt any rules necessary and appropriate
to implement the powers and duties of the Texas Department of Insurance under
the Insurance Code and other laws of this state.
§26.4.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise.
(1)
Actuary--A qualified actuary who is a member in good standing
of the American Academy of Actuaries.
(2)
Affiliation period--A period of time that under the terms
of the coverage offered by an HMO, must expire before the coverage becomes
effective. During an affiliation period an HMO is not required to provide
health care services or benefits to the participant or beneficiary and a premium
may not be charged to the participant or beneficiary.
(3)
Agent--A person who may act as an agent for the sale of
a health benefit plan under a license issued under the Insurance Code, Chapter
21.
(4)
Base premium rate--For each class of business and for a
specific rating period, the lowest premium rate that is charged or that could
be charged under a rating system for that class of business by the small employer
carrier to small employers with similar case characteristics for small employer
health benefit plans with the same or similar coverage.
(5)
Case characteristics--With respect to a small employer,
the geographic area in which that employer's employees reside, the age and
gender of the individual employees and their dependents, the appropriate industry
classification as determined by the small employer carrier, the number of
employees and dependents, and other objective criteria as established by the
small employer carrier that are considered by the small employer carrier in
setting premium rates for that small employer. The term does not include health
status related factors, duration of coverage since the date of issuance of
a health benefit plan, or whether a covered person is or may become pregnant.
(6)
Child--An unmarried natural child of the employee, including
a newborn child; adopted child, including a child as to whom an insured is
a party in a suit seeking the adoption of the child; natural child or adopted
child of the employee's spouse.
(7)
Class of business--All small employers or a separate grouping
of small employers established under the Insurance Code, Chapter 26, Subchapters
A-G.
(8)
Commissioner--The commissioner of insurance.
(9)
Consumer choice health benefit plan--A health benefit plan
authorized by Insurance Code Article 3.80 or Article 20A.09N.
(10)
Creditable coverage--
(A)
An individual's coverage is creditable for purposes of
this chapter if the coverage is provided under:
(i)
a self-funded or self-insured employee welfare benefit
plan that provides health benefits and that is established in accordance with
the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001
et seq.);
(ii)
a group health benefit plan provided by a health insurance
carrier or an HMO;
(iii)
an individual health insurance policy or evidence of
coverage;
(iv)
Part A or Part B of Title XVIII of the Social Security
Act (42 U.S.C. Section 1395c et seq.);
(v)
Title XIX of the Social Security Act (42 U.S.C. Section
1396 et seq., Grants to States for Medical Assistance Programs), other than
coverage consisting solely of benefits under Section 1928 of that Act (42
U.S.C. Section 1396s, Program for Distribution of Pediatric Vaccines);
(vi)
Chapter 55 of Title 10, United States Code (10 U.S.C.
Section 1071 et seq.);
(vii)
a medical care program of the Indian Health Service or
of a tribal organization;
(viii)
a state or political subdivision health benefits risk
pool;
(ix)
a health plan offered under Chapter 89 of Title 5, United
States Code (5 U.S.C. Section 8901 et seq.);
(x)
a public health plan as defined in this section;
(xi)
a health benefit plan under Section 5(e) of the Peace
Corps Act (22 U.S.C. Section 2504(e)); and
(xii)
short-term limited duration insurance as defined in this
section.
(B)
Creditable coverage does not include:
(i)
accident-only, disability income insurance, or a combination
of accident-only and disability income insurance;
(ii)
coverage issued as a supplement to liability insurance;
(iii)
liability insurance, including general liability insurance
and automobile liability insurance;
(iv)
workers' compensation or similar insurance;
(v)
automobile medical payment insurance;
(vi)
credit only insurance;
(vii)
coverage for onsite medical clinics;
(viii)
other coverage that is similar to the coverage described
in this subsection under which benefits for medical care are secondary or
incidental to other insurance benefits and specified in federal regulations;
(ix)
if offered separately, coverage that provides limited
scope dental or vision benefits;
(x)
if offered separately, long-term care coverage or benefits,
nursing home care coverage or benefits, home health care coverage or benefits,
community based care coverage or benefits, or any combination of those coverages
or benefits;
(xi)
if offered separately, coverage for limited benefits specified
by federal regulation;
(xii)
if offered as independent, noncoordinated benefits, coverage
for specified disease or illness;
(xiii)
if offered as independent, noncoordinated benefits,
hospital indemnity or other fixed indemnity insurance; or
(xiv)
Medicare supplemental health insurance as defined under
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss), coverage
supplemental to the coverage provided under Chapter 55 of Title 10, United
States Code (10 U.S.C. Section 1071 et seq.), and similar supplemental coverage
provided under a group plan, but only if such insurance or coverages are provided
under a separate policy, certificate, or contract of insurance.
(11)
Department--The Texas Department of Insurance.
(12)
Dependent--A spouse; newborn child; child under the age
of 25 years; child of any age who is medically certified as disabled and dependent
on the parent; any person who must be covered under Insurance Code Article
3.51-6, §3D or §3E, or the Insurance Code Article 3.70-2(L); and
any other child included as an eligible dependent under an employer's benefit
plan, including a child who is a full-time student as required by Insurance
Code Article 21.24-2 and §11.506(19) of this title (relating to Mandatory
Contractual Provisions: Group, Individual and Conversion Agreement and Group
Certificate).
(13)
DNA--Deoxyribonucleic acid.
(14)
Effective date--The first day of coverage under a health
benefit plan, or, if there is a waiting period, the first day of the waiting
period.
(15)
Eligible employee--An employee who works on a full-time
basis and who usually works at least 30 hours a week. The term also includes
a sole proprietor, a partner, and an independent contractor, if the sole proprietor,
partner, or independent contractor is included as an employee under a health
benefit plan of a small or large employer, regardless of the number of hours
the sole proprietor, partner, or independent contractor works weekly, but
only if the plan includes at least two other eligible employees who work on
a full-time basis and who usually work at least 30 hours a week. The term
does not include:
(A)
an employee who works on a part-time, temporary, seasonal
or substitute basis; or
(B)
an employee who is covered under:
(i)
another health benefit plan;
(ii)
a self-funded or self-insured employee welfare benefit
plan that provides health benefits and that is established in accordance with
the Employee Retirement Income Security Act of 1974 (29 United States Code, §§1001,
et seq.);
(iii)
the Medicaid program if the employee elects not to be
covered;
(iv)
another federal program, including the TRICARE program
or Medicare program, if the employee elects not to be covered; or
(v)
a benefit plan established in another country if the employee
elects not to be covered.
(16)
Employee--Any individual employed by an employer.
(17)
Franchise insurance policy--An individual health benefit
plan under which a number of individual policies are offered to a selected
group of a small or large employer. The rates for such a policy may differ
from the rate applicable to individually solicited policies of the same type
and may differ from the rate applicable to individuals of essentially the
same class.
(18)
Genetic information--Information derived from the results
of a genetic test or from family history.
(19)
Genetic test--A laboratory test of an individual's DNA,
RNA, proteins, or chromosomes to identify by analysis of the DNA, RNA, proteins,
or chromosomes the genetic mutations or alterations in the DNA, RNA, proteins,
or chromosomes that are associated with a predisposition for a clinically
recognized disease or disorder. The term does not include:
(A)
a routine physical examination or a routine test performed
as a part of a physical examination;
(B)
a chemical, blood or urine analysis;
(C)
a test to determine drug use; or
(D)
a test for the presence of the human immunodeficiency virus.
(20)
HMO--Any person governed by the Texas Health Maintenance
Organization Act, Insurance Code, Chapters 20A and 843, including:
(A)
a person defined as a health maintenance organization under
the Texas Health Maintenance Organization Act;
(B)
an approved nonprofit health corporation that is certified
under §162.001 Texas Occupations Code, and that holds a certificate of
authority issued by the commissioner under Insurance Code Article 21.52F;
(C)
a statewide rural health care system under Insurance Code,
Chapter 845 that holds a certificate of authority issued by the commissioner
under Insurance Code, Chapter 843; or
(D)
a nonprofit corporation created and operated by a community
center under Chapter 534, Subchapter C, Health and Safety Code.
(21)
Health benefit plan--A group, blanket, or franchise insurance
policy, a certificate issued under a group policy, a group hospital service
contract, or a group subscriber contract or evidence of coverage issued by
a health maintenance organization that provides benefits for health care services.
The term does not include the following plans of coverage:
(A)
accident-only or disability income insurance or a combination
of accident-only and disability income insurance;
(B)
credit-only insurance;
(C)
disability insurance coverage;
(D)
coverage for a specified disease or illness;
(E)
Medicare services under a federal contract;
(F)
Medicare supplement and Medicare Select policies regulated
in accordance with federal law;
(G)
long-term care coverage or benefits, nursing home care
coverage or benefits, home health care coverage or benefits, community-based
care coverage or benefits, or any combination of those coverages or benefits;
(H)
coverage that provides limited-scope dental or vision benefits;
(I)
coverage provided by a single-service health maintenance
organization;
(J)
coverage issued as a supplement to liability insurance;
(K)
insurance coverage arising out of a workers' compensation
or similar insurance;
(L)
automobile medical payment insurance coverage;
(M)
jointly managed trusts authorized under 29 United States
Code §§141 et seq. that contain a plan of benefits for employees
that is negotiated in a collective bargaining agreement governing wages, hours,
and working conditions of the employees that is authorized under 29 United
States Code §157;
(N)
hospital indemnity or other fixed indemnity insurance;
(O)
reinsurance contracts issued on a stop-loss, quota-share,
or similar basis;
(P)
short-term limited duration insurance as defined in this
section;
(Q)
liability insurance, including general liability insurance
and automobile liability insurance;
(R)
coverage for onsite medical clinics; or
(S)
coverage that provides other limited benefits specified
by federal regulations; or
(T)
other coverage that is:
(i)
similar to the coverage described in subparagraphs (A)
- (S) of this paragraph under which benefits for medical care are secondary
or incidental to other insurance benefits; and
(ii)
specified in federal regulations.
(22)
Health carrier--Any entity authorized under the Insurance
Code or another insurance law of this state that provides health insurance
or health benefits in this state including an insurance company, a group hospital
service corporation under Insurance Code, Chapter 842, an HMO, and a stipulated
premium company under Insurance Code, Chapter 844.
(23)
Health insurance coverage--Benefits consisting of medical
care (provided directly, through insurance or reimbursement, or otherwise)
under any hospital or medical service policy or certificate, hospital or medical
service plan contract, or HMO contract.
(24)
Health status related factor--Health status; medical condition,
including both physical and mental illnesses; claims experience; receipt of
health care; medical history; genetic information; evidence of insurability,
including conditions arising out of acts of domestic violence; and disability.
(25)
Index rate--For each class of business as to a rating
period for small employers with similar case characteristics, the arithmetic
average of the applicable base premium rate and corresponding highest premium
rate.
(26)
Large employer--An employer who employed an average of
at least 51 eligible employees on business days during the preceding calendar
year and who employs at least two employees on the first day of the policy
year. For purposes of this definition, a partnership is the employer of a
partner.
(27)
Large employer carrier--A health carrier, to the extent
that carrier is offering, delivering, issuing for delivery, or renewing health
benefit plans subject to Insurance Code, Chapter 26, Subchapters A and H.
(28)
Large employer health benefit plan--A health benefit plan
offered to a large employer.
(29)
Late enrollee--Any employee or dependent eligible for
enrollment who requests enrollment in a small or large employer's health benefit
plan after the expiration of the initial enrollment period established under
the terms of the first plan for which that employee or dependent was eligible
through the small or large employer or after the expiration of an open enrollment
period under Insurance Code Article 26.21(h) or 26.83(f), who does not fall
within the exceptions listed below, and who is accepted for enrollment and
not excluded until the next open enrollment period. An employee or dependent
eligible for and requesting enrollment cannot be excluded until the next open
enrollment period and, when enrolled, is not a late enrollee, in the following
special circumstances:
(A)
the individual:
(i)
was covered under another health benefit plan or self-funded
employer health benefit plan at the time the individual was eligible to enroll;
(ii)
declines in writing, at the time of initial eligibility,
stating that coverage under another health benefit plan or self-funded employer
health benefit plan was the reason for declining enrollment;
(iii)
has lost coverage under another health benefit plan or
self-funded employer health benefit plan as a result of the termination of
employment, the reduction in the number of hours of employment, the termination
of the other plan's coverage, the termination of contributions toward the
premium made by the employer; or the death of a spouse, or divorce; and
(iv)
requests enrollment not later than the 31st day after
the date on which coverage under the other health benefit plan or self-funded
employer health benefit plan terminates;
(B)
the individual is employed by an employer who offers multiple
health benefit plans and the individual elects a different health benefit
plan during an open enrollment period;
(C)
a court has ordered coverage to be provided for a spouse
under a covered employee's plan and the request for enrollment is made not
later than the 31st day after the date on which the court order is issued;
(D)
a court has ordered coverage to be provided for a child
under a covered employee's plan and the request for enrollment is made not
later than the 31st day after the date on which the employer receives the
court order or notification of the court order;
(E)
the individual is a child of a covered employee and has
lost coverage under Chapter 62, Health and Safety Code, Child Health Plan
for Certain Low-Income Children or Title XIX of the Social Security Act (42
U.S.C. §§1396, et seq., Grants to States for Medical Assistance
Programs), other than coverage consisting solely of benefits under Section
1928 of that Act (42 U.S.C. §1396s, Program for Distribution of Pediatric
Vaccines);
(F)
the individual has a change in family composition due to
marriage, birth of a child, adoption of a child, or because an insured becomes
a party in a suit for the adoption of a child;
(G)
an individual becomes a dependent due to marriage, birth
of a newborn child, adoption of a child, or because an insured becomes a party
in a suit for the adoption of a child; and
(H)
the individual described in subparagraphs (E), (F) and
(G) of this paragraph requests enrollment no later than the 31st day after
the date of the marriage, birth, adoption of the child, loss of the child's
coverage, or within 31 days of the date an insured becomes a party in a suit
for the adoption of a child.
(30)
Limited scope dental or vision benefits--Dental or vision
benefits that are sold under a separate policy or rider and that are limited
in scope to a narrow range or type of benefits that are generally excluded
from hospital, medical, or surgical benefits contracts.
(31)
Medical care--Amounts paid for:
(A)
the diagnosis, cure, mitigation, treatment, or prevention
of disease, or amounts paid for the purpose of affecting any structure or
function of the body;
(B)
transportation primarily for and essential to the medical
care described in subparagraph (A) of this paragraph; or
(C)
insurance covering medical care described in either subparagraph
(A) or (B) of this paragraph.
(32)
Medical condition--Any physical or mental condition including,
but not limited to, any condition resulting from illness, injury (whether
or not the injury is accidental), pregnancy, or congenital malformation. Genetic
information in the absence of a diagnosis of the condition related to such
information shall not constitute a medical condition.
(33)
New business premium rate--For each class of business
as to a rating period, the lowest premium rate that is charged or offered
or that could be charged or offered by the small employer carrier to small
employers with similar case characteristics for newly issued small employer
health benefit plans that provide the same or similar coverage.
(34)
New entrant--An eligible employee, or the dependent of
an eligible employee, who becomes part of or eligible for a small or large
employer group after the initial period for enrollment in a health benefit
plan. After the initial enrollment period, this includes any employee or dependent
who becomes eligible for coverage and who is not a late enrollee.
(35)
Participation criteria--Any criteria or rules established
by a large employer to determine the employees who are eligible for enrollment,
including continued enrollment, under the terms of a health benefit plan.
Such criteria or rules may not be based on health status related factors.
(36)
Person--An individual, corporation, partnership, or other
legal entity.
(37)
Point-of-service coverage (POS coverage)--Coverage provided
under a POS plan as described in §21.2901 of this title (relating to
Definitions) and as permitted by Article 26.48, Insurance Code.
(38)
Plan year--For purposes of the Insurance Code, Chapter
26, and this chapter, a 365-day period that begins on the plan or policy's
effective date or a period of one full calendar year, under a health benefit
plan providing coverage to small or large employers and their employees, as
defined in the plan or policy. Small or large employer carriers must use the
same definition of plan year in all small or large employer health benefit
plans.
(39)
Postmark--A date stamp by the US Postal Service or other
delivery entity, including any electronic delivery available.
(40)
Preexisting condition provision--A provision that denies,
excludes, or limits coverage as to a disease or condition for a specified
period after the effective date of coverage.
(41)
Premium--All amounts payable by a small or large employer
and eligible employees as a condition of receiving coverage from a small or
large employer carrier, including any fees or other contributions associated
with a health benefit plan.
(42)
Premium rate quote--A statement of the premium a small
or large employer carrier offers and will accept to make coverage effective
for a small or large employer.
(43)
Public health plan--Any plan established or maintained
by a State, county, or other political subdivision of a State that provides
health insurance coverage to individuals who are enrolled in the plan.
(44)
Rating period--A calendar period for which premium rates
established by a small employer carrier are assumed to be in effect.
(45)
Reinsured carrier--A small employer carrier participating
in the Texas Health Reinsurance System.
(46)
Renewal date--For each small or large employer's health
benefit plan, the earlier of the date (if any) specified in such plan (contract)
for renewal; the policy anniversary date; or the date on which the small or
large employer's plan is changed. To determine the renewal date for employer
association or multiple employer trust group health benefit plans, small or
large employer carriers may use the date specified for renewal, or the policy
anniversary date, of either the master contract or the contract or certificate
of coverage of each small or large employer in the association or trust. Small
or large employer carriers must use the same method of determining renewal
dates for all small or large employer health benefit plans. A change in the
premium rate is not considered a renewal if the change is due solely:
(A)
to the addition or deletion of an employee or dependent
if the deletion is due to a request by the employee, death or retirement of
the employee or dependent, termination of employment of the employee, or because
a dependent is no longer eligible; or
(B)
to fraud or intentional misrepresentation of a material
fact by a small employer or an eligible employee or dependent.
(47)
Risk-assuming carrier--A small employer carrier that elects
not to participate in the Texas Health Reinsurance System, as approved by
the department.
(48)
Risk characteristic--The health status related factors,
duration of coverage, or any similar characteristic, except genetic information,
related to the health status or experience of a small employer group or of
any member of a small employer group.
(49)
Risk load--The percentage above the applicable base premium
rate that is charged by a small employer carrier to a small employer to reflect
the risk characteristics of the small employer group. A small employer carrier
may not use genetic information to alter or otherwise affect risk load.
(50)
Risk pool--The Texas Health Insurance Risk Pool established
under Insurance Code Article 3.77, or other similar arrangements in other
states.
(51)
RNA--Ribonucleic acid.
(52)
Short-term limited duration insurance--Health insurance
coverage provided under a contract with an issuer that has an expiration date
specified in the contract (taking into account any extensions that may be
elected by the policyholder without the issuer's consent) that is within 12
months of the date the contract becomes effective.
(53)
Significant break in coverage--A period of 63 consecutive
days during all of which the individual does not have any creditable coverage.
Neither a waiting period nor an affiliation period is counted in determining
a significant break in coverage.
(54)
Small employer--An employer that 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 policy year. For purposes of this definition, a partnership
is the employer of a partner. A small employer includes an independent school
district that elects to participate in the small employer market as provided
under Insurance Code Article 26.036.
(55)
Small employer carrier--A health carrier, to the extent
that health carrier is offering, delivering, issuing for delivery, or renewing,
under Insurance Code Article 26.06(a), health benefit plans subject to Subchapters
A - G of the Insurance Code, Chapter 26.
(56)
Small employer health benefit plan--A health benefit plan
offered to a small employer under the Insurance Code, Chapter 26, Subchapter
E.
(57)
State-mandated health benefits--As defined in §21.3502
of this title (relating to Definitions).
(58)
Waiting period--A period of time 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. If an employee or dependent
enrolls as a late enrollee, under special circumstances that except the employee
or dependent from the definition of late enrollee, or during an open enrollment
period, any period of eligibility before the effective date of such enrollment
is not a waiting period.
§26.7.Requirement to Insure Entire Groups.
(a)
A small employer carrier that offers coverage to a small
employer and its employees shall offer to provide coverage to each eligible
employee and to each dependent of an eligible employee. Except as provided
in subsection (b) of this section, the small employer carrier shall provide
the same health benefit plan to each such employee and dependent.
(b)
If elected by the small employer, a small employer carrier
may offer the eligible employees of a small employer the option of choosing
among one or more health benefit plans, provided that each eligible employee
may choose any of the plans offered. Except as provided in the Insurance Code,
Article 26.21 and Article 26.49 (with respect to an affiliation period or
exclusions for pre-existing), the choice among benefit plans may not be limited,
restricted, or conditioned based upon the risk characteristics of the eligible
employees or their dependents.
(c)
A small employer carrier may require each small employer
that applies for coverage, as part of the application process, to provide
a complete list of employees, eligible employees and dependents of eligible
employees as defined in Insurance Code Article 26.02. The small employer carrier
may also require the small employer to provide reasonable and appropriate
supporting documentation to verify the information required under this subsection,
as well as to confirm the applicant's status as a small employer. The small
employer carrier shall make a determination of eligibility within five business
days of receipt of any requested documentation. A small employer carrier may
not condition the issuance of coverage on an employer's production of a particular
document, where the employer can otherwise provide the information required
by this section. Similarly, if a particular document an employer produces
does not reasonably evidence the employer's compliance with this subsection,
the employer must produce other documentation to satisfy the requirements.
Following are examples of the types of supporting documentation which a small
employer carrier may request, as reasonable and appropriate, from an employer
as needed to fulfill the purposes of this subsection:
(1)
a W-2 Summary Wage and Tax Form or other federal or state
tax records;
(2)
a loan agreement;
(3)
an invoice;
(4)
a business check;
(5)
a sales tax license;
(6)
articles of incorporation or other business entity filings
with the Secretary of State;
(7)
assumed name filings;
(8)
professional licenses; and
(9)
reports required by the Texas Workforce Commission.
(d)
A small employer carrier shall not deny two individuals
who are married the status of eligible employee solely on the basis that the
two individuals are married. The small employer carrier shall provide a reasonable
opportunity for the individuals to submit evidence as provided in subsection
(c) of this section to establish each individual's status as an eligible employee.
(1)
The two individuals will not be eligible for coverage as
a dependent. Each must be covered as an employee.
(2)
A child of either of the two individuals may only be covered
under the same small employer health benefit plan as a dependent by one of
the two individuals.
(e)
A small employer carrier shall secure a waiver with respect
to each eligible employee and each dependent of such an eligible employee
who declines an offer of coverage under a health benefit plan provided to
a small employer. If a small employer elects to offer coverage through more
than one small employer carrier, waivers are only required to be signed if
the eligible individual is declining all small employer health benefit plans
offered and the small employer carriers may enter into an agreement under
which one small employer carrier will retain the waiver. Waivers shall be
maintained by the small employer carrier for a period of six years. The waiver
shall be signed by the eligible employee (on behalf of such employee or the
dependent of such employee) and shall certify that the individual who declined
coverage was informed of the availability of coverage under the health benefit
plan. Receipt by the small employer carrier of a facsimile transmission of
the waiver is permissible, provided that the transmission includes a representation
from the small employer that the employer will maintain the original waiver
on file for a period of six years from the date of the facsimile transmission.
The waiver form shall:
(1)
require that the reason for declining coverage be stated
on the form;
(2)
include a written warning of the penalties imposed on late
enrollees; and
(3)
include a statement that the eligible employee and dependents
were not induced or pressured by the small employer, agent, or health carrier
into declining coverage, but elected of their own accord to decline such coverage.
(f)
A small employer carrier may not provide coverage to a
small employer or the employees of such employer if the health carrier, or
an agent for such health carrier, has knowledge that the small employer has
induced or pressured an eligible employee (or dependent of an eligible employee)
to decline coverage due to the individual's risk characteristics.
(g)
An agent shall notify a small employer carrier, prior to
submitting an application for coverage with the health carrier on behalf of
a small employer or employee of a small employer, of any circumstances that
would indicate that the small employer has induced or pressured an eligible
employee (or dependent of an eligible employee) to decline coverage due to
the individual's risk characteristics.
(h)
New entrants in a health benefit plan issued to a small
employer group shall be offered an opportunity to enroll in the health benefit
plan currently held by such employer group or shall be offered an opportunity
to enroll in the health benefit plan if the plan is provided through an individual
franchise policy or more than one plan is available. If a small employer carrier
has offered more than one health benefit plan to eligible employees of a small
employer group pursuant to subsection (b) of this section, the new entrant
shall be offered the same choice of health benefit plans as the other employees
(members) in the group. A new entrant that does not exercise the opportunity
to enroll in the health benefit plan within the period provided by the small
employer carrier may be treated as a late enrollee by the health carrier,
provided that the period provided to enroll in the health benefit plan complies
with subsection (i) of this section.
(i)
Periods provided for enrollment in and application for
any health benefit plan provided to a small employer group shall comply with
the following:
(1)
the initial enrollment period shall extend at least 31
consecutive days after the date the new entrant begins employment or, if the
waiting period exceeds 31 days, at least 31 consecutive days after the date
the new entrant completes the waiting period for coverage;
(2)
the new entrant shall be notified of his or her opportunity
to enroll at least 31 days in advance of the last date enrollment is permitted;
(3)
the new entrant's application for coverage shall be considered
timely if he or she submits the application within the initial enrollment
period. Submits, for purposes of this paragraph, means that the item(s) must
be postmarked by the end of the specified time period. At the discretion of
the small employer carrier, alternative methods of submission, such as facsimile
transmission (fax), may be acceptable; and
(4)
the small employer carrier shall provide an open enrollment
period of at least 31 consecutive days on an annual basis.
(j)
Any waiting period shall be established by the small employer
and shall not exceed 90 days. A small employer carrier shall not apply a waiting
period, elimination period, or other similar limitation of coverage (other
than an exclusion for pre-existing medical conditions or impose an affiliation
period consistent with the Insurance Code, Article 26.21 and Article 26.49),
with respect to a new entrant, that is longer than the waiting period established
by the small employer.
(k)
New entrants in a health plan issued to a small employer
group shall be accepted for coverage by the small employer carrier without
any restrictions or limitations on coverage related to the risk characteristics
of the employees or their dependents, except that a health carrier may exclude
coverage for pre-existing medical conditions or impose an affiliation period,
to the extent allowed under the Insurance Code, Article 26.21 and Article
26.49.
(l)
A small employer carrier may assess a risk load to the
premium rate associated with a new entrant, consistent with the requirements
of the Insurance Code, Chapter 26, Subchapter D, and this chapter. The risk
load shall be the same risk load charged to the small employer group immediately
prior to acceptance of the new entrant into the group.
(m)
In the case of an eligible employee (or dependent of an
eligible employee) who was excluded from coverage, not eligible for coverage,
or denied coverage by a small employer carrier, in the process of providing
a health benefit plan to an eligible small employer (as defined in the Insurance
Code, Chapter 26, and this chapter), the small employer carrier shall provide
an opportunity for the eligible employee (or dependent(s) of such eligible
employee) to enroll in the health benefit plan issued to the small employer
or the employees of the small employer on the earlier of the first renewal
date occurring on or after July 1, 1997, or the first open enrollment period
occurring on or after July 1, 1997. The opportunity to enroll shall meet the
following requirements.
(1)
The opportunity to enroll under this subsection shall comply
with subsection (i) of this section.
(2)
Eligible employees and dependents of eligible employees
who are provided an opportunity to enroll pursuant to this subsection shall
be treated as new entrants. Premium rates related to such individuals shall
be set in accordance with subsection (l) of this section.
(3)
The terms of coverage offered to an individual described
in this subsection may exclude coverage for preexisting medical conditions
or impose an affiliation period only if the health benefit plan currently
held by the small employer contains such an exclusion or an affiliation period.
(4)
A small employer carrier shall provide written notice at
least 45 days prior to the opportunity to enroll provided in this subsection
or if less than 45 days are available, within five working days after determination
that subsections (h) - (m) of this section apply to each small employer insured
under a health benefit plan offered by such health carrier. A small employer
carrier may provide the notice to the employer if the carrier has entered
into an agreement with the employer to provide the notice to the employees.
The notice shall clearly describe the rights granted under subsections (h)
- (m) of this section to employees and dependents who were previously excluded
from, not eligible for, or denied coverage and the process for enrollment
of such individuals in the employer's health benefit plan.
(n)
A small employer carrier may require an individual who
requests enrollment under subsection (m) of this section to sign a statement
indicating that such individual sought coverage under the group contract or
franchise policy (other than as a late enrollee) and that the coverage was
not offered or provided to the individual.
§26.9.Exclusions, Limitations, Waiting Periods, Affiliation Periods and Preexisting Conditions and Restrictive Riders.
(a)
All health benefit plans that provide coverage for small
employers and their employees as defined in Insurance Code Article 26.02(29)
and §26.4 of this chapter (relating to Definitions) shall comply with
the following requirements.
(1)
A small employer carrier shall not exclude any eligible
employee or dependent (including a late enrollee, who would otherwise be covered
under a small employer's health benefit plan), except to the extent permitted
under the Insurance Code, Article 26.21(k).
(2)
A small employer carrier shall not limit or exclude (by
use of rider, amendment, or other provision of the plan, applicable to a specific
individual) coverage by type of illness, treatment, medical condition, or
accident, except for preexisting conditions or diseases or an affiliation
period, as permitted under the Insurance Code, Article 26.49.
(3)
A preexisting condition provision in a small employer health
benefit plan may not apply to expenses incurred on or after the expiration
of the 12 months following the effective date of coverage of the enrollee
or late enrollee, except as authorized by paragraph (9)(B) of this subsection.
(4)
A small employer health benefit plan may not limit or exclude
initial coverage of a newborn child of a covered employee. Any coverage of
a newborn child of an employee under this subsection terminates on the 32nd
day after the date of the birth of the child unless notification of the birth
and any required additional premium are received by the small employer carrier
not later than the 31st day after the date of birth. A small employer carrier
shall not terminate coverage of a newborn child if such carrier's billing
cycle does not coincide with this 31-day premium payment requirement, until
the next billing cycle has occurred and there has been nonpayment of the additional
required premium, within 30 days of the due date of such premium.
(5)
A small employer health benefit plan may not limit or exclude
initial coverage of an adopted child of an insured. A child is considered
to be the child of an insured if the insured is a party in a suit seeking
the adoption of the child. The adopted child of an insured may be enrolled,
at the option of the insured, within either:
(A)
31 days after the insured is a party in a suit for adoption;
or
(B)
within 31 days of the date the adoption is final.
(6)
Coverage of an adopted child of an insured under paragraph
(4) of this subsection terminates unless notification of the adoption and
any required additional premium are received by the small employer carrier
not later than either:
(A)
the 31st day after the insured becomes a party in a suit
in which the adoption of the child by the insured is sought; or
(B)
the 31st day after the date of the adoption. A small employer
carrier shall not terminate coverage of an adopted child if such carrier's
billing cycle does not coincide with this 31-day premium payment requirement,
until the next billing cycle has occurred and there has been nonpayment of
the additional required premium, within 30 days of the due date of such premium.
(7)
For purposes of paragraphs (4) and (6) of this subsection,
received by the small employer by a specified time period means that the item(s)
must be either received or postmarked by the specified time period.
(8)
If a newborn or adopted child is enrolled in a health benefit
plan or other creditable coverage within the time periods specified in paragraph
(4) or (5) of this subsection, respectively, and subsequently enrolls in another
health benefit plan without a significant break in coverage, the other plan
may not impose any preexisting condition exclusion or affiliation period with
regard to the child. If a newborn or adopted child is not enrolled within
the time periods specified in paragraph (4) or (5) of this subsection, respectively,
then in accordance with paragraph (9) of this subsection, the newborn or adopted
child may be considered a late enrollee or excluded from coverage until the
next open enrollment period.
(9)
A small employer carrier shall choose one of the methods
set forth in subparagraph (A) or (B) of this paragraph for handling requests
for enrollment as a late enrollee in any health benefit plan subject to this
subchapter. The small employer carrier must use the same method in regards
to all such health benefit plans.
(A)
The employee or dependent may be excluded from coverage
and any application for coverage rejected until the next annual open enrollment
period and, upon enrollment, may be subject to a 12-month preexisting condition
provision, or, in the case of an HMO, may be subject to a 60-day affiliation
provision, as such provisions are described by the Insurance Code, Article
26.49.
(B)
the employee or dependent's application may be accepted
immediately and the employee or dependent enrolled as a late enrollee during
the plan year, in which case the preexisting condition provision imposed for
a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation
period may not exceed 90 days, from the date of the late enrollee's application
for coverage.
(C)
The provisions of subparagraphs (A) and (B) of this paragraph
do not apply to employees or dependents under the special circumstances listed
as exceptions under the definition of late enrollee in §26.4 of this
chapter.
(D)
Examples for applying subparagraphs (A) and (B) of this
paragraph, in the case of both insurers and HMOs: Individual A requests coverage
on October 1, 1997, after the enrollment period of July 1, 1997, through July
31, 1997 has ended. The next annual open enrollment period is July 1, 1998,
through July 31, 1998. The effective date of coverage for persons enrolling
during an open enrollment period is the beginning of the plan year, which
is September 1 of each year.
(i)
If the carrier is an insurer and has elected to exclude
all applicants requesting late enrollment under health benefit plans subject
to this subchapter until the next open enrollment period, Individual A must
reapply for coverage in July 1998 and the carrier may apply up to a 12-month
preexisting condition period from the effective date of coverage, as with
any other enrollee, the preexisting condition period would begin on September
1, 1998, and expires on September 1, 1999.
(ii)
If the carrier is an insurer and has elected to accept
applications for late enrollment under health benefit plans subject to this
subchapter immediately and enroll the applicant during the plan year, then
the carrier may apply up to an 18-month preexisting condition period from
the date of application. If Individual A applied for coverage on October 1,
1997, the preexisting condition period would begin on that date and would
expire on April 1, 1999.
(iii)
If the carrier is an HMO and has elected to exclude all
applicants requesting late enrollment under health benefit plans subject to
this subchapter until the next open enrollment period, Individual A must reapply
for coverage in July 1998 and the carrier may apply up to a 60-day affiliation
period, as with any other enrollee.
(iv)
If the carrier is an HMO and has elected to accept applications
for late enrollment under health benefit plans subject to this subchapter
immediately and enroll the applicant during the plan year, then the carrier
may apply up to a 90-day affiliation period from the day Individual A applied
for coverage.
(10)
A preexisting condition provision in a small employer
health benefit plan may not apply to coverage for a disease or condition other
than a disease or condition for which medical advice, diagnosis, care, or
treatment was recommended or received from an individual licensed to provide
such services under state law and operating within the scope of practice authorized
by state law during the six months before the effective date of coverage.
(11)
A small employer carrier shall not treat genetic information
as a preexisting condition described by Insurance Code, Article 26.49(b) in
the absence of a diagnosis of the condition related to the information.
(12)
A small employer carrier shall not treat a pregnancy as
a preexisting condition described in Article 26.49(b), Insurance Code.
(13)
A preexisting condition provision in a small employer
health benefit plan shall not apply to an individual who was continuously
covered for an aggregate period of 12 months under creditable coverage that
was in effect up to a date not more than 63 days before the effective date
of coverage under the small employer health benefit plan, excluding any waiting
period under the previous coverage. For example, Individual A has coverage
under an individual policy for six months beginning on May 1, 1997, through
October 31, 1997, followed by a gap in coverage of 61 days until December
31, 1997. Individual A is covered under an individual health plan beginning
on January 1, 1998, for six months through June 30, 1998, followed by a gap
in coverage of 62 days until August 31, 1998. Individual A's effective date
of coverage under a small employer health benefit plan is September 1, 1998.
Individual A has 12 months of creditable coverage and would not be subject
to a preexisting condition exclusion under the small employer health benefit
plan.
(14)
In determining whether a preexisting condition provision
applies to an individual covered by a small employer health benefit plan,
the small employer carrier shall credit the time the individual was covered
under creditable coverage if the previous coverage was in effect at any time
during the 12 months preceding the effective date of coverage under a small
employer health benefit plan. Any waiting period that applied before that
coverage became effective also shall be credited against the preexisting condition
provision period. For instance, Individual B is covered under an individual
health insurance policy for 18 months beginning May 1, 1995, through November
30, 1996, followed by a four month gap in coverage from December 1, 1996,
to March 31, 1997. On April 1, 1997, Individual B is covered under a group
health plan for three months through June 30, 1997, followed by a two month
gap in coverage until August 31, 1997. Individual B's coverage became effective
on September 1, 1997. Under this example, since there was a significant break
in coverage, to determine the length of creditable coverage, the small employer
carrier counts the creditable coverage the individual had for the 12-month
period preceding the effective date of the individual's coverage under the
small employer plan. Individual B has creditable coverage of six months and
the issuer of the small employer health benefit plan may impose a preexisting
condition limitation for six months on Individual B.
(15)
A small employer may establish a waiting period that cannot
exceed 90 days from the first day of employment during which a new employee
is not eligible for coverage. Upon completion of the waiting period and enrollment
within the time frame allowed by §26.7(i) of this chapter (relating to
Requirement to Insure Entire Groups), coverage must be effective no later
than the next premium due. Coverage may be effective at an earlier date as
agreed upon by the small employer and the small employer carrier.
(16)
A health maintenance organization may impose an affiliation
period, if the period is applied uniformly without regard to any health status
related factor. The affiliation period shall not exceed two months for an
enrollee, other than a late enrollee, and shall not exceed 90 days for a late
enrollee. An affiliation period under a plan shall run concurrently with any
applicable waiting period under the plan. An HMO shall not impose any preexisting
condition limitation, except for an affiliation period.
(17)
The imposition by an HMO carrier of an affiliation period
does not preclude application of any waiting period applicable as determined
by the employer to all new entrants under a health benefit plan.
(18)
An affiliation period provision in a small employer health
benefit plan shall not apply to an individual who would not be subject to
a preexisting condition limitation in accordance with paragraphs (12) and
(13) of this subsection.
(b)
To determine if preexisting conditions as defined in Insurance
Code Article 26.02, exist, a small employer carrier shall ascertain the source
of previous or existing coverage of each eligible employee and each dependent
of an eligible employee at the time such employee or dependent initially enrolls
into the health benefit plan provided by the small employer carrier. The small
employer carrier shall have the responsibility to contact the source of such
previous or existing coverage to resolve any questions about the benefits
or limitations related to such previous or existing coverage in the absence
of a creditable coverage certification form.
§26.11.Restrictions Relating to Premium Rates.
(a)
A small employer carrier shall develop a separate rate
manual for each class of business. Base premium rates and new business premium
rates charged to small employers by the small employer carrier shall be computed
solely from the applicable rate manual developed pursuant to this subsection.
To the extent that a portion of the premium rates charged by a small employer
carrier is based on objective criteria established by the small employer carrier
consistent with the criteria set out in the Insurance Code, Article 26.02(5)
and Article 26.36, the manual shall specify the criteria and factors considered
by the health carrier in exercising such discretion.
(b)
A small employer carrier shall file with the department,
at least 60 days prior to the proposed date of the change, any proposed change
to the rating method used in the rate manual for a class of business. The
small employer carrier shall ensure that the rating method used is actuarially
sound and appropriate to assure compliance with Insurance Code, Chapter 26,
and this chapter, and that differences in rates charged for each small employer
health benefit plan are reasonable and reflect objective differences in plan
design. The commissioner may disapprove a change to the rating method that
does not meet the requirements of this chapter. At the expiration of 60 days
from the filing of the form with the department the proposed change shall
be deemed compliant unless prior thereto the commissioner has disapproved
it by written order.
(1)
The filing shall contain at least the following information:
(A)
the reasons the change in rating method is being requested;
(B)
a complete description of each of the proposed modifications
to the rating method;
(C)
a description of how the change in rating method would
affect the premium rates currently charged to small employers in the class
of business, including an estimate from a qualified actuary of the number
of groups or individuals and a description of the types of groups or individuals
whose premium rates may change by more than 10% due to the proposed change
in rating method (not including general increases in premium rates applicable
to all small employers in a health benefit plan);
(D)
a certification from a qualified actuary that the new rating
method would be based on objective and credible data and would be actuarially
sound and appropriate; and
(E)
a certification from a qualified actuary that the proposed
change in rating method would not produce premium rates for small employers
that would be in violation of the Insurance Code, Chapter 26, Subchapter D.
(2)
For the purpose of this section a change in rating method
shall mean:
(A)
a change in the number of case characteristics used by
a small employer carrier to determine premium rates for health benefit plans
in a class of business;
(B)
a change in the manner or procedures by which insureds
are assigned into categories for the purpose of applying a case characteristic
to determine premium rates for health benefit plans in a class of business;
(C)
a change in the method of allocating expenses among health
benefit plans in a class of business; or
(D)
a change in a rating factor with respect to any case characteristic
if the change would produce a change in premium for any small employer that
exceeds 10%. For the purpose of this paragraph, a change in a rating factor
shall mean the cumulative change with respect to such factor considered over
a 12-month period. If a small employer carrier changes rating factors with
respect to more than one case characteristic in a 12-month period, the health
carrier shall consider the cumulative effect of all such changes in applying
the 10% test under this paragraph.
(c)
Each rate manual developed pursuant to subsection (a) of
this section shall specify the case characteristics and rate factors to be
applied by the small employer carrier in establishing premium rates for the
class of business.
(1)
A small employer carrier may not use case characteristics
other than those specified in the Insurance Code, Article 26.36(c), without
the prior approval of the commissioner. A small employer carrier seeking such
an approval shall make a filing with the commissioner for a change in rating
method under subsection (b) of this section.
(2)
A small employer carrier shall use the same case characteristics
in establishing premium rates for each health benefit plan in a class of business
and shall apply them in the same manner in establishing premium rates for
each such health benefit plan. Case characteristics may include the employer's
industry classification consistent with the Insurance Code, Article 26.33(c).
Case characteristics shall be applied without regard to the risk characteristics
of a small employer.
(3)
The rate manual developed pursuant to subsection (a) of
this section shall clearly illustrate the relationship among the base premium
rates charged for each health benefit plan in the class of business. If the
new business premium rate is different than the base premium rate for a health
benefit plan, the rate manual shall illustrate the difference.
(4)
Differences among base premium rates for health benefit
plans shall be based solely on the reasonable and objective differences in
the design and benefits of the health benefit plans and shall not be based
in any way on the actual or expected health status related factors of the
small employer groups that choose or are expected to choose a particular health
benefit plan. A small employer carrier shall apply case characteristics and
rate factors within a class of business in a manner that assures that premium
differences among health benefit plans for identical small employer groups
vary only due to reasonable and objective differences in the design and benefits
of the health benefit plans and are not due to the actual or expected health
status related factors of the small employer groups that choose or are expected
to choose a particular health benefit plan.
(5)
Each rate manual developed pursuant to subsection (a) of
this section shall provide for premium rates to be developed in a two-step
process. In the first step, the small employer carrier shall develop a base
premium rate for the small employer group without regard to any risk characteristics
of the group. In the second step, the small employer carrier may adjust the
resulting base premium rate by the risk load of the group, subject to the
provisions of Insurance Code, Chapter 26, Subchapter D, to reflect the risk
characteristics of the group.
(6)
Except as provided in this subsection, a premium charged
to a small employer for a health benefit plan shall not include a separate
application fee, underwriting fee, or any other separate fee or charge. A
small employer carrier may charge a separate fee with respect to a health
benefit plan (but only one fee with respect to such plan) provided the fee
is no more than $5.00 per month per covered employee and is applied in a uniform
manner to each health benefit plan in a class of business.
(7)
A small employer carrier shall allocate administrative
expenses to the small employer health benefit plans on no less favorable of
a basis than expenses are allocated to other health benefit plans in the class
of business. The rate manual developed pursuant to subsection (a) of this
section shall describe the method of allocating administrative expenses to
the health benefit plans in the class of business for which the manual was
developed.
(8)
The health carrier shall retain each rate manual developed
pursuant to subsection (a) of this section for a period of six years. The
health carrier shall maintain all updates and changes with the manual.
(9)
Each rate manual and the rating practices of a small employer
carrier shall comply with any applicable rules.
(d)
If a small employer carrier uses the number of employees
and dependents of a small employer as a case characteristic, the highest rate
factor associated with a classification based on the number of employees and
dependents of a small employer shall not exceed the lowest rate factor associated
with such a classification by more than 20%.
(e)
The restrictions related to changes in premium rates in
the Insurance Code, Article 26.33 and Article 26.34, shall be applied as follows.
(1)
A small employer carrier shall revise its rate manuals
each rating period to reflect changes in base premium rates and changes in
new business premium rates.
(2)
If, for any health benefit plan with respect to any rating
period, the percentage change in the new business premium rate is less than
or the same as the percentage change in the base premium rate, the change
in the new business premium rate shall be deemed to be the change in the base
premium rate for the purposes of the Insurance Code, Article 26.33 and Article
26.34.
(3)
If, for any health benefit plan with respect to any rating
period, the percentage change in the new business premium rate exceeds the
percentage change in the base premium rate, the health benefit plan shall
be considered a health benefit plan into which the small employer carrier
is no longer enrolling new small employers for the purposes of the Insurance
Code, Article 26.33 and Article 26.34.
(4)
If, for any rating period, the change in the new business
premium rate for a health benefit plan differs from the change in the new
business premium rate for any other health benefit plan in the same class
of business by more than 20%, the health carrier shall make a filing with
the commissioner containing a complete explanation of how the respective changes
in new business premium rates were established and the reason for the difference.
The filing shall be made at least 60 days prior to the beginning of the rating
period when the change would be applicable. The filing is for the purpose
of allowing the commissioner to determine whether the methodology used is
actuarially sound and appropriate to insure compliance with the Insurance
Code, Chapter 26.
(5)
A small employer carrier shall keep on file for a period
of at least six years the calculations used to determine the change in base
premium rates and new business premium rates for each health benefit plan
for each rating period.
(f)
Changes in premium rates and revised premium rates shall
comply with the following.
(1)
Except as provided in subsection (e) of this section, a
change in premium rate for a small employer shall produce a revised premium
rate that is no more than the base premium rate for the small employer (as
shown in the rate manual as revised for the rating period), multiplied by
one plus the sum of:
(A)
the risk load applicable to the small employer during the
previous rating period; and
(B)
15% (prorated for periods of less than one year).
(2)
In the case of a health benefit plan into which a small
employer carrier is no longer enrolling new small employers, a change in premium
rate for a small employer shall produce a revised premium rate that is no
more than the base premium rate for the small employer (given its present
composition and as shown in the rate manual in effect for the small employer
at the beginning of the previous rating period), multiplied by one plus the
lesser of:
(A)
the change in the base rate; or
(B)
the percentage change in the new business premium for the
most similar health benefit plan into which the small employer carrier is
enrolling new small employers, multiplied by one plus the sum of:
(i)
the risk load applicable to the small employer during the
previous rating period; and
(ii)
15% (prorated for periods of less than one year).
(3)
In the case of a health benefit plan described in the Insurance
Code, Article 26.33(c), if the current premium rate for the health benefit
plan exceeds the ranges set forth in the Insurance Code, Article 26.32(b),
the formulae set forth in paragraphs (1) and (2) of this subsection will be
applied as if the 15% adjustment provided in paragraphs (1)(B)(ii) and (2)(C)(ii)
of this subsection were a 0% adjustment.
(4)
Notwithstanding the provisions of paragraphs (1) and (2)
of this subsection, a change in premium rate for a small employer shall not
produce a revised premium rate that would exceed the limitations on rates
provided in the Insurance Code, Article 26.32(c).
(g)
An HMO offering any state approved, federally qualified
plan described in Insurance Code Article 26.48 and §26.14 of this chapter
(relating to Coverage) shall establish premium rates for those plans in accordance
with formulae or schedules of charges filed with the department under the
procedures set forth in Insurance Code Article 20A.09(b), and Chapter 11,
Subchapter H of this title (relating to Schedule of Charges). An HMO shall
follow the rating requirements set out in this section for any plan it offers
that is not federally qualified.
(h)
An HMO participating in a purchasing cooperative that provides
employees of small employers a choice of benefit plans, that has established
a separate class of business as provided by the Insurance Code, Article 26.31,
and that has established a separate line of business as provided under the
Insurance Code, Article 26.48(a), and 42 United States Code §§300e
et seq. may use rating methods in accordance with this subchapter that are
used by other small employer carriers participating in the same purchasing
cooperative, including rating by age and gender. This subsection applies to
all employer health benefit plans offered, issued or delivered for issue to
small employers and their employees on or after September 1, 1995.
(i)
When seeking to obtain information relating to a small
employer group, including the risk characteristics of the small employer group,
a small employer carrier shall comply with §26.13(m) of this chapter
(relating to Rules Related to Fair Marketing).
§26.13.Rules Related to Fair Marketing.
(a)
A small employer carrier shall market each of its small
employer health benefit plans to small employers in this state. A small employer
carrier may not suspend the marketing or issuance of the small employer benefit
plans unless the health carrier has good cause and has received the prior
approval of the commissioner or the commissioner's designee. In marketing
consumer choice health benefit plans to small employers, a small employer
carrier shall use at least the same sources and methods of distribution that
it uses to market other small employer health benefit plans to small employers.
Any agent authorized by a small employer carrier to market health benefit
plans to small employers in this state shall also be authorized to market
the small employer health benefit plans.
(b)
To each small employer who inquires about purchasing a
small employer health benefit plan, a small employer carrier shall offer the
employer a choice of health benefit plans as required by §26.14 of this
chapter (relating to Coverage). The small employer carrier may provide the
offer directly to the small employer or deliver it through an agent, but in
either case shall offer each required plan contemporaneously with the offer
of any other small employer health benefit plan. The offer shall be in writing
and shall include at least the following:
(1)
information describing how the small employer may enroll
in the plan or plans;
(2)
information set out in Insurance Code Article 26.40 and §26.12
of this chapter (relating to Disclosure); and
(3)
a written disclosure, as required by §21.3530 of this
title (relating to Health Carrier Disclosure).
(c)
Upon request, a small employer carrier shall explain to
a small employer each of the small employer health benefit plans it offers.
(d)
As required by §21.3542(a) of this title (relating
to Offer of State-Mandated Plan), a small employer carrier shall obtain from
each small employer to which it issues coverage, at or before the time of
application, a written affirmation that the small employer carrier offered
the small employer a consumer choice health benefit plan and a comparable
policy or plan as required by Insurance Code Articles 3.80, §8 and 20A.9N(k).
(e)
A small employer carrier shall comply with this subsection
when providing a premium rate quote to a small employer.
(1)
A small employer carrier shall provide a premium rate quote
to a small employer, directly or through an authorized agent, within 15 business
days of receiving the small employer's completed application for coverage
and individual enrollment forms.
(2)
A small employer carrier may request, directly or through
an authorized agent, any additional information, using the applicable rate
manual and associated underwriting guidelines developed pursuant to §26.11
of this chapter (relating to Restrictions Relating to Premium Rates), necessary
to provide the premium rate quote. If the carrier requests this additional
information prior to the end of the 15-day period described in paragraph (1)
of this subsection, the request for additional information tolls the running
of the 15-day period until the small employer carrier receives the requested
additional information.
(3)
A small employer carrier may give a small employer an estimated
cost of coverage prior to end of the 15-day period described in paragraph
(1) of this subsection, so long as the carrier makes clear that the estimate
is not a premium rate quote.
(4)
A small employer carrier shall not impose any additional
conditions to its provision of a premium rate quote.
(f)
A small employer carrier shall not apply more stringent
or detailed requirements related to the application process, or otherwise
discriminate in the offer of, any small employer health benefit plan than
are applied for other health benefit plans offered by the health carrier to
small employers.
(g)
If a small employer carrier denies coverage under a health
benefit plan to a small employer on any basis, the denial shall be in writing
and shall state with specificity the reasons for the denial (subject to any
restrictions related to confidentiality of medical information).
(h)
A small employer carrier shall establish and maintain a
means to provide information to small employers who request information on
the availability of small employer health benefit plans in this state. The
information provided to small employers shall include information about how
to apply for coverage from the health carrier and may include the names and
phone numbers of agents located geographically proximate to the caller or
such other information that is reasonably designed to assist the caller to
locate an authorized agent or to otherwise apply for coverage.
(i)
The small employer carrier shall not require a small employer
to join or contribute to any association or group as a condition of being
accepted for coverage by the small employer carrier, except that, if membership
in an association or other group is a requirement for accepting a small employer
into a particular health benefit plan, a small employer carrier may apply
such requirement, subject to the requirements of Insurance Code, Chapter 26,
Subchapters A - G.
(j)
A small employer carrier may not require, as a condition
to the offer or sale of a health benefit plan to a small employer, that the
small employer purchase or qualify for any other insurance product or service.
(k)
Health carriers offering individual and group health benefit
plans in this state shall be responsible for determining whether the plans
are subject to the requirements of Insurance Code, Chapter 26, Subchapters
A - G, and this subchapter. Health carriers shall elicit the following information
from applicants for such plans at the time of application:
(1)
whether any portion of the premium will be paid by a small
employer;
(2)
whether the prospective policyholder, certificate holder,
or any prospective insured individual intends to treat the health benefit
plan as part of a plan or program under §162 or §106 of the United
States Internal Revenue Code of 1986 (26 United States Code §106 or §162);
(3)
whether the health benefit plan is an employee welfare
benefit plan under 29 CFR §2510.3-1(j); or
(4)
whether the applicant is a small employer.
(l)
If a health carrier fails to comply with subsection (k)
of this section, the health carrier shall be deemed to be on notice of any
information that could reasonably have been attained if the health carrier
had complied with subsection (k) of this section.
(m)
A small employer carrier may not discriminate between small
employer groups when obtaining information relating to a small employer, including
information related to the risk characteristics of the small employer group
or other aspects of the application or application process.
(n)
A small employer carrier may not terminate, fail to renew,
limit its contract or agreement of representation with, or take any other
negative action against an agent for the agent's request that the carrier
issue or renew a health benefit plan to a small employer.
§26.20.Reporting Requirements.
(a)
Small employer health carriers offering a small employer
health benefit plan shall file annually, not later than March 1 of each year,
an actuarial certification Form Number 1212 CERT ACTUARIAL, stating that the
underwriting and rating methods of the small employer carrier:
(1)
comply with accepted actuarial practices;
(2)
are uniformly applied to each small employer health benefit
plan covering a small employer; and
(3)
comply with the provisions of the Insurance Code, Chapter
26, Subchapters A - G, and this chapter.
(b)
Not later than March 1 of each calendar year, a small employer
carrier shall complete and file with the commissioner Form Number 1212 CERT
DATA. This annual filing shall include the following information related to
health benefit plans issued by the small employer carrier to small employers
in this state:
(1)
the number of small employers that were issued and the
number of lives that were covered under health benefit plans in the previous
calendar year (separated, if applicable, as to newly issued plans and renewals);
(2)
the number of small employers that were issued and the
number of lives that were covered under consumer choice health benefit plans,
plans offering all state-mandated health benefits, HMO consumer choice health
benefit plans and HMO plans including all state-mandated health benefits in
the previous calendar year (as applicable, separated as to newly issued plans
and renewals and by groups based on the following covered-employee size ranges:
2 - 9, 10 - 20, 21 - 35, and 36 - 50);
(3)
a copy of the certificate of coverage for each of the carrier's
three (if applicable) most frequently issued consumer choice health benefit
plans. Each certificate must illustrate the selected benefits and plan features
without variability;
(4)
the number of small employer health benefit plans in force
and the number of lives covered under those plans. This information should
be broken down by the zip code of the small employers' principal place of
business in the state of Texas;
(5)
the number of small employer health benefit plans that
were voluntarily not renewed by small employers in the previous calendar year;
(6)
the number of small employer health benefit plans that
were terminated or nonrenewed (for reasons other than nonpayment of premium)
by the health carrier in the previous calendar year;
(7)
the number of small employer health benefit plans that
were issued to small employers that were uninsured for at least the two months
prior to issue;
(8)
the health carrier's gross premiums derived from health
benefit plans delivered, issued for delivery, or renewed to small employers
in the previous calendar year. For purposes of this subsection, gross premiums
shall be the total amount of monies collected by the health carrier for health
benefit plans during the applicable calendar year or the applicable calendar
quarter. Gross premiums shall include premiums collected for individual and
group health benefit plans issued to small employers or their employees. Gross
premiums shall also include premiums collected under certificates issued or
delivered to employees (in this state) of small employers, regardless of where
the policy is issued or delivered;
(9)
if applicable, information regarding any small employer
health benefit plans assumed from another small employer carrier; and
(10)
the number of small employers and the number of lives
that were covered under plans issued to small employer health coalitions in
the previous calendar year (as applicable, separated as to newly issued plans
and renewals).
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on March 17, 2005.
TRD-200501211
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 6, 2005
Proposal publication date: November 12, 2004
For further information, please call: (512) 463-6327
28 TAC §§26.301 - 26.309, 26.311, 26.312
The amendments are adopted under Insurance Code Article 26.04,
HIPAA, and Insurance Code §36.001. Chapter 26 of the Insurance Code implements
provisions regarding small and large employers which were necessary to comply
with the federal requirements contained in HIPAA. Article 26.04 requires the
commissioner to adopt rules as necessary to implement the Insurance Code,
Chapter 26, and to meet the minimum requirements of federal law and regulations
which, for small and large employer health carriers, are contained in HIPAA.
Federal agencies have adopted regulations implementing HIPAA as follows: Department
of the Treasury, 26 CFR Part 54; Department of Labor, 29 CFR Part 2590; and
Department of Health and Human Services, 45 CFR Part 144 and Part 146. As
identified in the Introduction, portions of the Federal Regulations are included
in these rules as necessary to meet the minimum requirements of federal law.
Section 36.001 provides that the Commissioner of Insurance may adopt any rules
necessary and appropriate to implement the powers and duties of the Texas
Department of Insurance under the Insurance Code and other laws of this state.
§26.304.Requirement to Insure Entire Groups.
(a)
A large employer carrier that offers coverage to a large
employer and its employees shall offer to provide coverage to each eligible
employee who meets the large employer's participation criteria. If dependent
coverage is offered to enrollees under a large employer health benefit plan,
then a large employer carrier shall offer to provide coverage to each eligible
dependent. Except as provided in subsection (b) of this section, the large
employer carrier shall provide the same health benefit plan to each such employee
and dependent.
(b)
If elected by the large employer, a large employer carrier
may offer the eligible employees of a large employer, who meet the participation
criteria, the option of choosing among one or more health benefit plans, provided
that each eligible employee who meets the participation criteria may choose
any of the plans offered to the employee. Except as provided in the Insurance
Code, Articles 26.83 and 26.90 (with respect to an affiliation period or exclusions
for preexisting conditions), the choice among benefit plans may not be limited,
restricted, or conditioned based upon the health status related factors of
the eligible employees or their dependents, if applicable.
(c)
A large employer carrier may require each large employer
that applies for coverage, as part of the application process, to provide
a complete list of employees, eligible employees, and if dependent coverage
is offered to enrollees under a large employer health benefit plan, a complete
list of dependents of eligible employees as defined in Insurance Code Article
26.02. The large employer carrier may also require the large employer to provide
reasonable and appropriate supporting documentation to verify the information
required under this subsection, as well as to confirm the applicant's status
as a large employer. The large employer carrier shall make a determination
of eligibility within five business days of receipt of any requested documentation.
A large employer carrier may not condition the issuance of coverage on an
employer's production of a particular document, where the employer can otherwise
provide the information required by this section. Similarly, if a particular
document an employer produces does not reasonably evidence the employer's
compliance with this subsection, the employer must produce other documentation
to satisfy the requirements. Following are examples of the types of supporting
documentation which a large employer carrier may request, as reasonable and
appropriate, from an employer as needed to fulfill the purposes of this subsection.
(1)
a W-2 Summary Wage and Tax Form or other federal or state
tax records;
(2)
a loan agreement;
(3)
an invoice;
(4)
a business check;
(5)
a sales tax license;
(6)
articles of incorporation or other business entity filings
with the Secretary of State;
(7)
assumed name filings;
(8)
professional licenses; and
(9)
reports required by the Texas Workforce Commission.
(d)
A large employer carrier shall not deny two individuals
that are married the status of eligible employee solely on the basis that
the two individuals are married. The large employer carrier shall provide
a reasonable opportunity for the individuals to submit evidence as provided
in subsection (c) of this section to establish each individual's status as
an eligible employee.
(1)
The two individuals will not be eligible for coverage as
a dependent. Each must be covered as an employee.
(2)
A child of either of the two individuals may only be covered
under the same large employer health benefit plan as a dependent by one of
the two individuals.
(e)
New entrants who meet the large employer's participation
criteria in a health benefit plan issued to a large employer group shall be
offered an opportunity to enroll in the health benefit plan currently held
by such employer group or shall be offered an opportunity to enroll in the
health benefit plan if the plan is provided through an individual franchise
policy or more than one plan is available. If a large employer carrier has
offered more than one health benefit plan to eligible employees of a large
employer group pursuant to subsection (b) of this section, the new entrant
shall be offered the same choice of health benefit plans as the other employees
(members) in the group. A new entrant that does not exercise the opportunity
to enroll in the health benefit plan within the period provided by the large
employer carrier may be treated as a late enrollee by the health carrier,
provided that the period provided to enroll in the health benefit plan complies
with §26.305(a) of this title (relating to Enrollment).
(f)
New entrants meeting the participation criteria in a health
benefit plan issued to a large employer group shall be accepted for coverage
by the large employer carrier without any restrictions or limitations on coverage
related to the health status related factors of the employees or their dependents,
if applicable, except that a health carrier may exclude coverage for pre-existing
medical conditions or impose an affiliation period, to the extent allowed
under Insurance Code, Articles 26.83 and 26.90.
(g)
In the case of an eligible employee that meets the participation
criteria (or dependent of an eligible employee, if applicable) who was excluded
from coverage, not eligible for coverage, denied coverage by a large employer
carrier, or in the process of providing a health benefit plan to an eligible
large employer, the large employer carrier shall provide an opportunity for
the eligible employee that meets the participation criteria (or dependent(s)
of such eligible employee) to enroll in the health benefit plan issued to
the large employer or the employees of the large employer on the earlier of
the first renewal date occurring on or after July 1, 1997, or the first open
enrollment period occurring on or after July 1, 1997. The opportunity to enroll
shall meet the following requirements:
(1)
The opportunity to enroll under this subsection shall comply
with §26.305(a) of this title.
(2)
Eligible employees that meet the large employer's participation
criteria and dependents of eligible employees who are provided an opportunity
to enroll pursuant to this subsection shall be treated as new entrants.
(3)
The terms of coverage offered to an individual described
in this subsection may exclude coverage for preexisting conditions or impose
an affiliation period only if the health benefit plan currently held by the
large employer contains such an exclusion or an affiliation period.
(4)
A large employer carrier shall provide written notice at
least 45 days prior to the opportunity to enroll provided in this subsection
or if less than 45 days are available, within five working days after determination
that subsections (e) - (g) of this section apply to each large employer insured
under a health benefit plan offered by such health carrier. A large employer
carrier may provide the notice to the employer if the carrier has entered
into an agreement with the employer to provide the notice to the employees.
The notice shall clearly describe the rights granted under subsections (e)
- (g) of this section to employees and dependents who were previously excluded
from, not eligible for, or denied coverage and the process for enrollment
of such individuals in the employer's health benefit plan.
(h)
A large employer carrier may require an individual who
requests enrollment under subsection (g) of this section to sign a statement
indicating that such individual sought coverage under the group contract or
franchise policy (other than as a late enrollee) and that the coverage was
not offered or provided to the individual.
§26.306.Exclusions, Limitations, Waiting Periods, Affiliation Periods and Preexisting Conditions and Restrictive Riders.
(a)
A large employer carrier may not exclude any eligible employee
who meets the participation criteria or an eligible dependent, if dependent
coverage is offered to enrollees under a large employer health benefit plan
(including a late enrollee, who would otherwise be covered under a large employer's
health benefit plan), except to the extent permitted under Insurance Code
Articles 26.83 and 26.90.
(b)
A preexisting condition provision in a large employer health
benefit plan may not apply to expenses incurred on or after the expiration
of the 12 months following the effective date of coverage of the enrollee
or late enrollee, except as authorized by subsection (h)(2) of this section.
(c)
A preexisting condition provision in a large employer health
benefit plan may not apply to coverage for a disease or condition other than
a disease or condition for which medical advice, diagnosis, care, or treatment
was recommended or received from an individual licensed to provide such services
under state law and operating within the scope of practice authorized by state
law during the six months before the effective date of coverage.
(d)
A large employer carrier shall not treat genetic information
as a preexisting condition described by Insurance Code, Article 26.90(b) in
the absence of a diagnosis of the condition related to the information.
(e)
A large employer carrier shall not treat a pregnancy as
a preexisting condition described by Insurance Code, Article 26.90(b).
(f)
A preexisting condition provision in a large employer health
benefit plan shall not apply to an individual who was continuously covered
for an aggregate period of 12 months under creditable coverage that was in
effect up to a date not more than 63 days before the effective date of coverage
under the large employer health benefit plan, excluding any waiting period.
For example, Individual A has coverage under an individual policy for 6 months
beginning on May 1, 1997, through October 31, 1997, followed by a gap in coverage
of 61 days until December 31, 1997. Individual A is covered under an individual
health plan beginning on January 1, 1998, for 6 months through June 30, 1998,
followed by a gap in coverage of 62 days until August 31, 1998. The effective
date of Individual A's coverage under a large employer health benefit plan
is September 1, 1998. Individual A has 12 months of creditable coverage and
would not be subject to a preexisting condition exclusion under the large
employer health benefit plan.
(g)
In determining whether a preexisting condition provision
applies to an individual covered by a large employer benefit plan, the large
employer carrier shall credit the time the individual was covered under previous
creditable coverage if the previous coverage was in effect at any time during
the 12 months preceding the effective date of coverage under a large employer
health benefit plan. If the previous coverage was issued under a health benefit
plan, any waiting period that applied before that coverage became effective
also shall be credited against the preexisting condition provision period.
For instance, Individual B is covered under an individual health insurance
policy for 18 months beginning May 1, 1995, through November 30, 1996, followed
by a four month gap in coverage from December 1, 1996, to March 31, 1997.
On April 1, 1997, Individual B is covered under a group health plan for three
months through June 30, 1997, followed by a two month gap in coverage until
August 31, 1997. The effective date of Individual B's coverage under a large
employer health insurance policy is September 1, 1997. Under this example,
since there was a significant break in coverage, to determine the length of
creditable coverage, the large employer carrier counts the creditable coverage
the individual had for the 12 month period preceding the effective date of
the individual's coverage under the large employer plan. Individual B has
creditable coverage of six months and the issuer of the large employer health
benefit plan may impose a preexisting condition limitation for six months
on Individual B.
(h)
A large employer carrier shall choose one of the methods
set forth in paragraph (1) or (2) of this subsection for handling requests
for enrollment from a late applicant in any health benefit plan subject to
this subchapter. The large employer carrier must use the same method in regards
to all such health benefit plans.
(1)
The employee or dependent may be excluded from coverage
and any application for coverage rejected until the next annual open enrollment
period and, upon enrollment, may be subject to a 12-month preexisting condition
provision, or, in the case of an HMO, may be subject to a 60-day affiliation
provision, as such provisions are described by Insurance Code Article 26.90.
(2)
The employee or dependent's application may be accepted
immediately and the employee or dependent enrolled as a late enrollee during
the plan year, in which case the preexisting condition provision imposed for
a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation
period may not exceed 90 days, from the date of the late enrollee's application
for coverage.
(3)
The provisions of paragraphs (1) and (2) of this subsection
do not apply to employees or dependents under the special circumstances listed
as exceptions under the definition of late enrollee in §26.4 of this
chapter (relating to Definitions).
(4)
Examples for applying subparagraphs (A) and (B) of this
paragraph, in the case of both insurers and HMOs: Individual A requests coverage
on October 1, 1997, after the enrollment period of July 1, 1997, through July
31, 1997 has ended. The next annual open enrollment period is July 1, 1998,
through July 31, 1998. The effective date of coverage for persons enrolling
during an open enrollment period is the beginning of the plan year, which
is September 1 of each year.
(A)
If the carrier is an insurer and has elected to exclude
all applicants requesting late enrollment under health benefit plans subject
to this subchapter until the next open enrollment period, Individual A must
reapply for coverage in July 1998 and the carrier may apply up to a 12-month
preexisting condition period from the effective date of coverage, as with
any other enrollee, the preexisting condition period would begin on September
1, 1998, and expires on September 1, 1999.
(B)
If the carrier is an insurer and has elected to accept
applications for late enrollment under health benefit plans subject to this
subchapter immediately and enroll the applicant during the plan year, then
the carrier may apply up to an 18-month preexisting condition period from
the date of application. If Individual A applied for coverage on October 1,
1997, the preexisting condition period would begin on that date and would
expire on April 1, 1999.
(C)
If the carrier is an HMO and has elected to exclude all
applicants requesting late enrollment under health benefit plans subject to
this subchapter until the next open enrollment period, Individual A must reapply
for coverage in July 1998 and the carrier may apply up to a 60-day affiliation
period, as with any other enrollee.
(D)
If the carrier is an HMO and has elected to accept applications
for late enrollment under health benefit plans subject to this subchapter
immediately and enroll the applicant during the plan year, then the carrier
may apply up to a 90-day affiliation period from the day Individual A applied
for coverage.
(i)
A health maintenance organization may impose an affiliation
period if the period is applied uniformly to each enrollee without regard
to any health status related factor. The affiliation period shall not exceed
two months for an enrollee, other than a late enrollee, and shall not exceed
90 days for a late enrollee. An affiliation period under a plan shall run
concurrently with any applicable waiting period under the plan. An HMO shall
not impose any preexisting condition limitation, except for an affiliation
period.
(j)
A large employer may establish a waiting period applicable
to all new entrants under the health benefit plan during which a new employee
is not eligible for coverage. The large employer shall determine the duration
of the waiting period. A large employer carrier shall not apply a waiting
period, elimination period, or other similar limitation of coverage (other
than an exclusion for preexisting medical conditions or impose an affiliation
period consistent with Insurance Code Articles 26.83 and 26.90), with respect
to a new entrant, that is longer than the waiting period established by the
large employer. Upon completion of the waiting period and enrollment within
the time frame allowed by §26.305(a) of this chapter (relating to Enrollment),
coverage must be effective no later than the next premium due date. Coverage
may be effective at an earlier date as agreed upon by the large employer and
the large employer carrier.
(k)
A large employer health benefit plan may not, by use of
a rider or amendment applicable to a specific individual, limit or exclude
coverage by type of illness, treatment, medical condition, or accident, except
for a preexisting condition or affiliation period permitted under Insurance
Code, Articles 26.83 and 26.90.
(l)
To determine if preexisting conditions as defined in Insurance
Code Article 26.02(23) exist, a large employer carrier shall ascertain the
source of previous or existing coverage of each eligible employee meeting
the participation criteria and each dependent of an eligible employee at the
time such employee or dependent initially enrolls into the health benefit
plan provided by the large employer carrier. The large employer carrier shall
have the responsibility to contact the source of such previous or existing
coverage to resolve any questions about the benefits or limitations related
to such previous or existing coverage in the absence of a creditable coverage
certification form.
§26.307.Fair Marketing.
(a)
Upon request, each large employer purchasing health benefit
plans shall be given a summary of all plans for which the employer is eligible.
(b)
Denial by a large employer carrier of an application for
coverage or cancellation, or refusal to renew must be in writing and must
state with specificity the reasons for the denial, cancellation, or refusal
to renew (subject to any restrictions related to confidentiality of medical
information). The large employer carrier shall notify the large employer in
accordance with Insurance Code, Articles 26.87 and 26.88.
(c)
A large employer carrier may not require, as a condition
to the offer or sale of a health benefit plan to a large employer, that the
large employer purchase or qualify for any other insurance product or service.
(d)
The large employer carrier shall not require a large employer
to join or contribute to any association or group as a condition of being
accepted for coverage by the large employer carrier, except that, if membership
in an association or other group is a requirement for accepting a large employer
into a particular health benefit plan, a large employer carrier may apply
such requirement, subject to the requirements of the Insurance Code, Chapter
26, Subchapters A and H.
(e)
Health carriers offering individual and group health benefit
plans in this state shall be responsible for determining whether the plans
are subject to the requirements of the Insurance Code, Chapter 26, Subchapters
A and H, and this subchapter. Health carriers shall elicit the following information
from applicants for such plans at the time of application:
(1)
whether any portion of the premium will be paid by a large
employer;
(2)
whether the prospective policyholder, certificate holder,
or any prospective insured individual intends to treat the health benefit
plan as part of a plan or program under §162 or §106 of the United
States Internal Revenue Code of 1986 (26 United States Code §106 or §162);
(3)
whether the health plan is an employee welfare benefit
plan under 29 CFR §2510.3-1(i); or
(4)
whether the applicant is a large employer.
(f)
If a health carrier fails to comply with subsection (e)
of this section, the health carrier shall be deemed to be on notice of any
information that could reasonably have been attained if the health carrier
had complied with subsection (e) of this section.
(g)
A large employer carrier may not terminate, fail to renew,
limit its contract or agreement of representation with, or take any other
negative action against an agent for any reason related to the agent's request
that the carrier issue or renew a health benefit plan to a large employer.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed
with the Office of the Secretary of State on March 17, 2005.
TRD-200501212
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: April 6, 2005
Proposal publication date: November 12, 2004
For further information, please call: (512) 463-6327
Subchapter A. SMALL EMPLOYER HEALTH INSURANCE PORTABILITY AND AVAILABILITY ACT REGULATIONS
Subchapter C. LARGE EMPLOYER HEALTH INSURANCE PORTABILITY AND AVAILABILITY ACT REGULATION
Chapter 26.
SMALL EMPLOYER HEALTH INSURANCE REGULATIONS