28 TAC §21.3901 - 21.3905
The Commissioner of Insurance adopts new §§21.3901
- 21.3905 concerning high deductible health plans (HDHP). Sections 21.3901
- 21.3904 are adopted with changes to the proposed text as published in the
November 11, 2005, issue of the
Texas Register
(30
TexReg 7363). Section 21.3905 is adopted without changes.
The 79th Texas Legislature's enactment of House Bill 1602 added new Chapter
1653 to the Texas Insurance Code, authorizing a carrier to apply deductible
or copayment requirements to benefits, including state-mandated health benefits,
to qualify a health benefit plan as an HDHP. The department adopts these new
sections to implement HB 1602.
To qualify as an HDHP, a health plan must meet standards specified in §223,
Internal Revenue Code of 1986. Section 1201 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, added §223
to the Internal Revenue Code to permit eligible individuals to establish health
savings accounts (HSAs) for taxable years beginning after December 31, 2003.
Among the requirements for an individual to qualify as an eligible individual
under §223(c)(1) (and thus to be eligible to make tax-favored contributions
to an HSA) is the requirement that the individual be covered under an HDHP,
a health plan that satisfies certain requirements with respect to minimum
deductibles and maximum out-of-pocket expenses. Generally, an HDHP may not
provide benefits for any year until the deductible for that year is satisfied.
Section 223(c)(2)(C), however, provides a safe harbor in that a plan does
not lose its status as an HDHP by reason of failing to have a deductible for
preventive care. An HDHP may therefore provide preventive care benefits without
a deductible or with a deductible below the minimum annual deductible.
Texas law requires health plans to provide certain health care benefits
or services without regard to a deductible, and health carriers should take
care to follow federal guidance regarding whether such benefits or services
fall within the §223(c)(2)(C) safe harbor for preventive care. For example,
Texas Insurance Code, §1367.053, requires coverage of certain childhood
immunizations through age six without regard to a deductible, copayment, or
coinsurance requirement. Similarly, Texas Insurance Code, §1367.103,
requires coverage of certain screening tests for hearing loss in children
from birth through the date the child is 30 days old without regard to deductible
or dollar limits. The federal government has identified both these types of
benefits or services, in IRS Bulletin 2004-15, as within the preventive safe
harbor, so this rule would not authorize a carrier to apply a deductible or
copayment requirement to these benefits or services. In that Bulletin, the
IRS also indicated that it may publish additional guidance on the definition
of preventive care, so carriers should monitor IRS publications to remain
in compliance with all applicable law.
The IRS has provided transitional relief for individuals in states where
HDHPs are not available because state laws require health plans to provide
certain benefits without regard to a deductible or below the minimum annual
deductible of §223(c)(2)(A)(i). The transitional relief covers months
before January 1, 2006. To achieve full implementation of HB 1602, this proposal
contains a provision making the rule applicable to plans issued, amended to
be effective, renewed, or issued for delivery on or after that date. This
provision will ensure that HDHPs in Texas, to the extent necessary, will be
able to maintain federal tax qualification after the end of transitional relief.
Carriers seeking to amend existing plans not scheduled for renewal before
January 1, 2006 must comply with all state and federal laws before effecting
amendment, including obtaining the consent of the policyholder where required.
The adoption includes changes to the new sections as proposed. In response
to a comment, the department changed §21.3901 to state that Texas Insurance
Code, Chapter 1653, prohibits construing state statutes to prevent a health
carrier from applying deductible or copayment requirements to benefits in
order to qualify a health benefit plan as a high deductible health plan. The
department also added §21.3902(8) defining preventive services in response
to a comment.
The department responded to a comment by deleting the language proposed
in §21.3904(b). Subsection (b) no longer contains a reference to a "minimum"
amount. Further, in response to another comment regarding this section, the
department has clarified that preventive benefits or services that are paid
on a first-dollar basis will not disallow a plan from qualifying as an HDHP.
Additionally, the amended text of §21.3904(b) states that subsection
(a) will not apply to a preventive care benefit or service, such as childhood
immunizations. Other minor mechanical changes in relation to grammar and punctuation
are included in §§21.3901 - 21.3904.
New §21.3901 expresses the purpose of the rule. New §21.3902
includes definitions of terms used in the subchapter. New §21.3903 provides
that high deductible health plans are subject to state mandated health benefits,
except as provided by new §21.3904, which defines the scope of the exemption
from state requirements as necessary to qualify a health benefit plan as a
high deductible health plan. New §21.3905 makes the subchapter applicable
to coverage under a health benefit plan issued, amended to be effective, renewed,
or issued for delivery on or after January 1, 2006.
Comment: A commenter argues that §1653.001(b) of HB 1602 overrides
(a), but that the rule does not reflect this preemption. The commenter is
concerned that the proposed rule will interfere with the ability to have a
high deductible plan that is not subject to the mandated benefits enacted
by the legislature.
Agency Response: The department changed the text of proposed rule §21.3901
to conform to the statutory language and standard.
Comment: A commenter notes that the proposed rule does not distinguish
between preventive services and other services.
Agency Response: The department adds §21.3902(8) which defines preventive
services.
Comment: A commenter recommends revising the beginning of §21.3903
to make the permitted exceptions for health carriers in §21.3904 clearer
and to avoid unintended misinterpretation.
Agency Response: The department declines to make the requested changes
as the proposed language mirrors that of Insurance Code, §1653.002.
Comment: Several commenters object to the language in the proposed rule §21.3904(b)
that refers to a minimum amount necessary to qualify a health benefit plan
as a high deductible health plan. They state that this language goes beyond
the scope of the legislation.
Agency Response: The language of §21.3904(b) has been deleted, and
the proposed rule no longer contains a reference to a "minimum" amount.
Comment: A commenter notes that the preamble of the proposed regulation
goes beyond the scope of HB 1602, misinterpreting IRS notice 2004-23 by implying
that the rule would not authorize a carrier to apply a deductible or copayment
requirement to preventive benefits or services.
Agency Response: The department disagrees with the commenter's interpretation.
While the commenter is correct that federal law only allows the application
of a deductible to preventive care benefits or services, it does not take
into account state statutes forbidding application of a deductible to certain
preventive care; to wit, Insurance Code, §1367.053 and §1367.054,
require a health benefit plan to cover certain childhood immunizations without
making them subject to a deductible, copayment, or coinsurance requirement.
Since this benefit falls under the federal law safe harbor, HB 1602 does not
prevent its application to a high deductible health plan. In §21.3904(b),
the rule now clarifies that preventive benefits or services that are paid
on a first-dollar basis will not disallow a plan from qualifying as a high
deductible health plan.
Comment: A commenter believes that the proposed rule is consistent with
HB 1602. The commenter suggests that, if there are any changes made, the rule
should also indicate that any service falling within the safe harbor will
be subject to any deductible restrictions specified by Texas law.
Agency Response: The department has amended the text of §21.3904(b)
to state that subsection (a) of §21.3904 does not apply to preventive
care.
For: Office of Public Insurance Counsel.
Against: Texas Association of Health Plans, American Health Insurance Plans.
Against: Kyle Janek, State Senator for District 17, Texas Association of
Underwriters, Texas Association of Life and Health Insurers, Unicare, and
Blue Cross and Blue Shield of Texas.
The amendments are adopted under the Insurance Code, §1653.003
and §36.001. Section 1653.003 provides rulemaking authority to the Commissioner
of Insurance for the purpose of administering the statute and directs the
Commissioner to adopt rules necessary to implement the chapter. 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.
§21.3901.Purpose.
The purpose of this subchapter is to implement Texas Insurance Code
Chapter 1653 which prohibits construing state statutes to prevent a health
carrier from applying deductible or copayment requirements to benefits, including
state-mandated health benefits, in order to qualify health benefit plans as
high deductible health plans.
§21.3902.Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise.
(1)
Accident and health insurance policy--Any policy or contract
that provides insurance against loss resulting from:
(A)
accidental bodily injury;
(B)
accidental death; or
(C)
sickness.
(2)
Evidence of coverage--Any certificate, agreement, or contract,
including a blended contract, that:
(A)
is issued to an enrollee; and
(B)
states the coverage to which the enrollee is entitled.
(3)
Health benefit Plan--An accident and health insurance policy
or evidence of coverage.
(4)
Health carrier--A health insurer or health maintenance
organization.
(5)
Health insurer--Includes:
(A)
a life, health, and accident insurance company;
(B)
a mutual insurance company, including:
(i)
a mutual life insurance company; and
(ii)
a mutual assessment life insurance company;
(C)
a local mutual aid association;
(D)
a mutual or natural premium life or casualty insurance
company;
(E)
a general casualty company;
(F)
a Lloyd's plan;
(G)
a reciprocal or interinsurance exchange;
(H)
a nonprofit hospital, medical, or dental service corporation,
including a corporation operating under Texas Insurance Code Chapter 842;
and
(I)
another insurer issuing an accident and health insurance
policy and required by law to be authorized by the department.
(6)
Health maintenance organization--A person who arranges
for or provides to enrollees on a prepaid basis a health care plan, a limited
health care service plan, or a single health care service plan.
(7)
High deductible health benefit plan--Has the meaning assigned
by Section 223, Internal Revenue Code of 1986.
(8)
Preventive care--Has the meaning assigned by Section 223(c)(2)(C),
Internal Revenue Code of 1986. Preventive care does not generally include
any service or benefit intended to treat an existing illness, injury, or condition.
Preventive care includes, but is not limited to:
(A)
periodic health evaluations, including tests and diagnostic
procedures ordered in connection with routine examinations, such as annual
physicals;
(B)
routine prenatal and well-child care;
(C)
child and adult immunizations;
(D)
tobacco cessation programs;
(E)
obesity weight-loss programs; and
(F)
screening services.
§21.3903.Applicability of State Mandates to High Deductible Health Plans.
Subject to §21.3904(a) of this subchapter (relating to Exemption
from State Mandates for High Deductible Health Plans), a high deductible health
plan is subject to any law mandating a minimum health insurance benefit or
reimbursement.
§21.3904.Exemption from State Mandates for High Deductible Health Plans.
(a)
No provision of the Insurance Code may be construed to
prevent a health carrier or other entity issuing a health benefit plan from
applying deductible or copayment requirements to benefits and services, including
state-mandated health benefits and services, in order to qualify the health
benefit plan as a high deductible health plan.
(b)
Subsection (a) of this section does not apply to a preventive
care benefit or service. Example: Insurance Code §§1367.053 and
1367.054 require a health benefit plan to cover certain childhood immunizations
without making them subject to a deductible, copayment, or coinsurance requirement.
While compliance with this Texas statute would ostensibly prevent a health
benefit plan from qualifying as a high deductible health plan, since IRS Bulletin
2004-15 classifies the benefit as preventive care, the safe harbor of 29 U.S.C. §228
allows a high-deductible health plan to cover it on a first-dollar basis.
Accordingly, compliance with §§1367.053 and 1367.054 does not prevent
a health benefit plan from qualifying as a high deductible health plan, and
Insurance Code §1653.002 thus would not except a health carrier issuing
a high deductible health plan from compliance with the state mandate.
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 May 11, 2006.
TRD-200602650
Gene C. Jarmon
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: May 31, 2006
Proposal publication date: November 11, 2005
For further information, please call: (512) 463-6327