Part 1.
TEXAS DEPARTMENT OF INSURANCE
Chapter 3.
LIFE, ACCIDENT, AND HEALTH INSURANCE ANNUITIES
Subchapter T. MINIMUM STANDARDS FOR MEDICARE SUPPLEMENT POLICIES
28 TAC §§3.3306, 3.3308, 3.3312
The Texas Department of Insurance proposes amendments to §§3.3306,
3.3308 and 3.3312 concerning minimum benefit standards for issuers of Medicare
supplement policies and guaranteed issuance of Medicare supplement policies
to eligible beneficiaries. The amendments are necessary to implement changes
made to the Social Security Act (Act) by Medicare, Medicaid, and State Children's
Health Insurance Program Benefits Improvement and Protection Act of 2000 (BIPA)
and subsequent changes made to the National Association of Insurance Commissioners
(NAIC) Model Regulation to Implement the NAIC Medicare Supplement Insurance
Minimum Standards Model Act. The Model Regulation was accepted by the Centers
for Medicare and Medicaid Services (CMS), as it is the agency that administers
Medicare. The proposed amendment to §3.3306(1)(G)(ii) requires Medicare
supplement policies and certificates to include provisions that allow benefits
and premiums to be suspended for any period that may be provided by federal
regulations. Proposed amendments to §3.3306(2)(E) and §3.3308 clarify
that the copayment amount for hospital outpatient services paid under the
prospective payment system is a basic core benefit. The proposed amendment
to §3.3306(3)(I)(ii)(II) corrects a misspelling. As the federal government
has changed the name of the agency that governs Medicare supplement policies
from Health Care Financing Administration to the Centers for Medicare and
Medicaid Services, this name change is reflected in the proposed amendment
to §3.3308(a)(6).
The proposed amendments to §3.3312 include changing the language of
subsection (a)(1) to use the wording of the Act "seek to enroll"; however,
the change does not affect the meaning of that paragraph. Proposed amendments
to subsection (b)(2)(A) and (B) are necessary to delete language that is no
longer applicable due to BIPA changes. The proposed amendments to subsection
(b)(3) and (5) clarify that the subparagraphs refer to the Act and to reflect
a change in the language used by the Act relating to Medicare cost versus
risk. Proposed amendments to subsection (b)(5) and (6) change the wording
from "PACE program" to "PACE provider" to distinguish that the enrollee enrolls
with an entity that provides services rather than the program that oversees
the entity that provides the services. Proposed paragraphs (1)(A) and (2)
- (5) of subsection (d) explain guaranteed issue periods for individuals under
certain scenarios in compliance with changes in federal law (BIPA). As allowed
by federal law and as suggested by the NAIC and supported by CMS paragraph
(1)(A) is proposed to provide greater protection by delaying the guaranteed
issue time period to the later of the date of termination of coverage or notice
of termination (or denial of a claim because of such termination). Corresponding
changes are also proposed to paragraph (1)(B) inasmuch as existing §3.3312(b)(1)
previously extended protections for guaranteed issuance beyond those required
by federal law. Subsection (e) is proposed in compliance with federal law
and explains interrupted trial periods to an enrollee during these periods.
As the accepted changes to the NAIC Model Regulation affected guaranteed
issue time periods, proposed amendments to §21.2107 are published elsewhere
in this issue of the
Texas Register
.
Ana Smith-Daley, Deputy Commissioner, Life/Health Division, has determined
that for each year of the first five years the proposal will be in effect,
there will be no fiscal impact to state and local governments as a result
of the enforcement or administration of the rule. There will be no measurable
effect on local employment or the local economy as a result of the proposal.
Ms. Smith-Daley has also determined that for each year of the first five
years the sections are in effect, the public benefits anticipated as a result
of the proposal will be an increase in the understanding of requirements and
benefits of Medicare supplement policies, guaranteed issue by Medicare supplement
issuers and extended Medicare supplement access for interrupted trial periods.
With the exception of the proposed amendment to §3.3312(d)(1) which only
delays the guaranteed issue time period for individuals losing their employee
welfare benefit plan, any cost to persons required to comply with the proposed
amendments is the result of federal enactment of BIPA, and not as the result
of the enforcement or administration of the proposed amendments. The department
believes that the cost associated with the delayed guaranteed issue time period
for individuals losing their employee welfare benefit would be limited to
the cost of notifying employees and agents as the rule does not require extension
of coverage to an individual who would not otherwise be entitled to coverage.
Medicare Supplement issuers could notify their employees and agents through
regular in-house training, newsletters, flyers or announcements, either electronically
or hard copy. The department estimates that if an issuer were to notify affected
employees and agents via U.S. postal service regular mail, the cost associated
would be no more than $0.40 per employee or agent which includes cost for
postage and printing a one page document. The actual cost will depend on the
methods of notification and on the number of employees or agents the issuers
must notify. It is the department's position that the proposed amendments
will not have an adverse economic effect on small businesses or micro-businesses.
Because the requirements of this rule are mandated by underlying federal statute,
and considering the underlying state and federal the statutes' purposes, it
is neither legal nor feasible to waive or modify the requirements of the amendments
for small and micro-businesses, as doing so would result in a disparate effect
on persons affected by these proposed amendments.
To be considered, written comments on the proposal must be submitted no
later than 5:00 P.M. on February 25, 2002 to Lynda H. Nesenholtz, General
Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance,
P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment
must be simultaneously submitted to Diane Moellenberg, Chief Director, Regulatory
Development, Mail Code 107-2A, P.O. Box 149104, Austin, Texas 78714-9104.
A request for public hearing on the proposal should be submitted separately
to the Office of the Chief Clerk.
The amendments are proposed under Insurance Code Article 3.74
and §36.001. Article 3.74, §2(c) requires the department to issue
reasonable rules to establish specific standards for provisions of Medicare
supplement policies and standards for facilitating comparison among the Medicare
supplement products of the insurer or entity offering such Medicare supplement
products. Article 3.74, §3 mandates the department to issue reasonable
rules to establish minimum standards for benefits and claim payments under
Medicare supplement policies. Article 3.74, §5(b) requires the department
to prescribe the format and content of the disclosure which outlines Medicare
supplement policy coverage. Article 3.74, §2(f) and §5(f) mandate
that the rules shall be at least equal to those required by federal law, regulations,
and standards adopted under 42 U.S.C. §1395ss. Article 3.74, §10
provides that the department shall adopt rules in accordance with the federal
law applicable to the regulation of Medicare supplement insurance coverage
that are necessary for the state to obtain or retain certification as a state
with an approved regulatory program under §1882 Social Security Act (42
U.S.C. §1395ss). Section 36.001 authorizes the Commissioner to adopt
rules for the conduct and execution of the powers of the department as authorized
by statute.
The following article is affected by this proposal: Insurance Code, Article
3.74
§3.3306.Minimum Benefit Standards.
No insurance policy, subscriber contract, certificate, or evidence
of coverage may be advertised, solicited, or issued for delivery in this state
as a Medicare supplement policy unless the policy, contract, certificate,
or evidence of coverage meets the applicable standards in paragraphs (1) -
(3) of this section. These are minimum standards and do not preclude the inclusion
of other provisions or benefits which are not inconsistent with these standards.
(1)
General standards. The following standards apply to Medicare
supplement policies and are in addition to all other requirements of this
subchapter, the Insurance Code, Article 3.74, and any other applicable law.
(A) - (F)
(No change.)
(G)
A Medicare supplement policy or certificate shall provide
that benefits and premiums under the policy or certificate shall be suspended
at the request of the policyholder or certificate holder for the period (not
to exceed 24 months) in which the policyholder or certificate holder has applied
for and is determined to be entitled to medical assistance under Title XIX
of the Social Security Act, but only if the policyholder or certificate holder
notifies the issuer of such policy or certificate within 90 days after the
date the individual becomes entitled to such assistance.
(i)
(No change.)
(ii)
Each Medicare supplement policy or certificate shall provide
that benefits and premiums under the policy or certificate shall be suspended
(for
any
[
(iii)
(No change.)
(2)
Standards for the basic (core) benefits common to all benefit
plans. Every issuer shall make available a policy or certificate including
only the basic "core" package of benefits described in subparagraphs (A) -
(E) of this paragraph to each prospective insured. An issuer may make available
to prospective insureds any of the other Medicare supplement insurance benefit
plans in addition to the basic core package, but not in lieu of it. The basic
core benefits shall consist of the following:
(A) - (D)
(No change.)
(E)
coverage for the coinsurance amount (or in the case of
hospital outpatient department services
paid
under a prospective
payment system, the copayment amount) of Medicare eligible expenses under
Part B regardless of hospital confinement, subject to the Medicare Part B
deductible.
(3)
Standards for Additional Benefits. The additional benefits
as uniformly defined in subparagraphs (A) - (K) of this paragraph shall be
included in Medicare Supplement Benefit Plans "B" through "J" only as provided
in paragraph (5)(A) - (I) of this section.
(A) - (H)
(No change.)
(I)
Preventive Medical Care Benefit or Services--Coverage for
the preventive health services described in clauses (i) - (iv) of this subparagraph.
Coverage for preventive medical care benefits or services shall be for the
actual charges up to 100% of the Medicare-approved amount for each service,
as if Medicare were to cover the service as identified in American Medical
Association Current Procedural Terminology (AMA CPT) codes, to a maximum of
$120 annually under this benefit. This benefit shall not include payment for
any procedure covered by Medicare:
(i)
(No change.)
(ii)
any one or a combination of the following preventive screening
tests or preventive services, the frequency of which is considered medically
appropriate:
(I)
(No change.)
(II)
dipstick urinalysis for hematuria, bacteriuria, and
proteinuria
[
(III) - (VI)
(No change)
(iii) - (iv)
(No change.)
(J) - (K)
(No change.)
(4) - (5)
(No change.)
§3.3308.Required Disclosure Provisions.
(a)
General rules.
(1) - (5)
(No change.)
(6)
Issuers of accident and sickness policies, certificates,
or subscriber contracts which provide hospital or medical expense coverage
on an expense incurred or indemnity basis, to a person(s) eligible for Medicare
shall provide to those applicants a Guide to Health Insurance for People with
Medicare in the form developed jointly by the National Association of Insurance
Commissioners and the
Centers for Medicare and Medicaid Services
[
(A) - (D)
(No change.)
(7)
(No change.)
(b)
(No change.)
(c)
Form for outline of coverage. In providing outlines of
coverage to applicants pursuant to the requirements of subsection (b)(1) of
this section, insurers shall use a form which complies with the requirements
of this subsection. The outline of coverage must contain each of the following
four parts in the following order: a cover page, premium information, disclosure
pages, and charts displaying the features of each benefit plan offered by
the issuer. The outline of coverage shall be in the language and format prescribed
in paragraphs (1) and (2) of this subsection in no less than 12-point type.
(1)
(No change.)
(2)
The items in subparagraphs (A) - (C) of this paragraph
shall be included in the outline of coverage in addition to the items specified
in the plan-specific outline-of-coverage forms.
(A) - (C)
(No change.)
(D)
The outline of coverage for Medicare Select policies or
certificates shall include information regarding grievance procedures which
meet the requirements of §3.3325(m) of this title (relating to Medicare
Select Policies, Certificates and Plans of Operation).
Figure: 28 TAC §3.3308(c)(2)(D)
(d)
(No change.)
§3.3312.Guaranteed Issue for Eligible Persons.
(a)
Guaranteed issue.
(1)
Eligible persons are those individuals described in subsection
(b) of this section who
seek to enroll under the Medicare supplement
policy during the period specified in
[
(2)
(No change.)
(b)
Eligible Persons. An eligible person is an individual described
in any of the following paragraphs:
(1)
(No change.)
(2)
The individual is enrolled with a Medicare+Choice organization
under a Medicare+Choice plan under Part C of Medicare, and any of the following
circumstances apply, or the individual is 65 years of age or older and is
enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider
under Section 1894 of the Social Security Act, and there are circumstances
similar to the following that would permit discontinuance of the individual's
enrollment with such provider if such individual were enrolled in a Medicare+Choice
plan:
(A)
The certification of the organization or plan has been
terminated[
(B)
The organization has terminated or otherwise discontinued
providing the plan in the area in which the individual resides[
(C) - (E)
(No change.)
(3)
The individual is enrolled with an entity listed in subparagraphs
(A) - (D) of this paragraph and enrollment ceases under the same circumstances
that would permit discontinuance of an individual's election of coverage under
paragraph (2) of this subsection:
(A)
An eligible organization under a contract under Section
1876
of the Social Security Act
(Medicare [
(B)
(No change.)
(C)
An organization under an agreement under Section 1833(a)(1)(A)
of the Social Security Act
(health care prepayment plan); or
(D)
(No change.)
(4)
(No change.)
(5)
The individual was enrolled under a Medicare supplement
policy and terminates enrollment and subsequently enrolls, for the first time,
with any Medicare+Choice organization under a Medicare+Choice plan under part
C of Medicare, any eligible organization under a contract under section 1876
of the Social Security Act
(Medicare [
(6)
The individual, upon first becoming enrolled in Medicare
part B for benefits at age 65 or older, enrolls in a Medicare+Choice plan
under part C of Medicare, or
with
[
(c)
(No change.)
(d)
Guaranteed Issue Time Period(s).
[
(1)
In the case of an individual described
in subsection (b)(1) of this section:
(A)
for a plan that supplements the benefits under Medicare,
the guaranteed issue period begins on the later of:
(i)
the date the individual receives a notice of termination
or cessation of all supplemental health benefits (or if a notice is not received,
the date the individual receives notice that a claim has been denied because
of such termination or cessation); or
(ii)
the date the applicable coverage terminates or ceases;
and ends 63 days thereafter; or
(B)
for a plan that is primary to the benefits under Medicare,
the guaranteed issue period begins on the later of:
(i)
the date the individual receives a notice of termination
or cessation of all health benefits (or if a notice is not received, the date
the individual receives notice that a claim has been denied because of such
termination or cessation); or
(ii)
the date the applicable coverage terminates or ceases;
and ends 63 days thereafter.
(2)
In the case of an individual described
in subsection (b)(2), (3), (5), or (6) of this section whose enrollment is
terminated involuntarily, the guaranteed issue period begins on the date that
the individual receives a notice of termination and ends 63 days after the
date the applicable coverage is terminated;
(3)
In the case of an individual described
in subsection (b)(4)(A) of this section, the guaranteed issue period begins
on the earlier of the date that the individual receives a notice of termination,
a notice of the issuer's bankruptcy or insolvency, or other such similar notice
if any, and the date that the applicable coverage is terminated, and ends
on the date that is 63 days after the date the coverage is terminated;
(4)
In the case of an individual described
in subsection (b)(2), (4)(B) and (C), (5), or (6) of this section, who disenrolls
voluntarily, the guaranteed issue period begins on the date that is 60 days
before the effective date of the disenrollment and ends on the date that is
63 days after the effective date of disenrollment; and
(5)
In the case of an individual described
in subsection (b) of this section, but not described in paragraphs (1) - (4)
of this subsection, the guaranteed issue period begins on the effective date
of disenrollment and ends on the date that is 63 days after the effective
date of disenrollment.
(e)
Extended Medicare Supplement Access for
Interrupted Trial Periods.
(1)
In the case of an individual described in subsection (b)(5)
of this section (or deemed to be so described, pursuant to this paragraph),
whose enrollment with an organization or provider described in subsection
(b)(5) of this section is involuntarily terminated within the first 12 months
of enrollment, and who, without an intervening enrollment, enrolls with another
such organization or provider, the subsequent enrollment shall be deemed to
be an initial enrollment as described in subsection (b)(5) of this section.
(2)
In the case of an individual described in subsection (b)(6)
of this section (or deemed to be so described, pursuant to this paragraph),
whose enrollment with a plan or in a program described in subsection (b)(6)
of this section is involuntarily terminated within the first 12 months of
enrollment, and who, without an intervening enrollment, enrolls with another
such plan or program, the subsequent enrollment shall be deemed to be an initial
enrollment as described in subsection (b)(6) of this section.
(3)
For purposes of subsection (b)(5) and (6) of this section,
no enrollment of an individual with an organization or provider described
in subsection (b)(5) of this section, or with a plan or in a program described
in subsection (b)(6) of this section, may be deemed to be an initial enrollment
under this paragraph after the 2-year period beginning on the date on which
the individual first enrolled with such an organization, provider, plan, or
program.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State, on January 14, 2002.
TRD-200200169
Gene Jarmon
Assistant General Counsel
Texas Department of Insurance
Earliest possible date of adoption: February 24, 2002
For further information, please call: (512) 463-6327
Subchapter B. INSURANCE HOLDING COMPANY SYSTEM REGULATORY ACT
28 TAC §§7.201 - 7.205, 7.209 - 7.213
The Texas Department of Insurance proposes amendments to §§7.201
- 7.205 and §§7.209 - 7.213, concerning administrative regulation
under the Insurance Holding Company System Regulatory Act (Insurance Code
Article 21.49-1). The amendments are necessary to implement amendments made
to the Act by Senate Bill 605, 77th Legislature, 2001, to improve the administrative
efficiency of the Texas Department of Insurance, and to promote compliance
by entities subject to the Act. The proposed amendments also require the filing
of fingerprint cards on certain individuals associated with an applicant in
the acquisition or change of control of a domestic insurer. These amendments
are necessary to facilitate background checks on such individuals through
the Federal Bureau of Investigation and the Texas Department of Public Safety.
Background checks will provide another tool for the department, in its efforts
to protect policyholders by identifying persons who have a criminal background,
so that the department can consider the potential for problems such as illegal
use of company funds, non-compliance with federal statutes and fitness and
competency of management. Additionally, the requirement for background checks
is consistent with other states whose statutes or regulations require fingerprints.
The proposed amendments to §§7.201(a)(1), 7.202(b)(1), 7.203(n),
7.209(d), and 7.210(e) reflect a change in name of the division within the
Financial Program which handles holding company transactions; the name change
is from Financial Monitoring to Financial Analysis and Examinations. The proposed
amendments to §7.201(b)(1) and §7.209(m)(4) remove the reference
to the previous State Board of Insurance which no longer exists. The proposed
amendment to §7.202(a)(4) adds the commissioner's senior associates within
the definition of "commissioner." Proposed amendments to §§7.203(g),
(h), (n), 7.204(d)(1), 7.205(m) and (n) correct citations which have changed
as a result of recodification of the Insurance Code. The proposed amendments
to §7.203(n) clarify that notices of ordinary dividends can be provided
by facsimile; clarify that ordinary dividends can be paid after ten calendar
days notice to the commissioner; and adopt a revised Form HCDividend (Rev.
01/2002). Proposed §7.204(a)(2)(G) is amended to provide for the filing
of notice of the participation in an investment pool by a property and casualty
insurer, and the remaining section is relettered. The proposed amendment to §7.204(b)
clarifies that transactions with affiliates are subject to receipt of the
applicable filing fee by the commissioner and provides that contracts, agreements,
or memoranda of understanding must provide for settlement within 90 days.
The proposed amendment to §7.204(e) removes a reference to a previously
repealed section. The proposed amendments to §7.205 clarify that all
acquisitions and changes of control are subject to the Act, §5(a) and
implement Senate Bill 605 by deleting language repealed by that bill. The
proposed amendments to §7.205(f) provide for a denial of an acquisition
or change of control by the commissioner. The proposed amendments to §7.209(a)
are made for consistency with proposed §7.205(a) and to change the year
as a result of the change in the century. The proposed amendments to §7.209(d)
add a new paragraph (1) and a new paragraph (2) that provides for certain
persons in an acquisition or change of control to provide fingerprint cards
to the commissioner. The proposed amendment to §7.209(f)(3) adds a new
provision that requires disclosure of plans for changes in the privacy policies
and procedures of a domestic insurer and provides for an affirmative statement
by the acquiring party of the domestic insurer's compliance with applicable
statutes and regulations regarding privacy. The proposed amendments to §§7.209(n),
7.210(a) and (j), and 7.213(a) and (i) correct references and change the year
as a result of the change of the century. The proposed amendment to §7.210(f)(1)
adds a new subparagraph (C) that provides for disclosure of investment activities
of an investment pool and transactions between pools and participants and
reletters the remaining subparagraphs. The proposed amendments to §7.211(a)
and (f) and §7.212(a) and (p) change the year as a result of the change
in the century. Also, duplicative language has been deleted. Form HCDividend,
referenced under §7.203(n), is proposed for revision to incorporate technical
corrections to line numbers as a result of changes in the statutory annual
statement blank and to reflect the name of the Financial Analysis and Examinations
Division. The biographical affidavit form referenced under §7.201(a)(1)
is proposed for revision to add a notice concerning correction of information,
as required by House Bill 1922, 77th Legislature, 2001. Form HCDividend is
available for review by contacting the Financial Analysis and Examinations
Division, Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149099,
333 Guadalupe, Austin, Texas 78714-9099, or by calling (512) 322-5002, or
by fax to (512) 322-5082.
Betty Patterson, Senior Associate Commissioner for financial, has determined
that, for the first five-year period the proposed sections will be in effect,
the fiscal implications for state or local government as a result of enforcing
or administering the sections will be approximately $6,000 per year and there
will be no effect on local employment or local economy. The related cost for
implementing these sections includes fees for background checks through the
Federal Bureau of Investigation and the Texas Department of Public Safety
with a fee for each of $25 and $15, respectively. The department reviews approximately
35 acquisitions or changes of control of a domestic insurer each fiscal year.
The positions of Chairman of the Board, Chief Executive Officer, President,
Chief Financial Officer, Treasurer, and Controller are positions that have
fiduciary responsibilities. In certain instances, a person will hold the office
of two or more positions of fiduciary responsibility. To avoid duplication,
only one fingerprint card for such person will be necessary.
Ms. Patterson also has determined that, for each year of the first five
years the sections are in effect, the public benefits anticipated as a result
of enforcing this section will be more effective regulation of acquisitions
by insurers. Requiring fingerprint cards on persons who will be in control
of the financial records and transactions of a domestic insurer after an acquisition
or change of control will provide protection to policyholders and promote
the solvency of domestic insurers. There is minimal anticipated economic cost
to persons or entities who are required to comply with the amended sections,
as proposed, other than the cost of completion of the appropriate forms and
obtaining approval of the commissioner. The anticipated cost of obtaining
fingerprint cards from law enforcement agencies or testing centers will vary
in different locations; however, the department anticipates the cost should
not exceed $25 for each person. A company can minimize the cost of obtaining
a fingerprint card by going to a local law enforcement agency. On the basis
of cost per hour of labor, there is no anticipated difference in cost of compliance
between small and large businesses. Regardless of the fiscal effect, the department
does not believe it legal or feasible to waive the requirements of these rules
for small businesses or micro-businesses, because the necessity to perform
background checks on those individuals with a fiduciary responsibility does
not change based on the size of the acquiring company and the department has
no authority to waive fees or costs of other municipal, state, or federal
agencies.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on February 25, 2002 to Lynda H. Nesenholtz, General
Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance,
P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comments
should be submitted simultaneously to Betty Patterson, Senior Associate Commissioner,
Financial Program, Mail Code 305-2A, Texas Department of Insurance, P.O. Box
149104, Austin, Texas 78714-9104. Any requests for a public hearing should
be submitted separately to the Office of the Chief Clerk.
The amendments are proposed under the Insurance Code Article
21.49-1 and Section 36.001. Article 21.49-1, §11 authorizes the Commissioner
of Insurance to issue such rules and orders as shall be consistent with and
shall carry out the provisions of the Insurance Holding Company System Regulatory
Act and to govern the conduct of its business and proceedings under the Act.
Section 36.001 authorizes the commissioner to adopt rules for the conduct
and execution of the duties and functions of the department.
The following articles of the Insurance Code are affected by these amendments:
Articles 21.49-1 and 21.49-2C.
§7.201.Forms Filings.
(a)
General requirements.
(1)
The forms that are specified in §§7.209 - 7.213
of this title (relating to Form A, Form B, Form C, Form D, and Form E) are
intended to be guides in the preparation of the statements, notices, and applications
required by the Insurance Code[
(2)
Two complete originally signed copies (unless additional
copies are requested by the commissioner) of each statement, notice, or application,
including exhibits and all other papers and documents filed as a part thereof,
in connection with any acquisition statement filed under §7.209 of this
title [
(3) - (4)
(No change.)
(b)
Incorporation by reference, summaries, and omissions.
(1)
Information required by any item of any statement, notice,
or application may be incorporated by reference in answer or partial answer
to another item. Information contained in any instrument or document filed
with the [
(2) - (4)
(No change.)
(c) - (e)
(No change.)
§7.202.Definitions.
(a)
The following words and terms, when used in this subchapter,
shall have the following meanings, unless the context clearly indicates otherwise.
(1) - (3)
(No change.)
(4)
Commissioner--The commissioner of insurance of the State
of Texas, the commissioner's
senior associates,
associates or deputies,
or their designees, as appropriate.
(5) - (20)
(No change.)
(b)
Exemption--Commercially Domiciled Insurer.
(1)
The commissioner may exempt from the provisions of the
Act and these sections, except the registration requirement, any commercially
domiciled insurer if the commissioner determines that the insurer has assets
physically located in this state or an asset to liability ratio sufficient
to justify the conclusion that there is no reasonable danger that the operations
or conduct of the business of the insurer could present a danger of loss to
the policyholders of this state. The exemption granted under this subsection
shall set forth the specific criteria under which it is granted and shall
be subject to annual review. The commissioner may, after notice and
opportunity for
hearing, rescind an exemption granted to a commercially
domiciled insurer under the provisions of the Act and these sections. A rescission
of an exemption shall set forth the rationale for the rescission. Requests
for an exemption under this subsection shall be filed with Financial
Analysis and Examinations
[
(A) - (D)
(No change.)
(2)
(No change.)
§7.203.Registration of Insurers.
(a) - (f)
(No change.)
(g)
Annual amendment. Within 120 days after the end of each
fiscal year of the ultimate controlling person (that person which is not controlled
by another person) of the insurance holding company system, the registrant
shall file an amendment to the registration statement which shall make the
registration statement current. Within 120 days of the end of each calendar
year ending in a five or a zero, the registrant shall file a completely restated
up-to-date registration statement as set out in §7.210 of this title
(relating to Form B), with amendments consolidated therein. The registrant
is not required to file an annual amendment to its registration statement
under this subsection in the year that it files a completely restated up-to-date
registration statement. The registration statement referred to in
§7.1301(d)(22)
[
(h)
Termination of registration. The commissioner shall terminate
the registration of any insurer as provided in the Act,
§3(f)
[
(i) - (m)
(No change.)
(n)
Dividends and distributions. Each registered insurer shall,
by personal delivery, by telecopy
or facsimile
, or by mail addressed
to: Financial
Analysis and Examinations
[
§7.204.Commissioner's Approval Required.
(a)
Prior approval and notice.
(1)
(No change.)
(2)
The following transactions between a domestic insurer and
any person in its holding company system may not be entered into unless the
insurer has notified the commissioner in writing of its intention to enter
into any such transaction at least 30 days prior thereto, or such shorter
period as he may permit, and he has not disapproved it within such period:
(A) - (F)
(No change.)
(G)
participation in an investment pool by
a property and casualty insurer pursuant to the Insurance Code Article 2.10-5;
and
(H)
[
(3) - (6)
(No change.)
(b)
Transactions. Requests for approval of transactions pursuant
to subsection (a)(1) of this section and notices of proposed transactions
pursuant to subsection (a)(2) of this section, shall be accompanied by descriptions
of the essential features of such transactions which are reasonably adequate
to permit proper evaluation thereof by the commissioner
including the
applicable filing fee provided for in §7.1301(d)(23) of this title (relating
to Regulatory Fees)
. Such descriptions shall in all cases include at
least the following: the nature and purpose of the transaction; the nature
and amounts of any payments or transfers of assets between the parties; the
identities of all parties to such transactions; whether any officers or directors
of a party are pecuniarily interested therein, and copies of any proposed
contracts, agreements, or memoranda of understanding between the parties relating
to the transaction along with sufficient competent documentation evidencing
compliance with the standards specified in the Act, §4(a), and evidencing
that the transaction will not adversely affect the interest of policyholders.
Proposed contracts, agreements, or memoranda of understanding shall provide
for settlement within 90 days.
No such request or notice shall be deemed
filed with the commissioner until the date all such material has been provided.
(c)
(No change.)
(d)
Extraordinary dividends and other distributions.
(1)
No insurer subject to registration under §7.203(a)
of this title (relating to Registration of Insurers) shall pay any extraordinary
dividend or make any other extraordinary distribution to its shareholders
until:
(A)
30 days after the commissioner has received written notice
in accordance with §7.212 of this title (relating to Form D) of the declaration
thereof, including the applicable filing fee pursuant to
§7.1301(d)(23)
[
(B)
the commissioner shall have approved such payment within
such 30-day period. The written notice required under this paragraph shall
be deemed filed with the commissioner only when all material sufficient to
constitute a complete filing, including documentation to support each of the
standards set forth in the Act, §4(b), and the payment of any required
filing fee pursuant to
§7.1301(d)(23)
[
(2) - (3)
(No change.)
(e)
Adequacy of surplus. For the purposes of these sections,
in determining whether an insurer's surplus as regards policyholders is reasonable
in relation to the insurer's outstanding liabilities and adequate to its financial
needs, the factors specified in the Act, §4(b), among others, shall be
considered. [
§7.205.Acquisition Statements--Filing Requirements.
(a)
Filing Requirements. Filing and other regulatory requirements
for acquisitions
or changes
of control and certain other matters
as specified in the Act, §5(a), are governed by the Act, §5(a).
For purposes of this subsection, a domestic insurer as defined in the Act, §5(a)(2),
shall include any person controlling a domestic insurer, including a commercially
domiciled insurer, unless such person is either directly or through its affiliates
primarily engaged in business other than the business of insurance. A change
or substitution of an attorney-in-fact of a Lloyds' or reciprocal or interinsurance
exchange is subject to the Act, §5. An acquisition of control of a domestic
insurer is subject to the Act, §5, regardless of the domestic insurer's
exemption from regulation under the Act, §2(r). A failure to file complete
and accurate information in all material respects is grounds for a denial
by the commissioner under the Act, §5(c).
(b)
Form and content of statement. The statement required by
subsection (a) of this section (elsewhere referred to as acquisition statement)
shall be made in accordance with §7.209 of this title (relating to Form
A), the acquisition statement. The acquiring party shall provide additional
financial information in the form or substance as required by the commissioner
which is material to the finding required by the Act, §5(c)(1)(iii).
Any financial information required under the Act, §5(b)(3), may be waived
by the commissioner if such information is not deemed material. No statement
required by subsection (a) of this section shall be deemed filed with the
commissioner until on the date all such material required and sufficient to
constitute a full statement has been provided. [
(c) - (e)
(No change.)
(f)
Approval
or denial
by commissioner; hearings.
All mergers, acquisitions
or changes
of control, and other matters
as specified in the Act, §5(a), and mergers contemplated by the Insurance
Code[
(g) - (k)
(No change.)
(l)
Violations. The following shall be violations of this section:
(1)
(No change.)
(2)
the effectuation of, or any attempt to effectuate, an acquisition
or change
of control of, or merger with, a domestic insurer unless the
commissioner has given his approval thereto.
(m)
Additional violations. Each director or officer of an insurance
company subject to these sections, or of an insurance holding company system
subject to these sections, who knowingly and willfully violates, participates
in, or assents to or who knowingly and willfully permits any of the officers,
agents, or employees of the insurer or holding company system to engage in
transactions or make investments that have not been properly reported or submitted
under these sections or that knowingly and willfully violate these sections,
is subject to administrative penalty under the Insurance Code
§§84.001
- 84.051
[
(n)
Additional sanctions. An entity that holds a certificate
of authority granted by the Texas Department of Insurance or the commissioner
and that violates the Insurance Code is subject to the sanctions authorized
under the Insurance Code
§§82.001 - 82.056
[
(o) - (p)
(No change.)
§7.209.Form A.
(a)
Statement regarding the acquisition
or change
of control of a domestic insurer.
Figure: 28 TAC §7.209(a)
(b) - (c)
(No change.)
(d)
Identity and background of individuals associated with
the applicant.
(1)
Furnish biographical data for the applicant
if such person is an individual, or for all persons who are directors, executive
officers, or owners of 10% or more of the voting securities of the applicant
if the applicant is not an individual, with such biographical data in the
form of the biographical affidavit form adopted by reference under §7.201(a)(1)
of this title (relating to Forms Filings). Copies of this form are available
from Financial
Analysis and Examinations
[
(2)
Furnish fingerprint cards for
the applicant if such person is an individual, or for persons who are the
Chairman of the Board, Chief Executive Officer, President, Chief Financial
Officer, Treasurer, and Controller of the applicant if the applicant is not
an individual. Copies of fingerprint cards may be obtained by sending a written
request to Licensing Division, Mail Code 107-1B, Texas Department of Insurance,
P.O. Box 149104, Austin, Texas 78714-9104, by telecopy or facsimile to (512)
475-1819, or by e-mail to LICENSE@tdi.state.tx.us. The request should include
the name of the requestor, address, phone number and number of cards requested
and should be limited to the actual number needed up to a maximum of 25 cards
per order. Fingerprint cards are also available from local law enforcement
agencies, such as sheriff and police departments, and agent testing centers.
Each fingerprint card submitted should be accompanied by the full name of
the law enforcement agency or testing center, the printed or typed identity
of the individual performing the fingerprinting, the address, the phone and
telecopy or facsimile numbers of the law enforcement agency or testing center.
(e)
(No change.)
(f)
Future plans for insurer.
(1) - (2)
(No change.)
(3)
Provide:
(A)
an affirmative statement of applicant's and the domestic
insurer's compliance with Chapter 22 of this title (relating to Privacy);
and,
(B)
if applicant proposes revisions to the domestic insurer's
current privacy policy, the proposed revised privacy policy along with any
revised notices required pursuant to §22.12 of the title (relating to
Revised Privacy Notices) and any other notices or authorization requests and
forms that applicant will be required to provide to maintain compliance with
Chapter 22 of this title.
(4)
[
(5)
[
(g) - (l)
(No change.)
(m)
Financial statements and exhibits.
(1) - (3)
(No change.)
(4)
In addition to the other material required to be filed
by this section, a person as described in §7.205(a) of this title (relating
to Acquisition Statements--Filing Requirements) shall file, as an exhibit,
annual reports to the stockholders of the insurer and the applicant for the
last two fiscal years; these reports are for review of the
Texas Department
[
(n)
Signature and certification. Signature and certification
of the following form:
Figure: 28 TAC §7.209(n)
§7.210.Form B.
(a)
Insurance holding company system registration statement.
Figure: 28 TAC §7.210(a)
(b) - (d)
(No change.)
(e)
Biographical information. Furnish biographical data for
the ultimate controlling person(s) if such person is an individual, or for
the directors and executive officers of the ultimate controlling person if
the ultimate controlling person is not an individual, with such biographical
data in the form of the biographical affidavit form adopted by reference under §7.201(a)(1)
of this title (relating to Forms Filings). Copies of this form are available
from Financial
Analysis and Examinations
[
(f)
Transactions, relationships, and agreements.
(1)
Briefly describe the following agreements in force, relationships
subsisting, and transactions currently outstanding between the registrant
and its holding company, its subsidiaries, and its affiliates:
(A) - (B)
(No change.)
(C)
investment activities of an investment
pool and transactions between pools and participants (the Insurance Code Articles
2.10-5 and 3.33, §4(g));
(D)
[
(E)
[
(F)
[
(G)
[
(H)
[
(I)
[
(J)
[
(K)
[
(L)
[
(M)
[
(N)
[
(2)
(No change.)
(g) - (i)
(No change.)
(j)
Signature and certification. Signature and certification
of the following form:
Figure: 28 TAC §7.210(j)
§7.211.Form C.
(a)
Disclaimer of control or affiliation filed with the Texas
Department of Insurance by ________________________(name of applicant).
Figure: 28 TAC §7.211(a)
(b) - (e)
(No change.)
(f)
Signatures and certification. Signatures and certification
of the following form:
Figure: 28 TAC §7.211(f)
§7.212.Form D.
(a)
Notice of declaration of extraordinary dividend.
Figure: 28 TAC §7.212(a)
(b) - (o)
(No change.)
(p)
Signatures and certification. Signature and certification
of the following form:
Figure: 28 TAC §7.212(p)
§7.213.Form E.
(a)
Statement regarding the exemption from approval of the
acquisition of control of a domestic insurer.
Figure: 28 TAC §7.213(a)
(b) - (h)
(No change.)
(i)
Signature and certification. Signature and certification
of the following form:
Figure: 28 TAC §7.213(i)
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on January 14, 2002.
TRD-200200155
Gene Jarmon
Assistant General Counsel
Texas Department of Insurance
Earliest possible date of adoption: February 24, 2002
For further information, please call: (512) 463-6327
Subchapter M. MANDATORY BENEFIT NOTICE REQUIREMENTS
the
] period
that may be
provided
by federal regulation) at the request of the policyholder or certificate holder
if the policyholder or certificate holder is entitled to benefits under section
226(b) of the Social Security Act and is covered under a group health plan
(as defined in Section 1862(b)(1)(A)(v) of the Social Security Act). If suspension
occurs and if the policyholder or certificate holder loses coverage under
the group health plan, the policy or certificate shall be automatically reinstated
(effective as of the date of loss of coverage) if the policyholder or certificate
holder provides notice of loss of coverage within 90 days after the date of
such loss and pays the premium attributable to the period, effective as of
the date of termination of entitlement.
proteinauria
];
Health Care Financing Administration
] of the United States Department
of Health and Human Services in no smaller than 12-point type.
, subject to
] subsection
(d) of this section, [
apply to enroll under the policy not later than
63 days after the date of the termination of enrollment described in subsection
(b) of this section,
] and who submit evidence of the date of termination
or disenrollment with the application for a Medicare supplement policy.
, or the organization or plan has notified the individual
of an impending termination of such certification
]; or
, or has
notified the individual of an impending termination or discontinuance of such
plan
];
risk or
]
cost);
risk or
] cost), any
similar organization operating under demonstration project authority, any
PACE
provider
[
program
] under section 1894 of the Social
Security Act, [
an organization under an agreement under section 1833(a)(1)(A)
(health care prepayment plan),
] or a Medicare Select policy; and the
subsequent enrollment is terminated by the individual during any period within
the first 12 months of such subsequent enrollment (during which the individual
is permitted to terminate such subsequent enrollment under section 1851(e)
of the Social Security Act); or
in
] a PACE
provider
[
program
] under section 1894 of the Social Security
Act, and disenrolls from the plan or program no later than 12 months after
the effective date of enrollment.
Alternate
Date for Termination of Enrollment. An individual described in paragraph (b)(2)
of this section may elect to apply subsection (a) by substituting, for the
date of termination of enrollment, the date on the letter which the individual
was notified by the Medicare+Choice organization or PACE program of the impending
termination or discontinuance of such plan or program it offers in the area
in which the individual resides, but only if the individual disenrolls from
the plan or program as a result of such notification. In the case of an individual
making such an election, the issuer involved shall accept the application
of the individual submitted before the date of termination of enrollment,
but the coverage under subsection (a) of this section shall only become effective
upon termination of enrollment under the plan or program involved.
]
Chapter 7.
CORPORATE AND FINANCIAL REGULATION
,
] Article 21.49-1. They are to
provide notice of the information required and the location in which it will
be expected to be found. In preparing any statement, notice, or application,
the text of the form need not be repeated so long as there is clear identity
of the matter to which the answer or material applies. Unless expressly provided
otherwise, if any item is inapplicable or the answer thereto is in the negative,
an appropriate statement to that effect shall be made. The forms specified
in §§7.209 - 7.213 of this title [
(relating to Form A, Form
B, Form C, Form D, and Form E)
] are also referred to in this subchapter
as Forms A - E. Form A is also referred to as the acquisition statement, Form
B as the registration statement, Form C as a disclaimer, Form D as an extraordinary
dividend, and Form E as an exemption statement. For use in accordance with §7.209(d)
and (f) of this title [
(relating to Form A)
] and §7.210(e)
of this title [
(relating to Form B)
], the Texas Department of Insurance
adopts by reference the biographical affidavit form published by and available
from the Texas Department of Insurance. Copies of this form may be obtained
from Financial
Analysis and Examinations
[
Monitoring
],
Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149099, 333 Guadalupe,
Austin, Texas 78714-9099.
(relating to Form A)
], and one complete originally signed
copy of every other statement, notice, or application, including exhibits
and all other papers and documents filed as a part thereof, shall be filed
with the commissioner by personal delivery or by mail addressed to: Financial
Analysis and Examinations
[
Monitoring
], Mail Code 303-1A,
Texas Department of Insurance, P.O. Box 149099, 333 Guadalupe, Austin, Texas
78714-9099. Each statement, notice, or application shall be subject to the
appropriate filing fee provided for in §7.1301 of this title (relating
to Regulatory Fees). The appropriate filing fee shall be forwarded to Financial
Analysis and Examinations
[
Monitoring
] of the Texas Department
of Insurance under separate cover along with a copy of the letter transmitting
the statement, notice, or application.
board or
] commissioner within five years and currently
remaining on file may be incorporated by reference. Such reference shall clearly
identify the material and indicate it is incorporated by reference.
Monitoring
], Mail Code 303-1A,
Texas Department of Insurance, P.O. Box 149099, 333 Guadalupe, Austin, Texas
78714-9099. The request must contain a signed and notarized affidavit of an
executive officer of the insurer that, should the exemption be granted, the
insurer has agreed to notify Financial
Analysis and Examinations
[
Monitoring
] within ten days after it no longer meets the criteria
set out in this section on which the exemption is based. In determining that
a commercially domiciled insurer has sufficient assets to justify the conclusion
that there is no reasonable danger that the operations or conduct of the business
of the insurer could present a danger or loss to policyholders of this state,
the commissioner shall give consideration to the matters contained in subparagraphs
(A) - (D) of this paragraph in connection with an exemption requested under
the Act, §2(s), and these sections.
§7.1301(d)(23)
] of this title (relating to Regulatory
Fees) includes each annual amendment to the registration statement and the
completely restated up-to-date registration statement.
§3(e)
].
Monitoring
],
Mail Code
303-1A
[
303-1D
], Texas Department of Insurance,
P.O. Box 149099, 333 Guadalupe, Austin, Texas 78714-9099, provide notice to
the commissioner of all dividends and other distributions to shareholders
within two business days following the declaration thereof and at least ten
calendar
days prior to payment in the form prescribed by the commissioner
and adopted herein by reference as Form HCDividend (Rev.
01/2002
[
September 13, 1995
]) and such notice shall be deemed an amendment
to the registration statement without further action or filing. Prepayment
notices will be considered promptly. Each prepayment notice shall be accompanied
by documentation supporting each of the standards specified in the Act, §4(b),
unless such documentation has previously been provided during the current
calendar year and the person to whom such documentation was sent is identified.
Dividends and distributions shall be reviewed by the commissioner and, if
the standards in the Act, §4(b), are not met, the commissioner shall
take appropriate action, including but not limited to that provided under
the Insurance Code
§§82.001 - 82.056, 83.001 - 83.153 and
[
,
] Articles [
1.10, 1.10A,
] 1.32, 21.28, 21.28-A, 21.31, and
21.32. All reported dividends and distributions shall be reviewed annually
in the registration statement filed pursuant to §7.210 of this title
[
(relating to Form B)
]. See §7.204(d) of this title (relating
to Commissioner's Approval Required) for requirements regarding extraordinary
dividends and distributions.
(G)
] any material transactions which
the commissioner has determined after notice may adversely affect the interest
of the insurer's policyholders or of the public.
§7.1301(d)(24)
] of this title [
(relating to Regulatory
Fees)
], and the commissioner has not within such period disapproved
such payment; or
§7.1301(d)(24)
] of this title [
(relating to Regulatory Fees)
] have been
provided.
The factors specified in §7.206 of this title (relating
to Subsidiaries of Insurers) shall also be considered.
]
At any time after the
submission or resubmission to the commissioner of a statement filed under
the Act, §5(a) regardless of whether the statement is complete and accurate,
the matter may be placed on the commissioner's contested case docket to hear
any prehearing matters and motions permitted under the Administrative Procedure
Act, Texas Government Code, Chapter 2001.
]
,
] Article 21.28-A, §1, are subject to the Act, §5(c).
The acquiring party shall have the burden of providing sufficient competent
evidence for the commissioner to make the determinations required under the
Act, §5(c)(1).
, Article 1.10E
].
, Article
1.10, §7
].
Monitoring
],
Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149099, 333 Guadalupe,
Austin, Texas 78714-9099.
(3)
] For the domestic insurer, provide
the full name of each individual proposed to be an executive officer or director
of the domestic insurer and the full name of each individual who will be responsible
for major areas of operations of the domestic insurer, including but not limited
to, supervision of agents, underwriting, advertising, production of business
through agents and through reinsurance, policyholder services, premium accounting,
claims processing and litigation, reinsurance cessions, investments, and financial
accounting and reporting. For each such position, evidence of such individual's
ability and experience to perform same by providing biographical data in the
form of the biographical affidavit form adopted by reference under §7.201(a)(1)
of this title [
(relating to Forms Filings)
].
(4)
] Describe any other arrangement
or agreement oral or written, entered into by any acquiring party or any of
its affiliates and the domestic insurer during the immediately preceding 12
months.
State Board
] of Insurance, and are not a part of the material
required to be submitted under the Act, §5(b)(12). However, the materials
shall be open for public inspection at the offices of the
Texas Department
[
State Board
] of Insurance during the pendency of the application.
Monitoring
],
Mail Code 303-1A, Texas Department of Insurance, P.O. Box 149099, 333 Guadalupe,
Austin, Texas 78714-9099.
(C)
] transactions not in the ordinary
course of business;
(D)
] guarantees or undertakings
for the benefit of an affiliate which result in an actual contingent exposure
of the registrant's assets to liability, other than insurance contracts entered
into in the ordinary course of the registrant's business;
(E)
] all management and service
contracts and all cost sharing arrangements;
(F)
] reinsurance agreements covering
all or substantially all of one or more lines of insurance of the ceding company;
(G)
] all dividends and other distributions
to shareholders;
(H)
] agreements with affiliates
to consolidate federal income tax returns;
(I)
] all transactions with affiliated
financial institutions;
(J)
] the amount of commissions paid
to the controlling producer, the percentage such amount represents of the
net premium written, and comparable amounts and percentages paid to noncontrolling
producers for placements of the same kinds of insurance;
(K)
] all surplus debentures, surplus
notes, premium income notes, bonds, or debentures, and other contingent evidences
of indebtedness outstanding;
(L)
] any affiliated transaction
not disclosed in subparagraphs (A) -
(L)
[
(K)
] of this
paragraph which is subject to the Act, §4(d); and,
(M)
] any pledge of an insurer's
stock, including stock of any subsidiary or controlling affiliate, for a loan
made to any member of its insurance holding company system.
Chapter 21.
TRADE PRACTICES