ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 19. EDUCATION PART I. Texas Higher Education Coordinating Board CHAPTER 7.State Postsecondary Review Program SUBCHAPTER A.General Provisions 19 TAC sec.sec.7.1-7.5 The Texas Higher Education Coordinating Board adopts the repeal of sec.sec.7.1- 7.5, concerning State Postsecondary Review Program (SPRE) (General Provisions), without changes to the proposed text as published in the April 12, 1996 issue of the Texas Register (21 TexReg 3109). The rules are being repealed for the reason that such rules were promulgated to implement the State Postsecondary Review Program in Texas. Since passage of the rules, all funding for the program has been cut by the U.S. Congress, and the program has been terminated. Accordingly, there is no longer any need for the rules. The rules established the guidelines under which the State Postsecondary Review Entity would review institutions of higher education in the state. The rules guided the activities of the State Postsecondary Review Entity in its review of institutions of higher education. They also established the standards developed in consultation with affected schools. There were no comments received regarding the proposed repeal of these rules. The repeals are adopted under 42 United States Code, sec.1099 a-1 and Texas Education Code, Chapter 61, sec.61.927, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Postsecondary Review Program (Definitions). 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. Issued in Austin, Texas, on June 13, 1996. TRD-9608462 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: July 4, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 483-6160 SUBCHAPTER B.Institutional Reviews 19 TAC sec.sec.7.21-7.25 The Texas Higher Education Coordinating Board adopts the repeal of sec.sec.7.21- 7.25, concerning State Postsecondary Review Program (SPRE) (Institutional Reviews), without changes to the proposed text as published in the April 12, 1996 issue of the Texas Register (21 TexReg 3110). The rules are being repealed for the reason that such rules were promulgated to implement the State Postsecondary Review Program in Texas. Since passage of the rules, all funding for the program has been cut by the U.S. Congress, and the program has been terminated. Accordingly, there is no longer any need for the rules. The rules established the guidelines under which the State Postsecondary Review Entity would review institutions of higher education in the state. The rules guided the activities of the State Postsecondary Review Entity in its review of institutions of higher education. They also established the standards developed in consultation with affected schools. There were no comments received regarding the proposed repeal of these rules. The repeals are adopted under 42 United States Code, sec.1099 a-1 and Texas Education Code, Chapter 61, sec.61.927, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Postsecondary Review Program (Institutional Reviews). 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. Issued in Austin, Texas, on June 13, 1996. TRD-9608465 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: July 4, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 483-6160 SUBCHAPTER C.State Review Standards and Procedures 19 TAC sec.sec.7.41-7.43 The Texas Higher Education Coordinating Board adopts the repeal of sec.sec.7.41- 7.43, concerning State Postsecondary Review Program (SPRE) (State Review Standards and Procedures), without changes to the proposed text as published in the April 12, 1996 issue of the Texas Register (21 TexReg 3110). The rules are being repealed for the reason that such rules were promulgated to implement the State Postsecondary Review Program in Texas. Since passage of the rules, all funding for the program has been cut by the U.S. Congress, and the program has been terminated. Accordingly, there is no longer any need for the rules. The rules established the guidelines under which the State Postsecondary Review Entity would review institutions of higher education in the state. The rules guided the activities of the State Postsecondary Review Entity in its review of institutions of higher education. They also established the standards developed in consultation with affected schools. There were no comments received regarding the proposed repeal of these rules. The repeals are adopted under 42 United States Code, sec.1099 a-1 and Texas Education Code, Chapter 61, sec.61.927, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Postsecondary Review Program (State Review Standards and Procedures). 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. Issued in Austin, Texas, on June 13, 1996. TRD-9608466 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: July 4, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 483-6160 SUBCHAPTER D.Peer Review Standards and Procedures 19 TAC sec.sec.7.61-7.63 The Texas Higher Education Coordinating Board adopts the repeal of sec.sec.7.61- 7.63, concerning State Postsecondary Review Program (SPRE) (Peer Review Standards and Procedures), without changes to the proposed text as published in the April 12, 1996 issue of the Texas Register (21TexReg3111). The rules are being repealed for the reason that such rules were promulgated to implement the State Postsecondary Review Program in Texas. Since passage of the rules, all funding for the program has been cut by the U.S. Congress, and the program has been terminated. Accordingly, there is no longer any need for the rules. The rules established the guidelines under which the State Postsecondary Review Entity would review institutions of higher education in the state. The rules guided the activities of the State Postsecondary Review Entity in its review of institutions of higher education. They also established the standards developed in consultation with affected schools. There were no comments received regarding the proposed repeal of these rules. The repeals are adopted under 42 United States Code, sec.1099 a-1 and Texas Education Code, Chapter 61, sec.61.927, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Postsecondary Review Program (Peer Review Standards and Procedures). 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. Issued in Austin, Texas, on June 13, 1996. TRD-9608467 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: July 4, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 483-6160 SUBCHAPTER E.Initial and Final Reports 19 TAC sec.sec.7.81-7.83 The Texas Higher Education Coordinating Board adopts the repeal of sec.sec.7.81- 7.83, concerning State Postsecondary Review Program (SPRE) (Initial and Final Reports), without changes to the proposed text as published in the April 12, 1996 issue of the Texas Register (21 TexReg 3111). The rules are being repealed for the reason that such rules were promulgated to implement the State Postsecondary Review Program in Texas. Since passage of the rules, all funding for the program has been cut by the U.S. Congress, and the program has been terminated. Accordingly, there is no longer any need for the rules. The rules established the guidelines under which the State Postsecondary Review Entity would review institutions of higher education in the state. The rules guided the activities of the State Postsecondary Review Entity in its review of institutions of higher education. They also established the standards developed in consultation with affected schools. There were no comments received regarding the proposed repeal of these rules. The repeals are adopted under 42 United States Code, sec.1099 a-1 and Texas Education Code, Chapter 61, sec.61.927, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Postsecondary Review Program (Initial and Final Reports). 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. Issued in Austin, Texas, on June 13, 1996. TRD-9608468 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: July 4, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 483-6160 SUBCHAPTER F.Administrative Review 19 TAC sec.sec.7.121-7.142 The Texas Higher Education Coordinating Board proposes the repeal of sec.sec.7.121-7.142, concerning State Postsecondary Review Program (SPRE) (Administrative Review), without changes to the proposed text as published in the April 12, 1996 issue of the Texas Register (21 TexReg 3112). The rules are being repealed for the reason that such rules were promulgated to implement the State Postsecondary Review Program in Texas. Since passage of the rules, all funding for the program has been cut by the U.S. Congress, and the program has been terminated. Accordingly, there is no longer any need for the rules. The rules established the guidelines under which the State Postsecondary Review Entity would review institutions of higher education in the state. The rules guided the activities of the State Postsecondary Review Entity in its review of institutions of higher education. They also established the standards developed in consultation with affected schools. There were no comments received regarding the proposed repeal of these rules. The repeals are adopted under 42 United States Code, sec.1099 a-1 and Texas Education Code, Chapter 61, sec.61.927, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Postsecondary Review Program (Administrative Review). 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. Issued in Austin, Texas, on June 13, 1996. TRD-9608469 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: July 4, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 483-6160 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 3.Life, Accident, and Health Insurance and Annuitites SUBCHAPTER F.Group Health Insurance Mandatory Conversion Privelege 28 TAC sec.sec.3.501-3.520 The Commissioner of Insurance adopts amendments to sec.sec.3.502-3.512 and new sec.sec.3.513-3.520, concerning group health insurance mandatory conversion privileges, with changes to the proposed text as published in the April 5, 1996, issue of the Texas Register (21 TexReg 2905). The amendments and new sections are necessary to address requirements and set minimum standards for benefits for any conversion policy issued in accordance with a conversion privilege provided under a group health benefit plan and to ensure that a converted policy provides similar coverage and benefits as provided under the group policy or plan. The sections also implement the provisions of Insurance Code, Article 3.51-6, sec.1(d)(3)(A)(i), as amended by Acts 1995, 74th Legislature in House Bill 369. The agency's response to comments, including the specific changes to the sections and reasoned justification for the changes, are addressed in the paragraphs that follow. Section 3.502 adds a definition of conversion package benefits and amends the definitions of lifetime maximum and prototype forms. Section 3.503 describes the forms that are adopted and incorporated by reference in the sections. Section 3.504 describes eligibility for mandatory group conversion and continuation privileges and sets forth criteria for ineligibility. Section 3.505 sets forth mandatory conversion or continuation options for insurers and employees, members, or dependents eligible for conversion or continuation. Section 3.506 provides for notification requirements of insurers and employer/group policyholders. Section 3.507 establishes election and effective dates for employees, members, or dependents electing continuation or conversion. Section 3.508 sets forth methods for determining a conversion premium and provides for the agency's obtaining premium rate information. Section 3.509 sets forth the requirements concerning a continuation premium. Section 3.510 sets forth minimum standards for benefits for other conversion policies. Section 3.511 describes minimum standards for conversion policy provisions and requirements for conversion policies. Section 3.512 sets forth requirements for lifetime maximums and benefits calculations for conversion policies. Section 3.513 establishes minimum standards for renewability of conversion policies. Section 3.514 provides minimum standards for continuation of coverage. Section 3.515 describes prototype forms which are adopted and incorporated by reference and outlines required conversion benefit packages. Section 3.516 sets forth filing requirements for conversion policy products. Section 3.517 sets forth language readability requirements. Section 3.518 provides for mandatory group policy provisions. Section 3.519 establishes an effective date for meeting the requirements of the subchapter as amended. Section 3.520 is an appendix containing form and figure numbers and their descriptions. Three sets of comments were received regarding the amendments and new sections. The commenters expressed general support for the rules as proposed but offered comments or concerns on specific sections. The agency appreciates the comments it has received. As a result of these comments, the agency has made the changes as indicated and has made several non-substantive changes to the formatting of these rules for consistency and ease of reading. Section 3.502. Definitions. A commenter stated that no definitions exist in the proposed regulations for either "hospital or surgical expense coverage" or "major medical coverage" and suggested that a standard group policy could be included within either term. Agency Response: The agency agrees with this comment and has added clarifying language to sec.3.505(a)(2)(C) and (3)(B) to specify the differences. Section 3.505(a)(3). Mandatory Conversion or Continuation Options. A commenter stated that the written rejection by the insured of the benefits described in paragraphs (1) and (2) of subsection (a) is unnecessary because the insured will be submitting a written application for the lesser level of coverage which will evidence rejection of the higher level of coverage. Agency Response: The agency disagrees because Article 3.51-6 requires the offer of same or similar coverage, and application for a lesser plan is not necessarily evidence that the higher level of coverage has been offered or rejected. However, for efficiency purposes the same form can be utilized by insurers. Section 3.505(a)(4). Mandatory Conversion or Continuation Options. A commenter disagreed with the language in this paragraph allowing an employee, member, or dependent to opt for continuation of a group policy for a minimum of six months. The commenter stated that Insurance Code, Article 3.51-6 allows termination upon the earlier of several events and there is no minimum six month coverage. The commenter suggested either replacing "minimum" with "maximum" or adding a reference like current sec.3.511(b), e.g., "If this option is selected, continuation shall be permitted until the earlier of: (a) six months after the date of election;..." Agency Response: The agency disagrees with this comment because the statute does not specify six months as a maximum time before termination; however, to clarify the paragraph the agency has changed sec.3.505(a)(4) to specify that the conversion policy is subject to the termination provisions of sec.3.514. Section 3.505(a)(5). Mandatory Conversion or Continuation Options. A commenter stated that because an insurer will be able to offer conversion policies with benefits greater than the minimum standards of the prototype conversion policies, that carriers should also be allowed to offer policies with lesser benefits. These policies would be for insureds who, because they must pay all of the premium, can only afford less expensive conversion plans. Agency Response: The agency disagrees with this comment because Article 3.51-6, sec.1(d)(3) requires that minimum standards be set by the agency to provide standards for meaningful coverage for policyholders' conversion policies. A commenter stated that the insurer's own plans must be at least equal to the standard "lesser" plans developed by the agency but might not be equivalent to the original group plan or the Standard Conversion Policy Benefit Package. However, the commenter believed the offer of the insurer's own plan does not appear to be contingent upon the consumer's rejection of coverage identical to the original group policy or the standard policy, although it may include some benefit limitations. The commenter suggested that companies should be able to offer their own conversion policy only after the consumer rejects the Standard Conversion Policy in writing. Agency Response: The agency agrees and has clarified sec.3.505(a)(5) by adding language that only after written rejection of the benefits described in subsection (a)(1) and (2) and the offering of the lesser coverage provided in subsection (a)(3), may an insurer offer its own policy or policies. For efficiency purposes the same form can be utilized by insurers. Sections 3.505(a) and 3.519. Mandatory Conversion or Continuation Options and Effective Date. One commenter requested that the sections be made applicable to plans renewed on or after June 1, 1996, and in addition be applicable to plans offered, delivered, and issued for delivery on or after that date. Even though H.B. 369 was silent regarding the applicability to renewed plans, to facilitate conversion the commenter suggested a change in sec.3.505(a)(2) and sec.3.517 either (1) adding "renewed" between the words "delivered" and "on," or (2) adding, "or, at the option of the insurer, for group policies renewed on or after June 1, 1996" between "1996" and "the insurer." Agency Response: H.B. 369 expressly applies only to plans offered, delivered, or issued for delivery on or after June 1, 1996. Existing plans, even if renewed after June 1, 1996, are required to continue the initial offer of the same coverage and benefits. The agency recognizes the burden two sets of rules place on insurers and drafted the sections to allow one set of lesser coverage options to be offered after the initial offering of same coverage (for plans issued prior to June 1, 1996) or similar coverage (for plans issued after June 1, 1996). Specifically, sec.3.505 outlines what must be offered by plans prior to and after June 1, 1996. However, the agency has changed sec.3.519 to clarify the effective date. Section 3.505(d). Mandatory Conversion or Continuation Options. A commenter stated this provision needs to be clearer to insureds because Insurance Code, Article 3.51-6A is only intended to extend benefits for persons with a total disability for the condition causing the total disability, and no other coverage is provided. The commenter stated that under Article 3.51-6 an insured has 31 days from termination of the group policy to apply for conversion and that waiting to apply until after the 90 day period for extension of benefits relating to the total disability would result in loss of the conversion right. The commenter proposed deleting the reference to extended benefits, or substituting in the alternative: "provisions of Insurance Code, Article 3.51-6A, shall be applicable upon termination of the group policy." Agency Response: The agency disagrees with this comment. Both an extension of benefits provision and a right to convert provision must be in the group policy, and the section provides that a person who elects an extension of benefits will not forego the right to convert. Section 3.506. Notification Requirement of Insurers and Employer/Group Policyholders. A commenter stated that the section goes beyond the current notice rule and imposes too great a burden on the insurer for four reasons. First, the commenter states that the group policyholder rather than the insurer should be responsible for notification because insurers frequently have no information regarding when a group might terminate or why an individual is deleted from coverage; instead, the employer has the information. An employer could withhold the information regarding who is terminating for months and leave the insurer responsible for later claims. The commenter believes the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), Title 29 U.S.C.A., Chapter 18, addresses this issue well because under COBRA the employer has notice responsibility. In addition, no mention of the insurer's obligation to provide notice is contained in Article 3.51-6, and Article 3.51-6, sec.1(3)(B)(ii) specifies notice by the "employer or the group policyholder." Agency Response: The agency disagrees because Insurance Code, Article 3.51-6, sec.1(d)(3) expressly states that insurers must offer conversion to the insured, and the agency is authorized to regulate insurers rather than employers. Additional statutes require employer notice; however, the agency only regulates insurers. In addition, COBRA only applies to employer groups of 20 or more and does not apply to all groups (such as associations). However, for administrative ease the previous rule and adopted sec.3.506(d) provide that only one notice is required to be given, which may be delivered by either the insurer or the employer/group policyholder. Second, the commenter stated the proposed notice would be exceptionally long and complicated, especially the provision in the section requiring notice of a premium amount when the insurer does not know who is purchasing the policy, which option is being selected, or whether various family members are choosing the same or different options. The commenter proposed the premium amount be provided (1) as an estimate, e.g., "not to exceed a percentage of the group premium" and (2) with current coverage assumption, i.e., family coverage under the group policy would be provided a family coverage conversion rate. Agency Response: The agency disagrees with this comment because a similar notice requirement existed in the prior rule in 28 TAC sec.3.504, and insurers should have already implemented this provision. Third, the commenter questioned the requirement under sec.3.506(b) of notice "immediately" when "not less than 30 days" notice is required in the prior rule. The commenter suggested defining "immediately" as "two business days" or replacing the term with "two business days." Agency Response: No change is needed as sec.3.502 defines "immediate" or "immediately" as "within five working days of the notice or termination." Fourth, the commenter stated that to insure uniformity, the notice should be prescribed by the agency except for premium amount and believes a notice similar to (or a summary of) the language required by current sec.3.505(a) would work well. Agency Response: The agency disagrees because of the innumerable options of different notices that would have to be developed for different insurers by the agency and the significant agency resources needed to draft and implement the notices. The prescribed format should insure an effective level of uniformity of notices. Section 3.507. Election and Effective Dates. A commenter believed this section needs clarification to protect insurers from an application that fails to designate either any election or which election each family member selects. The commenter proposed that the section specify guidelines designating what election applies if the conversion application does not designate the election for each family member. Agency Response: The agency disagrees. Insurers should develop and utilize applications which clearly articulate the requirements of these rules (i.e. each eligible person must elect conversion or continuation) and insurers should have internal procedures that would prevent the acceptance of applications that do not provide such information. Section 3.508(c). Conversion Premium. A commenter stated that no time is specified for submission of the certification that premiums are reasonable in relation to benefits provided and suggested language be inserted "on each March 1, beginning March 1, 1997." Agency Response: The agency agrees that the section should clearly identify when the certification is required to be submitted to the agency, but has set the date as beginning on June 1, 1997, to give insurers a reasonable amount of time to develop credible experience and comply with this section. A commenter stated that consumers who purchase conversion policies should be pooled with non- conversion individual or group health insurance consumers to spread risk. Many of the consumers who choose to continue their health coverage or convert to an individual policy, despite the substantially higher premiums they must pay, expect to use their insurance. While concentrating all these consumers into one credible group will spread the risk more than if they are split into many small groups by policy form, location, and other factors, the pool as a whole would still face higher losses than a standard pool of group or individual purchasers. Agency Response: The agency recognizes that the pooling of the conversion group with the non-conversion group would spread the expenses and benefit converting persons, but this would exceed current statutory and rule-making authority. Section 3.511(a). Minimum Standards for Conversion Policy Provisions and Requirements for Conversion Policies. A commenter stated that the purpose of the statute on continuation and conversion is to provide for on-going coverage of persons previously covered under a group policy, but only until such time as those persons are able to obtain other coverage and an insurer should not be required to cover additional dependents (such as newborn children and children for whom a court has mandated coverage) who were never covered under the group policy unless a company elects to do so. If, however, newborn and court-ordered dependent coverage is required under the section, the commenter believes a change should be made to a provision in the proposed General Provisions section of the prototype policies requiring the insurer to continue coverage on an after-acquired dependent even if the primary insured drops his own coverage to avoid the result in a conversion policy for a person who was never covered under the group policy for as long as 19 to 20 years. If the requirement in the section for coverage for these after-acquired dependents is retained, the provision in the prototype forms should be revised so coverage for these after- acquired dependents is only required for so long as the primary insured maintains his own coverage. Agency Response: The agency disagrees with this comment because the requirement of coverage for newborn children and children subject to a court or administrative order should be consistent with other laws regarding availability and accessibility of coverage for dependent children. However, the agency agrees that when the converting person's coverage terminates under sec.3.513, that coverage for newborn children and children subject to a court or administrative order may also terminate unless the insurer has elected to extend coverage for these individuals even if the converted employee or member's coverage ceases. The agency has changed sec.3.511(a) and sec.3.515(a)(5) and Figure 15 accordingly. Section 3.516(c). Filing Requirements. A commenter questioned whether the requirement for forms to be signed by an officer of the company is consistent with the new filing regulations adopted by the agency in February, 1996. Agency Response: The agency agrees and has changed sec.3.516(c) and Figure Number 17 to be consistent with Article 3.42 and 28 TAC, Chapter 3, Subchapter A. Prototype Forms, Figure Number 1. A commenter stated the definition of "Provider" could be read to include any person with a license including massage therapists, athletic trainers, acupuncturists, and cosmetologists. While the agency may intend to include only protected providers under Insurance Code, Article 21.52, the definition should be precise for an insurer to avoid causes of action when a claim for services by providers not mentioned in Article 21.52 is not paid. Agency Response: The agency disagrees because the definition does encompass types of providers not listed in Insurance Code, Article 21.52. The definition is not intended, however, to require insurers to provide coverage for services by providers beyond those listed in Article 21.52. The definition is intended as a cost containment measure by allowing insurers to provide coverage for services by other licensed providers. The definition is consistent with a generic definition generally appearing in policies. Insurers are still only required, pursuant to Insurance Code, Article 21.52, to provide coverage for covered services performed by the types of providers listed in that article. A commenter stated that the definition of "Reasonable and Customary" should be altered because insurers often pay providers based upon Diagnostic Related Groups ("DRGs"), per diems, or relative values. The reasonable charge definition should be broad enough to include such methodologies. Companies organized under Insurance Code, Chapter 20, have specific authority to contract with providers. The prototypes express that authority in certain places; however, the definition should be specific for Chapter 20 companies allowing the negotiated charges whether per diem, DRGs, discounted, or on a line by line basis. Agency Response: The agency disagrees with this comment because there is sufficient flexibility in the definition to accommodate the unique needs of Chapter 20 carriers. Prototype Forms, General Comment on Riders to Similar Coverage. A commenter stated that the riders are required to equate similar coverage if the benefits of the prior group coverage contain benefits found in the riders, and that no rider is required for similar coverage if the prior group coverage did not contain such benefit. Thus, if a group policy contained drug and alcohol benefit but did not contain mental health benefits, only a drug and alcohol rider is required. The commenter asked, for compliance purposes, if a group policy contains serious mental illness benefits but no other mental health benefit whether the mental illness rider is required. The commenter also stated that it appears no riders are required for the in-hospital expense policy except for prescription drugs and only if such benefit was in the prior group coverage, and no riders are required for any lesser coverage. Agency Response: The agency agrees that the riders are required in order to be as consistent as possible with the prior coverage. If a policy provides serious mental illness benefits and no other mental illness benefits, the mental illness rider would be required. Additionally, the agency agrees that no riders are required for lesser coverage. For clarification, requirements for riders for alcohol and drug abuse benefits and mental health benefits have been added to the requirements for the In-Hospital Conversion Policy Benefit Package in sec.3.505(a)(2)(C) and sec.3.515(b)(5)(A) and (B). For with changes: Office of Public Insurance Counsel, Blue Cross Blue Shield of Texas, and Long, Burner, Parks and Sealy on behalf of the firm. The amendments and new sections are adopted pursuant to the Insurance Code, Articles 3.51-6, sec.1(d)(3)(A)(ii) and sec.5, 3.42, and 1.03A. Article 3.51-6, sec.1(d)(3) contains requirements for conversion or continuation privileges for the policies covered by that section, and sec.1(d)(3)(A)(ii) requires the agency to issue rules and regulations to establish minimum standards for benefits under policies issued pursuant to the subsection. Article 3.51-6, sec.5, authorizes the agency to issue rules and regulations as may be necessary to carry out the various provisions of the article. Article 3.42 contains filing requirements for policies, contracts, certificates, and forms subject to that statute and specifically authorizes the agency to adopt reasonable rules and regulations as necessary to implement and accomplish the provisions of that statute. Article 1.03A authorizes the Commissioner of Insurance to promulgate and adopt rules and regulations for the conduct and execution of duties and functions by the agency. sec.3.502. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Commissioner -- The Commissioner of Insurance. Conversion Benefit Packages -- Promulgated forms that must be used as required in sec.3.505 of this title (relating to Mandatory Conversion or Continuation Options) and sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages). Department -- The Texas Department of Insurance. Immediate or Immediately -- Within five working days of the notice or termination. Lifetime maximum -- The maximum benefit payable per covered person's lifetime, as computed in sec.3.512 of this title (relating to Lifetime Maximums and Benefit Calculations). Prototype forms -- Those forms promulgated by the department and adopted by reference in sec.3.503 of this title (relating to Forms Adopted and Incorporated by Reference) and sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages), required in sec.3.505 of this title (relating to Mandatory Conversion or Continuation Options), sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages), and sec.3.518 of this title (relating to Mandatory Group Policy Provisions), and found in sec.3.520 of this title (relating to Appendix). Renewal date -- For each 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 plan is changed in any way. sec.3.503. Forms. Adopted and Incorporated by Reference. The forms relating to the conversion prototype forms and the certification form, listed in sec.3.520 of this title (relating to Appendix), are adopted and incorporated by reference and have been filed with the Office of the Secretary of State. The forms can be obtained from the Texas Department of Insurance, Life/Health Group, MC 106-1A, P.O. Box 149104, Austin, Texas 78714-9104. sec.3.504. Eligibility for Mandatory Group Conversion and Continuation Privilege. (a) Eligibility. Pursuant to Insurance Code, Article 3.51-6, sec.1(d)(3), each employee, member or dependent whose coverage under a group policy providing hospital, medical, surgical, or major medical coverage on an expense incurred basis, ceases for any reason shall have the right to conversion or continuation provided: (1) the person was continuously covered under the group policy for at least three (3) consecutive months immediately prior to termination (or under any policy providing similar benefits which it replaced); and (2) coverage terminated for any reason except involuntary termination for cause. (b) Ineligibility. A conversion or continuation privilege under Insurance Code, Article 3.51-6, sec.1(d)(3) shall not be required for any person under the following circumstances: (1) termination of the group coverage occurred because the person failed to pay any required premium; (2) any discontinued group coverage was replaced by similar group coverage within 31 days; (3) the person is or could be covered by Medicare; (4) the person is covered for similar benefits by another hospital, surgical, medical, or major medical expense insurance policy, or hospital or medical service subscriber contract, or medical practice plan, or any other prepayment plan or any other plan or program; (5) the person is eligible for similar benefits whether or not covered for similar benefits under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or (6) similar benefits are provided or available to the person under the requirements of any state or federal law. sec.3.505. Mandatory Conversion or Continuation Options. (a) An employee, member, or dependent eligible for conversion or continuation shall have the following options: (1) For group policies issued, delivered, or renewed prior to June 1, 1996, the insurer shall first offer to each eligible employee, member, or dependent, a conversion policy with the same coverage and benefits as the terminating group coverage. Evidence of insurability shall not be required. (2) For group policies issued or delivered on or after June 1, 1996, the insurer shall first offer to each eligible employee, member, or dependent, a conversion policy with coverage and benefits similar to those of the terminating group coverage. Evidence of insurability shall not be required. For the purposes of this subsection, similar coverage and benefits means: (A) the same coverage and benefits as provided by the terminating group coverage; or (B) for hospital, surgical, medical, and major medical expense coverage and benefits as provided by the Standard Conversion Policy Benefit Package (Form Number 369SC-BP)(Figure Number 1) prescribed in sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) and found in sec.3.520 of this title (relating to Appendix). If the group policy from which the employee, member, dependent is converting contains benefits for chemical dependency, mental illness, or out-patient prescription drugs, the insurer shall attach to the converted policy the following riders, which are prescribed in sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) and found in sec.3.520 of this title (relating to Appendix); however, nothing herein shall be construed to require a rider for benefits which were not contained in the group policy: (i) Alcohol and Drug Abuse Benefit Rider (Form Number 369CONV-ADB)(Figure Number 2); (ii) Mental Health Benefit Rider (Form Number 369CONV-MHB)(Figure Number 3); or (iii) Prescription Drug Benefit Rider (Form Number 369CONV-RX)(Figure Number 4). (C) As an exception to subparagraph (B) of this paragraph, for in-hospital expense policies, the coverage and benefits as provided by the In-Hospital Conversion Policy Benefit Package (Form Number 369IHC-BP)(Figure Number 5) prescribed in sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) and found in sec.3.520 of this title (relating to Appendix). If the group policy from which the employee, dependent, or member is converting contains benefits for chemical dependency, mental illness, or out patient prescription drugs, the insurer shall attach to the converted policy the following riders, which are prescribed in sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) and found in sec.3.520 of this title (relating to Appendix); however, nothing herein shall be construed to require a rider for benefits which were not contained in the group policy: (i) Alcohol and Drug Abuse Benefit Rider (Form Number 369CONV-ADB)(Figure Number 2); (ii) Mental Health Benefit Rider (Form Number 369CONV-MHB)(Figure Number 3); or (iii) Prescription Drug Benefit Rider (Form Number 369CONV-RX)(Figure Number 4). (3) Upon written rejection of the coverage and benefits described in paragraphs (1) or (2) of this subsection, any employee, member, or dependent eligible for conversion, may elect lesser coverage. For purposes of this subsection, lesser coverage means: (A) For major medical and hospital, medical, or surgical policies, the coverage and benefits as provided by the Basic Conversion Policy Benefit Package (Form Number 369BC-BP)(Figure Number 6) as prescribed in sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) and found in sec.3.520 of this title (relating to Appendix). (B) As an exception to subparagraph (A) of this paragraph, for in-hospital expense only policies or for policies providing coverage and benefits equivalent to or lesser than those provided by the Small Employer Basic Coverage Benefits Plan promulgated by the department and found in Figure Numbers 14 or 15 and in 16, 17, and 18 in the Appendix to Chapter 26 of this title (relating to Small Employer Health Insurance Regulations), lesser coverage is the Lesser In- Hospital Conversion Policy Benefit Package (Form Number 369LIHC-BP)(Figure Number 7) as prescribed in sec.3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) and found in sec.3.520 of this title (relating to Appendix). (4) Any eligible employee, member or dependent may choose continuation under the group policy in lieu of a conversion policy. If this option is selected, continuation shall be permitted for a minimum of six months, subject to the termination provisions of sec.3.514 of this title (relating to Minimum Standards for Continuation of Coverage). (5) In addition to the conversion benefit packages required by this section, an insurer may offer other conversion benefit plans at its option. Other conversion benefit plans may only be offered after written rejection of the benefits described in paragraphs (1) and (2) of this subsection and the offering of the lesser coverage provided in paragraph (3) of this subsection. Other conversion benefit plans must provide benefits greater than the Minimum Standards for Benefits for Other Conversion Policies, as described in sec.3.510 of this title (relating to Minimum Standards for Benefits for Other Conversion Policies). Such other conversion plans must be filed with and approved by the Department prior to use. (b) An insured shall have the option to convert or continue insurance as described in this subchapter, upon completion of any continuation of coverage provided under The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)(Public Law Number 99-272, 100 stat. 222) and any amendments thereto. The conversion option must be offered by the insurer to the employee, member, or dependent prior to the expiration of the COBRA continuation coverage. (c) A dependent shall have the option to convert his insurance as described in this subchapter upon completion of any continuation of coverage provided under Insurance Code, Article 3.51-6, sec.3B. (d) Insureds entitled to an extension of benefits under Insurance Code, Article 3.51-6A, sec.5 shall again be entitled to a conversion policy in accordance with all requirements of this subchapter at the end of the extension period. sec.3.506. Mandatory Conversion or Continuation Options. Notification Requirement of Insurers and Employer/Group Policyholders. (a) The insurer is responsible for the timely offer of conversion and continuation options and shall provide the conversion and continuation notice as described in subsection (b) of this section. (b) Not less than 30 days before termination or discontinuance, a notification of conversion and continuation privileges available shall be provided to each employee, member, or dependent whose coverage is terminating. (1) In situations in which the employer or group policyholder becomes aware that coverage will terminate less than 30 days before actual termination, notification shall be given to the affected employee, member, or dependent immediately. (2) The time limit required by this subsection in no way affects or limits the notice requirements specified in the Insurance Code, Article 3.51-6, sec.3B. In instances in which the group policyholder is required to give notice of continuation immediately upon receipt of written notification of an event triggering the election of a continuation option, the statutory time limits shall prevail. (c) The notification required in subsection (b) of this section shall be provided as follows: (1) The notice shall include the following information regarding conversion: (A) an explanation of the criteria which must be met in order to be eligible for conversion as set out in sec.3.504 of this title (relating to Eligibility for Mandatory Group Conversion and Continuation Privilege); (B) for group policies issued, delivered, or renewed prior to June 1, 1996, a statement of the option to convert to a policy providing the same coverage and benefits as those provided by the preceding group contract, including a description of the actual benefits; (C) for group policies issued or delivered on or after June 1, 1996, a statement of the option to convert to a policy providing coverage and benefits similar to those provided by the preceding group contract, including a description of the actual benefits; (D) a statement of the options to convert to a policy of lesser coverage and benefits, including a description of the actual benefits; (E) the time period allocated for making the election and paying the required premium; (F) the actual required premium amount for each option; (G) instructions on how and to whom the first premium payment is to be made; (H) a statement of when the conversion policy will become effective; and (I) a statement of the renewability provisions. (2) The notice shall include the following information regarding continuation: (A) the time period allocated for making the election to continue as prescribed in Insurance Code, Article 3.51-6, sec.1(d)(3)(B)(ii); (B) the premium amount which an employee, member, or dependent electing continuation of coverage must pay to the employer/group policyholder on a monthly basis in advance; (C) the date on which the employer/group policyholder must receive the employee's, member's, or dependent's written election to continue and the first premium contribution; and (D) the length of time one may continue coverage. (3) Additionally, the notice shall include: (A) other conversion options available, if any, including a description of the actual benefits and required premium; (B) enrollment/election form and signature line; and (C) the following English/Spanish statement at the end of the notice: "If you have questions regarding your rights for conversion or continuation of your health insurance, contact (insert name of insurance company) at (insert company toll-free telephone number, or other telephone number if no toll-free number is available). If you have additional questions, you may contact the Texas Department of Insurance, toll-free, at (800) 252-3439." "Si usted tiene una pregunta sobre sus derechos bajo el proceso de convertir o de continuar el seguro de salud, hable (insert name of insurance company) por el numero (insert company toll-free telephone number, or other telephone number if no toll-free number is available). Si usted necesita mas informacion, se puede comunicar con el Departamento de Seguros de Tejas por el numero gratis (800) 252-3439. Se habla espanol." (d) In order to eliminate duplicate information requirements and insure adequate notification to each eligible employee, member, or dependent, delivery of the mandatory notification to each individual within the specified time period by either the insurer or the employer/group policyholder shall satisfy the notification requirements of both the insurer and the employer/group policyholder. (e) For information purposes, the insurer shall submit the required notice as outlined in this section to the department's Life/Health Group. sec.3.507. Election and Effective Dates. (a) An employee, member, or dependent electing conversion must make written election for the conversion policy and pay the first premium to the insurer not later than 31 days after the termination of insurance under the group policy. The effective date of the converted policy shall be the day following the termination of insurance under the group policy. (b) An employee, member, or dependent electing continuation must make a written election and pay the first premium to the employer/group policyholder not later than 31 days after the later of the date of the termination of insurance under the group policy or the date the employee is given notice as required by sec.3.506 of this title (relating to Notification Requirement of Insurers and Employer/Group Policy Holder). Subsequent premiums shall be payable in advance to the employer/group policyholder on a monthly basis. (c) Each employee, member, or dependent shall have the right to elect continuation or conversion, and such election shall not be contingent upon an identical election of any other family member. sec.3.508. Conversion Premium. (a) The initial premium at the time of conversion for any converted policy issued shall be determined as follows: (1) in accordance with the insurer's table of premium rates for coverage that was provided under the group policy or plan; and (2) based on the type of converted policy and the coverage provided by the converted policy. (b) The initial premium at the time of conversion may be based on the age at issue of the conversion policy and the geographic location of each person to be covered and the type of converted policy; however, the premium for the same coverage and benefits under a converted policy may not exceed 200% of the premium determined under subsection (a)(1) and (2) of this section. (c) For all policies converted for 12 months or more, renewal premiums will be based on the pooled experience of all such policies with credibility applied. The credibility of the pooled policies will be based on sound actuarial principles and practices. A certification that the resulting premiums are reasonable in relation to benefits provided shall be submitted to the department by each June 1, beginning June 1, 1997. (d) All rates for individual conversion policies shall be submitted to the department in accordance with the requirements of Insurance Code, Article 3.42, and Subchapter A of Chapter 3 of this title (relating to Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities). The department may request documentation related to the premium rates and/or actuarial information for any conversion policy as permitted by Subchapter A of Chapter 3 of this title. (e) An insurer is required to substantiate with actuarial data the rate for any converted policy providing the same coverage and benefits with a premium rate of 200% of the premium determined under subsection (a)(1) and (2) of this section. The premium charged for converted policies must be determined using sound actuarial principles, and the relationship of benefits to premiums paid must be reasonable, subject to the maximum 200% cap. sec.3.509. Continuation Premium. The premium for continuation shall be the same premium charged for active employees, members, or dependents including any amount contributed by the employer/group policyholder, plus 2.0%. sec.3.510. Minimum Standards for Benefits for Other Conversion Policies. No insurer shall issue any other conversion policy in this state unless it meets the following minimum standards: (1) Hospital or Surgical Expense Coverage. Subject to the provisions and conditions of these sections, if the group health benefit plan from which conversion is made insures the employee, member, or dependent for basic hospital or surgical expense insurance, any converted policy must provide coverage and benefits on an expense incurred basis under a plan meeting the requirements of the Lesser In-Hospital Conversion Policy Benefit Package (Form Number 369LIHC- BP)(Figure Number 7) found in sec.3.520 of this title (relating to Appendix). Provisions of the converted policy may not be less favorable than the prototype provisions for covered services and benefits. (2) Major Medical Coverage. If the group health benefit plan from which conversion is made insures the employee, member, or dependent for major medical insurance, any converted policy must provide coverage and benefits on an expense-incurred basis under a plan meeting the requirements of the Basic Conversion Policy Benefit Package (Form Number 369BC-BP)(Figure Number 6) found in sec.3.520 of this title (relating to Appendix). Provisions of the converted policy may not be less favorable than the prototype provisions for covered services and benefits. sec.3.511. Minimum Standards for Conversion Policy Provisions and Requirements for Conversion Policies. (a) A conversion policy shall provide for the addition of newborn children and children for whom a court or administrative order has mandated coverage. The policy may provide that such coverage terminates when the converted person's coverage terminates. (b) A conversion policy may not reduce benefits when benefits are being provided under the Texas Medical Assistance Act of 1967, as amended. (c) A conversion policy may not exclude any condition as a pre-existing condition of any insured person unless the condition was excluded under the group coverage from which the employee, member, or dependent is converting. Any condition excluded under that policy may be excluded under the conversion policy only until such time as the condition would have been covered under the group policy had the coverage remained in force. (d) An individual or group conversion policy, subject to this subchapter, may provide that the insurer may refuse to renew the policy or coverage of any person insured under the policy only for the reasons outlined in sec.3.513 of this title (relating to Minimum Standards for Renewability of Conversion Policies). (e) Any group conversion policy must contain the following: (1) A provision that the trust policy will not be terminated by either the trustee or the insurer until such time as no certificate holders remain covered under the policy; and (2) A provision prohibiting any unilateral change in the terms of coverage. sec.3.512. Lifetime Maximums and Benefits Calculations; Deductible and Co- Insurance Credit. (a) The lifetime maximum under a conversion policy providing same or similar coverage and benefits shall be computed from the initial date of the employee's, member's or dependent's effective date under the preceding group coverage. This shall apply equally in the calculation of lifetime maximum dollar limits or durational limits. (b) The lifetime maximum under a conversion policy providing lesser coverage and benefits shall be computed from the effective date of the employee's, member's, or dependent's conversion coverage. This shall apply equally in the calculation of lifetime maximum dollar limits or durational limits. (c) When conversion is being made to a policy of same or similar coverage and benefits, the insurer shall give credit under the conversion policy for any portion of the deductible and any amounts attributed to an insured's out-of- pocket maximums which were met during the policy year in which conversion is made. (d) When conversion is being made to a policy of lesser coverage and benefits, the insurer shall calculate deductibles and co-insurance maximums from the effective date of the conversion coverage. sec.3.513. Minimum Standards for Renewability of Conversion Policies. A converted policy may provide that the insurer may refuse to renew the policy or the coverage of any person insured under the policy only for the following reasons: (1) The converted person is covered for similar benefits by another hospital, surgical, medical, or major medical expense insurance policy or hospital or medical service subscriber contract or medical or other prepayment plan, or by any other plan or program; (2) The converted person is eligible for similar benefits under any arrangement of coverage for individuals in a group, whether on an insured or an uninsured basis; (3) Similar benefits are provided for or available to such person under the requirements of any state of federal law; (4) The converted person fails to provide information as requested by the insurer in advance of any premium due date in order to establish the existence of coverage as outlined in (1) through (3) of this section; (5) Fraud or material misrepresentation in applying for any benefits under the converted policy; (6) The insured person is eligible for coverage under Medicare (Title XVIII of the United States Social Security Act as added by the Social Security Amendments of 1965 or as later amended or superseded) or under any other state or federal law (except the Texas Medical Assistance Act of 1967, as amended) providing for benefits similar to those provided by the converted policy; or (7) Any other reason which has received specific prior approval by the commissioner. sec.3.514. Minimum Standards for Continuation of Coverage. (a) For those persons who elect continuation, coverage may not terminate until the earliest of the following dates: (1) six months after the date the election is made; (2) the date on which failure to make timely payments would terminate the coverage; (3) the date on which the group policy terminates in its entirety; (4) the date on which the covered person is or could be covered under Medicare; (5) the date on which the covered person is covered for similar benefits by another hospital, medical, surgical, or major medical expense insurance policy or hospital or medical service subscriber contract or medical practice or other prepayment plan or by any other plan or program; (6) the date on which the covered person is eligible for similar benefits whether or not covered therefor under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or (7) the date on which similar benefits are provided for or available to such person, pursuant to or in accordance with the requirements of any state or federal law. (b) Any insurer providing continuation of group coverage in accordance with Insurance Code, Article 3.51-6, sec.1(d)(3)(B)(i) in lieu of conversion shall not be relieved of its obligation to provide benefits in the event of policy termination. A conversion privilege shall be available to all insureds including those insureds affected during the six-month continuation period unless the insurer provides for the continuation of the coverage beyond the policy termination date to fulfill the continuation obligations. (c) Any insured person who has elected to continue group coverage under applicable federal or state law shall be included under any group plan which replaces the existing group plan. Coverage under the replacing policy must be continued until the completion of the continuation period. sec.3.515. Prototype Forms and Required Conversion Benefit Packages. (a) This subsection sets forth requirements for optional prototype policy forms. The policy forms, described in this section and listed in sec.3.520 of this title (relating to Appendix), are adopted and incorporated by reference to complete an individual prototype policy when combined with the required conversion benefit packages outlined in this section. The prototype policy forms have been developed to facilitate implementation of the Insurance Code, Article 3.51-6, sec.1(d)(3) and to streamline the policy approval process. Insurers are encouraged to use all of the prototype policy forms as described in this subsection to expedite the approval process. Each form has a unique form number appearing in the lower left-hand corner and insurers may use one or any number of the prototype forms. Alternate language, except for variables indicated by brackets, must be filed for review and approval under a different form number using 369CONV as part of the form number. Additional filing requirements are outlined in sec.3.516 of this title (relating to Filing Requirements). (1) Policy face pages. Policy face pages provide for the entire contract to include the attached application and any attached papers. Each policy face page, whether or not the prototype form is used, shall include the insurer's name and address; provision for the entire contract to include the application and any attached papers; a ten-day free look period; workers' compensation disclaimer notice; description of the policy in bold type as a conversion policy; and the form number in the lower left hand corner. The policy face page for the required conversion benefit packages shall contain the description of the plan in bold type as the Texas Standard Conversion Policy, the Texas Basic Conversion Policy, the Texas In-Hospital Conversion Policy or the Texas Lesser In-Hospital Conversion Policy. The policy face pages for the prototype policies include the following which are found in sec.3.520 of this title (relating to Appendix): (A) Texas Standard Conversion Policy (Form Number 369SC)(Figure Number 8). (B) Texas Basic Conversion Policy (Form Number 369BC)(Figure Number 9). (C) Texas In-Hospital Conversion Policy (Form Number 369IHC)(Figure Number 10). (D) Texas Lesser In-Hospital Conversion Policy (Form Number 369LIHC)(Figure Number 11). (2) Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures Form (Form Number TOLLFREE)(Figure Number 12) found in sec.3.520 of this title (relating to Appendix). This prototype form contains the language prescribed in sec.1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures) and shall be attached as the second or third page of the policy. The variable provisions are optional only to the extent outlined in sec.1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures). (3) Data Page (Form Number 369CONV-DP)(Figure Number 13) found in sec.3.520 of this title (relating to Appendix). Each data page, whether or not the prototype form is used, shall include the insurer's name and address, the name of the policyholder, the policy number, the policy effective date, the amount of premium, and the premium mode. If coverage for a dependent child is added, the insurer shall issue a revised data page including the name and the effective date of coverage for the dependent child. The insurer is permitted to add other information, including but not limited to the policyholder's address and the name of the beneficiary. (4) Table Of Contents (Form Number 369CONV-TC)(Figure Number 14) found in sec.3.520 of this title (relating to Appendix). The variable items shall be included or omitted as appropriate for the policy and page numbers shall be numbered accordingly. If the prototype table of contents is not used, the format and order shall be the same as provided in the prototype. (5) The General Provisions Form (Form Number 369CONV-GP)(Figure Number 15) found in sec.3.520 of this title (relating to Appendix). This form may be used with all individual conversion policies. If the prototype general provisions form is not used, each provision with the same or similar language shall be included in each policy. Variability is permitted to allow an insurer to: (A) Terminate coverage for an insured dependent child when the insured's coverage terminates, or (B) Continue coverage for an insured dependent child when the insured's coverage terminates. (6) The Standard Provisions Form (Form Number 369CONV-SP)(Figure Number 16) found in sec.3.520 of this title (relating to Appendix). This form may be used with all individual conversion policies. If the prototype standard provisions form is not used, each provision with the same or similar language shall be included in each policy. Variable provisions for the standard provisions form include the following: (A) The Time Limit on Certain Defenses provision is variable only to the extent that the alternate provision may be substituted for use with policies issued for conversion from a small employer plan that is guaranteed issue in accordance with Insurance Code, Article 26.21. (B) The Payment to Assignee provision under Payment of Claims is variable only to the extent that corporations organized under Insurance Code, Chapter 20 may substitute this provision for the alternate Assignment provision. (C) Cancellation, Dividends, Misstatement Of Age, Right to Recovery/Clerical Error, Subrogation and Unpaid Premiums provisions may be included or omitted by the insurer. Right to Recovery/Clerical Error provisions shall be considered one provision for purposes of variability and both provisions shall be either included or omitted. (b) This subsection contains the required conversion benefit packages and riders. No conversion policy shall be issued or delivered for issue in this state as a Texas Standard Conversion Policy, a Texas Basic Conversion Policy, a Texas In-Hospital Conversion Policy, or a Texas Lesser In-Hospital Conversion Policy unless such policy contains the required benefit and coverage provisions outlined in paragraphs (1)-(5) of this subsection. (1) The Standard Conversion Policy Benefit Package (Form Number 369SC-BP)(Figure Number 1) found in sec.3.520 of this title (relating to Appendix) is set forth in this paragraph and shall be in the language and format prescribed. Variable language in the prescribed form is indicated by brackets and is described in subparagraphs (A)-(D) of this paragraph: (A) The Schedule of Benefits shall be in the language and format as required in this section and sec.3.505 of this title (relating to Mandatory Conversion or Continuation Options). The Schedule of Benefits shall state any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. The penalties, if any, shall not reduce benefits more than 50% in the aggregate. (B) The Policy Definitions for the Standard Conversion Policy Benefit Package shall be in the language and format prescribed. (i) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included only by corporations organized under Insurance Code, Chapter 20, and neither provision shall be used by corporations other than Chapter 20 companies. (ii) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate insurers with unique operations and special statutory rights, such as corporations organized under Insurance Code, Chapter 20. (C) The Benefits Provided for the Standard Conversion Policy Benefit Package shall be in the language and format prescribed. The services provided by first assistant at surgery may be included as a covered service if elected by the insurer. (D) The Exclusions and Limitations for the Standard Conversion Policy Benefit Package shall be in the language and format prescribed. The variable exclusions may be included by corporations organized under Insurance Code, Chapter 20. (2) The Basic Conversion Policy Benefit Package (Form Number 369BC-BP)(Figure Number 6) found in sec.3.520 of this title (relating to Appendix) is set forth in this paragraph and shall be included in the language and format prescribed. Variable language in the prescribed form is indicated by brackets and is described in subparagraphs (A)-(D) of this paragraph: (A) The Schedule of Benefits shall be in the language and format prescribed. The Schedule of Benefits shall reflect any penalties for failing to comply with any precertification or cost containment provisions. The penalties, if any, shall not reduce benefits more than 50% in the aggregate. (B) The Policy Definitions for the Basic Conversion Policy Benefit Package shall be in the language and format prescribed. (i) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by Chapter 20 companies only and neither provision shall be used by other than corporations organized under Insurance Code, Chapter 20. (ii) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate insurers with unique operations and special statutory rights, such as corporations organized under Insurance Code, Chapter 20. (C) The Benefits Provided for the Basic Conversion Policy Benefit Package shall be in the language and format prescribed. The services provided by first assistant at surgery may be included as a covered service if elected by insurer. (D) The Exclusions and Limitations for the Basic Conversion Policy Benefit Package shall be in the language and format prescribed. The variable exclusions may be included by corporations organized under Insurance Code, Chapter 20. (3) The In-Hospital Conversion Policy Benefit Package (Form Number 369IHC- BP)(Figure Number 5) is set forth in this paragraph and shall be included in the language and format prescribed. Variable language in the prescribed form is indicated by brackets and is described in subparagraphs (A)-(D) of this paragraphs: (A) The Schedule of Benefits shall be in the language and format prescribed. The Schedule of Benefits shall reflect any benefits added by riders as required by this section and sec.3.505 of this title (relating to Mandatory Conversion or Continuation Options) and found in sec.3.520 of this title (relating to Appendix) and any penalties for failing to comply with any precertification or cost containment provisions. The penalties, if any, shall not reduce benefits more than 50% in the aggregate. (B) The Policy Definitions for the In-Hospital Conversion Policy Benefit Package shall be in the language and format prescribed. (i) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by corporations organized under Insurance Code, Chapter 20 only and neither provision shall be used by corporations organized under any other chapter of the Insurance Code. (ii) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate insurers with unique operations and special statutory rights, such as corporations organized under Insurance Code, Chapter 20. (C) The Benefits Provided for the In-Hospital Conversion Policy Benefit Package shall be in the language and format prescribed. The services provided by first assistant at surgery may be included as a covered service if elected by the insurer. (D) The Exclusions and Limitations for the In-Hospital Conversion Policy Benefit Package shall be in the language and format prescribed. The variable exclusions may be included by corporations organized under Insurance Code, Chapter 20. (4) The Lesser In-Hospital Conversion Policy Benefit Package (Form Number 369LIHC-BP)(Figure Number 7), and found in sec.3.520 of this title (relating to Appendix) is set forth in this paragraph and shall be included in the language and format prescribed. Variable language in the prescribed form is indicated by brackets and is described in subparagraphs (A)-(D) of this paragraph: (A) The Schedule of Benefits shall be in the language and format prescribed. The Schedule of Benefits shall reflect any penalties for failing to comply with any precertification or cost containment provisions. The penalties, if any, shall not reduce benefits more than 50% in the aggregate. (B) The Policy Definitions for the Lesser In-Hospital Conversion Policy Benefit Package shall be in the language and format prescribed. (i) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by corporations organized under Insurance Code, Chapter 20 only and neither provision shall be used by corporations organized under any other chapter of the Insurance Code. (ii) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate insurers with unique operations and special statutory rights, such as by corporations organized under Insurance Code, Chapter 20. (C) The Benefits Provided for the Lesser In-Hospital Conversion Policy Benefit Package shall be in the language and format prescribed. The services provided by first assistant at surgery may be included as a covered service if elected by the insurer. (D) The Exclusions and Limitations for the Lesser In-Hospital Conversion Policy Benefit Package shall be in the language and format prescribed. The variable exclusions may be included by corporations organized under Insurance Code, Chapter 20. (5) Riders are set forth in this paragraph. The insurer shall include with the converted policy the riders described in subparagraphs (A)-(C) of this paragraph as required by sec.3.505 of this title (relating to Mandatory Conversion or Continuation Options). Any benefits added by riders shall be reflected on the Schedule of Benefits. (A) The Alcohol and Drug Abuse Benefit Rider (Form Number 369CONV-ADB)(Figure Number 2) found in sec.3.520 of this title (relating to Appendix) may be included with the Texas Standard Conversion Policy and the Texas In-Hospital Conversion Policy. (B) The Mental Health Benefit Rider (Form Number 369CONV-MHB)(Figure Number 3) found in sec.3.520 of this title (relating to Appendix) may be included with the Texas Standard Conversion Policy and the Texas In-Hospital Conversion Policy. (C) The Prescription Drug Benefit Rider (Form Number 369CONV-RX)(Figure Number 4) found in sec.3.520 of this title (relating to Appendix) may be included with the Texas Standard Conversion Policy and the Texas In-Hospital Conversion Policy. Benefits shall be provided at a percentage payable of 50%. In the alternative, the insurer may elect to provide the prescription drug benefit through a prescription drug card program with a co-payment of $8 per prescription or refill for a generic drug or for a name brand drug if the name brand drug costs less than the generic drug, and a co-payment of $12 per prescription or refill for a name brand drug. Exclusions of a prescription drug card program shall not be more restrictive than the exclusions contained in Form Number 369CONV-RX (Figure Number 4) found in sec.3.520 of this title (relating to Appendix). (6) Individual family conversion policies issued to cover an employee/member and eligible dependents are set forth in this paragraph. Insurers may develop their own conversion policies covering an employee/member and eligible dependents using the rules for the individual conversion policies amended as necessary to comply with all statutes and regulations pertaining to dependent coverage. Prescribed components include the required conversion packages as set out in paragraphs (1)-(5) of this subsection. All developed forms must be filed with the department in accordance with sec.3.516 of this title (relating to Filing Requirements). (7) Group conversion policies are set forth in this paragraph. Insurers must develop their own group conversion policies using the rules for the individual conversion policies amended as necessary to comply with the statutes and regulations pertaining to group accident and sickness insurance. Prescribed components include the required conversion packages as set out in paragraphs (1)-(5) of this subsection. All developed forms must be filed with the department in accordance with sec.3.516 of this title (relating to Filing Requirements). sec.3.516. Filing Requirements. (a) An insurer may provide conversion coverage through use of the individual conversion prototype policy forms found in sec.3.520 of this title (relating to Appendix); or through individual forms designed and developed by the insurer; or through group policy/certificate forms designed and developed by the insurer pursuant to Insurance Code, Article 3.51-6, sec.1(a)(4), or through a combination of these methods. (b) All conversion policy forms shall be in policy shell format. (c) The Prototype Conversion Certification Form (Form Number 369CONV- CERT)(Figure Number 17) found in sec.3.520 of this title (relating to Appendix) shall accompany each filing made under subsection (a) of this section. The Prototype Conversion Certification Form shall be signed by a chief executive officer, actuary, attorney, or other designated representative for the named health carrier. The company shall complete and certify through use of the Prototype Conversion Certification Form: (1) If the insurer will be using only prototype forms; (2) If any cost containment provisions will be utilized; (A) An insurer shall list any previously approved cost containment forms that will be used and dates of approval. (B) If the cost containment forms have not been previously approved, the insurer shall include/attach to the certification two copies of the cost containment forms. (3) If the insurer is under contract to provide conversion for other insurers and if so, list the names of the insurers; (4) The option the insurer will provide in the event the group policy is terminated during a continuation period; (5) If the insurer has elected to offer the same coverage and benefits for plans issued after June 1, 1996 as allowed by sec.3.505(a)(2) of this title (relating to Mandatory Conversion or Continuation Options); (6) If the insurer will utilize group conversion trusts; (A) An insurer shall list any previously approved group conversion trusts and dates of approval. (B) If the group conversion trust has not been previously approved, the insurer shall include/attach to the certification, a copy of the group conversion trust agreement. (7) If the insurer will be offering other conversion options as allowed by sec.3.505(a)(5) of this title (relating to Mandatory Conversion or Continuation Option); (A) An insurer shall list any previously approved conversion forms that will be used, dates of approval and that the coverage and benefits of the previously approved forms exceed the minimum standards of sec.3.510 of this title (relating to Minimum Standards for Benefits for Other Conversion Policies). (B) If the other conversion options have not been previously approved, the insurer shall include/attach to the certification two copies of the other conversion forms. (8) Which of the prototype forms will be used and if applicable, alternative forms and flesch scores. (A) An insurer, utilizing the conversion prototype forms to meet the requirements of this subchapter, shall not submit the prototype forms to the department for review and approval. (B) If the alternate forms have not been previously approved, the insurer shall include/attach to the certification two copies of the alternate forms. (C) An insurer shall list any previously approved alternate forms that will be used and dates of approval. (d) Unless the same coverage is offered by the insurer, the Prototype Benefit Packages required by sec.3.505(a)(2)(B) and (C) of this title (relating to Mandatory Conversion of Continuation Options) and sec.3.515(b)(1) and (3) of this title (relating to Prototype Forms and Required Conversion Benefit Packages) shall be inserted into individual or group conversion policy shells as may be appropriate to produce conversion policies in compliance with this subchapter. (e) An insurer shall submit to the department any forms designed and developed by the insurer not previously approved and referenced in subsection (c) of this section, pursuant to Insurance Code, Article 3.42 and Subchapter A of this Chapter (relating to Requirements for Filing of Policy Forms, Riders, Amendments and Endorsements for Life, Accident and Health Insurance and Annuities). sec.3.517. Language Readability Requirements. An insurer not using prototype forms shall submit the readability score for the policy and the certificate and any related documents/forms along with the forms at the time of submission for approval. The minimum readability level shall meet the requirements of rules found in Subchapter G of this Chapter (relating to Plain Language Requirements for Health Benefit Policies). sec.3.518. Mandatory Group Policy Provisions. Each group accident and health policy/certificate required to provide conversion or continuation shall contain policy provisions addressing the conversion and continuation options available to an insured. (1) Small employer plans shall include language that is the same or similar to the language found in Figure Number 28 in sec.26.27(b) of Chapter 26 of this title (relating to the Small Employer Health Insurance Regulations). (2) All other group accident and health policies/certificates shall contain language that is the same or similar to the language contained in the Group Policy Mandatory Conversion Provision (Figure Number 369CCPRO)(Figure Number 18) found in sec.3.520 of this title (relating to Appendix). sec.3.519.Compliance. The requirements of this subchapter apply to plans offered, delivered, or issued for delivery on or after June 1, 1996. sec.3.520. Appendix. The forms adopted and incorporated by reference in sec.sec.3.503 of this title (relating to Forms Adopted and Incorporated by Reference) and 3.515 of this title (relating to Prototype Forms and Required Conversion Benefit Packages) are included in this Appendix. The following list refers to the form number, figure number, and its description. Figure: 28 TAC 3.520 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. Issued in Austin, Texas, on June 12, 1996. TRD-9608365 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: July 3, 1996 Proposal publication date: April 5, 1996 For further information, please call: (512) 463-6327 TITLE 30. ENVIRONMENTAL QUALITY PART I. Texas Natural Resource Conservation Commission CHAPTER 336.Radiation Rules SUBCHAPTER A.Source Material Recovery and Radioactive Substance Disposal 30 TAC sec.336.8 The Texas Natural Resource Conservation Commission (commission) adopts a new sec.336.8, concerning adoption of a Memorandum of Understanding (MOU) between the Railroad Commission of Texas (RCT), and the Texas Department of Health (TDH), and the commission relating to jurisdiction over uranium surface mining, ore milling, and mill tailings disposal. Section 336.8 is adopted without changes to the proposed text as published in the March 19, 1996, issue of the Texas Register (21 TexReg 2176). The MOU amends an existing MOU between the TDH and RCT which has been effective since August 5, 1988. The amendment of the MOU is necessary because of the transfer of regulatory jurisdiction for responsibilities covered under the existing agreement. Senate Bill 2, First Called Session, 72nd Texas Legislature, Chapter 3, 1991, Texas General Laws 4, transferred the jurisdiction for disposal of radioactive substances from the TDH to the Texas Water Commission, a predecessor agency to the commission, effective March 1, 1992. Senate Bill 1043, 73rd Texas Legislature, Chapter 992, 1993, Texas Session Laws 4343, transferred jurisdiction over source material recovery and processing from the TDH to the commission effective September 1, 1993. The new MOU incorporates the changed regulatory jurisdiction between the TDH and the commission with respect to uranium ore milling and tailings disposal. In addition, the new MOU incorporates the legislative mandate placing jurisdiction under the commission for uranium ore milling operations and tailings disposal impoundments. This results in a more efficient regulatory program for milling and tailings disposal placed in a single agency, in conformance with the statutes, whereas the existing agreement provides for joint jurisdiction with the RCT. The new MOU provides for exchanges of information by the three agencies and coordination and cooperation to assure the highest level of technical expertise in the regulatory programs. There were no comments received regarding the proposed amendment. The commission has prepared a Takings Impact Assessment for this new section pursuant to Texas Government Code, Annotated, sec.2007.043. The following is a summary of that Assessment. The specific purpose of the new section is to implement Senate Bill 2, First Called Session, 72nd Texas Legislative, and Senate Bill 1043, 73rd Texas Legislative session, to clearly delineate jurisdictional responsibilities and delete duplicative regulatory efforts. The new section will substantially advance this specific purpose by placing jurisdiction for uranium ore milling operations and tailings disposal in the commission. Promulgation and enforcement of this new section will not affect private real property which is the subject of the rules because the MOU is an interagency agreement that simply outlines specific jurisdictions. The new section is adopted under Texas Health and Safety Code sec.401.412(c), which provides the commission with the authority to adopt rules and guidelines reasonably necessary to exercise its authority over the disposal of radioactive substances and source material recovery and processing. 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. Issued in Austin, Texas, on June 12, 1996. TRD-9608393 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: July 3, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 239-6087 TITLE 31. NATURAL RESOURCES AND CONSERVATION PART II. Texas Parks and Wildlife Department CHAPTER 53.Finance Selling Price of Department Information 31 TAC sec.53.35 The Parks and Wildlife Commission, in a regularly scheduled meeting held May 9, 1996 adopted sec.53.35, concerning the selling price of departmental information without changes to the text as proposed in the April 5, 1996, issue of theTexas Register (21 TexReg 2960). House Bill 2012, enacted by the 74th Legislature, requires the Parks and Wildlife Commission to adopt policies regarding the disclosure of personal customer information recorded by the department in the course of its marketing and sales activities. The proposed new rule stipulates what types of information can and cannot be released, authorizes the executive director to set the price(s) for the sale of customer information such as mailing lists, and provides for the confidentiality of such information at the request of a customer. The department received no public comment concerning the adopted new rule. The new rule is adopted under Parks and Wildlife Code, sec.11.030, which gives the commission authority to set policies, delegate authority, and promulgate rules relating to the disclosure of personal customer information. sec.53.35. Release and Sale of Customer Information. (a) The department may release customer information to accomplish its underlying mission and goals. It is the policy of the commission that certain personal information about the department's customers shall not be released, including, but not limited to, customers' social security, drivers' license, bank account, credit card, or charge card numbers, except where release of such information is dictated by statute or valid court order. The department may release a customer's telephone number only when the customer gives the department prior written consent. (b) The department may rent or sell mailing lists consisting of names and addresses of persons who purchase customer products, licenses or services. It is the commission's policy to refuse rental or sale of mailing lists to any potential user at any time if the use proposed for the list(s) is for mailing(s): (1) whose purpose is deemed by the department to be contrary to the goals and missions of the department; or (2) for political candidates, parties, or causes; or (3) which contain elements that are dishonest, salacious or otherwise deleterious and which are not in the best interest of the State of Texas. (c) The rental or sales price of mailing lists may be adjusted periodically by the executive director or his designee to reflect fair market value of such lists. (d) The department may release customer information, except personal information, without charge or at a reduced fee when the executive director deems that release of such information is in the best interest of the state. (e) Upon request by a customer, information about that customer, or information about a customer's minor family members, will not be released, rented or sold by the department except as otherwise specifically provided by law. (f) Consistent with these rules, the executive director or his designee shall establish a procedure to withhold customer information. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on June 12, 1996. TRD-9608372 Bill Harvey Regulatory Coordinator Texas Parks and Wildlife Department Effective date: July 3, 1996 Proposal publication date: April 5, 1996 For further information, please call: (512) 389-4642, 1-800-792-1112, Ext. 4642 PART XVI. Coastal Coordination Council CHAPTER 506. Council Procedures for Federal Consistency with Coastal Management Program Goals and Policies 31 TAC sec.506.26, sec.506.27 The Coastal Coordination Council (council) adopts amendments to sec.506.26 of this title (relating to Referral of Federal Agency Activities) and sec.506.27 of this title (relating to Council Hearing to Review Federal Agency Activities) without changes to the proposed text as published in the March 26, 1996, issue of the Texas Register (21 TexReg 2456). The amendments resolve a technical conflict between the council's rules for review of federal agency activities for consistency with the goals and policies of the Texas Coastal Management Program (CMP) and federal rules for such reviews. The federal rules allow 60 days for such reviews. The original council rules were based on an incorrect interpretation of the federal rules, however, and allow 90 days. The amendments are intended to conform the council rules to match the 60 days allowed by the federal rules and thereby result in the CMP meeting requirements for federal approval and entry into the federal coastal zone management program. No public comments were received regarding adoption of the amendments. A takings impact assessment of this rule adoption shows that the purpose of the rule is to conform the time period for council reviews of federal agency activities to the shorter period provided by the federal rules. This amendment deals exclusively with procedures affecting federal agencies. Therefore, the amendment has no applicability to nor impact on private real property. Therefore, it has been determined that the adoption of this rule will not constitute a taking, as that term is defined in Texas Government Code, Chapter 2007. The amendments are adopted pursuant to the Coastal Coordination Act, Texas Natural Resources Code, Chapter 33, Subchapters C and F, and are adopted under the council's authority to promulgate rules pursuant to those subchapters. 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. Issued in Austin, Texas, on June 14, 1996. TRD-9608531 Garry Mauro Chairman Coastal Coordination Council Effective date: July 5, 1996 Proposal publication date: March 26, 1996 For further information, please call: (512) 305-9129 TITLE 34. PUBLIC FINANCE PART I. Comptroller of Public Accounts CHAPTER 3.Tax Administration SUBCHAPTER V.Franchise Tax 34 TAC sec.3.545 The Comptroller of Public Accounts adopts an amendment to sec.3.545, concerning extensions, without changes to the proposed text as published in the April 5, 1996, issue of the Texas Register (21 TexReg 2997). The amendment implements changes in the requirements for obtaining extensions of the due date for filing an annual franchise tax report. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. 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. Issued in Austin, Texas, on June 14, 1996. TRD-9608503 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: July 5, 1996 Proposal publication date: April 5, 1996 For further information, please call: (512) 463-4028 34 TAC sec.3.575 The Comptroller of Public Accounts adopts new sec.3.575, concerning annual extensions/electronic funds transfer, without changes to the proposed text as published in the April 5, 1996, issue of the Texas Register (21 TexReg 2998). The new section provides information concerning annual report extension requirements for corporations which are required by law to pay their franchise tax by electronic funds transfer. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. 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. Issued in Austin, Texas, on June 14, 1996. TRD-9608502 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: July 5, 1996 Proposal publication date: April 5, 1996 For further information, please call: (512) 463-4028