Frequently Asked Questions for Health Carriers
Under the new Federal Affordable Care Act, the insurance market will be subject to substantial change and, as such, the department recognizes the need for flexibility during the initial implementation phase. The department's primary goal during this transition period is to minimize market disruption and protect consumers. With these goals in mind, the department issues these FAQs related to state insurance requirements, contained in the Texas Insurance Code (TIC) and Title 28, Texas Administrative Code (28 TAC), as they arise. The department has also assembled a Resource Page for health carriers. For questions regarding compliance with federal law, issuers should seek guidance from appropriate federal authorities, including from the numerous FAQs developed by federal regulators that are available on Regtap. The NAIC has compiled federal FAQs here.
Navigate to FAQs on various topics using the links below:
- Termination of Group Coverage Due to Death (added October 7, 2015)
- Guaranteed Renewability for Small Groups (added May 26, 2015)
- Cost-Sharing Reduction (CSR) Subsidies (added May 4, 2016)
- Composite Premiums in the Small Group Market (added March 25, 2015)
- Certificates of Creditable Coverage (added October 29, 2014)
- Enrollment Outside Service Area (added October 29, 2014)
- Health Plan Consumer Disclosures (added September 3, 2014 and expanded December 2, 2014)
- Consumer Choice Plans (expanded September 3, 2014)
- Federal Grace Periods, Prompt Payment of Claims, and Eligibility Statements (updated May 4, 2016)
- Transition Policies Concerning Nongrandfathered Plans (updated May 4, 2016)
- General Form and Rate Filing Process (updated May 4, 2016)
- Rate Filings
- Small Employer Plans (updated December 14, 2015)
Under 28 TAC §21.4003(a)(8), a carrier is not obligated to continue coverage after the later of the date of the enrollee’s death or the date of receipt of the last covered service under the plan. However, a carrier is obligated under 28 TAC §21.4001 to continue coverage for the employee’s dependents until the end of the month in which the group plan sponsor notifies the health carrier that the dependents are no longer eligible for coverage under the group health plan. Additionally, carriers must offer group continuation coverage to dependents, consistent with COBRA and state continuation provisions.
Though the Federal SHOP standards (at 45 CFR §155.430(d)(7) and Regtap FAQ ID: 1555) dictate the date of death as the last day of coverage for both employees and dependents, carriers in Texas should comply with the requirements of Texas’ law, because it offers a greater level of consumer protection.
Federal law does not consider a family-run business consisting of a husband and wife to be an eligible small group unless they employ at least one common law employee. May a small group carrier non-renew coverage for existing small group policyholders that do not meet this federal definition?
No, under Texas law a small group carrier may not non-renew coverage for an existing small group policyholder, even if it fails to meet the federal definition.
Federal law (42 US Code 300gg-91(e)(1)(B)) allows a state to elect to regulate coverage offered to very small groups as coverage in the small group market, and Texas considers a group of two eligible employees to be a small group, regardless of marital status. The Texas Insurance Code does not exclude spouses from the definition of “eligible employee” or exclude such employees in defining “small employer,” and consistent with this 28 TAC §26.7(d) prohibits a small employer carrier from denying two individuals who are married the status of eligible employee solely on the basis that the two individuals are married. In addition, Texas Insurance Code §1501.108 gives a covered employer the right to renew coverage under a group health plan unless the employer fails to comply with the terms of the plan. Based on these provisions, a small group carrier may not non-renew coverage for an existing small group policyholder, even if the small group policyholder is a small group consisting of only a husband and wife.
What are CSRs?
Established by the ACA, CSRs are subsidies that reduce out-of-pocket liability for members who meet certain financial criteria and select "silver" plans on the exchange. CSRs are separate from premium subsidies under the ACA. Currently, the federal government reimburses each health carrier for CSRs, but pending litigation could result in termination of this reimbursement.
What can carriers do to prepare for the possibility of the termination of federal funding for CSRs?
TDI will accept contractual language in exchange forms permitting carriers to stop covering cost-sharing reductions in the event of the termination of federal reimbursements. TDI believes this may be more feasible than attempting to increase premiums in a manner that complies with state notification requirements. Such contractual language should clearly identify the triggers and time frames for how such changes to CSRs would be implemented and what the plan's benefits would be with and without CSRs. Note that TDI has concerns about contractual language that would permit immediate termination of CSRs without notice and encourages carriers to provide reasonable notice to consumers, such as at least 30 days advance notice and implementation on the first of the month. Carriers are also advised to ensure that any changes to CSRs maintain compliance with Texas HMO, PPO and EPO requirements for cost-sharing. For example, Texas requires that enrollees in state-mandated HMO plans not be held responsible for copayment requirements that exceed 50% of the total cost of services provided or total more than 200% of the total premium cost. Refer to 28 TAC §11.506(2)(A).
Are carriers required to offer premiums on a composite basis?
Federal law states that carriers must offer premiums on a per-member basis, but may also offer composite premiums as an option. Federal law also requires that the composite option be made uniformly, i.e. if a carrier offers composite premiums to one small employer in Texas, it must make that option available to all small employers in Texas. See p. 13750 of the HHS Final Rule.
Does this method apply to plans purchased on the SHOP exchange?
Based on information contained in the March 10, 2015, response from CMS, the SHOP exchange will not use composite premium methods for the 2015 plan year. The response also stated that the SHOP exchange will use the federal default composite premium method for the 2016 plan year.
How does the alternative 4-tier composite methodology differ from the default federal methodology?
The federal methodology consists of two tiers: one for adults age 21 and older, and another for children under the age of 21. The methodology approved by CMS for Texas consists of four tiers: employee, employee + spouse, employee + children, and employee + family, with tier factors of 1.0, 2.0, 2.0, and 3.0, respectively. In either methodology, federal law requires that the sum of the per-member premiums must equal the sum of the composite premiums for every small employer. Click here for an example.
Where can I view the request that Texas submitted to CMS for approval of its 4-tier composite methodology?
Here’s a link to our request. CMS responded by email on March 10, 2015. An excerpt of their response is below:
“…..CMS leadership has approved your proposed small group composite premium method.
I would like to provide a few reminders:
- Issuers in your state need to use this method when they offer the composite premium option to small groups.
- Small group issuers must first rate all the individuals in a group on a per-member basis following the Market Reform Premium Rules (e.g., standard age factors that reflect the 3:1 limit and state specific geographic rating areas).
- The FF SHOP will not use composite premium methods for the 2015 plan year. The FF SHOP plans to use the federal default composite premium method for the 2016 plan year.”
Can carriers use a different composite methodology?
Federal regulations state that only one composite methodology is allowed per state.
What is the effective date of the composite methodology by CMS for Texas?
Subsequent to TDI submitting its January 21 request to CMS, several stakeholders requested that the effective date of the request be revised to a date earlier than January 1, 2016. The primary reason given for revising the effective date was the ability to capture plans with renewal dates prior to January 1, 2016. After receiving approval of an alternative composite methodology, TDI contacted CMS regarding the possibility of revising the effective date. CMS did not object to revising the effective date; however, they stated that any date chosen should be consistently applied. As a result of this communication with CMS, the effective date is revised from January 1, 2016, to November 1, 2015.
What happens to composite premiums if there are census changes within a group?
According to federal law, composite premiums that are computed at the beginning of the plan year must not vary during the plan year, regardless of any census changes within the group. See p. 13750 of the HHS Final Rule.
Given federal guaranteed issue requirements and prohibitions on preexisting condition exclusions, do carriers still need to provide certificates of creditable coverage?
Yes. Texas law (TIC §1205.002) requires carriers to continue issuing certificates of creditable coverage, “as necessary.” However, given the reduced need for these certificates, TDI will consider carriers in compliance if they provide certificates of creditable coverage upon request, consistent with 28 TAC §21.1103(b).
Can a carrier issue coverage if a consumer living outside the carrier’s service area attempts to purchase a plan offered by the carrier through the federal Marketplace?
In light of strict federal guaranteed renewability requirements, carriers must not issue coverage outside their approved service areas. Plans that use provider networks regulated by TDI (including preferred provider benefit plans, exclusive provider benefit plans, and plans offered by health maintenance organizations) may market only within a service area where the issuer meets network adequacy requirements consistent with TIC §1301.005, 28 TAC §3.3704, TIC §843.082, and 28 TAC §11.1607.
In order to avoid violating the above provisions, TDI strongly encourages issuers to put processes into place to ensure prospective policyholders live within the issuer’s approved service area prior to processing applications for enrollment.
The ACA requires health plans to provide a Summary of Benefits and Coverage (SBC) to all current and prospective policyholders. Will the SBC satisfy Texas requirements related to mandatory consumer disclosures?
No. The SBC does not satisfy Texas requirements. In addition to the SBC, Texas issuers must provide consumers with compliant PPO disclosures (TIC §1301.158(b), 28 TAC §3.3705), EPO disclosures (TIC §1301.1581, 28 TAC §3.3705), or HMO disclosures (TIC §843.201, 28 TAC §11.1600), and outlines of coverage (TIC §1201.107 and §1201.108, 28 TAC §§3.3090-3.3093), as applicable. These disclosures should be specific to each plan an issuer markets and should include, in the order listed in the rule, a description of policy terms and conditions related to each data element listed in the rule. Disclosures should also include the notice required under 28 TAC §3.3705(f).
PPO and EPO disclosures must be filed with the department, consistent with 28 TAC §3.3705(c) and made available on an insurer’s website (as applicable), consistent with 28 TAC §3.3705(e)(3).
It has come to TDI's attention that some carriers are not providing these mandatory consumer disclosures, or are not providing the full scope of required information. The department encourages carriers to review the rules to ensure their disclosures are fully compliant. Carriers should also review their mechanisms for providing mandatory disclosures to current and prospective enrollees and ensure disclosures are easily available to consumers shopping for health benefit plans. The department intends to monitor compliance with these requirements and take enforcement action as necessary.
Mandatory disclosure requirements are not waived for health benefit plans offered through the federally operated Marketplace. However, a company may use its website to provide these disclosures to prospective enrollees shopping for coverage through the Marketplace or through another third party website if the disclosures are prominently available on a webpage consumers are directed to from the Marketplace or other website for more information about a plan, such as a webpage that contains plan SBCs.
Texas issuers participating in the federal Marketplace may not receive final federal certification to market plans for the 2015 policy year until November 3, 2014. How should issuers fulfill the obligation to provide consumers with a notice of rate increase 60 days prior to the effective date of the increase?
TDI recognizes that rates may not be final until QHP Agreements are in place with the federal Marketplace. Given this constraint, TDI will consider any QHP issuer to be in compliance with TIC §1201.109 if the issuer provides a notice of rate increase as soon as is practical, but no later than 5 business days, following the signing of federal QHP Agreements.
The ACA actuarial value requirements make it difficult to offer state-mandated plans at every metal level. Do carriers offering consumer choice plans still have to comply with Texas requirements to offer a state-mandated plan?
Yes. Consistent with 28 TAC §21.3542, any carrier offering one or more consumer choice health benefit plans must also offer a plan that includes state-mandated health benefits. While TDI does not require that carriers make a state-mandated plan available at every metal level, carriers must "use the same sources and methods of distribution," to market consumer choice and state-mandated plans "contemporaneously." TDI will consider a carrier to be in compliance with this requirement if the carrier makes the state-mandated plan directly available in any venue (e.g., the federal Marketplace, a private brokerage, or the carrier's website) in which a consumer choice plan is offered.
The written affirmation required at 28 TAC §21.3542(d) may be fulfilled using the same method outlined by TDI's FAQ below regarding disclosures for consumer choice plans.
In the context of consumer choice plans offered in the federal Marketplace, how do carriers comply with the requirements of 28 TAC 21.3530(c) and (d), which require (in subsection (c)(1)) that the carrier provide a consumer choice disclosure to prospective customers not later than with the offer of the plan and prohibit (in subsection (d)(2)) processing an application for such a plan until the carrier has secured the signed disclosure statement from the applicant?
The department recognizes that the federal Marketplace currently has functional limitations that do not permit providing the notice through that website. As an alternative method to comply with 28 TAC 21.3530(c)(1) until such functionality of having the disclosure or a link to it on the Marketplace is available, carriers may make a good faith effort to post the disclosure on their own website so that it is reasonably available to prospective customers and provide the disclosure individually as soon as possible after the consumer selects the consumer choice plan through the Marketplace. The department also recognizes that the federal Marketplace does not currently have the functionality to allow the consumer to sign the disclosure document at the time of application and that the Marketplace also requires that applications be processed as soon as they are received by carriers. As an alternative method to comply with 28 TAC 21.3530(d)(2) until the functionality of proof of the consumer's receipt of the disclosure is available, carriers may issue the disclosure notice as soon as they receive the enrollment information from the federal Marketplace, request that the consumer sign and return the notice, and provide at least a self-addressed stamped envelope as a method for returning the disclosure.
Do TDI rules permit an HMO to include a deductible within a qualified health plan, in order to meet actuarial value requirements for bronze, silver, gold, and platinum plans?
Yes, if a product without a deductible is also available. Although under 28 TAC §11.506 a state-mandated health benefit plan offered by an HMO may not impose a deductible for services provided by the HMO's delivery network, TIC Chapter 1507 waives this requirement for standard health benefit plans (also known as Consumer Choice plans). Any HMO that offers a Consumer Choice plan must also offer a state-mandated health plan. Enrollment applications and plan documents for Consumer Choice plans must comply with the notice requirements detailed in TIC §1507.055.
Texas issuers participating in the federal Marketplace are required under federal rules (45 CFR §156.270(d)) to provide enrollees receiving federal premium subsidies with a 3 month premium grace period, if the enrollee has previously paid at least one full month’s premium during the benefit year. If the enrollee does not pay all outstanding premiums before the grace period expires, issuers are not responsible for claims incurred during months 2 and 3 of the grace period. Federal rules allow issuers to pend these claims and require issuers to notify providers of the possibility for denied claims during this time. In the case of a pharmacy claim that may not be pended due to electronic transaction standards, federal guidance allows issuers to deny the claim.
How do Texas laws related to eligibility statements and prompt pay requirements impact issuers subject to the federal 90-day grace period?
The department expects issuers to comply with Texas' requirement (28 TAC Chapter 21, Subchapter DD) to provide contracted providers eligibility statements upon request that contain accurate information on an enrollee's current enrollment and eligibility status at the time of the enrollee's visit. Texas law does not reference the federal grace period, but TDI anticipates that, if an issuer receives an eligibility inquiry during months 2 and 3 of the grace period, the issuer will provide the federally-required notice to the requesting provider as part of its eligibility response.
With regard to any claims incurred by an enrollee during the grace period, the department reminds issuers that Texas' requirements (TIC Chapter 1301, Subchapter C) related to the prompt payment of claims do not allow issuers to "pend" claims as suggested under federal rules. Therefore, issuers will generally be expected to pay claims received during months 2 and 3 of the grace period in a timely manner. Consistent with federal guidance (QHP Webinar Series FAQ #10, Question 43, published May 2, 2013), issuers may deny pharmacy claims received during months 2 and 3 of the grace period. If an enrollee pays the pharmacy for a product for which a claim has been denied, and subsequently pays his or her premium due and exits the grace period, the enrollee may submit a receipt to the issuer, and the issuer must reimburse the enrollee for the plan's share of the pharmacy claim.
If the grace period expires, an issuer may recoup claims paid during months 2 and 3 as an overpayment under TIC §1301.132. Issuers may also pay claims during months 2 and 3 subject to audit, consistent with TIC §1301.105, which requires the issuer to clearly note that the claim is being paid subject to audit. If the issuer has not previously advised the provider that the enrollee was in the grace period, TDI anticipates that the issuer would at least note this at the time of claim adjudication along with the audit notice.
Does Texas' requirement (TIC §1661.002) for issuers to use information technology to provide participating providers with real-time information concerning enrollees' covered benefits and cost sharing apply to the provision of eligibility statements under 28 TAC Chapter 21, Subchapter DD?
Yes. Upon receipt of a request for an eligibility statement that complies with 28 TAC §21.3804, a health benefit plan issuer must use information technology to provide the eligibility statement in real time at the point of care.
Transition Policies Concerning Nongrandfathered Plans
CMS announced a transitional policy and an extension of the policy that together allow issuers to continue to renew nongrandfathered policies that are not compliant with the ACA until October 1, 2017, so long as they terminate by December 31, 2017. Is the Texas Department of Insurance allowing these transitional renewals for Texas consumers?
Yes. ACA compliance is not required under Texas law, so TDI does not object to carriers renewing noncompliant plans under the federal transitional policy.
Termination Without Replacement
Can an issuer refuse to renew all individual, small employer, or large employer health insurance coverage issued after March 23, 2010, (nongrandfathered coverage), without an offer for replacement coverage, while retaining those insureds with coverage issued on or prior to March 23, 2010, (grandfathered coverage), as of December 31, 2013?
No. TIC §1501.109 and 28 TAC §26.16 and §26.309, relating to small employer and large employer coverage; and 28 TAC §3.3038 and §21.2704(d), relating to individual and member-only association coverage, respectively, allow an issuer to elect to discontinue a particular type of coverage. Discontinuation of a particular type of coverage is allowed only with proper notice to policyholders and the department, if applicable, along with an option offered to each policyholder to purchase other coverage offered by the issuer at the time of the discontinuation.
Termination of a particular type of individual policy or group plan coverage the issuer chose to continue to market after March 23, 2010, without any substitute offer is not permitted by Texas law. The legislature has previously addressed this issue in the context of the guaranteed issue small employer market and has provided only two options, as set forth §1501.109.
The options are:
- termination of all plans through a withdrawal, or
- discontinuance of a particular plan type with an offer to replace with coverage by the same carrier.
Termination With Replacement
Can an issuer discontinue issuing and renewing a particular type of individual, small employer, or large employer health insurance coverage issued after March 23, 2010, while continuing to renew the same coverage that qualifies as grandfathered under ACA and issued prior to that date?
Generally yes. TIC §1501.109(d) and 28 TAC §26.16 and §26.309, relating to small and large employer coverage; and 28 TAC §3.3038 and §21.2704(d), relating to individual and association coverage, respectively, allow an issuer to elect to discontinue a particular policy form if the issuer meets certain conditions. These conditions include proper notification to policyholders along with notification to the department, if applicable, and an option offered to each policyholder to purchase other coverage offered by the issuer at the time of the discontinuation. In this situation, the department views grandfathered and nongrandfathered plans as different types of coverage under the law.
What ability does an issuer have to change a guaranteed renewable policy's renewal date? For example, if a policy year runs from January 1, 2013, through December 31, 2013, and is scheduled to renew on January 1, 2014, can the issuer change the policy year to run from January 1, 2013, through November 30, 2013, and set a new renewal date on December 1, 2013, resulting in a new policy year running from December 1, 2013, through November 30, 2014?
TIC §1202.051 does not permit an issuer to unilaterally change the renewal date in individual health insurance policy provisions. TIC §1501.108(d) does not permit an issuer to unilaterally change small or large employer health benefit policy provisions except at renewal. However, issuers may modify the renewal date by obtaining the signed acceptance of the policyholder. If a change in the renewal date could impact the consumer's out-of-pocket costs by resetting the deductible or out-of-pocket maximum, carriers are strongly encouraged to disclose this at the time of signed acceptance in order to avoid deceptive trade practice complaints.
Can carriers continue applying a pre-ACA rating methodology to grandfathered or transitional small employer business while applying the ACA rating requirements to ACA-compliant plans?
No, a carrier generally cannot have one rating methodology for small employer pre-ACA plans and another for ACA-compliant plans unless the carrier files with and receives approval from the commissioner to establish a separate class of business under TIC §1501.202(e). This is true whether the pre-ACA plans are "grandfathered" under federal law or transitional plans that are exempt from certain federal market reforms until December 31, 2017, as described in CMS' February 29, 2016, bulletin “Extended Transition to Affordable Care Act-Compliant Policies.” Section 26.11(a) of the Texas Administrative Code requires carriers in the small employer market to maintain a separate rating manual for each class of business. To use distinct rating methodologies for ACA-compliant and pre-ACA plans, carriers must establish a separate class of business for grandfathered plans or transitional plans. Carriers can send a letter to TDI requesting approval to establish a separate class of business on the basis that a separate class would enhance the efficiency and fairness of the health coverage market for small employers. Carriers must receive approval by Commissioner's Order to establish a separate class of business (See Commissioner's Order 2546 as an example).
If a separate class of business is established for qualifying grandfathered coverage, must the issuer meet the index rate limitation requirements established under TIC §1501.204(1)?
Generally yes, since TIC §1501.204(1) limits the index rate variation between classes of business to 20 percent.
However, given the need for a transitional view of market regulations during this time of substantial market change, the department will permit issuers to gradually transition to full compliance through a good faith implementation of the new requirement, over a period, not to exceed five years. The department will permit this transition to full compliance to help minimize market disruption and mitigate consumer harm.
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Can the federal premium load for tobacco use be applied in nongrandfathered small employer health plans on an individual enrollee basis?
No. Federal law 42 USC §300gg and 45 CFR §147.102 permit nongrandfathered small group premiums to vary by up to 1.5:1 due to tobacco use, but federal regulations clarify that these provisions do not preempt more narrow state law requirements. In Texas, TIC §1501.206 prohibits adjustment of individual small group enrollee premium rates based on the health status of the individual enrollee. In Texas, tobacco use has historically been considered a health status element, as evidenced by the definition of "health status related factor" in TIC §1501.002(7), which includes medical history and evidence of insurability. Texas will not change this interpretation. Carriers may reflect the tobacco surcharge in the rate charged to a small employer; however, the surcharge must be applied uniformly to the rates charged for all members of the small employer.
What is the general process for filing with TDI the forms and rates for qualified health plans (QHPs) sold on the Exchange and off the Exchange?
For general information regarding the review of forms and rates effective on or after January 1, 2014, please refer to the bulletin TDI released March 15, 2013.
Carriers must submit all health policy forms to TDI for approval prior to use. Rates for the individual market must be filed with TDI. Small employer rates are not required to be filed, but any change in rating methodology must be filed with, and approved by, TDI. Generally, carriers submit forms and rates through the System for Electronic Rate and Form Filing (SERFF) or to Filings Intake in the Life and Health Lines Office. In order to expedite the review process, carriers complete a transmittal checklist for all filings, which contains information necessary to route the filing to the appropriate reviewer. The transmittal checklists are available in SERFF and on TDI's website and are specific to the type of filing the carrier is submitting. Reviewers work with each carrier to address any compliance issues with the filing.
The process for filing forms and rates with TDI will remain the same for carriers, regardless of whether the filing is for QHPs intended for sale on the Exchange or for products sold off of the Exchange. The same process also applies to grandfathered plans and nongrandfathered plans.
Federal regulators also require carriers to file forms and rates for all nongrandfathered plans. All policy forms and related materials in the group and individual markets in Texas should be submitted to federal regulators through the Health Insurance Oversight System (HIOS). See federal guidance RE: 2016 Form Filing Instructions and Health Insurance Oversight System (HIOS) Technical Assistance for Plan Year 2017.
If a carrier only plans to sell in the outside market, is it required to file anything at the federal level through the HIOS?
Yes. As discussed in the response to the question above regarding the general filing process, CCIIO requires that carriers provide all policy forms and accompanying material as well as rates for nongrandfathered plans to CCIIO through the HIOS system.
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Will TDI require separate filings for QHPs sold on the Exchange and plans sold in the outside market?
No. For a single product, carriers must only submit one filing to TDI, regardless of whether the product will be sold in, out, or in and out of the Exchange.
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Can the carrier file both forms and rates in the same filing?
Yes and no - it depends on the product type. For non-HMO products, carriers are permitted to combine forms and rates in one filing. Typically, carriers choose to do this for new product filings. For HMO products, forms and rates must be submitted separately.
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How can carriers expedite the review process for their forms and rates?
TDI intends to prioritize the review of forms and rates for nongrandfathered health plans; however, carriers can also take certain steps to ensure forms and rates are reviewed as quickly as possible.
Carriers should use the product checklists that TDI makes available on its website to ensure that their form filings and rate filings comply with the applicable state requirements. Carriers are also encouraged to reach out directly to TDI with questions about forms and rates so they can be addressed prior to filing.
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Will SERFF change? If so, how?
For Texas, the SERFF interface and functionality will remain the same. Carriers will continue to submit form and rate filings through SERFF in the manner they have in the past. In addition, carriers are required to submit the federal plan management templates through HIOS for nongrandfathered plans. Federal regulators will conduct reviews of those templates and communicate directly with carriers through HIOS.
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Where can carriers find the plan management templates that are submitted through HIOS?
The templates are available on SERFF's website for download along with instructions and other guidance for completing them.
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Do carriers need to file advertising material for QHPs sold on the Exchange?
No. State law does not require carriers to file this material.
If a carrier intends to offer more than one metallic plan such as a gold and silver, can the carrier file one policy form and include two Schedules of Benefits?
Yes. TDI permits carriers to include two Schedules of Benefits in one form filing by using variable material. The carrier must file a statement of variability, which contains a clear explanation of how the material will vary.
What should carriers that are new to the health insurance market file with TDI to comply with state rating requirements?
TDI encourages carriers entering the market to contact the Life, Accident, and Health Section so TDI can work with them individually to ensure rates comply with state law, which will expedite the review.
State requirements on rates differ among individual plans, small employer plans and HMO plans, as follows:
- HMO rates must be filed prior to use and must include an actuarial certification that the rates are not excessive, inadequate, or unfairly discriminatory (28 TAC §11.701).
- In the individual market, rates must be filed, and they must be actuarially justified (28 TAC §3.4(p)-(q)). TDI reviews rates to ensure they are just, fair, reasonable, and adequate, and are not confiscatory, excessive for the risks to which the rate applies, or unfairly discriminatory (Insurance Code §560.002).
- Carriers in the small employer market are not required to file rates prior to use but must comply with the requirements of Insurance Code Chapter 1501 and TAC §11.707. These sections require an issuer to maintain a description of its rating methodology, which state regulators can request. Carriers must also submit an annual certification. All changes in rating method must be approved by TDI.
Additional federal requirements that pertain to rating in the individual and small group markets differ from these state requirements. The final market rules published February 27, 2013, set out the rating requirements for nongrandfathered health plans sold or renewed on or after January 1, 2014, in the individual and small group markets.
In its March 14, 2014, annual letter to issuers, the U.S. Department of Health and Human Services (HHS) lists other relevant resources for issuers seeking to offer QHPs in the Exchange and SHOP.
How will the change in TDI's Effective Rate Review Program status affect the rate filing and review process for rate increases that trigger the federal rate review threshold?
Carriers will continue to submit information through HIOS about rate increases that trigger the rate review threshold; however, TDI will no longer enter determinations on rate increases in HIOS.
TDI will continue to review rate increases as it has in the past. The rate review process assesses:
- whether a proposed increase is just, fair, reasonable, and adequate under Insurance Code §560.002; and
- whether the proposed rate complies with other Insurance Code requirements specific to the product.
Is the rate submission timeline different for nongrandfathered and grandfathered plans? Should these be filed separately with TDI?
The timeline is not different for rates for nongrandfathered and grandfathered plans. Separate filings are not necessary, but if a single submission includes both grandfathered and nongrandfathered plans, issuers should submit distinct experience and pricing components for each.
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How often can carriers change rates for products sold or renewed on or after January 1, 2014?
State law does not limit the frequency of rate changes; however, rates must be just, fair, reasonable, and adequate. All rate changes for individual market plans must be filed. Any change to methodology for small group rates must be filed for approval with TDI (28 TAC §26.11). TDI anticipates the transition to the federal adjusted community rating methodology will trigger a change in rating methodology for most small group carriers in Texas, requiring that they file the new methodology with TDI.
Federal law outlines requirements for how often rates can be changed for nongrandfathered products sold on or after January 1, 2014. The Centers for Medicare and Medicaid Services (CMS), in its April 8, 2013, "Rate Changes for Small Group Market Plans and System Processing of Rates" document, informed carriers that due to system limitations, it cannot process rate changes for small group health plans more frequently than annually. Carriers can build in quarterly trend increases for small group rates in the Unified Rate Review Template that is submitted to CMS, but at this time, CMS says it cannot accommodate more frequent changes to rates.
In the individual market, carriers must submit the Unified Rate Review Template annually with an effective date of January 1 of the applicable year. The capability to enter quarterly increases for trend only pertains to small group plans (see the Unified Rate Review Template and instructions for additional information).
For the 2017 plan year, HHS lists the essential health benefit (EHB) benchmark for Texas as a Blue Cross Blue Shield (BCBS) plan Blue Choice PPO RSH3. What benefits does this plan include?
HHS selected a new EHB benchmark plan for use in the 2017 plan year. HHS provides a chart that summarizes the basic benefits that are included in the benchmark; however, this chart is not fully inclusive. The primary resource that defines the EHB benchmark is the BCBS Best Choice plan document. Note that the EHB includes all benefits covered by the benchmark and applicable coverage limits, but does not include cost-sharing requirements. You can view state mandated benefits applicable to the individual and small group markets the benchmark might not reflect. In addition to the coverage included in the benchmark, federal regulations require the benchmark plan package to comply with the Federal Employees Dental and Vision Program (FEDVIP) dental and vision benefit standards to meet the pediatric dental and vision coverage required by statute. While the benchmark plan generally defines how to fulfill the EHB requirement, some federal provisions may preempt certain EHB benchmark provisions, such as the mental health parity requirement and the prohibition on annual and lifetime coverage limits.
Information on the EHB benchmark from 2014-2016 (Best Choice PPO RS26) is available at the following links:
- HHS summary chart
- BCBS Best Choice plan document
- TDI summary of benchmark and state mandates
- Federal regulations on pediatric dental and vision standards
How should plans handle mandated offers that are not included within the benchmark?
Texas' requirements to offer certain benefits continue to apply, whether a plan is sold on or off a federal Marketplace. Some mandated offers were contained in the essential health benefits benchmark plan and will be required to be in all nongrandfathered individual and small group plans by federal law. Texas' mandated offers of benefits for developmental delays in the individual market and benefits for in vitro fertilization in the small group market fall outside of the EHB requirements. Carriers must continue to offer these benefits to Texas consumers. For plans offered outside a federal Marketplace, the current offer-and-issuance process requirements do not appear to require revision. The federal Marketplace process, as indicated in federal guidance, will require separate plan filings for each plan variation, rather than the inclusion of riders at the purchaser's option. An issuer also must notify the consumer of the option to purchase an identical plan that also includes the benefits required under the mandated offer in instances where a consumer applies to purchase a plan that does not contain benefits for a mandated offer. Federal guidance emphasizes that the issuer is responsible to ensure that state-mandated offers are presented to consumers.
How may preferred provider benefit plans comply with the federal pediatric dental benefit requirement when TIC Chapter 1301 does not apply to provisions for dental care benefits (TIC §1301.002)? May carriers offer a preferred provider benefit plan with a dental rider that complies with TIC §1451.201 et seq?
TIC Chapter 1451, Subchapter E, addresses dental care benefits in health insurance policies or employee benefit plans. It does not prohibit a preferred provider benefit plan from offering dental care benefits through a rider that complies with its provisions. Though §1301.002 provides that Chapter 1301 does not apply to dental benefit provisions in a health insurance policy, it also does not prohibit the provisions of dental care benefits through a rider to a preferred provider benefit plan. The dental care benefit provisions must meet applicable insurance code and administrative code requirements and comply with review standards for such benefits. Dental care benefits marketed outside a federal Marketplace, either as stand-alone products or a part of a benchmark plan, must provide pediatric dental benefits if they are intended to be used to fulfill the essential health benefit requirement. Issuers should seek guidance from appropriate federal authorities regarding compliance with federal law. Federal regulators address some questions related to dental coverage in FAQs posted on Regtap.
Does the PACE Act affect the definitions of “small employer” and “large employer” for the purposes of federal medical loss ratio reporting and rebate requirements under 45 CFR Part 158?
Yes. For the purposes of federal medical loss ratio reporting and rebate requirements, issuers must use the definitions for small and large employer at 42 USC 18024(b), as amended by Pub. L. 114-60. This means that, consistent with Texas definitions at TIC §1501.002, a threshold of 50 rather than 100 employees will be used to determine employer size.
Will Texas continue to define small group size as up to 50 employees, rather than 100?
Yes. The federal Protecting Affordable Coverage for Employees (PACE) Act of 2015 amended provisions of the ACA to keep the definition of small employer at no more than 50 employees, while giving the states the option to set the definition at 100. No action is necessary in Texas to keep the definition at 50. In 2013, the Texas Legislature enacted SB 1332, which maintains the Texas definitions of small and large employer and removed a requirement that only “eligible” employees be counted.
May small employer plans refuse to extend coverage to groups that fail to meet minimum participation requirements?
No. Guaranteed issue requires issuers to allow any group to enroll in coverage; however, federal market rules at 45 CFR §147.104(b)(1) allow a small group issuer to limit the availability of coverage to an annual enrollment period (November 15 through December 15) for any plan sponsor that is unable to comply with a material plan provision relating to employer contribution or group participation.
Does TDI require agents to be appointed with a carrier in order to sell that carrier's products on the federally facilitated health insurance exchange?
Yes. Texas law regarding the licensure and appointment of agents continues to apply to agents marketing through a federal Marketplace in Texas. Whether marketing in or out of the federal Marketplace, an agent must be appointed by a carrier in order to sell that carrier's products. Agents may participate in the Marketplace without being appointed by every participating carrier. HHS released additional guidance for agents and brokers May 1, 2013.
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Last updated: 05/05/2016