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You are here: Home . rules . 2004 . 1101a-059
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Subchapter A. Small Employer Health Insurance

Portability and Availability Act Regulations

§§26.4 - 26.11, 26.13 - 26.16, 26.18 - 26.20,

26.22, 26.24, 26.26, and 26.27

Subchapter C. Large Employer Health Insurance Portability and Availability Act Regulation

§§26.301 - 26.309, 26.311, and 26.312

The Texas Department of Insurance proposes amendments to §§26.4 ­ 26.11, 26.13, 26.15 ­ 26.16, 26.18 ­ 26.20, 26.22, 26.24, 26.26, 26.301 ­ 26.309, 26.311, 26.312, and new §§26.14 and 26.27 concerning small and large employer health insurance regulations. This proposal is necessary to implement House Bills 1211, 1217, and 2969 and Senate Bill 881, enacted by the 76 th Legislature (1999); House Bills 471, 949, 1440, 1676, and 2382 and Senate Bill 990, enacted by the 77 th Legislature (2001); and House Bills 897 and 1446, and Senate Bills 10 and 541, enacted by the 78 th Legislature (2003).The referenced bills amended provisions of Insurance Code, Chapter 26, to provide for the availability and affordability of health insurance for small and large employers; to conform Texas law with updates to the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA); and to clarify the scope and meaning of certain provisions in the rules. In conjunction with the proposed new sections, the department is proposing the repeal of existing §§26.14 and 26.27, which is published elsewhere in this issue of the Texas Register .

Proposed §26.4 amends existing and adds new definitions of terms relating to small and large employer health coverage. Proposed §26.5 expands the scope of the chapter in compliance with HIPAA, and clarifies requirements relating to minimum group size. Proposed §26.6 revises procedures and deadlines and adds new procedures for filing certain certifications. Proposed §26.7 clarifies that health carriers may require proof of status as a small employer, provides examples of reasonable and appropriate supporting documentation, and redefines open enrollment periods in compliance with recent state legislation. Proposed §26.8 contains minor changes in compliance with HIPAA as well as new language explaining a health carrier´s option to terminate coverage due to group size violations.Proposed §26.9 makes clarifying changes to language and the example relating to the application of preexisting conditions. Proposed §26.10 replaces the term "group size" with "the number of employees and dependents of a small employer." Proposed §26.11 revises procedures for filing proposed changes to rating methodology, amends the procedure for developing and retaining rate manuals in accordance with recent legislation, replaces the term "group size" with "the number of employees and dependents of a small employer" in reference to limits on disparity in rate factors, and requires use of the same term for obtaining information relating to a small employer group. Proposed §26.13 updates references to changes in forms; revises the requirement regarding offers of standard benefit plans, including a requirement that small employers must affirm an offer of the plans; prohibits carriers from discriminating between small employer groups when obtaining information; changes the term "price quote" to "premium rate quote;" revises the requirement for eliciting information regarding whether a plan is subject to Ch apter 26, Subchapters A - G, and this subchapter; and proh ibits retaliation against an agent related to the agent´s request that the carrier issue coverage to a small employer. Proposed §26.14 sets out requirements for offers of plans; revises continuation and conversion requirements to conform to new legislation; and contains minor technical changes in compliance with HIPAA. Proposed §26.14 contains some provisions from the §26.14 proposed for repeal. Proposed §26.15 allows nonrenewal of plans not in compliance with minimum group size requirements, and deletes requirements for conversion provisions. Proposed §26.16 adds a subsection clarifying that carriers are subject to all applicable withdrawal and discontinuation requirements. Proposed §26.18 revises requirements relating to the election to be a risk-assuming or reinsured carrier and clarifies requirements for renewal of that election or application at the end of the election period. Proposed §26.19 revises and clarifies requirements related to filing certifications, and revises format requirements for accident and health policy filings. Proposed §26.20 clarifies a carrier´s obligation to complete certain forms and revises previous reporting requirements in light of new requirements to offer consumer choice health benefit plans instead of prototype policies. Proposed §26.22 clarifies that March 1 of each year is the deadline for Private Purchasing Cooperatives to file their statements of amounts collected and expenses incurred, and changes the reference to a form that must be filed. Proposed §26.24 reflects organizational changes within the department. Proposed §26.26 updates statutory references due to recodification. Proposed §26.27 provides notice as to how required forms may be obtained.

Proposed §26.301 expands the scope of this chapter in compliance with HIPAA as well as clarifying requirements relating to minimum group size and a carrier´s option to terminate coverage due to violation of minimum group size requirements. Proposed §26.302 revises procedures and deadlines and adds new procedures for filing certain certifications. Proposed §26.303 makes minor amendments to comply with HIPAA and adds language allowing termination for noncompliance with minimum group size requirements. Proposed §26.304 clarifies that health carriers may require proof of status as a large employer and provides examples of reasonable and appropriate supporting documentation. Proposed §26.305 redefines open enrollment periods in compliance with recent state legislation. Proposed §26.306 clarifies that the 12 month limitation on preexisting condition provisions may not apply with regard to certain late enrollees and clarifies the example relating to the application of preexisting conditions. Proposed §26.307 revises the requirement for eliciting information regarding whether a plan is subject to Chapter 26, Subchapters A, C and H, and this subchapter, and prohibits retaliation against an agent related to the agent´s request that the carrier issue coverage to a large employer. Proposed §26.308 allows nonrenewal of plans not in compliance with minimum group size requirements. Proposed §26.309 clarifies the notification requirements of health carriers withdrawing from the large employer market.

Throughout the sections, including §§26.9, 26.311 and 26.312, minor changes were made to correct form and grammar, make clarifications, correct citations and update examples and references to form numbers.

Kim Stokes, Senior Associate Commissioner for the Life, Health & Licensing Program, has determined that for each year of the first five years the proposed sections will be in effect, there will be no fiscal impact to state and local governments as a result of the enforcement or administration of the rule. There will be no measurable effect on local employment or the local economy as a result of the proposal.

Ms. Stokes has also determined that for each year of the first five years the sections are in effect, the public benefits anticipated as a result of the proposed sections will be the increased affordability and availability of health benefit plans to small and large employers and their employees and dependents, if dependent coverage is offered to employees. The proposed sections will also promote fairer, more uniform marketing practices and provide for efficiencies for carriers, as well as provide for easier administration of and access to the forms. Except as specifically enumerated below, the probable economic cost to persons required to comply with the sections results from the enactment of House Bills 1211, 1217, and 2969 and Senate Bill 881 by the 76 th Legislature (1999); House Bills 471, 949, 1440, 1676, and 2382 and Senate Bill 990 by the 77 th Legislature (2001); and House Bills 897 and 1446, and Senate Bills 10 and 541 by the 78 th Legislature (2003); as well as the federal HIPAA legislation and rules adopted thereunder, and not a result of the adoption, enforcement, or administration of the proposed amendments or new sections. Some carriers may incur additional costs as a result of reprinting forms, many of which will need to be reprinted due to other changes required by statute. To the extent that forms need to be reprinted for reasons related solely to changes in this rule, the department estimates the printing cost to be between $.01 and $.04 per page. The number of pages a carrier will need to print will depend on the carrier´s marketing and business practices. To the extent that carriers need to file endorsements or forms with the department to conform to changes resulting solely from this rule, the department estimates that the cost to carriers will include a $100 filing fee and a printing cost of between $.01 and $.04 per page. The proposal revises reporting requirements in a manner which should result in cost savings to carriers. The proposal does require, as part of annual reporting, tendering copies of certain policies issued by small employer carriers. The department estimates that the cost to carriers of providing these copies will be between $.01 and $.04 per page, with the total cost depending on the length of a carrier´s policies.

The proposal´s cost to a health carrier is not dependent upon the size of the carrier, but rather is dependent upon the number of persons to whom the carrier markets and/or provides health coverage. Both small and micro-businesses and the largest businesses affected by these sections would incur the same cost per notice. The cost per hour of labor would not vary between the smallest and largest businesses, assuming that a small business and the largest business have to modify forms for approximately the same percentage of their applicants or insured groups. Therefore, it is the department´s position that the adoption of these proposed sections will have no adverse economic effect on small or micro-businesses. Regardless of the fiscal effect, it is neither legal nor feasible to waive or modify the requirements of this rule for small or micro-businesses because the proposed amendments are either required by statute or would result in unallowable differentiation of benefits between the applicants/enrollees of small and micro-carriers, compared to those benefits provided to the applicants/enrollees of large carriers.

To be considered, written comments on the proposal must be submitted not later than 5:00 p.m. on December 13, 2004 to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be submitted simultaneously to Bill Bingham, Deputy for Regulatory Matters, Life, Health, & Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. The department will consider the adoption of the proposed amendments and new sections in a public hearing under Docket Number 2607, scheduled for 9:30 a.m., on December 9, 2004, in Room 100 of the William P. Hobby, Jr. State Office Building, 333 Guadalupe Street, Austin, Texas.

The sections are proposed under Insurance Code Article 26.04, HIPAA, and Insurance Code §36.001. The Insurance Code, Chapter 26, implements provisions regarding small and large employers which were necessary to comply with the federal requirements contained in HIPAA. Article 26.04 requires the commissioner to adopt rules as necessary to implement the Insurance Code, Chapter 26, and to meet the minimum requirements of federal law and regulations which, for small and large employer health carriers, are contained in HIPAA. Federal agencies have adopted regulations implementing HIPAA as follows: Department of the Treasury, 26 CFR Part 54; Department of Labor, 29 CFR Part 2590; and Department of Health and Human Services, 45 CFR Parts 144 and 146. As identified in the Introduction, portions of the Federal Regulations are included in these rules as necessary to meet the minimum requirements of federal law. Section 36.001 provides that the Commissioner of Insurance may adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.

The following articles are affected by this proposal: Insurance Code, Chapter 26 and

Chapter 843, Subchapter G; Articles 26.02, 20A.09(k), 3.70-3C, and 21.58A; and §843.002

Subchapter A. SMALL EMPLOYER HEALTH INSURANCE

PORTABILITY AND AVAILABILITY ACT REGULATIONS

§26.4. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Actuary--A qualified actuary who is a member in good standing of the American Academy of Actuaries.

(2) Affiliation period--A period of time that under the terms of the coverage offered by an [ a ] HMO, must expire before the coverage becomes effective. During an affiliation period an [ a ] HMO is not required to provide health care services or benefits to the participant or beneficiary and a premium may not be charged to the participant or beneficiary.

(3) Agent--A person who may act as an agent for the sale of a health benefit plan under a license issued under the Insurance Code, [ Article 20A.15 or 20A.15A, or under the Insurance Code, ] Chapter 21 [ , Subchapter A] .

(4) ­ (5) (No change.)

(6) Child--An unmarried natural child of the employee, including a newborn child; adopted child, including a child as to whom an insured is a party in a suit seeking [ in which ] the adoption of the child [ by the insured is sought ]; natural child or adopted child of the employee´s spouse[ , provided that the child resides with the employee ].

(7) ­ (8) (No change.)

(9) Consumer choice health benefit plan--A health benefit plan authorized by Insurance Code Article 3.80 or Article 20A.09N.

(10) [ (9) ] Creditable coverage--

(A) An individual´s coverage is creditable for purposes of this chapter if the coverage is provided under:

(i) a self-funded or self-insured employee welfare benefit plan that provides health benefits and that is established in accordance with the Employee Retirement Income Security Act of 1974 (29 U.S.C. Section 1001et seq.);

(ii) a group health benefit plan provided by a health insurance carrier or an HMO;

(iii) an individual health insurance policy or evidence of coverage;

(iv) Part A or Part B of Title XVIII of the Social Security Act (42 U.S.C. Section 1395c et seq.);

(v) Title XIX of the Social Security Act (42 U.S.C. Section 1396 et seq . , Grants to States for Medical Assistance Programs ), other than coverage consisting solely of benefits under Section 1928 of that Act (42 U.S.C. Section 1396s , Program for Distribution of Pediatric Vaccines );

(vi) Chapter 55 of Title 10, United States Code (10 U.S.C. Section 1071 et seq.);

(vii) a medical care program of the Indian Health Service or of a tribal organization;

(viii) a state or political subdivision health benefits risk pool;

(ix) a health plan offered under Chapter 89 of Title 5, United States Code (5 U.S.C. Section 8901 et seq.);

(x) a public health plan as defined in this section;

(xi) a health benefit plan under Section 5(e) of the Peace Corps Act (22 U.S.C. Section 2504(e)); and

(xii) short-term limited duration insurance as defined in this section.

(B) Creditable coverage does not include:

(i) accident-only, disability income insurance, or a combination of accident-only and disability income insurance;

(ii) coverage issued as a supplement to liability insurance;

(iii) liability insurance, including general liability insurance and automobile liability insurance;

(iv) workers' compensation or similar insurance;

(v) automobile medical payment insurance;

(vi) credit only insurance;

(vii) coverage for onsite medical clinics;

(viii) other coverage that is similar to the coverage described in this subsection under which benefits for medical care are secondary or incidental to other insurance benefits and specified in federal regulations;

(ix) if offered separately, coverage that provides limited scope dental or vision benefits;

(x) if offered separately, long-term care coverage or benefits, nursing home care coverage or benefits, home health care coverage or benefits, community based care coverage or benefits, or any combination of those coverages or benefits;

(xi) if offered separately, coverage for limited benefits specified by federal regulation;

(xii) if offered as independent, noncoordinated benefits, coverage for specified disease or illness;

(xiii) if offered as independent, noncoordinated benefits, hospital indemnity or other fixed indemnity insurance; or

(xiv) Medicare supplemental health insurance as defined under Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss), coverage supplemental to the coverage provided under Chapter 55 of Title 10, United States Code (10 U.S.C. Section 1071 et seq.), and similar supplemental coverage provided under a group plan, but only if such insurance or coverages are provided under a separate policy, certificate, or contract of insurance.

(11) [ (10) ] Department--The Texas Department of Insurance.

(12) [ (11) ] Dependent--A spouse; newborn child; child under the age of 25 [ 19 ] years; [ child who is a full-time student under the age of 23 years and who is financially dependent on the parent; ] child of any age who is medically certified as disabled and dependent on the parent; any person who must be covered under [ the ] Insurance Code[ , ]Article 3.51-6, §3D [ §3D ] or §3E [ §3E ], or the Insurance Code[ , ] Article 3.70-2(L); and any other child included as an eligible dependent under an employer´s benefit plan , including a child who is a full-time student described in Insurance Code Article 21.24-2 and §11.506(19) of this title (relating to Mandatory Contractual Provisions: Group, Individual and Conversion Agreement and Group Certificate) .

(13) [ (12) ] DNA--Deoxyribonucleic acid.

(14) [ (13) ] Effective date--The first day of coverage under a health benefit plan, or, if there is a waiting period, the first day of the waiting period.

(15) [ (14) ] Eligible employee--An employee who works on a full-time basis and who usually works at least 30 hours a week. The term also includes a sole proprietor, a partner, and an independent contractor, if the sole proprietor, partner, or independent contractor is included as an employee under a health benefit plan of a small or large employer , regardless of the number of hours the sole proprietor, partner, or independent contractor works weekly . The term does not include:

(A) an employee who works on a part-time, temporary, seasonal or substitute basis; or

(B) an employee who is covered under:

(i) another health benefit plan;

(ii) a self-funded or self-insured employee welfare benefit plan that provides health benefits and that is established in accordance with the Employee Retirement Income Security Act of 1974 (29 United States Code, §§1001, et seq.);

(iii) the Medicaid program if the employee elects not to be covered;

(iv) another federal program, including the TRICARE [ CHAMPUS ] program or Medicare program, if the employee elects not to be covered; or

(v) a benefit plan established in another country if the employee elects not to be covered.

(16) Employee--Any individual employed by an employer.

(17)[ (15) ] Franchise insurance policy--An individual health benefit plan under which a number of individual policies are offered to a selected group of a small or large employer. The rates for such a policy may differ from the rate applicable to individually solicited policies of the same type and may differ from the rate applicable to individuals of essentially the same class.

(18)[ (16) ] Genetic information--Information derived from the results of a genetic test or from family history .

(19)[ (17) ] Genetic test--A laboratory test of an individual´s DNA, RNA, proteins, or chromosomes to identify by analysis of the DNA, RNA, proteins, or chromosomes the genetic mutations or alterations in the DNA, RNA, proteins, or chromosomes that are associated with a predisposition for a clinically recognized disease or disorder. The term does not include:

(A) a routine physical examination or a routine test performed as a part of a physical examination;

(B) a chemical, blood or urine analysis;

(C) a test to determine drug use; or

(D) a test for the presence of the human immunodeficiency virus.

(20) [( 18) ] HMO--Any person governed by the Texas Health Maintenance Organization Act, Insurance Code, Chapters [ Chapter ] 20A and 843 , including:

(A) a person defined as a health maintenance organization under [ Section 2 of ] the Texas Health Maintenance Organization Act;

(B) an approved nonprofit health corporation that is certified under §162.001 [ Section 5.01(a), Medical Practice Act, Article 4495b ], Texas Occupations Code [ Civil Statutes ], and that holds a certificate of authority issued by the commissioner under Insurance Code[ , ] Article 21.52F;

(C) a statewide rural health care system under Insurance Code, Chapter 845 that holds a certificate of authority issued by the commissioner under Insurance Code, Chapter 843 [ Article 20C.05 ]; or

(D) a nonprofit corporation created and operated by a community center under Chapter 534, Subchapter C, Health and Safety Code.

(21)[ (19) ] Health benefit plan--A group, blanket, or franchise insurance policy, a certificate issued under a group policy, a group hospital service contract, or a group subscriber contract or evidence of coverage issued by a health maintenance organization that provides benefits for health care services. The term does not include the following plans of coverage:

(A) accident-only or disability income insurance or a combination of accident-only and disability income insurance;

(B) credit-only insurance;

(C) disability insurance coverage;

(D) coverage for a specified disease or illness;

(E) Medicare services under a federal contract;

(F) Medicare supplement and Medicare Select policies regulated in accordance with federal law;

(G) long-term care coverage or benefits, nursing home care coverage or benefits, home health care coverage or benefits, community-based care coverage or benefits, or any combination of those coverages or benefits;

(H) coverage that provides limited-scope dental or vision benefits;

(I) coverage provided by a single-service health maintenance organization;

(J) coverage issued as a supplement to liability insurance;

(K) insurance coverage arising out of a workers' compensation or similar insurance;

(L) automobile medical payment insurance coverage;

(M) jointly managed trusts authorized under 29 United States Code §§141 et seq. that contain a plan of benefits for employees that is negotiated in a collective bargaining agreement governing wages, hours, and working conditions of the employees that is authorized under 29 United States Code §157;

(N) hospital indemnity or other fixed indemnity insurance;

(O) reinsurance contracts issued on a stop-loss, quota-share, or similar basis;

(P) short-term limited duration insurance as defined in this section;

(Q) liability insurance, including general liability insurance and automobile liability insurance;

(R) coverage for onsite medical clinics; or

(S) coverage that provides other limited benefits specified by federal regulations; or

(T) other coverage that is:

(i) similar to the coverage described in subparagraphs (A) ­ (S) [ A-S ] of this paragraph under which benefits for medical care are secondary or incidental to other insurance benefits; and

(ii) specified in federal regulations.

(22) [ (20) ] Health carrier--Any entity authorized under the Insurance Code or another insurance law of this state that provides health insurance or health benefits in this state including an insurance company, a group hospital service corporation under [ the ] Insurance Code, Chapter 842 [ 20 ], an HMO , and a stipulated premium company under [ the ] Insurance Code, Chapter 844 [ 22 ].

(23) [ (21) ] Health insurance coverage--Benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or HMO contract.

(24) [ (22) ] Health status related factor--Health status; medical condition, including both physical and mental illnesses; claims experience; receipt of health care; medical history; genetic information; evidence of insurability, including conditions arising out of acts of domestic violence; and disability.

(25) [( 23) ] Index rate--For each class of business as to a rating period for small employers with similar case characteristics, the arithmetic average of the applicable base premium rate and corresponding highest premium rate.

(26) [ (24) ] Large employer--An employer who employed an average of at least 51 eligible employees on business days during the preceding calendar year and who employs at least two [ eligible ] employees on the first day of the policy year. For purposes of this definition, a partnership is the employer of a partner.

(27) [ (25) ] Large employer carrier--A health carrier, to the extent that carrier is offering, delivering, issuing for delivery, or renewing health benefit plans subject to Insurance Code, Chapter 26, Subchapters A and H.

(28) [ (26) ] Large employer health benefit plan--A health benefit plan offered to a large employer.

(29) [ (27) ] Late enrollee--Any employee or dependent eligible for enrollment who requests enrollment in a small or large employer's health benefit plan after the expiration of the initial enrollment period established under the terms of the first plan for which that employee or dependent was eligible through the small or large employer or after the expiration of an open enrollment period under Insurance Code[ , ] Article 26.21(h) or 26.83(f), who does not fall within the exceptions listed below, and who is accepted for enrollment and not excluded until the next open enrollment period. An employee or dependent eligible for and requesting enrollment cannot be excluded until the next open enrollment period and, when enrolled, is not a late enrollee, in the following special circumstances:

(A) the individual:

(i) was covered under another health benefit plan or self-funded employer health benefit plan at the time the individual was eligible to enroll;

(ii) declines in writing, at the time of initial eligibility, stating that coverage under another health benefit plan or self-funded employer health benefit plan was the reason for declining enrollment;

(iii) has lost coverage under another health benefit plan or self-funded employer health benefit plan as a result of the termination of employment, the reduction in the number of hours of employment, the termination of the other plan's coverage, the termination of contributions toward the premium made by the employer; or the death of a spouse, or divorce; and

(iv) requests enrollment not later than the 31st day after the date on which coverage under the other health benefit plan or self-funded employer health benefit plan terminates;

(B) the individual is employed by an employer who offers multiple health benefit plans and the individual elects a different health benefit plan during an open enrollment period;

(C) a court has ordered coverage to be provided for a spouse under a covered employee's plan and the request for enrollment is made not later than the 31st day after the date on which the court order is issued;

(D) a court has ordered coverage to be provided for a child under a covered employee´s plan and the request for enrollment is made not later than the 31st day after the date on which the employer receives the court order or notification of the court order;

(E) the individual is a child of a covered employee and has lost coverage under Chapter 62, Health and Safety Code, Child Health Plan for Certain Low-Income Children or Title XIX of the Social Security Act (42 U.S.C. §§1396, et seq ., Grants to States for Medical Assistance Programs), other than coverage consisting solely of benefits under Section 1928 of that Act (42 U.S.C. § 1396s, Program for Distribution of Pediatric Vaccines);

(F) the individual has a change in family composition due to marriage, birth of a child, adoption of a child, or because an insured becomes a party in a suit for the adoption of a child;

(G) [ (F) ] an individual becomes a dependent due to marriage, birth of a newborn child, adoption of a child, or because an insured becomes a party in a suit for the adoption of a child; and

(H) [ (G) ] the individual described in subparagraphs (E) , [ and ] (F) and (G) of this paragraph requests enrollment no later than the 31st day after the date of the marriage, birth, adoption of the child, loss of the child´s coverage, or within 31 days of the date an insured becomes a party in a suit for the adoption of a child.

(30) [ (28) ] Limited scope dental or vision benefits--Dental or vision benefits that are sold under a separate policy or rider and that are limited in scope to a narrow range or type of benefits that are generally excluded from hospital, medical, or surgical benefits contracts.

(31) [ (29) ] Medical care--Amounts paid for:

(A) the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body;

(B) transportation primarily for and essential to the medical care described in subparagraph (A) of this paragraph; or

(C) insurance covering medical care described in either subparagraphs (A) or (B) of this paragraph.

(32) [ (30) ] Medical condition--Any physical or mental condition including, but not limited to, any condition resulting from illness, injury (whether or not the injury is accidental), pregnancy, or congenital malformation. Genetic information in the absence of a diagnosis of the condition related to such information shall not constitute a medical condition.

(33) [ (31) ] New business premium rate--For each class of business as to a rating period, the lowest premium rate that is charged or offered or that could be charged or offered by the small employer carrier to small employers with similar case characteristics for newly issued small employer health benefit plans that provide the same or similar coverage.

(34) [ (32) ] New entrant--An eligible employee, or the dependent of an eligible employee, who becomes part of or eligible for a small or large employer group after the initial period for enrollment in a health benefit plan. After the initial enrollment period, this includes any employee or dependent who becomes eligible for coverage and who is not a late enrollee.

(35) [ (33) ] Participation criteria--Any criteria or rules established by a large employer to determine the employees who are eligible for enrollment, including continued enrollment, under the terms of a health benefit plan. Such criteria or rules may not be based on health status related factors.

(36) [ (34) ] Person--An individual, corporation, partnership, or other legal entity.

(37) [ (35) ] Point-of-service coverage (POS coverage)--Coverage provided under a POS plan as described [ defined ] in §21.2901 of this title (relating to Definitions) [ Articles 3.64(a)(4), 20A02(bb), 26.09(a)(2) of the Code ] and as permitted by Article 26.48 , Insurance [ of the ] Code.

(38) [ (36) ] Plan [ Policy ] year--For purposes of the Insurance Code, Chapter 26, and this chapter, a 365-day period that begins on the plan or policy's effective date or a period of one full calendar year [ calendar-year ], under a health benefit plan providing coverage to small or large employers and their employees, as defined in the plan or policy. Small or large employer carriers must use the same definition of plan [ policy ] year in all small or large employer health benefit plans.

(39) [ (37) ] Postmark [ Postmarked ]--A date stamp by the US Postal Service or other delivery entity , including any electronic delivery available.

(40) [ (38) ] Preexisting condition provision--A provision that denies, excludes, or limits coverage as to a disease or condition for a specified period after the effective date of coverage.

(41) [ (39) ] Premium--All amounts payable [ paid] by a small or large employer and eligible employees as a condition of receiving coverage from a small or large employer carrier, including any fees or other contributions associated with a health benefit plan.

(42) Premium rate quote--A statement of the premium a small or large employer carrier offers and will accept to make coverage effective for a small or large employer.

(43) [ (40) ] Public health plan--Any plan established or maintained by a State, county, or other political subdivision of a State that provides health insurance coverage to individuals who are enrolled in the plan.

(44) [ (41) ] Rating period--A calendar period for which premium rates established by a small employer carrier are assumed to be in effect.

(45) [ (42) ] Reinsured carrier--A small employer carrier participating in the Texas Health Reinsurance System.

(46) [ (43) ] Renewal date--For each small or large employer's health benefit plan, the earlier of the date (if any) specified in such plan (contract) for renewal; the policy anniversary date; or the date on which the small or large employer's plan is changed. To determine the renewal date for employer association or multiple employer trust group health benefit plans, small or large employer carriers may use the date specified for renewal, or the policy anniversary date, of either the master contract or the contract or certificate of coverage of each small or large employer in the association or trust. Small or large employer carriers must use the same method of determining renewal dates for all small or large employer health benefit plans. A change in the premium rate is not considered a renewal if the change is due solely :

(A) to the addition or deletion of an employee or dependent if the deletion is due to a request by the employee, death or retirement of the employee or dependent, termination of employment of the employee, or because a dependent is no longer eligible ; or

(B) to fraud or intentional misrepresentation of a material fact by a small employer or an eligible employee or dependent [ is not considered a renewal date. For association or multiple employer trusts group health benefit plans, small or large employer carriers may use the date specified for renewal or the policy anniversary date, of either the master contract or the contract or certificate of coverage of each small or large employer in the association or trust, in determining the renewal date. Small or large employer carriers must use the same method of determining renewal dates for all small or large employer health benefit plans ].

(47) [ (44) ] Risk-assuming carrier--A small employer carrier that elects not to participate in the Texas Health Reinsurance System, as approved by the department.

(48) [ (45) ] Risk characteristic--The health status related factors, duration of coverage, or any similar characteristic , except genetic information, related to the health status or experience of a small employer group or of any member of a small employer group.

(49) [ (46) ] Risk load--The percentage above the applicable base premium rate that is charged by a small employer carrier to a small employer to reflect the risk characteristics of the small employer group. A small employer carrier may not use genetic information to alter or otherwise affect risk load.

(50) [ (47) ] Risk pool--The Texas Health Insurance Risk Pool established under Insurance Code[ , ] Article 3.77, or other similar arrangements in other states.

(51) [ (48) ] RNA--Ribonucleic acid.

(52) [ (49) ] Short-term limited duration insurance--Health insurance coverage provided under a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer´s consent) that is within 12 months of the date the contract becomes effective.

(53) [ (50) ] Significant break in coverage--A period of 63 consecutive days during all of which the individual does not have any creditable coverage. Neither a waiting period nor an affiliation period is counted in determining a significant break in coverage.

(54) [ (51) ] Small employer--An employer that employed an average of at least two employees but not more than 50 eligible employees on business days during the preceding calendar year and who employs at least two [ eligible ] employees on the first day of the policy year. For purposes of this definition, a partnership is the employer of a partner. A small employer includes an independent school district that elects to participate in the small employer market as provided under Insurance Code[ , ] Article 26.036.

(55) [ (52) ] Small employer carrier--A health carrier, to the extent that health carrier is offering, delivering, issuing for delivery, or renewing , under Insurance Code Article 26.06(a), health benefit plans subject to Subchapters A - G of the Insurance Code, Chapter 26[ , under Article 26.06(a) ].

(56) [ (53) ] Small employer health benefit plan--A health benefit plan offered to a small employer [ developed by the commissioner ] under the Insurance Code, Chapter 26, Subchapter E [ , or any other health benefit plan offered to a small employer under the Insurance Code, Article 26.42(c) or Article 26.48 ].

(57) [ (54) ] State-mandated health benefits--As defined in §21.3502 of this title (relating to Definitions) [ Standard benefit plans--The basic coverage benefit plan and the catastrophic care benefit plan required to be offered by health carriers, excluding HMOs, under the Insurance Code, Chapter 26, Subchapter E. For HMOs, the standard benefit plan means the prototype small employer group health benefit plan that may be offered by an HMO, as provided under the Insurance Code, Chapter 26, Subchapter E ].

(58) [ (55) ] Waiting period--A period of time[ , ] established by an employer that must pass before an individual who is a potential enrollee in a health benefit plan is eligible to be covered for benefits. If an employee or dependent enrolls as a late enrollee, under special circumstances that except the employee or dependent from the definition of late enrollee, or during an open enrollment period, any period of eligibility before the effective date of such enrollment is not a waiting period.

§26.5. Applicability and Scope.

(a) Except as otherwise provided, Subchapter A of this chapter shall apply to any health benefit plan providing health care benefits covering two or more eligible employees of a small employer, whether provided on a group or individual franchise basis, regardless of whether the policy was issued in this state, if the plan meets one of the following conditions:

(1) a portion of the premium or benefits is paid by a small employer;

(2) the health benefit plan is treated by the employer or by a covered individual as part of a plan or program for the purposes of 26 United States Code §106 or §162; [ or ]

(3) the health benefit plan is a group policy issued to a small employer ; or

(4) the health benefit plan is an employee welfare benefit plan under 29 CFR §2510.3-1(j) .

(b) Except as provided by Insurance Code[ , ] Article 26.06(a), or subsection (a) of this section, this subchapter does not apply to an individual health insurance policy that is subject to individual underwriting, even if the premium is remitted through a payroll deduction method.

(c) For an employer who was not in existence throughout the calendar year preceding the year in which the determination of whether the employer is a small employer is made, the determination is based on the average number of [ eligible ] employees the employer reasonably expects to employ on business days in the calendar year in which the determination is made.

(d) An insurance policy, evidence of coverage, contract, or other document that is delivered, issued for delivery, or renewed to small employers and their employees on or after July 1, 1997 shall comply with all provisions of the Insurance Code, Chapter 26, Subchapters A - G[ , as amended by the 75th Legislature, ] and with [ amendments to ] this subchapter.

(e) ­ (h) (No change.)

(i) If a small employer or the employees of a small employer are issued a health benefit plan under the provisions of [ the ] Insurance Code, Chapter 26, Subchapters A - G, and this subchapter, and the small employer subsequently employs more than 50 eligible employees or less than two eligible employees, the provisions of [ the ] Insurance Code, Chapter 26, and this subchapter shall continue to apply to that particular health plan subject to the provisions of §26.15 of this chapter [ title ] (relating to Renewability of Coverage and Cancellation). A health carrier providing coverage to such an employer shall, within 60 days of becoming aware that the employer has more than 50 eligible employees or less than two eligible employees, but not later than the first renewal date occurring after the small employer has ceased to be a small employer qualifying for coverage under Insurance Code Article 26.06(a) and this subchapter , notify the employer that the protections provided under [ the ] Insurance Code, Chapter 26, Subchapters A - G, and this subchapter shall cease to apply to the employer, if such employer fails to renew its current health benefit plan ; [ , ] fails to comply with the contribution , minimum group size (as set forth in subsection (a) of this section), or participation requirements of this subchapter; [ , ] or elects to enroll in a different health benefit plan. The notice requirement of this subsection does not apply to a health carrier electing, pursuant to this subchapter, to issue coverage to a group consisting of one eligible employee.

(j) (No change.)

(k) A governmental entity´s [ entities´ ] health benefit plan (subject to Insurance Code[ , ] Articles 3.51-1, 3.51-2, [ 3.51-3, ] 3.51-4, 3.51-5, [ or ] 3.51-5A , or Chapter 1578 ) that is provided through health insurance coverage and that otherwise meets the requirements of being a small employer is subject to the provisions of [ Chapter 26, ] Insurance Code, Chapter 26, Subchapters A - G and this subchapter. The portion of a non-federal governmental entity´s health benefit plan that is self-insured may elect not to comply with §2721 of the Public Health Services Act as added by the Health Insurance Portability and Accountability Act of 1996.

§26.6. Status of Health Carriers as Small Employer Carriers and Geographic Service Area.

(a) No later than March 1 annually , [ 1998, ] each health carrier providing health benefit plans in this state shall make a filing with the commissioner indicating whether the health carrier will or will not offer, renew, issue, or issue for delivery health benefit plans to small employers in this state as defined in the Insurance Code, Chapter 26, Subchapters A - G, and this subchapter. The required filing shall include the certification [ form ]provided in the current [ at Figure 40 of §26.27(b) of this title (relating to Forms) [ ( ]Form Number 1212 CERT SEHC STATUS[ ) ] , completed according to the carrier's status and shall at least provide a statement to the effect of one of the following:

(1) ­ (4) (No change.)

(b) If a health carrier chooses to change its election or the date of implementing its election under subsection (a)(1), (2), or (4) of this section, the health carrier shall notify the commissioner of its new election at least 30 days prior to the date the health carrier intends to begin operations under the new election. This notification shall be made on Form Number 1212 CERT SEHC STATUS [ provided at Figure 40 of §26.27(b)(40) of this title (relating to Forms) ].

(c) Upon election to become a small employer carrier, the health carrier shall establish geographic service areas within which the health carrier reasonably anticipates it will have the capacity to deliver services adequately to small employers in each established geographic service area. Small employer carriers shall comply with the following:

(1) The carrier shall define [ The ] geographic service areas [ shall be defined ] in terms of counties or ZIP [ zip ] codes, to the extent possible[ , and shall be submitted in conjunction with any filing of a small employer health benefit plan ].

(2) If the service area cannot be defined by counties or ZIP [ zip ] code, the carrier shall submit a map which clearly shows the geographic service areas [ is required to be submitted in conjunction with the filing of the small employer health benefit plan ].

(3) ­ (4) (No change.)

(5) [ Networks of ]HMO small employer carriers shall establish networks [ be established] in accordance with Insurance Code, Chapters [ Chapter ] 20A and 843, [ , Insurance Code ] and Chapter 11 of this title (relating to Health Maintenance Organizations) .

(6) Small employer carriers shall , no later than the initial filing of a small employer health benefit plan, utilize Form Number 1212 CERT GEOG to submit this information [ provided at Figure 44 of §26.27(b)(44) of this title (relating to Forms) ], as required by §26.19(b) of this chapter [ title ] (relating to Filing Requirements).

(7) If a small employer carrier elects to alter its geographic service area, the small employer carrier shall notify the department of its intent at least 30 days prior to the date the health carrier intends to effect the change. The small employer carrier shall utilize Form Number 1212 CERT GEOG to submit this information.

(d) Health carriers providing coverage under any health benefit plans issued to small employers and/or their employees, whether on a group or franchise basis, shall be considered small employer carriers for purposes of such plans, and shall comply with all provisions of [ the ] Insurance Code, Chapter 26, Subchapters A - G, and this subchapter, as applicable.

(e) A health carrier that continues to provide coverage pursuant to subsection (a)(2) of this section shall not be eligible to participate in the reinsurance program established under [ the ] Insurance Code, Chapter 26, Subchapter F.

(f) This subsection does not exempt a health carrier from any other applicable legal requirements, such as those for withdrawal from the market under §§7.1801, et seq . of this title (relating to Withdrawal Plan Requirements and Procedures).

§26.7. Requirement to Insure Entire Groups.

(a) ­ (b) (No change.)

(c) A small employer carrier may require each small employer that applies for coverage, as part of the application process, to provide a complete list of employees, eligible employees and dependents of eligible employees as defined in [ the ] Insurance Code[ , ] Article 26.02. The small employer carrier may also require the small employer to provide reasonable and appropriate supporting documentation [ (such as a W-2 Summary Wage and Tax Form) ] to verify the information required under this subsection , as well as to confirm the applicant´s status as a small employer . The small employer carrier shall make a [ A ] determination of eligibility [ shall be made ] within five business days of receipt of any requested documentation. A small employer carrier may not condition the issuance of coverage on an employer´s production of a particular document, where the employer can otherwise provide the information required by this section. Following are examples of the types of supporting documentation which a small employer carrier may request, as reasonable and appropriate, from an employer as needed to fulfill the purposes of this subsection:

(1) a W-2 Summary Wage and Tax Form or other federal or state tax records;

(2) a loan agreement;

(3) an invoice;

(4) a business check;

(5) a sales tax license;

(6) articles of incorporation or other business entity filings with the Secretary of State;

(7) assumed name filings;

(8) professional licenses; and

(9) reports required by the Texas Workforce Commission.

(d) ­ (h) (No change.)

(i) Periods provided for enrollment in and application for any health benefit plan provided to a small employer group shall comply with the following:

(1) the initial enrollment period shall extend [ extends ] at least 31 consecutive days after the date the new entrant begins employment or , if the waiting period exceeds 31 days, at least 31 consecutive days after the date the new entrant completes the waiting period for coverage;

(2) the new entrant shall be [ is ] notified of his or her opportunity to enroll at least 31 days in advance of the last date enrollment is permitted;

(3) the new entrant´s application for coverage shall be considered timely if he or she submits the application within the initial enrollment [ a ] period [ of at least 31 days following the date of employment, or following the date the new entrant is eligible for coverage, is provided during which the new entrant's application for coverage may be submitted ]. Submits, [ Submitted ] for purposes of this paragraph , means that the item(s) must be postmarked by the end of the specified time period. At the discretion of the small employer carrier, alternative methods of submission , such as facsimile transmission (fax) [ fax ], may be acceptable; and

(4) the small employer carrier shall provide an open enrollment period of at least 31 consecutive days [ is provided ] on an annual basis. [ Such enrollment period shall consist of an entire calendar month, beginning on the first day of the month and ending on the last day of the month. If the month is a 30-day month, the enrollment period shall begin on the first day of the month and end on the first day of the following month. If the month is February, the period shall last through March 2nd. ]

(j) ­ (n) (No change.)

§26.8. Guaranteed Issue; Contribution and Participation Requirements.

(a) (No change.)

(b) Health carriers may require small employers to answer questions designed to determine the level of contribution by the small employer, the number of employees and eligible employees of the small employer, and the percentage of participation of eligible employees of the small employer.

(c) (No change.)

(d) Coverage under a small employer health benefit plan is available if at least 75% of the eligible employees of a small employer elect to be covered, as provided in [ the ] Insurance Code[ , ] Article 26.21 [ 26.21(b) ]. This 75% requirement shall not apply to a small employer that has only two eligible employees. A small employer that has only two eligible employees shall be subject to a 100% participation requirement.

(1) ­ (2) (No change.)

(e) ­ (f) (No change.)

(g) A health carrier shall treat all similarly situated small employer groups in a consistent and uniform manner when terminating health benefit plans due to a participation level of less than the qualifying participation level or group size .

(h) - (i) (No change.)

(j) If a small employer fails to meet, for a period of at least six consecutive months, the qualifying minimum group size requirement set forth in §26.5(a) of this chapter (relating to Applicability and Scope) for a small employer health benefit plan, the health carrier may terminate coverage under the plan no earlier than the first day of the next month following the end of the six-month consecutive period during which the small employer did not meet the qualifying minimum group size requirement, provided that the termination shall be in accordance with the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum group size requirement and in accordance with Insurance Code Articles 26.23, 26.24, and 26.25 and §26.15 of this chapter (relating to Renewability of Coverage and Cancellation).

§26.9. Exclusions, Limitations, Waiting Periods, Affiliation Periods and Preexisting Conditions and Restrictive Riders.

(a) All health benefit plans that provide coverage for small employers and their employees as defined in [ the ] Insurance Code[ , ] Article 26.02(29) [ 26.02(28 ]) and §26.4 of this chapter [ title ] (relating to Definitions) shall comply with the following requirements.

(1) - (3) (No change.)

(4) A small employer health benefit plan may not limit or exclude initial coverage of an adopted child of an insured. A child is considered to be the child of an insured if the insured is a party in a suit seeking [ in which ] the adoption of the child [ by the insured is sought ]. The adopted child of an insured may be enrolled, at the option of the insured, within either:

(A) ­ (B) (No change.)

(5) ­ (6) (No change.)

(7) If a newborn or adopted child is enrolled in a health benefit plan or other creditable coverage within the time periods specified in paragraphs (3) or (4) of this subsection , respectively, and subsequently enrolls in another health benefit plan without a significant break in coverage, the other plan may not impose any preexisting condition exclusion or affiliation period with regard to the child. If a newborn or adopted child is not enrolled within the time periods specified in paragraphs (3) or (4) of this subsection , respectively, then in accordance with paragraph (8) of this subsection, the newborn or adopted child may be considered a late enrollee or excluded from coverage until the next open enrollment period.

(8) A small employer carrier shall choose one of the methods set forth in subparagraphs (A) or (B) of this paragraph for handling requests for enrollment as a late enrollee in any health benefit plan subject to this subchapter. The small employer carrier must use the same method in regards to all such health benefit plans.

(A) - (B) (No change.)

(C) The provisions of subparagraphs (A) and (B) of this paragraph do not apply to employees or dependents under the special circumstances listed as exceptions under the definition of late enrollee in §26.4 of this chapter [ title (relating to Definitions) ].

(D) (No change.)

(9) - (11) (No change.)

(12) A preexisting condition provision in a small employer health benefit plan shall not apply to an individual who was continuously covered for an aggregate period of 12 months under creditable coverage that was in effect up to a date not more than 63 days before the effective date of coverage under the small employer health benefit plan, excluding any waiting period. For example, Individual A has coverage under an individual policy for six months beginning on May 1, 1997, through October 31, 1997, followed by a gap in coverage of 61 days until December 31, 1997. Individual A is covered under an individual health plan beginning on January 1, 1998 [ 1997 ], for six months through June 30, 1998 [ 1997 ], followed by a gap in coverage of 62 days until August 31, 1998 [ 1997 ]. Individual A's effective date of coverage under a small employer health benefit plan is September 1, 1998 [ 1997 ]. Individual A has 12 months of creditable coverage and would not be subject to a preexisting condition exclusion under the small employer health benefit plan.

(13) (No change.)

(14) A small employer may establish a waiting period that cannot exceed 90 days from the first day of employment during which a new employee is not eligible for coverage. Upon completion of the waiting period and enrollment within the time frame allowed by §26.7(i) of this chapter [ title ] (relating to Requirement To Insure Entire Groups), coverage must be effective no later than the next premium due. Coverage may be effective at an earlier date as agreed upon by the small employer and the small employer carrier.

(15) A health maintenance organization may impose an affiliation period [ factor ], if the period is applied uniformly without regard to any health status related factor. The affiliation period shall not exceed two months for an enrollee, other than a late enrollee, and shall not exceed 90 days for a late enrollee. An affiliation period under a plan shall run concurrently with any applicable waiting period under the plan. An HMO shall not impose any preexisting condition limitation, except for an affiliation period.

(16) ­ (17) (No change.)

(b) To determine if preexisting conditions as defined in [ the ] Insurance Code[ , ] Article 26.02 [ 26.02(23) ], exist, a small employer carrier shall ascertain the source of previous or existing coverage of each eligible employee and each dependent of an eligible employee at the time such employee or dependent initially enrolls into the health benefit plan provided by the small employer carrier. The small employer carrier shall have the responsibility to contact the source of such previous or existing coverage to resolve any questions about the benefits or limitations related to such previous or existing coverage in the absence of a creditable coverage certification form.

§26.10. Establishment of Classes of Business.

(a) (No change.)

(b) A health carrier may not directly or indirectly use the number of employees and dependents of a small employer or, except as provided in Insurance Code Article 26.31(a), [ group size or ] the trade or occupation of the employees of a small employer or the industry or type of business of the small employer as criteria for establishing eligibility for a health benefit plan or for a class of business.

(c) (No change.)

§26.11. Restrictions Relating to Premium Rates.

(a) (No change.)

(b) A small employer carrier shall file with the department, at least 60 days prior to the proposed date of the change, any proposed change to [ not modify ] the rating method used in the rate manual for a class of business [ until the change has been filed with the department for 60 days ]. The small employer carrier shall ensure that the rating method used is actuarially sound and appropriate to assure compliance with [ the ] Insurance Code, Chapter 26, and this chapter, and that differences in rates charged for each small employer health benefit plan are reasonable and reflect objective differences in plan design. The commissioner may disapprove a change to the rating method that does not meet the [ these ] requirements of this chapter . At the expiration of 60 days from the filing of the form with the department the proposed change shall be deemed compliant unless prior thereto the commissioner has disapproved it by written order.

(1) [ A small employer health carrier may modify the rating method for a class of business only with prior approval of the commissioner. A small employer health carrier requesting to change the rating method for a class of business shall make a filing with the commissioner at least 60 days prior to the proposed date of the change. ] The filing shall contain at least the following information:

(A) ­ (E) (No change.)

(2) (No change.)

(c) Each rate manual developed pursuant to subsection (a) of this section shall specify the case characteristics and rate factors to be applied by the small employer carrier in establishing premium rates for the class of business.

(1) - (2) (No change.)

(3) The rate manual developed pursuant to subsection (a) of this section shall clearly illustrate the relationship among the base premium rates charged for each health benefit plan in the class of business. If the new business premium rate is different than the base premium rate for a health benefit plan, the rate manual shall illustrate the difference.

(4) (No change.)

(5) Each rate manual developed pursuant to subsection (a) of this section shall provide for premium rates to be developed in a two-step process. In the first step, the small employer carrier shall develop a base premium rate [ shall be developed ] for the small employer group without regard to any risk characteristics of the group. In the second step, the small employer carrier may adjust the resulting base premium rate [ may be adjusted ] by the [ a ] risk load of the group , subject to the provisions of [ the ] Insurance Code, Chapter 26, Subchapter D, to reflect the risk characteristics of the group.

(6) - (7) (No change.)

(8) The health carrier shall retain each [ Each ] rate manual developed pursuant to subsection (a) of this section [ shall be maintained by the health carrier ] for a period of six years. The health carrier shall maintain all updates [ Updates ] and changes [ to the manual shall be maintained ] with the manual.

(9) (No change.)

(d) If a small employer carrier uses the number of employees and dependents of a small employer [ group size is used ] as a case characteristic [ by a small employer carrier ], the highest rate factor associated with a [ group size ] classification based on the number of employees and dependents of a small employer shall not exceed the lowest rate factor associated with such a classification by more than 20%.

(e) ­ (f) (No change.)

(g) An HMO [ HMOs shall follow the rating requirements set out in this section for the prototype benefit plans authorized by the Insurance Code, Article 26.42, and this chapter. HMOs ] offering any state approved, federally qualified plan described in [ the ] Insurance Code[ , ] Article 26.48 and §26.14[ , ] of this chapter [ title ] (relating to Coverage) shall establish premium rates for those plans in accordance with formulae or schedules of charges filed with the department under the procedures set forth in [ the ] Insurance Code[ ,] Article 20A.09(b), and Chapter 11, Subchapter H of this title (relating to Schedule of Charges). An HMO shall follow the rating requirements set out in this section for any plan it offers that is not federally qualified.

(h) (No change.)

(i) When seeking to obtain information relating to a small employer group, including the risk characteristics of the small employer group, a small employer carrier shall comply with §26.13(i) of this chapter (relating to Rules Related to Fair Marketing).

§26.13. Rules Related to Fair Marketing.

(a) (No change.)

(b) To each small employer who inquires about purchasing a small employer health benefit plan, a [ Each ] small employer carrier shall offer the employer a choice of health benefit plans as required by §26.14 of this chapter (Relating to Coverage). The small employer carrier may provide the offer directly to the small employer or deliver it through an agent, but in either case shall offer each required plan contemporaneously with the offer of any other small employer health benefit plan. The offer shall be in writing and shall include at least the following

(1) information describing how the small employer may enroll in the plan or plans;

(2) information set out in Insurance Code Article 26.40 and §26.12 of this chapter (relating to Disclosure); and

(3) [ that has expressed an interest in purchasing a small employer health benefit plan shall be given ] a written disclosure, as required by §21.3530 of this title (relating to Health Carrier Disclosure). [ summary of the standard benefit plans. The summary shall be in a readable and understandable format and shall include a clear, complete and accurate description of these items in the following order: lifetime maximums; deductibles, coinsurance maximums and percentages payable; benefits provided; and limitations and exclusions and riders that must be offered. To assure that small employers are fully aware that the Basic Coverage Benefit Plan does not cover organ transplants, or hospice, small employer carriers, other than HMOs, electing not to utilize Figure 41 , shall reference this difference in the summary which is prepared and shall appear in bold print. Small employer carriers other than HMOs may use Form Number 1212 SUMM at Figure 41 of §26.27(b)(41) of this title (relating to Forms) to meet the requirements of this subsection. HMOs shall use the disclosure format required by §11.1600 of this title (relating to Information to Prospective Group Contract Holders and Enrollees) to meet the requirements of this subsection ].

(c) Upon request, a small employer carrier shall explain to a small employer each of the small employer health benefit plans it offers. [ A small employer carrier shall offer the standard benefit plans to each small employer who inquires about purchasing a small employer health benefit plan and shall, upon request, explain each of the plans to the small employer. A small employer carrier, other than an HMO, shall offer and explain the basic coverage benefit plan and the catastrophic care benefit plan. An HMO shall [offer and] explain the small employer health benefit plans that the HMO has filed for use in the small employer market. The offer may be provided directly to the small employer or delivered through an agent. The offer shall be in writing and shall include at least the following information: ]

[ (1) information describing how the small employer may enroll in the plans; and ]

[ (2) [ information set out in the Insurance Code, Article 26.40, and §26.12 of this title (relating to Disclosure). ]

(d) A small employer carrier shall obtain from each small employer to which it issues coverage, at or before the time of application, a written affirmation that the small employer carrier offered the small employer a consumer choice health benefit plan and a comparable policy or plan as provided by Insurance Code Articles 3.80, §8 and 20A.9N(k) and §21.3542(a) of this title (relating to Offer of State-Mandated Plan).

(e) [ (d) ] A small employer carrier shall :

(1) provide a premium rate [ price ] quote to a small employer (directly or through an authorized agent) within ten working days of receiving :

(A) a request for a premium rate quote ; and

(B) such information as is necessary to provide the premium rate quote.

(2) not impose any conditions, other than those enumerated in paragraph (1) of this subsection, to its provision of a premium rate quote; and

(3) within five working days of receiving a request for a premium rate quote, [ A small employer carrier shall ] notify a small employer (directly or through an authorized agent) [ within five working days of receiving a request for a price quote ] of any additional information the small employer carrier needs, using the applicable rate manual and associated underwriting guidelines developed pursuant to §26.11 of this chapter (relating to Restrictions Relating to Premium Rates), [ needed by the small employer carrier ] to provide the premium rate quote.

(f) [ (e) ] A small employer carrier[ , other than an HMO, ] shall not apply more stringent or detailed requirements related to the application process , or otherwise discriminate in the offer of, any small employer health benefit [ for the standard benefit plans, including the basic coverage benefit plan and the catastrophic coverage benefit ] plan than are applied for other health benefit plans offered by the health carrier to small employers. [ An HMO shall not apply more stringent or detailed requirements related to the application process for the prototype small employer group health benefit plan than are applied for other health benefit plans offered by the HMO to small employers. ]

(g) [ (f) ] If a small employer carrier denies coverage under a health benefit plan to a small employer on any basis, the denial shall be in writing and shall state with specificity the reasons for the denial (subject to any restrictions related to confidentiality of medical information).

(h) [ (g) ] A small employer carrier shall establish and maintain a means to provide information to small employers who request information on the availability of small employer health benefit plans in this state. The information provided to small employers shall [ at least ] include information about how to apply for coverage from the health carrier and may include the names and phone numbers of agents located geographically proximate to the caller or such other information that is reasonably designed to assist the caller to locate an authorized agent or to otherwise apply for coverage.

(i) [ (h) ] The small employer carrier shall not require a small employer to join or contribute to any association or group as a condition of being accepted for coverage by the small employer carrier, except that, if membership in an association or other group is a requirement for accepting a small employer into a particular health benefit plan, a small employer carrier may apply such requirement, subject to the requirements of [ the ] Insurance Code, Chapter 26, Subchapters A - G.

(j) [ (i) ] A small employer carrier may not require, as a condition to the offer or sale of a health benefit plan to a small employer, that the small employer purchase or qualify for any other insurance product or service.

(k) [ (j) ] Health carriers offering individual and group health benefit plans in this state shall be responsible for determining whether the plans are subject to the requirements of [ the ] Insurance Code, Chapter 26, Subchapters A - G, and this subchapter. Health carriers shall elicit the following information from applicants for such plans at the time of application:

(1) whether [ or not ] any portion of the premium will be paid by a small employer;

(2) whether [ or not ] the prospective policyholder, certificate holder, or any prospective insured individual intends to treat the health benefit plan as part of a plan or program under §162 or §106 of the United States Internal Revenue Code of 1986 (26 United States Code §106 or §162); [ or ]

(3) whether the health benefit plan is an employee welfare benefit plan under 29 CFR § 2510.3-1(j); or

(4) [ (3) ] whether [ or not ] the applicant is a small employer.

(l) [ (k) ] If a health carrier fails to comply with subsection (k) [ (j) ] of this section, the health carrier shall be deemed to be on notice of any information that could reasonably have been attained if the health carrier had complied with subsection (k) [ (i) ] of this section.

(m) A small employer carrier may not discriminate between small employer groups when obtaining information relating to a small employer, including information related to the risk characteristics of the small employer group or other aspects of the application or application process.

(n) A small employer carrier may not terminate, fail to renew, limit its contract or agreement of representation with, or take any other negative action against an agent for any reason related to the agent´s request that the carrier issue a health benefit plan to a small employer.

§26.14. Coverage.

(a) Every small employer carrier other than an HMO shall, as a condition of transacting business in this state with small employers, offer plans in compliance with Insurance Code Articles 26.42 and 3.80, and Chapter 21, Subchapter AA of this title (relating to Consumer Choice Health Benefit Plans).

(b) An HMO small employer carrier, shall, as a condition of transacting business in this state with small employers, offer plans in compliance with Insurance Code Articles 26.42, 26.48 and 20A.09N, and Chapter 21, Subchapter AA of this title.

(c) All small employer health benefit plans shall provide for continuation and may provide an option for conversion which complies with Insurance Code Articles 3.51-6, Sec. 1(d)(3) and 20A.09(k) and rules adopted thereunder. A state approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 U.S.C. §§300e, et seq. shall provide coverage for continuation which complies with the requirements of Insurance Code Article 20A.09(k) and must offer conversion in compliance with 42 C.F.R. §417.124(e) and applicable federal law.

(d) Each health benefit plan, certificate, policy, rider, or application used by health carriers to provide coverage to small employers and their employees shall comply with Insurance Code Article 26.43, be written in plain language, and meet the requirements of Chapter 3, Subchapter G of this title (relating to Plain Language Requirements). Requirements for use of plain language are not applicable to a health benefit plan group master policy or a policy application or enrollment form for a health benefit plan group master policy.

(e) Every small employer carrier providing health benefit plans to small employers is required to offer dependent coverage to each eligible employee. Dependent coverage may be paid for by the employer, the employee, or both.

(f) Every small employer carrier providing a health benefit plan to a small employer shall comply, as applicable, with Insurance Code Articles 3.51-14, 3.51-5A, and 3.50-3, Section 4C.

§26.15. Renewability of Coverage and Cancellation.

(a) Except as provided by [ the ] Insurance Code[ , ] Article 26.24, a small employer carrier shall renew any small employer health benefit plan for any covered small employer at the option of the small employer, unless:

(1) (No change.)

(2) the small employer has committed fraud or intentional misrepresentation of a material fact. On or after September 1, 1995, an intentional misrepresentation of a material fact shall not include any misrepresentation related to health status ; [ . ]

(3) the small employer has not complied with a material provision of the health benefit plan relating to premium contribution , group size, or participation requirements;

(4) - (5) (No change.)

(b) A small employer carrier may refuse to renew the coverage of an eligible employee or dependent for fraud or intentional misrepresentation of a material fact by that individual and with respect to an eligible employee or dependent who is a subscriber or enrollee in an HMO, for the reasons specified in §11.506 [ §11.506(4)(A) ] of this title (relating to Mandatory Contractual Provisions: Group , Individual and Conversion [ and Non-group ] Agreement and Group Certificate). The coverage is also subject to any policy or contractual provisions relating to incontestability or time limits on certain defenses. On or after September 1, 1995, an intentional misrepresentation of a material fact shall not include any misrepresentation related to health status.

(c) - (d) (No change.)

(e) Other [ Standard benefit plans and other ] small employer health benefit plans, provided through individual policies, shall be guaranteed renewable for life or until maximum benefits have been paid, or may be guaranteed renewable with the only reasons for termination being those set out in [ the ] Insurance Code[ , ] Articles 26.23 and 26.24, and this subchapter[ , provided that such plans shall include a conversion provision which provides comparable benefits to those required under Chapter 3, Subchapter F of this title (relating to Group Health Insurance Mandatory Conversion Privilege) ]. All other health benefit plans issued to small employers shall be renewed at the option of the small employer, but may provide for termination in accordance with [ the ] Insurance Code, Chapter 26, and this subchapter.

§26.16. Refusal to Renew and Application to Reenter Small Employer Market.

(a) - (d) (No change.)

(e) A small employer carrier may elect to discontinue a particular type of small employer coverage[ , other than the basic and catastrophic plans, ] only if the small employer carrier:

(1) [ provides notice to each employer of the discontinuation ] before the 90th day preceding the date of the discontinuation of the coverage : [ ; ]

(A) provides notice of the discontinuation to each employer and the department; and

(B) [ (2) ] offers to each employer the option to purchase other small employer coverage offered by the small employer carrier at the time of the discontinuation; and

(2) [ (3) ] acts uniformly without regard to the claims experience of the employer or any health status related factors of employees or dependents or new employees or dependents who may become eligible for the coverage.

(f) This section does not exempt a health carrier from any other legal requirements, such as those contained in Insurance Code Article 21.49-2C, §26.14(a) of this chapter (relating to Coverage) and §§7.1801, et seq. of this title (relating to Withdrawal Plan Requirements and Procedures), or requirements for discontinuation of certain plans under this chapter.

§26.18. Election and Application to be Risk-Assuming or Reinsured Carrier.

(a) Each small employer carrier shall file with the commissioner , no later than with the first filing of a small employer health benefit plan, notification of whether the carrier elects to operate as a risk-assuming or reinsured carrier. A small employer carrier´s operation as a risk-assuming carrier is subject to approval by the commissioner, and each small employer carrier electing to operate as a risk-assuming carrier shall file an application with the commissioner contemporaneously with its election to operate as a risk-assuming carrier. A small employer carrier [ The required filing ] shall use [ the form provided at Figure 42 of §26.27(b)(42) of this title (relating to Forms) ( ]Form Number 1212 RISK[ ,) ] for these purposes [ this purpose ].

(b) A small employer carrier seeking to change its status as a risk-assuming or reinsured carrier shall file an application with the commissioner. The required filing shall include a completed certification form [ provided at Figure 42 of §26.27(b)(42) of this title (relating to Forms) ] [ ( ]Form Number 1212 RISK[ ) ] and shall provide information demonstrating good cause why the carrier should be allowed to change its status.

(c) A small employer carrier´s election is effective until the fifth anniversary of the election, and a small employer carrier seeking to maintain its status after that date:

(1) as a reinsured carrier must file with the commissioner, at least 90 days prior to the fifth anniversary of its election, Form Number 1212 RISK to renew that election;

(2) as a risk-assuming carrier must file with the commissioner, at least 90 days prior to the fifth anniversary of its election, Form Number 1212 RISK to reapply for the commissioner´s approval of that election [ carrier applying to become a risk-assuming carrier shall file an application with the commissioner. A completed certification form provided at Figure 42 of §26.27(b)(42) of this title (relating to Forms) (Form Number 1212 RISK) shall accompany each application ].

§26.19. Filing Requirements.

(a) Each small employer [ health ] carrier shall file each form, including, but not limited to, each policy, contract, certificate, agreement, evidence of coverage, endorsement, amendment, enrollment form, and application that will be used to provide a health benefit plan in the small employer market, with the department in accordance with [ the ] Insurance Code[ , ] Article 3.42, and Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings [ Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities ]), or [ the ] Insurance Code[ , ] Article 20A.09, and §11.301 [ §11.301(4) ] of this title (relating to Filing Requirements) or §11.302 [ §11.302(6) ] of this title (relating to Service Area Expansion or Reduction Application [ Requests ]), as applicable, except as provided in subsection (b) of this section. A small employer [ health ] carrier desiring to use existing forms to provide a health benefit plan in the small employer market shall file a certification stating which previously approved forms the health carrier intends to use in that market provided such forms have been amended to comply with applicable laws. [ The form provided at Figure 43 of §26.27(b)(43) of this title (relating to Forms ) ( ]Form Number 1212 CERT ANN LIST-OTHER/SEHBP shall [ ,) may ] be used for this purpose. [ The previously approved forms should be listed in Provision E of that form. ] The certification shall be forwarded to the department as soon as reasonably possible after January 1, 1994 , and for newly elected small employer carriers no later than with the first filing of a small employer health benefit plan .

(b) Each small employer carrier shall submit a [ The following certification forms providing information relating to prototype policy forms, marketing in the small employer market and/or other markets, and ] geographic service area certification form, provided in Form Number 1212 CERT GEOG, prior to offering any small employer health benefit plan and subsequent to such filing only if the small employer carrier changes the elections it made in the certification [ areas shall accompany each health benefit plan form filing submitted for use in the small employer market ]. The certification form

[ (1) A geographic service area certification provided at Figure 44 of §26.27(b)(44) of this title (relating to Forms) (Form Number 1212 CERT GEOG ) shall be submitted by each health carrier providing health benefit plans to small employers and ] shall define the geographic service areas within which the small employer carrier will operate as a small employer carrier.

(1) [ (A) ] Each small employer carrier shall submit this [ This ] certification form no later than with the initial filing of [ must accompany ] a small employer health benefit plan [ carrier's initial filing submitted for use in the small employer market ].

(2) [ (B) ] If a [ After the initial filings of health benefit plans intended for use in the ] small employer carrier elects to alter its [ market have been approved, this certification form will only be due annually, no later than March 1 of each calendar year; however, if the] geographic service areas , the small employer carrier shall notify the department of its intent at least [change at any time, a new certification form defining the new service areas will be due no later than ] 30 days prior to the date the small employer carrier intends to effect the change. The small employer carrier shall utilize Form Number 1212 CERT GEOG to submit this information. This subsection does not exempt a health carrier from any other legal requirements, such as those for withdrawal from the market under §§7.1801, et seq. of this title (relating to Withdrawal Plan Requirements and Procedures).

[ (2) A prototype certification form provided at Figure 45 of §26.27(b)(45) of this title (relating to Forms) (Form Number 1212 CERT PROTOTYPES/MRKT shall accompany each policy form filing and/or certification filing. A small employer carrier other than an HMO shall complete the certification form indicating: ]

[ (A) which of the prototype policy forms will be used; ]

[ (B) alternate forms which will be used, where permitted, and their Flesch score. If a small employer health carrier, other than an HMO, utilizes the prototype forms and only uses variations permitted in the prescribed and/or adopted forms, the certification with the description of the variations will suffice and policy forms will not be required to be submitted for review and approval. Approval of the use of the prototype forms based on the certification and the description of the variations will be communicated via an approval letter; ]

[ (C) define the market in which the form will be used, such as, for use only in the small employer market or in all employer markets or other markets; ]

[ (D) the type of group filing, if applicable; ]

[ (E) the small employer carrier's required participation amount; election to issue or not issue medically underwritten plans, the required employer contribution amount; election or non-election of a grace period and the number of days; termination for failure of employer to maintain participation requirements; election of Policy Year definition, Prescription Drug Benefit Rider or Prescription Drug Card Program, preexisting condition limitation provision including the time period for the preexisting limitation; late enrollee election; election or non-election of reduction in benefits for failure to pre-certify and the reduction amount; form numbers, approval dates and description of any riders that will be offered with the standard benefit plans; and description of additional percentages payable, deductibles and coinsurance amounts the small employer carrier will offer and description of PPO service area, if applicable, utilizing Figure 30 of §26.27(b)(30) of this title (relating to Forms) (Form Number 1212 PPO). ]

[ (3) A prototype certification form provided at Figure 46 of §26.27(b)(46) of this title (relating to Forms) (Form Number 1212 HMO-CERT) with elections for HMO small employer plans shall accompany the contract form filing for HMOs. The HMO small employer carrier shall complete the certification form for variable provisions of the prototype form. ]

(c) Each small employer [ health ] carrier, other than an HMO, shall use a policy shell format for any group or individual health benefit plan form used to provide a health benefit plan in the small employer market. To expedite the review and approval process, all group and individual health benefit plan form filings (excluding HMO filings which are covered in subsection (d) of this section) shall be submitted as follows:

(1) ­ (2) (No change.)

(3) as applicable under Chapter 3, Subchapter A of this title, the toll-free number and complaint notice page, as required by Chapter 1, Subchapter E of this title (relating to Notice of Toll-Free Telephone Numbers and Procedures for Obtaining Information and Filing Complaints [ Policyholder Complaint Procedure ]);

(4) ­ (6) (No change.)

(7) [ for the standard benefit forms, which include the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan, an insert of the required benefits section that includes the schedule of benefits, definitions, benefits provided, alternate cost containment and preferred provider [provisions, if any, exclusions and limitations, continuation/conversion provisions , coordination of benefits, and riders; ]

[ (8) ] for small employer health benefit plans [ that are not one of the standard benefit forms ], an insert page for the benefits section of the health benefit plan, including, but not limited to, schedule of benefits, definitions, benefits provided, [ alternate cost containment and preferred provider provisions, if any, ] exclusions and limitations, continuation provisions [ continuation/conversion provisions ], and if applicable, alternate cost containment, preferred provider, conversion and coordination of benefits provisions , and riders;

(8) [ (9) ] insert pages for any amendments, applications, enrollment forms, or other form filings which comprise part of the contract;

[ (10) insert pages for any additional forms required under Chapter 3, Subchapter F of this title (relating to Group Health Insurance Mandatory Conversion Privilege); ]

(9) [ (11) ] insert pages for any required outline of coverage for individual products;

(10) [ (12) ] any additional form filings and documentation as outlined in Chapter 3, Subchapter A of this title and Chapter 3, Subchapter G of this title (relating to Plain Language Requirements for Health Benefit Policies);

(11) [ (13) ] the certifications required under this section and any other rating information required under §26.10 of this chapter [ title ] (relating to Establishment of Classes of Business) and §26.11 of this chapter [ title ] (relating to Restrictions Relating to Premium Rates); and

(12) [ (14) ] the rate schedule applicable to any individual health benefit plan, as required by Chapter 3, Subchapter A of this title [ (relating to Requirements for Filing of Policy Forms Riders, Amendments, and Endorsements for Life, Accident, and Health Insurance and Annuities) ].

(d) (No change.)

§26.20. Reporting Requirements.

(a) Small employer health carriers offering a small employer health benefit plan shall file annually, not later than March 1 of each year, an actuarial certification [ provided at Figure 47 of §26.27(b)(47) of this title (relating to Forms) ] [ ( ]Form Number 1212 CERT ACTUARIAL[ ) ] , stating that the underwriting and rating methods of the small employer carrier:

(1) ­ (3) (No change.)

(b) [ Not later than March 1 of each calendar year, Each health carrier shall file a certification provided at Figure 43 of §26.27(b)(43) of this title (relating to Forms) (Form Number 1212 CERT ANN LIST-OTHER/SEHBP) with the commissioner, stating whether the health carrier is offering any health benefit plan to small employers that is subject to the Insurance Code, Article 26.06(a). The certification shall: ]

[ (1) list each other health insurance coverage (including the form number, approval date, and a very brief description of the type of coverage) that the health carrier is offering, delivering, issuing for delivery, or renewing to or through small employers in this state; and is not subject to this chapter because it is listed as excluded from the definition of a health benefit plan under the Insurance Code, Article 26.02, and §26.4 of this title (relating to Definitions); ]

[ (2) include a statement that the health carrier is not offering or marketing to small employers as a health benefit plan the coverage listed under the Insurance Code, Article 26.07(b), and paragraph (1) of this subsection, and the health carrier is complying with the provisions of the Insurance Code, Chapter 26, Subchapters A-G, and this subchapter to the extent it is applicable to the health carrier; ]

[(3) list each health benefit plan along with riders (including the form number and approval date) previously filed with the department (or filed through the certification process) which the health carrier is no longer marketing to small employers in the state. If the health carrier no longer wishes to offer the plan, a formal withdrawal of the plan shall be filed and can be accomplished by marking the appropriate blank on the certification provided at Figure 43 of §26.27(b)(43) of this title (relating to Forms) (Form Number 1212 CERT ANN LIST-OTHER/SEHBP); and ]

[ (4) list each health benefit plan and rider (including the form number and approval date) previously filed with the department which the health carrier plans to continue marketing to small employers in the state. ]

[ (c) ] Not later than March 1 of each calendar year, a small employer carrier shall complete and file with the commissioner Form Number 1212 CERT DATA [ provided at Figure 48 of §26.27(b)(48) of this title (relating to Forms), ] . This annual filing shall include the following information related to health benefit plans issued by the small employer carrier to small employers in this state:

(1) the number of small employers that were issued and the number of lives that were covered under health benefit plans in the previous calendar year (separated , if applicable, as to newly issued plans and renewals);

(2) the number of small employers that were issued and the number of lives that were covered under consumer choice health benefit plans, plans offering all state-mandated health benefits [ the preventive and primary care benefit plan, the in-hospital benefit plan, the standard health benefit plan, basic coverage benefit plan, catastrophic care benefit plan, optional catastrophic care medical savings account plan ], HMO consumer choice health benefit plans and HMO plans including all state-mandated health benefits [ preventive and primary care benefit plan, HMO group standard benefit plan and HMO small employer group health benefit plan ] in the previous calendar year (as applicable , separated as to newly issued plans and renewals and by groups based on the following covered-employee size ranges: 2 ­ 9, 10 ­ 20, 21 ­ 35, and 36 ­ 50 ) [ to class of business ];

(3) the number of small employers that were issued and the number of lives that were covered for each of the carrier´s three (if applicable) most frequently issued consumer choice health benefit plans [ under a prescription drug rider with the preventive and primary care benefit plan, a preventive and primary care benefit rider with the in-hospital benefit plan, an alcohol and drug abuse rider with the basic coverage and catastrophic benefit plans, a mental health benefit rider with the basic coverage and catastrophic care benefit plans, a prescription drug rider with the basic coverage and catastrophic care benefit plans, and a preventive care rider with the basic coverage benefit plan ] ( as applicable, separately listed as to newly issued plans and renewals[ , type of rider and type of benefit plan ] and including copies of the consumer choice health benefits plans );

(4) the number of small employer health benefit plans in force and the number of lives covered under those plans. This information should be broken down by the zip code of the small employers´ principal place of business in the state of Texas;

(5) the number of small employer health benefit plans that were voluntarily not renewed by small employers in the previous calendar year;

(6) the number of small employer health benefit plans that were terminated or nonrenewed (for reasons other than nonpayment of premium) by the health carrier in the previous calendar year;

(7) the number of small employer health benefit plans that were issued to small employers that were uninsured for at least the two months prior to issue; [ and ]

(8) the health carrier's gross premiums derived from health benefit plans delivered, issued for delivery, or renewed to small employers in the previous calendar year. For purposes of this subsection, gross premiums shall be the total amount of monies collected by the health carrier for health benefit plans during the applicable calendar year or the applicable calendar quarter. Gross premiums shall include premiums collected for individual and group health benefit plans issued to small employers or their employees. Gross premiums shall also include premiums collected under certificates issued or delivered to employees (in this state) of small employers, regardless of where the policy is issued or delivered ;

(9) if applicable, information regarding any small employer health benefit plans assumed from another small employer carrier; and

(10) the number of small employers and the number of lives that were covered under plans issued to small employer health coalitions in the previous calendar year (as applicable, separated as to newly issued plans and renewals) .

§26.22. Private Purchasing Cooperatives.

(a) (No change.)

(b) On receipt of a certificate of incorporation or certificate of authority from the secretary of state, the purchasing cooperative shall file notification of the receipt of the certificate and a copy of the cooperative's organizational documents with the commissioner by filing the required notification and documents with the Life/Health Division [ Group ], Mail Code 106-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

(c) The board of directors shall file annually with the commissioner a statement of all amounts collected and expenses incurred for each of the preceding years. The annual filing shall be made , no later than March 1 of each year, on Form Number 1212 CERT COOP [ provided at Figure 49 of §26.27(b)(49) of this title (relating to Forms) ] and shall be mailed to the Life/Health Division [ Group ], Mail Code 106-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

(d) (No change.)

§26.24. Procedure for Obtaining the Approval of Commissioner and Filing with the Commissioner.

(a) Whenever the approval of the commissioner is required by this chapter for a small employer carrier other than an HMO, the initial approval shall be granted or denied by the deputy commissioner for the Life/Health Division [ Group ]. The initial decision is expressly delegated by this section to the deputy commissioner for the Life/Health Division [ Group ]. Whenever the approval of the commissioner is required by this chapter for HMO small employer plans, the initial approval shall be granted or denied by the deputy commissioner for the HMO Division [ HMO/URA Group ]. The applicant for the approval may appeal the initial decision to the commissioner.

(b) Whenever a filing of a policy, contract, or form is required by §26.19 of this title (relating to Filing Requirements) for a small employer carrier other than an HMO, any approval, withdrawal, or disapproval of the filing shall initially be made by the deputy commissioner for the Life/Health Division [ Group ]. Whenever a filing of a contract, evidence of coverage, or form is required by §26.19 of this title[ (relating to Filing Requirements) ] for HMO small employer plans, any approval, withdrawal, or disapproval of the filing shall initially be made by the deputy commissioner for the HMO Division [ HMO/URA Group ]. Notice of any adverse action shall be given to the applicant not later than the fifth day before the action is proposed to be taken. The applicant may appeal an adverse decision to the commissioner.

(c) Whenever a report is required to be filed by this chapter, that filing shall be made to the Deputy Commissioner, Life/Health Division [ Group ], Mail Code 106-1A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104.

§26.26. Administrative Violations and Penalties. If, after notice and opportunity for hearing, the commissioner determines that a health carrier or a small employer carrier has violated or is violating any provision of [ the ] Insurance Code, Chapter 26, Subchapters A - G, or this subchapter, the commissioner may impose sanctions under [ the ] Insurance Code[ , ] §§82.001, et seq., and [ Article 1.10, ] §§84.001, et seq. [ 1.10E ], and/or issue a cease and desist order under [ the ] Insurance Code[ , ] §§83.001, et seq. [ Article 1.10A ].

§26.27. Forms. The forms relating to Chapter 26, Insurance Code, for small and large employers referenced in this chapter can be obtained from the Texas Department of Insurance, Life/Health & HMO Intake Section, Life/Health Division, MC 106-1E, P. O. Box 149104, Austin, Texas 78714-9104, or at the department´s website, www.tdi.state.tx.us .

Subchapter C. LARGE EMPLOYER HEALTH INSURANCE PORTABILITY AND AVAILABILITY ACT REGULATION.

§26.301. Applicability and Scope.

(a) Except as otherwise provided, this subchapter shall apply to any health benefit plan providing health care benefits covering 51 or more eligible employees of a large employer, whether provided on a group or individual franchise basis, regardless of whether the policy was issued in this state , if it provides coverage to any citizen or inhabitant of this state and if the plan meets one of the following conditions:

(1) a portion of the premium or benefits is paid by a large employer;

(2) the health benefit plan is treated by the employer or by a covered individual as part of a plan or program for the purposes of 26 United States Code §106 or §162; [ or ]

(3) the health benefit plan is a group policy issued to a large employer ; or

(4) the health benefit plan is an employee welfare benefit plan under 29 CFR 2510.3-1(i) .

(b) (No change.)

(c) An insurance policy, evidence of coverage, contract, or other document that is delivered, issued for delivery, or renewed to large employers and their employees on or after July 1, 1997, shall comply with all provisions of the Insurance Code, Chapter 26, Subchapters A and H[ , as adopted by the 75th Legislature, ] and with this subchapter.

(d) (No change.)

(e) If a large employer or the employees of a large employer are issued a health benefit plan under the provisions of the Insurance Code, Chapter 26, Subchapters A and H, and this subchapter, and the large employer subsequently employs less than 51 eligible employees, the provisions of the Insurance Code, Chapter 26, Subchapters A and H, and this subchapter shall continue to apply to that particular health plan if the employer elects to renew the large employer health benefit plan subject to the provisions of §26.308 of this chapter [ title ] (relating to Renewability of Coverage and Cancellation). A health carrier providing coverage to such an employer shall, within 60 days of becoming aware that the employer has less than 51 eligible employees, but not later than the first renewal date occurring after the employer ceases to be a large employer, notify the employer of the following:

(1) The employer may renew the large employer policy.

(2) If the employer does not renew the large employer health benefit plan, the employer will be subject to the requirements of the Insurance Code, Chapter 26, Subchapters A - G concerning small employers, and Subchapter A of this chapter (relating to Small Employer Health Insurance Portability and Availability Regulations) , including guaranteed issue, rating protections, and participation/contribution/minimum group size [ participation/contribution ] requirements.

(3) (No change.)

(4) If the employer fails to comply with the qualifying [ minimum percentage ] participation , [ or ] contribution , or group size requirements, of §26.303 of this chapter (relating to Coverage Requirements), the health carrier may terminate coverage under the plan, provided that the termination shall be in accordance with the terms and conditions of the plan concerning termination for failure to meet the qualifying participation, contribution, or minimum group size requirement and in accordance with Insurance Code Articles 26.86, 26.87, 26.88 and §26.303 of this chapter [ the coverage will terminate ].

(f) - (g) (No change.)

§26.302. Status of Health Carriers as Large Employer Carriers and Geographic Service Area.

(a) Not later than March 1 annually , [ 1998, ] each health carrier providing health benefit plans in this state shall make a filing with the commissioner indicating whether the health carrier will or will not offer, renew, issue, or issue for delivery health benefit plans to large employers in this state as defined in the Insurance Code, Chapter 26, Subchapters A and H, and this subchapter. The required filing shall include the certification form [ provided at Figure 50 of §26.27(b)(50) of this title (relating to Forms) ] [ ( ] Form Number 1212 CERT LEHC STATUS[ )] , completed according to the carrier's status , and shall at least provide a statement to the effect of one of the following:

(1) ­ (4) (No change.)

(b) If a health carrier chooses to change its election or the date of implementing its election under subsection (a)(1), (2), or (4) of this section, the health carrier shall notify the commissioner of its new election at least 30 days prior to the date the health carrier intends to begin operations under the new election. This notification shall be made on Form Number 1212 CERT LEHC STATUS [ provided at Figure 50 of §26.27(b)(50) of this title (relating to Forms) ].

(c) Upon election to become a large employer carrier, the health carrier shall establish geographic service areas within which the health carrier reasonably anticipates it will have the capacity to deliver services adequately to large employers in each established geographic service area. Large employer carriers shall comply with the following:

(1) The health carrier shall define and submit the geographic service areas [ shall be defined ] in terms of counties or ZIP [ zip ] codes, to the extent possible[ , and shall be submitted in conjunction with any filing of a large employer health benefit plan ].

(2) If the health carrier cannot define the service area [ cannot be defined] by counties or ZIP [ zip ] code, the health carrier shall submit a map which clearly shows the geographic service areas [ is required to be submitted in conjunction with any filing of the large employer health benefit plan ].

(3) ­ (5) (No change.)

(6) Large employer carriers shall , no later than the initial filing of a large employer health benefit plan, utilize Form Number 1212 LEHC GEOG [ provided in Figure 51 of §26.27(b)(51) of this title (relating to Forms) ] to submit this information.

(d) If a large employer carrier elects to alter its geographic service area, the large employer carrier shall notify the department of its intent at least 30 days prior to the date the health carrier intends to effect the change. The large employer carrier shall utilize Form Number 1212 LEHC GEOG to submit this information.

(e) This section does not exempt a large employer carrier from any other legal requirements, such as those for withdrawal from the market under §§7.1801, et seq . of this title (relating to Withdrawal Plan Requirements and Procedures).

§26.303. Coverage Requirements.

(a) A large employer carrier may refuse to provide coverage to a large employer in accordance with the carrier's underwriting standards and criteria. However, on issuance to a large employer, each large employer carrier shall provide coverage to the eligible employees meeting the participation criteria established by the large employer without regard to an individual's health status related factors. The participation criteria may not be based on health status related factors. A large employer's participation criteria may not require an employee to maintain an actively at work status, unless the actively at work status is wholly unrelated to health status related factors, such as time off for a sabbatical leave or vacation.

(b) The large employer carrier shall accept or reject the entire group of individuals who meet the participation criteria established by the employer and who choose coverage and may exclude only those eligible employees or dependents, if applicable, who have declined coverage. The carrier may charge premiums in accordance with Insurance Code[ , ] Article 26.89 to the group of employees or dependents, if applicable, who meet the participation criteria established by the employer and who do not decline coverage.

(c) A large employer carrier shall secure a written waiver for each eligible employee who meets the participation criteria and each dependent, if dependent coverage is offered to enrollees under a large employer health benefit plan, who declines an offer of coverage under a health benefit plan provided to a large employer. If a large employer elects to offer coverage through more than one large employer carrier, waivers are only required to be signed if the eligible individual is declining all large employer health benefit plans offered. The large employer carriers may enter into an agreement designating which large employer carrier will receive and retain the waiver. Waivers shall be maintained by the large employer carrier for a period of six years. The waiver must ensure that the employee was not induced or pressured into declining coverage because of the employee's health status related factors. The waiver shall be signed by the employee (on behalf of such employee or the dependent, if applicable, of such employee) and shall certify that the individual who declined coverage was informed of the availability of coverage under the health benefit plan. Receipt by the large employer carrier of a facsimile transmission of the waiver is permissible, provided that the transmission includes a representation from the large employer that the employer will maintain the original waiver on file for a period of six years from the date of the facsimile transmission. The waiver form shall:

(1) ­ (3) (No change.)

(d) A large employer carrier may not provide coverage to a large employer or the employees of a large employer if the carrier or an agent for the carrier knows that the large employer has induced or pressured an eligible employee who meets the participation criteria or a dependent of the employee to decline coverage because of that individual's health status related factors.

(e) An agent shall notify a large employer carrier, prior to submitting an application for coverage with the health carrier on behalf of a large employer or employee of a large employer, of any circumstances that would indicate that the large employer has induced or pressured an eligible employee who meets the large employer's participation criteria or a dependent of the employee to decline coverage due to the individual's health status related factors.

(f) A large employer carrier may require a large employer to meet minimum premium contribution requirements as a condition of issuance and renewal in accordance with the carrier's usual and customary practices for all employer health benefit plans in this state. A health carrier shall treat all similarly situated large employer groups in a consistent and uniform manner when terminating health benefit plans due to failure of the large employer to meet a contribution requirement. If a large employer fails to meet a contribution requirement for a large employer health benefit plan, the health carrier may terminate coverage as provided under the plan in accordance with the terms and conditions of the plan requiring such contribution and in accordance with [ the ] Insurance Code[ , ] Articles 26.86, 26.87, 26.88 and §26.308 [ §26.309 ] of this chapter [ title ] (relating to Renewability of Coverage and Cancellation).

(g) (No change.)

(h) A large employer carrier may require a large employer to meet minimum participation requirements as a condition of issuance and renewal in accordance with the carrier's usual and customary practices for all employer health benefit plans in this state. The minimum participation requirements may determine the percentage of individuals that must be enrolled in the plan in accordance with participation criteria established by the employer. These minimum participation requirements must be stated in the contract and must be applied uniformly to each large employer offered or issued coverage by the large employer carrier in this state. A large employer health carrier shall accept or reject the entire group of eligible employees meeting the participation criteria and minimum participation requirements that choose to participate and exclude only those employees and dependents, if applicable, that have declined coverage.

(i) In determining whether an employer has the required percentage of participation of eligible employees who meet the large employer's participation criteria, if the percentage of eligible employees is not a whole number, the result of applying the percentage to the number of eligible employees shall be rounded down to the nearest whole number. For example: if a large employer health carrier [ an employer ] uses a minimum participation requirement of 75% of the eligible employees meeting the large employer's participation criteria, 75% of 55 employees is 41.25, so 41.25 would be rounded down to 41; therefore, 75% participation by a 55 employee group will be achieved if 41 of the eligible employees meeting the large employer's participation criteria participate.

(j) If a large employer fails to meet the qualifying minimum participation requirement for a large employer health benefit plan, for a period of at least six consecutive months, the large employer health carrier may terminate coverage under the plan upon the first renewal date following the end of the six-month consecutive period during which the qualifying minimum participation requirement was not met, provided that the termination shall be in accordance with the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum participation requirement and in accordance with [ the ] Insurance Code[ , ] Articles 26.86, 26.87, 26.88 and §26.308 [ §26.309 ] of this chapter [ title (relating to Renewability and Cancellation) ]. A large employer health carrier shall treat all similarly situated large employer groups in a consistent and uniform manner when terminating health benefit plans due to a participation level of less than the qualifying participation level.

(k) A large employer must continue to meet the qualifying minimum group size requirement of §26.5(a) of this chapter (relating to Applicability and Scope) to be entitled to elect to renew coverage pursuant to §26.301(e) of this chapter (relating to Applicability and Scope). If a large employer fails to meet, for a period of at least six consecutive months, the minimum group size requirement of §26.5(a) of this chapter, the health carrier may terminate coverage under the plan upon the first renewal date following the later of the end of the six-month consecutive period during which the large employer did not meet the qualifying minimum group size requirement, provided that the termination shall be in accordance with the terms and conditions of the plan concerning termination for failure to meet the minimum group size requirement of §26.5(a) of this chapter, and in accordance with the Insurance Code Articles 26.86, 26.87, 26.88 and §26.308 of this chapter.

§26.304. Requirement to Insure Entire Groups.

(a)­ (b) (No change.)

(c) A large employer carrier may require each large employer that applies for coverage, as part of the application process, to provide a complete list of employees, eligible employees , and if dependent coverage is offered to enrollees under a large employer health benefit plan, a complete list of dependents of eligible employees as defined in [ the ] Insurance Code[ , ] Article 26.02. The large employer carrier may also require the large employer to provide reasonable and appropriate supporting documentation [ (such as a W-2 Summary Wage and Tax Form) ] to verify the information required under this subsection , as well as to confirm the applicant´s status as a large employer . The large employer carrier shall make a [ A ] determination of eligibility [ shall be made ] within five business days of receipt of any requested documentation. A large employer carrier may not condition the issuance of coverage on an employer´s production of a particular document, where the employer can otherwise provide the information required by this section. Following are examples of the types of supporting documentation which a large employer carrier may request, as reasonable and appropriate, from an employer as needed to fulfill the purposes of this subsection.

(1) a W-2 Summary Wage and Tax Form or other federal or state tax records;

(2) a loan agreement;

(3) an invoice;

(4) a business check;

(5) a sales tax license;

(6) articles of incorporation or other business entity filings with the Secretary of State;

(7) assumed name filings;

(8) professional licenses; and

(9) reports required by the Texas Workforce Commission.

(d) A large employer carrier shall not deny two individuals that are married the status of eligible employee solely on the basis that the two individuals are married. The large employer carrier shall provide a reasonable opportunity for the individuals to submit evidence as provided in subsection (c) of this section to establish each individual´s status as an eligible employee.

(1) The two individuals will not be eligible for coverage as a dependent. Each must be covered as an employee.

(2) A child of either of the two individuals may only be covered under the same large [ small ] employer health benefit plan as a dependent by one of the two individuals.

(e) ­ (h) (No change.)

§26.305. Enrollment.

(a) Periods provided for enrollment in and application for any health benefit plan provided to a large employer group shall comply with the following:

(1) the initial enrollment period for the employees meeting the large employer´s participation criteria shall extend [ must be ] at least 31 consecutive days after the employee´s initial date of employment , or if the waiting period exceeds 31 days, at least 31 consecutive days after the date the new entrant completes the waiting period for coverage;

(2) the new entrant who meets the large employer´s participation criteria shall be notified of his or her opportunity to enroll at least 31 days in advance of the last date enrollment is permitted;

(3) a new entrant´s application for coverage shall be timely if he or she submits the application within a period of at least 31 consecutive days following the initial date of employment, or following the date the new entrant is eligible for coverage[ , shall be provided during which the new entrant´s application for coverage may be submitted ]. For purposes of this paragraph, "submits" [ submitted ] means that the item(s) must be postmarked by the end of the specified time period. At the discretion of the large employer carrier, alternative methods of submission such as facsimile transmission (fax) [ fax ], may be acceptable; and

(4) the large employer carrier shall provide an annual open enrollment period of at least 31 consecutive days [ shall be provided on an annual basis. Such enrollment period shall consist of an entire calendar month, beginning on the first day of the month and ending on the last day of the month. If the month is a 30-day month, the enrollment period shall begin on the first day of the month and end on the first day of the following month. If the month is February, the period shall last through March 2nd ].

(b) If dependent coverage is offered to enrollees under a large employer health benefit plan, the initial enrollment period for the dependents must be at least 31 consecutive days, with a 31 consecutive day annual open enrollment period.

(c) A new employee who meets the participation criteria of a covered large employer may not be denied coverage if the application for coverage is received by the large employer carrier not later than the 31st day after the later of:

(1) the date on which the employment begins; or

(2) the date on which the waiting period established under Insurance Code[ , ] Article 26.83(h) expires.

(d) (No change.)

(e) A large employer carrier may not exclude any eligible employee who meets the participation criteria or an eligible dependent, including a late enrollee, who would otherwise be covered under a large employer group.

(f) ­ (n) (No change.)

§26.306. Exclusions, Limitations, Waiting Periods, Affiliation Periods and Preexisting Conditions and Restrictive Riders.

(a) A large employer carrier may not exclude any eligible employee who meets the participation criteria or an eligible dependent, if dependent coverage is offered to enrollees under a large employer health benefit plan (including a late enrollee, who would otherwise be covered under a large employer's health benefit plan), except to the extent permitted under [ the ] Insurance Code[ , ] Articles 26.83 and 26.90.

(b) A preexisting condition provision in a large employer health benefit plan may not apply to expenses incurred on or after the expiration of the 12 months following the initial effective date of coverage of the enrollee or late enrollee , except as authorized by subsection (h)(2) of this section .

(c) - (e) (No change.)

(f) A preexisting condition provision in a large employer health benefit plan shall not apply to an individual who was continuously covered for an aggregate period of 12 months under creditable coverage that was in effect up to a date not more than 63 days before the effective date of coverage under the large employer health benefit plan, excluding any waiting period. For example, Individual A has coverage under an individual policy for 6 months beginning on May 1, 1997, through October 31, 1997, followed by a gap in coverage of 61 days until December 31, 1997. Individual A is covered under an individual health plan beginning on January 1, 1998 [ 1997 ], for 6 months through June 30, 1998 [ 1997 ], followed by a gap in coverage of 62 days until August 31, 1998 [ 1997 ]. The effective date of Individual A's coverage under a large employer health benefit plan is September 1, 1998 [ 1997 ]. Individual A has 12 months of creditable coverage and would not be subject to a preexisting condition exclusion under the large employer health benefit plan.

(g) (No change.)

(h) A large employer carrier shall choose one of the methods set forth in paragraphs (1) or (2) of this subsection for handling requests for enrollment from a late applicant in any health benefit plan subject to this subchapter. The large employer carrier must use the same method in regards to all such health benefit plans.

(1) The employee or dependent may be excluded from coverage and any application for coverage rejected until the next annual open enrollment period and, upon enrollment, may be subject to a 12-month preexisting condition provision, or, in the case of an HMO, may be subject to a 60-day affiliation provision, as such provisions are described by [ the ] Insurance Code[ , ] Article 26.90.

(2) The employee or dependent's application may be accepted immediately and the employee or dependent enrolled as a late enrollee during the plan year, in which case the preexisting condition provision imposed for a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation period may not exceed 90 days, from the date of the late enrollee's application for coverage.

(3) The provisions of paragraphs (1) and (2) of this subsection [ subparagraphs (A) and (B) ] do not apply to employees or dependents under the special circumstances listed as exceptions under the definition of late enrollee in §26.4 of this chapter [ title ] (relating to Definitions).

(4) (No change.)

(i) (No change.)

(j)A large employer may establish a waiting period applicable to all new entrants under the health benefit plan during which a new employee is not eligible for coverage.The large employer shall determine the duration of the waiting period.A large employer carrier shall not apply a waiting period, elimination period, or other similar limitation of coverage (other than an exclusion for preexisting [ pre-existing ] medical conditions or impose an affiliation period consistent with [ the ] Insurance Code[ , ] Articles 26.83 and 26.90), with respect to a new entrant, that is longer than the waiting period established by the large employer.Upon completion of the waiting period and enrollment within the time frame allowed by §26.305(a) of this chapter [ title ] (relating to Enrollment), coverage must be effective no later than the next premium due date.Coverage may be effective at an earlier date as agreed upon by the large employer and the large employer carrier.

(k)(no change.)

(l)To determine if preexisting conditions as defined in [ the ] Insurance Code[ , ] Article 26.02(23) exist, a large employer carrier shall ascertain the source of previous or existing coverage of each eligible employee meeting the participation criteria and each dependent of an eligible employee at the time such employee or dependent initially enrolls into the health benefit plan provided by the large employer carrier.The large employer carrier shall have the responsibility to contact the source of such previous or existing coverage to resolve any questions about the benefits or limitations related to such previous or existing coverage in the absence of a creditable coverage certification form.

§26.307. Fair Marketing.

(a) - (d) (No change.)

(e) Health carriers offering individual and group health benefit plans in this state shall be responsible for determining whether the plans are subject to the requirements of the Insurance Code, Chapter 26, Subchapters A and H, and this subchapter. Health carriers shall elicit the following information from applicants for such plans at the time of application:

(1) whether [ or not ] any portion of the premium will be paid by a large employer;

(2) whether [ or not ] the prospective policyholder, certificate holder, or any prospective insured individual intends to treat the health benefit plan as part of a plan or program under §162 or §106 of the United States Internal Revenue Code of 1986 (26 United States Code §106 or §162); [ or ]

(3) whether the health plan is an employee welfare benefit plan under 29 CFR § 2510.3-1(i); or

(4) [ (3) ] whether [ or not ] the applicant is a large employer.

(f) If a health carrier fails to comply with subsection (e) [ (f) ] of this section, the health carrier shall be deemed to be on notice of any information that could reasonably have been attained if the health carrier had complied with subsection (e) [ (f) ] of this section.

(g) A large employer carrier may not terminate, fail to renew, limit its contract or agreement of representation with, or take any other negative action against an agent for any reason related to the agent´s request that the carrier issue a health benefit plan to a large employer.

§26.308. Renewability of Coverage and Cancellation.

(a) Except as provided by [ the ] Insurance Code[ , ] Article 26.87, a large employer carrier shall renew any large employer health benefit plan for any covered large employer at the option of the large employer, unless:

(1) ­ (2) (No change.)

(3) the large employer has not complied with a material provision of the health benefit plan relating to premium contribution , group size, or minimum participation requirements;

(4) ­ (5) (No change.)

(b)A large employer carrier may refuse to renew the coverage of an eligible employee or dependent, if applicable, for fraud or intentional misrepresentation of a material fact by that individual and with respect to an eligible employee or dependent who is a subscriber or enrollee in an HMO, for the reasons specified in §11.506(3) [ §11.506(4)(A) ] of this title (relating to Mandatory Contractual Provisions: Group , Individual and Conversion [ Non-group ] Agreement and Group Certificate). The coverage is also subject to any policy or contractual provisions relating to incontestability or time limits on certain defenses.

§26.309. Refusal to Renew and Application to Reenter Large Employer Market.

(a)A large employer carrier may elect to refuse to renew all large employer health benefit plans delivered or issued for delivery by the large employer carrier in this state or in a geographic service area approved under [ the ] Insurance Code[ , ] Article 26.85(d).The large employer carrier shall notify the commissioner of the election not later than the 180th day before the date coverage under the first large employer health benefit plan terminates under [ the ] Insurance Code[ , ] Article 26.87(a) and shall comply with the notification requirements set forth in §26.302(c) and (d)(2) of this chapter (relating to Status of Health Carriers as Large Employer Carriers and Geographic Service Area).This subsection does not exempt a health carrier from any other legal requirements, such as those for withdrawal from the market under §§7.1801, et seq . of this title (relating to Withdrawal Plan Requirements and Procedures) .

(b) ­ (d)(no change.)

(e)A large employer carrier may elect to discontinue a particular type of large employer coverage, only if the large employer carrier:

(1)[ provides notice to each employer of the discontinuation ] before the 90th day preceding the date of the discontinuation of the coverage : [ ; ]

(A)provides notice of the discontinuation to each employer and the department; and

(B) [ (2) ]offers to each employer the option to purchase other large employer coverage offered by the large employer carrier at the time of the discontinuation; and

(2) [ (3) ] acts uniformly without regard to the claims experience of the employer or any health status related factors of employees or dependents or new employees or dependents who may become eligible for the coverage.

§26.311. Administrative Violations and Penalties. If, after notice and opportunity for hearing, the commissioner determines that a health carrier or a large employer carrier has violated or is violating any provision of the Insurance Code, Chapter 26, Subchapters A and H, or this subchapter, the commissioner may impose sanctions under [ the ] Insurance Code §§82.001, et seq ., and [ , Article 1.10, ] §§84.001, et seq . [ 1.10E ], and/or issue a cease and desist order under [ the ] Insurance Code §§83.001, et seq . [ , Article 1.10A ].

§26.312. Point-of-service Coverage.

(a) Definitions. The following words and terms when used in this section shall have the following meanings , unless the context clearly indicated otherwise .

(1) ­ (5) (No change.)

(6) Point-of-service (POS) plan--As defined in Insurance Code Article 26.09(a)(2)[ of the Code ].

(b) ­ (f) (No change.)



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