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