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You are here: Home . rules . 2006 . 0706-059

SUBCHAPTER O. Notice of Availability of Coverage Under the Texas Health Insurance Risk Pool

28 TAC §§21.2302 - 21.2306

1. INTRODUCTION. The Commissioner of Insurance adopts amendments to §§21.2302 - 21.2306, concerning notice of availability of coverage under the Texas Health Insurance Risk Pool (Health Pool). Sections 21.2304 and 21.2306 are adopted with nonsubstantive changes to the proposed text published in the May 5, 2006 issue of the Texas Register (31 TexReg 3656). Sections 21.2302, 21.2303, and 21.2305, are adopted without changes.

2. REASONED JUSTIFICATION. The adopted amendments are necessary to implement SB 809, enacted by the 79th Legislature, Regular Session, effective January 1, 2006, which, in part, amends the Insurance Code §1506.152 to address eligibility for pool coverage. The primary purpose of SB 809 is to amend Chapter 1506 to make risk pool operations more cost-effective, efficient, and equitable. The amendments to the rules modify the definitions, notice requirements, and form used for notification of an individual's eligibility for coverage under the Health Pool.

The Department made one nonsubstantive change to the published proposed amendment to §21.2304(b) by conforming §21.2304(b)(5) to reflect that the amendments to §21.2305 as adopted delete subsection (b) and its reference to Figure 1, since the amended notice will not be filed with the Secretary of State's Office and is not adopted by reference in the text of the rule. The change conforms the cross reference in §21.2304(b)(5) to the Form Health Pool Notice as referenced in §21.2305 and as subsequently updated. The change does not introduce new subject matter or affect additional persons other than those subject to the proposal as published.

The Department made one nonsubstantive change to the published proposed amendment to §21.2306 by eliminating the reference to subsection (D) of §21.2304(b)(3) in the §21.2306 reference to amendments to §21.2304(b)(3). The change does not introduce new subject matter or affect additional persons other than those subject to the proposal as published.

3. HOW THE SECTIONS WILL FUNCTION. The adopted amendments to §21.2302 make necessary conforming changes to the definitions of "covered individual," "health carrier," and "health coverage and substantially similar health coverage," by substituting the term "benefit plan issuer" for the term "carrier." These changes are needed as a result of the enactment of the nonsubstantive Insurance Code revision by the 78th Legislature, Regular Session, effective April 1, 2005 (78th Legislature code revision).

The adopted amendments to §21.2303 remove the requirement that a health benefit plan issuer provide written notice of Health Pool availability when the issuer offers substantially similar health coverage to or for an eligible individual who has applied for health coverage from the issuer, but at rates higher than the issuer's standard rate. SB 809 deletes this condition as a qualifier for Health Pool eligibility. The adopted amendments also make necessary conforming changes to §21.2303 by substituting the term "benefit plan issuer" for the term "carrier," based on the 78th Legislature code revision.

The adopted amendments to §21.2304 change the Form Health Pool Notice referenced in §21.2305 from a formal Figure filed with the Secretary of State's Office and adopted by reference to a form to be provided by the Department and available on its website. The Department will provide this form for a health benefit plan issuer to use at its option when providing either the mandatory or permissive notice. The adopted amendment to §21.2304(b)(3) removes former subparagraph (D) from the listing of reasons an individual may be eligible for coverage under the Health Pool, and redesignates remaining subparagraphs. Former subparagraph (D) had provided that an individual may be eligible for Health Pool coverage when the issuer offers substantially similar health coverage with rates that exceed the rates of the Health Pool. SB 809 deletes that qualifier from among those specified in the Insurance Code §1506.152(a)(3). The adopted amendments also make necessary conforming changes to §21.2304 by substituting the term "benefit plan issuer" for the term "carrier," based on the 78th Legislature code revision.

The adopted amendments to §21.2305 direct that the Form Health Pool Notice can be obtained from the Department and update the mailing address; the amendments also indicate that the notice is available at the Department's website. The adopted amendments also delete subsection (b) and its reference to Figure 1, since the amended notice will not be filed with the Secretary of State's Office and is not adopted by reference in the text of the rule.

The adopted amendments to §21.2306 specify the effective date pertaining to certain sections of this adoption. In accordance with SECTIONS 11 and 13 of SB 809, the adopted amendments to §§21.2303(a) and §21.2304(b)(3) are effective for any application for health coverage received, processed, or acted upon by a health benefit plan issuer on or after January 1, 2006. The other adopted amendments will be effective pursuant to the Government Code §2001.036, which provides that a rule takes effect 20 days after the date on which it is filed in the Office of the Secretary of State.

4. SUMMARY OF COMMENTS. The Department did not receive any comments on the proposal.

5. STATUTORY AUTHORITY. The amendments are adopted under the Insurance Code Chapter 1506 and §36.001. Section 1506.005 provides that the Commissioner may adopt rules as necessary and proper to implement the chapter. Section 1506.007(b) states that an insurer providing notice pursuant to the section shall provide such notice as prescribed by the Commissioner. 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.

6. TEXT.

§21.2302. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

(1) Covered individual--An individual who is a resident of Texas and currently covered by health coverage issued by a health benefit plan issuer.

(2) Eligible individual--An individual who is a resident of Texas who has applied, or for whom application has been made, for health coverage.

(3) Health benefit plan issuer--Any entity authorized under the Texas Insurance Code or another insurance law of this state, which provides health coverage in this state, including an insurance company, a group hospital service corporation under Chapter 20, a health maintenance organization under the Texas Health Maintenance Organization Act (Chapter 20A), an approved nonprofit health corporation, a fraternal benefit society under Chapter 10, and a stipulated premium company under Chapter 22.

(4) Health coverage and substantially similar health coverage--Individual health coverage issued by a health benefit plan issuer that provides coverage for hospital, medical, or surgical expenses. The term does not include accident, dental-only, vision-only, fixed indemnity, credit insurance or other limited coverage including specified disease, long-term care or disability income coverage, coverage issued as a supplement to liability insurance, insurance arising out of a workers' compensation or similar law, automobile medical-payment insurance, Medicare supplement or Medicare Select coverage, or coverage by Medicare, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

(5) Health Pool--The Texas Health Insurance Risk Pool.

§21.2303. Delivery of Notice.

(a) A health benefit plan issuer shall provide written notice of Health Pool availability to an eligible individual who has applied for health coverage from the health benefit plan issuer, if the health benefit plan issuer:

(1) refuses to issue substantially similar health coverage to or for the eligible individual; or

(2) offers substantially similar health coverage to or for the eligible individual with riders excluding an individual or a medical condition or illness of an individual from coverage by that policy.

(b) The notice shall be sent with the written notification of the action taken or proposed to be taken by the health benefit plan issuer on the eligible individual's application for coverage from the health benefit plan issuer.

(c) A health benefit plan issuer may also provide written notice of Health Pool availability to a covered individual for the purpose of allowing the covered individual to compare his or her current health coverage issued by the health benefit plan issuer with the coverage offered by the Health Pool.

§21.2304. Notice.

(a) The health benefit plan issuer may use the Form Health Pool Notice referenced in §21.2305 of this title (relating to Form) when issuing the notice required by §21.2303(a) of this title (relating to Delivery of Notice).

(b) In lieu of the notice outlined in subsection (a) of this section, a health benefit plan issuer may opt to provide a notice that contains substantially similar language to the language contained in the Form Health Pool Notice referenced in §21.2305 of this title (relating to Form). The substantially similar language shall be in a readable and understandable format and shall include a clear, complete, and accurate description of the items set out in paragraphs (1) - (5) of this subsection in the following order:

(1) a heading in bold print and all capital letters indicating the information in the notice relates to availability of coverage under the Health Pool;

(2) a statement in bold print that the notice is being provided to advise the individual that he/she may be eligible for coverage from the Health Pool;

(3) a listing of the reasons an individual may be eligible for coverage under the Health Pool which are:

(A) one written refusal or rejection for substantially similar health coverage from a health benefit plan issuer due to a medical condition;

(B) a certification from an agent or salaried representative of a health benefit plan issuer, on a form developed by the Texas Health Pool Board of Directors (Board) and approved by the commissioner, that states the agent or salaried representative is unable to obtain substantially similar health coverage for the individual with a health benefit plan issuer represented by the agent or salaried representative because, based on the health benefit plan issuer's underwriting guidelines, the individual will be declined for coverage as a result of a medical condition;

(C) the offer of substantially similar health coverage with a rider that excludes certain health conditions of the individual and an example of such rider similar to the following: For example, a health benefit plan issuer will provide coverage to the individual with an exclusion of the individual's diabetes, heart disease, cancer, etc.;

(D) the individual has been diagnosed with one of the medical conditions specified by the Board that qualifies him/her for Health Pool coverage; or

(E) evidence that the individual has maintained health coverage for the previous 18 months with no gap in coverage greater than 63 days, with the most recent health coverage through an employer-sponsored plan, government plan, or church plan.

(4) a statement that the individual should contact the Health Pool for additional information regarding eligibility, coverages, cost, limitations, exclusions, and termination provisions;

(5) in bold print the full name, address, and telephone numbers of the Health Pool as shown in the Form Health Pool Notice referenced in §21.2305 of this title and as subsequently updated.

(c) If a health benefit plan issuer provides a notice of Health Pool availability to its covered individuals pursuant to §21.2303(c) of this title, the health benefit plan issuer may use the Form Health Pool Notice referenced in §21.2305 of this title, or a substantially similar notice as outlined in subsection (b) of this section, provided the health benefit plan issuer includes the provisions of paragraphs (1) and (2) of this subsection in either the Form Health Pool Notice or the substantially similar notice:

(1) a statement that the premium rates for Health Pool coverage are:

(A) based on the standard rates for substantially similar health coverage; and

(B) are subject to change based on:

(i) changes to the standard rates for substantially similar health coverage; and

(ii) the Health Pool's claims experience; and

(2) a statement that health coverage which may qualify a covered individual for Health Pool coverage does not include accident, dental-only, vision-only, fixed indemnity, credit insurance or other limited coverage including specified disease, long-term care or disability income coverage, coverage issued as a supplement to liability insurance, insurance arising out of a workers' compensation or similar law, automobile medical-payment insurance, Medicare supplement or Medicare Select coverage, or coverage by Medicare, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

(d) The notice shall be in no less than 10 point type.

§21.2305. Form.

The Form Health Pool Notice 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.

§21.2306. Compliance and Effective Date.

The amendments to §21.2303(a) of this title (relating to Delivery of Notice), and §21.2304(b)(3) of this title (relating to Notice) apply to any application for health coverage received, processed, or acted upon by a health benefit plan issuer on or after January 1, 2006.



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