Insurance Code Section 1501.003, which regulates small employer group health plans, does not apply to a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) under a federal law enacted in 2016 known as the 21st Century Cures Act.
Effect of the Cures Act
The Cures Act allows a small employer to use a QSEHRA to pay part or all of the cost of individual health insurance for each of its employees and their families without creating a group health plan. (Cures Act Section 18001)
Because a QSEHRA is not a group health plan, each employee's health insurance policy is regulated as an individual health insurance policy.
Ongoing effect of state law
Insurance Code Section 1501.003 still applies to small employers' health insurance plans that do not meet the Cures Act's requirements for a QSEHRA.
This means that if a small employer pays part or all of the cost of its employees' individual health insurance, but does not use a QSEHRA, the employer's arrangement will continue to be regulated under Insurance Code Section 1501.003 as a group health plan.
What this means to consumers
In Texas, a group health insurance policy usually includes different benefits and consumer protections than those included in an individual health policy. Premiums and out-of-pocket costs may also be different. QSEHRA limits how much an employer can pay toward an employee's individual insurance premium. Because a small employer deciding between a group insurance plan and a QSEHRA plan will probably not know about these differences, issuers and agents marketing QSEHRA plans should explain the differences to small employers.
TDI issued Commissioner's Bulletin B-0028-06 in 2006 explaining why and how specific federal and state laws apply to small and large employer group health plans. The explanations in that bulletin continue to be accurate except if an employer's plan is a QSEHRA that meets all federal requirements. As that bulletin explained:
- If a regulated health benefit plan issuer offers individual health benefit coverage through an employer's health reimbursement arrangement, or if an employer pays for part or all of the premium for individual coverage either directly or by reimbursing the employee, the coverage is regulated as a group health benefit plan under Insurance Code Chapter 1501.
- If an employer's health benefit plan is an employee welfare benefit plan regulated under the Employee Retirement Income Security Act, the plan is regulated as a group health benefit plan under Insurance Code Chapter 1501.