28 TAC §§21.2302 - 21.2306
1. INTRODUCTION. The Texas Department of Insurance proposes amendments to §§21.2302 - 21.2306, concerning notice of availability of coverage under the Texas Health Insurance Risk Pool (Health Pool). The Department proposes these amendments 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed amendment to §21.2304(b)(3) removes existing subparagraph (D) from the listing of reasons an individual may be eligible for coverage under the Health Pool, and redesignates remaining subparagraphs. Existing subparagraph (D) provides 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 proposed 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 proposed 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 proposed amendments also delete subsection (b) and its reference to Figure 1, since the amended notice will be neither filed with the Secretary of State's Office nor adopted by reference in the text of the rule.
The proposed amendments to §21.2306 specify the effective date pertaining to certain sections of this proposal. In accordance with SECTIONS 11 and 13 of SB 809, the proposed 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 proposed 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.
2. FISCAL NOTE. Jennifer Ahrens, Associate Commissioner, Life, Health & Licensing Division, has determined that for each year of the first five years the proposed amendments are in effect, there will be no measurable fiscal implications on state or local government, local employment, or local economies as a result of enforcing or administering this proposal.
3. PUBLIC BENEFIT/COST NOTE. Ms. Ahrens also has determined that for each year of the first five years the proposed amendments are in effect, the public benefit anticipated as a result of the proposed amendments will be more accurate consumer understanding of the availability of Health Pool coverage.
Ms. Ahrens has determined that the cost of compliance associated with the proposal results from legislative amendments to Insurance Code §1506.152. Accordingly, the proposed amendments will not have an impact on small and micro businesses. The Department has considered the purposes of the relevant statute, which is to require health benefit plan issuers to provide written notice of Health Pool availability to an eligible individual who has applied for health coverage from the health benefit plan issuer in certain statutorily specified instances, and has determined that it is neither legal nor feasible to waive or modify the requirements for small or micro businesses. To minimize notice provision costs, health benefit plan issuers may obtain the Health Pool Notice form template from the Texas Department of Insurance or the Department's web site.
4. REQUEST FOR PUBLIC COMMENT. Comments on the proposal must be submitted in writing by 5:00 p.m. on June 5, 2006, 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 comments must be submitted to Bill Bingham, Deputy Commissioner for Regulatory Matters, Life, Health & Licensing Program, Mail Code 107-2A, Texas Department of Insurance, P. O. Box 149104, Austin, Texas 78714-9104. Any request for a public hearing should be submitted separately to the Office of the Chief Clerk by 5:00 p.m. on May 29, 2006.
5. STATUTORY AUTHORITY. The amendments are proposed 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. CROSS REFERENCE TO STATUTE. The following statute is affected by this proposal:
Rule Number Statute
§§21.2302 - 21.2306 Insurance Code Chapter 1506
7. 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 [carrier].
(2) (No change.)
(3) Health benefit plan issuer [carrier]--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 [carrier] 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) (No change.)
§21.2303. Delivery of Notice.
(a) A health benefit plan issuer [carrier] shall provide written notice of Health Pool availability to an eligible individual who has applied for health coverage from the health benefit plan issuer [carrier], if the health benefit plan issuer [carrier]:
(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 . [; or]
[(3) offers substantially similar health coverage to or for the eligible individual at rates higher than the health carrier's standard rate.]
(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 [carrier] on the eligible individual's application for coverage from the health benefit plan issuer [carrier].
(c) A health benefit plan issuer [carrier] 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 [carrier] with the coverage offered by the Health Pool.
§21.2304. Notice.
(a) The health benefit plan issuer [carrier] may use the Form Health Pool Notice referenced [provided at Figure 1] 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 [carrier] may opt to provide a notice that contains substantially similar language to the language contained in the Form Health Pool Notice referenced [Figure 1] 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) - (2) (No change.)
(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 [carrier] due to a medical condition;
(B) a certification from an agent or salaried representative of a health benefit plan issuer [carrier], 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 [carrier] represented by the agent or salaried representative because, based on the health benefit plan issuer's [carrier'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 [carrier] will provide coverage to the individual with an exclusion of the individual's diabetes, heart disease, cancer, etc.;
[(D) the offer of substantially similar health coverage with rates that exceed the rates of the Health Pool;]
(D) [(E)] 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) [(F)] 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) - (5) (No change.)
(c) If a health benefit plan issuer [carrier] provides a notice of Health Pool availability to its covered individuals pursuant to §21.2303(c) of this title, the health benefit plan issuer [carrier] may use the Form Health Pool Notice referenced [provided at Figure 1] 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 [carrier] includes the provisions of paragraphs (1) and (2) of this subsection in either the Form Health Pool Notice [Figure 1] or the substantially similar notice:
(1) - (2) (No change.)
(d) (No change.)
§21.2305. Form.
[(a)] The Form Health Pool Notice [is included in subsection (b) of this section in its entirety and has been filed with the Office of the Secretary of State. The address and phone numbers are variable to encompass any future changes. The form] can be obtained from the Texas Department of Insurance, Life/Health & HMO Intake Section, Life/Health Division, MC 106-1E[MC 106-1A], P. O. Box 149104, Austin, Texas 78714-9104 , or at the department's website, www.tdi.state.tx.us.
[(b) Form Health Pool Notice, Figure 1:]
§21.2306. Compliance and Effective Date [Dates].
The amendments to [§21.2302(4) of this title (relating to Definitions),] §21.2303(a) of this title (relating to Delivery of Notice), and §21.2304[(a) and](b)(3) of this title (relating to Notice) [, and §21.2305(b) of this title (relating to Form)] apply to any application for health coverage received, processed, or acted upon by a health benefit plan issuer [carrier] on or after January 1, 2006 [September 1, 1999, and the provisions of §21.2302(5) of this title, §21.2303(c) of this title, and §21.2304(c) of this title apply to any notice by a health carrier on or after January 1, 2000].