Current through Reg. 50, No. 13; March 28, 2025
(a) The applicable
terms defined in §
26.4 of this title (relating to
Definitions) are incorporated into this subchapter.
(b) Insurance Code Chapter 1501, concerning
the Health Insurance Portability and Availability Act, and this subchapter
regulate all health benefit plans sold to large employers, whether the plans
are sold directly or through associations or other groupings of large
employers.
(c) Except as otherwise
provided, this subchapter applies to any health benefit plan providing health
care benefits covering 51 or more employees of a large employer, whether
provided on a group or individual franchise insurance policy 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 the United States Internal Revenue Code of 1986 (26 U.S.C.
§
106, concerning Contributions by
Employer to Accident and Health Plans, or §162, concerning Trade or
Business Expenses).
(3) The health
benefit plan is a group policy issued to a large employer.
(4) The health benefit plan is an employee
welfare benefit plan under
29 C.F.R. §
2510.3-1 (concerning Employee Welfare Benefit
Plan).
(d) For an
employer that was not in existence the previous calendar year, the
determination is based on the average number of employees the employer
reasonably expects to employ on business days in the calendar year in which the
determination is made.
(e) If a
large employer or the employees of a large employer are issued a health benefit
plan under the provisions of Insurance Code Chapter 1501 and this subchapter,
and the large employer subsequently employs fewer than 51 employees, the
provisions of Insurance Code Chapter 1501 and this subchapter 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 title (relating to
Renewability of Coverage and Cancellation). A health carrier providing coverage
to an employer must, within 60 days of becoming aware that the employer has
fewer than 51 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 Insurance Code Chapter 1501 that apply
to small employers, and Chapter 26, Subchapter A, of this title (relating to
Definitions, Severability, and Small Employer Health Regulations), including:
(B) rating protections; and
(C) minimum participation, contribution, and
minimum group size requirements.
(3) The employer has the option to purchase a
small employer health benefit plan from the employer's current health carrier
if the carrier is offering small employer coverage or from any small employer
carrier currently offering small employer coverage in this state.
(4) If the employer fails to comply with the
qualifying minimum participation, contribution, or group size requirements of
§
26.303 of this title (relating to
Coverage Requirements) and Insurance Code §
1501.605 (concerning
Minimum Contribution or Participation Requirements), the health carrier may
terminate coverage under the plan, provided that the termination complies with
the terms and conditions of the plan concerning termination for failure to meet
the qualifying minimum participation, contribution, or minimum group size
requirement and in accordance with Insurance Code §§
1501.108" 1501.111
(concerning Renewability of Coverage: Cancellation; Refusal to Renew:
Discontinuation of Coverage; Notice to Covered Persons; and Written Statement
of Denial, Cancellation, or Refusal to Renew Required, respectively) and §
26.308 of this
title.
(f) If a health
benefit plan is issued to an employer that is not a large employer, but
subsequently the employer becomes a large employer, the provisions of Insurance
Code Chapter 1501 and this subchapter apply to the health benefit plan on the
first renewal date, unless the employer was a small employer and renews its
current health benefit plan as provided under §
26.5(e) of this
title (relating to Applicability and Scope).
(g) An employer group or association that is
a bona fide employer association under this subsection is a single large
employer for purposes of this subchapter and Insurance Code Chapter 1501.
(1) An employer group or association is a
bona fide employer association if:
(A) the
employer group or association has a formal organizational structure with a
governing body and has bylaws or other similar indications of
formality;
(B) the functions and
activities of the employer group or association are controlled by its member
employers;
(C) the employer group
or association has at least one substantial business purpose unrelated to
offering and providing health coverage or other employee benefits to its member
employers and their employees;
(D)
the member employers of the group or association are in the same trade,
industry, line of business, or profession;
(E) the member employers that participate in
the group health plan control the plan in form and in substance;
(F) each member employer participating in the
group health plan is a person acting directly as an employer of at least one
eligible employee who is a participant covered under the plan;
(G) the employer group or association does
not make health coverage through the group health plan available to individuals
other than:
(i) an eligible employee of a
current member employer;
(ii) a
former employee of a current member employer who became eligible for coverage
under the group health plan when the former employee was an employee of the
employer;
(iii) a current member
employer; or
(iv) a dependent of an
individual described in clause (i), (ii), or (iii) of this subparagraph (for
example, spouses and dependent children); and
(H) the employer group or association is not
a health insurance issuer, or owned or controlled by a health insurance issuer
or by a subsidiary or affiliate of a health insurance issuer, other than if and
to the extent such entities participate in an employer group or association in
their capacity as member employers of the employer group or association. For
purposes of this subparagraph, control is the power to direct, or cause the
direction of, the management and policies of a person, other than power that
results from an official position with or corporate office held by the person.
The power may be possessed directly or indirectly by any means, including
through the ownership of voting securities or by contract, other than a
commercial contract for goods or nonmanagement services.
(2) An issuer wanting to issue coverage to an
employer group or association seeking designation as a bona fide employer
association under this subsection must submit to TDI an association filing and
any supporting documents establishing that the group or association meets the
requirements of this subsection. The filing must be made as provided in Chapter
3, Subchapter A, of this title (relating to Submission Requirements for Filings
and Departmental Actions). The department will review the filing and all
supporting documents and will determine whether to approve or disapprove the
employer group's or association's eligibility as a bona fide employer
association. The filing must include either:
(A) an advisory opinion from the U.S.
Department of Labor recognizing the employer group or association as a bona
fide employer association that is no more than three years old; or
(B) an opinion from an attorney attesting to
the fact that the employer group or association qualifies as a bona fide
employer association under paragraph (1) of this subsection. An attorney
attestation must adequately explain how and why the employer group or
association meets all of the criteria, based on the facts and circumstances of
the employer group's or association's governance and operations during the 12
months immediately preceding submission of the application, with explicit
references to relevant language drawn from the employer group's or
association's bylaws, trust agreement, or other organizational documents, which
must be submitted to the department with the attorney's attestation.
(3) For purposes of paragraph
(1)(C) of this subsection, the employer group or association will be treated as
having a substantial business interest unrelated to the provision of benefits
under the plan if:
(A) the employer group or
association would be a viable entity in the absence of sponsoring an employee
benefit plan;
(B) the member
employers have a shared or common purpose that is not generally applicable to
the population at large; and
(C)
the primary method of obtaining new members is not through, or in conjunction
with, the solicitation of insurance.
(4) When determining whether an entity is a
bona fide employer association, the department may consider whether the
employer group or association ever existed without offering a health benefit
plan.
(5) An employer group or
association must not condition employer membership in the group or association
on any health-status-related factor, as defined in §
26.4 of this title (relating to
Definitions), of any individual who is or may become eligible to participate in
the group health plan sponsored by the bona fide group or
association.
(6) If TDI approves an
association as a bona fide employer association, an issuer must treat the
employer group or association as a single large employer, including for
purposes of compliance with this chapter and Texas Insurance Code Chapter
1501.
(h) A large
employer nonfederal governmental employee health benefit plan that is not
self-funded is subject to the Insurance Code and this title, as applicable,
including Chapter 1501 and this chapter.
(i) If a large employer has employees in more
than one state, the provisions of Insurance Code Chapter 1501 and this
subchapter apply to a health benefit plan issued to the large employer if the:
(1) majority of employees are employed in
this state on the issue date or renewal date; or
(2) primary business location is in this
state on the issue date or renewal date and no state contains a majority of the
employees.
(j) A carrier
licensed in this state that issues a certificate of insurance covering a Texas
resident is responsible for ensuring that the certificate complies with
applicable Texas insurance laws and rules, including Senate Bill 1264, 86th
Legislature, 2019, and other mandated benefits, regardless of whether the group
policy underlying the certificate was issued outside the
state.
