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  S.B. No. 859
 
 
 
 
AN ACT
  relating to small and large employer health group cooperatives and
  to employer contributions to individual health insurance policies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 1501.051, Insurance Code, is amended by
  amending Subdivision (3-a) and adding Subdivision (3-b) to read as
  follows:
               (3-a)  "Eligible single-employee business" means a
  business entity that:
                     (A)  is owned and operated by a sole proprietor;
                     (B)  employed an average of fewer than two
  employees on business days during the preceding calendar year; and
                     (C)  is eligible to participate in a cooperative
  under this subchapter in accordance with Section 1501.066.
               (3-b)  "Expanded service area" means any area larger
  than one county in which a health group cooperative offers
  coverage.
         SECTION 2.  Subsection (a), Section 1501.058, Insurance
  Code, is amended to read as follows:
         (a)  A cooperative shall:
               (1)  arrange for small or large employer health benefit
  plan coverage for small employer groups, [or] large employer
  groups, and, subject to Section 1501.0581, eligible
  single-employee businesses that participate in the cooperative by
  contracting with small or large employer health benefit plan
  issuers that meet the requirements established by Section 1501.061;
               (2)  collect premiums to cover the cost of:
                     (A)  small or large employer health benefit plan
  coverage purchased through the cooperative; and
                     (B)  the cooperative's administrative expenses;
               (3)  establish administrative and accounting
  procedures for the operation of the cooperative;
               (4)  establish procedures under which an applicant for
  or participant in coverage issued through the cooperative may have
  a grievance reviewed by an impartial person;
               (5)  contract with small or large employer health
  benefit plan issuers to provide services to small or large
  employers covered through the cooperative; and
               (6)  develop and implement a plan to maintain public
  awareness of the cooperative and publicize the eligibility
  requirements for, and the procedures for enrollment in, coverage
  through the cooperative.
         SECTION 3.  Section 1501.0581, Insurance Code, is amended by
  amending Subsections (a), (b), (k), and (p) and adding Subsections
  (q) through (x) to read as follows:
         (a)  The membership of a health group cooperative may consist
  of only small employers;[,] only large employers;[, or] both small
  and large employers; small employers and eligible single-employee
  businesses; large employers and eligible single-employee
  businesses; or small employers, large employers, and eligible
  single-employee businesses. To participate as a member of a health
  group cooperative, an employer must be a small or large employer as
  described by this chapter or an eligible single-employee business.
         (b)  Subject to the requirements imposed on small employer
  health benefit plan issuers under Section 1501.101 and subject to
  Subsections (a-1) and (o), a health group cooperative:
               (1)  shall allow a small employer to join a health group
  cooperative, other than a health group cooperative consisting of
  only [small employers or both small and] large employers, and
  enroll in health benefit plan coverage; [and]
               (2)  subject to Subsection (t), may allow eligible
  single-employee businesses to join a health group cooperative and
  enroll in health benefit plan coverage; and
               (3)  may allow a large employer to join the health group
  cooperative and enroll in health benefit plan coverage.
         (k)  A health group cooperative may offer more than one
  health benefit plan, but each plan offered must be made available to
  all employers participating in [employees covered by] the
  cooperative.
         (p)  A health group cooperative must make the election
  described by Subsection (o) at the time the cooperative is
  initially formed.  A health group cooperative making this election
  may not include an eligible single-employee business.  Evidence of
  the election must be filed in writing with the commissioner in the
  form and at the time prescribed by the commissioner by rule.
         (q)  Except as provided by Subsection (r), a health group
  cooperative may file an election with the commissioner, on a form
  and in the manner prescribed by the commissioner, to permit
  eligible single-employee businesses to join the cooperative and to
  enroll in health benefit plan coverage.  The election must be filed
  not later than the 90th day before the date coverage for eligible
  single-employee businesses is to become effective.
         (r)  A health group cooperative may file an election under
  Subsection (q) only if a small or large employer health benefit plan
  issuer has agreed in writing to offer to issue coverage to the
  cooperative based on its membership after the election to permit
  eligible single-employee businesses to participate in the
  cooperative has become effective.
         (s)  On the date an election under Subsection (q) becomes
  effective and until the election is rescinded, the provisions of
  this subchapter relating to guaranteed issuance of plans, to rating
  requirements, and to mandated benefits that are applicable to small
  employers apply to eligible single-employee businesses that are
  members of the health group cooperative.
         (t)  A health group cooperative that files an election with
  the commissioner to permit an eligible single-employee business to
  join the health group cooperative and enroll in health benefit plan
  coverage must permit participation and enrollment in the
  cooperative's health benefit plan coverage during the initial
  enrollment and annual open enrollment periods by each eligible
  single-employee business that elects to participate and agrees to
  satisfy requirements associated with participation in and coverage
  through the cooperative. For purposes of this subsection, the
  provisions of Subsection (a-1) applicable to small employers apply
  to eligible single-employee businesses.
         (u)  A health group cooperative may rescind its election to
  permit eligible single-employee businesses to join the cooperative
  and enroll in health benefit plan coverage only if:
               (1)  the election has been effective for at least two
  years, except as provided by Subsection (v);
               (2)  the health group cooperative files notice of the
  rescission with the commissioner not later than the 180th day
  before the effective date of the rescission; and
               (3)  the health group cooperative provides written
  notice of termination of coverage to all eligible single-employee
  business members of the cooperative not later than the 180th day
  before the effective date of the termination.
         (v)  The commissioner shall adopt rules under which a health
  group cooperative may for good cause rescind an election described
  by Subsection (u) before the second anniversary of the effective
  date of the election.
         (w)  Notwithstanding Subsection (u), a health group
  cooperative that files notice of rescission may choose to permit
  existing eligible single-employee businesses to remain active,
  covered members of the cooperative, but only if all such members of
  the cooperative are provided the same opportunity.
         (x)  A health group cooperative that has rescinded an
  election under Subsection (u) may not file a subsequent election to
  permit eligible single-employee businesses to join the cooperative
  and enroll in health benefit plan coverage before the fifth
  anniversary of the effective date of the rescission.
         SECTION 4.  Subsection (b-3), Section 1501.063, Insurance
  Code, is amended to read as follows:
         (b-3)  Except as provided by Section 1501.0581(k), a [A]
  health group cooperative shall have sole authority to make benefit
  elections and perform other administrative functions under this
  code for the cooperative's participating employers.
         SECTION 5.  Section 1501.065, Insurance Code, is amended to
  read as follows:
         Sec. 1501.065.  CERTAIN ACTIONS BASED ON RISK
  CHARACTERISTICS OR HEALTH STATUS PROHIBITED. A cooperative may not
  limit, restrict, or condition an employer's or employee's
  membership in a cooperative or an employee's choice among benefit
  plans based on:
               (1)  risk characteristics of a group or of any member of
  a group; or
               (2)  health status related factors, duration of
  coverage, or any similar characteristic related to the health
  status or experience of a group or of any member of a group.
         SECTION 6.  Subchapter B, Chapter 1501, Insurance Code, is
  amended by adding Sections 1501.066 and 1501.067 to read as
  follows:
         Sec. 1501.066.  ELECTION TO TREAT PARTICIPATING EMPLOYERS
  SEPARATELY FOR RATING PURPOSES. (a)  Notwithstanding Section
  1501.063, a health group cooperative may file with the
  commissioner, on a form and in the manner prescribed by the
  commissioner, an election to treat each participating employer
  within the cooperative as a separate employer for purposes of
  rating small and large employer health benefit plans, subject to
  the rating requirements of this code applicable to such plans. An
  existing health group cooperative must file the election with the
  department not later than the 90th day before the date on which the
  election is to become effective.
         (b)  A health group cooperative must provide to all
  participating and prospective employers, in a manner prescribed by
  the commissioner, a written notice of the cooperative's election to
  treat participating employers within the cooperative as separate
  employers for purposes of rating small and large employer health
  benefit plans.  Employers participating in the cooperative when
  such an election is made must be provided notice of the election not
  later than the 90th day before the date the election is to become
  effective.  For a participating employer, the notice must contain
  the quote for the premium rate applicable to the employer as of the
  date the plan is renewed.  Prospective employers must be provided
  notice of the election when the prospective employer applies to
  become a participating employer in the health group cooperative.
         (c)  An election under this section is effective on the
  earliest date after the election is made on which the plan to which
  the election applies is initially issued or renewed.  The election
  remains in effect for not less than 12 months after the effective
  date.
         Sec. 1501.067.  ELIGIBLE SINGLE-EMPLOYEE BUSINESS. The
  commissioner shall adopt rules governing the eligibility of a
  single-employee business to participate in a health group
  cooperative under this subchapter.  The rules must include
  provisions to ensure that each eligible single-employee business
  has a business purpose and was not formed solely to obtain health
  benefit plan coverage under this subchapter.
         SECTION 7.  Subtitle A, Title 8, Insurance Code, is amended
  by adding Chapter 1221 to read as follows:
  CHAPTER 1221.  EMPLOYER CONTRIBUTIONS TO INDIVIDUAL HEALTH
  INSURANCE POLICIES
         Sec. 1221.001.  RULES; EMPLOYER CONTRIBUTIONS.  The
  commissioner by rule, unless it would violate state or federal law,
  may develop procedures to allow an employer to make financial
  contributions to or premium payments for an employee or retiree's
  individual consumer directed health insurance policy in a manner
  that eliminates or minimizes the state or federal tax consequences,
  or provides positive state or federal tax consequences, to the
  employer.
         SECTION 8.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution.  If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2011.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 859 passed the Senate on
  March  24, 2011, by the following vote: Yeas 31, Nays 0; and that
  the Senate concurred in House amendment on May 27, 2011, by the
  following vote: Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 859 passed the House, with
  amendment, on May 23, 2011, by the following vote: Yeas 146,
  Nays 0, two present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor