| (a) Insurance Code Chapter 1501, concerning Health
Insurance Portability and Availability Act, and this subchapter regulate
all health benefit plans sold to small employers, whether sold directly
or through associations or other groupings of small employers.
(b) Except as otherwise provided, this subchapter applies
to any health benefit plan providing health care benefits covering
two or more employees of a small employer, whether provided on a group
or individual franchise insurance policy basis, regardless of whether
the policy was issued in this state, if the plan meets one of the
following conditions:
(1) a portion of the premium or benefits is paid by
a small 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 small employer; or
(4) the health benefit plan is an employee welfare
benefit plan under 29 C.F.R. §2510.3-1(j) (concerning Employee
Welfare Benefit Plan).
(c) For an employer that was not in existence the previous
calendar year, the determination of whether the employer is a small
employer 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.
(d) The provisions of Insurance Code Chapter 1501 and
this subchapter apply to a health benefit plan provided to a small
employer or to the employees of a small employer without regard to
whether the health benefit plan is offered under or provided through
a group policy or trust arrangement of any size sponsored by an association
or discretionary group.
(e) If a small employer or the employees of a small
employer are issued a health benefit plan under the provisions of
Insurance Code Chapter 1501 and this subchapter, and the small employer,
due to an increase or decrease in the number of employees, ceases
to meet the definition of a small employer, the provisions of Insurance
Code Chapter 1501 and this subchapter continue to apply to that particular
health plan, subject to the provisions of §26.15 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 no longer meets the definition of
small employer, but not later than the first renewal date occurring
after the small employer has ceased to be a small employer, notify
the employer of its change in status. The carrier must also notify
the employer that the protections provided to small employers under
Insurance Code Chapter 1501, and this subchapter will cease to apply
to the employer if the employer fails to renew its current health
benefit plan; fails to comply with the contribution, minimum group
size, or minimum participation requirements of this subchapter; or
elects to enroll in a different health benefit plan. The notice requirement
of this subsection does not apply to a health carrier electing to
issue coverage to a group consisting of one employee.
(f) If a small employer has employees in more than
one state, the provisions of Insurance Code Chapter 1501 and this
subchapter applicable to small employer plans, including provisions
regarding marketing and rates, apply to a health benefit plan issued
to the small employer if:
(1) the majority of employees are employed in this
state on the issue date or renewal date; or
(2) the primary business location is in this state
on the issue date or renewal date and no state contains a majority
of the employees.
(g) 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.
(h) A small 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) This chapter is applicable to an insurance policy,
evidence of coverage, contract, or other document that is delivered,
issued for delivery, or renewed on or after September 1, 2017. An
insurance policy, evidence of coverage, contract, or other document
that is delivered, issued for delivery, or renewed prior to September
1, 2017, is subject to the rules in effect at the time the insurance
policy, evidence of coverage, contract, or other document was delivered,
issued for delivery, or renewed.
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| Source Note: The provisions of this §26.5 adopted to be effective December 30, 1993, 18 TexReg 9375; amended to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539; amended to be effective July 12, 2023, 48 TexReg 3666 |
