CHAPTER 846. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
INSURANCE CODE
TITLE 6. ORGANIZATION OF INSURERS AND RELATED ENTITIES
SUBTITLE C. LIFE, HEALTH, AND ACCIDENT INSURERS AND RELATED
ENTITIES
CHAPTER 846. MULTIPLE EMPLOYER WELFARE ARRANGEMENTS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 846.001. DEFINITIONS. In this chapter:
(1) "Board" means the board of trustees or directors, as
applicable, of a multiple employer welfare arrangement.
(2) "Employee welfare benefit plan" has the meaning assigned by
Section 3(1) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. Section 1002(1)).
(3) "Health benefit plan" includes any plan that provides
benefits for health care services. The term does not include:
(A) accident-only or disability income insurance coverage, or a
combination of accident-only and disability income insurance
coverage;
(B) credit-only insurance coverage;
(C) disability insurance;
(D) coverage for a specified disease or illness;
(E) Medicare services under a federal contract;
(F) Medicare supplement and Medicare Select policies regulated
in accordance with federal law;
(G) long-term care coverage or benefits, nursing home care
coverage or benefits, home health care coverage or benefits,
community-based care coverage or benefits, or any combination of
those coverages or benefits;
(H) coverage that provides limited-scope dental or vision
benefits;
(I) coverage provided by a single service health maintenance
organization;
(J) workers' compensation insurance coverage or similar
insurance coverage;
(K) coverage provided through a jointly managed trust authorized
under 29 U.S.C. Section 141 et seq. that contains a plan of
benefits for employees that is negotiated in a collective
bargaining agreement governing wages, hours, and working
conditions of the employees that is authorized under 29 U. S.C.
Section 157;
(L) hospital indemnity or other fixed indemnity insurance
coverage;
(M) reinsurance contracts issued on a stop-loss, quota-share, or
similar basis;
(N) short-term major medical contracts;
(O) liability insurance coverage, including general liability
insurance coverage and automobile liability insurance coverage;
(P) coverage issued as a supplement to liability insurance
coverage;
(Q) automobile medical payment insurance coverage;
(R) coverage for on-site medical clinics;
(S) coverage that provides other limited benefits specified by
federal regulations; or
(T) other coverage that is:
(i) similar to the coverage described by this subdivision under
which benefits for medical care are secondary or incidental to
other coverage benefits; and
(ii) specified in federal regulations.
(4) "Health status related factor" means:
(A) health status;
(B) medical condition, including both physical and mental
illness;
(C) claims experience;
(D) receipt of health care;
(E) medical history;
(F) genetic information;
(G) evidence of insurability, including conditions arising out
of acts of family violence; and
(H) disability.
(5) "Multiple employer welfare arrangement" has the meaning
assigned by Section 3(40) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. Section 1002(40)).
(6) "Organizational document" means the articles, bylaws,
agreements, trusts, or other documents or instruments describing
the rights and obligations of employers, employees, and
beneficiaries with respect to a multiple employer welfare
arrangement.
(7) "Participation criteria" means any criteria or rules
established by an employer to determine the employees who are
eligible for enrollment or continued enrollment under the terms
of a health benefit plan.
(8) "Preexisting condition provision" means a provision that
excludes or limits coverage for a disease or condition for a
specified period after the effective date of coverage.
(9) "Waiting period" means a period established by a multiple
employer welfare arrangement that must elapse before an
individual who is a potential participating employee in a health
benefit plan is eligible to be covered for benefits.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.002. APPLICABILITY OF CHAPTER. (a) In this section,
"fully insured multiple employer welfare arrangement" means an
arrangement that provides to its participating employees and
beneficiaries benefits for which 100 percent of the liability has
been assumed by an insurance company authorized to do business in
this state.
(b) This chapter applies only to a multiple employer welfare
arrangement that meets either or both of the following criteria:
(1) one or more of the employer members in the arrangement:
(A) is domiciled in this state; or
(B) has its principal headquarters or principal administrative
office in this state; or
(2) the arrangement solicits an employer that:
(A) is domiciled in this state; or
(B) has its principal headquarters or principal administrative
office in this state.
(c) This chapter does not apply to a fully insured multiple
employer welfare arrangement during the period in which the
arrangement is fully insured. The commissioner periodically may
require proof that the arrangement is fully insured.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.003. LIMITED EXEMPTION FROM INSURANCE LAWS;
APPLICABILITY OF CERTAIN LAWS. (a) A multiple employer welfare
arrangement is exempt from the operation of all insurance laws of
this state, except laws that are made applicable by their
specific terms or as specified in this section or chapter.
(b) A multiple employer welfare arrangement is subject to the
following laws:
(1) Subchapters C and D, Chapter 36;
(2) Section 38.001;
(3) Section 81.002;
(4) Chapter 82;
(5) Chapter 83;
(6) Chapter 86;
(7) Section 201.003;
(8) Sections 401.051, 401.052, 401.054-401.062, 401.151,
401.152, 401.155, and 401.156;
(9) Chapter 441;
(10) Chapter 443;
(11) Chapter 461;
(12) Section 521.005;
(13) Chapter 541;
(14) Chapter 701;
(15) Chapter 801;
(16) Chapter 803;
(17) Chapter 804;
(18) Subchapter A, Chapter 805; and
(19) Sections 841.259, 841.701-841.702, and 841.704-841.705.
(c) A multiple employer welfare arrangement is only considered
an insurer for purposes of the laws described by this section.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.056, eff. April 1, 2009.
Sec. 846.004. LATE-PARTICIPATING EMPLOYEE OR DEPENDENT. (a)
For purposes of this chapter, an employee or dependent eligible
for enrollment in a participating employer's health benefit plan
is a late-participating employee or dependent if the individual
requests enrollment after the expiration of:
(1) the initial enrollment period established under the terms of
the first health benefit plan for which that employee or
dependent was eligible through the participating employer; or
(2) an open enrollment period under Section 846.257.
(b) An employee or dependent is not a late-participating
employee or dependent if the individual:
(1) was covered under another health benefit plan or self-funded
employer health benefit plan at the time the individual was
eligible to enroll;
(2) declined enrollment in writing, at the time of the initial
eligibility for enrollment, stating that coverage under another
health benefit plan or self-funded employer health benefit plan
was the reason for declining enrollment;
(3) has lost coverage under the other health benefit plan or
self-funded employer health benefit plan as a result of:
(A) the termination of employment;
(B) a reduction in the number of hours of employment;
(C) the termination of the other plan's coverage;
(D) the termination of contributions toward the premium made by
the employer; or
(E) the death of a spouse or divorce; and
(4) requests enrollment not later than the 31st day after the
date coverage under the other health benefit plan or self-funded
employer health benefit plan terminates.
(c) An employee or dependent is also not a late-participating
employee or dependent if the individual is:
(1) employed by an employer that offers multiple health benefit
plans and the individual elects a different health benefit plan
during an open enrollment period under Section 846.257;
(2) a spouse for whom a court has ordered coverage under a
covered employee's plan and the request for enrollment of the
spouse is made not later than the 31st day after the date the
court order is issued; or
(3) a child for whom a court has ordered coverage under a
covered employee's plan and the request for enrollment is made
not later than the 31st day after the date the employer receives
the court order.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.005. RULES; ORDERS. (a) The commissioner may, on
notice and opportunity for all interested persons to be heard,
adopt rules and issue orders reasonably necessary to augment and
implement this chapter.
(b) The commissioner shall adopt rules necessary to meet the
minimum requirements of federal law and regulations.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.006. APPEAL OF ORDERS. A person affected by an order
of the commissioner issued under this chapter may appeal that
order by filing suit in a district court in Travis County under
Subchapter D, Chapter 36.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.007. PREMIUM RATES; ADJUSTMENTS. (a) A multiple
employer welfare arrangement may charge premiums in accordance
with this section to the group of employees or dependents who
meet the participation criteria and who do not decline coverage.
(b) A multiple employer welfare arrangement may not charge an
adjustment to premium rates for individual employees or
dependents for health status related factors or duration of
coverage. Any adjustment must be applied uniformly to the rates
charged for all participating employees and dependents of
participating employees of the employer.
(c) Subsection (b) does not restrict the amount that an employer
may be charged for coverage.
(d) A multiple employer welfare arrangement may establish
premium discounts, rebates, or a reduction in otherwise
applicable copayments or deductibles in return for adherence to
programs of health promotion and disease prevention. A discount,
rebate, or reduction established under this subsection does not
violate Section 541.056(a).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.057, eff. April 1, 2009.
SUBCHAPTER B. FORMATION AND STRUCTURE OF MULTIPLE EMPLOYER
WELFARE ARRANGEMENTS
Sec. 846.051. CERTIFICATE OF AUTHORITY REQUIRED. A person may
not establish or maintain an employee welfare benefit plan that
is a multiple employer welfare arrangement in this state unless
the arrangement obtains and maintains a certificate of authority
issued under this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.052. APPLICATION FOR INITIAL CERTIFICATE OF AUTHORITY.
(a) A person who wants to establish an employee welfare benefit
plan that is a multiple employer welfare arrangement must apply
for an initial certificate of authority on an application form
prescribed by the commissioner.
(b) The application form must be completed and submitted along
with all information required by the commissioner, including:
(1) a copy of each organizational document;
(2) current financial statements of the arrangement;
(3) a fully detailed statement indicating the plan under which
the arrangement proposes to transact business;
(4) an initial actuarial opinion in compliance with the
requirements of Section 846.153(a)(2) and subject to Section
846.157(b); and
(5) a statement by the applicant certifying that the arrangement
is in compliance with all applicable provisions of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
seq.).
(c) The application must be accompanied by proof of a fidelity
bond that:
(1) protects against acts of fraud or dishonesty in servicing
the multiple employer welfare arrangement;
(2) covers each person responsible for servicing the employee
welfare benefit plan; and
(3) is in an amount equal to the greater of 10 percent of the
premiums and contributions received by the arrangement or 10
percent of the benefits paid, during the preceding calendar year,
with a minimum of $10,000 and a maximum of $500,000.
(d) A third-party administrator licensed to engage in business
in this state is not required to submit a fidelity bond under
Subsection (c).
(e) The commissioner shall promptly examine the application and
documents submitted by the applicant and may:
(1) conduct any investigation that the commissioner considers
necessary; and
(2) examine under oath any person interested in or connected
with the multiple employer welfare arrangement.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.053. ELIGIBILITY REQUIREMENTS FOR INITIAL CERTIFICATE
OF AUTHORITY. (a) An applicant for an initial certificate of
authority as a multiple employer welfare arrangement must meet
the requirements of this section.
(b) The employers in the multiple employer welfare arrangement
must be members of an association or group of five or more
businesses that are in the same trade or industry, including
closely related businesses that provide support, services, or
supplies primarily to that trade or industry.
(c) If the employers in the multiple employer welfare
arrangement are members of an association, the association must:
(1) be engaged in substantial activity for its members other
than sponsorship of an employee welfare benefit plan; and
(2) have been in existence for at least two years before
engaging in any activities relating to providing employee health
benefits to its members.
(d) The employee welfare plan of the association or group in the
multiple employer welfare arrangement must be controlled and
sponsored directly by participating employers, participating
employees, or both.
(e) The association or group of employers in the multiple
employer welfare arrangement must be a not-for-profit
organization.
(f) The multiple employer welfare arrangement must:
(1) have within its own organization adequate facilities and
competent personnel, as determined by the commissioner, to
administer the employee benefit plan; or
(2) have contracted with a third-party administrator licensed to
engage in business in this state.
(g) The multiple employer welfare arrangement:
(1) must have applications from not fewer than five employers
and must provide similar benefits for not fewer than 200 separate
participating employees; and
(2) will have annual gross premiums of or contributions to the
plan of not less than:
(A) $20,000 for a plan that provides only vision benefits;
(B) $75,000 for a plan that provides only dental benefits; and
(C) $200,000 for all other plans.
(h) The multiple employer welfare arrangement must possess a
written commitment, binder, or policy for stop-loss insurance
issued by an insurer authorized to do business in this state that
provides:
(1) at least 30 days' notice to the commissioner of any
cancellation or nonrenewal of coverage; and
(2) both specific and aggregate coverage with an aggregate
retention of not more than 125 percent of the amount of expected
claims for the next plan year and a specific retention amount
annually determined by the actuarial opinion required by Section
846.153(a)(2).
(i) Both the specific and aggregate coverage required by
Subsection (h)(2) must require all claims to be submitted within
90 days after the claim is incurred and provide a 12-month claims
incurred period and a 15-month paid claims period for each policy
year.
(j) The contributions must be established to fund at least 100
percent of the aggregate retention plus all other costs of the
multiple employer welfare arrangements.
(k) The multiple employer welfare arrangement must establish a
procedure for handling claims for benefits on dissolution of the
arrangement.
(l) The multiple employer welfare arrangement must obtain the
required bond.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.054. ISSUANCE OF INITIAL CERTIFICATE OF AUTHORITY. (a)
The commissioner shall approve, deny, or disapprove an
application for an initial certificate of authority that meets
the requirements of Section 846.053 not later than the 60th day
after the date on which the application is filed.
(a-1) On the applicant's request, the commissioner shall hold a
hearing on a denial. Not later than the 30th day after the date
of the applicant's request for a hearing, the commissioner shall
request a hearing date.
(b) An initial certificate of authority is a temporary
certificate issued for a one-year term.
(c) On receipt of the initial certificate of authority, the
multiple employer welfare arrangement shall begin business.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1022, Sec. 11, eff. June 19, 2009.
Sec. 846.055. EXTENSION OF TERM OF INITIAL CERTIFICATE OF
AUTHORITY. The commissioner may extend the term of an initial
certificate of authority for a period not to exceed one year if
the commissioner determines that the multiple employer welfare
arrangement is likely to meet the requirements of this chapter
for a final certificate of authority within that period. The
commissioner may not grant more than one extension of the initial
certificate of authority regardless of the length of time for
which an extension was granted.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.056. FINAL CERTIFICATE OF AUTHORITY. (a) A multiple
employer welfare arrangement that holds an initial certificate of
authority must apply for a final certificate of authority not
later than the first anniversary of the date of issuance of the
initial certificate.
(b) The multiple employer welfare arrangement must file an
application for a final certificate of authority on a form
prescribed by the commissioner and furnish the information
required by the commissioner. The application for a final
certificate of authority must include only:
(1) the names and addresses of:
(A) the association or group of employers sponsoring the
arrangement;
(B) the board members of the arrangement; and
(C) if the employers in the arrangement are not an association,
at least five employers;
(2) proof of compliance with the bonding requirements;
(3) a copy of each plan document and each agreement with service
providers; and
(4) a funding report containing:
(A) a statement certified by the board and an actuarial opinion
that all applicable requirements of Section 846.153 have been
met;
(B) an actuarial opinion describing the extent to which
contributions or premium rates:
(i) are not excessive;
(ii) are not unfairly discriminatory; and
(iii) are adequate to provide for the payment of all obligations
and the maintenance of required cash reserves and surplus by the
arrangement;
(C) a statement of the current value of the assets and
liabilities accumulated by the arrangement and a projection of
the assets, liabilities, income, and expenses of the arrangement
for the next 12-month period; and
(D) a statement of the costs to be charged for coverage,
including an itemization of amounts for:
(i) administrative expenses;
(ii) reserves; and
(iii) other expenses associated with operation of the
arrangement.
(c) The reserves described in Section 846.154(a) must have been
established or be established before the final certificate of
authority is issued.
(d) If, after examination and investigation, the commissioner is
satisfied that the multiple employer welfare arrangement meets
the requirements of this chapter, the commissioner shall issue a
final certificate of authority to the arrangement.
(e) The commissioner shall maintain the information required
under Subsection (b)(1)(C) and Subsection (b)(3) as confidential
information.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.057. DENIAL OF FINAL CERTIFICATE OF AUTHORITY. (a)
The commissioner shall deny a final certificate of authority to
an applicant that does not comply with this chapter.
(b) If the commissioner denies a final certificate of authority,
the commissioner shall issue a written notice of refusal to the
applicant. The notice of refusal must state the basis for the
denial. The notice of refusal constitutes 30 days' advance notice
of the revocation of the initial certificate of authority.
(c) If the applicant submits a written request for a hearing not
later than the 30th day after the date of mailing of the notice
of refusal, revocation of the initial certificate of authority is
temporarily stayed, and the commissioner shall promptly conduct a
hearing at which the applicant is given an opportunity to show
compliance with this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.058. DISQUALIFICATION. (a) A multiple employer
welfare arrangement, each board member and officer of the
arrangement, and any agent or other person associated with the
arrangement shall be subject to disqualification for eligibility
for a certificate of authority if the person:
(1) makes a material misstatement or omission in an application
for a certificate of authority under this chapter;
(2) obtains or attempts to obtain at any time a certificate of
authority or license for an insurance entity through intentional
misrepresentation or fraud;
(3) misappropriates or converts to the person's own use or
improperly withholds money under an employee welfare benefit plan
or multiple employer welfare arrangement;
(4) is prohibited from serving in any capacity with the
arrangement under Section 411, Employee Retirement Income
Security Act of 1974 (29 U.S.C. Section 1111);
(5) without reasonable cause or excuse, fails to appear in
response to a subpoena, examination, warrant, or any other order
lawfully issued by the commissioner; or
(6) has previously been subject to a determination by the
commissioner resulting in:
(A) suspension or revocation of a certificate of authority or
license; or
(B) denial of a certificate of authority or license on grounds
that would be sufficient for suspension or revocation.
(b) This section does not apply to a participating employer in
its capacity as a participating employer and the employer's
participating employees.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.059. FEES; SERVICE OF PROCESS. (a) Each multiple
employer welfare arrangement shall pay to the department in the
amount set by the commissioner:
(1) an application fee for an initial certificate of authority;
(2) an application fee for a final certificate of authority; and
(3) a filing fee for submission of the arrangement's annual
statement.
(b) The commissioner shall set the fees described by Subsection
(a) in amounts reasonable and necessary to defray the costs of
administering this chapter.
(c) Each multiple employer welfare arrangement shall appoint the
commissioner as its resident agent for purposes of service of
process. The fee for that service is $50, payable at the time of
appointment.
(d) Fees paid under this section shall be deposited to the
credit of the Texas Department of Insurance operating fund.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.060. SUSPENSION, REVOCATION, OR LIMITATION OF
CERTIFICATE OF AUTHORITY. In addition to any requirement or
remedy under a law cited under Section 846.003, the commissioner
may suspend, revoke, or limit the certificate of authority of a
multiple employer welfare arrangement if the commissioner
determines, after notice and hearing, that the agreement does not
comply with this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.061. ACTION BY ATTORNEY GENERAL. (a) The commissioner
may notify the attorney general of a violation of this chapter,
and the attorney general may apply to a district court in Travis
County for leave to file suit in the nature of quo warranto or
for injunctive relief or both.
(b) The attorney general may seek and the court may order:
(1) restitution for victims of an act declared to be unlawful
under this chapter;
(2) assessment of a fine under this code; and
(3) recovery of reasonable attorney's fees.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER C. BOARD MEMBERS; OTHER OFFICERS AND PERSONNEL
Sec. 846.101. BOARD MEMBERS; NOTICE OF ELECTIONS. (a) Except
as otherwise provided, the powers of a multiple employer welfare
arrangement shall be exercised by a board elected to carry out
the purposes established by the organizational documents of the
arrangement.
(b) The member employers shall elect at least 75 percent of the
board members. At least 75 percent of the board members must be
individuals who are covered under the arrangement.
(c) An owner, officer, or employee of a third-party
administrator who provides services to the multiple employer
welfare arrangement or any other person who has received
compensation from the arrangement may not serve as a board
member.
(d) Each board member shall be elected for a term of at least
two years.
(e) Each member employer of a multiple employer welfare
arrangement shall be given notice of each election of board
members and is entitled to an equal vote, either in person or by
a written proxy signed by the member employer. An owner, officer,
or employee of a third-party administrator who provides services
to the arrangement or any other person who has received
compensation from the arrangement may not serve as proxy.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.102. DUTIES OF BOARD MEMBERS. (a) The board members
of a multiple employer welfare arrangement are responsible for
all operations of the arrangement and shall take all necessary
precautions to safeguard the assets of the arrangement.
(b) A board member shall give the attention and exercise the
vigilance, diligence, care, and skill that a prudent person would
use in like or similar circumstances.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.103. LIMITATION ON ACTION AGAINST BOARD MEMBER. A
board member may not be held liable in a private cause of action
for any delinquency under Section 846.102 after the expiration of
the earlier of:
(1) six years from the date of delinquency; or
(2) two years from the time when the delinquency is discovered
by a person complaining of the delinquency.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.104. COMPENSATION OF BOARD MEMBERS. A board member
serves without compensation from the multiple employer welfare
arrangement except for actual and necessary expenses.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.105. OFFICERS; AGENTS. (a) The board shall select
officers for the multiple employer welfare arrangement as
designated in the organizational documents and may appoint agents
as necessary for the arrangement to engage in business. Each
officer and agent may exercise the authority and perform the
duties required in the management of the property and affairs of
the arrangement as delegated by the board.
(b) The board may remove an officer or agent if the board
determines that the business interests of the multiple employer
welfare arrangement are served by the removal.
(c) The board shall secure the fidelity of any or all of the
officers or agents who handle the funds of the multiple employer
welfare arrangement by bond or otherwise.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.106. COMPENSATION OF OFFICERS, AGENTS, AND EMPLOYEES.
(a) A multiple employer welfare arrangement may pay the officers
and agents of the arrangement suitable compensation. An officer,
employee, or agent of an arrangement may not be compensated
unreasonably.
(b) The compensation of any officer or employee of a multiple
employer welfare arrangement may not be computed directly or
indirectly as a percentage of money or premium collected.
(c) The compensation of an agent may not exceed five percent of
the money or premium collected.
(d) A multiple employer welfare arrangement may pay compensation
or make an emolument to an officer of the arrangement only if the
compensation or emolument is first authorized by a majority vote
of the board of the arrangement.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.107. RECEIPT OF THING OF VALUE; CRIMINAL PENALTY. (a)
A board member, officer, or employee of a multiple employer
welfare arrangement may not, knowingly and intentionally,
directly or indirectly:
(1) receive money or another valuable thing for negotiating,
procuring, recommending, or aiding in:
(A) a purchase by or sale to the arrangement of property; or
(B) a loan from the arrangement; or
(2) be pecuniarily interested as a principal, coprincipal,
agent, or beneficiary in a purchase, sale, or loan described by
Subdivision (1).
(b) A person commits an offense if the person violates this
section. An offense under this subsection is a felony of the
third degree.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER D. POWERS AND DUTIES OF MULTIPLE EMPLOYER WELFARE
ARRANGEMENTS
Sec. 846.151. GENERAL POWERS. (a) Unless otherwise provided by
or inconsistent with this chapter, each multiple employer welfare
arrangement may exercise the powers provided by this section.
(b) A multiple employer welfare arrangement may have succession,
by its name, for the term stated in its trust agreement.
(c) A multiple employer welfare arrangement may sue and be sued.
An arrangement may:
(1) complain and defend in any court;
(2) be a party to any proceedings before a public body of this
state or of any other state or government; and
(3) sue a participating employer, an employee, or a beneficiary
for any cause relating to the business of the arrangement.
(d) A multiple employer welfare arrangement may have a seal that
may be used by having the seal or a facsimile of the seal
impressed, affixed, or otherwise reproduced. The arrangement may
alter the seal at will.
(e) A multiple employer welfare arrangement may appoint officers
and agents as the business of the arrangement requires.
(f) A multiple employer welfare arrangement may adopt, amend,
and repeal bylaws as necessary for the government of its affairs.
(g) A multiple employer welfare arrangement may conduct its
business in this state, other states, and foreign countries and
their territories and colonies.
(h) A multiple employer welfare arrangement may have offices
outside this state.
(i) A multiple employer welfare arrangement may acquire, hold,
mortgage, pledge, assign, and transfer real and personal property
subject to this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.152. FILING OF ORGANIZATIONAL DOCUMENTS. A multiple
employer welfare arrangement shall file with the commissioner its
organizational documents and all appurtenant amendments before
those documents take effect.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.153. REQUIRED FILINGS. (a) A multiple employer
welfare arrangement engaging in business in this state shall file
the following with the commissioner on forms approved by the
commissioner:
(1) a financial statement audited by a certified public
accountant;
(2) an actuarial opinion prepared and certified by an actuary
who is:
(A) not an employee of the arrangement; and
(B) a fellow of the Society of Actuaries, a member of the
American Academy of Actuaries, or an enrolled actuary under the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
Section 1001 et seq.); and
(3) any modified terms of a plan document together with a
certification from the trustees that the changes are in
compliance with the minimum requirements of this chapter.
(b) A multiple employer welfare arrangement shall file the
financial statement and the actuarial opinion required by
Subsection (a) within 90 days of the end of the fiscal year.
(c) The actuarial opinion required under Subsection (a) must
include:
(1) a description of the actuarial soundness of the multiple
employer welfare arrangement, including any actions recommended
to improve the actuarial soundness of the arrangement;
(2) the amount of cash reserves recommended to be maintained by
the arrangement; and
(3) the level of specific and aggregate stop-loss insurance
recommended to be maintained by the arrangement.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.154. CASH RESERVE REQUIREMENTS. (a) The amount of
cash reserves recommended under Section 846.153(c)(2) may not be
less than the greater of:
(1) 20 percent of the total contributions in the preceding plan
year; or
(2) 20 percent of the total estimated contributions for the
current plan year.
(b) Cash reserves required by this section must be:
(1) computed with proper actuarial regard for:
(A) known claims, paid and outstanding;
(B) a history of incurred but not reported claims;
(C) claims handling expenses;
(D) unearned premium;
(E) an estimate for bad debts;
(F) a trend factor; and
(G) a margin for error; and
(2) maintained in cash or federally guaranteed obligations of
less than five-year maturity that have a fixed or recoverable
principal amount or in other investments as the commissioner may
authorize by rule.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.155. ADJUSTMENT OF CONTRIBUTIONS. If the recommended
cash reserves required by Section 846.154(a) exceed the greater
of 40 percent of the total contributions for the preceding plan
year or 40 percent of the total contributions expected for the
current plan year, the contributions may be reduced to fund less
than 100 percent of the aggregate retention plus all other costs
of the multiple employer welfare arrangement, but not less than
the level of contributions necessary to fund the minimum reserves
required under Section 846.154(a).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.156. WAIVER OR REDUCTION OF REQUIRED STOP-LOSS
INSURANCE OR CASH RESERVES. On the application of a multiple
employer welfare arrangement, the commissioner may waive or
reduce the requirement for aggregate stop-loss insurance coverage
and the amount of recommended cash reserves required by Section
846.154(a) on a determination that the interests of the
participating employers and employees are adequately protected.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.157. RENEWAL OF CERTIFICATE; ADDITIONAL ACTUARIAL
REVIEW. (a) The commissioner shall review the forms required by
Section 846.153 and shall renew a multiple employer welfare
arrangement's certificate of authority unless the commissioner
determines that the arrangement does not comply with this
chapter.
(b) On a finding of good cause, the commissioner may order an
actuarial review of a multiple employer welfare arrangement in
addition to the actuarial opinion required by Section 846.153(a).
The arrangement shall pay the cost of the additional actuarial
review.
(c) If the commissioner determines that a multiple employer
welfare arrangement does not comply with this chapter, the
commissioner may order the arrangement to correct the
deficiencies. The commissioner may take any action against the
multiple employer welfare arrangement authorized by this code if
the arrangement does not initiate immediate corrective action.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.158. EXAMINATION OF MULTIPLE EMPLOYER WELFARE
ARRANGEMENTS. (a) The commissioner or the commissioner's
appointee may examine the affairs of any multiple employer
welfare arrangement.
(b) For the purposes of this section the commissioner:
(1) shall have free access to all the books, records, and
documents that relate to the business of the plan; and
(2) may examine under oath a board member, officer, agent, or
employee of the multiple employer welfare arrangement in relation
to the affairs, transactions, and conditions of the arrangement.
(c) Each multiple employer welfare arrangement shall pay the
expenses of the examination as provided by Sections 401.151,
401.152, 401.155, and 401.156.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.058, eff. April 1, 2009.
Sec. 846.159. NAME OF MULTIPLE EMPLOYER WELFARE ARRANGEMENT.
(a) A multiple employer welfare arrangement shall transact
business under the arrangement's own name and may not adopt any
assumed name. An arrangement may not use a name that is the same
as or closely resembles the name of any other arrangement that:
(1) possesses a certificate of authority; and
(2) is engaged in business in this state.
(b) A multiple employer welfare arrangement may change its name
by:
(1) amending the articles of the arrangement; or
(2) taking a new name with the approval of the commissioner.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.160. EVIDENCE OF EXISTENCE. A certified copy of the
multiple employer welfare arrangement's certificate of authority
is prima facie evidence of the existence of the arrangement in a
legal proceeding.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER E. PROVISION OF COVERAGE
Sec. 846.201. BENEFITS ALLOWED. (a) A multiple employer
welfare arrangement may only provide one or more of the
following:
(1) medical, dental, vision, surgical, or hospital care;
(2) benefits in the event of sickness, accident, disability, or
death;
(3) another benefit authorized to be provided by health insurers
in this state; and
(4) prepaid legal services.
(b) Except as otherwise limited by the Employee Retirement
Income Security Act of 1974 (29 U.S.C. Section 1001 et seq.), a
multiple employer welfare arrangement may only provide benefits
to:
(1) active or retired owners, officers, directors, or employees
of or partners in participating employers; and
(2) the beneficiaries of a person described by Subdivision (1).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.202. PREEXISTING CONDITION PROVISION. (a) In this
section, "creditable coverage" has the meaning assigned by
Section 1205.004.
(b) A preexisting condition provision in a multiple employer
welfare arrangement's plan document may apply only to coverage
for a disease or condition for which medical advice, diagnosis,
care, or treatment was recommended or received during the six
months before the earlier of:
(1) the effective date of coverage; or
(2) the first day of the waiting period.
(c) A preexisting condition provision in a multiple employer
welfare arrangement's plan document may not apply to expenses
incurred on or after the expiration of the 12 months following
the initial effective date of coverage of the participating
employee, dependent, or late-participating employee or dependent.
(d) A preexisting condition provision in a multiple employer
welfare arrangement's plan document may not apply to an
individual who was continuously covered for an aggregate period
of 12 months under creditable coverage that was in effect until a
date not more than 63 days before the effective date of coverage
under the health benefit plan, excluding any waiting period.
(e) In determining whether a preexisting condition provision
applies to an individual covered by a multiple employer welfare
arrangement's plan document, the arrangement shall credit the
time the individual was covered under previous creditable
coverage if the previous coverage was in effect at any time
during the 12 months preceding the effective date of coverage
under the arrangement. If the previous coverage was issued under
a health benefit plan, any waiting period that applied before
that coverage became effective must also be credited against the
preexisting condition provision period.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
730, Sec. 2E.059, eff. April 1, 2009.
Sec. 846.203. TREATMENT OF CERTAIN CONDITIONS AS PREEXISTING
PROHIBITED. (a) A multiple employer welfare arrangement may not
treat genetic information as a preexisting condition described by
Section 846.202 in the absence of a diagnosis of the condition
related to the information.
(b) A multiple employer welfare arrangement may not treat
pregnancy as a preexisting condition described by Section
846.202.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.204. WAITING PERIOD PERMITTED. Sections 846.202 and
846.203 do not preclude application of a waiting period that
applies to all new participating employees under the health
benefit plan in accordance with the terms of the multiple
employer welfare arrangement's plan document.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.205. CERTAIN LIMITATIONS OR EXCLUSIONS OF COVERAGE
PROHIBITED. (a) A multiple employer welfare arrangement's plan
document may not limit or exclude, by use of a rider or amendment
applicable to a specific individual, coverage by type of illness,
treatment, medical condition, or accident.
(b) This section does not preclude a multiple employer welfare
arrangement from limiting or excluding coverage for a preexisting
condition in accordance with Section 846.202.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.206. RENEWABILITY OF COVERAGE; CANCELLATION. (a)
Except as provided by Section 846.207, a multiple employer
welfare arrangement shall renew the health benefit plan, at the
employer's option, unless:
(1) a contribution has not been paid as required by the terms of
the plan;
(2) the employer has committed fraud or has intentionally
misrepresented a material fact;
(3) the employer has not complied with the terms of the health
benefit plan document;
(4) the health benefit plan is ceasing to offer any coverage in
a geographic area; or
(5) there has been a failure to meet the terms of an applicable
collective bargaining agreement or other agreement requiring or
authorizing contributions to the health benefit plan, including a
failure to renew the agreement or to employ employees covered by
the agreement.
(b) A multiple employer welfare arrangement may refuse to renew
the coverage of a participating employee or dependent for fraud
or intentional misrepresentation of a material fact by that
person.
(c) A multiple employer welfare arrangement may not cancel a
health benefit plan except for a reason specified for refusal to
renew under Subsection (a). An arrangement may not cancel the
coverage of a participating employee or dependent except for a
reason specified for refusal to renew under Subsection (b).
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.207. REFUSAL TO RENEW. (a) A multiple employer
welfare arrangement may elect to refuse to renew all health
benefit plans delivered or issued for delivery by the arrangement
in this state. The arrangement shall notify:
(1) the commissioner of the election not later than the 180th
day before the date coverage under the first health benefit plan
terminates under this subsection; and
(2) each affected employer not later than the 180th day before
the date on which coverage terminates for that employer.
(b) A multiple employer welfare arrangement that elects under
this section to refuse to renew all health benefit plans may not
write a health benefit plan in this state before the fifth
anniversary of the date notice is delivered to the commissioner
under Subsection (a).
(c) A multiple employer welfare arrangement may elect to
discontinue a health benefit plan only if the arrangement:
(1) provides notice to each employer of the discontinuation
before the 90th day preceding the date of the discontinuation of
the plan;
(2) offers to each employer the option to purchase coverage
under another health benefit plan offered by the arrangement; and
(3) acts uniformly without regard to the claims experience of
the employer or any health status related factor of participating
employees or dependents or new employees or dependents who may
become eligible for the coverage.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.208. NOTICE TO COVERED PERSONS. (a) A multiple
employer welfare arrangement that cancels or refuses to renew
coverage under a health benefit plan under Section 846.206 or
Section 846.207 shall notify the employer of the cancellation of
or refusal to renew coverage not later than the 30th day before
the date termination of coverage is effective. The employer is
responsible for notifying participating employees of the
cancellation of or refusal to renew coverage.
(b) The notice provided under this section is in addition to any
other notice required by Section 846.206 or Section 846.207.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.209. WRITTEN STATEMENT OF DENIAL, CANCELLATION, OR
REFUSAL TO RENEW. Denial by a multiple employer welfare
arrangement of an application for coverage from an employer or
cancellation of or refusal to renew must:
(1) be in writing; and
(2) state the reason or reasons for the denial, cancellation, or
refusal to renew.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
SUBCHAPTER F. PARTICIPATION IN COVERAGE
Sec. 846.251. PARTICIPATION CRITERIA. Participation criteria
may not be based on health status related factors.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.252. COVERAGE REQUIREMENTS. (a) A multiple employer
welfare arrangement:
(1) may refuse to provide coverage to an employer in accordance
with the arrangement's underwriting standards and criteria;
(2) shall accept or reject the entire group of individuals who
meet the participation criteria and who choose coverage; and
(3) may exclude only those employees or dependents who have
declined coverage.
(b) On issuance of coverage to an employer, each multiple
employer welfare arrangement shall provide coverage to the
employees who meet the participation criteria without regard to
an individual's health status related factors.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.253. PROHIBITION ON EXCLUSION OF ELIGIBLE EMPLOYEE OR
DEPENDENT. A multiple employer welfare arrangement may not
exclude an employee who meets the participation criteria or an
eligible dependent, including a late-participating employee or
dependent, who would otherwise be covered.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.254. WRITTEN NOTICE TO EMPLOYEES COVERED. A multiple
employer welfare arrangement, in connection with an employee
welfare benefit plan, shall provide to each participating
employee covered by the plan a written notice at the time the
employee's coverage becomes effective that states that:
(1) individuals covered by the plan are only partially insured;
and
(2) if the plan or the arrangement does not ultimately pay
medical expenses that are eligible for payment under the plan for
any reason, the participating employer or its participating
employee covered by the plan may be liable for those expenses.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.255. DECLINING COVERAGE. (a) A multiple employer
welfare arrangement shall obtain a written waiver from each
employee who meets the participation criteria and declines
coverage under a health plan offered to an employer. The waiver
must ensure that the employee was not induced or pressured to
decline coverage because of the employee's health status related
factors.
(b) A multiple employer welfare arrangement may not provide
coverage to an employer or the employees of an employer if the
arrangement or an agent for the arrangement knows that the
employer has induced or pressured an employee who meets the
participation criteria or a dependent of the employee to decline
coverage because of that individual's health status related
factors.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.256. MINIMUM CONTRIBUTION OR PARTICIPATION
REQUIREMENTS. (a) A multiple employer welfare arrangement may
require an employer to meet minimum contribution or participation
requirements as a condition of issuance and renewal of coverage
in accordance with the terms of the arrangement's plan document.
(b) The minimum contribution and participation requirements must
be stated in the plan document and must be applied uniformly to
each employer offered or issued coverage by the multiple employer
welfare arrangement in this state.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.257. ENROLLMENT; WAITING PERIOD. (a) The initial
enrollment period for employees meeting the participation
criteria must be at least 31 days, with a 31-day annual open
enrollment period. The enrollment period must consist of an
entire calendar month, beginning on the first day of the month
and ending on the last day of the month. If the month is
February, the period must last through March 2.
(b) A multiple employer welfare arrangement may establish a
waiting period.
(c) A new employee who meets the participation criteria may not
be denied coverage if the application for coverage is received by
the multiple employer welfare arrangement not later than the 31st
day after the later of:
(1) the date on which the employment begins; or
(2) the date on which the waiting period established under
Subsection (b) expires.
(d) If dependent coverage is offered to participating employees
under the terms of a multiple employer welfare arrangement's plan
document:
(1) the initial enrollment period for the dependents must be at
least 31 days, with a 31-day annual open enrollment period; and
(2) a dependent of a new employee meeting the participation
criteria established by the arrangement may not be denied
coverage if the application for coverage is received by the
arrangement not later than the 31st day after the later of:
(A) the date on which the employment begins;
(B) the date on which the waiting period established under
Subsection (b) expires; or
(C) the date on which the dependent becomes eligible for
enrollment.
(e) A late-participating employee or dependent may be excluded
from coverage until the next annual open enrollment period and
may be subject to a one-year preexisting condition provision as
described by Section 846.202. The period during which a
preexisting condition provision applies may not exceed 18 months
after the date of the initial application.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.258. COVERAGE FOR NEWBORN CHILDREN. (a) A multiple
employer welfare arrangement's plan document may not limit or
exclude initial coverage of a newborn child of a participating
employee.
(b) Coverage of a newborn child of a participating employee
under this section ends on the 32nd day after the date of the
child's birth unless:
(1) children are eligible for coverage under the multiple
employer welfare arrangement's plan document; and
(2) not later than the 31st day after the date of birth, the
arrangement receives:
(A) notice of the birth; and
(B) any required additional premium.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.219(a),
eff. Sept. 1, 2003.
Sec. 846.259. COVERAGE FOR ADOPTED CHILDREN. (a) This section
applies only if children are eligible for coverage under the
terms of a multiple employer welfare arrangement's plan document.
(b) A multiple employer welfare arrangement plan document may
not limit or exclude initial coverage of an adopted child of a
participating employee. A child is considered to be the child of
a participating employee if the participating employee is a party
to a suit in which the employee seeks to adopt the child.
(c) An adopted child of a participating employee may be
enrolled, at the employee's option, not later than the 31st day
after:
(1) the date the employee becomes a party to a suit in which the
employee seeks to adopt the child; or
(2) the date the adoption becomes final.
(d) Coverage of an adopted child of a participating employee
under this section ends unless the multiple employer welfare
arrangement receives notice of the adoption and any required
additional premiums not later than the 31st day after:
(1) the date the participating employee becomes a party to a
suit in which the employee seeks to adopt the child; or
(2) the date the adoption becomes final.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.219(b),
eff. Sept. 1, 2003.
Sec. 846.260. LIMITING AGE APPLICABLE TO UNMARRIED CHILD. If
children are eligible for coverage under the terms of a multiple
employer welfare arrangement's plan document, any limiting age
applicable to an unmarried child of an enrollee is 25 years of
age.
Added by Acts 2003, 78th Leg., ch. 1276, Sec. 10A.219(c), eff.
Sept. 1, 2003.
SUBCHAPTER G. MARKETING
Sec. 846.301. MARKETING REQUIREMENTS. On request, each employer
purchasing a health benefit plan shall be given a summary of the
plans for which the employer is eligible.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.302. ADDITIONAL REPORTING REQUIREMENTS. The department
may require periodic reports by multiple employer welfare
arrangements and agents regarding the health benefit plans issued
by the arrangements. The reporting requirements must comply with
federal law and regulations.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.
Sec. 846.303. APPLICABILITY TO THIRD-PARTY ADMINISTRATOR. If a
multiple employer welfare arrangement enters into an agreement
with a third-party administrator to provide administrative,
marketing, or other services related to offering health benefit
plans to employers in this state, the third-party administrator
is subject to this chapter.
Added by Acts 2001, 77th Leg., ch. 1419, Sec. 1, eff. June 1,
2003.