81R4929 TJS-F
By: Alvarado H.B. No. 3120
A BILL TO BE ENTITLED
AN ACT
relating to the maximum allowable premium rate increase for small
employer health benefit plans.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter D, Chapter 501, Insurance Code, is
amended by amending Sections 501.151 and 501.153 and adding Section
501.160 to read as follows:
Sec. 501.151. POWERS AND DUTIES OF OFFICE. The office:
(1) may assess the impact of insurance rates, rules,
and forms on insurance consumers in this state; [and]
(2) shall advocate in the office's own name positions
determined by the public counsel to be most advantageous to a
substantial number of insurance consumers; and
(3) shall accept from a small employer, an eligible
employee, or an eligible employee's dependent and, if appropriate,
refer to the commissioner, a complaint described by Section
501.160.
Sec. 501.153. AUTHORITY TO APPEAR, INTERVENE, OR INITIATE.
The public counsel:
(1) may appear or intervene, as a party or otherwise,
as a matter of right before the commissioner or department on behalf
of insurance consumers, as a class, in matters involving:
(A) rates, rules, and forms affecting:
(i) property and casualty insurance;
(ii) title insurance;
(iii) credit life insurance;
(iv) credit accident and health insurance;
or
(v) any other line of insurance for which
the commissioner or department promulgates, sets, adopts, or
approves rates, rules, or forms;
(B) rules affecting life, health, or accident
insurance; or
(C) withdrawal of approval of policy forms:
(i) in proceedings initiated by the
department under Sections 1701.055 and 1701.057; or
(ii) if the public counsel presents
persuasive evidence to the department that the forms do not comply
with this code, a rule adopted under this code, or any other law;
(2) may initiate or intervene as a matter of right or
otherwise appear in a judicial proceeding involving or arising from
an action taken by an administrative agency in a proceeding in which
the public counsel previously appeared under the authority granted
by this chapter;
(3) may appear or intervene, as a party or otherwise,
as a matter of right on behalf of insurance consumers as a class in
any proceeding in which the public counsel determines that
insurance consumers are in need of representation, except that the
public counsel may not intervene in an enforcement or parens
patriae proceeding brought by the attorney general; [and]
(4) may appear or intervene before the commissioner or
department as a party or otherwise on behalf of small commercial
insurance consumers, as a class, in a matter involving rates,
rules, or forms affecting commercial insurance consumers, as a
class, in any proceeding in which the public counsel determines
that small commercial consumers are in need of representation; and
(5) may appear before the commissioner on behalf of a
small employer, eligible employee, or eligible employee's
dependent in a complaint the office refers to the commissioner
under Section 501.160.
Sec. 501.160. COMPLAINT RESOLUTION FOR CERTAIN PREMIUM RATE
INCREASES. (a) A small employer, an eligible employee, or an
eligible employee's dependent may file a complaint with the office
alleging that a rate is excessive for the risks to which the rate
applies, if the percentage increase in the premium rate charged to a
small employer under Subchapter E, Chapter 1501, for a new rating
period exceeds 10 percent.
(b) The office shall refer a complaint received under
Subsection (a) to the commissioner if the office determines that
the complaint substantially attests to a rate charged that is
excessive for the risks to which the rate applies.
(c) With respect to a complaint filed under Subsection (a),
the office may issue a subpoena applicable throughout the state
that requires the production of records.
(d) On application of the office in the case of disobedience
of a subpoena, a district court may issue an order requiring any
individual or person, including a small employer health benefit
plan issuer described by Section 1501.002, that is subpoenaed to
obey the subpoena and produce records, if the individual or person
has refused to do so. An application under this subsection must be
made in a district court in Travis County.
SECTION 2. Section 1501.204, Insurance Code, is amended to
read as follows:
Sec. 1501.204. INDEX RATES. Under a small employer health
benefit plan:
(1) the index rate for a class of business may not
exceed the index rate for any other class of business by more than
15 [20] percent; and
(2) premium rates charged during a rating period to
small employers in a class of business with similar case
characteristics for the same or similar coverage, or premium rates
that could be charged to those employers under the rating system for
that class of business, may not vary from the index rate by more
than 20 [25] percent.
SECTION 3. Section 1501.205, Insurance Code, is amended by
adding Subsection (d) to read as follows:
(d) A small employer health benefit plan issuer shall
disclose the risk load assessed to a small employer group to the
group, along with a description of the risk characteristics
material to the risk load assessment.
SECTION 4. Section 1501.206(a), Insurance Code, is amended
to read as follows:
(a) The percentage increase in the premium rate charged to a
small employer for a new rating period may not exceed the sum of:
(1) the percentage change in the new business premium
rate, measured from the first day of the preceding rating period to
the first day of the new rating period;
(2) any adjustment, not to exceed 10 [15] percent
annually and adjusted pro rata for a rating period of less than one
year, due to the claims experience, health status, or duration of
coverage of the employees or dependents of employees of the small
employer, as determined under the small employer health benefit
plan issuer's rate manual for the class of business; and
(3) any adjustment, not to exceed five percent
annually and adjusted pro rata for a rating period of less than one
year, due to change in coverage or change in the case
characteristics of the small employer, as determined under the
issuer's rate manual for the class of business.
SECTION 5. Subchapter E, Chapter 1501, Insurance Code, is
amended by adding Section 1501.2131 and amending Section 1501.214
to read as follows:
Sec. 1501.2131. COMPLAINT FACILITATION FOR PREMIUM RATE
ADJUSTMENTS. If the percentage increase in the premium rate
charged to a small employer for a new rating period exceeds 10
percent, the small employer, an eligible employee, or an eligible
employee's dependent may file a complaint with the office of public
insurance counsel as provided by Section 501.160.
Sec. 1501.214. ENFORCEMENT. (a) Subject to Subsection
(b), if [If] the commissioner determines that a small employer
health benefit plan issuer subject to this chapter exceeds the
applicable premium rate established under this subchapter, the
commissioner may order restitution and assess penalties as provided
by Chapter 82.
(b) The commissioner shall enter an order under this section
if the commissioner makes the finding described by Section
1501.653.
SECTION 6. Chapter 1501, Insurance Code, is amended by
adding Subchapter N to read as follows:
SUBCHAPTER N. RESOLUTION OF CERTAIN COMPLAINTS AGAINST SMALL
EMPLOYER HEALTH BENEFIT PLAN ISSUERS
Sec. 1501.651. DEFINITIONS. In this chapter:
(1) "Honesty-in-premium account" means the account
established under Section 1501.656.
(2) "Office" means the office of public insurance
counsel.
Sec. 1501.652. COMPLAINT RESOLUTION PROCEDURE. (a) On the
receipt of a referral of a complaint from the office of public
insurance counsel under Section 501.160, the commissioner shall
request written memoranda from the office and the small employer
health benefit plan issuer that is the subject of the complaint.
(b) After receiving the initial memoranda described by
Subsection (a), the commissioner may request one rebuttal
memorandum from the office.
(c) The commissioner may by rule limit the number of
exhibits submitted with or the time frame allowed for the submittal
of the memoranda described by Subsection (a) or (b).
Sec. 1501.653. ORDER; FINDINGS. The commissioner shall
issue an order under Section 1501.214(b), if the commissioner
determines that the rate complained of is excessive for the risks to
which the rate applies.
Sec. 1501.654. COSTS. The office may request, and the
commissioner may award to the office, reasonable costs and fees
associated with the investigation and resolution of a complaint
filed under Section 501.160 and disposed of in accordance with this
subchapter.
Sec. 1501.655. ASSESSMENT. (a) The commissioner may make
an assessment against each small employer health benefit plan
issuer in an amount that is sufficient to cover the costs of
investigating and resolving a complaint filed under Section 501.160
and disposed of in accordance with this subchapter.
(b) The commissioner shall deposit assessments collected
under this section to the credit of the honesty-in-premium account.
Sec. 1501.656. HONESTY-IN-PREMIUM ACCOUNT. (a) The
honesty-in-premium account is an account in the general revenue
fund that may be appropriated only to cover the cost associated with
the investigation and resolution of a complaint filed under Section
501.160 and disposed of in accordance with this subchapter.
(b) Interest earned on the honesty-in-premium account shall
be credited to the account. The account is exempt from the
application of Section 403.095, Government Code.
Sec. 1501.657. RATE REDUCTION NOT PROHIBITED. Nothing in
this subchapter prohibits a small employer health benefit plan
issuer from, at any time, offering a different rate to the group
whose rate is the subject of a complaint.
SECTION 7. The change in law made by Chapter 1501, Insurance
Code, as amended by this Act, applies only to a small employer
health benefit plan that is delivered, issued for delivery, or
renewed on or after January 1, 2010. A small employer health
benefit plan that is delivered, issued for delivery, or renewed
before January 1, 2010, is covered by the law in effect at the time
the health benefit plan was delivered, issued for delivery, or
renewed, and that law is continued in effect for that purpose.
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, 2009.