81R4921 PMO-F
By: Watson S.B. No. 815
A BILL TO BE ENTITLED
AN ACT
relating to consumer labeling requirements for certain health
benefit plans; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. PURPOSE AND FINDINGS. The legislature finds
that health care coverage is one of the most important purchases
many Texans make, yet basic information that allows comparison
between health benefit plans is difficult to find, if the
information is available at all. Further, the large number of
health benefit plans available in Texas with differing benefits,
exclusions, and costs creates a complex array of information that
complicates consumer decision making. The legislature further
finds that important information typically considered to be
indecipherable in health benefit plan documents must be brought to
consumers' attention. A standard labeling requirement is,
therefore, necessary to allow consumers to gain the information
needed to make reasoned health benefit plan purchases.
SECTION 2. Chapter 541, Insurance Code, is amended by
adding Subchapter K to read as follows:
SUBCHAPTER K. REQUIRED LABELING FOR HEALTH BENEFIT PLANS
Sec. 541.501. DEFINITIONS. In this subchapter:
(1) "Direct losses incurred" means the sum of direct
losses paid plus an estimate of losses to be paid in the future for
all claims arising from all prior and current reporting periods,
minus the corresponding estimate made at the close of business for
the preceding period. This amount does not include home office and
overhead costs, advertising costs, commissions and other
acquisition costs, taxes, capital costs, administrative costs,
utilization review costs, or claims processing costs.
(2) "Direct losses paid" means the sum of all payments
made during the reporting period for claimants before reinsurance
has been ceded or assumed. This amount does not include home office
and overhead costs, advertising costs, commissions and other
acquisition costs, taxes, capital costs, administrative costs,
utilization review costs, or claims processing costs.
(3) "Direct premiums earned" means the amount of
premium attributable to the coverage already provided in a given
period before reinsurance has been ceded or assumed.
(4) "Enrollee" means an individual who is eligible to
receive health care services under a health benefit plan.
(5) "Insurance facts label" means a notice that
complies with the requirements of this subchapter.
Sec. 541.502. APPLICABILITY OF SUBCHAPTER. This subchapter
applies to any health benefit plan that:
(1) provides benefits for medical or surgical expenses
incurred as a result of a health condition, accident, or sickness,
including an individual, group, blanket, or franchise insurance
policy or insurance agreement, a group hospital service contract,
or an individual or group evidence of coverage that is offered by:
(A) an insurance company;
(B) a group hospital service corporation
operating under Chapter 842;
(C) a fraternal benefit society operating under
Chapter 885;
(D) a stipulated premium company operating under
Chapter 884;
(E) a health maintenance organization operating
under Chapter 843;
(F) a multiple employer welfare arrangement that
holds a certificate of authority under Chapter 846;
(G) an approved nonprofit health corporation
that holds a certificate of authority under Chapter 844; or
(H) an entity not authorized under this code or
another insurance law of this state that contracts directly for
health care services on a risk-sharing basis, including a
capitation basis; or
(2) provides health and accident coverage through a
risk pool created under Chapter 172, Local Government Code,
notwithstanding Section 172.014, Local Government Code, or any
other law.
Sec. 541.503. INSURANCE FACTS LABEL REQUIRED; NOTICE OF
LABEL REQUIRED. (a) The following written communications must
contain an insurance facts label:
(1) a document used by a health benefit plan issuer to
advertise a health benefit plan;
(2) a written communication, other than an explanation
of benefits, from a health benefit plan issuer to an enrollee; and
(3) a written communication from a health benefit plan
issuer to a potential enrollee.
(b) The following communications, if made for the purpose of
advertising a health benefit plan, must include the phrase "Check
our label at:" followed by the Internet website address where a
health benefit plan issuer's insurance facts label can be viewed:
(1) a television or radio advertisement;
(2) a billboard advertisement;
(3) an advertisement published or posted on the
Internet; and
(4) any nonwritten media not otherwise described in
this section.
Sec. 541.504. GENERAL FORMAT OF INSURANCE FACTS LABEL. (a)
An insurance facts label must include a box outline that contains
only white background.
(b) An insurance facts label must:
(1) be conspicuous and not less than three inches in
height and two inches in width;
(2) be enclosed by a one-half point box rule within
three points of text measure; and
(3) separate all lines of text by two points, leading
above and below.
(c) The phrase "Insurance Facts" must:
(1) appear in a widely used sans serif font that is no
smaller than 13 point; and
(2) be located inside and at the top of the box to fit
the width of the label flush left and right.
(d) The health benefit plan name and the name of the company
must:
(1) appear in a widely used sans serif font that is no
smaller than 10 point; and
(2) be located immediately below the phrase "Insurance
Facts" and separated from the phrase "Insurance Facts" by a
seven-point rule.
(e) Any disclaimer or other information not otherwise
required to appear at a specific location on the label by this
subchapter must appear in a widely used sans serif font that is no
smaller than six point and located at the bottom of the label box.
Sec. 541.505. REQUIRED HEADINGS; FORMAT. (a) An insurance
facts label must contain the following headings:
(1) "Monthly Premium";
(2) "Percent of Expense Paid by Plan In-Network";
(3) "Percent of Expense Paid by Plan Out-of-Network";
(4) "Annual Out-of-Pocket Expense (est.)";
(5) "Your Total Annual Cost (est.)";
(6) "Justified Complaints";
(7) "Premium to Direct Patient Care Ratio";
(8) "Expected Profit"; and
(9) "Benefit Levels."
(b) The headings described by this section must be flush
left in the label box and appear in a widely used sans serif font
that is no smaller than eight point.
(c) "Monthly Premium" must be the first heading and must be:
(1) located immediately below the health benefit plan
and health benefit plan issuer name; and
(2) separated from all other headings by a three-point
rule.
(d) A numeric value that corresponds to a heading must
appear flush right in a widely used sans serif font that is no
smaller than eight point.
(e) Any heading that is immediately followed by a disclaimer
or information other than another heading or a subheading must be
separated from the disclaimer or other information by a seven-point
rule.
(f) Each heading must be separated from another heading and
any applicable subheadings by a one-quarter-point rule.
Sec. 541.506. REQUIRED HEADINGS; DEFINITIONS. For the
purposes of Section 541.505, the following terms have the following
meanings:
(1) "Monthly Premium" means the average dollar amount
an enrollee pays each month for coverage under a health benefit
plan.
(2) "Percent of Expense Paid by Plan In-Network" means
the percentage of a submitted charge for an in-network service that
a health benefit plan pays.
(3) "Percent of Expense Paid by Plan Out-of-Network"
means the percentage of a submitted charge a health benefit plan
pays for services provided out-of-network.
(4) "Annual Out-of-Pocket Expense (est.)" means the
estimated dollar amount of the cost incurred by a consumer with
average health care needs over 12 months. "Average health care
need" means health care service required by a health benefit plan's
enrollees under 60 years of age who:
(A) were not required to pass a medical
examination for coverage; or
(B) were required to pass a medical examination
by the health benefit plan, if the plan requires all enrollees to
pass a medical examination.
(5) "Your Total Annual Cost (est.)" is the dollar
amount of the sum of annual out-of-pocket expense estimate and
annual premium.
(6) "Justified Complaints" means complaints for the
previous two years submitted to the department against a health
benefit plan issuer for which the department determined that:
(A) after examination and investigation, a
violation of a policy provision, contract provision, rule, or
statute occurred; or
(B) a prudent layperson may regard a practice or
service below customary business practice.
(7) "Premium to Direct Patient Care Ratio" means the
ratio of a health benefit plan's direct losses incurred to the
direct premiums earned.
(8) "Expected Profit" means the actuarially set
percentage of premium allowed for profit.
(9) "Benefit Levels" means the dollar value of the
items listed in Section 541.507(a)(1)-(13).
Sec. 541.507. REQUIRED SUBHEADINGS; FORMAT. (a)
Subheadings under the "Benefit Levels" heading must disclose the
dollar value provided by the underlying certificate, policy, or
contract, and must be as follows:
(1) "Annual Deductible";
(2) "Annual Family Deductible";
(3) "Annual In-Network Deductible";
(4) "Annual Out-of-Network Deductible";
(5) "Out-of-Pocket Maximum";
(6) "Office Visit Copayment" listed separately for
primary care providers and specialists;
(7) "Prescription Copayment";
(8) "Lifetime Maximum Benefit";
(9) "Emergency Room Visit Copayment";
(10) "Number of Electric Wheelchairs per Lifetime";
(11) "Outpatient Surgery Copayment";
(12) "Inpatient Cost Sharing"; and
(13) "Number of Justified Complaints."
(b) Each subheading required by this section must be
indented six points from the left and appear in a widely used sans
serif font that is no smaller than eight point.
(c) A numeric value that corresponds to a subheading must
appear flush right in a widely used sans serif font that is no
smaller than eight point.
(d) Each subheading must be separated from another
subheading and the heading "Monthly Premium" by a one-quarter-point
rule.
Sec. 541.508. RULES. (a) The commissioner may:
(1) require differing titles, headings, and
subheadings as may otherwise be required by this subchapter as
necessary to prevent confusion between insurance and noninsurance
products; and
(2) adopt rules as necessary to implement and
administer this subchapter.
(b) The commissioner shall adopt rules regulating:
(1) the use of insurance and noninsurance terms in the
insurance facts label to prevent confusion in the marketplace
between insurance and noninsurance products;
(2) the manner in which a health benefit plan may use
space available in the label box after disclosure of the consumer
information required by this subchapter;
(3) allowable disclaimers below the headings and
subheadings on the label; and
(4) the format for a label containing information
about a multiple health benefit plan.
Sec. 541.509. REMEDIES AND ENFORCEMENT. (a) A violation of
this subchapter is an unfair and deceptive act or practice in the
business of insurance under this chapter.
(b) The department may examine records and investigate to
determine whether a violation of this subchapter has occurred.
(c) All procedures, settlements, sanctions, and penalties
provided under Subchapters C, E, G, and H are available under this
subchapter.
SECTION 3. 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.