1. (a) Every small employer carrier, except HMOs, shall, as a condition of transacting business in this state with small employers, offer to small employers two standard benefit plans, the basic coverage benefit plan and the catastrophic care benefit plan, as provided under the Insurance Code, Articles 26.42, 26.43, 26.44, 26.44A, 26.44B, and 26.49.
2. (b) In addition to the standard benefit plans required to be offered to small employers as provided in the Insurance Code, Chapter 26, Subchapters A-G, small employer carriers may, subject to the provisions of the Insurance Code, Article 26.42(c), and this subchapter, offer other health benefit plans to small employers, as provided in the Insurance Code, Article 26.42(c). Such other health benefit plans shall comply with all provisions of the Insurance Code, Chapter 26, and this subchapter, except that provisions defining the specific benefits required under the required standard benefit plans are not applicable. The Insurance Code, Article 26.06(d), does not apply to a health benefit plan offered to a small employer as provided under the Insurance Code, Article 26.42(c).
3. (c) Instead of the standard benefit plans described by this chapter, a health maintenance organization may offer a state-approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 United States Code §§300e, et seq.) and rules adopted under that Act or by the Commissioner. An HMO may also offer the prototype small employer group health benefit plan.
4. (d) All small employer health benefit plans provided by a small employer carrier other than an HMO shall provide an option for conversion/continuation which complies with all provisions of Chapter 3, Subchapter F of this title (relating to Group Health Insurance Mandatory Conversion Privilege). An HMO shall provide coverage for continuation or if offered by the HMO conversion of any small employer health benefit plan which complies with the requirements of Insurance Code, Article 20A.09(k). A state approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 USC §300e et seq.) shall provide coverage for continuation which complies with the requirements of Insurance Code, Article 20A.09(k) and must offer conversion in compliance with 42 CFR §417.124(e) and applicable federal law.
5. (e) Each health benefit plan, certificate, policy, rider, or application used by health carriers to provide coverage to small employers and their employees shall comply with the Insurance Code, Article 26.43; be written in plain language; and meet the requirements of Chapter 3, Subchapter G of this title (relating to Plain Language Requirements). Requirements for use of plain language are not applicable to a health benefit plan group master policy or a policy application or enrollment form for a health benefit plan group master policy.
6. (f) Every small employer carrier providing health benefit plans to small employers is required to offer dependent coverage to each employee. Dependent coverage may be paid for by the employer, the employee, or both.

7. (g) This subsection contains requirements for optional prototype policy forms for small employer carriers other than HMOs. The policy forms described in this subsection complete a prototype policy and/or certificate when combined with the required prescribed benefit prototype policy forms outlined in this section. The prototype policy forms have been developed to facilitate implementation of the Insurance Code, Chapter 26, Subchapters A-G, and to streamline the policy approval process. Small employer carriers are encouraged to use all of the prototype policy forms as described in this section to expedite the approval process. The forms referenced in this section can be found in §26.27(b) of this title (relating to Forms). Each form has a unique form number appearing in the lower left-hand corner and small employer carriers may use one or any number of the prototype forms. Alternate language, except for variables indicated by brackets, must be filed for review and approval under a different form number using 1212 as part of the form number. Additional filing requirements are outlined in §26.19 of this title (relating to Filing Requirements).

   1. (1) This paragraph describes group policy face pages. These prototype policies provide for the entire contract to include any applications, the certificate of insurance, and any attached riders. If the small employer carrier elects to use policies other than the prototype forms, this shell format shall be used with any small employer health benefit plan. Each policy face page, whether or not the prototype form is used, shall include the small employer carrier name and address; policyholder name (and industry, if used on a multiple employer trustee basis); policy number; policy effective date; provision for the entire contract to include applications, the certificate of insurance, and any attached riders; workers' compensation disclaimer notice; description of the policy in bold type as a small employer benefit plan; and the form number in the lower left hand corner. The policy face page for the prototype form shall contain the description of the plan in bold type as the Group Small Employer Basic Coverage Benefit Plan or the Group Small Employer Catastrophic Care Benefit Plan. The small employer carrier may include or omit the variable provision addressing the free look period. The group policy face pages for the prototype policies include the following:

      1. (A) Group Small Employer Basic Coverage Benefit Plan (Form Number 1212 SE.BASC) for a single employer policy provided at Figure 1 of §26.27(b)(1) of this title (relating to Forms);
      2. (B) Group Small Employer Catastrophic Care Benefit Plan (Form Number 1212 SE.CAT) for a single employer policy provided at Figure 2 of §26.27(b)(2) of this title (relating to Forms);
      3. (C) Group Small Employer Basic Coverage Benefit Plan (Form Number 1212 ASSN.BASC) for an association policy provided at Figure 3 of §26.27(b)(3) of this title (relating to Forms);
      4. (D) Group Small Employer Catastrophic Care Benefit Plan (Form Number 1212 ASSN.CAT) for an association policy provided at Figure 4 of §26.27(b)(4) of this title (relating to Forms);
      5. (E) Group Small Employer Basic Coverage Benefit Plan (Form Number 1212 MET.BASC) for a multiple employer trustee policy provided at Figure 5 of §26.27(b)(5) of this title (relating to Forms);
      6. (F) Group Small Employer Catastrophic Care Benefit Plan (Form Number 1212 MET.CAT) for a multiple employer trustee policy provided at Figure 6 of §26.27(b)(6) of this title (relating to Forms).
   2. (2) The Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures Form (Form Number TOLLFREE) for group policies is described in this paragraph. This prototype form contains the language prescribed in §1.601 of this title (relating to Notice of Toll-Free Telephone Numbers and Information and Complaint Procedures) and shall be attached as the second or third page of the policy and the certificate of insurance. The variable provisions are optional only to the extent outlined in §1.601 of this title.

   3. (3) The group certificate of insurance face page is described in this paragraph. Each certificate of insurance face page, whether or not the prototype form is used, shall include the small employer carrier name and address; the certification provision; a provision that the certificate face page, all attached provisions, and any riders shall constitute the entire certificate of insurance; the workers' compensation disclaimer notice; a description of the plan in bold type as a small employer benefit plan; and the form number in the lower left hand corner. The certificate face page for the prototype form shall contain the description of the plan in bold type as the Group Small Employer Basic Coverage Benefit Plan or the Group Small Employer Catastrophic Care Benefit Plan. The identification information (Employee name, ID Number, Certificate Effective Date, Policyholder Name, Policy Number, Policy Effective Date, Dependent Coverage) is variable to the extent that small employer carriers may include all of the information in the certificate of insurance by any appropriate method, such as an insert or as a sticker on the face page or schedule of benefits or printed on the face page as provided in the prototype form. The dependent coverage information is variable for small employer carriers to insert an employee's election of dependent coverage. The variable replacement provision is an optional provision which carriers may include as provided in the prototype form or carriers may alter the language in any appropriate manner or may elect to omit the provision in its entirety. The group certificate of insurance face pages include the following:

      1. (A) Certificate of Insurance Face Page for the Group Small Employer Basic Coverage Benefit Plan (Form Number 1212 CERT.BASC) provided at Figure 8 of §26.27(b)(8) of this title (relating to Forms);
      2. (B) Certificate of Insurance Face Page for the Group Small Employer Catastrophic Care Benefit Plan (Form Number 1212 CERT.CAT) provided at Figure 9 of §26.27(b)(9) of this title (relating to Forms).
   4. (4) The table of contents for group policies (Form Number 1212 TCG) is described in this paragraph and provided at Figure 10 of §26.27(b)(10) of this title (relating to Forms). The variable items shall be included or omitted as appropriate for the policy or certificate and page numbers shall be numbered accordingly. If the prototype table of contents is not used, the format and order shall be the same as provided in the prototype.

   5. (5) The General Provisions Form for Group Policies (Form Number 1212 GGP) and provided at Figure 11 of §26.27(b)(11) of this title (relating to Forms) may be used with all group small employer health benefit plans. If the prototype general provisions form is not used, each general provision with same or similar language shall be included in each policy/certificate. Variable language for the general provisions form are described as follows:

      1. (A) The definition of an Eligible Employee under the Eligibility for Coverage (Employee Coverage) provision shall add that an "Eligible Employee also includes an Employee of an Employer member of an association" when the policy is to be issued to an association.
      2. (B) The definition of Eligible Dependents under the Eligibility for Coverage (Dependent Coverage) provision allows a variable to include language describing other children who are included under an employer's benefit plan.

      3. (C) The Initial Enrollment for New Eligible Employees provision under Effective Dates allows a variable for receipt of the application or enrollment form within 31 days of the:

         1. (i) date of employment; or
         2. (ii) completion of any waiting period established by the small employer. The length of time for the waiting period is also variable to allow flexibility for small employers to elect a period of time not to exceed 90 days.
      4. (D) The Newborn Children provision under Effective Dates allows a variable to be included if the small employer carrier requires a premium to be charged for the 31-day period of coverage if the insured person elects not to continue coverage for the newborn child. If no premium will be charged, this provision shall be omitted.
      5. (E) The Newly Adopted Children provision under Effective Dates allows a variable to be included if the small employer carrier requires a premium to be charged for the 31-day period of coverage if the insured person elects not to continue coverage for the newly adopted child. If no premium will be charged, this provision shall be omitted.
      6. (F) The Late Enrollment provision under Effective Dates is variable based on whether the small employer carrier has elected to exclude eligible employees or dependents who request late enrollment under a health benefit plan until the next open enrollment period or enroll such applicants immediately. The provision shall be omitted in its entirety if the small employer carrier elects not to impose a limitation for preexisting conditions. The time period is variable to allow a shorter period of time, if elected by the small employer carrier.
      7. (G) The Preexisting Conditions provision is variable only to the extent that it shall be omitted in its entirety if the small employer carrier elects not to impose a limitation for preexisting conditions. If a preexisting condition limitation applies, this provision shall be included in its entirety. The time period is variable to allow a shorter period of time if elected by the small employer carrier.
      8. (H) The Eligible Employees provision under Termination of Insurance allows variables for continued coverage for an employee who is on an approved leave of absence for a specified period of time to be inserted if the provision remains. This provision shall be included or omitted as appropriate.
      9. (I) The Eligible Employees and Dependents provisions under Termination of Insurance allow a variable to be included if the policy contains a grace period.
      10. (J) The Eligible Employees and Dependents provisions under Termination of Insurance allow variables for coverage to end on either "the date the Employer terminates participation in the Trust" which may be included when the policy is to be issued to a multiple employer trust; or "the date the Employer member terminates membership in the Association" which may be included when the policy is to be issued to an association.
      11. (K) The Policyholder and Company provision under Termination of Insurance provides alternate provisions for termination by the Employer as Policyholder; termination by the Association as Policyholder; termination of participation by an Employer (member) under an Association policy, or termination of participation by an Employer under a Multiple Employer Trust policy. Provisions shall be included appropriately for a single employer policy, an association policy or a multiple employer trust policy.
      12. (L) The Policyholder and Company provision under Termination of Insurance allows a variable to be included for the exception to nonpayment of premiums if a grace period is provided. If a grace period is not provided, the variable "Coverage will end at the end of the last period for which premium payment has been made to Us" shall be included. The policy shall contain a provision allowing for termination by the small employer carrier due to fraud or intentional misrepresentation of a material fact by the "Policyholder or" Employer. The phrase "Policyholder or" shall be used when policies are issued to an association or to a multiple employer trust. A variable is allowed to be included if the small employer carrier will terminate the employer's plan for failure to maintain the required minimum participation requirements.

   6. (6) The Group Provisions Form (Form Number 1212 GRP) provided at Figure 12 of §26.27(b)(12) of this title (relating to Forms) may be used with all group small employer health benefit plans. If the prototype Group Provisions form is not used, each provision with the same or similar language shall be included in each policy/certificate. Variable provisions for the Group Provisions form include the following.

      1. (A) A variable is provided in the Payment of Premiums provision for the mode of premium to be inserted.
      2. (B) The Time Limit on Certain Defenses provision allows a variable for Preexisting Conditions only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for preexisting conditions. If a preexisting condition limitation applies, this provision shall be included in its entirety. The time period is variable to allow a shorter period of time if elected by the small employer carrier.
      3. (C) The alternate Time Limit on Certain Defenses provision is allowed to be used in policies that are underwritten as permitted by and in accordance with the Insurance Code, Article 26.21(d). The Preexisting Conditions under the alternate Time Limit on Certain Defenses provision is variable only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for preexisting conditions. If a preexisting condition limitation applies, this provision shall be included in its entirety. The time period is variable to allow a shorter period of time if elected by the small employer carrier.
      4. (D) The Payment to Assignee provision under Payment of Claims is variable only to the extent that Chapter 20 companies may substitute this provision for the alternate Assignment provision.
      5. (E) The Grace Period provision is a variable to be included when a grace period is provided for the specified number of days as determined by the small employer carrier.
      6. (F) Dividends, Right to Recovery/Clerical Error, and Subrogation provisions may be included, omitted, or modified by the small employer carrier. Right to Recovery/Clerical Error provisions shall be considered one provision for purposes of variability and both provisions shall be either included or omitted.
   7. (7) Alternate Cost Containment Provisions for Large Case Management and Second Opinion Requirements (Form Number 1212 ACC) provided at Figure 13 of §26.27(b)(13) of this title (relating to Forms) are provided as optional provisions for all plans. Small employer carriers may use these provisions or modifications of these provisions. The reduction in Percentage Payable is variable but cannot be more than 50%. Other alternate cost containment provisions, including precertification, pre-authorization, case management and utilization review may be used. Penalties for noncompliance with cost containment provisions shall not reduce benefits more than 50% in the aggregate.

8. (h) Prescribed benefits are discussed in this subsection. No policy, subscriber contract or certificate shall be issued or delivered for issue in this state to a small employer by a small employer carrier as a Basic Coverage Benefit Plan or a Catastrophic Care Benefit Plan unless such policy, subscriber contract, or certificate contains the prescribed benefit provisions outlined in paragraphs (1)-(4) of this subsection.

   1. (1) The Basic Coverage Benefit Plan is discussed in this paragraph. The forms which follow shall be included in this plan as prescribed. Variable language in the prescribed forms is indicated by brackets. These forms can be found in §26.27(b) of this title (relating to Forms. A small employer carrier shall provide the benefits as described in the following subparagraphs (A) and/or (B):

      1. (A) The Schedule of Benefits (Non-PPO Plan) for the Basic Coverage Benefit Plan (Form Number 1212 SCH.BASC) provided at Figure 14 of §26.27(b)(14) of this title (relating to Forms) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan does not include preferred provider (PPO) benefits.

         1. (i) A small employer carrier shall offer and make available to the small employer the Basic Coverage Benefit Plan with a Policy Year Deductible of $500 per Insured Person, a Policy Year Coinsurance Maximum of $3,000 per Insured Person and a Percentage Payable of 80%. The amounts are variable to allow the small employer carrier to offer other deductible, coinsurance maximum and percentage payable amounts but the Policy Year Deductible shall not exceed $1,000 per Insured Person, the Policy Year Coinsurance Maximum shall not exceed $5,000 per Insured Person and the Percentage Payable shall not be less than 70%.
         2. (ii) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate.

      2. (B) The Schedule of Benefits (PPO Plan) for the Basic Coverage Benefit Plan (Form Number 1212 SCHPPO.BASC) provided at Figure 15 of §26.27(b)(15) of this title (relating to Forms) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan includes preferred provider benefits.

         1. (i) The terms "Policy Year Deductible," "Non-Preferred Provider Policy Year Deductible" and "Preferred Provider Policy Year Deductible" are variable to allow the same policy year deductible to apply to both preferred and non-preferred provider options or to allow a "Non-Preferred Provider Policy Year Deductible" and a "Preferred Provider Policy Year Deductible" if different deductibles will apply. A "Per Office Visit Copayment" may be used in lieu of a Preferred Provider Policy Year Deductible. The deductible may be waived for either option.
         2. (ii) If the small employer carrier elects to include preferred provider benefits, the carrier shall offer and make available to the small employer a Basic Coverage Benefit Plan with a Policy Year Deductible or Non-Preferred Provider Policy Year Deductible of $500 per Insured Person with a Preferred Provider Policy Year Deductible of $250 per Insured Person if a preferred provider deductible is chosen, a Policy Year Coinsurance Maximum of $3,000 per Insured Person and Percentages Payable of 90% for preferred providers and 70% for non-preferred providers. A Per Office Visit Copayment of $10 or $15 can be used in lieu of the Preferred Provider Policy Year Deductible.

         3. (iii) Variability is permitted to allow the small employer carrier to offer other deductible, coinsurance maximum, and percentage payable amounts within the limits set out in the following subclauses.

            1. (I) A variable amount not to exceed $1,000 for the Policy Year Deductible or the Non-Preferred Provider Policy Year Deductible may be elected by the small employer carrier or offered as an option to the small employer. The Preferred Provider Policy Year Deductible amount shall not be less than one half of the Non-Preferred Provider Policy Year Deductible.
            2. (II) In lieu of the Preferred Provider Policy Year Deductible, a Per Office Visit Copayment of $10 or $15 may be included for the preferred provider option for office visits. A carrier may use an office copayment in combination with a preferred provider policy year deductible which is applicable to other services.
            3. (III) A variable amount not to exceed $5,000 for the Policy Year Coinsurance Maximum may be elected by the small employer carrier or offered as an option to the small employer. The preferred provider and non-preferred provider amounts shall be combined for the Policy Year Coinsurance Maximum. Office visit copayments are not required to be included in the calculation of coinsurance maximums.
            4. (IV) A variable Percentage Payable of not less than 60% when non-preferred providers are utilized may be elected by the small employer carrier or offered as an option to the small employer. A variable Percentage Payable when preferred providers are utilized may not be more than 30% greater than the Percentage Payable for non-preferred providers as required by §3.3704(1) of this title (relating to Preferred Provider Plans).
         4. (iv) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate.

      3. (C) The Policy Definitions for the Basic Coverage Benefit Plan (Form Number 1212 DEF.BASC) provided at Figure 16 of §26.27(b)(16) of this title (relating to Forms) shall be in the language and format prescribed.

         1. (i) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by Chapter 20 companies only and neither provision shall be used by other than Chapter 20 companies.
         2. (ii) The definition Dependent allows a variable to include language describing other children who are included under an employer's benefit plan.
         3. (iii) The term and definition of "Employer" provides a variable to include an Employer member of an association when a policy is to be issued to an association.
         4. (iv) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate carriers with unique operations and special statutory rights, such as Chapter 20 companies.
         5. (v) The alternate language in the definition of "Initial Enrollment Period" is included for use in a policy that contains a waiting period.
         6. (vi) The alternate definitions for the term "Policy Year" are included to allow the small employer carrier to select the definition that is consistent with the carrier's and employer's practices. The definition as selected shall be included in the policy/certificate.
         7. (vii) The term and definition of "Policyholder" shall be included in the Policy Definitions as appropriate to define the Policyholder as the Employer, the Association, the Trustee of a Multiple Employer Trust or the Cooperative.
         8. (viii) The term and definition of "Preexisting Condition" is variable only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for preexisting conditions. If a preexisting condition limitation applies, the provision shall be included in its entirety. The time period is variable to allow a shorter period of time to be elected by the small employer carrier or offered as an option to the small employer. Language addressing the waiting period is variable only to the extent that it may be omitted in its entirety if the small employer elects not to impose a waiting period.
         9. (ix) The term and definition of "Waiting Period" is variable only to the extent that it may be omitted in its entirety if the small employer elects not to impose a waiting period.
      4. (D) The Benefits Provided for the Basic Coverage Benefit Plan (Form Number 1212 BEN.BASC) provided at Figure 17 of §26.27(b)(17) of this title (relating to Forms) shall be in the language and format prescribed. The Policy Year Coinsurance Maximum amount elected shall be inserted in this provision. Services provided by first assistant at surgery may be included as a covered service if elected by the small employer carrier or offered as an option to the small employer.
      5. (E) The Exclusions and Limitations for the Basic Coverage Benefit Plan (Form Number 1212 EXC.BASC) provided at Figure 18 of §26.27(b)(18) of this title (relating to Forms) shall be in the language and format prescribed. Exclusions of elective abortions, if any, are to be determined by an agreement between the employer and the small employer carrier and shall be included in the exclusions and limitations of the policy and the certificate. Other variable exclusions may be included by Chapter 20 companies for their Non-PPO products only.

   2. (2) The Catastrophic Care Benefit Plan is discussed in this paragraph. The forms which follow shall be included in this plan as prescribed. These forms can be found in §26.27(b) of this title (relating to Forms). Variable language in the prescribed forms is indicated by brackets. A small employer carrier shall provide the benefits as described in the following subparagraphs (A) and/or (B).

      1. (A) The Schedule of Benefits (Non-PPO Plan) for the Catastrophic Care Benefit Plan (Form Number 1212 SCH.CAT) provided at Figure 19 of §26.27(b)(19) of this title (relating to Forms) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan does not include preferred provider (PPO) benefits.

         1. (i) A small employer carrier shall offer and make available to the small employer Catastrophic Care Benefit Plans with each of the coverage options described in subclauses (I)-(IV) as follows.

            1. (I) A Policy Year Deductible in the amount of $2,500 per Insured Person with a Policy Year Coinsurance Maximum of $5,000 per Insured Person and a Percentage Payable of 80%.
            2. (II) A Policy Year Deductible in the amount of $2,500 per Insured Person with a Policy Year Coinsurance Maximum of $5,000 per Insured Person and a Percentage Payable of 90%.
            3. (III) A Policy Year Deductible in the amount of $5,000 per Insured Person with a Policy Year Coinsurance Maximum of $10,000 and a Percentage Payable of 80%.
            4. (IV) A Policy Year Deductible in the amount of $5,000 per Insured Person with a Policy Year Coinsurance Maximum of $10,000 and a Percentage Payable of 90%.
         2. (ii) Variability is permitted to allow the small employer carrier to offer additional deductible, coinsurance maximum and percentage payable amounts; but the Policy Year Deductible shall not exceed $5,000 per Insured Person, the Policy Year Coinsurance Maximum shall not exceed $10,000 per Insured Person and the Percentage Payable shall not be less than 70%.
         3. (iii) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate.

      2. (B) The Schedule of Benefits (PPO Plan) for the Catastrophic Care Benefit Plan (Form Number 1212 SCHPPO.CAT) provided at Figure 20 of §26.27(b)(20) of this title (relating to Forms) shall be in the language and format prescribed. This Schedule of Benefits shall be used when the plan includes preferred provider benefits.

         1. (i) The terms "Policy Year Deductible," "Non-Preferred Provider Policy Year Deductible" and "Preferred Provider Policy Year Deductible" are variable to allow the same policy year deductible to apply to both preferred and non-preferred provider options or to allow a "Non-Preferred Provider Policy Year Deductible" and a "Preferred Provider Policy Year Deductible" if different deductibles will apply.

         2. (ii) If the small employer carrier elects to include preferred provider benefits, the carrier shall offer and make available to the small employer the Catastrophic Care Benefit Plan with all of the coverage options described in subclauses (I) and (II) as follows.

            1. (I) A Policy Year Deductible or a Non-Preferred Provider Policy Year Deductible of $2,500 per Insured Person with a Preferred Provider Policy Year Deductible of $1,250 per Insured Person if a preferred provider deductible is chosen and a Policy Year Coinsurance Maximum of $5,000 per Insured Person. Percentages Payable shall be offered at each of the following levels: 80% for preferred providers with 60% for non-preferred providers, and 90% for preferred providers and 70% for non-preferred providers.
            2. (II) A Policy Year Deductible or a Non-Preferred Provider Policy Year Deductible of $5,000 per Insured Person, a Preferred Provider Policy Year Deductible of $2,500 per Insured Person if a preferred provider deductible is chosen, and a Policy Year Coinsurance Maximum of $10,000 per Insured Person. Percentages Payable shall be offered at each of the following levels: 80% for preferred providers with 60% for non-preferred providers, and 90% for preferred providers and 70% for non-preferred providers.

         3. (iii) Variability is permitted to allow the small employer carrier to offer other deductible, coinsurance maximum and percentage payable amounts within the limits set out in the following subclauses.

            1. (I) A variable amount not to exceed $10,000 for the Policy Year Deductible or the Non-Preferred Provider Policy Year Deductible may be elected by the small employer carrier or offered as an option to the small employer. The Preferred Provider Policy Year Deductible shall not be less than one half of the Non-Preferred Provider Policy Year Deductible.
            2. (II) A variable amount not to exceed $15,000 for the Policy Year Coinsurance Maximum may be elected by the small employer carrier or offered as an option to the small employer. The preferred provider and non-preferred provider amounts shall be combined for the Policy Year Coinsurance Maximum.
            3. (III) A variable Percentage Payable of not less than 60% when non-preferred providers are utilized may be elected by the small employer carrier or offered as an option to the small employer. A variable Percentage Payable when preferred providers are utilized may not be more than 30% greater than the Percentage Payable for non-preferred providers as required by §3.3704(1) of this title (relating to Preferred Provider Plans).
         4. (iv) The Schedule of Benefits shall reflect any benefits added by riders and any penalties for failing to comply with any precertification or cost containment provisions. Any such penalties shall not reduce benefits more than 50% in the aggregate.
      3. (C) A small employer carrier may offer and make available to an employer eligible for medical savings account coverage a Catastrophic Care Medical Savings Account Plan. If a small employer carrier elects to offer this plan, the small employer carrier shall develop and submit to the department for approval alternate Schedule of Benefits for either or both a Catastrophic Care Medical Savings Account (Non-PPO) Plan or a Catastrophic Care Medical Savings Account (PPO) Plan. The Schedule of Benefits must comply with applicable laws pertaining to Medical Savings Accounts and include appropriate amendatory language.

      4. (D) The Policy Definitions for the Catastrophic Care Benefit Plan (Form Number 1212 DEF.CAT) provided at Figure 21 of §26.27(b)(21) of this title (relating to Forms) shall be in the language and format prescribed.

         1. (i) The terms and definitions for "Contracting Facility" and "Noncontracting Facility" are variables to be included by Chapter 20 companies only and neither provision shall be used by other than Chapter 20 companies.
         2. (ii) The term and definition of "Employer" provides a variable to include an Employer member of an association when a policy is to be issued to an association.
         3. (iii) The definition Dependent allows a variable to include language describing other children who are included under an employer's benefit plan.
         4. (iv) The term and definition of "Hospital" is variable only to allow for additional criteria for purposes of clarification or to accommodate carriers with unique operations and special statutory rights, such as Chapter 20 companies.
         5. (v) The alternate language in the definition of "Initial Enrollment Period" is included for use in a policy that contains a waiting period.
         6. (vi) The alternate definitions for the term "Policy Year" are included to allow the small employer carrier to select the definition that is consistent with the carrier's and employer's practices. The definition as selected shall be included in the policy/certificate.
         7. (vii) The term and definition of "Preexisting Condition" is variable only to the extent that it may be omitted in its entirety if the small employer carrier elects not to impose a limitation for preexisting conditions. If a preexisting condition limitation applies, the provision shall be included in its entirety. The time period is variable to allow a shorter period of time to be elected by the small employer carrier or offered as an option to the small employer. Language addressing the waiting period is variable only to the extent that it may be omitted in its entirety if the small employer elects not to impose a waiting period.
         8. (viii) The term and definition of "Waiting Period" is variable only to the extent that it shall be omitted in its entirety if the small employer elects not to impose a waiting period.
      5. (E) The Benefits Provided for the Catastrophic Care Benefit Plan (Form Number 1212 BEN.CAT) provided at Figure 22 of §26.27(b)(22) of this title (relating to Forms) shall be in the language and format prescribed. The Policy Year Coinsurance Maximum amount shall be inserted in this provision. Services provided by first assistant at surgery may be included as a covered service if elected by the small employer carrier or offered as an option to the small employer.
      6. (F) The Exclusions and Limitations for the Catastrophic Care Benefit Plan (Form Number 1212 EXC.CAT) provided at Figure 23 of §26.27(b)(23) of this title (relating to Forms) shall be in the language and format prescribed. Exclusions of elective abortions, if any, are to be determined by an agreement between the employer and the small employer carrier and shall be included in the exclusions and limitations of the policy and the certificate. Other variable exclusions may be included by Chapter 20 companies for their Non-PPO products only.

   3. (3) Riders are discussed in this paragraph. The small employer carrier shall offer and make available to the small employer the riders described in subparagraphs (A)-(D). Any benefits added by riders shall be reflected on the Schedule of Benefits.

      1. (A) The Alcohol and Drug Abuse Benefit Rider (Form Number 1212 ADB) provided at Figure 24 of §26.27(b)(24) of this title (relating to Forms) is required to be offered with the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan. Variable amounts of five or ten days of care per Insured Person per Policy Year are allowed to be elected by the small employer carrier or offered as an option to the small employer. The coinsurance and deductible amounts are variable.
      2. (B) The Mental Health Benefit Rider (Form Number 1212 MHB) provided at Figure 25 of §26.27(b)(25) of this title (relating to Forms) is required to be offered with the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan. The 30 days of inpatient benefits and the 20 outpatient treatments per Insured Person per Policy Year are variable to allow longer periods of time to be elected by the small employer carrier or offered as an option to the small employer. The coinsurance and deductible amounts are variable.
      3. (C) The Prescription Drug Benefit Rider (Form Number 1212 RX) provided at Figure 26 of §26.27(b)(26) of this title (relating to Forms) is required to be offered with the Basic Coverage Benefit Plan and the Catastrophic Care Benefit Plan. Benefits shall be provided at a Percentage Payable of at least 50% but may be provided at a greater Percentage Payable to be elected by the small employer carrier or offered as an option to the small employer. In the alternative the small employer carrier may elect to provide the prescription drug benefit through a prescription drug card program with a copayment not to exceed $8.00 per prescription or refill for a generic drug, or name brand drug if less than the generic drug, and $12 per prescription or refill for a name brand drug. Exclusions of a prescription drug card program shall not be more restrictive than the exclusions contained in Form Number 1212 RX.
      4. (D) The Preventive Care Benefit Rider (Form Number 1212 PCR) provided at Figure 27 of §26.27(b)(27) of this title (relating to Forms) is required to be offered with the Basic Coverage Benefit Plan. The coinsurance and deductible amounts are variable.
      5. (E) Additional riders may be offered as elected by the small employer carrier. Any such riders must be filed in accordance with Chapter 3, Subchapter A of this title (relating to Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities).

   4. (4) Forms common to more than one health benefit plan are described in subparagraphs (A)-(C) and shall be included with the benefit provisions of each plan as specified.

      1. (A) Continuation/Conversion Provisions are described in this subparagraph.

         1. (i) Small employer carriers shall include (Form Number 369 CONV) provided at Figure 28 of §26.27(b)(28) of this title (relating to Forms) shall be included with all group plans issued prior to June 1, 1996.
         2. (ii) Small employer carriers shall include Form 369 CCPRO adopted under §3.520 of this title (relating to Appendix) with all group plans issued after June 1, 1996.
         3. (iii) The forms shall be in the language and format prescribed in accordance with Chapter 3, Subchapter F of this title (relating to Group Health Insurance Mandatory Conversion Privilege). The small employer carrier shall include one of the variable provisions for continuation upon policy termination.
      2. (B) The Coordination of Benefits (Form Number 1212 COB) provided at Figure 29 of §26.27(b)(29) of this title (relating to Forms) shall be included with all plans. This form shall be in the language and format prescribed. The variable insert language "This provision will only apply for the duration of your employment with the Employer" is required to be included in the individual policies.

      3. (C) The Preferred Provider Provisions (PPO) (Form Number 1212 PPO) provided at Figure 30 of §26.27(b)(30) of this title (relating to Forms) shall be included with all plans when preferred provider options are included. This form shall be in the language and format prescribed. Additional provisions may be added as necessary to disclose preferred provider information.

         1. (i) Variable provisions are allowed for the definition of service area to be in terms of counties, zip codes, in terms of a 50 mile radius from the employee's principal place of employment unless there are no providers located within the 50 mile radius, or the service area may be described in a specific document to be referenced in the policy/certificate provision. Service areas by zip codes shall be defined in a non-discriminatory manner and in compliance with the Insurance Code, Articles 21.21, §4, and 21.21-6. Service area definitions and descriptions shall be filed with the form filings. The small employer carrier shall obtain approval for any definition of the service area by counties or zip codes where the grouping of counties or zip codes exceed a 50 mile radius from the principal place of employment or for a different definition of a service area.
         2. (ii) Small employer carriers shall include language regarding complaint and appeal procedures in accordance with applicable law.
         3. (iii) Except as provided in §26.21 of this title (relating to Cost Containment) preferred provider arrangements shall comply with Chapter 3, Subchapter X of this title (relating to Preferred Provider Plans) and Insurance Code, Article 3.70-3C.

   5. (5) Applications are discussed in this paragraph. The Texas Small Employer Group Health Benefit Plan Master Application (Form Number 1212 APP) provided at Figure 31 of §26.27(b)(31) of this title (relating to Forms) may be used by small employer carriers. Small employer carriers may use any appropriate application, enrollment or participation agreement forms in lieu of this form. Variability is described in the following subparagraphs:

      1. (A) Language relating to a waiting period is variable only to the extent that it may be omitted in its entirety if the small employer elects not to impose a waiting period.
      2. (B) Language relating to additional deductibles, coinsurance and percentage payable is variable only to the extent that the amounts offered comply with the provisions of this subsection.
   6. (6) The House Bill 1212 Compliance Rider for Small Employers (Form Number 1212 SE END) provided at Figure 32 of §26.27(b)(32) of this title (relating to Forms) may be used as a guide for carriers to bring existing policies into compliance with the requirements of these regulations. Because of the differences in small employer health benefit plans, the compliance rider provisions may not be all encompassing and carriers should amend the rider as needed to achieve compliance with these rules and with the provisions of Insurance Code, Chapter 26, Subchapters A-G. Any variability that was previously discussed in these rules regarding the prototype policies shall be addressed accordingly in this rider.
   7. (7) Individual small employer benefit plans are discussed in this paragraph. Although individual prototype policies were not developed, carriers must develop their own individual small employer policies using the rules for the group small employer prototype forms, amended as necessary to comply with the statutes and regulations pertaining to individual accident and sickness insurance. Prescribed components include the Benefits, Definitions, and Exclusions and Limitations provisions as set out in paragraphs (1)-(4) of this subsection relating to prescribed benefit provisions. All forms must be filed with the department in accordance with Chapter 3, Subchapter A of this title (relating to Requirements for Filing of Policy Forms, Riders, Amendments, and Endorsements for Life, Accident and Health Insurance and Annuities).

9. (i) HMO Coverage. Every HMO small employer carrier shall, as a condition of transacting business in this state with small employers, offer to small employers a standard benefit plan as provided under the Insurance Code, Articles 26.42, 26.43, 26.44, 26.44A, 26.44B, 26.48, and 26.49(g). The HMO forms are as follows:

   1. (1) Prototype contract/certificate of coverage and benefit plans have been developed to facilitate implementation of the Insurance Code, Chapter 26, and to streamline the contract approval process. The required benefit language is provided in the prototype Small Employer Group Health Benefit Plan (Form Numbers 1212 HMO-GRP CONT, Contract and Certificate of Coverage; 1212 HMO-APP, Group Application; 1212 HMO-SCHB, Schedule of Benefits; 1212 HMO-RX, Prescription Drugs Benefit Rider; 1212 HMO-DAA, Drug and Alcohol Abuse Benefit Rider; 1212 HMO-INF, Infertility Benefit Rider; 1212 HMO-MHMR, Mental Health Benefit Rider). These forms can be found at Figures 33-39 of §26.27(b)(33)-(39) of this title (relating to Forms. Variable provisions in these forms are denoted in brackets. HMOs may use various options in accordance with the bracketed provisions. Exclusions of elective abortions, and health services that violate religious convictions, if any, are to be determined by an agreement between the employer and the small employer carrier and must be in the contract/certificate of coverage in the Exclusions contract provision.
   2. (2) The prototype contracts/certificates of coverage provide for the entire contract to include an application, schedule of benefits, and any attached riders.

   3. (3) If the HMO elects to be a small employer carrier and offers a health benefit plan other than the prototype benefit plan, that plan must be a state approved health benefit plan that complies with the requirements of Title XIII, Public Health Service Act (42 United States Code §§300, et seq.) and the rules adopted under the Act or by the Commissioner. An HMO small employer carrier that is offering a state approved health plan shall submit health benefit plan forms that contain the following:

      1. (A) CONTRACT FACE PAGE. This page shall contain the name, address and telephone numbers (800 number, if applicable) of the health maintenance organization, workers compensation disclaimer notice, and the form number in the lower left hand corner.
      2. (B) TOLL-FREE NUMBER PAGE. This form must contain the language prescribed in §1.601 of this title (relating to Notice of Toll-free Telephone Numbers and Information and Complaint Procedures) and shall be attached as the first, second or third page of the contact.

      3. (C) CONTRACT PROVISIONS. At a minimum, the contract must contain the following provisions:

         1. (i) Face Page;
         2. (ii) Benefits;
         3. (iii) Cancellation;
         4. (iv) Claim filing procedure;
         5. (v) Complaint procedure;
         6. (vi) Conformity with state law;
         7. (vii) Continuation of coverage for certain dependents;
         8. (viii) Conversion privilege;
         9. (ix) Coordination of Benefits;
         10. (x) Definitions;
         11. (xi) Effective date;
         12. (xii) Eligibility;
         13. (xiii) Emergency services;
         14. (xiv) Entire contract provisions;
         15. (xv) Exclusions and limitations;
         16. (xvi) Grace period;
         17. (xvii) Incontestability;
         18. (xviii) Schedule of charges;
         19. (xix) Service area;
         20. (xx) Subrogation;
         21. (xxi) Termination.
      4. (D) RIDERS. Riders allowing for additional benefits may be attached to the state approved health benefit plan and to the Texas Small Employer Group Health Benefit Plan.
      5. (E) PREMIUM RATES. Premium rates must be established in accordance with Article 26.38(a) or 42 CFR §417.104.
10. (j) Every small employer carrier providing a health benefit plan to a small employer shall comply with Insurance Code Article 21.53F if the plan provides maternity coverage, including benefits for childbirth.
11. (k) A small employer carrier that offers point-of-service coverage shall comply, as applicable, with the requirements set forth in either Chapter 11, Subchapter Z of this title (relating to Point-of-Service Riders) or Chapter 21, Subchapter U of this title (relating to Arrangements between Indemnity Carriers and HMOs for Point-of-Service Coverage).

Source Note:The provisions of this §26.14 adopted to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective February 2, 1999, 24 TexReg 576; amended to be effective July 10, 2001, 26 TexReg 5016.