Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 7 - CORPORATE AND FINANCIAL REGULATION › Subchapter S - MULTIPLE-EMPLOYER WELFARE ARRANGEMENTS REQUIREMENTS FOR OBTAINING AND MAINTAINING CERTIFICATE OF AUTHORIZATION › Section 7.1905 - Commissioner Review of Application; Issuance of Temporary Certificate of Authority

Current through Reg. 49, No. 28; July 12, 2024
(a) The
				  commissioner shall promptly review the documentation submitted by the applicant
				  and shall have the power to conduct any investigation which may be necessary
				  and to examine under oath any persons interested or connected with the
				  multiple-employer welfare arrangement. An existing multiple-employer welfare
				  arrangement which timely files notice for an initial and a final certificate of
				  authority will not be denied such certificate based on the fact that it engaged
				  in the business of insurance in this state on an unauthorized basis prior to
				  September 1, 1993. Within 60 days of the filing of the completed application,
				  the commissioner shall issue an initial certificate of authority, which shall
				  be a temporary certificate of authority for a term of one year, to the
				  multiple-employer welfare arrangement, provided that all of the conditions in
				  paragraphs (1)-(16) of this subsection have been met, as follows:
(1) the employers in the multiple-employer
				  welfare arrangement are members of an association or group of five or more
				  businesses which are the same trade or industry, including closely related
				  businesses which provide support, services, or supplies primarily to that trade
				  or industry;
(2) if the applicant
				  is an association, that the association in the multiple-employer welfare
				  arrangement is engaged in substantial activity for its members other than
				  sponsorship of an employee welfare benefit plan;
(3) if the applicant is an association, that
				  the association in the multiple-employer welfare arrangement has been in
				  existence for a period of not less than two years prior to engaging in any
				  activities relating to the provision of employer health benefits to its
				  members;
(4) the employee welfare
				  plan of the association or group in the multiple-employer welfare arrangement
				  is controlled and sponsored directly by participating employers, participating
				  employees, or both;
(5) the
				  association or group of employers in the multiple-employer welfare arrangement
				  is a not-for-profit organization;
(6) the multiple-employer welfare arrangement
				  has within its own organization adequate facilities and competent personnel, as
				  determined by the commissioner, to service the employee benefit plan or has
				  contracted with a third party administrator that holds a current certificate of
				  authority to engage in business in the State of Texas;
(7) the multiple-welfare arrangement has
				  applications from not less than five employers and will provide similar
				  benefits for not less than 200 separate participating employees, and the annual
				  gross premiums or contributions to the plan will be not less than $20,000 for a
				  plan that provides only vision benefits, $75,000 for a plan that provides only
				  dental benefits, and $200,000 for all other plans;
(8) the multiple-employer welfare arrangement
				  possesses a written commitment, binder, or policy for stop-loss insurance
				  issued by an insurer that has a certificate of authority to transact business
				  in the State of Texas, providing not less than 30 days notice to the
				  commissioner of any cancellation or non-renewal of coverage (this instrument
				  shall provide both specific and aggregate coverage with an aggregate retention
				  of no more than 125% of the amount of expected claims for the next plan year
				  and a specific retention amount annually determined by the actuarial report
				  required by Article 3.95-8(a)(2), and verified by the signature of the actuary
				  who prepared the report);
(9) both
				  the specific and aggregate coverage will 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;
(10) the contributions shall
				  be set to fund at least 100% of the aggregate retention plus all other costs of
				  the multiple-employer welfare arrangement;
(11) if the reserves required by Article
				  3.95-8(a)(2)(B) exceed the greater of 40% of the total contributions for the
				  current plan year, or 40% of the total contributions expected for the current
				  plan year, the contributions may be reduced to fund less than 100% of the
				  aggregate retention plus all other costs of the multiple-employer welfare
				  arrangement, but in no event less than the level of contributions necessary to
				  fund the minimum reserves required under Article 3.95-8(a)(2)(B);
(12) the reserves described in Article
				  3.95-8(a)(2)(B) have been established or will be established before the final
				  certificate of authority is issued;
(13) the multiple-employer welfare
				  arrangement has established a procedure for handling claims for benefits in the
				  event of dissolution of the multiple-employer welfare arrangement;
(14) the multiple-employer welfare
				  arrangement has obtained the required fidelity bond;
(15) the multiple-employer welfare
				  arrangement has submitted its plan document or any instrument describing the
				  rights and obligations of the employers, employees, and beneficiaries with
				  respect to the multiple-employer welfare arrangement; and
(16) the multiple-employer welfare
				  arrangement has submitted a summary plan description and has filed for review
				  any notifications such as an identification card, policy or contract, in
				  connection with the employee welfare benefit plan, which notifications include
				  any of the disclosures set out in subparagraphs (A)-(D) of this paragraph, as
				  follow:
(A) that individuals covered by the
				  plan are only partially insured;
(B) that in the event the plan or the
				  multiple-employer welfare 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;
(C) that, if
				  applicable, the plan does not participate in the guaranty fund; such disclosure
				  being provided in the same notice format required of insurers and health
				  maintenance organizations in §
												1.1001
				  of this title (relating to Disclosure of Guaranty Fund Nonparticipation);
				  and
(D) the toll-free number for
				  the complaints section of the Texas Department of Insurance consumer services
				  division.