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BILL ANALYSIS |
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By: Carona |
BACKGROUND AND PURPOSE
Prior to the passage of S.B. 51, 79th Legislature, Regular Session, 2005, when a health insurance
company discovered that an individual was no lo nger enrolled in a group health insurance plan,
the insurance company would retroactively terminate that individual's coverage and recoup
payments made to health care providers for the provision of health care services delivered during
that time period. S.B. 51 made an employer liable for health insurance premiums until the end of
the month during which an employee is removed from coverage and the insurer receives
notification that such individual is no longer part of the group health plan. An unintended
consequence of S.B. 51 has been that employers are now liable for premiums when the insurer
did not receive notification of termination, even if no claims for health care services were made
by that individual.
S.B. 1143 requires insurers and health maintenance organizations to insert a statement into
monthly bills notifying an employer of the employer's liability for premiums on all enrollees
until notification of termination is received by the insurer, as well as how to best send
notification of termination.
RULEMAKING AUTHORITY
It is the committee's opinion that rulemaking authority is expressly granted to the commissioner
of insurance in SECTIONS 1 and 2 of this bill.
ANALYSIS
S.B. 1143 amends the Insurance Code to require each health maintenance organization (HMO)
that enters into a contract with a group contract holder to notify the group contract holder
periodically that the contract holder is liable for premiums on an enrollee who is no longer part
of the group eligible for coverage under the contract until the HMO receives notification of
termination of the enrollee's eligibility for that coverage. The bill requires the HMO to include
the notice in each monthly statement sent to the contract holder if the HMO charges the contract
holder on a monthly basis for coverage premiums, and to notify the contract holder periodically
in the manner prescribed by the commissioner of insurance by rule if the HMO charges the
contract holder on other than a monthly basis. The bill requires the notice to include a
description of methods preferred by the HMO for notification by a contract holder of an
enrollee's termination from coverage eligibility.
S.B. 1143 requires each insurer that enters into a contract with a group policyholder under a
preferred provider benefit plan to notify the group contract holder in the same manner as
described above. The bill requires the notice to include a description of methods preferred by
the insurer for notification by a policyholder of an individual's termination from coverage
eligibility.
S.B. 1143 makes its provisions applicable to a contract between an insurer or HMO and a group
policy or contract holder that is entered into or renewed on or after January 1, 2010.
EFFECTIVE DATE
September 1, 2009.