Section 26.301 - Applicability, Definitions, and Scope(a) The applicable terms defined in § 26.4 of this title (relating to Definitions) are incorporated into this subchapter.(b) Insurance Code Chapter 1501, concerning the Health Insurance Portability and Availability Act, and this subchapter regulate all health benefit plans sold to large employers, whether the plans are sold directly or through associations or other groupings of large employers.(c) Except as otherwise provided, this subchapter applies to any health benefit plan providing health care benefits covering 51 or more employees of a large employer, whether provided on a group or individual franchise insurance policy basis, regardless of whether the policy was issued in this state, if it provides coverage to any citizen or inhabitant of this state and if the plan meets one of the following conditions: (1) A portion of the premium or benefits is paid by a large employer.(2) The health benefit plan is treated by the employer or by a covered individual as part of a plan or program for the purposes of the United States Internal Revenue Code of 1986 (26 U.S.C. § 106, concerning Contributions by Employer to Accident and Health Plans, or §162, concerning Trade or Business Expenses).(3) The health benefit plan is a group policy issued to a large employer.(4) The health benefit plan is an employee welfare benefit plan under 29 C.F.R. § 2510.3-1 (concerning Employee Welfare Benefit Plan).(d) For an employer that was not in existence the previous calendar year, the determination is based on the average number of employees the employer reasonably expects to employ on business days in the calendar year in which the determination is made.(e) If a large employer or the employees of a large employer are issued a health benefit plan under the provisions of Insurance Code Chapter 1501 and this subchapter, and the large employer subsequently employs fewer than 51 employees, the provisions of Insurance Code Chapter 1501 and this subchapter continue to apply to that particular health plan if the employer elects to renew the large employer health benefit plan subject to the provisions of § 26.308 of this title (relating to Renewability of Coverage and Cancellation). A health carrier providing coverage to an employer must, within 60 days of becoming aware that the employer has fewer than 51 employees, but not later than the first renewal date occurring after the employer ceases to be a large employer, notify the employer of the following:(1) The employer may renew the large employer policy.(2) If the employer does not renew the large employer health benefit plan, the employer will be subject to the requirements of Insurance Code Chapter 1501 that apply to small employers, and Chapter 26, Subchapter A, of this title (relating to Definitions, Severability, and Small Employer Health Regulations), including: (B) rating protections; and(C) minimum participation, contribution, and minimum group size requirements.(3) The employer has the option to purchase a small employer health benefit plan from the employer's current health carrier if the carrier is offering small employer coverage or from any small employer carrier currently offering small employer coverage in this state.(4) If the employer fails to comply with the qualifying minimum participation, contribution, or group size requirements of § 26.303 of this title (relating to Coverage Requirements) and Insurance Code § 1501.605 (concerning Minimum Contribution or Participation Requirements), the health carrier may terminate coverage under the plan, provided that the termination complies with the terms and conditions of the plan concerning termination for failure to meet the qualifying minimum participation, contribution, or minimum group size requirement and in accordance with Insurance Code §§ 1501.108 " 1501.111 (concerning Renewability of Coverage: Cancellation; Refusal to Renew: Discontinuation of Coverage; Notice to Covered Persons; and Written Statement of Denial, Cancellation, or Refusal to Renew Required, respectively) and § 26.308 of this title.(f) If a health benefit plan is issued to an employer that is not a large employer, but subsequently the employer becomes a large employer, the provisions of Insurance Code Chapter 1501 and this subchapter apply to the health benefit plan on the first renewal date, unless the employer was a small employer and renews its current health benefit plan as provided under § 26.5(e) of this title (relating to Applicability and Scope).(g) An employer group or association that is a bona fide employer association under this subsection is a single large employer for purposes of this subchapter and Insurance Code Chapter 1501. (1) An employer group or association is a bona fide employer association if: (A) the employer group or association has a formal organizational structure with a governing body and has bylaws or other similar indications of formality;(B) the functions and activities of the employer group or association are controlled by its member employers;(C) the employer group or association has at least one substantial business purpose unrelated to offering and providing health coverage or other employee benefits to its member employers and their employees;(D) the member employers of the group or association are in the same trade, industry, line of business, or profession;(E) the member employers that participate in the group health plan control the plan in form and in substance;(F) each member employer participating in the group health plan is a person acting directly as an employer of at least one eligible employee who is a participant covered under the plan;(G) the employer group or association does not make health coverage through the group health plan available to individuals other than: (i) an eligible employee of a current member employer;(ii) a former employee of a current member employer who became eligible for coverage under the group health plan when the former employee was an employee of the employer;(iii) a current member employer; or(iv) a dependent of an individual described in clause (i), (ii), or (iii) of this subparagraph (for example, spouses and dependent children); and(H) the employer group or association is not a health insurance issuer, or owned or controlled by a health insurance issuer or by a subsidiary or affiliate of a health insurance issuer, other than if and to the extent such entities participate in an employer group or association in their capacity as member employers of the employer group or association. For purposes of this subparagraph, control is the power to direct, or cause the direction of, the management and policies of a person, other than power that results from an official position with or corporate office held by the person. The power may be possessed directly or indirectly by any means, including through the ownership of voting securities or by contract, other than a commercial contract for goods or nonmanagement services.(2) An issuer wanting to issue coverage to an employer group or association seeking designation as a bona fide employer association under this subsection must submit to TDI an association filing and any supporting documents establishing that the group or association meets the requirements of this subsection. The filing must be made as provided in Chapter 3, Subchapter A, of this title (relating to Submission Requirements for Filings and Departmental Actions). The department will review the filing and all supporting documents and will determine whether to approve or disapprove the employer group's or association's eligibility as a bona fide employer association. The filing must include either: (A) an advisory opinion from the U.S. Department of Labor recognizing the employer group or association as a bona fide employer association that is no more than three years old; or(B) an opinion from an attorney attesting to the fact that the employer group or association qualifies as a bona fide employer association under paragraph (1) of this subsection. An attorney attestation must adequately explain how and why the employer group or association meets all of the criteria, based on the facts and circumstances of the employer group's or association's governance and operations during the 12 months immediately preceding submission of the application, with explicit references to relevant language drawn from the employer group's or association's bylaws, trust agreement, or other organizational documents, which must be submitted to the department with the attorney's attestation.(3) For purposes of paragraph (1)(C) of this subsection, the employer group or association will be treated as having a substantial business interest unrelated to the provision of benefits under the plan if: (A) the employer group or association would be a viable entity in the absence of sponsoring an employee benefit plan;(B) the member employers have a shared or common purpose that is not generally applicable to the population at large; and(C) the primary method of obtaining new members is not through, or in conjunction with, the solicitation of insurance.(4) When determining whether an entity is a bona fide employer association, the department may consider whether the employer group or association ever existed without offering a health benefit plan.(5) An employer group or association must not condition employer membership in the group or association on any health-status-related factor, as defined in § 26.4 of this title (relating to Definitions), of any individual who is or may become eligible to participate in the group health plan sponsored by the bona fide group or association.(6) If TDI approves an association as a bona fide employer association, an issuer must treat the employer group or association as a single large employer, including for purposes of compliance with this chapter and Texas Insurance Code Chapter 1501.(h) A large employer nonfederal governmental employee health benefit plan that is not self-funded is subject to the Insurance Code and this title, as applicable, including Chapter 1501 and this chapter.(i) If a large employer has employees in more than one state, the provisions of Insurance Code Chapter 1501 and this subchapter apply to a health benefit plan issued to the large employer if the: (1) majority of employees are employed in this state on the issue date or renewal date; or(2) primary business location is in this state on the issue date or renewal date and no state contains a majority of the employees.(j) A carrier licensed in this state that issues a certificate of insurance covering a Texas resident is responsible for ensuring that the certificate complies with applicable Texas insurance laws and rules, including Senate Bill 1264, 86th Legislature, 2019, and other mandated benefits, regardless of whether the group policy underlying the certificate was issued outside the state.28 Tex. Admin. Code § 26.301
The provisions of this §26.301 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; Amended by Texas Register, Volume 42, Number 19, May 12, 2017, TexReg 2557, eff. 5/17/2017; Amended by Texas Register, Volume 45, Number 51, December 18, 2020, TexReg 9226, eff. 12/24/2020; Amended by Texas Register, Volume 48, Number 27, July 7, 2023, TexReg 3671, eff. 7/12/2023