There are several provision in the draft that need to be understood by any PEO operating in Texas that is considering creating a self-funded health benefits plans.

Health Underwriting

One interesting provision 13.543 “Offers of Enrollment” make a rule that an approved PEO: Here is an excerpt:

§13.543. Marketing Materials; Offers of Enrollment.

(a)Marketing material. An approved PEO’s marketing material must be fair and accurate, and may not represent the plan or cost of coverage under the plan in a way that is materially inaccurate or misleading.

(b) Offer of enrollment. An approved PEO:

(1) may not choose whether to offer enrollment in the plan to a prospective client employer based on the prospective client employer’s claims history or its employees’ health status related factors; and

(2) must provide a prospective client employer a good-faith estimate of the cost of coverage under the plan and an accurate and concise description of the basis on which the cost of coverage was calculated, including:

(A) anticipated claims and loss adjustment expenses; and
(B) any other expenses, services or items charged.

(c) Enrollment of small employer’s employees. If an approved PEO enrolls plan participants employed by a client employer that meets the definition of “small employer” in Insurance Code §1501.002, the approved PEO may not decline to enroll employees of any of the approved PEO’s other client employers that meet that definition.

(d) Cancellation of agreement. An approved PEO may not cancel its client services agreement with a client employer because of health benefit claims made by plan participants employed by the client employer.