On February 19, 2015 the Texas Department of Insurance (TDI) held an meeting to review its informal working draft rules pertaining to the regulation self-funded employee health benefit plans sponsored by a PEO. Since it published its rule initial rule package on November 25, 2014 there have been a series of informal meetings on the topic. At the most recent meeting, TDI pledged to continue to work with members of the PEO industry and NAPEO. Interested participants can review a copy of the draft rule package for professional employer organizations sponsoring self-funded employee health benefit plans.
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.
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.