PART 1. TEXAS DEPARTMENT OF INSURANCE
CHAPTER 3. LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES
The Texas Department of Insurance (TDI) proposes to repeal 28 TAC §§3.1 - 3.8, and replace them with new Division 1, containing §3.1 and §3.2; Division 2, containing §§3.10 - 3.23; Division 3, containing §3.40 and §3.41; Division 4, containing §§3.50 - 3.52; and Division 5, containing §§3.60 - 3.62, concerning filing and submission requirements for life, annuity, accident, health, and health maintenance organization (HMO) products. TDI proposes to amend §3.3100 and repeal §3.3101 and §3.3102 of Subchapter S, concerning readability. TDI also proposes to amend §§3.4004, 3.4005, and 3.4009 of Subchapter Z, concerning certain life, accident, health, and annuity forms that are exempt from review, and to repeal §3.4020, concerning policy form certifications in connection with exempt filings.
In a separate rulemaking, TDI proposes to amend 28 TAC §7.1301 and repeal §7.1302, concerning the billing system for regulatory fees, to be consistent with new and amended sections in 28 TAC Chapter 3. The proposed Chapter 7 amendment and repeal are also published in this issue of the Texas Register.
EXPLANATION. This proposal streamlines and modernizes the filing processes for life, annuity, accident, health, and HMO products, including form, rate, network, and advertising filings. These rules last underwent significant updates in 2003. The proposal:
- updates standards governing all filings that are submitted to TDI's Life and Health Division through SERFF;
- repeals provisions related to the manual TDI billing system;
- aligns filing procedures across the Life and Health Division by extending filing rules to apply to HMO and network filings;
- limits excessive use of variability in a filing to help TDI ensure compliance and promptly process filings;
- addresses acceptable methods of premium payment and circumstances when third-party payments must be accepted;
- expands the applicability of readability and plain language requirements to all life, annuity, credit, accident, health, and HMO products, other than group annuities and major medical products subject to existing plain language rules;
- strengthens consumer protections related to applications by adding disclosure requirements and clarifying that an applicant cannot be asked to sign an application before receiving a written copy;
- narrows the scope of filings eligible to be filed exempt; and
- reorganizes the rules for clarity and readability.
Descriptions of the new, amended, and repealed sections follow, organized by subchapter and division.
Subchapter A. Submission Requirements for Filings and Departmental Actions Related to Such Filings.
Proposed New Division 1. Applicability, Scope, and Definitions.
Section 3.1. Applicability and Scope. The proposed new section tracks provisions currently contained in the existing section. It explains that the subchapter applies to all form, rate, advertising, network, group eligibility, and informational filings for products including life, annuity, accident and health, credit life, credit accident and health, and HMO products. The new section differs from current §3.1, which is proposed for repeal. The current section does not apply to HMO products; the expanded applicability in the new section reflects that these filings are processed using the same submission procedures. While the proposed section is written broadly to capture a wide range of product and filing types, it does not require issuers to make any filing that is not already required under existing rules.
Section 3.2. Definitions. The proposed new section defines 33 terms for use in Subchapter A. Included among these are some terms contained in current §3.2, which is proposed for repeal. The proposed definitions for these terms are updated to align with terms used by industry through the filing process.
Proposed New Division 2. General Filing Requirements.
Section 3.10. Requested Filing Mode. The proposed new section is similar to subsections (a)(1) - (3) and (b)(1) in current §3.5, which is proposed for repeal. The proposed new section outlines four requested filing modes and specifies the types of filings that are eligible to be submitted on a file and use or exempt basis, at the option of the insurer, rather than being filed for review or approval. A filing that is not subject to review or approval may be filed in an informational filing mode.
Section 3.11. Submission Requirements. The proposed new section outlines submission requirements that apply to all types of filings. It duplicates submission of information currently required by existing §3.3 and §3.4(c) and (m), which are proposed for repeal. Proposed new subsection (a) would require issuers to submit filings electronically through the System for Electronic Rates & Forms Filing (SERFF) or a subsequent electronic system, and proposed subsection (b) addresses how the department would handle a system outage. TDI intends to continue using SERFF, and only anticipates that a subsequent system would be used if SERFF is replaced with a different system or the Texas Legislature mandates that a different system be used.
The proposed new section carries over language from current §3.3, but updates and simplifies it in regard to transmittal information to align with SERFF submission fields. Since some information previously collected through transmittal checklists can now be collected within SERFF fields, proposed new subsection (c) specifies the information that must be included, either in applicable SERFF fields or in a transmittal checklist. As technology evolves, TDI may modify transmittal checklists to streamline filing processes and avoid duplicative requirements. Most of the information specified in proposed new subsection (c) is substantially similar to existing §3.3 and §3.4(c) and (m). Company information in subsection (c)(1) is broader, to reflect SERFF fields. A confidentiality designation is included in subsection (c)(4) because SERFF allows all filings to be posted for public access, unless a document within the form is designated as containing confidential information. Requirements in subsection (c)(10) expand on the requirements in existing §3.3(b)(2)(J)(ii) to include a copy of a form approved before January 1, 2012, which is the date TDI's SERFF records begin.
Proposed new subsection (d) addresses submission requirements for a substantially similar, exact copy, substitution, or resubmission filing, which are similar to existing requirements in §3.6(a)(3), (4), and (6). Many of the certification requirements in existing §3.6 are included in new §3.16.
Proposed new subsection (e) references requirements for advertising filings contained in Chapter 21, Subchapter B.
Proposed new subsection (f) specifies that TDI may ask for any additional information necessary, which aligns with existing §3.6(d).
Section 3.12. Contact Person. The proposed new section aligns closely with language in existing §3.4(b). Additions include paragraph (2), requiring an issuer to provide the contact person's email address (rather than providing it "if available," as in the existing rule), and paragraph (3)(B), requiring that an issuer clearly authorize their designee to act on behalf of the issuer with respect to the type of filing. Designees might include a consulting firm, qualified actuary, or legal counsel.
Section 3.13. Filing Fees. The proposed new section sets the fee for form filings at $100, subject to certain exceptions, which are consistent with the fees in existing §3.4(r). Likewise, rate filing fee amounts are unchanged at $100 for certain products subject to approval, and $50 for others. The proposed new section does not apply filing fees to any other filing types (e.g., advertising, network, group eligibility, or informational filings). These changes simplify the fee structure currently addressed in §3.4(r). The proposed new section requires all form and rate filing fees to be paid through SERFF, or a subsequent electronic payment system designated by TDI. Proposed new §3.13 requires issuers to pay filing fees at the time a filing is accepted for review, and provides that TDI may consider a filing withdrawn if the issuer does not pay the fee within five business days following acceptance for review. This ensures that the appropriate fee will be paid before a filing is approved. The proposed new section will eliminate the need for TDI's manual billing system, thus TDI proposes to repeal §7.1302, which addresses TDI's manual billing system.
Section 3.14. Purpose and Use. The proposed new section includes provisions similar to existing §3.2(9) and §3.3(b)(2)(F). The existing provisions are included in new paragraphs (1) - (4), (6), and (7). Instead of using the term "form," which is found in existing §3.2(9), the proposed new section uses the term "filing" to reflect the focus of Chapter 3, as proposed, on filing requirements. Paragraph (3)(B) provides examples of the types of key or unique provisions in an accident and health filing that must be identified, including exclusive provider benefits and innovative excepted benefit products. Innovative excepted benefit products would include experimental or nonconventional coverage types addressed in §3.3081 and authorized by Insurance Code §1201.103. New paragraph (5) does not duplicate a provision from existing §3.2 or §3.3. It requires a filing to explain any new program or initiative addressed by the filing. Examples of this include a noninsurance benefit authorized by Insurance Code §1701.061, or a steering or tiering program addressed in Insurance Code §1458.101. This provision will streamline TDI's review by helping staff understand how the filing will be used at the beginning of the review and reducing the need to ask additional questions.
Section 3.15. Confidential Information in Filings. The proposed new section codifies TDI's existing process for handling confidential information in filings and aligns with the Property and Casualty Filings Made Easy rules in 28 TAC Chapter 5, Subchapter M. The new subsections address public inspection of filings through SERFF Filing Access; confidentiality and disclosure under the Texas Public Information Act; a prohibition against declaring an entire filing confidential; redaction; and the confidentiality of personally identifiable information. The definition of personally identifiable information under §3.2 does not include the name of a group policyholder, thus this section does not require an issuer to designate a group policy face page as confidential.
Section 3.16. Certifications. The proposed new section lists requirements for certifications that are similar to those in existing §3.4(j) and §3.6(a). Proposed new subsection (a) lists general certifications required for all filings to affirm the company's responsibility to thoroughly review a filing, consistent with existing §3.6(a)(1). Paragraphs (1) and (2) state the certification is on behalf of the issuer and the issuer is bound by it. Paragraphs (3) and (4) state that the individual is familiar with the laws applicable to the filing, has reviewed the filing, and believes the filing is compliant. Paragraph (5) states that the form filed is not deceptive or misleading; this certification was previously required only in exempt filings. Paragraph (6) affirms that, if applicable, the filing accurately reflects the Flesch score of each form.
Subsection (b) lists additional certifications from existing §3.6(a)(2) that only apply to certain filings by creating new Figure 28 TAC §3.16(b) to clearly display when these specific certifications should be used. The first two certifications ensure that companies do not knowingly file forms with compliance deficiencies that have been previously flagged by the department. The third certification ensures that companies review and update previously filed forms as needed to comply with new requirements before submitting a substantially similar, exact copy, or substitution filing. The fourth and fifth certifications affirm that all changes to a form are identified and that any exact copy filing meets the definition. The sixth certification affirms that a substitution filing is made only for forms that have not been issued. The seventh certification affirms that a form will be marketed as supplemental coverage only if it is filed for review as supplemental. The eighth certification affirms that products created using matrix or insert page forms will comply, since TDI does not review such products in their final form. The ninth - 13th certifications affirm that exempt filings will comply with Chapter 3, Subchapter Z, similar to existing certifications in §3.6(a)(9).
Subsection (c) outlines the consequences for submitting false certifications by referencing Insurance Code §841.704 and §843.464, which address criminal penalties for knowingly making false statements to TDI.
Section 3.17. Form and Rate Filing Requirements . The proposed new section updates form and rate filing requirements for efficient review. Subsection (a) specifies that, except for general use filings, a single filing may contain rates and forms only for one product.
Subsection (b) requires general use forms to be filed individually, unless the forms are reasonably related and intended to be used with one or more of the same underlying products. These provisions are substantially similar to existing rules; for example, existing §3.4(r)(1)(A) specifies the $100 filing fee applies to "each contract or policy, including . . . its certificate, . . . application, and . . . riders filed as part of the entire policy or contract." These provisions ensure that filings are accurately classified on the basis of the type of product and help TDI staff apply the correct product standards. TDI encourages issuers to identify related filings in the general information provided with the filing so that TDI can assign related filings to the same reviewer, or otherwise coordinate TDI staff to ensure prompt and consistent reviews. Issuers can also identify subsequent filings as "substantially similar" to a previous filing, which allows TDI staff to focus on new language and perform a faster review.
Subsection (c) specifies the minimum requirements for a face page.
Subsection (d) addresses the requirements for unique form numbers, which are addressed in existing §3.4(c)(2). Form numbers are required on each page or below each matrix provision.
Subsection (e) contains requirements for limited, partial refilings that are consistent with existing §3.4(h).
Subsection (f) requires amendments and endorsements to be accompanied by an insert page or a revised form that incorporates the changes made. This requirement supports plain language and readability and ensures that when consumers are issued coverage, they receive a clean, updated document. An amendment or endorsement form should be issued only to modify a consumer's existing coverage document and should not accompany newly issued coverage.
Section 3.18. Variable Material. The proposed new section includes updated requirements similar to those in existing §3.4(d) and (e). These provisions promote the appropriate use of variability where it adds value and efficiency. The limits on variability are necessary to address challenging reviews and ensure compliance. TDI anticipates that the proposed limits on variable material will significantly increase speed-to-market by reducing the time issuers spend correcting deficient filings.
Subsection (a) describes the general and proper use of variable material.
Subsection (b) requires issuers to submit a statement of variability that demonstrates compliance and provides a clear explanation of how the material will vary.
Subsection (c) describes permissible uses of variability.
Subsection (d) explains limits on variability. A form number cannot be variable because TDI's approval of a form is tied to the form number. Likewise, an issuer's name cannot be variable because TDI separately approves each issuer's use of a form. Instead, issuers can submit an exact copy filing if they experience a name change or want to use the same form that was approved for another company. Different product types must be filed in separate filings so the filing reflects the appropriate type of insurance and the correct review standards can be applied. While variability cannot be used to create different product types, issuers have other tools available that support efficient filing methods, including general use, matrix provisions, insert page filing options, and the option to identify a filing as substantially similar to another filing, which allows for a streamlined review. The ranges of variability specified must be consistent with any applicable rate filing. TDI cannot approve a form unless it can verify that the issued form will comply with applicable requirements.
Subsection (e) addresses fill-in material for life and annuity forms, consistent with existing §3.4(d)(2).
Subsection (f) prohibits the use of variable material in life forms for text and specifications of nonforfeiture assumptions, similar to existing §3.4(e)(2), and it clarifies proper use of zero-range entries.
Subsection (g) clarifies that any change to a statement of variability is considered a change to the form itself and must be filed in conjunction with the form.
Subsection (h) specifies that TDI may request examples of issued forms without variability, if needed to aid staff's understanding of how the variability will function. The limits set on variability in this section provide insurers with clear guidance on the proper and expected use of variable material to ensure efficient reviews. These limits do not restrict general use filings that can capture similar documents used in a variety of contract forms.
Section 3.19. Matrix and Insert Page Forms. The proposed new section sets out submission requirements that apply to a matrix or insert page form filing. The proposed requirements are similar to requirements in existing §3.4(f) and (g), but they are combined where requirements for matrix or insert pages are identical. Subsection (a)(1) addresses form number requirements, and subsection (a)(2) clarifies when a matrix provision can be used in multiple products. Subsection (a)(3) requires the issuer to explain how the forms will be used. Subsection (b) explains how an insert page may be used to replace an existing page of a previously approved or exempted form, consistent with existing §3.4(g)(3).
Section 3.20. Plain Language and Readability Requirements. The proposed new section extends plain language and readability requirements to life and annuity products (other than group annuity products) and group accident and health excepted benefit products, other than major medical plans. Major medical plans continue to be subject to plain language and readability requirements under similar provisions in Chapter 3, Subchapter G. To promote uniformity, the requirements in this section replace similar readability requirements for individual accident and health products under Chapter 3, Subchapter S, which are proposed for repeal.
Subsection (a) describes the purpose of the plain language requirements.
Subsection (b) describes the forms to which the plain language requirements apply.
Subsection (c) requires applicable forms to be written in plain language.
Subsection (d) sets the Flesch Reading Ease score at 40; references the method of calculation in existing Chapter 3, Subchapter G; requires a statement of the Flesch score; and states that TDI may require additional information to verify compliance. The calculation method allows certain text to be excluded, including language required by any state or federal law.
Subsection (e) provides guidance to issuers by describing plain language best practices.
Subsection (f) addresses how a definitions section may be used.
Subsection (g) addresses font size and formatting.
Subsection (h) specifies when a table of contents or index is required.
These provisions are in line with industry standards and provide additional guidance to aid companies in submitting compliant form filings. Most issuers are already using plain language best practices.
Section 3.21. Group Filings. The proposed new section includes updated requirements similar to those currently in existing §3.4(o) and §3.6(c). Group filing requirements are streamlined by not including the requirement from existing §3.6(c)(2) for issuers to submit separate form filings for each group type.
Subsection (a) uses updated language to identify the Insurance Code provisions that address eligible policyholders for group and blanket coverage, applies the criteria for accident and health policyholders to apply to groups purchasing HMO coverage, specifies when an issuer must submit a group eligibility filing, and explains how group eligibility information and forms may be submitted. Under the new section, issuers will not be required to submit the group eligibility information for review for each product being issued. Instead, if TDI has verified the group's eligibility in the past five years, the issuer will submit only an informational filing.
Subsection (b) specifies the group eligibility filing requirements for coverage to be issued to an association, which are similar to requirements in existing §3.6(c)(3)(B) - (D). Those filings must identify the types of coverage the issuer will offer the association; demonstrate that the association is an eligible group policyholder; and include an alternate face page and a copy of the association's constitution, bylaws, and articles of incorporation.
Subsection (c) specifies the group eligibility filing requirements for coverage to be issued to a trust, which are similar to requirements in existing §3.6(c)(3)(D) and (F). Trust filings must include a copy of the trust agreement and an alternate face page form for each related industry group. Association trust filings also must include a list of all participating associations and a reference to the group eligibility filing for each association.
Subsection (d) requires issuers to notify TDI of additional associations within a multiple association trust by making an informational filing and is similar to requirements in existing §3.6(c)(3)(E). Approved association trusts must notify TDI of any additions to the trust upon enrollment and include additional documentation.
Subsection (e) requires issuers to submit a group eligibility filing for any type of group or blanket policyholder that is not identified in statute as an eligible policyholder, including actuarial information similar to requirements in existing §3.4(q)(6). These filings are needed to determine whether it is in the best interest of consumers to allow a particular "discretionary group" to offer insurance coverage.
Subsection (f) specifies information that issuers must provide when issuing a major medical health benefit plan to an association, which is similar to requirements in existing §3.6(c)(3)(A) and relevant for determining the applicable requirements. For example, different requirements apply to member-only bona fide associations, bona fide employer associations, and associations issuing coverage to small employers versus large employers.
Subsection (g) clarifies that products issued to educational institutions on a group basis must be filed under Insurance Code §1131.064 or §1251.056, and that products issued to educational institutions on a blanket basis must be filed under Insurance Code §1251.353. While educational institutions are specifically identified as eligible blanket policyholders under Insurance Code §1251.353, the statute does not specifically identify them as eligible group policyholders.
Subsection (h) is consistent with existing §3.4(o), which requires issuers to ensure that insurance certificates or HMO evidences of coverage being delivered to Texas residents comply with all the applicable laws of this state and include copies of out-of-state documentation.
Section 3.22. Braille and Non-English Filings. The proposed new section provides guidance regarding braille and non-English filings. Subsection (a) aligns with existing §3.4004(h) and requires a certification that the form meets the definition of an exact copy. Subsection (b) allows a filing that includes only a braille or non-English language version of a previously approved form to be filed in an informational mode or an exempt mode.
Section 3.23. Acceptance, Rejection, and Disposition of Filings. The proposed new section includes reorganized versions of rules in existing §3.7 to clarify procedures for accepting and processing filings and to avoid restating statutory provisions. New subsection (a) addresses acceptance of filings and includes provisions similar to existing §3.7(a) and (b). Subsection (a)(1) explains that filings that are subject to approval and not rejected will be considered filed as of the submission date. It also references the statutory provisions that address deemer periods. Subsection (a)(2) explains that an exempt filing that is not rejected will be considered exempt as of the disposition date. Subsection (a)(3) explains that an informational filing that is not rejected will be considered filed as of the submission date and will be closed with an informational disposition.
New subsection (b) addresses rejection of filings that are incomplete or otherwise do not meet submission requirements, similar to existing §3.7(a)(2). TDI may reject a filing if an issuer does not make corrections within two business days of TDI's request for corrections. This limited timeframe reflects the straightforward nature of submission deficiencies, in contrast to the more complex and substantive nature of the compliance standards for which corrections may be requested under subsection (c). TDI will not reopen a filing that has been rejected.
New subsection (c) is similar to existing §3.7(c) in addressing requests for correction and extensions and waivers of deemer dates. These provisions are necessary to ensure that a form is not deemed approved when compliance issues have been identified. Submission requirements for corrections consist of a summary and certification of identified changes similar to those in existing §3.6(a)(5)(E) and (F). In the interest of processing filings promptly, subsection (c)(3) requires issuers to submit corrections within 10 business days. This replaces the 30-day period provided in existing §3.7(c)(4) and is necessary to allow TDI to review filings within the statutory deemer dates.
New subsection (d) addresses how TDI will notify issuers of a filing disposition.
New subsection (e) explains that TDI may withdraw approval only after notice and opportunity for hearing, consistent with existing §3.7(e).
New subsection (f) addresses issuer responsibilities to retain records related to form filings.
Proposed New Division 3. Requirements Relating to Application Form Filings.
Section 3.40. Applications Generally. The proposed new section explains TDI's expectations for application form filings, consistent with Insurance Code §1701.055. Subsection (a) requires application form filings to address the type of contracts and products the application will be used with and whether the application will be used in paper, electronic, or telephonic form.
Subsection (b) requires issuers to submit entire applications for review and to make clear what an applicant is required to complete. This section does not require issuers to file screenshots or websites for review, but rather to include in the form filing all text that may be used in an application, however it is delivered.
Subsection (c) explains the requirements for applications to be used by multiple issuers. Subsections (a), (b), and (c) are consistent with TDI's current review standards.
Subsection (d) specifies fairness standards for questions asked on an application form. Questions must be consistent with underwriting standards, limited to information necessary to issue or administer the policy, and may not require the applicant to self-diagnose.
Subsection (e) specifies disclosure requirements for application forms, explaining that the application will become part of the contract and helping applicants understand underwriting standards. It also requires applications to include a method for applicants to opt out of electronic communications if the issuer does not seek affirmative consent. This provision helps issuers ensure their forms and procedures comply with Insurance Code Chapter 35 as amended by House Bill 1040, 88th Legislature, 2023. Finally, it requires issuers to disclose how applicants' personal information may be obtained from third parties.
Section 3.41. Standards for Electronic and Telephonic Applications. The proposed new section adds provisions to aid issuers in complying with appropriate delivery of applications, consistent with TDI's current review standards. Subsection (a) references an issuer's obligation to comply with Insurance Code Chapter 35.
Subsection (b) requires issuers to provide applicants with a written copy of the completed application before signing. This provision is needed to ensure that a consumer is not asked to verbally sign an application without being able to verify that it was completed accurately. It does not prevent an issuer from delivering a written copy of the application electronically.
Subsection (c) requires issuers to deliver the completed application in a manner that allows the consumer to keep it for their records in compliance with Texas Business Commerce Code §322.008(a) and Insurance Code §35.004(c).
Subsection (d) requires issuers to include a description of security procedures that will be used to verify the authenticity of an electronic transaction.
Proposed New Division 4. Requirements Specific to Accident, Health, and HMO Filings.
Section 3.50. Filing Requirements for Health Plan Disclosures. The proposed new section is similar to the requirements in existing §3.4(i) and identifies each product for which an outline of coverage or similar plan disclosure is required to be filed. Applicable product filings must either include the required disclosure document or reference the filing ID that the document was filed separately under.
Section 3.51. Payment of Premiums or Cost Sharing. The proposed new section implements Insurance Code Chapter 541 and addresses consumer protections related to restrictions on the form or manner of premium or cost-sharing payments for major medical and Medicare Supplement coverage.
Subsection (a) specifies practices that are unfair methods of competition or unfair or deceptive acts, such as failing to disclose in the contract a restriction on the form or manner of the payment of premiums or cost sharing.
Subsection (b) requires issuers to permit payments by an enrollee's family, approved entities under 45 CFR §156.1250, or another type of third party if certain criteria are met. This section does not require issuers to accept premium payments from third parties that are health care providers or are financially interested.
Subsection (c) clarifies that the section does not modify the requirements or applicability of Insurance Code §1369.0542.
Section 3.52. Filings Required for Termination of Guaranteed Renewable Major Medical Coverage. The proposed new section adds clarity to the filing requirements for issuers terminating or nonrenewing all guaranteed renewable major medical coverage in a given market or service area. This is needed to provide clarity on how to file required notices. These filings give TDI the opportunity to help issuers comply. They also allow TDI to help consumers affected by terminations.
Subsection (a) references the rules that require issuers to provide notice regarding termination of guaranteed renewable major medical coverage.
Subsection (b) identifies the information that issuers must include in filings related to termination of guaranteed renewable major medical coverage.
Subsection (c) clarifies that the filing requirements are in addition to withdrawal plan rules in Chapter 7, Subchapter R, if the termination of coverage constitutes a withdrawal under Insurance Code Chapter 827.
Proposed New Division 5. Actuarial Filing Requirements.
Section 3.60. General Actuarial Filing Requirements. The proposed new section requires issuers to submit either rate filings or other actuarial information as required by law and specifies the existing applicable statutes and rules. This section replaces existing provisions in §3.1(8) and (10) and §3.4(p), which are proposed for repeal.
Section 3.61. Actuarial Information for Certain Accident and Health Filings. The proposed new section specifies the actuarial information that must be included for certain accident and health products. This section includes updated versions of filing requirements previously contained in §3.4(q)(5) and (6). Subsection (a) specifies that the section applies to individual accident and health products and group accident and health products issued to alternative types of group policyholders.
Subsection (b) clarifies that the section does not apply to rate filings for non-grandfathered individual major medical, small group major medical, Medicare supplement, or long-term care products. Rate filing standards for these are addressed in separate rules.
Subsection (c) clarifies that a premium rate schedule must be filed before being used.
Subsection (d) requires a premium rate schedule to be accompanied by an actuarial memorandum signed by a qualified actuary.
Subsection (e) specifies actuarial filing submission requirements for new products, which are not specified in existing rules, beyond a brief reference in §3.4(q)(6). This information is necessary to implement Insurance Code §1251.056 and §1701.057, which require TDI to assess whether benefits are reasonable in relation to the premiums charged.
Subsection (f) specifies requirements for rate adjustment filings for existing products, and replaces provisions addressed in existing §3.4(q)(5).
Section 3.62. Actuarial Information for Life and Annuity Filings. The proposed new section replaces existing §3.4(q)(1) and (2) to update the actuarial information required for life and annuity filings, consistent with current agency standards. Subsection (a)(1) references requirements in Insurance Code Chapter 1105. Subsection (a)(2) addresses actuarial information required for universal life filings. Subsection (a)(3) references the actuarial information required for variable life forms. Subsection (a)(4) requires a certification similar to existing §3.4(q)(1)(C).
Subsection (b) addresses actuarial information required for annuity filings, which is substantially similar to existing §3.4(q)(2).
Subsection (c) addresses multiple guaranteed interest charge periods.
Subchapter S. Minimum Standards and Benefits and Readability for Individual Accident and Health Insurance Policies.
Section 3.3100. Policy Readability Generally. Amendments to the section revise duplicative readability references in Chapter 3, Subchapter S, to align with standards listed in new §3.20. Subsection (a) is amended to add the title for Insurance Code Chapter 1201, Subchapter E, and strike unnecessary references to Chapter 1201. Subsection (b) is amended to reference plain language and readability standards in proposed new Chapter 3, Subchapter A.
Repeal of §3.3101 and §3.3102. The proposal repeals rules related to plain language and readability standards that are replaced by proposed new §3.20.
Subchapter Z. Exemption from Review and Approval of Certain Life, Accident, Health, and Annuity Forms and Expedition of Review.
Section 3.4004. Exempt Forms. The proposed amendments to the section update the types of documents that are eligible to be filed in an exempt filing mode to reflect the types of forms prior review is necessary for to ensure consumer protection based on changes in the market and the department's observation of compliance issues through consumer complaints and audits of exempt forms.
Amendments proposed in subsection (a) broadly exempt group and individual term life insurance forms. Exempt privileges are removed for product types that are subject to actuarial review, including whole life, endowment life, and certain limited refilings. This change will have minimal impact on issuers because the volume of exempt filings is low--an estimated four whole life filings may be impacted based on filing patterns in 2022 and 2023. TDI's average review time for life filings is less than a month, and issuers can elect "file and use" if they do not want to wait for TDI to complete its review. The subsection is simplified to remove reference to different types of groups, forms, and products previously addressed in paragraphs (1) - (3). Individual variable life with a separate account only, which was previously specified as exempt in paragraph (3)(Q) is renumbered as paragraph (2). Subsequent paragraphs are renumbered. Nonsubstantive amendments are made to paragraphs (3) and (4) as renumbered to clarify abbreviated terms. Paragraph (5) as renumbered is amended to remove exempt privileges for limited refilings that change the mortality table or interest rates for new issues under the policy form because these filings require actuarial review.
Amendments proposed in subsection (b) clarify that it addresses the types of life insurance forms that are not permitted to be filed as exempt. Paragraph (1) is amended to clarify that universal life includes flexible premium adjustable life. Paragraph (2) is amended to remove universal-related life, which duplicates the reference to universal life in paragraph (1), and add whole life, consistent with the removal of ordinary life from subsection (a)(3)(A) because it is subject to actuarial review. Paragraph (3) is amended to remove adjustable life, which is now referenced in paragraph (1) and add endowment life, consistent with its removal from subsection (a)(3)(M) - (O), because it is subject to actuarial review. Nonsubstantive amendments are made to paragraphs (8) and (10) - (12). New paragraph (13) is added for limited refilings for life insurance that change the mortality table or interest rates for new issues under the policy form, consistent with the change made in subsection (a)(4).
Nonsubstantive amendments are proposed in subsection (c) to conform to agency style.
Amendments to subsection (d) are proposed to clarify that it addresses the types of annuity forms that are not permitted to be filed as exempt. The term "index-linked crediting" replaces "equity indexed" to be consistent with the terminology more commonly used by issuers. New paragraph (6) is added to list contingent deferred annuities.
Amendments proposed in subsection (e) update the types of accident and health forms that can be filed as exempt. Nonsubstantive amendments in paragraph (1)(A) and (C) simplify the exemption of certain group accident and health forms by removing reference to different types of forms. Paragraph (1) is amended to remove exempt privileges for blanket forms in subparagraph (B) because of a pattern of compliance issues. Subsequent subparagraphs are redesignated.
Nonsubstantive amendments are made to paragraph (1)(B) as redesignated to clarify the exemption for employer plans that supplement Medicare. Nonsubstantive amendments in paragraph (2) simplify the exemption of certain types of group and individual accident and health forms by removing reference to different types of forms. Paragraph (2)(C) is amended to remove exempt privileges for dental forms because of a pattern of compliance issues and clarify that hospital indemnity forms are eligible to be filed exempt. Paragraph (2)(D) is amended to remove exempt privileges for in-patient confinement and basic hospital expense coverages because, unless they are structured as hospital indemnity coverage, they are reviewed as major medical products. Subsequent subparagraphs are redesignated. A nonsubstantive amendment in paragraph (2)(H) removes the reference to Champus supplements because those policies are rarely filed, so the example is not useful. Paragraph (2)(K) is amended to remove exempt privileges for prescription drug policies because major medical review standards apply. Paragraph (3) is amended to remove exempt filing privileges for certain alternate face pages because group eligibility filing requirements are addressed in Chapter 3, Subchapter A. As proposed in §3.13, group eligibility filings would not be charged a filing fee.
Amendments to subsection (f) are proposed to remove repetitive language and clarify that it addresses the types of forms and rates that are not permitted to be filed as exempt. Paragraph (1) is amended to modernize the language related to comprehensive or major medical policies by adding a reference to "guaranteed renewable or short-term limited duration" and removing the reference to limited benefit policies, which are no longer permitted under federal law. Nonsubstantive amendments are made to paragraphs (2) - (6). New paragraph (7) is added to list "other fixed indemnity coverage" that is more extensive than coverage for hospital confinement because such forms often provide innovative benefits and contain compliance issues. New paragraph (8) is added to clarify that the exempt status for forms does not extend to rates that are required to be filed. TDI has identified that rates related to individual health products have been inappropriately filed as exempt, and these rates are often unreasonable in relation to the benefits provided. New paragraph (9) is added to list dental policies because TDI has consistently found compliance issues related to unique requirements in Texas law.
Amendments to subsection (g) are proposed to remove unnecessary language related to certifications and remove a reference to §3.4020, which is proposed for repeal. While exact copies can almost always be filed exempt, an exception is added to disallow an exact copy filing to be filed exempt for preferred provider benefit plans so that staff can verify that these plans have satisfied examination requirements added to Insurance Code §1301.056.
An amendment to subsection (h) is proposed to remove the reference to the outdated certification form. Certifications are addressed in proposed §3.16. For clarity and consistency with new §3.22, the term "foreign language" is replaced with references to the terms "braille" and "non-English."
Section 3.4005. General Information. Proposed amendments to subsection (c) remove unnecessary language related to certifications and a reference to §3.4020, which is proposed for repeal. Language is added to reference the certifications required for exempt filings in §3.16. Also, a nonsubstantive amendment is proposed for subsection (b) to improve readability.
Section 3.4009. Sanctions and Cancellation of Exempt Filing Privileges. Proposed amendments to subsection (a) explain that an insurer's exempt filing privileges may be cancelled if the insurer makes an exempt filing that fails to comply that results in TDI determining that the filing has failed audit. If TDI determines it is appropriate to cancel exempt filing privileges, this will be communicated in the failed audit notice. This removes the requirement that TDI hold a hearing before canceling an insurer's exempt filing privilege. However, it does not remove an insurer's right to request a hearing to challenge the failed audit determination, consistent with Insurance Code Chapter 36. TDI anticipates that the need to take action under this section will be rare. However, to protect consumers and maintain a fair and competitive market, it is important to ensure TDI can take prompt action when needed. Nonsubstantive amendments are made in subsections (b) and (c) to improve readability.
Section 3.4020. The proposal repeals §3.4020, which contains a figure with outdated certifications. New certifications are proposed in §3.16. Conforming changes are made in §3.4004 and §3.4005 to remove references to §3.4020.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Rachel Bowden, director of the Regulatory Initiatives Office, has determined that during each year of the first five years the sections as proposed are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering the sections, other than that imposed by statute. Ms. Bowden made this determination because the sections as proposed do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed sections.
Ms. Bowden does not anticipate any measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the sections as proposed are in effect, Ms. Bowden expects that enforcing and administering the sections will have the public benefits of ensuring that TDI can efficiently process life and health filings, including forms, rates, networks, advertising, group eligibility, and other informational documents required to be filed with TDI, and ensure life and health products comply with applicable requirements. The requirements will also promote consumer protection and ensure life and health products are not unjust or deceptive.
The requirement in §3.11(a) for issuers to use SERFF to submit filings will help TDI efficiently comply with Government Code Chapter 552 by facilitating the appropriate release of information while including the necessary technical safeguards to protect confidential information. It will also help TDI function more efficiently by reducing the administrative tasks associated with receiving, scanning, storing, and replying to paper filings.
The requirement in §3.13(d) for issuers to pay applicable fees through the SERFF EFT system or another electronic payment option designated by TDI will allow TDI to eliminate its manual billing system that is addressed in §7.1302, which has been proposed for repeal. This change creates administrative efficiency for TDI and issuers by ensuring that correct fee amounts are transmitted within the filing, without the need to separately track which fees have not been paid and process invoices. It also ensures that no issuers will have their filings held up for lack of payment.
New plain language standards in §3.20 will have the public benefit of improving consumers' ability to understand their coverage documents. Likewise, the requirement in §3.17(f) will improve readability by reducing issuers' reliance on amendments and ensuring that newly issued coverage will be clearly explained in a single cohesive document. In the absence of plain language standards, issuers might use confusing language or organization, which could be unjust, misleading, or deceptive, contrary to Insurance Code §1701.055.
New requirements for applications in §3.40(d) will have the public benefit of ensuring that applications for life and health coverage are fair, do not require applicants to self-diagnose, and align with issuers' underwriting standards. New requirements for applications in §3.40(e) will have the public benefit of helping applicants understand the underwriting process and how the applicant's personal information may be obtained from third parties.
New requirements for electronic and telephonic applications in §3.41 will have the public benefit of ensuring that consumers can verify that any answers provided through a telephonic application have been accurately captured, and ensuring that issuers have security procedures in place that allow them to verify the authenticity of electronic transactions.
New provisions related to payment of premiums or cost sharing in §3.51 will have the public benefit of ensuring that issuers do not impose unfair restrictions on the form or manner of premium and cost-sharing payments and requiring issuers to disclose any payment requirements within their contract.
ANTICIPATED COSTS TO COMPLY WITH THE PROPOSAL.
TDI anticipates that there will be possible costs to persons required to comply with the sections as proposed during each year of the first five years that the rules will be in effect. However, these possible costs will be offset with cost savings that result from the proposed sections.
Electronic Filing Requirements. Proposed new §3.11 requires issuers to submit filings through SERFF. Since the use of SERFF is not currently required, the proposed requirement in §3.11(a) could have a cost impact on any issuer that currently submits filings outside of SERFF. In 2024, SERFF charges a fee of $18.68 for each filing. In addition, for form filings, issuers also must pay a fee (currently $35 per filing) for data organization and consolidation services.
However, there is also a cost for paper filings. Issuers must pay to print and mail the filing. TDI estimates that a typical initial filing may cost $5 - $10 dollars to print, and $9.85 - $30.45 to mail, based on USPS prices for flat rate envelopes. Costs will vary depending on the number of pages submitted, the speed of delivery selected, and the number of times an issuer needs to make corrections. TDI also estimates it would take an additional 15 minutes of time for an administrative assistant to process a paper filing, compared with submitting a filing through SERFF. According to data maintained by the Texas Workforce Commission and located at www.texaswages.com/WDAWages, an administrative assistant working in Texas earns a median hourly wage of approximately $19.47. Costs would be incurred multiple times within a filing if TDI identifies any compliance deficiencies that require changes because the issuer would need to print and mail new copies of the corrected documents. Also, waiting for documents to be mailed would add significant time to the typical review period.
While TDI is not able to quantify the value of the time saved by using SERFF, the data shows that issuers do not choose to use paper filings, even though that option exists under the current rules. Over the course of 2022 and 2023, TDI received just one paper filing. Issuers voluntarily use SERFF because it provides a cost-effective option for issuers to transmit filings, store information, communicate with TDI staff, make information publicly available, and designate any information that is proprietary or confidential. Because of this, Ms. Bowden estimates that this change in practice will not cause issuers subject to the proposal to incur additional costs.
Filing Fees. TDI anticipates that the proposed rules that impact the amount of filing fees charged will result in cost savings for issuers. The proposed rules maintain the existing fee structure for all form and rate filings. Fees will not be charged for other types of filings, including informational filings, advertising filings, network filings, and group eligibility filings. While Insurance Code §1701.053 authorizes fees to be charged for each form, the proposed rules apply a single fee for all forms contained in a filing (except for matrix forms, for which fees are unchanged). Issuers are permitted to include multiple forms related to a given product within a single filing, such as an application, policy, certificate, and optional rider.
There are no direct increases to filing fees; however, there are some circumstances where issuers may experience some indirect costs. While the fee for exempt filings is maintained at $50, changes to the types of filings that are eligible to be filed as exempt in §3.4004 will effectively raise the fee for certain filings from $50 to $100. In addition, new standards on variability may sometimes require issuers to submit additional filings, such as if the issuer previously included multiple products in a single filing.
However, these increased fees are offset by decreases in fees for other types of filings. The proposed rule will eliminate fees for network filings and group eligibility filings that contain alternate face pages, which are currently set at $100. It will also eliminate fees for certain informational filings, including outlines of coverage and disclosure forms, which are currently set at $50. Also, the removal of the requirement to submit separate form filings for different group types that otherwise use substantially the same forms will reduce the number of filings issuers must submit.
Based on filing patterns observed in SERFF in 2022 and 2023, TDI estimates that the changes in fees proposed in §3.13 and the changes to exempt filings in §3.4004 will result in a net cost savings to issuers of $25,000 - $42,000 each year.
Variability. TDI anticipates that the proposed rules may have a cost impact on some issuers that submit forms with variable material. Proposed §3.18 clarifies the permissible use of variable material. TDI estimates that compliance officers currently spend an additional 20 - 80 hours completing necessary corrections to filings that contain a large amount of variable material. These filings typically take an additional four to eight weeks to process, and sometimes must be disapproved or withdrawn by the filer if they need additional time to make corrections. TDI anticipates that the proposed rules' new limits on variable material will significantly reduce the amount of time filers spend submitting corrections or clarifying filings. TDI estimates that a compliance officer will need to spend an extra four to 16 hours to comply with new limits on variable material, including submitting separate filings where appropriate. But because the changes will eliminate the time that is currently spent correcting and explaining overly complex variability, TDI estimates that the changes to variable material will save compliance officers an estimated four to 64 hours of time, resulting in a net cost savings of $141.24 - $2,259.84 per filing. The new requirements are also expected to reduce processing time and improve speed-to-market for applicable products.
Plain Language. TDI anticipates that the proposed plain language requirements in §3.20 could have a cost impact on any issuer that has not already developed forms to meet plain language and readability standards. However, TDI believes that the vast majority of issuers will not have to make changes to comply because the plain language requirements are substantially similar to standards contained in NAIC Model #575 (Life and Health Insurance Policy Language Simplification Model Act), which was last updated in 1995 and has been adopted in at least 27 states (though not Texas). In addition, as with Texas, several other states have adopted or otherwise require their own similar plain language requirements. Also, issuers are already required to follow the plain language standards for individual accident and health products and for major medical coverage. The rule does not require issuers to submit new forms or modify previously issued forms; the plain language standards will apply only to forms filed after the rule is effective.
Any issuer that needs to measure readability for the first time or update forms to comply with the new plain language and readability requirements in proposed §3.20 may experience some new costs. TDI estimates four to 20 hours for a compliance officer to draft revisions to affected products to comply with the new rules and two to five hours for an attorney to review the revisions. According to data maintained by the Texas Workforce Commission and located at www.texaswages.com/WDAWages, compliance officers and attorneys earn a median hourly wage of approximately $35.31 and $64.50, respectively. It may cost affected issuers between $270 and $1,029 to comply with §3.20.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. TDI has determined that the sections as proposed will not have an adverse economic effect on small or micro businesses, or on rural communities. As explained in the Public Benefit and Cost Note section, TDI anticipates that all possible costs that result from the proposal will be offset by cost savings. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal does not impose a cost on regulated persons because all possible costs will be offset by cost savings. Therefore, no additional rule amendments are required under Government Code §2001.0045.
GOVERNMENT GROWTH IMPACT STATEMENT. TDI has determined that for each year of the first five years that the sections as proposed are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will require a decrease in fees paid to the agency;
- will create a new regulation;
- will expand, limit, or repeal an existing regulation;
- will increase the number of individuals subject to the rule's applicability; and
- will not positively or adversely affect the Texas economy.
TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT. TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on November 4, 2024. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2850 at 2:00 p.m., central time, on November 7, 2024, in Room 2.035 of the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin, Texas 78701.
SUBCHAPTER A. SUBMISSION REQUIREMENTS FOR FILINGS AND DEPARTMENTAL ACTIONS RELATED TO SUCH FILINGS
STATUTORY AUTHORITY. TDI proposes the repeal of §§3.1 - 3.8 under Insurance Code §§1111A.015, 1153.005, 1701.060, and 36.001.
Insurance Code §1111A.015 provides that the commissioner may adopt rules to implement Insurance Code Chapter 1111A.
Insurance Code §1153.005 provides that the commissioner, after notice and hearing, may adopt rules to implement Insurance Code Chapter 1153.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. The repeal of §§3.1 - 3.8 implements Insurance Code §§1111A.005, 1153.053, 1701.053, 1701.055, 1701.057, and 1701.061.
§3.1.Scope.
§3.2.Definitions.
§3.3Transmittal Information.
§3.4.General Submission Requirements.
§3.5.Filing Authorities and Categories.
§3.6.Certifications, Attachments, and Additional Information Requirements.
§3.7.Form Acceptance and Procedures.
§3.8.Effective Date.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404526
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes new §3.1 and §3.2 under Insurance Code §§35.0045, 541.401, 843.151, 1111A.015, 1153.005, 1201.006, 1251.008, 1271.004, 1271.253, 1501.010, 1651.004, 1651.051, 1652.005, 1652.051, 1652.052, 1652.103, 1698.051, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §35.0045 provides that the commissioner adopt rules necessary to implement Insurance Code Chapter 35.
Insurance Code §541.401 provides that the commissioner may adopt reasonable rules as necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §843.151 provides that the commissioner may adopt reasonable rules as necessary and proper to (1) implement Insurance Code §1367.053; Chapter 843; Chapter 1452, Subchapter A; Chapter 1507, Subchapter B; Chapters 222, 251, and 258, as applicable to an HMO; and Chapters 1271 and 1272, including rules to (A) prescribe authorized investments for an HMO for all investments not otherwise addressed in Chapter 843; (B) ensure that enrollees have adequate access to health care services; and (C) establish minimum physician-to-patient ratios, mileage requirements for primary and specialty care, maximum travel time, and maximum waiting time for obtaining an appointment; and (2) meet the requirements of federal law and regulations.
Insurance Code §1111A.015 provides that the commissioner may adopt rules to implement Insurance Code Chapter 1111A.
Insurance Code §1153.005 provides that the commissioner, after notice and hearing, may adopt rules to implement Insurance Code Chapter 1153.
Insurance Code §1201.006 provides that the commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Insurance Code Chapter 1201.
Insurance Code §1251.008 provides that the commissioner may adopt rules necessary to administer Insurance Code Chapter 1251, subject to a notice and hearing as required by Insurance Code §1201.007.
Insurance Code §1271.004 provides that the commissioner may adopt rules necessary to implement the section (which concerns individual health care plans) and to meet the minimum requirements of federal law, including regulations.
Insurance Code §1271.253 provides that the commissioner may require the submission of any relevant information the commissioner considers necessary in determining whether to approve or disapprove a filing under Insurance Code Chapter 1271.
Insurance Code §1501.010 provides that the commissioner adopt rules necessary to implement Insurance Code Chapter 1501 and meet the minimum requirements of federal law, including regulations.
Insurance Code §1651.004 provides that TDI may adopt rules that are necessary and proper to carry out Chapter 1651.
Insurance Code §1651.051 provides that the commissioner by rule establish standards for long-term care benefit plans, and for full and fair disclosure setting forth the manner, content, and required disclosures for the marketing and sale of these plans.
Insurance Code §1652.005 provides that, in addition to other rules required or authorized by Insurance Code Chapter 1652, the commissioner adopt reasonable rules necessary and proper to carry out the chapter, including rules adopted in accordance with federal law relating to the regulation of Medicare supplement benefit plan coverage that are necessary for this state to obtain or retain certain certification as a state with an approved regulatory program.
Insurance Code §1652.051 provides that the commissioner adopt reasonable rules to establish specific standards for provisions in Medicare supplement benefit plans and standards for facilitating comparisons of different plans, and may adopt reasonable rules that specifically prohibit benefit plans provisions that are not otherwise specifically authorized by statute and that the commissioner determines are unjust, unfair, or unfairly discriminatory.
Insurance Code §1652.052 provides that the commissioner adopt reasonable rules to establish minimum standards for benefits and claim payments under Medicare supplement benefit plans.
Insurance Code §1652.103 provides that the commissioner by rule provide a process for reviewing and approving or disapproving a proposed premium increase relating to a Medicare supplement benefit plan.
Insurance Code §1698.051 provides that the commissioner by rule establish a process under which the commissioner reviews health benefit plan rates and rate changes for compliance with Insurance Code Chapter 1698 and other applicable state and federal law.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 3.1 and §3.2 implement Insurance Code §§1105.055, 1111A.005, 1131.064, 1131.101, 1131.102, 1153.005, 1153.053, 1153.101, 1153.701, 1251.056, 1251.101, 1251.359, 1271.004, 1271.051 - 1271.057, 1271.101, 1271.104, 1271.251, 1271.253, 1501.260, 1652.101, 1701.053, 1701.055, 1701.057, and 1701.061.
§3.1.Applicability and Scope.
This subchapter applies to all filings related to a life insurance, annuity, life settlement, credit insurance, accident and health insurance, HMO, or point-of-service product that are filed with the department, including the following filing types:
(1) a form filing submitted under Insurance Code §1111A.005, concerning Requirements for Contract Forms, Disclosure Forms, and Advertisements; Insurance Code §1153.051, concerning Filing of Form; Insurance Code §1271.101, concerning Approval of Form of Evidence of Coverage or Group Contract; or Insurance Code Chapter 1701, concerning Policy Forms, including:
(A) a policy, contract, group agreement, certificate, evidence of coverage, application, enrollment form, rider, amendment or endorsement, insert page, matrix filing, or limited partial refiling; or
(B) any other coverage document attached to or made part of a contract;
(2) a rate filing submitted in connection with a form filing under this subsection or otherwise required to be filed under Division 5 of this subchapter (relating to Actuarial Filing Requirements), including a schedule of charges, actuarial memorandum, or change to rating methodology;
(3) an advertising filing submitted in connection with a product filed under this subchapter, including filings identified under §21.120 of this title (relating to Filing for Review);
(4) a network filing submitted in connection with an HMO plan under Chapter 11 of this title (relating to Health Maintenance Organizations), a preferred or exclusive provider benefit plan under Subchapter X of this chapter (relating to Preferred and Exclusive Provider Plans), or a Medicare Select plan under §3.3325 of this title (relating to Medicare Select Policies, Certificates and Plans of Operation), including:
(A) provider contract forms (including a template, executed contract, amendment, termination, or attestation of compliance), delegated entity contract forms (including a template, executed contract, amendment, or termination), and related filings;
(B) provider directories;
(C) network configuration filings, including:
(i) new applications;
(ii) limited provider networks;
(iii) annual network adequacy report filings;
(iv) access plans;
(v) service area expansions or reductions; and
(vi) material modification to a network configuration;
(D) notices, including a notice of a network termination or an annual application period for physicians and providers to contract; and
(E) quality assurance program filings;
(5) a group eligibility filing, as specified in §3.21 of this title (related to Group Filings), including articles of incorporation, bylaws, constitution, or a trust agreement, policy face page, and any other documentation needed to demonstrate that a prospective group or blanket policyholder is eligible under Insurance Code Chapter 1131, Subchapter B, concerning Group and Wholesale, Franchise, or Employee Life Insurance: Eligible Policyholders; Insurance Code Chapter 1251, Subchapter B, concerning Group Accident and Health Insurance: Eligible Policyholders; or Insurance Code Chapter 1251, Subchapter H, concerning Blanket Accident and Health Insurance: Eligible Policyholders;
(6) an informational filing, other than a form filing, rate filing, advertising filing, network filing, or group eligibility filing, that is required for compliance with Texas law but is not subject to approval, including:
(A) a disclosure, outline of coverage, or a similar plan summary;
(B) notices, including those relating to a discontinuance, withdrawal, uniform benefit modification, and modification of drug coverage;
(C) reports, including reports required for Medicare Supplement in Subchapter T of this title (relating to Minimum Standards for Medicare Supplement Policies) and Long-Term Care in Subchapter Y of this title (relating to Standards for Long-Term Care Insurance, Non-Partnership and Partnership Long-Term Care Insurance Coverage Under Individual and Group Policies and Annuity Contracts, and Life Insurance Policies That Provide Long-Term Care Benefits Within the Policy);
(D) certifications related to form filings, readability scores, actuarial memoranda, statements of variability, and small and large employer health benefit plans;
(E) Medicare SELECT plans of operation and amendments; and
(F) other documents and information necessary to make a filing complete or for a comprehensive review of the filing that are filed in an informational mode.
§3.2.Definitions.
The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise.
(1) Amendment or endorsement--A form that is not a rider that changes or modifies the provisions of an issued policy, certificate, contract, or evidence of coverage.
(2) Blanket policy or contract--A policy or contract authorized by Insurance Code Chapter 1251, Subchapter H, concerning Blanket Accident and Health Insurance: Eligible Policyholders, and issued to a master group policyholder or contract holder that covers all or nearly all individuals within a described group or class of individuals without individual application or underwriting.
(3) Commissioner--The commissioner of insurance.
(4) Department--The Texas Department of Insurance.
(5) Disposition--The final status of a filing, which is issued in writing by the department and communicated to the issuer upon closing the filing. A disposition status may include approved, disapproved, exempt, failed audit, informational, noncompliant, rejected, reviewed, substitution approval, or withdrawn.
(6) Disposition date--The date the department issues a disposition on a filing.
(7) Evidence of coverage--Any certificate, agreement, or contract, including a blended contract, that is issued by an HMO to an enrollee and states the coverage to which the enrollee is entitled.
(8) Exact copy--A filing that, except for the issuer's name, address, telephone number, or other similar identification information, is identical to a form that was previously approved by the department and is still compliant with current statutes and regulations. A braille or non-English-language copy of a form that is a direct translation from the English version of the form is also an exact copy.
(9) Failed audit--A finding made by the department, consistent with §3.4008 of this title (relating to Procedures for Corrections to Non-Compliant Exempt Forms) that a form filed in an exempt filing mode includes one or more compliance deficiencies.
(10) Filing--A document filed with the department under this subchapter, including a form filing, rate filing, advertising filing, group eligibility filing, network filing, or informational filing.
(11) Filing ID--A unique identifier assigned to a filing by SERFF (for example, SERFF ID).
(12) Filing types--A designation used to describe the purpose and contents of a filing, which includes form filings, rate filings, advertising filings, network filings, group eligibility filings, and informational filings and the associated categories identified in §3.1 of this title (relating to Applicability and Scope).
(13) Form--A document required to be filed under Insurance Code §1111A.005, concerning Requirements for Contract Forms, Disclosure Forms, and Advertisements; Insurance Code §1153.051, concerning Filing of Form; Insurance Code §1271.101, concerning Approval of Form of Evidence of Coverage or Group Contract; or Insurance Code §1701.051, concerning Filing Required;
(14) Form number--A unique identifier printed at the lower left-hand corner composed of numbers or letters that is assigned to a unique form.
(15) General use--A filing classification that indicates that the filed forms will be used with other forms submitted in the filing or with previously approved or exempted forms for a certain product or products or a subset of a product or type (for example, an application that will be used with all life products, an application that will be used with all universal life products, an application that will be used with group life and accident and health products, or an application that will be used with major medical and dental products).
(16) HMO--A health maintenance organization as defined in Insurance Code §843.002, concerning Definitions.
(17) Insert page--A form consisting of a page or section of a contract that has a unique identifiable form number and is used in combination with other forms to create a complete contract.
(18) Issuer--An insurance company or HMO that makes a filing under this subchapter.
(19) Limited, partial refiling--A change to a previously approved or exempted life or annuity form that meets one or more of the criteria set forth in subparagraphs (A) - (D) of this paragraph:
(A) a change in the text, interest rate, guaranteed charges, or mortality table used to compute nonforfeiture for life insurance or annuities;
(B) a change in the current interest rate, where such rates are guaranteed and shown in the policy or contract;
(C) a change in the reserves (if the change in reserves affects the text of the policy); or
(D) a change to the separate account for variable products when the separate account is bracketed as variable text on the initial filing.
(20) Matrix filing--A filing consisting of individual provisions, each with its own unique identifiable form number, allowing the flexibility to create multiple policies, evidences of coverage, certificates, contracts, or applications by using numerous combinations of the individual provisions.
(21) NAIC--National Association of Insurance Commissioners.
(22) New submission--A filing submission type that is applicable to all filings other than a resubmission subject to Insurance Code §1701.058, concerning Reconsideration of Form.
(23) Personally identifiable information--Facts or details about an individual that can be used either alone or in combination to distinguish the individual's identity, such as:
(A) any individual policyholder's, certificate holder's, or insured's identification, including name, address, phone number, or email;
(B) social security numbers;
(C) insurance policy, contract, or plan numbers;
(D) identification cards;
(E) debit, credit card, bank account, or routing numbers; or
(F) health information about an individual.
(24) Product--A package of benefits with a discrete set of rating and pricing methodologies that will be offered to a consumer within a single policy, group agreement, evidence of coverage, certificate, or contract. In the case of health coverage, a product also includes a particular network type (such as HMO, point of service, preferred provider, exclusive provider, or indemnity).
(25) Qualified actuary--An actuary who is certified by the American Academy of Actuaries to meet the U.S. Qualification Standards.
(26) Resubmission--A filing submission type that contains corrections made to a form that was previously disapproved or for which approval has been withdrawn.
(27) Rider--A form that adds or expands benefits and becomes a part of the policy, group agreement, evidence of coverage, certificate, or contract.
(28) SERFF--The System for Electronic Rates & Forms Filing established by the NAIC or a subsequent electronic system designated by the department.
(29) Submission guide--Documentation provided by the department that includes technical guidance concerning how to submit and classify filings. The submission guide is available on SERFF and on the department's website: www.tdi.texas.gov.
(30) Substantially similar--A form that, except for minor changes that are clearly identified and described in an accompanying document, is identical to a form that the department previously approved and is still compliant with current statutes and regulations.
(31) Substitution--A new submission that includes a form that replaces a previously approved or exempted form that has not been and will not be issued or otherwise used in Texas at any time by the issuer and that has a form number that is the same as the form it is replacing.
(32) Supplemental--A type of product that is specifically designed and issued to supplement other in-force coverage.
(33) Withdrawn filing--A filing that is not pending the department's review and is not considered approved or exempted, including a filing that was submitted and subsequently removed from the department's review for any reason, including at the issuer's request, or by the department because of an issuer's failure to respond to a request for information or request for revision.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404529
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes new §§3.10 - 3.23 under Insurance Code §§541.401, 843.151, 843.154, 1111A.015, 1153.005, 1153.006, 1201.006, 1201.101, 1201.206, 1251.008, 1271.004, 1271.253, 1501.010, 1651.004, 1651.051, 1652.005, 1652.051, 1652.052, 1652.103, 1698.051, 1701.053, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §541.401 provides that the commissioner may adopt reasonable rules as necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §843.151 provides that the commissioner may adopt reasonable rules as necessary and proper to (1) implement Insurance Code §1367.053; Chapter 843; Chapter 1452, Subchapter A; Chapter 1507, Subchapter B; Chapters 222, 251, and 258, as applicable to an HMO; and Chapters 1271 and 1272, including rules to (A) prescribe authorized investments for an HMO for all investments not otherwise addressed in Chapter 843; (B) ensure that enrollees have adequate access to health care services; and (C) establish minimum physician-to-patient ratios, mileage requirements for primary and specialty care, maximum travel time, and maximum waiting time for obtaining an appointment; and (2) meet the requirements of federal law and regulations.
Insurance Code §843.154 provides that the commissioner, within the limits provided by the section, prescribe the fees to be charged under Insurance Code §843.154.
Insurance Code §1111A.015 provides that the commissioner may adopt rules to implement Insurance Code Chapter 1111A.
Insurance Code §1153.005 provides that the commissioner, after notice and hearing, may adopt rules to implement Insurance Code Chapter 1153.
Insurance Code §1153.006 provides that TDI set a fee not to exceed $200 for a form or schedule filed under Insurance Code Chapter 1153.
Insurance Code §1201.006 provides that the commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Insurance Code Chapter 1201.
Insurance Code §1201.101 provides that the commissioner adopt reasonable rules establishing standards for the readability of individual accident and health policies.
Insurance Code §1201.206 provides that the commissioner may adopt reasonable rules regarding the procedure for submitting policies subject to Insurance Code Chapter 1201 that are necessary, proper, or advisable for the administration of the chapter.
Insurance Code §1251.008 provides that the commissioner may adopt rules necessary to administer Insurance Code Chapter 1251, subject to a notice and hearing as required by Insurance Code §1201.007.
Insurance Code §1271.004 provides that the commissioner may adopt rules necessary to implement the section (which concerns individual health care plans) and to meet the minimum requirements of federal law, including regulations.
Insurance Code §1271.253 provides that the commissioner may require the submission of any relevant information the commissioner considers necessary in determining whether to approve or disapprove a filing under Insurance Code Chapter 1271.
Insurance Code §1501.010 provides that the commissioner adopt rules necessary to implement the chapter and meet the minimum requirements of federal law, including regulations.
Insurance Code §1651.004 provides that TDI may adopt rules that are necessary and proper to carry out Chapter 1651.
Insurance Code §1651.051 provides that the commissioner by rule establish standards for long-term care benefit plans, and for full and fair disclosure setting forth the manner, content, and required disclosures for the marketing and sale of these plans.
Insurance Code §1652.005 provides that, in addition to other rules required or authorized by Insurance Code Chapter 1652, the commissioner adopt reasonable rules necessary and proper to carry out the chapter, including rules adopted in accordance with federal law relating to the regulation of Medicare supplement benefit plan coverage that are necessary for this state to obtain or retain certain certification as a state with an approved regulatory program.
Insurance Code §1652.051 provides that the commissioner adopt reasonable rules to establish specific standards for provisions in Medicare supplement benefit plans and standards for facilitating comparisons of different plans, and may adopt reasonable rules that specifically prohibit benefit plan provisions that are not otherwise specifically authorized by statute and that the commissioner determines are unjust, unfair, or unfairly discriminatory.
Insurance Code §1652.052 provides that the commissioner adopt reasonable rules to establish minimum standards for benefits and claim payments under Medicare supplement benefit plans.
Insurance Code §1652.103 provides, that the commissioner by rule provide a process for reviewing and approving or disapproving a proposed premium increase relating to a Medicare supplement benefit plan.
Insurance Code §1698.051 provides that the commissioner by rule establish a process under which the commissioner reviews health benefit plan rates and rate changes for compliance with Insurance Code Chapter 1698 and other applicable state and federal law.
Insurance Code §1701.053 provides that TDI shall collect a fee in an amount determined by the commissioner for the filing of the form of a document under Insurance Code Chapter 1701.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Sections 3.10 - 3.23 implement Insurance Code §§1105.055, 1111A.005, 1131.064, 1131.101, 1131.102, 1153.005, 1153.053, 1153.101, 1153.701, 1251.056, 1251.101, 1251.359, 1271.004, 1271.051 - 1271.057, 1271.101 - 1271.104, 1271.251, 1271.253, 1501.260, 1652.101, 165.102, 1701.053, 1701.055, 1701.057, and 1701.061.
§3.10.Requested Filing Mode.
Requested filing mode. All filings must identify a requested filing mode as described in this section.
(1) Review or approval. The following types of filings must be submitted for review or approval:
(A) a form or rate filing that is required to be filed for review or approval under §3.1(1) or (2) of this title (relating to Applicability and Scope), other than a filing made under paragraphs (2) or (3) of this section;
(B) an advertising filing that is required to be filed for review under §21.120 of this title (relating to Filing for Review);
(C) a group eligibility filing for review; and
(D) a network configuration filing under §3.1(4)(C) of this title.
(2) File and use. A form or rate filing may be submitted in a file-and-use mode only as permitted under Insurance Code §1701.052, concerning File and Use.
(3) Exempt. A form filing may be submitted in an exempt mode only as permitted under Insurance Code §1701.005, concerning Exemptions, and Subchapter Z of this chapter (relating to Exemption from Review and Approval of Certain Life, Accident, Health, and Annuity Forms and Expedition of Review).
(4) Informational. A filing may be submitted in an informational filing mode as specified in §3.1(6) of this title or if paragraphs (1) - (3) of this section do not apply.
§3.11.Submission Requirements.
(a) All filings and supporting documentation within the scope of this subchapter must be submitted through SERFF or a subsequent electronic system designated by the department.
(b) If the electronic system designated by the department experiences a system-wide outage for any reason, any applicable deemer date or due date for a company response is tolled until the outage is resolved. The department may designate an alternative submission method for filings and supporting documents during such an outage.
(c) Filings submitted to the department must provide complete and accurate information about the filing, include responsive information in all applicable SERFF fields, and include applicable responsive information that is not duplicative of SERFF fields in a transmittal checklist uploaded into SERFF as provided in the department's submission guide. Material information required to be submitted in an initial filing through SERFF fields and transmittal checklists will not exceed the following:
(1) the issuer's name, address, and identifying information, including the NAIC number, NAIC group number, federal employer identification number (FEIN), and the issuer's license type and state of domicile;
(2) the contact person information as required by §3.12 of this title (relating to Contact Person);
(3) an explanation of the purpose and use of the filing as required in §3.14 of this title (relating to Purpose and Use);
(4) a clear designation if the issuer would like to make confidential a specific form, rate, or document in the filing, consistent with §3.15 of this title (relating to Confidential Information in Filings);
(5) the information and certifications required in §3.16 of this title (relating to Certifications);
(6) identification of the unique form number of each form submitted;
(7) a classification of the attributes of the filing and forms included in the filing, consistent with the department's submission guide, including the:
(A) type of filing, consistent with the categories identified in §3.1 of this title (relating to Applicability and Scope);
(B) type of submission, including new or resubmission;
(C) requested filing mode, including review and approval, file and use, informational, or exempt, as described in §3.10 of this title (relating to Requested Filing Mode);
(D) requested effective date for the filing;
(E) type of product and subtype of product, consistent with the product classification guidance provided in the department's submission guide;
(F) type of form, including policy, certificate, application or enrollment, schedule of benefits, rider, endorsement, outline of coverage, advertising, network access plan, provider contract, provider addendum, provider leasing agreement, and provider directory;
(G) type of rate, including a new or revised rate; and
(H) type of market, including individual, franchise, or group, and if applicable:
(i) size of group, including small, large, or small and large;
(ii) type of group, including employer, association, trust, discretionary, blanket, or other; and
(iii) name of group policyholder, in connection with a group eligibility filing;
(8) rate filing information for any product a rate filing is required for;
(9) a statement that the submission will be used on a general-use basis, only with the product being filed, or with previously approved or exempted forms;
(10) in the case of a filing that will be used with previously approved or exempted forms, or other pending filings, a list of the following:
(A) the form numbers and filing IDs of the pending or previously approved or exempted forms;
(B) the disposition dates of the previously approved or exempted forms;
(C) for a form approved before January 1, 2012, a copy of the approved or exempted form;
(D) if applicable, the updated list of form numbers the previously approved or exempted form is to be used with; and
(E) a brief description of when or how each submitted form or rate will be used with the previously approved or exempted forms or other pending forms;
(11) an explanation of any variable material as required by §3.18 of this title (relating to Variable Material); and
(12) the Flesch score for each submitted form, consistent with §3.20 of this title (relating to Plain Language and Readability Requirements).
(d) For a substantially similar, exact copy, substitution, or resubmission filing, the issuer must include the following information concerning how the forms in the filing relate to the forms that were previously approved, exempted, disapproved, or withdrawn from approval, as applicable:
(1) the form number, filing ID, and disposition date of the previously filed form; and
(2) a summary of the differences between the previously approved form and the new form, including a description of any deleted text and a clear identification of all changes with new or modified text underlined.
(e) An advertising filing must include the information and certifications required under Chapter 21, Subchapter B of this title (relating to Advertising, Certain Trade Practices, and Solicitation).
(f) The department may request any additional information necessary for a comprehensive review of any filing.
§3.12.Contact Person.
An issuer submitting a filing to the department must:
(1) designate one person as the contact person for that filing;
(2) provide the contact person's name, address, direct telephone number, and email address;
(3) provide, for any filing submitted by anyone other than the issuer, a dated letter of specific authorization that:
(A) designates the contact person for that filing;
(B) authorizes the designee to act on behalf of the issuer with respect to the type of filing; and
(C) is signed by an officer of the issuer or a person with authority to bind the issuer; and
(4) notify the department immediately of any change of information for the contact person on a pending filing, regardless of whether the contact person is the issuer's employee or other authorized representative.
§3.13.Filing Fees.
(a) For a form filing identified under §3.1(1) of this title (relating to Applicability and Scope), a fee of $100 is required, subject to the following exceptions:
(1) a fee of $50 is required for an exempt form filing that is made under Insurance Code Chapter 1701, concerning Policy Forms, and Subchapter Z of this chapter (relating to Exemption from Review and Approval of Certain Life, Accident, Health, and Annuity Forms and Expedition of Review);
(2) a fee of $50 is required for a resubmission of a previously disapproved form, or a form for which approval has been withdrawn;
(3) for a matrix filing, due to the ability to create multiple contracts or policies from matrix provisions, a fee of $50 per form is required, subject to a maximum fee of $500 per filing; and
(4) no fee shall be required for a substitution filing.
(b) For a rate filing made under §3.1(2) of this title that is separate from a form filing:
(1) a fee of $100 is required for a filing under Insurance Code Chapters 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance; 1651, concerning Long-Term Care Benefit Plans; and 1652, concerning Medicare Supplement Benefit Plans; and
(2) a fee of $50 is required for all other rate filings.
(c) No fee is required for advertising, network, group eligibility, or informational filings under §3.1(3) - (6) of this title.
(d) Filing fees required under this section must be paid to the department using the electronic funds transfer system provided on SERFF or a subsequent electronic payment system designated by the department.
(e) Fees are due and must be paid at the time a filing is accepted for review. If the issuer does not pay the fee within five business days following the date of acceptance for review, the department may consider the filing withdrawn from review by the issuer. The department will not give any withdrawn filing consideration until the issuer resubmits the filing as a new filing.
§3.14.Purpose and Use.
Each filing must include an explanation of the purpose and use of the forms, rates, advertising, networks, or other information contained in the filing within the general information section of the filing that includes:
(1) how the contents of the filing will be used (for example, the application will be used on a general-use basis; or used with specific policies, evidences of coverage, or contract forms previously approved or exempted);
(2) the type of coverage addressed by the filing;
(3) any key or unique provisions contained in the filing, including:
(A) for a life or annuity filing, the inclusion of bonus interest, additional interest credits, two-tier values, bail-out, market value adjustments, and long-term care;
(B) for an accident and health filing, the inclusion of preferred or exclusive provider benefits, innovative excepted benefit products, standalone prescription drugs, or innovative benefits in a Medicare supplement policy;
(4) if applicable, how the product will be marketed (for example, direct, agent, or electronic);
(5) if applicable, whether the filing addresses a new program or initiative and, if so, how the program will affect consumers and whether the program or initiative has been filed, approved, or disapproved in other states;
(6) if applicable, to whom the product is to be marketed, for example, specific group types or sizes, such as an annuity contract marketed to issue ages 25 - 60; or a health benefit plan that will issued on the exchange; and
(7) if applicable, an indication of whether the filing is prompted by a business change such as an assumption, a name change, or a demutualization/conversion.
§3.15.Confidential Information in Filings.
(a) Filings submitted under this subchapter are subject to Government Code Chapter 552, concerning Public Information, including any applicable exception from required disclosure under that chapter. Except as provided in subsection (b) of this section, each submitted filing, including any supporting information filed, will be open for public inspection through SERFF Filing Access (or a subsequent electronic system) as of the date of the filing.
(b) If an issuer believes a portion of the information required to be filed under this subchapter is confidential and excepted from disclosure under Government Code Chapter 552, the issuer must use the SERFF confidentiality function to mark as confidential each document that contains information that the issuer believes is confidential and excepted from disclosure.
(c) An issuer is not permitted to add password protection or encryption, or otherwise format a document in a manner that restricts:
(1) the department's ability to fully process, review, search, and save the document without a password or other decryption process; or
(2) the public's ability to view public information in SERFF.
(d) An issuer may not declare an entire filing confidential. Entire filings marked confidential will be rejected under §3.23(c) of this title (relating to Acceptance, Rejection, and Disposition of Filings).
(e) An issuer may choose to include in the filing a redacted copy of a document that is marked as confidential, which would be available for public access. If included, the document must be clearly marked as a redacted copy.
(f) An issuer must not include an individual consumer's personally identifiable information in a filing, other than the name of a group policyholder that is included in a filing as required under §3.21 of this title (relating to Group Filings).
§3.16.Certifications.
(a) General certification - all filings. All filings must include the following certifications:
(1) the certification is on behalf of the issuer;
(2) the issuer is bound by the certification;
(3) the individual making the certification is familiar with all statutes and regulations of this state and the United States that are applicable to the filing and certifies that to the individual's best knowledge, information, and belief, the filing complies with those statutes and regulations;
(4) the individual making the certification has reviewed the filing and the information in the filing is true and correct;
(5) the form filed is not deceptive or misleading; and
(6) if applicable, the Flesch score of each form is accurately reflected and meets the requirements of §3.20 of this title (relating to Plain Language and Readability Requirements).
(b) Additional certifications. An issuer must include additional certifications as applicable and specified in Figure 28 TAC §3.16(b). An individual making a certification referenced in Figure 28 TAC §3.16(b) must also make the certifications required by subsection (a) of this section.
Figure: 28 TAC §3.16(b). (.pdf)
(c) Certification requirements. A false certification made under this section is an offense under Insurance Code §841.704, concerning False Statement, Report, or Other Document; Criminal Penalty, and §843.464, concerning Criminal Penalty.
§3.17.Form and Rate Filing Requirements.
(a) Except as provided by subsection (b) of this section, for a form or rate filing, only one product (including all forms that will constitute the entire contract and their associated rates) may be submitted in a single filing. This does not prevent an issuer from filing a product that contains multiple types of benefits that will be issued in combination in a single contract if that combination otherwise complies with applicable requirements.
(b) A form may be submitted for general use with multiple policies, evidences of coverage, or certificates. A form submitted for general use must be filed individually, except that multiple forms that are clearly related and intended to be used with one or more of the same underlying products may be filed together.
(c) Each form must prominently display on the cover page or the first page a face page that includes:
(1) the full name of the issuer assuming the risk of the product; and
(2) the complete mailing address of the issuer.
(d) Each form submitted must be designated by a unique form number that:
(1) is sufficient to distinguish it from all other forms used by the issuer;
(2) is shown in the lower left-hand corner of each page of the form, or in the case of a matrix provision, is shown below each matrix provision; and
(3) has the additional identifying form number requirements set forth in §3.5201 of this title (relating to Submission of Form and Rate Filings) if the form is submitted under Insurance Code Chapter 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance.
(e) A limited, partial refiling must contain the change and any additional actuarial information necessary for a comprehensive review of the refiling, if applicable.
(f) An amendment that is submitted to modify an existing form must be accompanied by a revised version of that form (with a new unique form number) that incorporates the contents of the amendment, unless the amendment does not apply to newly issued forms. For a newly issued policy, certificate, contract, or evidence of coverage, the issuer must issue the revised version of the form.
§3.18.Variable Material.
(a) Variable material generally. As specified in this section, an issuer may file forms, advertising, or provider contracts using variable material to illustrate the ways an issued document may vary from the filed material. Any variable material must be identified using brackets and include specimen language or fill-in material that reflects the most restrictive option, if applicable, within the range of variability. Variable material may not be used in an issued form. The issued form must clearly state the actual benefits and contract terms.
(b) Statement of variability. When variable material is included in a filing, the issuer must submit a statement of variability to accompany the filing that:
(1) provides a clear explanation of how the material will vary for each variable option or range that appears in the brackets on the form; and
(2) demonstrates compliance with applicable requirements.
(c) Permitted uses of variable material. It is acceptable for an issuer to use variable material to illustrate:
(1) how a document may vary due solely to the age, sex, or classification of the insured or enrollee;
(2) the range of benefit levels or options that will be offered to consumers;
(3) nonsubstantive administrative items in the document, such as phone numbers, addresses, or third-party administrators; and
(4) the type of group the policy will be issued to if different review standards do not apply based on the group type.
(d) Prohibited uses of variable material. It is not acceptable for:
(1) a unique form number on a form to be bracketed as variable;
(2) the issuer name to be bracketed as variable;
(3) a form to use variability to create different types of products using a single form number, rather than making separate product filings;
(4) a form to specify a range of variability that exceeds the range supported in the issuer's filed rates or schedule of charges and actuarial memorandum, if applicable; or
(5) an issuer to use variability to an extent that the department is unable to fully understand how the product will appear when issued.
(e) Fill-in material for life and annuity forms. Life and annuity forms must contain fill-in material for a 35-year-old insured. If the form is not issued at age 35, the fill-in material must contain the youngest issue age. If any form includes reduced death benefits, the fill-in material must include the age with the greatest reduction in benefits at issue. The fill-in material must be for the longest premium-paying period available.
(f) Life and annuity standards.
(1) For life forms, the text and specifications of nonforfeiture assumptions cannot include variable material;
(2) For life and annuity forms, a zero entry in a range of values on the specifications page:
(A) is acceptable for tiering levels, expense charges, or other fees applicable under the contract; and
(B) is not acceptable for any benefit or credit provided for in the language of the contract.
(g) Changes to variability. Any change to a statement of variability is considered a change to the form itself and must be filed in conjunction with the form.
(h) Examples upon request. The department reserves the right to request that the issuer supplement its filing with examples of forms without variability, including examples of forms actually issued to consumers (with confidential information redacted).
§3.19.Matrix and Insert Page Forms.
(a) Forms may be submitted as matrix or insert page forms. Any issuer submitting a matrix or insert page form:
(1) must identify each matrix provision or insert page with a unique form number that:
(A) is sufficient to distinguish it from all other matrix provisions or insert pages used by the issuer; and
(B) is shown in the lower left-hand corner of the matrix provision or insert page;
(2) may use the same matrix provision or insert page form number within multiple products, provided the language is applicable to each product; however, any changes in the language to comply with the requirements for each product will require a unique form number; and
(3) must list the form number for each matrix provision or insert page and provide a statement indicating how and with what type of product or products the matrix provision or insert page will be used.
(b) An issuer may use an insert page to replace an existing page or section of a previously approved or exempted form if the replaced page or section has a unique form number that distinguishes it from the other pages of the form it is inserted in.
§3.20.Plain Language and Readability Requirements.
(a) Purpose. This section establishes plain language requirements and procedures to make contracts easier to read by the public and to remove language that may be unjust, deceptive, misleading, or unreasonably confusing.
(b) Applicability. This section applies to all forms that are filed under this subchapter and issued to consumers, except for:
(1) forms that are subject to Subchapter G of this chapter (relating to Plain Language Requirements for Health Benefit Policies); and
(2) group annuity products.
(c) Plain language. Forms must be written in plain language and organized in a manner to make it easy for consumers to understand.
(d) Flesch Reading Ease requirements.
(1) The text of the form must achieve a minimum Flesch Reading Ease score of 40, calculated using the method described in §3.602(b)(1), (c), and (d) of this title (relating to Plain Language Requirements).
(2) An issuer must include a statement of the Flesch score of the document when the form is submitted to the department. The department may require the submission of further information to verify compliance.
(e) Best practices. In determining whether forms are written in plain language and organized in a manner to aid consumer understanding, the department will consider plain language best practices, including:
(1) the use of short, familiar words or words that are used in common speech, rather than the use of jargon or technical terms, and defining technical terms used when necessary;
(2) whether the form is written in a clear and coherent manner;
(3) the unnecessary use of technical or abstract words;
(4) whether short sentences are used in paragraphs limited to a single topic, when possible, rather than the use of complex and compound sentences;
(5) the unnecessary use of prefixes and suffixes;
(6) whether the style, arrangement, and overall appearance of the form gives undue prominence to any portion of the text; and
(7) the organization of the form, including as modified by any rider, endorsement, or amendment, such as:
(A) whether the form is organized in a logical order, with clear sections and headings;
(B) whether the form's coverage provisions are self-contained and independent;
(C) whether the form is appropriately divided and captioned in meaningful sequence, where each section contains an underlined, boldfaced, or otherwise conspicuous title or caption at the beginning of the section that indicates the nature of the subject matter included in or covered by the section;
(D) whether the form unnecessarily refers the reader from section to section;
(E) whether general policy provisions, such as defined words and terms or limitations and exclusions, are located in a common area and appropriately captioned; and
(F) whether the use of a separate form, such as an amendment or endorsement used to modify a contract, policy, certificate, or evidence of coverage, will result in confusion about the coverage, particularly if this will occur at the time coverage is first issued.
(f) Definitions. Companies may use a separate definitions section for words used throughout the policy or evidence of coverage. If a separate definitions section is used, it must appear early in the form.
(g) Formatting. The form must:
(1) except for specification pages, schedules, and tables, be printed in not less than 10-point type;
(2) use a font style and size that is easy to read, considering the audience; and
(3) use a format that aids readability, with sufficient white space and the use of bulleted or numbered lists when appropriate.
(h) Table of contents. A form must contain a table of contents or an index of the principal sections if it has more than 3,000 words on three or fewer pages of text or if it has more than three pages, regardless of the number of words.
§3.21.Group Filings.
(a) An issuer submitting a filing for a group policy, agreement, evidence of coverage, or contract must comply with the requirements in this section.
(1) An issuer must identify the specific group type the form is being filed under by indicating the applicable Insurance Code section, as follows:
(A) for life insurance, Insurance Code Chapter 1131, Subchapter B, concerning Group and Wholesale, Franchise, or Employee Life Insurance: Eligible Policyholders;
(B) for accident and health insurance and HMO coverage, Insurance Code Chapter 1251, Subchapter B, concerning Group Accident and Health Insurance: Eligible Policyholders; or
(C) for accident and health insurance, Insurance Code Chapter 1251, Subchapter H, concerning Blanket Accident and Health Insurance: Eligible Policyholders.
(2) If Texas resident members of a group will be eligible to obtain coverage under a product issued to a group type specified in subsections (b) - (f) of this section, then an issuer must submit a group eligibility filing, as specified in those subsections, indicating:
(A) the name of the group;
(B) the products to be issued to the group;
(C) the associated form numbers and filing IDs the forms were approved under; and
(D) either:
(i) information that demonstrates that the group is eligible; or
(ii) a reference to a previous filing ID submitted by the issuer that the group's eligibility was verified under if the filing was made within the past five years and there has not been a material change to the information submitted or the group's continued eligibility.
(3) Forms to be used with multiple groups must be submitted separately from the group eligibility filing. Forms to be used with a single group may be submitted separately or in conjunction with the group eligibility filing.
(b) For a product to be issued to an association under Insurance Code §1131.060, concerning Nonprofit Organizations or Associations; §1251.052, concerning Associations; §1251.053, concerning Funds Established by Employers, Labor Unions, or Associations; or §1251.358, concerning Association, the issuer must submit a group eligibility filing that includes:
(1) a copy of the association's constitution, bylaws, and articles of incorporation;
(2) an alternate face page form that identifies the association, unless the forms are filed to be used with a specific association, in which case the association must be identified on the case-specific face page;
(3) identification of the types of coverage the issuer intends to offer the association; and
(4) information demonstrating that the association is an eligible group policyholder.
(c) For a product to be issued to a trust under Insurance Code §1251.053, the issuer must submit a group eligibility filing that includes:
(1) a copy of the trust agreement;
(2) an alternate face page form for each related industry group, with a unique form number; and
(3) for a product to be issued to associations participating in a multiple association trust:
(A) a listing of all the associations participating in the multiple association trust; and
(B) a reference to the unique filing ID or IDs in which the department previously confirmed that each participating association is an eligible group, consistent with subsection (b) of this section.
(d) An issuer that has received a determination for a filing to be issued to associations participating in a multiple association trust must make a group eligibility filing for information to notify the department of any subsequent additions of participating associations upon enrollment. The filing must include the documentation required in subsection (c) of this section for each association that joins the trust after the initial filing.
(e) An issuer that intends to offer a product to a type of group or blanket policyholder that is not identified in statute as an eligible policyholder must submit a group eligibility filing that demonstrates the group's eligibility, consistent with Insurance Code §1131.064, concerning Other Groups, §1251.056, concerning Other Groups, and §1251.359, concerning Coverage for Other Risks. The issuer must also submit actuarial information as required in §3.61 of this title (relating to Actuarial Information for Certain Accident and Health Filings), as applicable.
(f) For a major medical health benefit plan issued to an association under Insurance Code §1251.052, the issuer must:
(1) for a member-only association, identify whether the plan is issued to a member-only bona fide association as defined under §21.2702 of this title (relating to Definitions); or
(2) for an employer association filing:
(A) comply with all filing requirements set forth in Chapter 26 of this title (relating to Employer-Related Health Benefit Plan Regulations);
(B) specify whether the plan will cover small or large employer members; and
(C) specify whether the group is considered a bona fide employer association under §26.301 of this title (relating to Applicability, Definitions, and Scope).
(g) A product to be issued to an educational institution, if it is issued on a group basis, must be filed under Insurance Code §1131.064 or §1251.056, or, if it is issued on a blanket basis, must be filed under §1251.353, concerning Educational Institutions.
(h) An issuer licensed in this state that issues a certificate of insurance or evidence of coverage covering a Texas resident is responsible for ensuring that the form complies with applicable Texas insurance laws and rules, regardless of whether the group policy, agreement, or contract underlying the certificate or evidence of coverage was issued outside the state. A copy of the master policy, group agreement, or contract issued outside of Texas must accompany any life, annuity, credit, or accident and health certificate, or HMO evidence of coverage filed for review or filed as exempt, along with certification and evidence that the master policy, group agreement, or contract was lawfully issued and delivered in a state the issuer was authorized to do business in.
§3.22.Braille and Non-English Filings.
(a) A filing that includes a copy of a form that is submitted in braille as an exact copy of a previously approved form, or that is submitted in a non-English language that is translated from a previously approved English language form, must include a certification as required under §3.16(b) of this title (relating to Certifications) that the form is an exact copy of the English version of the previously approved form.
(b) The filing must reference the filing ID of the filing in which the English version of the form was previously approved. A filing that includes only a Braille or non-English language version of a previously approved form may be filed in an informational mode and is eligible to be filed in an exempt mode, consistent with Subchapter Z of this chapter (relating to Exemption from Review and Approval of Certain Life, Accident, Health, and Annuity Forms and Expedition of Review).
§3.23.Acceptance, Rejection, and Disposition of Filings.
(a) Acceptance, approval, and exemption of filings. Upon submission, a filing will be accepted for preliminary review of compliance with the filing requirements in this subchapter. If the filing requirements in this subchapter have not been satisfied, the department will consider the filing incomplete and may reject the filing or request that the issuer make corrections. After a filing has been accepted by the department, an issuer is not permitted to expand the scope of a filing, such as by submitting additional forms for review, unless the department has instructed the issuer to do so.
(1) Review period for filings subject to approval. Filings subject to approval, whether filed in a review-and-approval mode or a file-and-use mode, will be reviewed for compliance with the Insurance Code, this title, and any other applicable law of this state or the United States. Filings are considered filed as of the date the filing is submitted, unless the filing is rejected as provided in subsection (b) of this section. The filings, after review, will be affirmatively approved or disapproved within the statutory deemer period if applicable, under Insurance Code §1271.102, concerning Procedures for Approval of Form of Evidence of Coverage or Group Contract; Withdrawal of Approval; §1701.054, concerning Approval of Form; or §1701.058, concerning Reconsideration of Form, unless the department initiates a request for correction as set forth in subsection (c) of this section.
(2) Date for exempt filings. As permitted under Subchapter Z of this chapter (relating to Exemption from Review and Approval of Certain Life, Accident, Health, and Annuity Forms and Expedition of Review), an issuer may submit a filing in an exempt mode. A filing closed with an exempt disposition is considered exempt as of the disposition date, unless the filing is rejected as provided in subsection (b) of this section. Exempt filings are subject to audit as specified in §3.4008 of this title (relating to Procedures for Corrections to Non-Compliant Exempt Forms).
(3) Date for informational filings. A filing submitted in an informational mode will be closed with an informational disposition, unless the department determines that the filing is subject to review. Informational filings are considered filed as of the date the filing is submitted, unless the filing is rejected as provided in subsection (b) of this section.
(b) Rejection of filings.
(1) If the department determines that a filing does not meet the requirements of this subchapter, the department will reject the filing as incomplete and notify the issuer of the reason for rejection or request that the issuer make corrections to the filing. If the issuer does not make corrections within two business days of the department's request for corrections, the department may reject the filing. A filing that is closed with a rejected disposition will not be considered to have been filed or accepted with the department for purposes of Insurance Code §§1153.106, concerning Rate Outside Certain Percentages of Presumptive Rate; 1271.102; or 1701.054, or this subchapter.
(2) The department may reject a filing for failure to comply with any requirement in this subchapter, for example if a filing:
(A) is marked confidential in its entirety;
(B) contains an individual consumer's personally identifiable information in violation of §3.15 of this title (relating to Confidential Information in Filings);
(C) contains changes from the previous form that are not clearly identified; or
(D) contains a certification that is materially inaccurate.
(3) The department will not reopen a rejected filing to allow the issuer to make corrections. The issuer must submit a new filing for the department to consider any corrections.
(c) Request for correction.
(1) Rather than disapproving a filing, the department may request that the issuer make corrections to a form that contains compliance deficiencies if:
(A) for an insurance filing, the issuer, as necessary and at least seven days before the date the filing is deemed approved (unless otherwise permitted by the department):
(i) requests a 45-day extension of the review period; or
(ii) provides a waiver of the issuer's right to deem the filing approved, if applicable; or
(B) for an HMO filing:
(i) the department notifies the issuer that the review period has been postponed, consistent with §11.301(6) of this title (relating to Filing Requirements); or
(ii) the issuer, as necessary and no less than seven days before the date the filing is deemed approved (unless otherwise permitted by the department), provides a waiver of the issuer's right to deem the filing approved, consistent with §11.301(7) of this title.
(2) An issuer submitting a form as a correction to a pending form must provide:
(A) a summary of the differences between the previously reviewed form and the corrected form, including a description of any deleted text, and a clear identification of all changes, with new or modified text redlined; and
(B) a statement that no changes were made to the form other than those identified.
(3) If an issuer fails to submit corrections to the department within 10 business days after the department provides a notice of any deficiencies and request for corrections, the department may consider the filing withdrawn from review by the issuer. The department will not give any withdrawn filing consideration unless the issuer resubmits it as a new filing.
(d) Disposition. The department will send written or electronic notice of any actions taken by the department when it has completed the processing of the filing. The notice will state the disposition and its effective date.
(e) Withdrawal of approval. Before withdrawing approval, the department will provide notice and opportunity for hearing. The notice will specify each applicable form number and the compliance deficiencies.
(f) Retention of filings and dispositions. Companies must retain the written notification or a copy of the electronic notification as documentation of the department's action on a form and maintain copies of approved, reviewed, and exempted forms. This requirement no longer applies if there are no lives insured under the form and the issuer has submitted a written or electronic request that the department withdraw approval of the form.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404530
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes new §3.40 and §3.41 under Insurance Code §§35.0045, 541.401, 843.151, 1153.005, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §35.0045 provides that the commissioner adopt rules necessary to implement Insurance Code Chapter 35.
Insurance Code §541.401 provides that the commissioner may adopt reasonable rules as necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §843.151 provides that the commissioner may adopt reasonable rules as necessary and proper to (1) implement Insurance Code §1367.053; Chapter 843; Chapter 1452, Subchapter A; Chapter 1507, Subchapter B; Chapters 222, 251, and 258, as applicable to an HMO; and Chapters 1271 and 1272, including rules to (A) prescribe authorized investments for an HMO for all investments not otherwise addressed in Chapter 843; (B) ensure that enrollees have adequate access to health care services; and (C) establish minimum physician-to-patient ratios, mileage requirements for primary and specialty care, maximum travel time, and maximum waiting time for obtaining an appointment; and (2) meet the requirements of federal law and regulations.
Insurance Code §1153.005 provides that the commissioner, after notice and hearing, may adopt rules to implement the chapter.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 3.40 and §3.41 implement Insurance Code §§35.0045, 541.401, 843.151, 1201.271, 1271.051 - 1271.057, 1271.101 - 1271.104, and 1701.055.
§3.40.Applications Generally.
(a) Application form filings must include an explanation of the purpose and use of the application that specifies:
(1) the purpose of the application, including the type of contracts and products the application will be used for; and
(2) whether the application will be in paper, electronic, or telephonic form.
(b) Application form filings must:
(1) include a form of the application that shows all text contained on the application, including all sections and questions that the applicant must complete, and any additional drop-downs, scripts, questions, questionnaires, or supplements that may be conditionally required on the basis of the applicant's responses; and
(2) clearly indicate which statements an applicant must agree to in order to be considered eligible for coverage.
(c) Applications for use by multiple companies or for use in offering products from multiple companies must be submitted to the department by each issuer that will use the form and must prominently display:
(1) the full name of each issuer assuming the risk of the products, and the products offered by each issuer;
(2) the complete mailing address of each issuer; and
(3) a means of designating the appropriate issuer (such as checkboxes) that coverage is being sought through.
(d) Questions that applicants must complete on an application:
(1) must be limited to questions necessary to issue or administer the policy or contract;
(2) may not be structured in a manner that requires the applicant to self-diagnose; and
(3) if limited by time or scope, must be consistent with the underwriting standards.
(e) Application forms must:
(1) clearly state that the application will be attached to the policy or evidence of coverage and will become part of the contract;
(2) state that coverage may not be denied on the basis of information not requested in the application except as described in the application;
(3) include a method for an applicant to opt out of electronic communications if the issuer does not seek affirmative consent for conducting business electronically under Insurance Code §35.004, concerning Minimum Standards for Regulated Entities Conducting Business with Consumers; and
(4) if the issuer will obtain personal information on applicants from third parties, disclose the types of information that might be obtained, the circumstances when it might be obtained, and how it will be used.
§3.41.Standards for Electronic and Telephonic Applications.
(a) When conducting business electronically, an issuer must comply with Insurance Code Chapter 35, concerning Electronic Transactions.
(b) For all applications, including applications that involve electronic or telephonic transactions, the issuer must provide the applicant with a written copy of the completed application, including any responses given verbally, before the applicant is asked to sign and submit the application.
(c) The issuer must deliver the completed written application in a manner that allows the consumer to retain the information, consistent with Texas Business and Commerce Code §322.008(a), concerning Provision of Information in Writing; Presentation of Records, and Insurance Code §35.004(c), concerning Minimum Standards for Regulated Entities Electronically Conducting Business with Consumers.
(d) When filing an application that will be used with electronic or telephonic transactions, the issuer must include in the filing a description of the security procedures that will be used to verify the authenticity of the transaction.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404531
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes new §§3.50 - 3.52 under Insurance Code §§541.401, 843.151, 1201.006, 1202.051, 1271.004, 1301.007, 1501.010, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §541.401 provides that the commissioner may adopt reasonable rules as necessary to accomplish the purposes of Insurance Code Chapter 541.
Insurance Code §843.151 provides that the commissioner may adopt reasonable rules as necessary and proper to (1) implement Insurance Code §1367.053; Chapter 843; Chapter 1452, Subchapter A; Chapter 1507, Subchapter B; Chapters 222, 251, and 258, as applicable to an HMO; and Chapters 1271 and 1272, including rules to (A) prescribe authorized investments for an HMO for all investments not otherwise addressed in Chapter 843; (B) ensure that enrollees have adequate access to health care services; and (C) establish minimum physician-to-patient ratios, mileage requirements for primary and specialty care, maximum travel time, and maximum waiting time for obtaining an appointment; and (2) meet the requirements of federal law and regulations.
Insurance Code §1201.006 provides that the commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Insurance Code Chapter 1201.
Insurance Code §1202.051 provides that the commissioner adopt rules necessary to implement the section and meet the minimum requirements of federal law.
Insurance Code §1271.004 provides that the commissioner may adopt rules necessary to implement the section (which concerns individual health care plans) and to meet the minimum requirements of federal law, including regulations.
Insurance Code §1301.007 provides that the commissioner may adopt rules necessary to implement the chapter.
Insurance Code §1501.010 provides that the commissioner adopt rules necessary to implement Insurance Code Chapter 1501 and meet the minimum requirements of federal law, including regulations.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement Insurance Code Chapter 1701.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Sections 3.50 - 3.52 implement Insurance Code §§843.201, 1202.051, 1271.004, 1271.051 - 1271.057, 1271.101 - 1271.104, 1301.158, 1701.055, 1701.057, and 1701.061.
§3.50.Filing Requirements for Health Plan Disclosures.
A filing for any product for which an outline of coverage, written description of plan terms and conditions, or similar disclosure is required must include a copy of the required disclosure document for review or a reference to the filing ID that the disclosure document was separately filed under. The disclosure document must comply with the applicable requirements, including:
(1) for individual accident and health coverage, the requirements in Subchapter S of this chapter (relating to Minimum Standards and Benefits and Readability for Individual Accident and Health Insurance Policies);
(2) for Medicare supplement coverage, the requirements in §3.3308 of this title (relating to Required Disclosure Provisions);
(3) for short-term limited-duration coverage, the requirements in §3.3602 of this title (relating to Requirements for Short-Term Limited-Duration Coverage);
(4) for a preferred or exclusive provider plan, the requirements in §3.3705 of this title (relating to Nature of Communications with Insureds; Readability, Mandatory Disclosure Requirements, and Plan Designations);
(5) for long-term-care coverage, the requirements in §3.3832 of this title (relating to Outline of Coverage); or
(6) for an HMO plan, the requirements in §11.1600 of this title (relating to Information to Prospective and Current Contract Holders and Enrollees).
§3.51.Payment of Premiums or Cost Sharing.
(a) With respect to an issuer's restrictions on the form or manner of the payment of premiums or cost sharing for a major medical health insurance, HMO, or Medicare supplement product, the following practices are unfair methods of competition or unfair or deceptive acts or practices prohibited under Insurance Code Chapter 541, concerning Unfair Methods of Competition and Unfair or Deceptive Acts or Practices:
(1) failing to disclose such restrictions in the contract;
(2) requiring payment by personal check; and
(3) prohibiting payments made by the enrollee, such as by money order, if the source of the funds meets the criteria in subsection (b) of this section.
(b) For a major medical insurance, HMO, or Medicare supplement product, an issuer must accept premium payments and apply cost-sharing payments to the enrollee's deductible, copayment, cost-sharing responsibility, or out-of-pocket maximum if the payments are made by:
(1) the enrollee's family;
(2) an entity described in 45 CFR §156.1250, concerning Acceptance of Certain Third Party Payments, as applicable; or
(3) another third party if the following criteria are met:
(A) the assistance is provided on the basis of the insured's financial need;
(B) the individual or organization providing the funds is not a health care provider; and
(C) the individual or organization providing the funds is not financially interested. Financially interested individuals or organizations include those that receive most of their funding from individuals or entities with a pecuniary interest in the payment of health insurance claims, or organizations that are subject to direct or indirect control of individuals or entities with a pecuniary interest in the payment of health insurance claims.
(c) Nothing in this section modifies the requirements or applicability of Insurance Code §1369.0542, concerning Effects of Reductions in Out-of-Pocket Expenses on Cost Sharing.
§3.52.Filings Required for Termination of Guaranteed Renewable Major Medical Coverage.
(a) Any issuer required to provide notice to the department related to termination by discontinuance or refusal to renew all guaranteed renewable major medical coverage in a given market or service area under §3.3038 of this title (relating to Mandatory Guaranteed Renewability Provisions for Individual Hospital, Medical, or Surgical Coverage; Exceptions), §11.506 of this title (relating to Mandatory Contractual Provisions: Group, Individual, and Conversion Agreement and Group Certificate), §21.2704 of this title (relating to Mandatory Guaranteed Renewability Provisions for Health Benefit Plans Issued to Members of an Association or Bona Fide Association), §26.16 of this title (relating to Refusal to Renew and Application to Reenter Small Employer Market), or §26.309 of this title (relating to Refusal to Renew and Application to Reenter Large Employer Market) must submit a filing consistent with this section at least 180 days before coverage under the first plan terminates.
(b) An issuer must submit a filing for each applicable line of business that includes:
(1) whether a withdrawal plan has been submitted under Chapter 7, Subchapter R of this title (relating to Withdrawal Plan Requirements and Procedures) and Insurance Code Chapter 827, concerning Withdrawal and Restriction Plans;
(2) as applicable, the service areas affected by the withdrawal and a reference to the filing ID that the issuer filed the service area reduction under;
(3) the number of covered lives affected in each Texas county;
(4) the effective date or dates the coverage will terminate on;
(5) a copy of the notices to be provided to policyholders, group contract holders, and enrollees; and
(6) a list of products that will be terminated that includes the form numbers and filing IDs.
(c) Filing requirements in this section are in addition to requirements in Chapter 7, Subchapter R of this title that may apply if the failure to renew coverage constitutes a withdrawal under Insurance Code Chapter 827.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404532
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes new §§3.60 - 3.62 under Insurance Code §§843.151, 1107.108, 1111A.015, 1153.005, 1153.103, 1201.006, 1201.206, 1251.008, 1271.004, 1501.010, 1651.004, 1651.051, 1651.053, 1651.055, 1652.005, 1652.051, 1652.052, 1652.101 - 1652.103, 1698.051, 1698.052, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §843.151 provides that the commissioner may adopt reasonable rules as necessary and proper to (1) implement Insurance Code §1367.053; Chapter 843; Chapter 1452, Subchapter A; Chapter 1507, Subchapter B; Chapters 222, 251, and 258, as applicable to an HMO; and Chapters 1271 and 1272, including rules to (A) prescribe authorized investments for an HMO for all investments not otherwise addressed in Chapter 843; (B) ensure that enrollees have adequate access to health care services; and (C) establish minimum physician-to-patient ratios, mileage requirements for primary and specialty care, maximum travel time, and maximum waiting time for obtaining an appointment; and (2) meet the requirements of federal law and regulations.
Insurance Code §1107.108 provides that the commissioner may adopt rules to implement the provisions of Insurance Code Chapter 1107.
Insurance Code §1111A.015 provides that the commissioner may adopt rules to implement Insurance Code Chapter 1111A.
Insurance Code §1153.005 provides that the commissioner, after notice and hearing, may adopt rules to implement Insurance Code Chapter 1153.
Insurance Code §1153.103 provides that the commissioner, after notice and a hearing, by rule may adopt a presumptive premium rate for various classes of business and terms of coverage regarding credit life insurance and credit accident and health insurance.
Insurance Code §1201.006 provides that the commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Insurance Code Chapter 1201.
Insurance Code §1201.206 provides that the commissioner may adopt reasonable rules regarding the procedure for submitting policies subject to Insurance Code Chapter 1201 that are necessary, proper, or advisable for the administration of the chapter.
Insurance Code §1251.008 provides that the commissioner may adopt rules necessary to administer Insurance Code Chapter 1251, subject to a notice and hearing as required by Insurance Code §1201.007.
Insurance Code §1271.004 provides that the commissioner may adopt rules necessary to implement the section (relating to individual health care plans) and to meet the minimum requirements of federal law, including regulations.
Insurance Code §1501.010 provides that the commissioner adopt rules necessary to implement Insurance Code Chapter 1501 and meet the minimum requirements of federal law, including regulations.
Insurance Code §1651.004 provides that TDI may adopt rules that are necessary and proper to carry out Chapter 1651.
Insurance Code §1651.051 provides that the commissioner by rule establish standards for long-term care benefit plans, and for full and fair disclosure setting forth the manner, content, and required disclosures for the marketing and sale of these plans.
Insurance Code §1651.053 provides that the commissioner adopt rules to establish standards for loss ratios of long-term care benefit plans.
Insurance Code §1651.055 provides that the commissioner adopt rules to stabilize long-term care premium rates.
Insurance Code §1652.005 provides that, in addition to other rules required or authorized by Insurance Code Chapter 1652, the commissioner adopt reasonable rules necessary and proper to carry out the chapter, including rules adopted in accordance with federal law relating to the regulation of Medicare supplement benefit plan coverage that are necessary for this state to obtain or retain certain certification as a state with an approved regulatory program.
Insurance Code §1652.051 provides that the commissioner adopt reasonable rules to establish specific standards for provisions in Medicare supplement benefit plans and standards for facilitating comparisons of different plans, and may adopt reasonable rules that specifically prohibit benefit plans provisions that are not otherwise specifically authorized by statute and that the commissioner determines are unjust, unfair, or unfairly discriminatory.
Insurance Code §1652.052 provides that the commissioner adopt reasonable rules to establish minimum standards for benefits and claim payments under Medicare supplement benefit plans.
Insurance Code §1652.101 provides that the commissioner adopt reasonable rules to establish minimum loss ratio standards for Medicare supplement benefit plans.
Insurance Code §1652.102 provides that the commissioner may adopt rules relating to filing requirements for rates, rating schedules, and loss ratios.
Insurance Code §1652.103 provides that the commissioner by rule provide a process for reviewing and approving or disapproving a proposed premium increase relating to a Medicare supplement benefit plan.
Insurance Code §1698.051 provides that the commissioner by rule establish a process under which the commissioner reviews health benefit plan rates and rate changes for compliance with Insurance Code Chapter 1698 and other applicable state and federal law.
Insurance Code §1698.052 provides that the commissioner adopt rules and provide guidance related to individual health plans, including qualified health plans, to address several factors, including covered benefits or health benefit plan design.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 3.60 implements Insurance Code §§1131.064, 1131.101, 1131.102, 1153.101, 1153.701, 1251.056, 1251.101, 1251.359, 1271.004, 1271.251, 1271.253, and 1651.056.
Section 3.61 implements Insurance Code §§1251.056, 1251.101, and 1251.359.
Section 3.62 implements Insurance Code §§1105.055, 1107.108, 1114.007, 1131.064, 1131.101, 1131.102, 1153.053, 1153.101, and 1153.701.
§3.60.General Actuarial Filing Requirements.
Issuers are required to submit rate filings or other actuarial information as required by law, including:
(1) Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance;
(2) Insurance Code Chapter 1107, concerning Standard Nonforfeiture Law for Certain Annuities;
(3) Insurance Code §1131.064, concerning Other Groups;
(4) Insurance Code §1153.101, concerning Filing of Schedule of Rates and Subchapter FF of this chapter (relating to Credit Life and Credit Accident and Health Insurance);
(5) Insurance Code §1251.056, concerning Other Groups;
(6) Insurance Code §1251.359, concerning Coverage for Other Risks;
(7) Insurance Code Chapter 1271, Subchapter F, concerning Schedule of Charges, and Chapter 11, Subchapter H of this title (relating to Schedule of Charges);
(8) Insurance Code Chapter 1501, Subchapter E, concerning Underwriting and Rating of Small Employer Health Benefit Plans, and §26.11 of this title (relating to Restrictions Relating to Premium Rates);
(9) Insurance Code Chapter 1651, concerning Long-Term Care Benefit Plans, and Subchapter Y of this chapter (relating to Standards for Long-Term Care Insurance, Non-Partnership and Partnership Long-Term Care Insurance Coverage Under Individual and Group Policies and Annuity Contracts, and Life Insurance Policies That Provide Long-Term Care Benefits Within the Policy);
(10) Insurance Code Chapter 1652, concerning Medicare Supplement Benefit Plans, and Subchapter T of this chapter (relating to Minimum Standards for Medicare Supplement Policies);
(11) Insurance Code Chapter 1698, concerning Rates for Certain Coverage, and Subchapter F of this chapter (relating to Rate Review for Health Benefit Plans); and
(12) Insurance Code §1701.057, concerning Withdrawal of Individual Accident and Health Insurance Policy Form Approval.
§3.61.Actuarial Information for Certain Accident and Health Filings.
(a) This section applies to:
(1) individual accident and health products under Insurance Code §1701.057, concerning Withdrawal of Individual Accident and Health Insurance Policy Form Approval; and
(2) group accident and health coverage issued to alternative types of group policyholders under Insurance Code §1251.056, concerning Other Groups, and §1251.359, concerning Coverage for Other Risks.
(b) This section does not apply to rate filings specified in §3.60(9) - (11) of this title (relating to General Actuarial Filing Requirements).
(c) No premium rate schedule may be used until a copy of the schedule has been filed with the department.
(d) Each premium rate schedule must be accompanied by an actuarial memorandum, signed by a qualified actuary.
(e) A new product filing must include the following actuarial information:
(1) the form numbers the rates apply to and the filing IDs that the forms were filed, approved, or exempted under;
(2) a new rate sheet that includes rates for each plan and each combination of rating factors used by the issuer;
(3) an actuarial memorandum that contains:
(A) a brief description of the policy benefits, renewability provision, and general marketing method;
(B) a brief description of how rates were determined, including a general description and source of each assumption used;
(C) a list of retention components, including, expenses, taxes, fees, and profit expressed as a percent of premium, dollars per policy, or dollars per unit of benefit;
(D) the target loss ratio, including a brief description of how it was calculated, and all components used in its calculation;
(E) a description of the experience used in developing the issuer's rates, including the level of credibility and appropriateness of experience data or justification for the use of the proposed manual rates if the issuer's own experience is not credible;
(F) assumptions and support used in developing rates, including adjustments for trend, morbidity, lapses, risk-mitigating programs, and changes in benefits; and
(G) any other data used to support the proposed rate.
(f) A rate adjustment filing for an existing product must include:
(1) the form numbers that the rate adjustments apply to and the filing IDs that the forms were filed, approved, or exempted under;
(2) a new rate sheet that includes rates for each plan and each combination of rating factors used by the issuer; and
(3) an actuarial memorandum that contains:
(A) a brief description of the benefits, renewability provision, and the general marketing method;
(B) scope and reason for the rate revision;
(C) a description of the experience used in developing the issuer's rates, including past experience, loss ratios for all applicable prior experience periods, and the level of credibility and appropriateness of experience data;
(D) a brief description of how revised rates were determined, including a general description and source of each assumption used;
(E) a list of expenses, taxes, fees, and profit, expressed as a percent of premium, dollars per policy, or dollars per unit of benefit;
(F) the target loss ratio and description of how it was calculated;
(G) assumptions and support used in developing rates, including adjustments for trend, morbidity, lapses, risk-mitigating programs, and changes in benefits; and
(H) any other data used to support the proposed rate increase.
§3.62.Actuarial Information for Life and Annuity Filings.
(a) Each life filing that changes the nonforfeiture values of a particular policy or certificate must be accompanied by the information described in this subsection.
(1) For a life insurance product that is subject to Insurance Code Chapter 1105, concerning Standard Nonforfeiture Law for Life Insurance, an issuer must include an actuarial memorandum that demonstrates compliance with Insurance Code Chapter 1105.
(2) For a universal life filing, an issuer must include:
(A) an actuarial memorandum, signed by a qualified actuary, with a detailed and complete explanation of the basis for computing the policy value and the cash surrender value of the policy, including:
(i) the guaranteed maximum expense charges and loads;
(ii) the guaranteed interest rate or rates;
(iii) the guaranteed maximum mortality charges;
(iv) any other guaranteed charges; and
(v) any surrender or partial withdrawal charges;
(B) a comparison table for issue age 35 that displays columns of:
(i) the guaranteed death benefits;
(ii) guaranteed accumulated values;
(iii) cash surrender values; and
(iv) reserves for the policy; and
(C) itemized monthly universal life calculations for the first and 50th years showing:
(i) beginning values;
(ii) maximum expense charges;
(iii) maximum cost-of-insurance deductions;
(iv) monthly expense and/or policy fees;
(v) interest accumulations; and
(vi) the ending values for the specimen policy.
(3) For variable life forms, the issuer must provide actuarial information as required by §4.1504 of this title (relating to Insurance Contract and Filing Requirements), and as required by this section.
(4) The issuer must provide a certification that it will calculate all premiums, reserves, and nonforfeiture values in a manner consistent with the information submitted under this subchapter.
(b) For each annuity filing, an actuarial memorandum must be provided to meet the minimum requirements of Insurance Code Chapter 1107, concerning Standard Nonforfeiture Law for Certain Annuities, and specify the guaranteed interest rates, the maximum surrender charges, and any other maximum charges applicable in the determination of nonforfeiture values. If the issuer intends to change the guaranteed interest rates specified in the form, notification must be submitted to the department before the change. The notification must specify the new guaranteed interest rate and the date when the new guaranteed interest rate will be effective for new issues of a specified policy form, as required by §3.1004 of this title (relating to Policy Form Review).
(1) For variable annuities, the actuarial information must include the information required in this subsection and the information required by §4.2105 of this title (relating to Contract Requirements) to the extent such material is applicable.
(2) For policies or contracts that contain a market-value adjustment, the actuarial memorandum must:
(A) identify the name of the separate account;
(B) indicate the basis for the market-value-adjustment formula and that the formula provides reasonable equity to both the contract holder and the issuer;
(C) detail that the reserve liabilities are established in accordance with actuarial procedures that recognize that assets of the separate account are based on market values, the variable nature of the benefits provided, and any mortality guarantees;
(D) include a table of minimum guaranteed policy values and cash surrender values that:
(i) are based on the longest guaranteed investment period;
(ii) reflect both upward and downward market-value adjustments; and
(iii) show that the minimum guaranteed values before the adjustment are not less than the minimum nonforfeiture values required by law; and
(E) provide a numerical illustration reproducing the values shown in the table for the first, second, and third years of investment, and at the end of the guaranteed investment period.
(c) For a filing that includes more than one guaranteed interest charge period, the actuarial memorandum must address each guaranteed interest charge period.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404533
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes amendments to §3.3100 under Insurance Code §§1201.006, 1201.101, 1201.206, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §1201.006 provides that the commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Insurance Code Chapter 1201.
Insurance Code §1201.101 provides that the commissioner adopt reasonable rules establishing specific standards for the content and manner of sale of an individual accident and health insurance policy.
Insurance Code §1201.206 provides that the commissioner may adopt reasonable rules regarding the procedure for submitting policies subject to Insurance Code Chapter 1201 that are necessary, proper, or advisable for the administration of the chapter.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 3.3100 implements Insurance Code §§1201.002, 1201.201, and 1201.202.
§3.3100.Policy Readability Generally.
(a) In order to increase policyholder understanding
of individual accident and sickness policies, insurers are encouraged
to draft individual accident and sickness policies in a readable manner. To maintain the value of [In order not to devalue]
the policy as a legal document, the utmost care and caution
must be used in its preparation. Insurance Code Chapter 1201, Subchapter
E, concerning Required Policy Provisions, requires the
use of certain policy provisions in particular language or provisions that are as [not less] favorable to the insured or
beneficiary as [than] those set forth in that [said] subchapter. Even with [The same is true
with respect to optional policy provisions as provided in Insurance
Code §§1201.219 - 1201.226. Notwithstanding] these
requirements of law, insurers are encouraged [urged]
to experiment with new language in these areas.
(b) The standards for plain language and readability
set forth in Subchapter A of this title (relating to Submission Requirements
for Filings and Departmental Actions Related to Such Filings) apply
to forms filed under this subchapter. [Insurers are encouraged
to follow the principles set forth in §3.3101 of this title (relating
to Organization of Policy Format for Readability) and §3.3102
of this title (relating to Language Readability) when preparing individual
accident and sickness policies.]
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404534
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes the repeal of §3.3101 and §3.3102 under Insurance Code §§1201.006, 1201.101, 1201.206, 1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §1201.006 provides that the commissioner may adopt reasonable rules as necessary to implement the purposes and provisions of Insurance Code Chapter 1201.
Insurance Code §1201.101 provides that the commissioner adopt reasonable rules establishing specific standards for the content and manner of sale of an individual accident and health insurance policy.
Insurance Code §1201.206 provides that the commissioner may adopt reasonable rules regarding the procedure for submitting policies subject to Insurance Code Chapter 1201 that are necessary, proper, or advisable for the administration of the chapter.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. The repeal of §3.3101 and §3.3102 implements Insurance Code §§1201.002, 1201.101, 1201.201, and 1201.202.
§3.3101.Organization of Policy Format for Readability.
§3.3102.Language Readability.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404527
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
28 TAC §§3.4004, 3.4005, 3.4009
STATUTORY AUTHORITY. TDI proposes amendments to §§3.4004, 3.4005, and 3.4009 under Insurance Code §§1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Sections 3.4004, 3.4005, and 3.4009 implement Insurance Code §§1701.005, 1701.060, and 1701.061.
§3.4004.Exempt Forms.
(a) Group and individual life forms. The group and individual life insurance forms specified in this subsection are exempt from the review and approval requirements of Insurance Code Chapter 1701, concerning Policy Forms, unless the forms are required by the laws of Texas, another state, or the United States, to be specifically approved or are otherwise excepted in subsection (b) of this section:
(1) group and individual term life insurance forms; [master policies, contracts, certificates, applications,
enrollment forms, riders, amendments, and endorsements applicable
thereto, issued under the authority of Insurance Code §§1131.003,
1131.051 -1131.058, 1131.060, and 1131.064(b), listed in subparagraphs
(A) and (B) of this paragraph:]
[(A) term policies and riders; and]
[(B) cash value and endowment policies with no more than five death benefit and/or premium changes;]
[(2) any alternate face pages filed subsequent to the original approval of a policy for use with multiple employer trusteed arrangements as defined in Insurance Code §1131.053;]
[(3) individual, joint life, and last survivor insurance forms, including applications, listed in subparagraphs (A) - (Q) of this paragraph:]
[(A) ordinary life;]
[(B) limited pay life with no more than five death benefit and/or premium changes;]
[(C) life paid up at specified ages with no more than five death benefit and/or premium changes;]
[(D) single premium life with no more than five death benefit changes;]
[(E) modified premium level death benefit life with no more than five premium changes;]
[(F) level premium life with no more than five death benefit changes;]
[(G) retirement income policies;]
[(H) level or decreasing term policies and riders;]
[(I) increasing term policies and riders;]
[(J) family plans;]
[(K) family income;]
[(L) family plan riders, including but not limited to children's term riders, dependent term riders, and spouse term riders;]
[(M) limited pay endowment with no more than five death benefit and/or premium changes;]
[(N) level premium endowment with no more than five death benefit changes;]
[(O) single premium endowment with no more than five death benefit changes;]
[(P) indeterminate premium policies with no more than five death benefit changes; and]
(2) [(Q)] individual variable
life policies with a separate account only;
(3) [(4)] rider forms listed
in subparagraphs (A) - (K) of this paragraph:
(A) accidental death benefit riders;
(B) waiver of premium riders;
(C) guaranteed insurability riders;
(D) individual retirement account [accounts
] (IRA) riders (to include Roth and Simple IRAs [IRA])
[riders];
(E) preliminary term riders;
(F) conversion riders;
(G) exchange riders;
(H) waiver of cost riders, including waiver of cost and monthly expense charge, and waiver of cost and premium payment;
(I) dividend option riders;
(J) additional insured riders; and
(K) additional insurance on base insured riders;
(4) [(5)] endorsement forms listed
in subparagraphs (A) - (K) of this paragraph:
(A) optional retirement program (ORP) [ORP]
endorsements;
(B) nontransferability endorsements;
(C) H.R. 10 (Keogh plan) endorsements;
(D) tax sheltered annuity endorsements;
(E) nonassignability endorsements;
(F) settlement option endorsements;
(G) individual retirement account endorsements (to
include Roth and Simple IRAs [IRA
endorsements]);
(H) unisex endorsements;
(I) loan endorsements;
(J) waiver of surrender charges on disability or confinement in a hospital or nursing home endorsements; and
(K) step-up or roll-up death benefit endorsements; and
(5) [(6)] limited refilings for
[life insurance which indicate only a change in the mortality
table or interest rates for new issues under the policy form, or]
changes to the separate account for variable products.
(b) Exceptions. A filing identified in [The
provisions of] subsection (a)(1) [and (2)] of this
section is not permitted to be filed as exempt for [do
not apply to] any group or individual life insurance forms providing
the types of coverages set out in paragraphs (1) - (13) [(12)] of this subsection:
(1) universal life, including flexible premium adjustable life;
(2) whole [universal related] life;
(3) endowment [adjustable] life;
(4) variable life with a fixed account;
(5) business value;
(6) any forms containing a market value adjustment;
(7) deposit term;
(8) forms subject to Insurance Code Chapter 1153, concerning Credit Life Insurance and Credit Accident and Health Insurance;
(9) any life insurance product used to fund prepaid funeral contracts;
(10) any form containing a persistency bonus provision,
no-lapse premium provision, or other additional interest credit to
the policy value provision (guaranteed or non-guaranteed), index-linked
crediting [equity indexed] provision, residual death
benefit provision, accelerated death benefit provision, long-term
care or other accident- and health-related [accident
and health related] benefit provision;
(11) applications for use with variable life or index-linked
[equity indexed] life, or forms that contain a market
value adjustment provision, a long-term care or other accident-
and health-related [accident and health related]
benefit provision; [or]
(12) group life master policies, contracts, certificates,
applications, or enrollment forms, as well as any
applicable riders, amendments, and endorsements [applicable
thereto], issued under the authority of Insurance Code §1131.064, concerning Other Groups, that are related [relating]
to discretionary groups; or[.]
(13) limited refilings for life insurance that indicate a change in the mortality table or interest rates for new issues under the policy form.
(c) Group and individual annuity forms. The group and individual annuity forms[, including applications,] specified in paragraphs (1) - (7) of this subsection are exempt from the review and approval requirements of Insurance Code Chapter 1701, unless the forms are required by the laws of Texas, another state, or of the United States to be specifically approved or are otherwise excepted in subsection (d) of this section:
(1) single premium immediate annuities (including variable immediate annuities);
(2) deferred annuities used as structured settlement options;
(3) individual deferred annuities that do not include persistency bonuses or additional interest credits of any type, waiver of surrender charges (except for death, disability, or confinement in a hospital or nursing home); two-tier values; or a market value adjustment:
(A) for purposes of this paragraph, and paragraph (4)
of this subsection, "waiver of surrender charges" means a waiver of
surrender charges that [which] is applied to
any amount greater than 10% of the surrender value;
(B) for purposes of this paragraph, and paragraph (4)
of this subsection, "two-tier values" means values on an annuity available
at the maturity date of the contract that [which]
are different, depending on whether the value is taken from the contract
in a lump sum or left with the issuer for periodic payments, regardless
of whether the different values are available at issue or later;
(4) group annuities that do not include persistency bonuses or additional interest credits of any type, waiver of surrender charges (except for death, disability, or confinement in a hospital or nursing home), two-tier values, or a market value adjustment; group annuities that are guaranteed investment contracts (GICs), synthetic GICs, funding agreements, and unallocated group annuities funding pension plans;
(5) limited refilings for annuity products that [which] indicate only a change in the mortality table or interest
rates for new issues under the policy form, or changes to the separate
account for variable products;
(6) variable annuities with a separate account only, which do not include a provision for guaranteed living benefits; and
(7) reversionary annuities.
(d) Exceptions. A filing identified in [The
provisions of] subsection (c) of this section may not be
filed as exempt for [do not include] any of the following
annuity forms:
(1) annuities used to fund prepaid funeral contracts;
(2) variable annuities that contain guaranteed living benefit provisions;
(3) annuities that contain an index-linked crediting [equity indexed] provision, long-term care, or other
accident- and health-related benefit provision;
(4) applications for use with variable annuities, index-linked
crediting [equity indexed] annuities, annuities that
contain a market-value-adjustment, or that contain a [market
value adjustment provision,] long-term care or other accident-
and health-related provision;
(5) group annuity master policies, contracts, certificates,
applications, enrollment forms, riders, amendments, and endorsements
applicable to those [thereto], issued under
the authority of Insurance Code §1131.064, relating to discretionary
groups; or[.]
(6) contingent deferred annuities.
(e) Group and individual accident and health forms.
The group and individual accident and health insurance forms specified
in paragraphs (1) and (2) [- (3)] of this subsection
are exempt from the review and approval requirements of Insurance
Code Chapter 1701, unless the forms are required by the laws of Texas,
another state, or the United States, to be specifically approved or
are otherwise excepted in subsection (f) of this section:
(1) the group [and blanket] accident and
health forms set out in subparagraphs (A) - (C) [(D)]
of this paragraph:
(A) a [any] group accident and
health form [master policies, contracts, certificates,
applications, enrollment forms, riders, amendments, and endorsements
applicable thereto] issued to employers under [authority
of] Insurance Code §1251.051, concerning Employers,
or to a labor union or association of labor unions [and §1251.052;
provided the forms issued] under [authority of] Insurance
Code §1251.052, concerning Associations [are
exempt only if delivered or issued for delivery to a labor union or
organization of labor unions];
[(B) any blanket accident and health
master policies, contracts, certificates, applications, enrollment
forms, riders, amendments, and endorsements applicable thereto, issued
under authority of Insurance Code §§1251.351 - 1251.358;]
(B) [(C) any] group forms [master policies, contracts, certificates, applications, enrollment
forms, riders, amendments, and endorsements applicable thereto,]
issued under [the authority of] Insurance Code §§1251.051;[,] 1251.052;[,] or 1251.053, concerning Funds Established by Employers, Labor Unions, or Associations,
respectively, that provide [providing] Medicare Supplement
coverage to an employer, multiple employer arrangement, or a labor
union and that are exempt from regulation under Insurance Code §1652.002(b)(1),
concerning Medicare Supplement Benefit Plan;
(C) [(D) any] group forms [master policies, contracts, certificates, applications, enrollment
forms, riders, amendments, and endorsements applicable thereto,]
issued under [the authority of] Insurance Code §1251.051
and §1251.052 that provide [providing]
long-term care coverage to a single employer, [or]
a labor union, or an association of labor unions through
a policy that [which] is delivered or issued
for delivery outside of Texas;
(2) group and individual accident and [and/or
] health forms that provide the following coverages: [policies, contracts, certificates, applications, enrollment forms,
riders, amendments, endorsements, and related forms (including but
not limited to outlines of coverage, notices, rates, and conditional
receipts) applicable thereto, providing coverages set forth in subparagraphs
(A) - (K) of this paragraph:]
(A) accident only (including occupational accident and other specified accident);
(B) accidental death and dismemberment;
(C) hospital indemnity [dental];
[(D) in-patient confinement and basic
hospital expense coverages (including policies with coverage on an
indemnity or expense-incurred basis);]
(D) [(E)] vision;
(E) [(F)] specified disease (including
cancer, heart attack, stroke, and other specifically named diseases);
(F) [(G)] disability coverages
(including [but not limited to] income replacement, key-man,
buy/sell, and overhead expense);
(G) [(H)] policies designed to
provide conversion coverages;
(H) [(I)] other permitted coverages that [which] are designed to supplement other in-force
health insurance[, including Champus supplements]; and
(I) [(J)] group stop loss/excess
loss policies containing an attachment point of $5,000 or more.[; and]
[(K) prescription drug policies; and]
[(3) any alternate face pages filed subsequent to the original approval of a policy for use with multiple employer trusteed arrangements as defined in Insurance Code §1251.053.]
(f) Exceptions. A filing identified in [The
provisions of] subsection (e) of this section is not permitted
to be filed as exempt for [do not apply to] any of
the following insurance forms or rates: [set
out in paragraphs (1)-(6) of this section.]
(1) a [The provisions of subsection
(e)(2) of this section do not apply to any] group or individual
health insurance policy that [which] provides,
on a comprehensive basis for illness and injury, a combination of
hospital, medical, and surgical coverages, including [but not
limited to] any guaranteed renewable or short-term limited-duration
major medical policies; [and any limited benefit
hospital, medical, and surgical policies as defined in §3.3079
of this title (relating to Minimum Standards for Limited Benefit Coverage).]
(2) a [The provisions of subsection
(e)(1) and (2) of this section do not apply to any] Medicare
supplement policy [policies] as defined in Insurance
Code Chapter 1652, concerning Medicare Supplement Benefit Plans, except
as specifically provided in subsection (e)(1)(C) of this section;[.]
(3) a [The provisions of subsection
(e)(1) and (2) of this section do not apply to any] long-term
care policy [policies] as defined in Insurance
Code Chapter 1651, concerning Long-Term Care Benefit Plans, (including
[but not limited to] any policies providing nursing home
or home health care coverages), except as specifically provided in
subsection (e)(1)(D) of this section;[.]
(4) a form containing [The provisions
of subsection (e)(1) and (2) of this section do not apply to any forms
which contain] preferred provider or exclusive provider benefit
plan provisions as defined in Insurance Code Chapter 1301, concerning
Preferred Provider Benefit Plans; [§§3.3701 -
3.3706 of this title (relating to Preferred Provider Plans).]
(5) a [The provisions of subsection
(e)(1) and (2) of this section do not apply to any] group form
that is [forms which are] issued under [the
authority of] Insurance Code §1251.056, concerning
Other Groups; [(discretionary groups).]
(6) a conversion [The provisions of
subsection (e)(2)(H) of this section do not apply to any] policy
subject to the provisions of Chapter 21, Subchapter SS of this
title, (relating to Continuation and Conversion Provisions) [Subchapter
F of this chapter (relating to Group Health Insurance Conversion Privilege)
], except for policies providing conversion from a policy included
as an exempt form in this section;[.]
(7) a policy of "other fixed indemnity coverage" that is more extensive than coverage for hospital confinement, including a policy that provides limited long-term care coverage for a period of less than 12 months;
(8) rate or actuarial information that is required to be filed, even if the form is filed exempt as permitted by this section; and
(9) a dental policy.
(g) Copies of previously approved forms. Except
for filings not eligible to be filed exempt under subsection (f)(4)
of this section, a [Any] form not otherwise exempted
under this subchapter that is an exact copy of a [previously
approved] form is exempt from the review and approval requirements
of Insurance Code Chapter 1701. These [Such]
forms must be filed in accordance with and accompanied by the required
certification as prescribed in Subchapter A of this chapter (relating
to Submission Requirements for Filings and Departmental Actions Related
to Such Filings). [The certification form required to be used
in filing the certification is "TEXAS POLICY FORM CERTIFICATIONS,
Multi-Use Form," which also is to be utilized for filing certifications
for file-and-use under Insurance Code §1701.052, as well as for
corrections, resubmissions, substitutions, and filings for forms exempted
from review and official action by this subchapter. Form "TEXAS POLICY
FORM CERTIFICATIONS" is available from the Life and Health Division,
has been filed with the Texas Register Division of the Secretary of
State for public inspection, and is adopted by reference in this subchapter.
The form also is reproduced in full as Figure 1 in §3.4020 of
this title (relating to Appendix).]
(h) Copies of previously approved forms subsequently
submitted in braille or a non-English [foreign]
language [(non-English)]. Any form not otherwise exempted
under this subchapter that is submitted in braille [Braille
] as an exact copy of a previously approved form, or any form
that has been translated into a non-English [foreign]
language from its previously approved English version, is exempt from
the review and approval requirements of Insurance Code Chapter 1701. These [Such] forms must be filed in accordance with
and accompanied by the required certification as prescribed in Subchapter
A of this chapter. [The certification form required to be used
in filing the certification is the same as that described in subsection
(g) of this section.]
§3.4005.General Information.
(a) This section does not relieve any insurer or other licensee from complying with the Insurance Code or the rules and regulations of the Texas Department of Insurance.
(b) Insurers must cause all forms to comply with all
required provisions of all applicable law, including [but
not limited to] the Insurance Code and the rules and regulations
of the department. In addition to other legal requirements:
(1) forms may not contain any ambiguous, deceptive, misleading, unfair, inequitable, or unjust wording or terminology;
(2) title headings or other indications of a form's provisions may not be misleading;
(3) forms may not contain any exception, exclusion,
limitation, or reduction that is deceptive, unjust, unfair, encourages
misrepresentation, or is inequitable or that would deceptively
affect the risk understood [purported] to be
assumed in the general coverage of the contract; and
(4) forms may not be printed or otherwise reproduced in such a manner as to render any provision of the form substantially illegible or not easily legible to persons of normal vision.
(c) Every filing exempted from review by this subchapter must be accompanied by each item of information set out in paragraphs (1) - (3) of this subsection.
(1) The certifications for exempt filings required
in §3.16 of this title (relating to Filing Modes, Categories,
and Certifications). [A signed copy of the certification
form which is entitled "TEXAS POLICY FORM CERTIFICATIONS, Multi-Use
Form," which also is to be utilized for filing certifications for
file-and-use under Insurance Code §1701.052, as well as for corrections,
resubmissions, substitutions, and filings for previously approved
similar forms. Form "TEXAS POLICY FORM CERTIFICATIONS" is available
from the Life and Health Division, has been filed with the Texas Register
Division of the Secretary of State for public inspection, and is adopted
by reference in this subchapter. The form also is reproduced in full
as Figure 1 in §3.4020 of this title (relating to Appendix).]
(2) Any additional information or documentation generally required under the provisions of Chapter 3, Subchapter A of this title (relating to Submission Requirements for Filings and Departmental Actions Related to Such Filings).
(3) A cover letter setting out the items in subparagraphs (A) - (C) of this paragraph, as follows:
(A) that the filing is exempt;
(B) the particular section, subsection, paragraph, and subparagraph of the section under which the filing is exempt; and
(C) a brief description of the benefits provided by the form.
§3.4009.Sanctions and Cancellation of Exempt Filing Privileges.
(a) The privileges under this subchapter that
permit an insurer to make exempt filings may be [these
sections are] canceled [for an insurer] if the
insurer makes an exempt filing that fails to comply with one or more
provisions of this title or the Insurance Code that results in the
department determining that the filing has failed audit. The department
will issue a notice of failed audit consistent with §3.23 of
this title (relating to Acceptance, Rejection, and Disposition of
Filings) that explains [either of the determinations in
paragraphs (1) or (2) of this subsection are made after notice and
hearing as follows]:
(1) the compliance deficiencies identified during the audit process;
[(1) an insurer's filing made under §3.4004
of this title (relating to Exempt Forms) fails to comply with §3.4005
of this title (relating to General Information); or]
(2) the corrective action required;
[(2) an insurer's filing made under §3.4004(g)
of this title fails to be an exact copy of a filing previously approved.]
(3) the cancellation of the insurer's exempt filing privileges; and
(4) how those privileges may be reinstated.
(b) If an insurer's privileges to make exempt
filings under this subchapter are cancelled [In the event
of cancellation of privileges under these sections], the insurer
is [henceforth] required to file for review and approval
any and all forms intended for use in Texas, until the [such
time as] privileges under these sections are reinstated.
(c) Reinstatement of any privilege canceled under these
sections will occur after a period of not more than one year,
as provided in the notice of failed audit under subsection (a) of
this section [from the date the privileges finally terminate,
unless otherwise determined by the commissioner]. An insurer
may make application for reinstatement prior to the passage of the
period specified in the notice of failed audit under subsection (a)
of this section [one year following the termination of
such privileges].
(d) Nothing in these sections limits the commissioner from imposing any other sanction authorized by the Insurance Code or other applicable law.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404547
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes the repeal of §3.4020 under Insurance Code §§1701.057, 1701.060, 1701.061, and 36.001.
Insurance Code §1701.057 provides that the commissioner, in accordance with Insurance Code §1201.007, adopt reasonable rules necessary to establish standards for the withdrawal of approval of an individual accident and health insurance policy form.
Insurance Code §1701.060 provides that the commissioner may adopt reasonable rules necessary to implement the purposes of Insurance Code Chapter 1701, including, after notice and hearing, rules that establish procedures and criteria relating to review and approval of types of forms.
Insurance Code §1701.061 provides that the commissioner may adopt rules to implement the section, including rules to determine which noninsurance benefits are reasonably related to the types of insurance subject to Insurance Code Chapter 1701, ensure that noninsurance benefits are not unfairly deceptive or do not constitute a prohibited inducement, and address application of other chapters of the Insurance Code to noninsurance benefits.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. The proposed repeal of §3.4020 implements Insurance Code §1701.005 and §§1701.052 - 1701.055.
§3.4020.Appendix.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404528
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
SUBCHAPTER M. REGULATORY FEES
The Texas Department of Insurance (TDI) proposes to amend 28 TAC §7.1301, concerning regulatory fees, and repeal §7.1302, concerning billing system, to be consistent with the proposed repeal and amendment of certain existing sections and adoption of new sections in 28 TAC Chapter 3, Subchapter A, Submission Requirements for Filings and Departmental Actions Related to Such Filings. The Chapter 3 proposal is published separately in this issue of the Texas Register.
EXPLANATION. Amending §7.1301 and repealing §7.1302 are necessary to conform to the proposed repeal, amendment, and addition of new sections in Chapter 3, Subchapter A. As proposed, the applicability of Chapter 3, Subchapter A, is expanded to include filings by health maintenance organizations (HMOs). The fee amounts for HMO filings addressed in §7.1301 will be replaced with fee amounts specified in proposed §3.13. Existing §3.7, which references the billing system in §7.1302, is proposed for repeal. Proposed new §3.13 requires filing fees to be paid through the electronic funds transfer system provided within the System for Electronic Rates & Forms Filing (SERFF). This change eliminates the need for the electronic billing system; thus, §7.1302 is proposed for repeal.
Descriptions of the proposed amendments to the sections follow.
Section 7.1301. Regulatory Fees. The proposed amendments to subsection (g) revise paragraph (4) and delete paragraph (5) to remove the existing provisions that specify a fee of $100 for an evidence of coverage that requires approval, and a fee of $50 for a filing that is required by rule but that does not require approval. Subsection (g)(4) is amended to reference filing fees specified in §3.13 for a filing governed by Chapter 3, Subchapter A. Subchapter A applies to form, rate advertising, network, group eligibility, and informational filings for life and health products, and as proposed, also applies to HMO products. As proposed separately in this edition of the Texas Register, §3.13 requires a fee of $100 for form and rate filings (including HMO evidence of coverage forms and their associated schedules of charges), subject to certain exceptions, and no fee for other types of filings (such as network filings). This change will result in a cost savings to issuers, as described in the Public Benefit and Cost Note section for Chapter 3, Subchapter A. In addition, TDI proposes nonsubstantive changes throughout §7.1301 to conform to agency style and usage guidelines, and to add titles to Insurance Code references.
Repeal of §7.1302. TDI proposes to repeal §7.1302, which establishes TDI's internal billing system. This change aligns with the proposed repeal of existing §3.7, and proposed new §3.13, which requires issuers to pay filing fees previously governed by §7.1302 through the SERFF EFT system. This change will increase efficiency for TDI and issuers by reducing the administrative work involved in creating, processing, and paying invoices.
FISCAL NOTE AND LOCAL EMPLOYMENT IMPACT STATEMENT. Rachel Bowden, director of the Regulatory Initiatives Office in the Life and Health Division, has determined that during each year of the first five years the sections as proposed are in effect, there will be no measurable fiscal impact on state and local governments as a result of enforcing or administering them, other than that imposed by statute. Ms. Bowden made this determination because the sections as proposed do not add to or decrease state revenues or expenditures, and because local governments are not involved in enforcing or complying with the proposed sections.
Ms. Bowden does not anticipate a measurable effect on local employment or the local economy as a result of this proposal.
PUBLIC BENEFIT AND COST NOTE. For each year of the first five years the sections as proposed are in effect, Ms. Bowden expects that administering them will have the public benefit of ensuring that TDI's rules conform to the proposed changes in Chapter 3, Subchapter A, relating to Submission Requirements for Filing and Departmental Actions Related to Such Filings. Chapter 3, Subchapter A, is also proposed for repeal and replacement, and its publication coincides with the publication of the proposed amendments to §7.1301 and the proposed repeal of §7.1302.
For each of the first five years the sections as proposed are in effect, Ms. Bowden also expects that the public benefit anticipated as a result of administration and enforcement of the proposed amendments to §7.1301 and the proposed repeal of §7.1302 will be increased efficiency in the filing process, both for filers and for TDI, resulting in increased speed-to-market for product filings. Currently, filers that fail to pay fees have their filings put "on hold" until delinquent fees are paid, consistent with §7.1302(f) and (g). The updated filing fee process will avoid such holds. In addition, Ms. Bowden expects that administering the sections as proposed will have the public benefit of ensuring that TDI's rules are accurate, consistent, and transparent by reflecting updated Insurance Code references and correct state agency names and by addressing and eliminating errors in punctuation, grammar, and typography.
Ms. Bowden expects that the sections as proposed will not increase the cost of compliance for stakeholders because, as explained in the proposal for Chapter 3, the amendments result in a decrease in filing fees. Based on filing data for 2022 and 2023, TDI estimates an annual cost savings of $10,000 - $17,000 associated with the changes to fees for HMO filings that are addressed in §7.1301.
ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS. TDI has determined that the sections as proposed will not have an adverse economic effect on small or micro businesses, or on rural communities. As a result, and in accordance with Government Code §2006.002(c), TDI is not required to prepare a regulatory flexibility analysis.
EXAMINATION OF COSTS UNDER GOVERNMENT CODE §2001.0045. TDI has determined that this proposal does not impose a possible cost on regulated persons. Instead, the proposal results in a cost savings, as explained in the Public Benefit and Cost Note section. Therefore, no additional rule amendments are required under Government Code §2001.0045
GOVERNMENT GROWTH IMPACT STATEMENT. TDI has determined that for each year of the first five years that the sections as proposed are in effect, the proposed rule:
- will not create or eliminate a government program;
- will not require the creation of new employee positions or the elimination of existing employee positions;
- will not require an increase or decrease in future legislative appropriations to the agency;
- will decrease fees paid to the agency;
- will not create a new regulation;
- will expand, limit, or repeal an existing regulation;
- will not increase or decrease the number of individuals subject to the rule's applicability; and
- will not positively or adversely affect the Texas economy.
TAKINGS IMPACT ASSESSMENT. TDI has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action. As a result, this proposal does not constitute a taking or require a takings impact assessment under Government Code §2007.043.
REQUEST FOR PUBLIC COMMENT. TDI will consider any written comments on the proposal that are received by TDI no later than 5:00 p.m., central time, on November 4, 2024. Send your comments to ChiefClerk@tdi.texas.gov or to the Office of the Chief Clerk, MC: GC-CCO, Texas Department of Insurance, P.O. Box 12030, Austin, Texas 78711-2030.
The commissioner of insurance will also consider written and oral comments on the proposal in a public hearing under Docket No. 2850 at 2:00 p.m., central time, on November 7, 2024, in Room 2.035 of the Barbara Jordan State Office Building, 1601 Congress Avenue, Austin, Texas 78701.
STATUTORY AUTHORITY. TDI proposes amendments to §7.1301 under Insurance Code §§843.154, 1153.006, 1701.053, and 36.001.
Insurance Code §843.154 provides that the commissioner, within the limits provided by the section, prescribe the fees to be charged under Insurance Code §843.154.
Insurance Code §1153.006 provides that TDI set a fee not to exceed $200 for a form or schedule filed under Insurance Code Chapter 1153.
Insurance Code §1701.053 provides that TDI collect a fee in an amount determined by the commissioner for the filing of the form of a document under Insurance Code Chapter 1701.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. Section 7.1301 implements Insurance Code §§843.154, 1153.006, and 1701.053.
§7.1301.Regulatory Fees.
(a) Regulated entities subject to fees. The regulated
entities subject to the fees imposed by this section include all authorized
insurers writing any class of insurance in this state that [which] are regulated by Insurance Code Title 2, concerning
Texas Department of Insurance; Title 6, concerning Organization of
Insurers and Related Entities; Title 7, concerning Life Insurance
and Annuities; Title 8, concerning Health Insurance and Other Health
Coverages; Title 9, concerning Provisions Applicable to Life and Health
Coverages; Title 10, concerning Property and Casualty Insurance; Title
11, concerning Title Insurance; and Title 12, concerning Other Coverage [Titles 2 and 6 - 12]. For filings and other actions received
by the Texas Department of Insurance (department) [department
] on and after the effective date of this section, the [Texas
Department of Insurance (department)] department will
charge these entities fees in amounts in accordance with the provisions
of this section. Filings or other actions received by the department
before the effective date of this section will be governed by this
subchapter as it existed immediately prior to that date.
(b) Fees for insurers with annual gross premium receipts less than $450,000. As provided in Insurance Code §202.004, concerning Reduced Fees for Certain Insurers, any insurer to which Insurance Code Chapter 202, concerning Fees, applies and whose gross premium receipts are less than $450,000 according to its annual statement for the preceding year ending December 31, is required to pay only one-half the amount of the fees required to be paid under subsection (d) or subsection (e) of this section. The fees will be collected at the higher rate unless the applicant can provide the department with satisfactory documentation that gross premium receipts were less than $450,000.
(c) Fees for specified filings under [pursuant
to] Insurance Code Chapter 1701, concerning Policy Forms.
Fees for specified filings under [pursuant to]
Insurance Code Chapter 1701 are set forth in and governed by Chapter
3, Subchapter A of this title (relating to Submission Requirements
for Filings and Departmental Actions Related to Such Filings).
(d) Fees for authorized insurers writing classes of insurance in this state that are regulated by Insurance Code Titles 2 and 6 - 12. For the following filings and actions, the fees are as follows.
(1) For classes of insurance for which statutory authority exists for collecting annual statement fees, the fee for filing annual statements is $250 unless otherwise specified.
(2) For filing amendments to certificate of authority if charter is not amended, the fee is $0.
(3) For reservation of name, the fee is $0.
(4) For renewal of reservation of name, the fee is $0.
(5) For filing application for admission of a foreign or alien insurance company, including issuance of certificate of authority, the fee is $0.
(6) For filing original charter, including issuance of certificate of authority, the fee is $0.
(7) For filing amendment to charter, including issuance of certificate of authority, if a hearing is held, the fee is $0.
(8) For filing amendment to charter, including issuance of certificate of authority, if a hearing is not held, the fee is $0.
(9) For filing designation of attorney for service
of process or amendment to that [thereto], the
fee is $0.
(10) For filing a total reinsurance agreement, the fee is $0.
(11) For filing a partial reinsurance agreement, the fee is $0.
(12) For filing a direct reinsurance agreement under [pursuant to] Insurance Code Chapter 884, Subchapter K, concerning
Direct Reinsurance Agreements, the fee is $0.
(13) For filing for approval of reinsurance agreement under [pursuant to] Insurance Code Chapter 828, concerning
Purchase of Stock for Total Assumption Reinsurance, the fee
is $0.
(14) For filing for approval of merger under [pursuant to] Insurance Code Chapter 824, concerning Merger
and Consolidation of Stock Insurance Corporations, the fee is $0.
(15) For accepting a security deposit, excluding deposits
made under [pursuant to] Insurance Code §425.002, concerning Certain Insurers: Deposit of Securities, Money, or Property
in Amount of Legal Reserves, the fee is $0.
(16) For substitution/amendment of a security deposit,
excluding deposits made under [pursuant to]
Insurance Code §425.002, the fee is $0.
(17) For certification of statutory deposit, the fee is $0.
(18) For filing notice of intent to relocate the books/records under [pursuant to] Insurance Code Chapter 803, concerning
Location of Books, Records, Accounts, and Offices Outside of This
State, the fee is $0.
(19) For filing restated articles of incorporation for domestic/foreign companies, the fee is $0.
(20) For filing a statement under [pursuant
to] Insurance Code Chapter 823, Subchapter D, concerning
Control of Domestic Insurer; Acquisition or Merger, and Subchapter
E, concerning Acquisition Statement, [Subchapters D and
E] for the first $9,900,000 of the purchase price or consideration,
the fee is $0.
(21) For filing a statement under [pursuant
to] Insurance Code Chapter 823, Subchapters D and E, if the
purchase price or consideration exceeds $9,900,000, the fee is $0.
(22) For filing registration statement under [pursuant to] Insurance Code Chapter 823, Subchapter B, concerning
Registration, the fee is $0.
(23) For filing for review under [pursuant
to] Insurance Code Chapter 823, Subchapter C, concerning Transactions
of Registered Insurer, or Chapter 884, Subchapter L, concerning
Direct Reinsurance Agreements with Mutual Assessment Companies, the
fee is $0.
(24) For filing for an exemption under [pursuant
to] Insurance Code §823.164, concerning Exemptions
from Subchapter, the fee is $0.
(e) Other fees established by Insurance Code Chapter 202. For the following filings, the fee is as follows.
(1) For filing joint control agreement, the fee is $0.
(2) For filing substitution/amendment to the joint control agreement, the fee is $0.
(3) For filing a change in attorney in fact, the fee is $0.
(f) Administrative procedures.
(1) When a reinsurance agreement or merger agreement is filed with the department, as enumerated in subsection (d)(10) - (14) of this section, the appropriate fee will be determined based on the ceding or merged company.
(2) The fee relating to reinsurance transactions entered
into under [pursuant to] Insurance Code Chapter
823, Subchapter C, and subsection (d)(23) of this section will be
[determined] based on the ceding company.
(3) When an amendment to a reinsurance agreement between affiliated insurers is filed with the department, as mentioned in paragraph (1) of this subsection, the appropriate fee will be based on the ceding company.
(4) An amendment to the charter would constitute any
change in the original charter, including [, but not limited
to,] name change, home office change, increase in capital, conversion,
and increase in lines.
(5) The fee relating to affixing the official seal and certifying to the seal will be applied to all requests for certification, irrespective of requesting party.
(6) The fees for filing an acquisition statement under
[pursuant to] Insurance Code Chapter 823, Subchapters
D and E, and subsection (d)(20) and (21) of this section will apply
to and be collected from the applicant whenever:
(A) the applicant is a regulated entity subject to this section; or
(B) the company being acquired is a regulated entity subject to this section.
(g) Fees under [pursuant to]
the Texas Health Maintenance Organization Act, Insurance Code Chapter
843, concerning Health Maintenance Organizations. For the
following filings and actions, the fees are as follows.
(1) For filing original application for certificate of authority, the fee is $0.
(2) For filing annual report, the fee is $250.
(3) For all examinations made on behalf of the State of Texas by the department or under its authority, the fee will be an amount the commissioner certifies to be just and reasonable.
(4) For a filing governed by Chapter 3, Subchapter
A of this title, fees are set forth in and governed by §3.13
of this title (relating to Filing Fees). [filing evidence
of coverage which requires approval, the fee is $100.]
[(5) For filing required by rule but
which does not require approval, the fee is $50.]
(h) Fees for filings under [pursuant
to] Insurance Code Chapter 1153, concerning Credit Life
Insurance and Credit Accident and Health Insurance. Fees for
filings under [pursuant to] Insurance Code Chapter
1153 are set forth in and governed by Chapter 3, Subchapter A of this title.
(i) Fee for filing an annual statement under Insurance Code Chapter 841, concerning Life, Health, or Accident Insurance Companies. The fee for filing an annual statement is $250.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404549
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555
STATUTORY AUTHORITY. TDI proposes the repeal of §7.1302 under Insurance Code §§843.154, 1153.006, 1701.053, and 36.001.
Insurance Code §843.154 provides that the commissioner, within the limits provided by the section, prescribe the fees to be charged under Insurance Code §843.154.
Insurance Code §1153.006 provides that TDI set a fee for a form or schedule filed under Insurance Code Chapter 1153.
Insurance Code §1701.053 provides that TDI collect a fee in an amount determined by the commissioner for the filing of the form of a document under Insurance Code Chapter 1701.
Insurance Code §36.001 provides that the commissioner may adopt any rules necessary and appropriate to implement TDI's powers and duties under the Insurance Code and other laws of this state.
CROSS-REFERENCE TO STATUTE. The proposed repeal of §7.1302 implements Insurance Code §§843.154, 1153.006, and 1701.053.
§7.1302.Billing System.
The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.
Filed with the Office of the Secretary of State on September 19, 2024.
TRD-202404548
Jessica Barta
General Counsel
Texas Department of Insurance
Earliest possible date of adoption: November 3, 2024
For further information, please call: (512) 676-6555