Who qualifies as a small employer?
A. The first step in determining if a small business is eligible for Healthy Texas is to determine if it is a small employer. For small group insurance purposes, Texas law defines a small business as one with 2-50 “eligible” employees. The term “eligible employees” identifies which employees are to be counted for determining whether the business qualifies to purchase small employer insurance and how many employees must enroll in order to meet “minimum participation requirements”. The term is defined in a way to make it easier for small businesses to qualify for insurance by excluding certain employees (such as those who already have insurance) from the count of “eligible” employees. The definition does not prohibit an employer from enrolling some non-eligible employees in the plan. To determine if you qualify as a small employer, eligible employees:
- Must work at least 30 hours a week.
- May be a sole proprietor, a partner or an independent contractor.
Employees are not eligible if they:
- Are temporary, seasonal or substitute.
- Are already covered by another group health benefit plan – such as a spouse’s health plan.
- Elect not to be covered under the employer’s health benefit plan, but are covered under Medicaid, CHAMPUS, Medicare or another federal program.
- Are covered under a benefit plan established in another country.
A business’ owners count as eligible employees. A husband and wife working in a business count as two separate employees. Neither of the employees is eligible for coverage as a dependent of the other. An employer may choose to offer part-time employees Healthy Texas coverage, but part-time employees are not counted as “eligible” employees for determining an employers’ status as a small business.
Example 1: Smith’s Cabinet Makers employs 75 employees. Fifteen employees are either part-time or seasonal workers; therefore, they are not eligible for coverage. Ten of the remaining 60 employees have elected not be covered under the employer’s group health plan because they are covered under Medicaid. The remaining 50 employees work at least 30 hours a week and are eligible for health care coverage. Though Smith’s Cabinet Makers employs a total of 75 employees, only 50 employees are eligible for coverage, thereby making it a small employer. Smith's Cabinet Makers may therefore use the Healthy Texas eligibility criteria to determine if it is eligible for Healthy Texas.
Total employees: 75
Part-time or seasonal employees −15
Employees not electing coverage who are covered by another plan −10
Total number of remaining employees 50
Example 2: Joe’s Grooming is a sole proprietorship that employs 3 employees including the owner. Two employees work 30 hours a week while Joe works 20 hours a week. Since two of the three employees meet the small employer eligibility requirements, Joe’s Grooming is considered a small employer. Joe's Grooming may therefore use the Healthy Texas eligibility criteria to determine if it is eligible for Healthy Texas.
Total employees: 3
Part-time or seasonal employees−1
Total number of remaining employees 2
Example 3: Sunshine Coffee House employs 10 employees. Five employees are part-time and are not eligible for coverage. Four of the remaining employees are covered under Medicare leaving the owner as the only eligible employee. Since the business is considered a single-person employer, it is not a small employer and would not be eligible for Healthy Texas coverage.
Part-time or seasonal employees−5
Employees not electing coverage who are covered by another plan −4
Total number of remaining employees 1
Q. Is a sole proprietor or single-person business eligible for Healthy Texas?
A. A sole proprietorship is eligible for Healthy Texas if it has two or more employees and at least two of its employees meet the statutory definition of “eligible employee.” A single-person business is not eligible for Healthy Texas.
Q. Who is eligible for Healthy Texas?
- A. Once an employer meets criteria to be considered a small employer, the employer must also meet the following requirements to be eligible to offer Healthy Texas:
- The employer is located in Texas;
- The employer employs 2-50 eligible employees;
- An employer must not have provided group insurance 12 months prior to applying for Healthy Texas. However, if an employer offered a plan and contributed less than an average of $50 per employee per month and the qualifying benefit plan’s annual maximum benefit level was less than $50,000, the employer nonetheless may be eligible for Healthy Texas;
- At least 30 percent of eligible employees must receive annual wages at or below 300 percent of the Federal Poverty Level ($32,670 for a single person in 2011);
- At least 60 percent of eligible employees must elect to participate in the program;
- The employer must pay at least 50% of the premium for employees;
- An employer must offer coverage to dependents of employees; and
- Each employee must be a citizen or national of the United States or is an alien lawfully present in the United States.
Incidentally, though not required to, an employer may:
- Pay any level of premium contribution made on behalf of dependents of employees;
- Offer coverage to part-time employees and their dependents; and
- Pay any level of premium contribution made on behalf of part-time employees and their dependents.
- Q. Why is Healthy Texas only available to small employers who have not provided health insurance for the last 12 months?
A. Healthy Texas is designed to target those employees who are completely uninsured. The employer qualification requirements are intended to ensure that employers do not drop existing coverage in favor of this product. The Legislature established participation requirements and may consider revisions in the future.
Q. What are the marketing requirements for agents and health plans?
A. All Healthy Texas marketing materials used by the participating carriers and their agents must be in compliance with applicable statutes and regulations. TDI reviews the marketing materials used by the participating carriers and the participating carriers’ agents prior to publishing to ensure statutory and regulatory compliance.
Q. How are Healthy Texas agents be compensated?
A. Participating carriers determine how agents are compensated. Commissions are paid according to the applicable statutes and regulations.
Q. Will MultiShare programs be participating with Healthy Texas?
A. Yes, in addition to the two Healthy Texas commercial insurers, MultiShare programs may also provide Healthy Texas coverage. In order to provide coverage, MultiShare programs must first apply with TDI and then be selected to market the Healthy Texas Program. If selected, the MultiShare program will provide Healthy Texas coverage to small employers within its service area. The MultiShare benefit designs will be different from those plans offered by the commercial carriers in that the MultiShare plans focus on a member’s wellness and primary and preventative care with limited hospitalization benefits.
Q. Is a streamlined application process in place that provides the small employer the opportunity to determine eligibility prior to enrollment?
A. Yes. Employers are required to submit a short verification form that determines eligibility and allows a rate quote to be generated. Once an employer makes a decision about purchasing a Healthy Texas plan, a more detailed application form is completed.
Q. What is a MultiShare program?
A. MultiShare programs (referred to as “regional and local health care programs” under Texas Health and Safety Code Chapter 75) are a creation of state legislation. The health care plans offered by MultiShare programs offer basic health benefit coverage designed for the small employer employing 2 to 50 employees.
One MultiShare program distinction is that, in order to make its health care plans more affordable for the small employer, the program health care costs for the lower-wage employees are split among the employee, employer, and public or philanthropic funding sources.
Q. How will MultiShare programs be involved in Healthy Texas?
A. In addition to the two Healthy Texas commercial insurers, MultiShare programs may also provide Healthy Texas coverage. In order to provide coverage, such programs must first apply with TDI and then be selected to market the Healthy Texas Program. If selected, the MultiShare program will provide Healthy Texas coverage to small employers within its service area. The MultiShare benefit designs will be different from those plans offered by the commercial carriers in that the MultiShare plans focus on a member’s wellness and primary and preventative care with limited hospitalization benefits.
Q. Are MultiShare health plans the same as conventional major medical health insurance plans?
A. No. Unlike conventional major medical health insurance plans which provide comprehensive coverage, MultiShare plans focus on a member’s wellness and primary and preventative care. The plans do not provide comprehensive health coverage nor do the plans assume the full risk for the member’s health care needs.
Q. Are program health care costs paid entirely by the employee?
A. No. As noted in the MultiShare program description, in order to make the MultiShare Program’s health care plans more affordable for the small employer, the program health care costs for the lower-wage employees are split among the employee, employer and public or philanthropic funding sources.
Q. Do the MultiShare program health care plans provide unlimited access to providers and unlimited coverage?
A. No. MultiShare program health care plans offer limited coverage and limited provider network access.
Q. Where is MultiShare health care coverage offered in the state?
A. MultiShare health care coverage is offered through the TexHealth Coalition, comprised of six regional MultiShare programs. The six regions represented in the coalition include Brazos Valley, Central Texas, El Paso County, Galveston County, Harris County and North Texas. Each region offers TexHealth coverage with different benefit plans. To date, these are the only areas where MultiShare health care plans are offered. Some of these MultiShare programs are operational and some are not yet offering coverage.
Q. What qualifications must be met for a small employer to qualify for TexHealth coverage?
A. Each regional MultiShare plan has developed its own eligibility requirements. A general summary of those eligibility requirements across the MultiShare plans are as follows:
- Business must be located within the geographic region where application for coverage occurs (i.e., business must be located in Travis, Hays or Williamson County to be eligible for coverage offered through the Central Texas Health Coalition (TexHealth Central Texas);
- Must have 2-50 eligible employees, including the business owner;
- Must not have offered group health coverage in the previous 12 months;
- Must have 60% of eligible employees enroll in the program's plan;
- Must provide proof of employer group status and employee eligibility through State Unemployment Tax Authority or Census (payroll ledger; eligible 1099 employee should be on the payroll ledger); and
- Must pay 50% of program health care costs for qualified employees or less if funds are obtained to support program health care cost subsidies.
- Must be employee (W-2 or 1099) of enrolled group;
- Must work the minimum number of hours required by the applicable health coalition (weekly minimum hour requirement varies by coalition member);
- Must be a Texas resident but may live outside of the coalition member’s service area;
- May not be receiving government health benefits, ( i.e. Medicaid, Medicare, SSI, County Indigent Care programs, etc.); and
- 12-month pre-existing condition exclusion with 6-month look back period.
Q. Are the MultiShare programs regulated by TDI?
A. The MultiShare programs are not regulated by TDI. Section 75.103 of the Texas Health and Safety Code provides that, to the extent authorized by federal law, the governing body of a regional or local health care program may establish or facilitate the establishment of self-funded health benefit plans or may facilitate the provision of health benefit coverage through health savings accounts and high deductible plans.
Since Texas MultiShare programs are self-funded health benefit plans, TDI may have less authority to regulate health coverage established pursuant to §75.103 because the regulation of such coverage may be preempted by federal law. To determine the extent of regulatory authority TDI has over a particular type of coverage, it would be necessary to consider the specific federal law under which the coverage was established, and the degree to which that federal law preempts state regulation.
A MultiShare program has statutory authority to contract directly with health care providers within the boundaries of the participating county or counties to provide health care services directly to a small employer’s employees and dependents. The statute specifically provides that a MultiShare program is not an insurer or HMO and is not subject to TDI regulation.
Cost Sharing Accounts (CSAs)
Q. What is a Cost Sharing Account?
A. Cost Sharing Accounts (CSAs) provide qualified Healthy Texas enrollees with subsidies that enrollees can opt to use either to help pay for out-of-pocket expenses such as deductibles, co-insurance and copays, or to reduce the employee share of premiums.
Q. What is the purpose of a CSA?
A. CSAs help ease the initial financial cost sharing burden for those who have not previously utilized insurance-type products. They are structured so that enrollee financial participation requirements increase incrementally over time. CSAs are designed to:
- Increase access to affordable care;
- Increase appropriate use of health care through a medical home; and
- Promote a culture of insurance.
Q. Who is eligible for a CSA?
A. A working individual, 18-64 years of age and eligible for health care coverage through a participating employer, is eligible for a CSA. The individual worker must be uninsured at the time of application and the individual’s salary must be equal to or below 300% of the Federal Poverty Level ($32,670). In order for an employer to offer a CSA to its employees, the employer must not have offered group insurance coverage within the past 6-to-12 month period. If an employer discontinues participation with a health plan offering a CSA, the individual is no longer eligible to participate.
Q. How much does Healthy Texas cost and how are rates determined?
A. One purpose of Healthy Texas is to provide small employers with access to quality health benefit plans at an affordable price. Healthy Texas carriers can only use age, gender and business location to rate a small employer group, thus rates vary based on the group. Healthy Texas benefit plans are designed to lower premium costs by an average of one-third through the use of this modified rating practice and also as a result of other Healthy Texas program features. For example, Healthy Texas benefit plans must be offered at a cost that reflects the reduced financial risk exposure that results from availability of the Healthy Texas premium stabilization fund. Healthy Texas premiums are subject to TDI approval. Rate tables are available on the Healthy Texas insurers’ websites.
Q. What types of benefits does Healthy Texas cover?
A. Healthy Texas provides a benefit package that includes inpatient hospital services, outpatient hospital services, maternity, physician services and prescription drug benefits. By law, Healthy Texas benefit plans are exempt from certain mandated benefit requirements. TDI created a standard benefit package that participating carriers must offer.
Q. Are preexisting conditions excluded?
A. Yes. Consistent with currently permitted market practices, a preexisting condition provision is included in benefit plans offered through the program. The provision allows for a 12-month preexisting condition exclusion with a 6-month look back into the employee’s medical history.
Q. What is the premium stabilization fund and how does it work?
A. Healthy Texas uses a state premium stabilization fund (fund) to reimburse participating carriers and MultiShare programs for qualifying health care claims costs within statutorily established limits. The fund helps to protect health insurance carriers against losses due to unexpectedly high claims costs or an unexpectedly high volume of claims. The fund is designed to pay a participating health insurance carrier 80 percent of the costs if an individual’s total claims fall between $5,000 and $75,000 in a calendar year.
Q. Who administers Healthy Texas?
A. TDI is the state agency responsible for implementing and administering the program. TDI oversees the premium stabilization fund and perform administrative operations, while commercial carriers and MultiShare programs provide the health plans. From the employer’s and enrollee’s perspectives, the health plan operates like any private market plan.
State Continuation of Coverage and COBRA Coverage
Q. Is state continuation of coverage and COBRA available to Healthy Texas enrollees?
A. Continuation of coverage requirements that apply to Healthy Texas are the same as those that apply to the small and large employer market. A Healthy Texas employer’s employee would not be eligible for state continuation of coverage or COBRA if the employee is terminated for cause.
A Healthy Texas enrollee (employee or dependent) would qualify for state continuation of coverage and COBRA if:
- The small employer has 20 or more employees and employment is terminated either by the employee or employer. In this instance, the employee and dependent may elect COBRA coverage for 18 months upon termination and then, once COBRA coverage has ended, the employee and dependent may apply for state continuation of coverage for six months. The employee and dependent could qualify for coverage through COBRA and state continuation of coverage for a total of 24 months upon termination from employment.
- The small employer has less than 20 employees and employment is terminated either by the employee or employer. In this instance, the employee and dependent may elect the state’s Continuation of Coverage for nine months. The employee and dependent do not qualify for COBRA.
A Healthy Texas enrollee does not qualify for COBRA and state continuation of coverage if an employer terminates coverage with its Healthy Texas carrier or the carrier terminates coverage with the small employer. At either point, the employer’s group coverage would be terminated. An employee who leaves employment after the employer or carrier terminates group coverage would not be eligible for COBRA or continuation of coverage regardless of the employee’s circumstances for leaving employment.
If the Healthy Texas carrier elects to discontinue Healthy Texas coverage, it must provide advance notice to the department and to each covered employer, and must offer to each employer at the time of discontinuation the option to purchase other small employer coverage offered by the carrier.
If an employee is terminated for cause, the employee is not eligible for COBRA or state continuation of coverage.