Texas Bill Allows More Flexibility in Employee Health Benefit Plans

Small employers in Texas may now get some flexibility in selecting and retaining the health benefit plan of their choosing for their employees following the passage of a bill in the regular session of the Texas Legislature.

In late May state lawmakers passed and Gov. Greg Abbott signed Senate Bill 1406, which allows the insurance commissioner to negotiate with the U.S. secretary of health and human services for a waiver of certain provisions of the Affordable Care Act regarding the range of actuarial values within which a health benefit plan must fall in order to be compliant with the Act.

According to the legislative analysis of the bill, federal regulations adopted in 2013 imposed arbitrary limitations on employer health plans that have no financial or mathematical basis and confine health benefit plans to a very narrow range of actuarial values. The imposed limitations not only added “significant expense” to employer plans; they also resulted in confusion among “employers who must review and respond to a different plan design and cost year after year,” the legislative analysis states.

However, Section 1332 of the Affordable Care Act provides that states may seek waivers from these regulations and the intention of SB 1406 is to authorize the insurance commissioner to request a waiver for small employer health benefit plans.

The Texas Association of Health Underwriters (TAHU) said in a press release that the bill will offer Texas employers more flexibility in their choice of health benefit plans for their employees.

“Senate Bill 1406 will help restore stability for employers who buy their plans in the small group market,” TAHU President Cheryl Clark said in the group’s announcement. She said the legislation will begin the process of restoring stability for employers in this market.

TAHU worked with Texas lawmakers and the governor’s office on the bill, which passed both the House and Senate by wide margins.

Clark said that employers can now look forward to keeping a plan they like for several years. She noted that the rule focused on the actuarial value that a plan must have. As such, it was almost impossible for a plan to meet the criteria and remain legal for more than a couple of years.

Clark also noted that while employers have faced uncertainty about their health insurance plans, getting rid of this one rule will be a big step in bringing them peace of mind.