HB 5455

relating to creation of the Texas Health Insurance Exchange;
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Subtitle G, Title 8, Insurance Code, is amended
by adding Chapter 1511 to read as follows:
CHAPTER 1511.  TEXAS HEALTH INSURANCE EXCHANGE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1511.001.  DEFINITIONS.  In this chapter:
(1)  "Board" means the board of directors of the
(2)  "Exchange" means the Texas Health Insurance
(3)  "Executive commissioner" means the executive
commissioner of the Health and Human Services Commission.
(4)  "Qualified health plan" means a health benefit
plan that has been certified by the board as meeting the criteria
established under Section 1311(c), Patient Protection and
Affordable Care Act (42 U.S.C. Section 18031(c)).
(5)  "Secretary" means the secretary of the United
States Department of Health and Human Services.
Sec. 1511.002.  PURPOSE.  The purpose of this chapter is to
create, manage, and maintain the exchange to:
(1)  benefit the state health insurance market and
individuals enrolling in health benefit plans;
(2)  facilitate or assist in facilitating the
purchasing of qualified health plans on the exchange by qualified
enrollees in the individual market or the individual and small
(3)  minimize barriers to enrollment in qualified
health plans offered on the exchange.
Sec. 1511.003.  TREATMENT OF EMPLOYERS.  (a) For purposes of
this chapter, "small employer" means a person who employed at least
two, and an average of not more than 50 employees during the
(b)  All persons treated as a single employer under Section
414(b), (c), (m), or (o), Internal Revenue Code of 1986, are single
employers for purposes of this chapter.
(c)  An employer and any predecessor employer are a single
employer for purposes of this chapter.
(d)  In determining the number of employees of an employer
under this section, the number of employees:
(1)  includes part-time employees and employees who are
not eligible for coverage through the employer; and
(2)  for an employer that did not have employees during
the entire preceding calendar year, is the average number of
employees that the employer is reasonably expected to employ on
business days in the current calendar year.
(e)  A small employer that makes enrollment in qualified
health plans available to its employees through the exchange and
ceases to be a small employer by reason of an increase in the number
of its employees continues to be a small employer for purposes of
this chapter as long as it continuously makes enrollment through
the exchange available to its employees.
Sec. 1511.004.  RULEMAKING AUTHORITY.  The board may adopt
rules necessary and proper to implement this chapter. Rules adopted
under this section may not conflict with or prevent the application
of regulations promulgated by the secretary under the  Patient
Protection and Affordable Care Act (Pub. L. No. 111-148).
Sec. 1511.005.  AGENCY COOPERATION.  (a)  The exchange, the
department, and the Health and Human Services Commission shall
cooperate fully in performing their respective duties under this
code or another law of this state relating to the operation of the
(b)  The Health and Human Services Commission shall
cooperate and coordinate with the exchange to ensure eligibility
systems are able to communicate and are sufficiently integrated to
facilitate a seamless user experience.
Sec. 1511.006.  THIRD PARTY AUDIT OF EXCHANGE SYSTEM.  (a)
Before the initial open enrollment period for the exchange, the
board shall engage an independent third party audit team that
specializes in exchange system technology to:
(1)  verify and validate new technology functionality
throughout the design, development, and implementation phases of
the exchange system to ensure the system is working as designed and
(2)  provide to the board a report on the team's
(b)  The earliest initial enrollment period for the exchange
may not begin until after the board receives the audit team's report
Sec. 1511.007.  EXEMPTION FROM STATE TAXES AND FEES.  The
exchange is not subject to any state tax, regulatory fee, or
surcharge, including a premium or maintenance tax or fee.
Sec. 1511.008.  COMPLIANCE WITH FEDERAL LAW.  The exchange
shall comply with all applicable federal law and regulations.
Sec. 1511.009.  EXEMPTION FROM STATE PURCHASING  PROCEDURES.
The exchange is not subject to state purchasing or procurement
requirements under Subtitle D, Title 10, Government Code, or any
SUBCHAPTER B. ESTABLISHMENT AND GOVERNANCE
Sec. 1511.051.  ESTABLISHMENT.  The Texas Health Insurance
Exchange is established as an American Health Benefit Exchange and
a Small Business Health Options Program (SHOP) Exchange authorized
and required by Section 1311, Patient Protection and Affordable
Care Act (42 U.S.C. Section 18031).
Sec. 1511.052.  GOVERNANCE OF EXCHANGE;  BOARD MEMBERSHIP.
(a)  The exchange is governed by a board of directors.
(b)  The board consists of the following 11 members:
(1)  nine members appointed as follows:
(A)  three members appointed by the governor;
(B)  three additional members appointed by the
governor from a list of nominees submitted by the speaker of the
(C)  three members appointed by the lieutenant
(2)  two ex officio, nonvoting members as follows:
(A)  the commissioner or the commissioner's
(B)  the executive commissioner or the executive
(c)  In making appointments or nominations under this
section, the governor, lieutenant governor, and speaker of the
house of representatives must include representation from
participating health plans, consumers, small employers, brokers,
Sec. 1511.053.  PRESIDING OFFICER.  The board shall annually
designate one member of the board to serve as presiding officer.
Sec. 1511.054.  TERMS;  VACANCY.  (a)  Appointed members of
the board serve two-year terms, with the members' terms expiring
February 1 of each odd-numbered year.
(b)  Members may be reappointed but may not serve more than
(c)  The appropriate appointing authority shall fill a
vacancy on the board by appointing, for the unexpired term, an
individual who has the appropriate qualifications to fill that
Sec. 1511.055.  CONFLICT OF INTEREST.  (a)  Any board member
or a member of a committee formed by the board with a direct
personal interest in a matter before the board shall abstain from
deliberations and actions on the matter in which the conflict of
interest arises and shall further abstain from any vote on the
matter, and may not otherwise participate in a decision on the
(b)  Each board member shall file a conflict of interest
statement and a statement of ownership interests with the board to
ensure disclosure of all existing and potential personal interests
Sec. 1511.056.  GENERAL DUTIES OF BOARD MEMBERS.  (a) Each
board member has the responsibility and duty to meet the
requirements of this title and applicable state and federal laws
and regulations, to serve the public interest of the individuals
and small businesses seeking health benefit plan coverage through
the exchange, and to ensure the operational well-being and fiscal
(b)  A member of the board may not make, participate in
making, or in any way attempt to use the board member's official
position to influence the making of any decision that the board
member knows or has reason to know will have a material financial
effect, distinguishable from its effect on the public generally, on
the board member or the board member's immediate family, or on:
(1)  any source of income, other than gifts and loans by
a commercial lending institution in the regular course of business
on terms available to the public generally, aggregating $250 or
more in value, provided or promised to the member within the 12
months immediately preceding the date the decision is made; or
(2)  any business entity in which the member is a
director, officer, partner, trustee, or employee, or holds any
Sec. 1511.057.  REIMBURSEMENT.  A member of the board is not
entitled to compensation but is entitled to reimbursement for
travel or other expenses incurred while performing duties as a
board member in the amount provided by the General Appropriations
Sec. 1511.058.  MEMBER'S IMMUNITY.  (a)  A member of the
board is not liable for an act or omission made in good faith in the
performance of powers and duties under this chapter.
(b)  A cause of action does not arise against a member of the
board for an act or omission described by Subsection (a).
Sec. 1511.059.  OPEN RECORDS AND OPEN MEETINGS.  The board is
subject to Chapters 551 and 552, Government Code.
Sec. 1511.060.  RECORDS.  The board shall keep records of the
board's proceedings for at least seven years.
SUBCHAPTER C.  POWERS AND DUTIES OF EXCHANGE
Sec. 1511.101.  EMPLOYEES; WORKING GROUPS.  (a)  The board
may employ an executive director and any other agents and employees
that the board considers necessary to assist the exchange in
carrying out its responsibilities and functions.
(b)  The executive director shall organize, administer, and
manage the operations of the exchange.  The executive director may
hire other employees as necessary to carry out the responsibilities
(c)  The exchange may appoint appropriate legal, actuarial,
technology, and other working groups necessary to provide
assistance in operating the exchange and performing any of the
(d)  The exchange shall on a regular basis make exchange
enrollment data available through public use files.
Sec. 1511.102.  ADVISORY COMMITTEE.  The board shall appoint
an advisory committee to allow for the involvement of key
stakeholders in the operation of the exchange.  The advisory
committee may provide expertise and recommendations to the board
but may not adopt rules or enter into contracts on behalf of the
Sec. 1511.103.  CONTRACTS.  (a)  Except as provided by
Subsection (b), the exchange may enter into any contract that the
exchange considers necessary to implement or administer this
chapter, including a contract with the department, the Health and
Human Services Commission, or an entity that has experience in
individual and small group health insurance, benefit
administration, or other experience relevant to the
responsibilities assumed by the entity, to perform functions or
provide services in connection with the operation of the exchange.
(b)  The exchange may not enter into a contract with a health
benefit plan issuer under this section.
(c)  The exchange shall develop and adopt a competitive
procurement process that promotes fairness and efficiency and
best-in-class performance for each functional component of the
Sec. 1511.104.  INFORMATION SHARING AND CONFIDENTIALITY.
(a)  The exchange may enter into information-sharing agreements
with federal and state agencies to carry out the exchange's
responsibilities under this chapter.  An agreement entered into
under this section must include adequate protection with respect to
the confidentiality of any information shared and comply with all
applicable state and federal law.
(b)  The exchange shall protect personally identifiable
health and financial information in accordance with all applicable
state and federal laws and regulations.
Sec. 1511.105.  MEMORANDUM OF UNDERSTANDING.  The exchange
shall enter into a memorandum of understanding with the department
and the Health and Human Services Commission regarding the exchange
of information and the division of regulatory functions among the
exchange, the department, and the commission.
Sec. 1511.106.  LEGAL ACTION.  (a)  The exchange may sue or
(b)  The exchange may take any legal action necessary to
recover or collect amounts due the exchange, including:
(2)  amounts erroneously or improperly paid by the
(3)  amounts paid by the exchange as a mistake of fact
Sec. 1511.107.  FUNCTIONS.  (a)  The exchange shall perform
all functions and duties related to state-based exchanges required
by applicable state and federal law, except for functions and
duties related to the federal risk adjustment program.
(b)  The exchange shall replicate, to the extent feasible,
the processes and enrollment formats used by the federal health
insurance exchange to ensure a successful implementation and
encourage health plan participation on the exchange.
Sec. 1511.108.  HEALTH CARE PROVIDER DIRECTORY AND
INFORMATION.  (a)  The exchange may provide an integrated and
uniform consumer directory of health care providers indicating
which health benefit plan issuers the providers contract with and
whether the providers are currently accepting new patients.
(b)  The exchange may establish methods by which health care
providers may transmit relevant information directly to the
exchange, rather than through an issuer.
Sec. 1511.109.  STATE-ADMINISTERED SUBSIDY PROGRAM.  (a)
Not later than July 1, 2026, the exchange, in coordination with the
department, shall review and make recommendations to the Senate
Business and Commerce Committee and the House of Representatives
Insurance Committee regarding the feasibility of implementing a
state-administered subsidy program for individuals, families, and
small employers to purchase health benefit plan coverage.  The
recommendations must include considerations regarding the best use
for any savings generated from the transition to a state-based
(b)  With the input and approval of the Senate Business and
Commerce Committee and the House of Representatives Insurance
Committee, the exchange may develop and implement a
state-administered subsidy program.
Sec. 1511.110.  ENHANCED DIRECT ENROLLMENT PATHWAY.  (a)
The exchange shall create a pathway for web brokers, insurers, and
licensed health insurance agents and brokers to enroll individuals
in subsidized coverage in a manner that is consistent with
enrolling those individuals in coverage through the exchange.
(b)  The exchange shall model the pathway created under
Subsection (a) after the enhanced direct enrollment pathway
operated by the federal Centers for Medicare and Medicaid Services
for the federal health insurance exchange.
(c)  To the extent practicable and consistent with sound
policy and the goals of the exchange, the pathway created under
Subsection (a) shall establish standards and requirements for the
certification of web brokers, insurers, and licensed health
insurance agents and brokers that are consistent with the standards
and requirements for certification established for the federal
(d)  In an effort to minimize duplication of effort and waste
and to promote sound policy and the goals of the exchange, the
technical requirements, connection protocols, and security
standards for the pathway created under Subsection (a) shall be
consistent with the requirements, protocols, and standards
developed for the federal health insurance exchange.
(e)  The exchange must create the pathway under Subsection
(a) as part of the initial development of the exchange and may not
delay creation of the pathway to a later date.
Sec. 1511.111.  FEDERAL WAIVERS.  (a)  Not later than July 1,
2026, the exchange, in coordination with the department, shall
review and make recommendations to the Senate Business and Commerce
Committee and the House of Representatives Insurance Committee
regarding the submission of a state innovation waiver that may be
granted under Section 1332, Patient Protection and Affordable Care
Act (42 U.S.C. Section 18052), with respect to health benefit plan
coverage or health insurance products in this state, including
(1)  risk stabilization strategies aimed at addressing
risk associated with individuals with high health care costs;
(2)  individual coverage health reimbursement
arrangements for employees of large and small businesses in this
(3)  financial assistance for different types of health
benefit plan coverage, including non-qualified health plans for
individuals purchasing coverage; and
(4)  the establishment of account-based premium
credits for individuals and families enrolled in coverage through
(b)  With the input of the Senate Business and Commerce
Committee and the House of Representatives Insurance Committee, the
exchange may submit one or more applications to the secretary to
obtain a waiver of any applicable provisions of the Patient
Protection and Affordable Care Act (Pub. L. No. 111-148).
(c)  On approval by the secretary of a waiver under
Subsection (b), the exchange may implement the approved waiver.
SUBCHAPTER D.  FUNDING FOR OPERATION OF EXCHANGE
Sec. 1511.151.  USER FEES.  (a)  The exchange may charge a
user fee to issuers offering qualified health plans on the exchange
as reasonable and necessary to cover the exchange's organizational
and operating expenses and expenses related to health coverage
programs associated with the exchange.  User fees must be
determined annually.  The exchange may charge interest for late
user fees.  User fees may not exceed three percent of total premiums
for qualified health plans on the exchange.
(b)  The commissioner shall adopt rules to implement and
enforce the assessment of user fees for health benefit plan issuers
offering coverage on the exchange as authorized under this section.
Sec. 1511.152.  GRANTS AND FEDERAL MONEY.  (a)  The exchange
may accept a grant from a public or private organization and may
spend that money to pay the costs of program administration and
(b)  The exchange may accept federal money and shall use that
money in compliance with applicable federal law, regulations, and
Sec. 1511.153.  USE OF EXCHANGE ASSETS; ANNUAL REPORT.  (a)
The assets of the exchange may be used only to pay the costs:
(1)  of the administration and operation of the
(2)  associated with any health coverage programs
(b)  The exchange shall prepare annually a complete and
detailed written report accounting for all money received and
disbursed by the exchange during the preceding fiscal year.  The
report must meet any reporting requirements provided in the General
Appropriations Act, regardless of whether the exchange receives any
money under that Act.  The exchange shall submit the report to the
governor, the legislature, the commissioner, and the executive
commissioner not later than January 31 of each year.
(c)  General revenue may not be appropriated for the
Sec. 1511.154.  PUBLICATION OF FINANCIAL INFORMATION.  The
exchange shall publish the average costs of licensing, regulatory
fees, and any other payments required by the exchange, and the
administrative costs of the exchange, on an Internet website to
educate consumers on those costs. This information must include
information on losses due to waste, fraud, and abuse.
Sec. 1511.201.  TRUST FUND.  (a)  The exchange fund is
established as a special trust fund outside of the state treasury in
the custody of the comptroller separate and apart from all public
(b)  The exchange may deposit fees, gifts or donations, and
any federal funding obtained by the exchange in the exchange fund in
accordance with procedures established by the comptroller.
(c)  Interest or other income from the investment of the fund
shall be deposited to the credit of the fund.
SECTION 2.  (a)  As soon as practicable after the effective
date of this Act, but not later than October 31, 2025, the governor
and lieutenant governor shall appoint the initial members of the
board of directors of the Texas Health Insurance Exchange.
(b)  As soon as practicable after the appointments required
by Subsection (a) of this section are made, but not later than
November 30, 2025, the board of directors of the Texas Health
Insurance Exchange shall hold a special meeting to discuss the
adoption of rules and procedures necessary to implement Chapter
1511, Insurance Code, as added by this Act.
(c)  As soon as practicable after the effective date of this
Act, but not later than July 1, 2026, the board of directors of the
Texas Health Insurance Exchange shall adopt rules and procedures
necessary to implement Chapter 1511, Insurance Code, as added by
(d)  If, after the effective date of this Act but before the
initial members of the board of directors of the Texas Health
Insurance Exchange have been appointed as required by Subsection
(a) of this section, the Texas Department of Insurance becomes
aware of any planning and establishment grants as described by
Section 1311, Patient Protection and Affordable Care Act (42 U.S.C.
Section 18031), or any other public or private funding source, the
department may apply for funding from that source.
(e)  The exchange may not begin operations without adequate
(f)  The initial coverage period for coverage on the exchange
may not begin before January 1, 2028.
SECTION 3.  This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution.  If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2025.