Texas
Small Business Health Insurance in Texas
Texas counts a payroll twice before it calls an employer small, and its rating map can put one city in three different places. This page walks a Texas census through both.
A group health plan sold to a Texas business answers to two sets of rules at once. The federal layer sets the benefit floor and much of how a rate is assembled. The Texas Insurance Code decides whether the business is a small employer at all, limits what an insurer may take into account, and lists what the policy carries.
The Texas half comes first, because it controls the threshold. Under Tex. Ins. Code § 1501.002(14) a business is a small employer when it employed an average of at least two but not more than fifty employees on business days during the preceding calendar year and employs at least two on the first day of the plan year. Two thresholds, two clocks, and a payroll that clears one can fail the other.
What follows is the Texas layer: the count, the limits on what a carrier may look at, the rating map, the benefits a policy carries whether or not anyone asks, and the cooperative route the Insurance Code opens to employers too small to negotiate alone. First plan the business has offered? Start with the first-time walkthrough. Renewal letter already in hand? Shopping a renewal is the companion.
Texas counts a payroll twice
The definition sits in the Insurance Code chapter on small employer health insurance, and its two halves do different work. One looks backward across a year: an average of at least two but not more than fifty employees on business days during the preceding calendar year. The other looks at one date: at least two employees on the first day of the plan year. A seasonal business that averaged comfortably inside the band and opens its plan year with one person on payroll fails the second test. TDI states the floor is a group of two, including two employees married to one another.
Employees, not eligible employees
The subsection counts employees. Tex. Ins. Code § 1501.002(4) defines an employee as an individual employed by an employer; eligible employee is a separate, narrower term at Tex. Ins. Code § 1501.002(3). A business checking the band against the people it expects to enroll is reading the wrong list, and usually a shorter one. A partnership is the employer of a partner.
A business that did not exist last year
Tex. Ins. Code § 1501.011(a) covers what the backward-looking half cannot reach: an employer not in business throughout the preceding calendar year is measured on the average number of employees it reasonably expects to employ on business days during the calendar year in which the determination is made.
Two companies, one owner
The chapter carries no employer-aggregation rule. Tex. Ins. Code § 1501.007 is headed for affiliates, and what it aggregates is insurance issuers, not employers. An owner running two Texas entities cannot assume the chapter adds the payrolls together. What the federal rules do with the same two entities is a separate question, better asked before the census goes out.
Class of business, index rate, and the short list a carrier may look at
Texas rates small groups through a class-of-business and index-rate system that predates the Affordable Care Act and still binds alongside it. Tex. Ins. Code Ch. 1501, Subchapter E is the machinery, the federal rating requirements sit over it, and TDI has said which state provisions still apply.
An insurer may not open a separate class of business for small employers except on grounds the statute names, and an additional class must be approved by the commissioner (Tex. Ins. Code § 1501.202, Tex. Ins. Code § 1501.203). Variation between class index rates is capped, and so is how far a premium inside a class may sit from that class’s index rate for similar case characteristics (Tex. Ins. Code § 1501.204). Rating must be applied consistently across a class, and involuntary transfer between classes is prohibited (Tex. Ins. Code § 1501.210).
Case characteristics are a closed statutory list — geographic area, the age and gender of employees and dependents, group size, and industry classification — and health-status related factors, duration of coverage and pregnancy are excluded from the term outright (Tex. Ins. Code § 1501.201(2), Tex. Ins. Code § 1501.210(c)). Read that list with its vintage in view: most of Subchapter E predates the federal rating rules and has not been amended since, so it reads as though every word were operative. The federal requirements narrow what actually reaches a rate, and what TDI confirms still applies is the class machinery, the index-rate limits, the bar on adjusting an individual enrollee, and the rating manual.
Tobacco, and the place Texas is narrower than the federal rule
TDI’s position is that a tobacco load may not be applied on an individual small-group enrollee basis in Texas. Tex. Ins. Code § 1501.206 bars adjusting an individual enrollee’s rate on health status, and Texas treats tobacco use as a health-status related factor under Tex. Ins. Code § 1501.002(7). A tobacco factor reaches the employer’s rate only if applied uniformly to every member of the group — all of them or none.
Composite rates, and the promise attached to them
Texas premiums are quoted per member. A composite premium — one rate per enrolled employee — is optional, and the option carries a statewide condition: an insurer offering it to one small employer in Texas must offer it to all of them. The answer turns on the carrier’s Texas book, not on your census.
What the department actually sees
Small employer rates are not required to be filed with the Texas Department of Insurance. A change in rating methodology is — filed with the department and approved. A separate rating manual is kept for each class of business under Title 28 of the Texas Administrative Code, section 26.11(a), and an annual actuarial certification goes to the commissioner under Tex. Ins. Code § 1501.215. Coverage is guaranteed issue under Tex. Ins. Code § 1501.151: a Texas small group is not turned away on the health of its people.
Where a Texas address falls on the rating map
Geographic area is one of those case characteristics, and in Texas it is drawn on counties. The federal rating-area table for Texas pairs every county with an area, and the areas are wildly uneven — one holds a metropolitan county and its neighbor, another runs from the Hill Country to the Rio Grande, another covers the Panhandle.
Two consequences follow, pulling opposite ways. A mailing city does not settle the question: several Texas cities cross county lines, and one reaches counties in three different areas. Yet crossing a county line is often free — other cities spread over three and four counties that all rate the same. Which case applies is a fact about the particular city, not about Texas.
What the map does to Houston, Dallas, the Valley and the Panhandle
Houston
City limits in Harris, Fort Bend and Montgomery, and the rating table puts those three counties in three different areas — the only market here reaching into three.
Harris, which shares its area with Galveston alone, also seats the Port of Houston Authority on the Houston Ship Channel (Texas Special District Local Laws Code, section 5007.204(a)). Houston, TX is not an answer a rate can use.
Dallas
The Metroplex rating line runs through the City of Dallas, not between Dallas and Fort Worth: limits reach Dallas, Collin, Denton, Kaufman and Rockwall, and the Denton portion rates with Fort Worth.
Dallas County alone is the Dallas County Community College District service area (Tex. Educ. Code § 130.176). Two employees of one employer can rate differently without leaving the city.
Fort Worth
The inverse. Fort Worth limits reach Tarrant, Denton, Parker and Wise, and all four rate in one area — including the whole of Denton, the county it shares with Dallas.
Tarrant County is the entire service area of the Tarrant County Junior College District (Tex. Educ. Code § 130.201). A Fort Worth census rates from the city name where a Dallas census cannot.
San Antonio
Bexar County alone, and Bexar sits in the area taking in more counties than any other in Texas — it runs from the Hill Country to the Rio Grande, with Maverick, Dimmit and Zavala inside it.
The Alamo Community College District service area falls inside it entirely (Tex. Educ. Code § 130.162). Staff in New Braunfels, Boerne or Kerrville do not move the factor.
Austin
Travis, Williamson and Hays share one area, so the whole corridor rates as a single geography.
The Austin Community College District service area — Hays, Caldwell, Blanco, Travis, Williamson, Bastrop — sits inside it, but for the San Marcos school district land in Guadalupe County, which rates with San Antonio (Tex. Educ. Code § 130.166). Hiring to Georgetown or Kyle keeps one area factor.
El Paso
A rating area with no other Texas metro in it. Its companions are Trans-Pecos and Big Bend counties — Hudspeth, Culberson, Jeff Davis, Presidio, Brewster.
The El Paso County Community College District service area sits wholly inside it (Tex. Educ. Code § 130.178). An El Paso site and a Dallas one are compared across areas sharing no county.
McAllen
The Rio Grande Valley is not one rating geography: Hidalgo rates with Starr and Brooks, while Cameron County — Brownsville and Harlingen — rates elsewhere with Willacy and Kenedy.
The South Texas Community College District service area stays inside Hidalgo’s (Tex. Educ. Code § 130.199). McAllen and Brownsville draw two area factors in one labor market.
Amarillo
Amarillo straddles the Potter and Randall line and nothing follows: both counties rate in the same area, which covers the Panhandle. The straddle that splits Dallas leaves Amarillo untouched.
The City of Amarillo Hospital District’s chapter names the city and both counties, taxing Potter County land outside the city to aid the district (Texas Special District Local Laws Code, section 1001.403(a)). Panhandle field staff stay on one geography.
City-to-county ties are read from the Texas Comptroller’s City Sales and Use Tax schedule, which lists a city under each county its limits fall in.
Who answers for the policy in Texas
The regulator is the Texas Department of Insurance. It licenses and appoints the agent, registers the cooperatives below, publishes the chart this page draws its benefit list from, and takes the complaint when a Texas-issued policy does not behave the way it was sold.
Texas did not build an exchange, and did not stop regulating the agents who use one
Texas is served by the federally facilitated exchange and operates none of its own. What TDI adds matters more to an employer: Texas law on the licensure and appointment of agents continues to apply to agents marketing through the federal exchange, in it or out of it. Who may advise a Texas employer does not change with the platform.
Medicaid was not expanded here
Texas is recorded as not having adopted the Medicaid expansion — no implementation date, no ballot adoption, no trigger law. That comes from a tracker rather than a Texas primary source, and the tracker says so on its face. The practical consequence is that an employee who declines the group plan here has fewer alternatives than the same employee in several of the other states we write.
What a Texas policy must cover, and what it only has to offer
Texas writes a long list into fully insured major medical plans, in more than one voice. Some items are required coverage. Some are a mandated offer — the carrier must put it in front of the employer, who may decline it. Some reach HMO plans only. That distinction is the part employers miss, because a benefit offered and declined reads on a renewal exactly like one that was never available.
The list is TDI’s own chart, filtered to rows whose small group column is affirmative. Two of the department’s cautions carry over: these are state laws and do not reach a self-funded plan exempt under the federal employee-benefits statute, and the chart is not a list of federal requirements.
| Benefit | How it reaches a small group | Citation |
|---|---|---|
| Basic health care services (without limit on time or cost) | HMO plans only — as applicable | Tex. Ins. Code Ch. 1271, Subch. D |
| Rehabilitation therapies — constraints on coverage limits | HMO plans only | Tex. Ins. Code § 1271.156 |
| HMO cost-sharing restrictions | HMO plans only | Title 28 of the Texas Administrative Code, section 11.506(b)(2) |
| Home health | Mandated offer — required for HMO | Tex. Ins. Code Ch. 1351 (insurance) |
| Acquired brain injury | Required coverage | Tex. Ins. Code Ch. 1352 |
| Autism spectrum disorder | Required coverage | Tex. Ins. Code § 1355.015 |
| Parity for mental health and substance use disorders | Required coverage | Tex. Ins. Code § 1355.254 |
| Chemical dependency | Required coverage | Tex. Ins. Code Ch. 1368 |
| Serious mental illness, crisis stabilization unit, residential treatment center for children and adolescents, and psychiatric day treatment facilities | Mandated offer | Tex. Ins. Code Ch. 1355 (section 1355.004, section 1355.053, section 1355.104) |
| Inpatient treatment of mental or emotional illness or disorder | Mandated offer | Tex. Ins. Code § 1355.106 |
| Limits on step therapy | Required coverage | Tex. Ins. Code § 1369.0547 |
| Reconstructive surgery following mastectomy | Required coverage (surgery). The companion minimum-stay item is NOT required for small group. | Tex. Ins. Code Ch. 1357 |
| Limits on cost-sharing (diabetes) | Required coverage | Tex. Ins. Code Ch. 1358, Subch. C |
| Formulas for phenylketonuria (PKU) or other heritable diseases | Required coverage | Tex. Ins. Code Ch. 1359 |
| In vitro fertilization | Mandated offer | Tex. Ins. Code Ch. 1366, Subch. A |
| Maternity minimum stay if maternity is covered; complications of pregnancy covered as any other illness | Required coverage | Tex. Ins. Code Ch. 1366, Subch. B |
| Fertility preservation services related to cancer treatment | Required coverage | Tex. Ins. Code Ch. 1366, Subch. C |
| Hearing aids and cochlear implants for children | Required coverage — children | Tex. Ins. Code Ch. 1367, Subch. F |
| Offer of speech and hearing; choice of hearing aid | Mandated offer | Tex. Ins. Code Ch. 1365 |
| Oral anticancer medications | Required coverage | Tex. Ins. Code Ch. 1369, Subch. E |
| Ovarian cancer diagnostic examination | Required coverage | Tex. Ins. Code Ch. 1370 |
| Prosthetic and orthotic devices and related services | Required coverage | Tex. Ins. Code Ch. 1371 |
| Biomarker testing | Required coverage | Tex. Ins. Code Ch. 1372 |
| Gender transition — reversal or treatment of adverse effects (required only for a plan that has provided coverage for gender transition) | Required coverage | Tex. Ins. Code Ch. 1373 |
| Amino acid-based formulas | Required coverage | Tex. Ins. Code Ch. 1377 |
| Breast cancer screening and diagnostic imaging | Required coverage | Tex. Ins. Code Ch. 1356 (see also Tex. Ins. Code Ch. 1653) |
| Osteoporosis screening | Required coverage | Tex. Ins. Code Ch. 1361 |
| Colorectal cancer screening | Required coverage | Tex. Ins. Code Ch. 1363 |
| Newborn screening | Required coverage | Tex. Ins. Code § 1271.154; Tex. Ins. Code § 1367.003 |
| Prescription contraceptive drugs and devices and related services; twelve-month supply | Required coverage — subject to religious exemption | Tex. Ins. Code Ch. 1369, Subch. C |
| Human papillomavirus and cervical cancer screening | Required coverage | Tex. Ins. Code Ch. 1370 |
| Cardiovascular disease screening | Required coverage | Tex. Ins. Code Ch. 1376 |
| Alzheimer’s disease — a clinical diagnosis satisfies any requirement for proof of organic disease | Required coverage | Tex. Ins. Code Ch. 1354 |
| Children under thirteen | Required coverage — children | Tex. Ins. Code § 1367.302 |
| HIV, AIDS, or HIV-related illnesses — a plan may not exclude, deny, or cancel coverage | Required coverage | Tex. Ins. Code Ch. 1364 (group plans) |
| Emergency care — covered in- or out-of-network in an HMO, EPO, or PPO, with protections from balance billing | Required coverage | Tex. Ins. Code § 1271.155 (HMO); Tex. Ins. Code § 1301.155 (PPO and EPO); Tex. Ins. Code § 1201.060 (non-network plans) |
Two or more employers, one cooperative
Texas wrote a pooling route for employers too small to negotiate alone. In TDI’s words, Texas law allows two or more employers to form a non-profit private cooperative for the purchase of small or large employer health benefit plans. Three statutory forms are registered with the department — health group cooperatives, purchasing cooperatives and small employer health coalitions — alongside the statutory cooperative at Tex. Ins. Code § 1501.052. The authority is Tex. Ins. Code Ch. 1501, Subchapter B.
TDI publishes the register with its own caveat beside it: listed cooperatives may not be active. Take that at face value — a name on a state list is a place to start a call, not evidence anyone is writing business today.
A chapter that reads live, and is not
Tex. Ins. Code Ch. 1508 created the Healthy Texas Program, a state premium-assistance program for small employers. The chapter is still in the Insurance Code, unrepealed and unamended, and reads end to end as operative small-employer law. It is not: TDI states that all Healthy Texas coverage ended on November 30, 2014. This page checks what a program is doing, not only what the code still prints.
How the call usually opens
Each opens with a different first question, and that question decides what we look at first.
There are two of us and we have never offered anything.
Whether the Texas rules reach the business at all is a counting question before it is a coverage question. After that the decisions are the plan year, who is eligible, and what the business contributes.
Our people are spread over four counties.
Then the census matters and the headquarters address does not. We map every enrolled employee’s county onto the rating map before asking a carrier anything, because in some Texas metros that changes the answer.
We were handed an increase and a single page.
A Texas increase is not one number. Part is the class-of-business and index-rate machinery, part the federal layer, part age movement, part a benefit change the letter never spells out. Separating them is the work.
We read about a Texas program for small employers and cannot tell whether it exists.
That happens more in Texas than anywhere else we write, because the Insurance Code still prints a small-employer program chapter whose coverage closed years ago. The cooperative route is current; that chapter is not.
What we do with a Texas census
We are an independent agency, licensed in 9 states with Texas among them, and we place group benefits rather than administer them. We answer to no single carrier’s book, and we adjust no claims — a benefits agency has none to adjust.
On a Texas placement the first pass is arithmetic and geography: confirm the business meets both halves of the count, then map the census onto the rating map county by county. The second is the benefit list — which mandated offers were made, which were declined, and whether a renewal changed shape because of one. The third is the market: what the 9+ carriers we work with will do with this census, in this part of Texas, at this plan year. Availability is not uniform across the states we are licensed in, which is why that number carries a plus sign.
Give us the census and the plan year and we come back with what Texas does to it.
What this page was checked against
Every statement above traces to a document read for this page: statute text from the Legislature’s mirror of the Insurance Code chapter on small employer health insurance; the rating, filing and tobacco positions from the TDI health insurance FAQ; the benefit list from the TDI mandated health benefits chart, which prints its own effective date; the cooperative route from the department’s cooperatives page; the closed program from its Healthy Texas page. The Medicaid posture comes from a tracker rather than a primary source, because the Texas health agency and the federal Medicaid site both refused our request. Rating geography is read from the federal rating-area table for Texas, and the market anchors from the Education Code chapter on public junior college districts and the special district chapters for the port and hospital districts named above.
Learn more
Group benefits we place in Texas
Where a Texas employer starts
Beyond Texas
Texas questions, answered plainly
We have two employees. Does Texas treat us as a group at all?
Yes, if both tests are met. Tex. Ins. Code § 1501.002(14) sets the floor at an average of at least two employees on business days through the preceding calendar year, and at least two employees again on the first day of the plan year. TDI confirms that a group of two qualifies, including two employees married to one another. Miss the first-day test and the small-employer rules do not reach the business that year.
Our payroll swings with the season. Which day does the Texas count land on?
Two days, in effect. The backward-looking half averages employees across business days in the preceding calendar year, so a busy season pulls the average up. The forward-looking half looks at one date only, the first day of the plan year. A seasonal employer can clear the average comfortably and still fail on that single morning, which is why the plan-year date is worth choosing rather than inheriting.
The owner has two Texas companies. Are the payrolls added together?
Not by the small-employer chapter. It carries no employer-aggregation rule, and Tex. Ins. Code § 1501.007, the affiliates section, aggregates insurance issuers rather than employers. So the Texas count does not automatically combine two entities. The federal rules sitting alongside the chapter ask their own question about related companies, and that one is better answered before a census goes out than after a quote comes back.
Can a Texas carrier charge our one smoker more than everyone else?
Not individually. TDI states that a tobacco load may not be applied on an individual small-group enrollee basis in Texas, because Tex. Ins. Code § 1501.206 prohibits adjusting an individual enrollee’s rate on health status and Texas treats tobacco use as a health-status-related factor under Tex. Ins. Code § 1501.002(7). A tobacco factor can reach the employer’s rate only if it is applied uniformly to every member of that employer’s group.
Can we be quoted one flat rate per employee instead of a rate per person?
You can ask. Texas premiums are quoted per member, and a composite premium is optional rather than required. The condition attached to it is statewide: an insurer that makes composite rating available to one small employer in Texas has to make it available to every small employer in Texas. The answer therefore turns on what the carrier does across its whole Texas small-group book, not on your census.
Does the Texas Department of Insurance approve the rate we are quoted?
Not the rate itself. Small-employer rates are not required to be filed with TDI. A change in rating methodology is: it must be filed with the department and approved. A separate rating manual has to be kept for each class of business under Title 28 of the Texas Administrative Code, section 26.11(a), and an annual actuarial certification of underwriting and rating methods goes to the commissioner under Tex. Ins. Code § 1501.215.
We found a Texas premium-assistance program in the Insurance Code. Is it running?
Almost certainly the Healthy Texas Program, and no. Tex. Ins. Code Ch. 1508 is still in the code, unrepealed and unamended, and it reads throughout as operative small-employer law — but TDI states that all Healthy Texas coverage ended on November 30, 2014. A chapter that is still printed is not the same thing as a program that is still open, and this is the clearest example of that gap in Texas.
Two small businesses want to buy together. Does Texas allow that?
It does. Tex. Ins. Code Ch. 1501, Subchapter B lets two or more employers form a non-profit private cooperative to purchase employer health benefit plans, and TDI registers three statutory forms and publishes a list of them. Read that list with the department’s own caution attached: TDI prints that listed cooperatives may not be active, so a registration is the start of a phone call rather than proof of an open door.
Next step for a Texas employer
Give us the census, the plan year and the counties your people live in. We will tell you what the Texas rules do to that before anyone quotes it.