Law:Title 8. Health Insurance And Other Health Coverages. Subtitle B. Group Health Coverage (Texas)

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Subtitle B. Group Health Coverage

Contents

Chapter 1251. Group And Blanket Health Insurance

Subchapter A. General Provisions

Section  1251.001.  Definitions.

In this chapter:

(1)  "Blanket accident and health insurance" means accident, health, or accident and health insurance covering a group described by Subchapter H.

(2)  "Group accident and health insurance" means accident, health, or accident and health insurance covering a group described by Subchapter B.

(3)  "Group hospital service corporation" means a corporation operating under Chapter 842.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.002.  Certain Group Health Insurance Authorized.

A group policy of accident, health, or accident and health insurance, including a group contract issued by a group hospital service corporation, may be delivered or issued for delivery in this state only if the policy:

(1)  covers a group described by Subchapter B; and

(2)  meets the requirements adopted under this chapter for a group policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.003.  Certain Blanket Health Insurance Authorized.

A blanket policy of accident, health, or accident and health insurance may be delivered or issued for delivery in this state only if the policy:

(1)  covers a group described by Subchapter H; and

(2)  meets the requirements adopted under this chapter for a blanket policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.004.  Certain Payments By Insurers Prohibited.

(a) Except as reimbursement for the cost of services that otherwise would have been provided by the insurer, an insurer may not pay to any individual, firm, corporation, or group entity a fee or allowance for services related to:

(1)  a group accident and health insurance policy; or

(2)  a blanket accident and health insurance policy.

(b)  Subsection (a) does not limit an insurer's right to:

(1)  pay dividends;

(2)  return a premium to a group or a combination of groups;

(3)  provide for a rate stabilization fund with combinations of groups; or

(4)  pay compensation, including a commission, to a licensed agent.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.005.  Payment Of Benefits.

(a) Except as otherwise provided by this section or Section 1251.113, benefits under a group accident and health insurance policy or blanket accident and health insurance policy must be paid to:

(1)  the insured;

(2)  the insured's designated beneficiary;

(3)  the insured's estate; or

(4)  if the insured is a minor or is otherwise not competent to give a valid release, the insured's parent, guardian, or other person actually supporting the insured.

(b)  A group accident and health insurance policy or blanket accident and health insurance policy may provide that all or a portion of any indemnity provided by the policy because of hospital, nursing, medical, or surgical services may, at the option of the insurer and unless the insured requests otherwise in writing not later than the time of filing a proof of the loss, be paid directly to the hospital or person providing the services. A payment made as provided by this subsection discharges the obligation of the insurer with respect to the amount paid.

(c)  A group accident and health insurance policy or blanket accident and health insurance policy must provide that all or a portion of any benefits provided by the policy for dental care services may, at the option of the insured, be assigned to the dentist providing the services. In the case of an assignment under this subsection, payment must be made directly to the dentist designated. A payment made pursuant to an assignment under this subsection discharges the obligation of the insurer with respect to the amount paid.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.006.  Policy May Not Specify Service Provider.

A group accident and health insurance policy or blanket accident and health insurance policy may not require that a covered service be provided by a particular hospital or person.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.007.  Exceptions.

This subchapter and Subchapters B-I do not apply to:

(1)  a credit accident and health insurance policy subject to Chapter 1153;

(2)  any group specifically provided for or authorized by law in existence and covered under a policy filed with the State Board of Insurance before April 1, 1975;

(3)  accident or health coverage that is incidental to any form of a group automobile, casualty, property, workers' compensation, or employers' liability policy approved by the commissioner; or

(4)  any policy or contract of insurance with a state agency, department, or board providing health services:

(A)  to eligible individuals under Chapter 32, Human Resources Code; or

(B)  under a state plan adopted in accordance with 42 U.S.C. Sections 1396-1396g, as amended, or 42 U.S.C. Section 1397aa et seq., as amended.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.008.  Rules.

The commissioner may adopt rules necessary to administer this chapter. A rule adopted under this section is subject to notice and hearing as provided by Section 1201.007 for a rule adopted under Chapter 1201.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter B. Group Accident And Health Insurance: Eligible Policyholders

Section  1251.051.  Employers.

(a) For purposes of this section, "employee" includes:

(1)  an officer, manager, or employee of the employer;

(2)  an individual proprietor or partner, if the employer is an individual proprietorship or partnership;

(3)  an officer, manager, or employee of a subsidiary or affiliated corporation; and

(4)  an individual proprietor, partner, or employee of an individual or firm, if the business of the employer and the individual or firm is under common control through stock ownership, contract, or otherwise.

(b)  A policy issued to insure employees of a public body may provide that the term "employee" includes an elected or appointed officer of the body.

(c)  A policy issued to the trustees of a fund established by an employer may provide that the term "employee" includes a trustee, an employee of the trustees, or both, if the person's duties are principally connected with the trusteeship.

(d)  A group accident and health insurance policy may be issued to an employer or trustees of a fund established by an employer to insure the employer's active and retired employees for the benefit of persons other than the employer.

(e)  The employer or the trustees of a fund established by an employer are the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.052.  Associations.

(a) A group accident and health insurance policy may be issued to an association, including a labor union or an organization of labor unions, a membership corporation organized or holding a certificate of authority under the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes), and a cooperative or corporation subject to the supervision and control of the Farm Credit Administration, to insure the association's active and retired members, employees, or employees of members for the benefit of persons other than the association or its officers or trustees.

(b)  To be eligible to obtain a group accident and health insurance policy, an association must:

(1)  have a constitution and bylaws;

(2)  have been organized and have actively existed for at least two years; and

(3)  be maintained in good faith for purposes other than that of obtaining insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.053.  Funds Established By Employers, Labor Unions, Or Associations.

(a) A group accident and health insurance policy may be issued to the trustees of a fund established by two or more employers in the same or related industry, by one or more labor unions, by one or more employers and one or more labor unions, or by an association described by Section 1251.052 to insure the active and retired employees of the employers, members of the union or association, or employees of the association for the benefit of persons other than the employers, union, or association.

(b)  A policy issued to the trustees of a fund established by employers or a labor union or association may provide that the term "employee" includes:

(1)  an officer or manager of the employer;

(2)  an individual proprietor or partner, if the employer is an individual proprietorship or partnership; or

(3)  a trustee, an employee of the trustees, or both, if the person's duties are principally connected with the trusteeship.

(c)  The trustees of a fund established by employers or a labor union or association are the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.054.  Eligibility For Group Life Insurance.

A group accident and health insurance policy may be issued to any individual or organization to which a policy of group life insurance may be issued or delivered in this state to insure any class or classes of individuals that could be insured under the group life policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.055.  Fund For Former Employees And Members.

(a) An insurer may issue a group accident and health insurance policy to a trustee of a fund to insure former employees, former members, and the spouses, former spouses, and dependents of former employees and members who were previously insured by the insurer under a policy issued to any entity described by this subchapter.

(b)  The trustee of a fund is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.056.  Other Groups. (a) Un

der the requirements prescribed by this section, a group accident and health insurance policy may be issued to cover a group other than a group described by Sections 1251.051-1251.055 if the commissioner determines that:

(1)  the issuance of the policy is not contrary to the best interest of the public;

(2)  the issuance of the policy would result in economies of acquisition or administration; and

(3)  the benefits are reasonable in relation to the premiums charged.

(b)  Group accident and health insurance coverage may not be offered to a group in this state by an insurer under a policy issued in another state unless this state or another state having requirements substantially similar to those prescribed by Subsections (a)(1)-(3) has determined that those requirements have been met.

(c)  The premium for the policy must be paid from the policyholder's funds, funds contributed by the covered persons, or both.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter C. Group Accident And Health Insurance: Required Provisions

Section  1251.101.  Required Provisions.

(a) A group accident and health insurance policy, including a group contract issued by a group hospital service corporation, may not be delivered in this state unless the policy contains in substance the provisions prescribed by this subchapter or provisions in relation to provisions prescribed by this subchapter that, in the opinion of the commissioner, are:

(1)  more favorable to the insureds under the policy; or

(2)  at least as favorable to the insureds under the policy and more favorable to the policyholder.

(b)  The standard provisions required for individual health insurance policies do not apply to group health insurance policies.

(c)  If any provision of this subchapter is wholly or partly inapplicable to or inconsistent with the coverage provided by a particular form of policy, the insurer, with the approval of the commissioner, shall:

(1)  omit the inapplicable provision or part from the policy; or

(2)  modify the inconsistent provision in a manner that makes the provision as contained in the policy consistent with the coverage provided by the policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.102.  Payment Of Premiums.

A group accident and health insurance policy must provide that premiums due under the policy must be remitted by the premium payor as designated in the policy:

(1)  on or before the due date; or

(2)  within any grace period specified in the policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.103.  Incontestability Of Policy.

(a) A group accident and health insurance policy must provide that:

(1)  the validity of the policy may not be contested after the policy has been in force for two years after its date of issue; and

(2)  in the absence of fraud, a statement made by any individual covered by the policy relating to the individual's insurability may not be used in contesting the validity of the insurance with respect to which the statement was made:

(A)  after the insurance has been in force before the contest for two years during the individual's lifetime; and

(B)  unless the statement is contained in a written instrument signed by the individual making the statement.

(b)  Subsection (a)(1) does not apply to a contest based on nonpayment of premiums.

(c)  The provisions required by this section do not preclude the assertion at any time of a defense based on:

(1)  a provision in the policy that relates to eligibility for coverage;

(2)  a provision in a group accident and health insurance policy or disability insurance policy that relates to overinsurance;

(3)  a provision in a disability policy that relates to the relation of earnings to insurance; or

(4)  another similar provision in a group accident and health insurance policy or disability insurance policy that limits the amounts of recovery from all sources to not more than 100 percent of the total actual losses or expenses incurred.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.104.  Entire Contract.

A group accident and health insurance policy must provide that the policy and any application attached to the policy constitute the entire contract between the parties.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.105.  Statement Made By Policyholder Or Insured.

A group accident and health insurance policy must provide that:

(1)  in the absence of fraud, a statement made by the policyholder or an insured is considered a representation and not a warranty; and

(2)  a statement made by the policyholder or an insured may not be used in any contest under the policy, unless a copy of the written instrument containing the statement is or has been provided to:

(A)  the person making the statement; or

(B)  if the statement was made by the insured and the insured has died or become incapacitated, the insured's beneficiary or personal representative.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.106.  Distinction Based On Marital Status Prohibited.

A group accident and health insurance policy must include a provision that prohibits a distinction on the basis of the marital status or lack of marital status between an insured and the other parent in the determination of the dependents or the beneficiaries of the insured, or both.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.107.  Evidence Of Insurability.

A group accident and health insurance policy must state the conditions, if any, under which the insurer reserves the right to require an individual eligible for insurance to provide evidence of individual insurability satisfactory to the insurer as a condition of obtaining part or all of the coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.108.  Exclusion Or Limitation Of Coverage For Preexisting Conditions.

(a) A group accident and health insurance policy must specify the additional exclusions or limitations, if any, applicable under the policy with respect to a disease or physical condition of an insured, not otherwise excluded from the insured's coverage by name or specific description effective on the date of the insured's loss, that existed before the effective date of the insured's coverage under the policy.

(b)  An exclusion or limitation described by Subsection (a) may apply only to a disease or physical condition for which the insured received medical advice or treatment during the 12 months before the effective date of the insured's coverage.

(c)  An exclusion or limitation described by Subsection (a) may not apply to a loss incurred or disability beginning after the earlier of:

(1)  the end of 12 consecutive months, beginning on or after the effective date of the insured's coverage, during which the insured has not received medical advice or treatment in connection with the disease or physical condition; or

(2)  the second anniversary of the effective date of the insured's coverage.

(d)  This section does not apply to:

(1)  a credit accident and health insurance policy; or

(2)  a group accident and health insurance policy subject to Chapter 1501.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.109.  Adjustment Of Premiums Or Benefits If Age Of Insured Is Misstated.

(a) A group accident and health insurance policy under which the premiums or benefits vary by age must specify an equitable adjustment of premiums or benefits, or both, to be made if the age of an insured has been misstated.

(b)  The provision required by Subsection (a) must contain a clear statement of the method of adjustment to be used.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.110.  Deadline For Notice Of Claim.

(a) A group accident and health insurance policy must provide that written notice of a claim must be given to the insurer not later than the 20th day after the date of the occurrence or beginning of any loss covered by the policy.

(b)  Failure to give notice within the time prescribed by Subsection (a) does not invalidate or reduce any claim if it is shown that:

(1)  it was not reasonably possible to give the notice within that time; and

(2)  notice was given as soon as was reasonably possible.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.111.  Claim Forms.

(a) A group accident and health insurance policy must provide that the insurer will furnish to the person making a claim or to the policyholder for delivery to a person making a claim the forms usually provided by the insurer for filing a proof of loss.

(b)  If the forms for a proof of loss are not provided before the 16th day after the date the insurer received notice of a claim under the policy, the person making the claim is considered to have complied with the requirements of the policy as to proof of loss on submitting, within the time set in the policy for filing proof of loss, written proof covering the occurrence, character, and extent of the loss for which the claim is made.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.112.  Deadline For Claim.

(a) A group accident and health insurance policy must provide that:

(1)  in the case of a claim for a loss other than a claim for a loss of time for disability, written proof of the loss must be provided to the insurer not later than the 90th day after the date of the loss; and

(2)  in the case of a claim for loss of time for disability:

(A)  written proof of the loss must be provided to the insurer not later than the 90th day after the beginning of the period for which the insurer is liable; and

(B)  subsequent written proofs of the continuance of the disability must be provided to the insurer at intervals as reasonably required by the insurer.

(b)  Failure to provide written proof of a loss within the time prescribed by Subsection (a) does not invalidate or reduce a claim if:

(1)  it was not reasonably possible to provide written proof of the loss within that time;

(2)  written proof of the loss is provided as soon as reasonably possible; and

(3)  unless the claimant does not have the legal capacity to provide proof of loss, proof of loss is provided not later than the first anniversary of the date the proof of loss is otherwise required.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.113.  Prompt Payment Of Benefits Required.

A group accident and health insurance policy must provide that:

(1)  all benefits payable under the policy, other than benefits for loss of time, must be paid not later than the 60th day after the date the proof of loss is received; and

(2)  subject to written proof of loss, all accrued benefits payable under the policy for loss of time must be paid at least monthly during the period for which the insurer is liable, and that any balance remaining unpaid at the end of that period must be paid as soon as possible after the proof of loss is received.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.114.  Payment Of Benefits.

(a) A group accident and health insurance policy must provide that all benefits of the policy, other than benefits for loss of life, must be paid to the insured or the insured's assignee.

(b)  A group accident and health insurance policy must provide that, subject to the provisions of the policy, benefits for loss of life of an insured must be paid to:

(1)  the beneficiary designated by the insured or the beneficiary's assignee;

(2)  the family member specified by the policy terms, if the policy contains conditions relating to family status; or

(3)  the estate of the insured, if the designated or specified beneficiary is not living at the time the insured dies.

(c)  A group accident and health insurance policy may provide that if any benefits are payable to the estate of an individual or to an individual who is a minor or is otherwise not competent to give a valid release, the insurer may pay the benefits, up to an amount established by the commissioner, to any individual related by consanguinity or affinity to the individual who is considered by the insurer to be equitably entitled to the benefits.

(d)  This section does not apply to:

(1)  a credit accident and health insurance policy; or

(2)  a group contract issued by a group hospital service corporation.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.115.  Right To Conduct Physical Examination Or Autopsy.

A group accident and health insurance policy must provide that the insurer has the right and opportunity to:

(1)  conduct a physical examination of an individual for whom a claim is made when and as often as the insurer reasonably requires during the pendency of the claim under the policy; and

(2)  in the case of a death, require that an autopsy be conducted, unless the autopsy is prohibited by law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.116.  Legal Or Equitable Actions; Limitations.

A group accident and health insurance policy must provide that an action at law or in equity may not be brought to recover on the policy:

(1)  before the 61st day after the date written proof of loss is filed as required under the policy; or

(2)  after the third anniversary of the date on which written proof of loss is required under the policy to be filed.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.117.  Continuation Or Conversion Of Coverage.

(a) A group accident and health insurance policy must describe the continuation of group coverage and any conversion coverage provided in accordance with Subchapter F.

(b)  Subsection (a) does not apply to a credit accident and health insurance policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter D. Group Accident And Health Insurance: Coverage For Dependents

Section  1251.151.  Coverage For Certain Grandchildren.

(a) A group policy or contract of insurance for hospital, surgical, or medical expenses incurred as a result of accident or sickness, including a group contract issued by a group hospital service corporation, that provides coverage under the policy or contract for a child of an insured must, on payment of a premium, provide coverage for any grandchild of the insured if the grandchild is:

(1)  unmarried;

(2)  younger than 25 years of age; and

(3)  a dependent of the insured for federal income tax purposes at the time the application for coverage of the grandchild is made.

(b)  Coverage for a grandchild of the insured under this section may not be terminated solely because the covered grandchild is no longer a dependent of the insured for federal income tax purposes.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.152.  Optional Coverage For Spouses And Dependents.

(a) For purposes of this section, "dependent" includes:

(1)  a child of an employee or member who is:

(A)  unmarried; and

(B)  younger than 25 years of age; and

(2)  a grandchild of an employee or member who is:

(A)  unmarried;

(B)  younger than 25 years of age; and

(C)  a dependent of the insured for federal income tax purposes at the time the application for coverage of the grandchild is made.

(b)  A group accident and health insurance policy may provide coverage for the spouse or a dependent of an employee or member.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.153.  Optional Continuation Of Dependents' Benefits On Death Of Insured.

(a) A group accident and health insurance policy that provides for the payment by the insurer of benefits for members of the family or dependents of an insured may provide for a continuation of all or part of those benefits after the death of the insured.

(b)  Insurance provided by benefits described by Subsection (a) is not life insurance under Title 7.

(c)  Coverage described by Subsection (a) may continue for any period subject to any other policy provisions relating to the termination of a dependent's coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.154.  Coverage For Adopted Children.

A group policy or contract of insurance for hospital, surgical, or medical expenses incurred as a result of accident or sickness, including a group contract issued by a group hospital service corporation, that provides coverage for the immediate family or a child of an insured may not exclude from coverage or limit coverage of a child of the insured solely because the child is adopted. A child is considered to be the child of an insured if the insured is a party to a suit in which the insured seeks to adopt the child.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter E. Group Accident And Health Insurance: General Provisions

Section 1251.201.  Certificate Of Insurance; Notice Of Separate Available Coverage.

(a) An insurer issuing a group policy under this chapter shall provide to the policyholder for delivery to each employee or member of the insured group:

(1)  a certificate of insurance that:

(A)  summarizes the essential features of the insurance coverage of the employee or member, including the annual deductibles, annual and lifetime policy limits, and maximum out-of-pocket expenses under the policy; and

(B)  states the person to whom benefits are payable; and

(2)  a notice that informs the employee or member of the availability of and premiums for a rider or separate insurance policy that would provide coverage in addition to the coverage provided under the policy.

(b)  If dependents are included in the coverage, an insurer is not required to provide more than one certificate or notice for each family unit.

(c)  By agreement between the insurer and the policyholder, a certificate may be delivered electronically.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.

Amended by:

Acts 2005, 79th Leg., Ch. 728, Sec. 11.030(a), eff. September 1, 2005.

Acts 2005, 79th Leg., Ch. 939, Sec. 1, eff. September 1, 2005.



Section 1251.202.  Notice Regarding Certain Employer Health Benefit Plans.

(a) In this section, "standard health benefit plan" means a plan offered under Chapter 1507.

(b)  If an employer offers to employees a standard health benefit plan, the employer shall:

(1)  provide a copy of the disclosure statement provided to the employer by the plan issuer under Section 1507.006 or 1507.056 to:

(A)  each employee:

(i)  before the employee initially enrolls in the plan, unless the employee received notice under Paragraph (B) on or after the 90th day before the date the employee initially enrolls; and

(ii)  not later than the 30th day before the date the employee renews enrollment in the plan; and

(B)  each prospective employee before the prospective employee is hired by the employer; and

(2)  obtain a copy of the notice signed by the employee or prospective employee at the time the notice is provided.

Added by Acts 2005, 79th Leg., Ch. 939, Sec. 2, eff. September 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 730, Sec. 2G.001, eff. April 1, 2009.



Subchapter F. Continuation Or Conversion Privilege On Termination Of Coverage Under Group Policy

Section  1251.251.  Continuation Of Group Coverage Required; Exception. (a)

An insurer or group hospital service corporation that issues policies that provide hospital, surgical, or major medical expense insurance coverage or any combination of those coverages on an expense incurred basis shall, as required by this subchapter, provide continuation of group coverage for employees or members and their eligible dependents, subject to the eligibility provisions prescribed by Section 1251.252.

(b)  This subchapter does not apply to an insurance policy that provides benefits only for expenses incurred because of a specified disease or an accident.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.252.  Eligibility For Continuation Of Group Coverage.

(a) An employee, member, or dependent is entitled to continuation of group coverage if:

(1)  the individual's coverage under the group policy is terminated for any reason other than involuntary termination for cause, including discontinuance of the group policy in its entirety or with respect to an insured class; and

(2)  the individual has been continuously insured under the group policy, or under any group policy providing similar benefits that the policy replaces, for at least three consecutive months immediately before termination.

(b)  For purposes of Subsection (a), involuntary termination for cause does not include termination for any health-related cause.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section 1251.253.  Request For Continuation Of Group Coverage.

An employee, member, or dependent must provide to the employer or group policyholder a written request for continuation of group coverage not later than the 60th day after the later of:

(1)  the date the group coverage would otherwise terminate; or

(2)  the date the individual is given, in a format prescribed by the commissioner, notice by either the employer or the group policyholder of the right to continuation of group coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 550, Sec. 2, eff. June 19, 2009.



Section 1251.254.  Payment Of Contributions.

Except as provided by this section, an employee, member, or dependent who elects to continue group coverage under this subchapter must pay to the employer or group policyholder each month the amount of contribution required by the employer or policyholder, plus two percent of the group rate for the coverage being continued under the group policy.  A payment under this section must be made not later than the 45th day after the date of the initial election for coverage and on the due date of each payment thereafter.  Following the first payment made after the initial election for coverage, the payment of any other premium shall be considered timely if made on or before the 30th day after the date on which the payment is due.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 550, Sec. 3, eff. June 19, 2009.



Section 1251.255.  Termination Of Continued Coverage.

(a) Group coverage continued under this subchapter may not terminate until the earliest of:

(1)  the date the maximum continuation period provided by law would end, which is:

(A)  for any employee, member, or dependent not eligible for continuation coverage under Title X, Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.) (COBRA), nine months after the date the employee, member, or dependent elects to continue the group coverage; or

(B)  for any employee, member, or dependent eligible for continuation coverage under COBRA, six additional months following any period of continuation coverage provided under COBRA;

(2)  the date failure to make timely payments would terminate the group coverage;

(3)  the date the group coverage terminates in its entirety;

(4)  the date the insured is or could be covered under Medicare;

(5)  the date the insured is covered for similar benefits by another plan or program, including:

(A)  a hospital, surgical, medical, or major medical expense insurance policy;

(B)  a hospital or medical service subscriber contract; or

(C)  a medical practice or other prepayment plan;

(6)  the date the insured is eligible for similar benefits, whether or not covered for those benefits, under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or

(7)  the date similar benefits are provided or available to the insured under any state or federal law other than continuation coverage under Title X, Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.) (COBRA).

(b)  Not later than the 30th day before the end of the continuation period described by Subsection (a)(1) that is applicable to the individual, the insurer shall:

(1)  notify the individual that the individual may be eligible for coverage under the Texas Health Insurance Risk Pool as provided by Chapter 1506; and

(2)  provide to the individual the address for applying to that pool.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 550, Sec. 4, eff. June 19, 2009.



Section  1251.256.  Conversion Of Group Policy.

(a) An insurer may offer a conversion policy to each employee, member, or dependent who is covered under a group accident and health insurance policy that is terminating.

(b)  If offered, an issuer shall issue a conversion policy without evidence of insurability if a written application for the policy and payment of the first premium are made not later than the 31st day after the date of termination.

(c)  Any conversion policy must meet the minimum standards for benefits for conversion policies.

(d)  The insurer may provide the conversion coverage on an individual or group basis.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.257.  Premium For Converted Policy.

(a) An insurer shall determine the premium for a converted policy issued under this subchapter in accordance with the insurer's table of premium rates for coverage that was provided under the group policy. The premium:

(1)  must be based on the type of converted policy and the coverage provided by the policy; and

(2)  may be based on the age and geographic location of each individual to be covered.

(b)  The premium for the same coverage and benefits under a converted policy may not exceed 200 percent of the premium determined for the group policy in accordance with Subsection (a).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.258.  Benefits Under Converted Policy.

The commissioner by rule shall establish minimum standards for benefits under converted policies issued under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.259.  Termination Of Converted Policy.

Conversion coverage under this subchapter for an insured may not terminate until the earlier of:

(1)  the date failure to make timely payments would terminate coverage; or

(2)  the date of an event specified by Section 1251.255(a)(4), (5), (6), or (7) for termination of continued group coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.260.  Notice Of Continuation And Conversion Privileges.

(a) An employer that provides to its employees group accident and health insurance coverage that includes a group continuation or conversion privilege on termination of coverage shall give written notice of the continuation or conversion privileges under the policy to each employee or dependent insured under the group and affected by the termination.

(b)  The commissioner by rule shall establish minimum standards for the notice required by this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter G. Continuation Of Group Coverage For Certain Family Members And Dependents

Section  1251.301.  Continuation Of Group Coverage.

A group policy or contract delivered, issued for delivery, renewed, amended, or extended in this state, including a group contract issued by a group hospital service corporation, that provides insurance for hospital, surgical, or medical expenses incurred as a result of accident or sickness must include an option for each individual covered by the policy or contract because of a family or dependent relationship to an individual who is a member of the group for which the policy or contract is provided to continue coverage with the group if the individual's eligibility for coverage under the policy or contract ends because of:

(1)  the severance of the family relationship; or

(2)  the retirement or death of the group member.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.302.  Eligibility For Continued Coverage.

A family member or dependent of an insured is eligible for continued coverage under this subchapter if the family member or dependent:

(1)  has been a member of the group for a period of at least one year; or

(2)  is an infant under one year of age.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.303.  Physical Examination Not Required.

An individual who exercises the option to continue group coverage under this subchapter may not be required to take and pass a physical examination as a condition to continuing coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.304.  Scope Of Coverage.

(a) An individual covered under group continuation coverage under this subchapter is entitled to coverage that is identical in scope to the coverage provided under the group health insurance policy or contract. An exclusion that was not included in the health insurance policy or contract may not be included in the group continuation coverage.

(b)  If the group policyholder or contract holder replaces the health insurance policy or contract within the period prescribed by Section 1251.310(3), an individual covered under group continuation coverage may obtain coverage identical in scope to the coverage under the replacement group policy as provided by this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.305.  Amount Of Premium.

Except as provided by Section 1551.064, the premium for continuation of a spouse or dependent on the group health insurance policy or contract may not be more than the premium charged under the group policy or contract for the individual had the family relationship not been severed.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.306.  Payment Of Premiums.

(a) An individual covered under group continuation coverage under this subchapter shall pay premiums for the coverage directly to the group policyholder or contract holder.

(b)  The coverage must provide the individual with the option of paying the premiums in monthly installments.

(c)  The group policyholder or contract holder may require the individual to pay a monthly fee of not more than $5 for administrative costs.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.307.  Notice Of Continuation Option.

Except as provided by Section 1551.064, at the time a health insurance policy or contract is issued, the group policyholder or contract holder shall give written notice to each group member and each dependent of a group member covered by the policy or contract of the continuation option under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.308.  Notice Of Severance Of Family Relationship; Notice Of Desire To Exercise Option.

(a) Except as provided by Section 1551.064, each group health insurance policy or contract must require a group member to give written notice to the group policyholder or contract holder not later than the 15th day after the date of any severance of the family relationship that might activate the continuation option under this subchapter. Written notice under this subsection may be given by the group member's dependent.

(b)  On receipt of notice under Subsection (a), the group policyholder or contract holder shall immediately give written notice of the continuation option under this subchapter to each affected dependent of the group member.

(c)  On receipt of notice of the death or retirement of a group member, the group policyholder or contract holder shall immediately give written notice of the continuation option under this subchapter to each dependent of the group member. The notice must state the amount of the premium to be charged and must be accompanied by any necessary enrollment forms.

(d)  Not later than the 60th day after the date of the severance of the family relationship or the retirement or death of the group member, a dependent must give written notice to the group policyholder or contract holder of the individual's desire to exercise the continuation option under this subchapter. Coverage under the health insurance policy or contract remains in effect during the period prescribed by this subsection if the policy or contract premiums are paid.

(e)  If a dependent does not give written notice of the individual's desire to exercise the continuation option under this subchapter within the time prescribed by Subsection (d), the option expires.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.309.  Continuation Of Certain Coverages.

(a) Any period of previous coverage under the health insurance policy or contract, including a policy or contract executed under Chapter 1551, must be used in full or partial satisfaction of any required probationary or waiting periods provided in the contract for dependent coverage.

(b)  If a health insurance policy or contract provides to a group member continuation rights to cover the period between the time the member retires and the time the member is eligible for coverage by Medicare, those same continuation rights must be made available to the group member's dependents.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.310.  Termination Of Continued Coverage.

The coverage of an individual who exercises the continuation option under this subchapter continues without interruption and may not be canceled or otherwise terminated until:

(1)  the insured fails to make a premium payment within the time required to make the payment;

(2)  the insured becomes eligible for substantially similar coverage under another plan or program, including a group health insurance policy or contract, hospital or medical service subscriber contract, or medical practice or other prepayment plan; or

(3)  the third anniversary of:

(A)  the severance of the family relationship; or

(B)  the retirement or death of the group member.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter H. Blanket Accident And Health Insurance: Eligible Policyholders

Section  1251.351.  Common Carrier Or Motor Vehicle Rental Or Leasing Company.

(a) A blanket accident and health insurance policy may be issued to:

(1)  a common carrier or the operator, owner, or lessor of a means of transportation to cover a group of individuals who may become passengers defined by reference to their travel status on the common carrier or means of transportation; or

(2)  an automobile or truck rental or leasing company to cover a group of individuals who may become renters, lessees, or passengers defined by their travel status on the rented or leased vehicles.

(b)  The common carrier, the operator, owner, or lessor of a means of transportation, or the automobile or truck rental or leasing company is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.352.  Employers.

(a) A blanket accident and health insurance policy may be issued to an employer to cover any group of employees, dependents, or guests defined by reference to specified hazards incident to an activity or operation of the employer.

(b)  The employer is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.353.  Educational Institutions.

(a) A blanket accident and health insurance policy may be issued to a college, school, or other institution of learning, to a school district or school jurisdictional unit, or to the head, principal, or governing board of such an educational unit to cover students, teachers, or employees.

(b)  The institution, head, principal, or governing board is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.354.  Religious, Charitable, Recreational, Educational, Or Civic Organization.

(a) A blanket accident and health insurance policy may be issued to a religious, charitable, recreational, educational, or civic organization, or a branch of the organization, to cover any group of members or participants defined by reference to specified hazards incident to an activity or operation sponsored or supervised by the organization or branch.

(b)  The organization or branch is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.355.  Sports Team Or Camp.

(a) A blanket accident and health insurance policy may be issued to a sports team or camp or the sponsor of a sports team or camp to cover members, campers, employees, officials, or supervisors.

(b)  The sports team, camp, or sponsor is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.356.  Governmental Or Volunteer Emergency Services Organization.

(a) A blanket accident and health insurance policy may be issued to a governmental or volunteer fire department or fire company, first aid or civil defense organization, or similar governmental or volunteer organization to cover a group of members or participants defined by reference to specified hazards incident to an activity or operation sponsored or supervised by the organization.

(b)  The governmental or volunteer organization is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.357.  Newspaper Or Other Publisher.

(a) A blanket accident and health insurance policy may be issued to a newspaper or other publisher to cover the publisher's carriers.

(b)  The publisher is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.358.  Association.

(a) A blanket accident and health insurance policy may be issued to an association, including a labor union, to cover any group of members or participants defined by reference to specified hazards incident to an activity or operation sponsored or supervised by the association.

(b)  To be eligible to obtain a blanket accident and health insurance policy, an association must:

(1)  have a constitution and bylaws; and

(2)  have been organized and be maintained in good faith for purposes other than that of obtaining insurance.

(c)  The association is the policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.359.  Coverage For Other Risks.

(a) A blanket accident and health insurance policy may be issued to cover any risk or class of risks other than a risk described by this subchapter that, as determined by the commissioner, is eligible for blanket accident and health insurance.

(b)  The commissioner may make a determination under Subsection (a) based on an individual risk, a class of risks, or both.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter I. Blanket Accident And Health Insurance: General Provisions

Section  1251.401.  Individual Application And Certificate Not Required.

(a) An individual application from an insured under a blanket accident and health insurance policy is not required.

(b)  An insurer is not required to provide a certificate to each insured under a blanket accident and health insurance policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Section  1251.402.  Liability Of Policyholder Not Affected.

Subchapter H and this subchapter do not affect the legal liability of a policyholder for the death of or injury to a member of a group.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.



Subchapter J. Regulation Of Out-of-state Group Accident And Health Insurance Coverage

Section  1251.451.  Applicability Of Certain Laws To Out-of-state Group Accident And Health Insurance Coverage.

(a) Chapters 1365 and 1368 and Subchapters A and C, Chapter 1451, apply to:

(1)  a certificate of insurance issued to a resident of this state under a group accident and health insurance policy delivered, issued for delivery, or renewed outside this state; or

(2)  a certificate issued to a resident of this state under a policy delivered, issued for delivery, or renewed outside this state by a group hospital service corporation.

(b)  Subsection (a) does not apply to a specified disease or limited benefit policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1, 2005.


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