CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE
INSURANCE CODE
TITLE 8. HEALTH INSURANCE AND OTHER HEALTH COVERAGES
SUBTITLE B. GROUP HEALTH COVERAGE
CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 1251.056. OTHER GROUPS. (a) Under 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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.
Sec. 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
Sec. 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.
Sec. 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
Sec. 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.