By: Lucio S.B. No. 1706
A BILL TO BE ENTITLED
AN ACT
1-1 relating to denial of or limitation on health insurance coverage
1-2 because of a preexisting condition.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
1-5 amended by adding Article 21.49-2E to read as follows:
1-6 Art. 21.49-2E. EXCLUSION OF COVERAGE FOR PREEXISTING
1-7 CONDITION
1-8 Sec. 1. DEFINITIONS. In this article:
1-9 (1) "Dependent" means:
1-10 (A) a spouse;
1-11 (B) a newborn child;
1-12 (C) a child under the age of 19 years;
1-13 (D) a child who is a full-time student under the
1-14 age of 23 years and who is financially dependent on the parent;
1-15 (E) a child of any age who is medically
1-16 certified as disabled and dependent on the parent; and
1-17 (F) any person who must be covered under:
1-18 (i) Section 3D or 3E, Article 3.51-6, of
1-19 this code; or
1-20 (ii) Section 2(L), Chapter 397, Acts of
1-21 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
1-22 Vernon's Texas Insurance Code).
1-23 (2) "Eligible employee" means a permanent employee who
1-24 is actively engaged on a full-time basis in the conduct of the
2-1 business of the employer with a normal work week of at least 30
2-2 hours, in the employer's regular place of business, and who has met
2-3 any statutorily authorized applicable waiting period requirements.
2-4 The term includes a sole proprietor or a partner of a partnership
2-5 if that person is actively engaged on a full-time basis in the
2-6 employer's business, and is included as an employee under a health
2-7 benefit plan of an employer. The term does not include an employee
2-8 who:
2-9 (A) works on a part-time, temporary, seasonal,
2-10 or substitute basis; or
2-11 (B) is covered under another health benefit plan
2-12 or a self-funded employee welfare benefit plan that provides health
2-13 benefits and that is established in accordance with the Employee
2-14 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
2-15 seq.).
2-16 (3) "Franchise insurance policy" means an individual
2-17 health benefit plan under which a number of individual policies are
2-18 offered to a selected group of employees of an employer.
2-19 (4) "Health benefit plan" means a group, blanket, or
2-20 franchise insurance policy, a certificate issued under a group
2-21 policy, a group hospital service contract, or a group subscriber
2-22 contract or evidence of coverage issued by a health maintenance
2-23 organization that provides benefits for health care services. The
2-24 term does not include:
2-25 (A) accident-only insurance coverage;
2-26 (B) credit insurance coverage;
2-27 (C) disability insurance coverage;
3-1 (D) specified disease coverage or other limited
3-2 benefit policies;
3-3 (E) coverage of Medicare services under a
3-4 federal contract;
3-5 (F) Medicare supplement and Medicare Select
3-6 policies regulated in accordance with federal law;
3-7 (G) long-term care insurance coverage;
3-8 (H) coverage limited to dental care;
3-9 (I) coverage limited to care of vision;
3-10 (J) coverage provided by a single service health
3-11 maintenance organization;
3-12 (K) insurance coverage issued as a supplement to
3-13 liability insurance;
3-14 (L) insurance coverage arising out of a workers'
3-15 compensation system or similar statutory system;
3-16 (M) automobile personal injury protection
3-17 coverage;
3-18 (N) jointly managed trusts authorized under 29
3-19 U.S.C. Section 141 et seq. that contain a plan of benefits for
3-20 employees that is negotiated in a collective bargaining agreement
3-21 governing wages, hours, and working conditions of the employees
3-22 that is authorized under 29 U.S.C. Section 157;
3-23 (O) hospital confinement indemnity coverage; or
3-24 (P) reinsurance contracts issued on a stop-loss,
3-25 quota-share, or similar basis.
3-26 (5) "Health carrier" means any entity authorized under
3-27 this code or another insurance law of this state that provides
4-1 health benefit plans in this state, including an insurance company,
4-2 a group hospital service corporation under Chapter 20 of this code,
4-3 a health maintenance organization, and a stipulated premium company
4-4 under Chapter 22 of this code.
4-5 (6) "Health maintenance organization" means an entity
4-6 regulated under the Texas Health Maintenance Organization Act
4-7 (Chapter 20A, Vernon's Texas Insurance Code).
4-8 (7) "Late enrollee" means an eligible employee or
4-9 dependent who requests enrollment in an employer's health benefit
4-10 plan after the expiration of the initial enrollment period
4-11 established under the terms of the first plan for which that
4-12 employee or dependent was eligible through the employer. An
4-13 eligible employee or dependent is not a late enrollee if the
4-14 individual:
4-15 (A) was covered under another employer health
4-16 benefit plan at the time the individual was eligible to enroll;
4-17 (B) declines in writing, at the time of the
4-18 initial eligibility, stating that coverage under another employer
4-19 health benefit plan was the reason for declining enrollment;
4-20 (C) has lost coverage under another employer
4-21 health benefit plan as a result of the termination of employment,
4-22 the termination of the other plan's coverage, the death of a
4-23 spouse, or divorce; and
4-24 (D) requests enrollment not later than the 31st
4-25 day after the date on which coverage under another employer health
4-26 benefit plan terminates.
4-27 (8) "Person" means an individual, corporation,
5-1 partnership, association, or other private legal entity.
5-2 (9) "Preexisting condition" means a medical condition
5-3 of an applicant for coverage under a health benefit plan for which
5-4 medical advice, diagnosis, care, or treatment was recommended or
5-5 received during the six months before the effective date of the
5-6 coverage.
5-7 (10) "Preexisting condition provision" means a
5-8 provision that excludes or limits coverage for a preexisting
5-9 condition for a specified period after the effective date of
5-10 coverage under a health benefit plan.
5-11 (11) "Qualifying prior coverage" means:
5-12 (A) an individual or group policy, contract, or
5-13 program that is written or administered by a health carrier,
5-14 nonprofit hospital service plan, health maintenance organization,
5-15 stipulated premium company, fraternal benefits society,
5-16 self-insured employer plan, or any other entity, in this state or
5-17 elsewhere, and that arranges or provides medical, hospital, and
5-18 surgical coverage not designed to supplement other private or
5-19 governmental plans, including continuation or conversion coverage
5-20 but not including coverage excluded under Subdivision (4) of this
5-21 section;
5-22 (B) the federal Medicare program under Title
5-23 XVIII, Social Security Act (42 U.S.C. Section 1395 et seq.);
5-24 (C) the federal Medicaid program under Title
5-25 XIX, Social Security Act (42 U.S.C. Section 1396 et seq.); or
5-26 (D) any other publicly sponsored program,
5-27 provided in this state or elsewhere, of medical, hospital, and
6-1 surgical care.
6-2 (12) "Waiting period" means a set time established by
6-3 an employer during which a new employee is not eligible for
6-4 coverage.
6-5 Sec. 2. RESTRICTIONS ON USE OF PREEXISTING CONDITION
6-6 PROVISIONS. (a) A preexisting condition provision in a health
6-7 benefit plan for which the employer pays a portion of the employee
6-8 premium may not apply to an individual who was continuously covered
6-9 under qualifying prior coverage that was in effect:
6-10 (1) for a minimum period of 12 months; and
6-11 (2) up to a date not more than 60 days before:
6-12 (A) the effective date of coverage under a
6-13 health benefit plan; or
6-14 (B) if a mandatory waiting period is applicable,
6-15 the first day of the waiting period.
6-16 (b) In determining whether a preexisting condition provision
6-17 applies to an individual covered by a health benefit plan, the
6-18 health carrier shall credit the time the individual was covered
6-19 under qualifying prior coverage if the previous coverage was in
6-20 effect at any time during the 12 months before the effective date
6-21 of coverage under a health benefit plan. If the previous coverage
6-22 was issued by a health maintenance organization, any waiting period
6-23 that applied before that coverage became effective also shall be
6-24 credited against the preexisting condition provision period.
6-25 (c) Before being eligible for coverage, a late enrollee may
6-26 be required to wait until the next open enrollment period or the
6-27 annual renewal date of the policy, or may be subject to a 12-month
7-1 preexisting condition provision.
7-2 (d) A preexisting condition provision in a health benefit
7-3 plan may not apply to coverage for a disease or condition other
7-4 than a disease or condition for which medical advice, diagnosis,
7-5 care, or treatment was recommended or received during the six
7-6 months before the effective date of coverage under the plan.
7-7 (e) An employer may establish a waiting period during which
7-8 a new employee is not eligible for coverage.
7-9 (f) To determine if preexisting conditions exist, a health
7-10 carrier shall ascertain the source of previous or existing coverage
7-11 of each eligible employee and each dependent of an eligible
7-12 employee at the time that employee or dependent initially enrolls
7-13 in the health benefit plan provided by the health carrier. The
7-14 health carrier shall contact the source of the previous or existing
7-15 coverage to resolve any questions about the benefits or limitations
7-16 related to that previous or existing coverage.
7-17 SECTION 2. This Act takes effect September 1, 1995, and
7-18 applies only to a health insurance policy, contract, or evidence of
7-19 coverage that is delivered, issued for delivery, or renewed on or
7-20 after January 1, 1996. A policy, contract, or evidence of coverage
7-21 that is delivered, issued for delivery, or renewed before January
7-22 1, 1996, is governed by the law as it existed immediately before
7-23 the effective date of this Act, and that law is continued in effect
7-24 for that purpose.
7-25 SECTION 3. The importance of this legislation and the
7-26 crowded condition of the calendars in both houses create an
7-27 emergency and an imperative public necessity that the
8-1 constitutional rule requiring bills to be read on three several
8-2 days in each house be suspended, and this rule is hereby suspended.