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.