1-1 By: Averitt (Senate Sponsor - Sibley) H.B. No. 1440
1-2 (In the Senate - Received from the House May 11, 2001;
1-3 May 11, 2001, read first time and referred to Committee on Business
1-4 and Commerce; May 11, 2001, reported favorably by the following
1-5 vote: Yeas 4, Nays 0; May 11, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the eligibility of certain children for certain health
1-9 benefit coverage.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 1(b), Article 3.51-6, Insurance Code, is
1-12 amended to read as follows:
1-13 (b) The spouse and dependents of employees or members
1-14 described by Subsections (a)(1)-(6) of this section, including an
1-15 unmarried child less than 25 years old and a [dependent] grandchild
1-16 described by Section 3E of this article, [of an employee or member
1-17 who is less than 21 years old and living with and in the household
1-18 of the employee or member, referred to in Subdivisions (a)(1)
1-19 through (a)(6) of this section] may be included within the coverage
1-20 provided in a group policy.
1-21 SECTION 2. Section 3E(b), Article 3.51-6, Insurance Code, is
1-22 amended to read as follows:
1-23 (b) A health insurance policy that provides coverage for a
1-24 child of the policyholder must upon payment of a premium provide
1-25 coverage for any unmarried child [children] of the policyholder's
1-26 child if the child is younger than 25 years of age and is a
1-27 dependent [those children are dependents] of the policyholder for
1-28 federal income tax purposes at the time application for coverage of
1-29 the child is made. Coverage for a child of the policyholder's
1-30 child under this subsection may not be terminated solely because
1-31 the covered child is no longer a dependent of the policyholder for
1-32 federal income tax purposes.
1-33 SECTION 3. Sections 2(A), (C), (L), and (M), Chapter 397,
1-34 Acts of the 54th Legislature, Regular Session, 1955 (Article
1-35 3.70-2, Vernon's Texas Insurance Code), are amended to read as
1-36 follows:
1-37 (A) No policy of accident and sickness insurance shall be
1-38 delivered or issued for delivery to any person in this state
1-39 unless:
1-40 (1) the entire money and other consideration therefor
1-41 are expressed therein or in the application, if it is made a part
1-42 of the policy; and
1-43 (2) the time at which the insurance takes effect and
1-44 terminates is expressed therein; and
1-45 (3) it purports to insure only one person, except that
1-46 a policy may insure, originally or by subsequent amendment, upon
1-47 the application of an adult member of a family who shall be deemed
1-48 the policy holder, any two or more eligible members of that family,
1-49 including husband, wife, unmarried [dependent] children under 25
1-50 years of age, including a [dependent] grandchild of the policy
1-51 holder as described by Section (L) of this article [who is less
1-52 than 21 years old and living with and in the household of the
1-53 policy holder, or any children under a specified age which shall
1-54 not exceed twenty-five years], a child the policy holder is
1-55 required to insure under a medical support order issued under
1-56 Chapter 154 [Section 14.061], Family Code, or enforceable by a
1-57 court in this state, and any other person dependent upon the policy
1-58 holder; and
1-59 (4) the style, arrangement and over-all appearance of
1-60 the policy gives no undue prominence to any portion of the text,
1-61 and unless every printed portion of the text of the policy and of
1-62 any endorsements or attached papers (except copies of applications
1-63 and identification cards) are plainly printed in lightfaced type of
1-64 a style in general use, the size of which shall be uniform and not
2-1 less than ten-point with a lower-case unspaced alphabet length not
2-2 less than one hundred and twenty-point (the "text" shall include
2-3 all printed matter except the name and address of the insurer, name
2-4 or title of the policy, the brief description, if any, and captions
2-5 and subcaptions); and
2-6 (5) the exceptions and reductions of indemnity are set
2-7 forth in the policy and, except those which are set forth in
2-8 Section 3 of this Act, are printed, at the insurer's option, either
2-9 included with the benefit provision to which they apply, or under
2-10 an appropriate caption such as "Exceptions" or "Exceptions and
2-11 Reductions"; provided that if an exception or reduction
2-12 specifically applies only to a particular benefit of the policy, a
2-13 statement of such exception or reduction shall be included with the
2-14 benefit provision to which it applies; and
2-15 (6) each such form, including riders and endorsements,
2-16 shall be identified by a form number in the lower left-hand corner
2-17 of the first page thereof; and
2-18 (7) it contains no provision purporting to make any
2-19 portion of the charter, rules, constitution, or bylaws of the
2-20 insurer a part of the policy unless such portion is set forth in
2-21 full in the policy, except in the case of the incorporation of, or
2-22 reference to, a statement of rates or classification of risks, or
2-23 shortrate table filed with the Board; and
2-24 (8) it shall have printed thereon or attached thereto
2-25 a notice stating in substance that the person to whom the policy is
2-26 issued shall be permitted to return the policy within ten (10) days
2-27 of its delivery to such person and to have the premium paid
2-28 refunded if, after examination of the policy, such person is not
2-29 satisfied with it for any reason. If such person pursuant to such
2-30 notice, returns the policy to the insurer at its home or branch
2-31 office or to the agent through whom it was purchased, it shall be
2-32 void from the beginning and the parties shall be in the same
2-33 position as if no policy had been issued. This subdivision shall
2-34 not apply to single premium nonrenewable policies.
2-35 (C) Any policy of accident and sickness insurance, including
2-36 policies issued by companies subject to Chapter 20, Texas Insurance
2-37 Code, as amended, delivered or issued for delivery in this state,
2-38 which provides that coverage of a [dependent] child shall terminate
2-39 upon attainment of the limiting age for [dependent] children
2-40 specified in the policy shall also provide in substance that
2-41 attainment of the limiting age shall not operate to terminate the
2-42 coverage of the child while the child is both (1) incapable of
2-43 self-sustaining employment by reason of mental retardation or
2-44 physical handicap and (2) chiefly dependent upon the insured for
2-45 support and maintenance. Proof of the incapacity and dependency
2-46 shall be furnished to the insurer by the insured within 31 days of
2-47 the child's attainment of the limiting age and subsequently as may
2-48 be required by the insurer but not more frequently than annually
2-49 after the two-year period following the child's attainment of the
2-50 limiting age.
2-51 (L) An individual or group policy of accident and sickness
2-52 insurance that is delivered, issued for delivery, or renewed in
2-53 this state, including a policy issued by a company subject to
2-54 Chapter 20, Insurance Code, evidence of coverage issued by a health
2-55 maintenance organization subject to the Texas Health Maintenance
2-56 Organization Act (Chapter 20A, Vernon's Texas Insurance Code), and
2-57 a self-funded or self-insured welfare or benefit plan or program to
2-58 the extent that regulation of the plan or program is not preempted
2-59 by federal law that provides coverage for a child of the
2-60 policyholder, must provide coverage upon payment of a premium for
2-61 any unmarried child [children] of the policyholder's child if the
2-62 child is younger than 25 years of age and is a dependent [those
2-63 children are dependents] of the policyholder for federal income tax
2-64 purposes at the time application for coverage of the child of the
2-65 policyholder's child is made or for a child for whom the group
2-66 member or insured must provide medical support under an order
2-67 issued under Chapter 154 [Section 14.061], Family Code, or
2-68 enforceable by a court in this state. Coverage for a child of the
2-69 policyholder's child may not be terminated solely because the
3-1 covered child is no longer a dependent of the policyholder for
3-2 federal income tax purposes.
3-3 (M)(1) A group or individual accident and sickness insurance
3-4 policy that provides coverage for [dependent] children of a group
3-5 member or a person insured under the policy may not exclude from or
3-6 discontinue coverage or set a different premium for the natural
3-7 born or adopted child of the group member or person insured or for
3-8 a child for whom the group member or insured must provide medical
3-9 support under an order issued under Chapter 154 [Section 14.061],
3-10 Family Code, or enforceable by a court in this state for either of
3-11 the following reasons:
3-12 (a) the child does not reside with the group
3-13 member or insured; or
3-14 (b) the group member or insured does not claim
3-15 the child as an exemption for federal income tax purposes under
3-16 Section 151(c)(1)(B), Internal Revenue Code of 1986 (26 U.S.C.
3-17 Section 151(c)(1)(B)).
3-18 (2) A group or individual accident and sickness
3-19 insurance policy that provides coverage for [dependent] children of
3-20 a group member or a person insured under the policy may not exclude
3-21 from or discontinue coverage or set a different premium for the
3-22 natural born or adopted child of the spouse of the group member or
3-23 person insured[, provided that the child resides with the group
3-24 member or person insured].
3-25 (3) Other policy provisions relating to maximum
3-26 limiting attained age and enrollment in school may be used to
3-27 establish continued eligibility for coverage of a [dependent] child
3-28 less than 25 years of age. In the event of late enrollment, the
3-29 insurance company may require evidence of insurability satisfactory
3-30 to the company before inclusion of the [dependent] child for
3-31 coverage under the policy.
3-32 SECTION 4. Section 2(5), Article 3.77, Insurance Code, is
3-33 amended to read as follows:
3-34 (5) "Dependent" means a resident spouse or unmarried
3-35 child younger than 25 years of [under the] age [of 18 years], a
3-36 child who is a full-time student younger than 25 [under the age of
3-37 23] years of age and who is financially dependent upon the parent,
3-38 a child who is [over] 18 years of age or older and for whom a
3-39 person may be obligated to pay child support, or a child of any age
3-40 who is disabled and dependent upon the parent.
3-41 SECTION 5. Section 10(e), Article 3.77, Insurance Code, is
3-42 amended to read as follows:
3-43 (e) Pool coverage shall cease:
3-44 (1) on the date a person is no longer a resident of
3-45 this state, except for a child who is a student under 25 [the age
3-46 of 23] years of age and who is financially dependent upon the
3-47 parent, a child for whom a person may be obligated to pay child
3-48 support, or a child of any age who is disabled and dependent upon
3-49 the parent;
3-50 (2) on the date a person requests coverage to end;
3-51 (3) upon the death of the covered person;
3-52 (4) on the date state law requires cancellation of the
3-53 policy;
3-54 (5) at the option of the pool, 30 days after the pool
3-55 sends to the person any inquiry concerning the person's
3-56 eligibility, including an inquiry concerning the person's
3-57 residence, to which the person does not reply;
3-58 (6) on the 31st day after the day on which a premium
3-59 payment for pool coverage becomes due if the payment is not made
3-60 before that date; or
3-61 (7) at such time as the person ceases to meet the
3-62 eligibility requirements of this section.
3-63 SECTION 6. Article 3.95-4.2, Insurance Code, is amended to
3-64 read as follows:
3-65 Art. 3.95-4.2. [DEPENDENT] CHILDREN. (a) A multiple
3-66 employer welfare arrangement's plan document may not limit or
3-67 exclude initial coverage of a newborn child of a participating
3-68 employee. Any coverage of a newborn child of a participating
3-69 employee under this subsection terminates on the 32nd day after the
4-1 date of the birth of the child unless:
4-2 (1) [dependent] children are eligible for coverage
4-3 under the multiple employer welfare arrangement's plan document;
4-4 and
4-5 (2) notification of the birth and any required
4-6 additional premium are received by the multiple employer welfare
4-7 arrangement not later than the 31st day after the date of birth.
4-8 (b) If [dependent] children are eligible for coverage under
4-9 the terms of a multiple employer welfare arrangement's plan
4-10 document, the plan document may not limit or exclude initial
4-11 coverage of an adopted child of a participating employee. A child
4-12 is considered to be the child of a participating employee if the
4-13 participating employee is a party in a suit in which the adoption
4-14 of the child by the participating employee is sought.
4-15 (c) If [dependent] children are eligible for coverage under
4-16 the terms of a multiple employer welfare arrangement's plan
4-17 document, an adopted child of a participating employee may be
4-18 enrolled, at the option of the participating employee, within
4-19 either:
4-20 (1) 31 days after the participating employee is a
4-21 party in a suit for adoption; or
4-22 (2) 31 days of the date the adoption is final.
4-23 (d) Coverage of an adopted child of an employee under this
4-24 article terminates unless notification of the adoption and any
4-25 required additional premiums are received by the multiple employer
4-26 welfare arrangement not later than either:
4-27 (1) the 31st day after the participating employee
4-28 becomes a party in a suit in which the adoption of the child by the
4-29 participating employee is sought; or
4-30 (2) the 31st day after the date of the adoption.
4-31 (e) If children are eligible for coverage under the terms of
4-32 a multiple employer welfare arrangement's plan document, any
4-33 limiting age applicable to an unmarried child of an enrollee is 25
4-34 years of age.
4-35 SECTION 7. Section 9(k), Texas Health Maintenance
4-36 Organization Act (Article 20A.09, Vernon's Texas Insurance Code)
4-37 (former Subsection (j)), as amended by Chapters 905 and 1026, Acts
4-38 of the 75th Legislature, Regular Session, 1997, is redesignated as
4-39 Section 9H, Texas Health Maintenance Organization Act (Article
4-40 20A.9H, Vernon's Texas Insurance Code), and amended to read as
4-41 follows:
4-42 Sec. 9H. CHILDREN AND GRANDCHILDREN. (a) If children are
4-43 eligible for coverage under the terms of an evidence of coverage,
4-44 any limiting age applicable to an unmarried child of an enrollee,
4-45 including an unmarried grandchild of an enrollee, is 25 years of
4-46 age. The limiting age applicable to a child must be stated in the
4-47 evidence of coverage.
4-48 (b) [(k) (r)] A health maintenance organization may provide
4-49 benefits under a health care plan to a dependent grandchild of an
4-50 enrollee who is [when the dependent grandchild is less than 21
4-51 years old and] living with and in the household of the enrollee.
4-52 SECTION 8. Article 21.24-2, Insurance Code, is amended to
4-53 read as follows:
4-54 Art. 21.24-2. [GROUP] COVERAGE OF CERTAIN STUDENTS
4-55 Sec. 1. DEFINITION. In this article, "health benefit plan"
4-56 means a [group] plan described by Section 2 of this article.
4-57 Sec. 2. SCOPE OF ARTICLE. (a) This article applies to a
4-58 health benefit plan that:
4-59 (1) provides [group] benefits for medical or surgical
4-60 expenses incurred as a result of a health condition, accident, or
4-61 sickness, including:
4-62 (A) an individual, [a] group, blanket, or
4-63 franchise insurance policy or insurance agreement, a group hospital
4-64 service contract, or an individual or [a] group evidence of
4-65 coverage that is offered by:
4-66 (i) an insurance company;
4-67 (ii) a group hospital service corporation
4-68 operating under Chapter 20 of this code;
4-69 (iii) a fraternal benefit society
5-1 operating under Chapter 10 of this code;
5-2 (iv) a stipulated premium insurance
5-3 company operating under Chapter 22 of this code; or
5-4 (v) a health maintenance organization
5-5 operating under the Texas Health Maintenance Organization Act
5-6 (Chapter 20A, Vernon's Texas Insurance Code); or
5-7 (B) to the extent permitted by the Employee
5-8 Retirement Income Security Act of 1974 (29 U.S.C. Section 1001 et
5-9 seq.), a health benefit plan that is offered by:
5-10 (i) a multiple employer welfare
5-11 arrangement as defined by Section 3, Employee Retirement Income
5-12 Security Act of 1974 (29 U.S.C. Section 1002); or
5-13 (ii) another analogous benefit
5-14 arrangement;
5-15 (2) is offered by an approved nonprofit health
5-16 corporation that is certified under Section 162.001, Occupations
5-17 Code [5.01(a), Medical Practice Act (Article 4495b, Vernon's Texas
5-18 Civil Statutes)], and that holds a certificate of authority issued
5-19 by the commissioner under Article 21.52F of this code; or
5-20 (3) is offered by any other entity not licensed under
5-21 this code or another insurance law of this state that contracts
5-22 directly for health care services on a risk-sharing basis,
5-23 including an entity that contracts for health care services on a
5-24 capitation basis.
5-25 (b) This article does not apply to:
5-26 (1) a plan that provides coverage:
5-27 (A) only for a specified disease;
5-28 (B) only for accidental death or dismemberment;
5-29 (C) for wages or payments in lieu of wages for a
5-30 period during which an employee is absent from work because of
5-31 sickness or injury; or
5-32 (D) as a supplement to liability insurance;
5-33 (2) a small employer health benefit plan written under
5-34 Chapter 26 of this code;
5-35 (3) a Medicare supplemental policy as defined by
5-36 Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
5-37 (4) workers' compensation insurance coverage;
5-38 (5) medical payment insurance issued as part of a
5-39 motor vehicle insurance policy; or
5-40 (6) a long-term care policy, including a nursing home
5-41 fixed indemnity policy, unless the commissioner determines that the
5-42 policy provides benefit coverage so comprehensive that the policy
5-43 is a health benefit plan as described by Subsection (a) of this
5-44 section.
5-45 Sec. 3. COVERAGE OF CERTAIN STUDENTS. (a) Each health
5-46 benefit plan that conditions [dependent] coverage for a child up to
5-47 25 [21] years of age [or older] on the child's being a full-time
5-48 student at an educational institution shall provide the coverage
5-49 for an entire academic term during which the child begins as a
5-50 full-time student and remains enrolled, regardless of whether the
5-51 number of hours of instruction for which the child is enrolled is
5-52 reduced to a level that changes the child's academic status to less
5-53 than that of a full-time student. Additionally, the health benefit
5-54 plan shall provide the coverage continuously until the 10th day of
5-55 instruction of the subsequent academic term on which date the
5-56 health benefit plan may terminate coverage of the child if the
5-57 child does not return to full-time student status before that date.
5-58 A health benefit plan may not condition coverage for a child
5-59 younger than 25 years of age on the child's being enrolled at an
5-60 educational institution.
5-61 (b) For purposes of this section, determination of the
5-62 full-time student status of a child subject to this article is made
5-63 in the manner provided by the educational institution at which the
5-64 child is enrolled.
5-65 SECTION 9. Subdivision (8), Article 26.02, Insurance Code, is
5-66 amended to read as follows:
5-67 (8) "Dependent" means:
5-68 (A) a spouse;
5-69 (B) a newborn child;
6-1 (C) a child younger than 25 [under the age of
6-2 19] years of age;
6-3 (D) [a child who is a full-time student under
6-4 the age of 23 years and who is financially dependent on the parent;]
6-5 [(E)] a child of any age who is medically
6-6 certified as disabled and dependent on the parent;
6-7 (E) [(F)] any person who must be covered under:
6-8 (i) Section 3D or 3E, Article 3.51-6, of
6-9 this code; or
6-10 (ii) Section 2(L), Chapter 397, Acts of
6-11 the 54th Legislature, Regular Session, 1955 (Article 3.70-2,
6-12 Vernon's Texas Insurance Code); and
6-13 (F) [(G)] any other child [included as an]
6-14 eligible [dependent] under an employer's benefit plan, including a
6-15 child described by Section 3, Article 21.24-2, of this code.
6-16 SECTION 10. Article 26.84, Insurance Code, is amended to read
6-17 as follows:
6-18 Art. 26.84. [DEPENDENT] CHILDREN. (a) A large employer
6-19 health benefit plan may not limit or exclude initial coverage of a
6-20 newborn child of a covered employee. Any coverage of a newborn
6-21 child of a covered employee under this subsection terminates on the
6-22 32nd day after the date of the birth of the child unless:
6-23 (1) [dependent] children are eligible for coverage
6-24 under the large employer health benefit plan; and
6-25 (2) notification of the birth and any required
6-26 additional premium are received by the large employer carrier not
6-27 later than the 31st day after the date of birth.
6-28 (b) If [dependent] children are eligible for coverage under
6-29 the large employer health benefit plan, a large employer health
6-30 benefit plan may not limit or exclude initial coverage of an
6-31 adopted child of an insured. A child is considered to be the child
6-32 of an insured if the insured is a party in a suit in which the
6-33 adoption of the child by the insured is sought.
6-34 (c) If [dependent] children are eligible for coverage under
6-35 the large employer health benefit plan an adopted child of an
6-36 insured may be enrolled, at the option of the insured, within
6-37 either:
6-38 (1) 31 days after the insured is a party in a suit for
6-39 adoption; or
6-40 (2) 31 days of the date the adoption is final.
6-41 (d) Coverage of an adopted child of an employee under this
6-42 article terminates unless notification of the adoption and any
6-43 required additional premiums are received by the large employer
6-44 carrier not later than either:
6-45 (1) the 31st day after the insured becomes a party in
6-46 a suit in which the adoption of the child by the insured is sought;
6-47 or
6-48 (2) the 31st day after the date of the adoption.
6-49 (e) If children are eligible for coverage under the terms of
6-50 a large employer health benefit plan, any limiting age applicable
6-51 to an unmarried child of an enrollee is 25 years of age.
6-52 SECTION 11. This Act applies only to a policy, plan,
6-53 contract, or evidence of coverage delivered, issued for delivery,
6-54 or renewed on or after January 1, 2002. A policy, plan, contract,
6-55 or evidence of coverage delivered, issued for delivery, or renewed
6-56 before January 1, 2002, is governed by the law as it existed
6-57 immediately before the effective date of this Act, and that law is
6-58 continued in effect for that purpose.
6-59 SECTION 12. This Act takes effect September 1, 2001.
6-60 * * * * *