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A BILL TO BE ENTITLED
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AN ACT
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relating to the application for and continuation of certain health |
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benefit plan coverage; providing a civil penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle A, Title 8, Insurance Code, is amended |
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by adding Chapters 1217 and 1218 to read as follows: |
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CHAPTER 1217. APPLICATION FOR HEALTH BENEFIT PLAN COVERAGE |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1217.001. DEFINITION OF HEALTH BENEFIT PLAN. (a) In |
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this chapter, "health benefit plan" means a plan that provides |
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benefits for medical or surgical expenses incurred as a result of a |
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health condition, accident, or sickness, including an individual, |
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group, blanket, or franchise insurance policy or insurance |
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agreement, a group hospital service contract, or an individual or |
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group evidence of coverage or similar coverage document that is |
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offered by: |
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(1) an insurance company; |
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(2) a group hospital service corporation operating |
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under Chapter 842; |
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(3) a fraternal benefit society operating under |
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Chapter 885; |
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(4) a stipulated premium company operating under |
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Chapter 884; |
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(5) an exchange operating under Chapter 942; |
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(6) a health maintenance organization operating under |
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Chapter 843; |
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(7) a multiple employer welfare arrangement that holds |
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a certificate of authority under Chapter 846; or |
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(8) an approved nonprofit health corporation that |
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holds a certificate of authority under Chapter 844. |
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(b) The term includes: |
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(1) a small employer health benefit plan subject to |
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Chapter 1501; |
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(2) a standard health benefit plan provided under |
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Chapter 1507; |
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(3) a basic coverage plan under Chapter 1551; |
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(4) a basic plan under Chapter 1575; |
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(5) a primary care coverage plan under Chapter 1579; |
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and |
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(6) basic coverage under Chapter 1601. |
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(c) The term does not include: |
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(1) disability income insurance coverage; or |
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(2) long-term care coverage or benefits, nursing home |
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care coverage or benefits, home health care coverage or benefits, |
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community-based care coverage or benefits, or any combination of |
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those coverages or benefits. |
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[Sections 1217.002-1217.050 reserved for expansion] |
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SUBCHAPTER B. APPLICATION FOR COVERAGE |
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Sec. 1217.051. APPLICATION ASSISTANCE; CIVIL PENALTY. |
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(a) A life, accident, and health agent who assists an applicant in |
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submitting an application to a health benefit plan issuer: |
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(1) has a duty to assist the applicant in providing |
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answers to health questions accurately and completely; and |
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(2) shall attest on the written application that: |
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(A) to the best of the agent's knowledge, the |
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information on the application is complete and accurate; |
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(B) the agent explained to the applicant, in |
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easy-to-understand language, the risk to the applicant of providing |
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inaccurate information; and |
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(C) the applicant understood the explanation |
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provided under Paragraph (B). |
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(b) For the purposes of Subsection (a)(2)(C), the agent may |
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request that the applicant attest in writing on the application or a |
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separate document that the applicant understood the explanation |
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provided under Subsection (a)(2)(B). |
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(c) If, in an attestation required by Subsection (a), an |
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agent wilfully states as true any material fact the agent knows to |
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be false, the agent, in addition to any other penalty or remedy |
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available by law, is liable for a civil penalty in an amount not to |
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exceed $10,000. |
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(d) The attorney general or a county or district attorney |
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may bring an action to recover a civil penalty under Subsection (c). |
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The penalty shall be deposited in the general revenue fund, except |
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that for a penalty recovered in a suit first instituted by a local |
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government or governments under this subsection, 50 percent of the |
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recovery shall be deposited in the general revenue fund and the |
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other 50 percent shall be equally distributed to the local |
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government or governments that instituted the suit. |
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(e) An application for health benefit plan coverage shall |
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include a statement advising affiants of the civil penalty |
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authorized under this section. |
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CHAPTER 1218. RESCISSION OF HEALTH BENEFIT PLAN COVERAGE |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 1218.001. DEFINITION. (a) Except as provided by this |
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section, in this chapter, "individual health benefit plan" means: |
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(1) an individual accident and health insurance policy |
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to which Chapter 1201 applies; or |
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(2) individual health maintenance organization |
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coverage. |
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(b) The term does not include: |
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(1) disability income insurance coverage; or |
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(2) long-term care coverage or benefits, nursing home |
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care coverage or benefits, home health care coverage or benefits, |
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community-based care coverage or benefits, or any combination of |
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those coverages or benefits. |
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[Sections 1218.002-1218.050 reserved for expansion] |
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SUBCHAPTER B. RESCISSION |
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Sec. 1218.051. INDIVIDUAL HEALTH BENEFIT PLAN: |
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CONTINUATION OF COVERAGE. (a) An individual health benefit plan |
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issuer that intends to rescind an individual health benefit plan |
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policy or contract: |
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(1) shall offer to each other individual covered under |
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the policy or contract the opportunity to obtain a new individual |
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health benefit plan policy or contract with benefits equal to those |
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of the rescinded policy or contract; and |
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(2) may permit an individual otherwise entitled to an |
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offer of coverage under Subdivision (1) to remain covered under the |
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policy or contract with a revised premium rate to reflect any |
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reduction in the number of individuals covered by the policy or |
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contract. |
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(b) An individual health benefit plan issuer is not required |
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to continue existing coverage of or issue new coverage to an |
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individual if the rescission is based on information about that |
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individual. |
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(c) If a new individual health benefit plan policy or |
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contract is issued under this section, the plan issuer may revise |
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the premium rate only to reflect the number of persons covered by |
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the new policy or contract. |
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Sec. 1218.052. PREEXISTING CONDITION EXCLUSION; WAITING OR |
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AFFILIATION PERIOD. (a) An individual health benefit plan issuer |
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required to offer coverage under this chapter may not decline to |
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issue the coverage or impose any preexisting condition exclusion on |
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an individual who retains existing coverage or obtains new coverage |
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under this chapter. |
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(b) Notwithstanding Subsection (a), if an individual was |
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subject to a preexisting condition provision or a waiting or |
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affiliation period under the rescinded health benefit plan policy |
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or contract, the plan issuer may apply the same preexisting |
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condition provision or waiting or affiliation period in a new |
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policy or contract issued under this chapter. The time period in |
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the new policy or contract for the preexisting condition provision |
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period or waiting or affiliation period may not be longer than the |
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applicable period in the rescinded policy or contract. The plan |
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issuer shall credit any time the individual was covered under the |
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rescinded policy or contract to the preexisting condition provision |
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period or waiting or affiliation period in the new policy or |
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contract. |
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Sec. 1218.053. NOTICE. An individual health benefit plan |
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issuer that rescinds an individual health benefit plan policy or |
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contract shall notify in writing each individual covered under the |
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policy or contract of the offer of coverage required to be made |
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under this chapter. |
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Sec. 1218.054. MINIMUM TIME TO ACCEPT OFFER. An individual |
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health benefit plan issuer required to offer continuation of |
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coverage under this chapter must allow an individual entitled to |
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the coverage at least 60 days to accept the offered coverage. |
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Sec. 1218.055. EFFECTIVE DATE OF COVERAGE. A new health |
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benefit plan policy or contract issued under this chapter is |
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effective as of the effective date of the rescinded policy or |
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contract, and there may not be a lapse in coverage. |
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SECTION 2. (a) The change in law made by Chapter 1217, |
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Insurance Code, as added by this Act, applies only to an application |
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for health benefit plan coverage submitted to a health benefit plan |
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issuer on or after January 1, 2010. An application submitted before |
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that date is governed by the law in effect immediately before the |
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effective date of this Act, and that law is continued in effect for |
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that purpose. |
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(b) The change in law made by Chapter 1218, Insurance Code, |
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as added by this Act, applies only to a rescission of an individual |
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health benefit plan policy or contract or health benefit plan |
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coverage on or after the effective date of this Act. A rescission |
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of a policy, contract, or coverage before the effective date of this |
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Act is governed by the law in effect immediately before that date, |
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and that law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2009. |
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* * * * * |