81R4748 AJA-D

By: Shapleigh S.B. No. 614

A BILL TO BE ENTITLED

AN ACT

relating to preexisting condition provisions in individual accident and health insurance policies.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1201.152, Insurance Code, is amended to read as follows:

Sec. 1201.152. PREEXISTING CONDITION PROVISION. (a) A preexisting condition provision in an individual accident and health insurance policy may apply only to coverage for a disease or condition for which medical advice, diagnosis, care, or treatment was recommended or received during the six months before the earlier of:

(1) the effective date of coverage; or

(2) the first day of any waiting period applicable under the policy.

(b) A preexisting condition provision in an individual accident and health insurance policy may not apply to expenses incurred on or after the first anniversary of the initial effective date of coverage of the insured. [COVERAGE UNDER SIMPLIFIED APPLICATION FORM. (a) Notwithstanding Clause (b) of the provision required by Section 1201.208(a), an individual accident and health insurance policy must cover any loss that occurs after 12 months from a preexisting condition if the insurer uses a simplified application form that does not include a question concerning the applicant's health history or medical treatment history.

[(b) This section applies regardless of whether the simplified application form includes a question regarding the applicant's health at the time of application.]

(c) This section does not require an insurer to cover a loss from a condition that the policy specifically excludes from coverage.

SECTION 2. Section 1201.153(a), Insurance Code, is amended to read as follows:

(a) Notwithstanding Section 1201.152 [or Clause (b) of the provision required by Section 1201.208(a)], an individual accident and health insurance policy delivered or issued for delivery to an individual who is 65 years of age or older may not include a provision that excludes from coverage a loss that occurs from a preexisting condition more than six months after the effective date of coverage under the policy.

SECTION 3. Sections 1201.154(b) and (c), Insurance Code, are amended to read as follows:

(b) A preexisting condition provision in an individual accident and health insurance policy may not apply to an individual who was continuously covered for an aggregate period of 12 [18] months by creditable coverage that was in effect up to a date not more than 63 days before the effective date of the individual coverage, excluding any waiting period.

(c) In determining whether a preexisting condition provision of an individual accident and health insurance policy applies to an individual, an insurer shall credit the time the individual previously was covered under creditable coverage if the previous coverage was in effect at any time during the 12 [18] months preceding the effective date of the individual coverage.

SECTION 4. The heading to Section 1201.208, Insurance Code, is amended to read as follows:

Sec. 1201.208. POLICY PROVISION: INCONTESTABILITY; PREEXISTING CONDITION.

SECTION 5. Section 1201.208, Insurance Code, is amended by amending Subsections (a), (b), and (c) and adding Subsection (e) to read as follows:

(a) Except as provided by Subsection (c), an individual accident and health insurance policy must contain the following provision:

"Time Limit on Certain Defenses: [(a)] After the second anniversary of the date this policy is issued, a misstatement, other than a fraudulent misstatement, made by the applicant in the application for the policy may not be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) beginning after that anniversary."

["(b) A claim for loss incurred or disability (as defined in the policy) beginning after the second anniversary of the date this policy is issued may not be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss existed before the effective date of coverage of this policy."]

(b) The [Clause (a) of the] provision required by Subsection (a) does not:

(1) affect any legal requirement for avoidance of a policy or denial of a claim during the initial two-year period; or

(2) limit the application of Section 1201.219, 1201.220, or 1201.221 in a case of a misstatement regarding age, occupation, or other insurance.

(c) For a policy that provides that the insured is entitled to continue the policy in force by the timely payment of premiums until the insured reaches at least 50 years of age or, if the policy was issued after the insured reached 44 years of age, until at least the fifth anniversary of the policy's date of issuance, an insurer may use the following clause instead of [Clause (a) of] the provision required by Subsection (a):

"After this policy has been in force for a period of two years during the lifetime of the insured (excluding any period during which the insured is disabled), it shall become incontestible as to the statements contained in the application."

(e) The commissioner by rule shall adopt a policy provision governing coverage for preexisting conditions under an individual accident and health insurance policy. The provision must comply with Subchapter D. An individual accident and health insurance policy must contain the provision in the words provided by the rules adopted under this subsection, subject to Sections 1201.201(b) and (c).

SECTION 6. The commissioner of insurance shall adopt rules as required by Section 1201.208, Insurance Code, as amended by this Act, not later than December 1, 2009.

SECTION 7. This Act applies only to an individual accident and health insurance policy delivered, issued for delivery, or renewed on or after January 1, 2010. A policy delivered, issued for delivery, or renewed before January 1, 2010, is governed by the law as it existed immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 8. This Act takes effect September 1, 2009.