Texas Individual Health Insurance Laws & Regulations

If you do not have access to employer-sponsored group health plan, you may want to buy an individual policy from a private health insurer. However, in Texas – as in most other states – you have limited guaranteed access to individual health insurance in the private market. There are some alternatives to private individual health insurance – such as COBRA coverage, state continuation coverage, and Texas Health Insurance Risk Pool coverage. This chapter summarizes your protections under different kinds of health plan coverage.

Eligibility: How Am I Evaluated by Health Insurance Companies?

Each private health insurance company has the flexibility to create their own rules regarding which applicants will be accepted for an individual health insurance policy in Texas. Additionally, an applicant can be turned down by in insurance provider for any reason. The only exception to this is for newborns who are required to be covered under their parent’s policy for the first 30 days and disabled, dependent children whose parents have a policy that covers dependents. Although private insurance in the state is not guarantee issue, to comply with HIPAA Group-to-Individual Portability Coverage regulations, the state does guarantee acceptance into the Texas Health Insurance Risk Pool (the state’s high-risk insurance pool), for those who are HIPAA eligible but have been unable to obtain coverage through a private insurer.

What Benefits Are Individual Health Insurers Required to Cover in Texas?

In Texas, individual health insurers are not required to provide standardized health plans, but there are certain benefits that insurers are required to cover, such as diabetes care and mammogram screenings.

How are Health Insurance Companies Allowed to Treat Pre-Existing Conditions in Texas?

In Texas, private insurers are allowed to go as far back as 24-months in an applicant’s medical history to uncover a pre-existing condition. They can then either impose a 24-month exclusion period on the condition or add it to the policy’s elimination rider (which means that it will likely never be covered). Additionally, if you make a claim for treatment related to a specific condition within the first 2 years of your policy, the insurer can look back up to 24-months prior to your application to see if it was a condition that should have been listed as pre-existing. If so, then your claim can be denied. However, if the individual health insurer does not ask you questions about your health or medical treatment history when you apply for health coverage and it does not exclude a condition by name on your policy, it can only exclude pre-existing conditions for 12 months. When determining if a condition is pre-existing, an individual health insurer is allowed to look back 5 years to see if you actually received care for a condition. In addition, the insurer can look for evidence of symptoms for which most people, in the insurer’s opinion, would have sought care. This is called the prudent person standard. Individual health insurance policies can count pregnancy as a pre-existing condition, but not genetic information. After you purchase your individual health insurance policy, insurers can still exclude coverage for a pre-existing condition, even if it wasn’t specifically excluded by the terms of your individual health insurance policy. If you make a claim during the first 2 years of coverage, your individual health insurer can look back 5 years from the time of your application to see if the claim is for a condition that would have been considered a pre-existing condition. If the insurer determines, using the prudent person standard, that the condition is a pre-existing condition, it can refuse to pay for related expenses. Individual health insurers have to give you credit for your prior continuous coverage if your most recent coverage was under a group, government, individual, or church plan. The same types of coverage that are creditable in fully insured group health plans are also considered creditable in individual health insurance. Coverage is considered continuous if the gap between health plans is less than 63 days. If you have 18 months of continuous creditable coverage, you will not face a pre-existing condition exclusion period. If your gap in health coverage was 63 days or more and your most recent coverage was under a group, government, individual, or church plan, you must be given credit for any creditable coverage in effect at any time during the 18 months preceding your application for coverage. This means that although you will have a pre-existing condition exclusion period, it will be shorter than it would otherwise be.

How are Individual Health Insurance Premiums Calculated?

The state allows for private health insurers to set their premiums at whatever rate they see fit, hoping that market competition will help keep them at a reasonable cost. Your insurer will take many factors into consideration when determining your rate, including age, health, and plan type. There are no laws or restrictions regarding what an individual can be charged for a policy or exclusions on the reasons for quoting a high premium. When it is time to renew your policy, your insurer also has the right to raise your premium for any reason. The good news for health insurance customers is that their provider cannot cancel their policy because they get sick, even at renewal. They can, however, raise your premium to compensate for this increased risk.

Texas Health Insurance Consumer Protections

In Texas, as in many other states, your health insurance options are somewhat dependent on your health status. Even if you are sick, however, the laws protect you in the following ways: Coverage under your group health plan (if your employer offers one) cannot be denied or limited, nor can you be required to pay more, because of your health status. This is called nondiscrimination. (see Group Health Plans) All health plans in Texas must limit exclusion of pre-existing conditions. There are rules about what counts as a pre-existing condition and how long you must wait before a new group health plan will begin to pay for care for that condition. Generally, if you join a new health plan, your old coverage will be credited toward the pre-existing condition exclusion period, provided you did not have a long break in coverage. (see Group Health Plans) When you apply for an individual health insurance policy, insurance companies may not turn you down, charge you more or impose a pre-existing condition exclusion period because of your genetic information. In addition, insurance companies are not allowed to even ask about your genetic tests or family history when you apply for coverage. (see Individual Health Plans) Your health insurance cannot be canceled because you get sick. Most health coverage is guaranteed renewable. (see Individual Health Plans for Individual Coverage, and Small Employer or Self-Employed Person for Small Group Coverage) If you leave your job, you may be able to remain in your old group health plan for a certain length of time. This is called COBRA or state continuation coverage. It can help you when you are between jobs or waiting for a new health plan to cover your pre-existing condition. There are limits on what you can be charged for this coverage. (see Individual Health Plans) If you lost your group health plan because of involuntary termination of employment that occurred between September 1, 2008 and December 31, 2009, you may be eligible for a federal tax credit that can help you pay for your COBRA or state continuation coverage premiums for up to nine months. (see Individual Health Plans) If you lose your group health plan and meet other qualifications, you will be HIPAA eligible. If so, you can buy an individual health insurance policy from the Texas Health Insurance Pool. You will not face a new pre-existing condition exclusion period. (see Individual Health Plans) If you are not HIPAA eligible and have had difficulty obtaining affordable individual health insurance because of your health condition, you may also be eligible for Texas Health Insurance Pool coverage. If you qualify for this coverage because of health reasons and you have had no previous health coverage, you may face a new pre-existing condition exclusion period. There are limits on what you can be charged for a Pool policy. (see Individual Health Plans) If you are a small employer buying a fully insured small group health plan, you cannot be turned down because of the health status, age, or any factor that might predict the use of health services of those in your group. All health insurance policies for small employers must be sold on a guaranteed issue basis. However, the insurance carrier can turn you down if your small business does not meet the participation or contribution requirements. (see Small Employer or Self-Employed Person) If you are a small employer buying a fully insured group health plan, there are limits on what you can be charged due to health status, age, gender, or occupation of those in your group. (see Small Employer or Self-Employed Person) As a small employer, you may not be turned down or charged more because of the genetic information of a member of your group. In addition, insurance companies are not allowed to even ask about genetic tests or family history of people in your group when you apply for coverage. (see Small Employer or Self-Employed Person) If you have low or modest household income, you may be eligible for free or subsidized health coverage for yourself or members of your family. The Texas Medicaid program offers free health coverage for pregnant women, families with children, elderly and disabled individuals with very low incomes. In addition, some women diagnosed with breast or cervical cancer may be eligible for medical care through Medicaid. Another program, the Texas Children’s Health Insurance Program (CHIP) offers subsidized health coverage for certain uninsured children. If you believe you may be at risk for cancer but are uninsured or underinsured, you may be eligible for screening and treatment. The Texas Breast and Cervical Cancer Control Program providers free cancer screening for qualified residents. Some women diagnosed with breast or cervical cancer through this program may be eligible for medical care through Medicaid. If you lost your health insurance and are receiving benefits from the Trade Adjustment Assistance (TAA) Program, you may be eligible for a federal income tax credit to help you pay for new health coverage. This credit is called the Health Coverage Tax Credit (HCTC), and is equal to 80% of the cost of qualified coverage, including COBRA and a policy offered through the Texas Health Insurance Risk Pool. If you are a retiree aged 55-65 and receiving benefits from Pension Benefit Guarantee Corporation (PBGC), then you may be eligible for the HCTC. Texas Health Insurance Protection Limitations As important as they are, the federal and state health insurance reforms are limited. Therefore, you also should understand how the laws do not protect you. If you change jobs, you usually cannot take your old group health plan with you. Except when you exercise your federal COBRA or state continuation rights, you are not entitled to take your actual group health plan with you when you leave a job. Your new health plan may not cover all of the benefits or include the same doctors that your old health plan did. Employers are not required to provide health benefits for their employees, so if you change jobs, you may find that your new employer does not offer you health coverage. Employers are only required to make sure that any health benefits they do offer do not discriminate based on health status. If you get a new job with health benefits, your coverage may not start right away. Employers can impose waiting periods before your health benefits begin. HMO’s can impose affiliation periods. If you have a break in coverage of 63 days or more, you may have to satisfy a new pre-existing condition exclusion period when you join a new group health plan. (see Group Health Plans) Even if your coverage is continuous, there may be a pre-existing condition exclusion period for some benefits if you join a group health plan that covers benefits your old group plan did not. For example, say you move from a group plan that does not cover prescription drugs to one that does. You may have to wait up to one year before your new health plan will pay for drugs prescribed to treat a pre-existing condition. If you work for certain non-federal public employers in Texas, not all of the group health plan protections may apply to you. If you are HIPAA eligible, your only guaranteed access to individual health insurance is through the Texas Health Insurance Pool. In Texas, your access to individual health insurance depends on your health status. Private insurers are not prohibited from turning you down, charging more, or limiting coverage due to your health. The law does not limit what you can be charged for individual health insurance. You can be charged substantially higher premiums because of your health status, age, gender, and other characteristics. If you move away from Texas, you may not be able to buy individual health insurance in another state unless you are HIPAA eligible. If you are a small employer, you may be charged more for health insurance if someone in your group is sick. While there are limits on what you can be charged based on health status, generally premiums can be significantly higher if someone in your group has a serious health condition. Also, the insurance carrier can turn you down if your small business does not meet the participation or contribution requirements.