CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE

State Codes and Statutes

Statutes > Texas > Insurance-code > Title-8-health-insurance-and-other-health-coverages > Chapter-1251-group-and-blanket-health-insurance

INSURANCE CODE

TITLE 8. HEALTH INSURANCE AND OTHER HEALTH COVERAGES

SUBTITLE B. GROUP HEALTH COVERAGE

CHAPTER 1251. GROUP AND BLANKET HEALTH INSURANCE

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1251.001. DEFINITIONS. In this chapter:

(1) "Blanket accident and health insurance" means accident,

health, or accident and health insurance covering a group

described by Subchapter H.

(2) "Group accident and health insurance" means accident,

health, or accident and health insurance covering a group

described by Subchapter B.

(3) "Group hospital service corporation" means a corporation

operating under Chapter 842.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.002. CERTAIN GROUP HEALTH INSURANCE AUTHORIZED. A

group policy of accident, health, or accident and health

insurance, including a group contract issued by a group hospital

service corporation, may be delivered or issued for delivery in

this state only if the policy:

(1) covers a group described by Subchapter B; and

(2) meets the requirements adopted under this chapter for a

group policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.003. CERTAIN BLANKET HEALTH INSURANCE AUTHORIZED. A

blanket policy of accident, health, or accident and health

insurance may be delivered or issued for delivery in this state

only if the policy:

(1) covers a group described by Subchapter H; and

(2) meets the requirements adopted under this chapter for a

blanket policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.004. CERTAIN PAYMENTS BY INSURERS PROHIBITED. (a)

Except as reimbursement for the cost of services that otherwise

would have been provided by the insurer, an insurer may not pay

to any individual, firm, corporation, or group entity a fee or

allowance for services related to:

(1) a group accident and health insurance policy; or

(2) a blanket accident and health insurance policy.

(b) Subsection (a) does not limit an insurer's right to:

(1) pay dividends;

(2) return a premium to a group or a combination of groups;

(3) provide for a rate stabilization fund with combinations of

groups; or

(4) pay compensation, including a commission, to a licensed

agent.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.005. PAYMENT OF BENEFITS. (a) Except as otherwise

provided by this section or Section 1251.113, benefits under a

group accident and health insurance policy or blanket accident

and health insurance policy must be paid to:

(1) the insured;

(2) the insured's designated beneficiary;

(3) the insured's estate; or

(4) if the insured is a minor or is otherwise not competent to

give a valid release, the insured's parent, guardian, or other

person actually supporting the insured.

(b) A group accident and health insurance policy or blanket

accident and health insurance policy may provide that all or a

portion of any indemnity provided by the policy because of

hospital, nursing, medical, or surgical services may, at the

option of the insurer and unless the insured requests otherwise

in writing not later than the time of filing a proof of the loss,

be paid directly to the hospital or person providing the

services. A payment made as provided by this subsection

discharges the obligation of the insurer with respect to the

amount paid.

accident and health insurance policy must provide that all or a

portion of any benefits provided by the policy for dental care

services may, at the option of the insured, be assigned to the

dentist providing the services. In the case of an assignment

under this subsection, payment must be made directly to the

dentist designated. A payment made pursuant to an assignment

under this subsection discharges the obligation of the insurer

with respect to the amount paid.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.006. POLICY MAY NOT SPECIFY SERVICE PROVIDER. A group

accident and health insurance policy or blanket accident and

health insurance policy may not require that a covered service be

provided by a particular hospital or person.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.007. EXCEPTIONS. This subchapter and Subchapters B-I

do not apply to:

(1) a credit accident and health insurance policy subject to

Chapter 1153;

(2) any group specifically provided for or authorized by law in

existence and covered under a policy filed with the State Board

of Insurance before April 1, 1975;

(3) accident or health coverage that is incidental to any form

of a group automobile, casualty, property, workers' compensation,

or employers' liability policy approved by the commissioner; or

(4) any policy or contract of insurance with a state agency,

department, or board providing health services:

(A) to eligible individuals under Chapter 32, Human Resources

Code; or

(B) under a state plan adopted in accordance with 42 U.S.C.

Sections 1396-1396g, as amended, or 42 U.S.C. Section 1397aa et

seq., as amended.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.008. RULES. The commissioner may adopt rules

necessary to administer this chapter. A rule adopted under this

section is subject to notice and hearing as provided by Section

1201.007 for a rule adopted under Chapter 1201.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER B. GROUP ACCIDENT AND HEALTH INSURANCE: ELIGIBLE

POLICYHOLDERS

Sec. 1251.051. EMPLOYERS. (a) For purposes of this section,

"employee" includes:

(1) an officer, manager, or employee of the employer;

(2) an individual proprietor or partner, if the employer is an

individual proprietorship or partnership;

(3) an officer, manager, or employee of a subsidiary or

affiliated corporation; and

(4) an individual proprietor, partner, or employee of an

individual or firm, if the business of the employer and the

individual or firm is under common control through stock

ownership, contract, or otherwise.

(b) A policy issued to insure employees of a public body may

provide that the term "employee" includes an elected or appointed

officer of the body.

employer may provide that the term "employee" includes a trustee,

an employee of the trustees, or both, if the person's duties are

principally connected with the trusteeship.

(d) A group accident and health insurance policy may be issued

to an employer or trustees of a fund established by an employer

to insure the employer's active and retired employees for the

benefit of persons other than the employer.

(e) The employer or the trustees of a fund established by an

employer are the policyholder under a policy to which this

section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.052. ASSOCIATIONS. (a) A group accident and health

insurance policy may be issued to an association, including a

labor union or an organization of labor unions, a membership

corporation organized or holding a certificate of authority under

the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,

Vernon's Texas Civil Statutes), and a cooperative or corporation

subject to the supervision and control of the Farm Credit

Administration, to insure the association's active and retired

members, employees, or employees of members for the benefit of

persons other than the association or its officers or trustees.

(b) To be eligible to obtain a group accident and health

insurance policy, an association must:

(1) have a constitution and bylaws;

(2) have been organized and have actively existed for at least

two years; and

(3) be maintained in good faith for purposes other than that of

obtaining insurance.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.053. FUNDS ESTABLISHED BY EMPLOYERS, LABOR UNIONS, OR

ASSOCIATIONS. (a) A group accident and health insurance policy

may be issued to the trustees of a fund established by two or

more employers in the same or related industry, by one or more

labor unions, by one or more employers and one or more labor

unions, or by an association described by Section 1251.052 to

insure the active and retired employees of the employers, members

of the union or association, or employees of the association for

the benefit of persons other than the employers, union, or

association.

(b) A policy issued to the trustees of a fund established by

employers or a labor union or association may provide that the

term "employee" includes:

(1) an officer or manager of the employer;

(2) an individual proprietor or partner, if the employer is an

individual proprietorship or partnership; or

(3) a trustee, an employee of the trustees, or both, if the

person's duties are principally connected with the trusteeship.

union or association are the policyholder under a policy to which

this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.054. ELIGIBILITY FOR GROUP LIFE INSURANCE. A group

accident and health insurance policy may be issued to any

individual or organization to which a policy of group life

insurance may be issued or delivered in this state to insure any

class or classes of individuals that could be insured under the

group life policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.055. FUND FOR FORMER EMPLOYEES AND MEMBERS. (a) An

insurer may issue a group accident and health insurance policy to

a trustee of a fund to insure former employees, former members,

and the spouses, former spouses, and dependents of former

employees and members who were previously insured by the insurer

under a policy issued to any entity described by this subchapter.

(b) The trustee of a fund is the policyholder under a policy to

which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.056. OTHER GROUPS. (a) Under the requirements

prescribed by this section, a group accident and health insurance

policy may be issued to cover a group other than a group

described by Sections 1251.051-1251.055 if the commissioner

determines that:

(1) the issuance of the policy is not contrary to the best

interest of the public;

(2) the issuance of the policy would result in economies of

acquisition or administration; and

(3) the benefits are reasonable in relation to the premiums

charged.

(b) Group accident and health insurance coverage may not be

offered to a group in this state by an insurer under a policy

issued in another state unless this state or another state having

requirements substantially similar to those prescribed by

Subsections (a)(1)-(3) has determined that those requirements

have been met.

policyholder's funds, funds contributed by the covered persons,

or both.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER C. GROUP ACCIDENT AND HEALTH INSURANCE: REQUIRED

PROVISIONS

Sec. 1251.101. REQUIRED PROVISIONS. (a) A group accident and

health insurance policy, including a group contract issued by a

group hospital service corporation, may not be delivered in this

state unless the policy contains in substance the provisions

prescribed by this subchapter or provisions in relation to

provisions prescribed by this subchapter that, in the opinion of

the commissioner, are:

(1) more favorable to the insureds under the policy; or

(2) at least as favorable to the insureds under the policy and

more favorable to the policyholder.

(b) The standard provisions required for individual health

insurance policies do not apply to group health insurance

policies.

inapplicable to or inconsistent with the coverage provided by a

particular form of policy, the insurer, with the approval of the

commissioner, shall:

(1) omit the inapplicable provision or part from the policy; or

(2) modify the inconsistent provision in a manner that makes the

provision as contained in the policy consistent with the coverage

provided by the policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.102. PAYMENT OF PREMIUMS. A group accident and health

insurance policy must provide that premiums due under the policy

must be remitted by the premium payor as designated in the

policy:

(1) on or before the due date; or

(2) within any grace period specified in the policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.103. INCONTESTABILITY OF POLICY. (a) A group

accident and health insurance policy must provide that:

(1) the validity of the policy may not be contested after the

policy has been in force for two years after its date of issue;

and

(2) in the absence of fraud, a statement made by any individual

covered by the policy relating to the individual's insurability

may not be used in contesting the validity of the insurance with

respect to which the statement was made:

(A) after the insurance has been in force before the contest for

two years during the individual's lifetime; and

(B) unless the statement is contained in a written instrument

signed by the individual making the statement.

(b) Subsection (a)(1) does not apply to a contest based on

nonpayment of premiums.

assertion at any time of a defense based on:

(1) a provision in the policy that relates to eligibility for

coverage;

(2) a provision in a group accident and health insurance policy

or disability insurance policy that relates to overinsurance;

(3) a provision in a disability policy that relates to the

relation of earnings to insurance; or

(4) another similar provision in a group accident and health

insurance policy or disability insurance policy that limits the

amounts of recovery from all sources to not more than 100 percent

of the total actual losses or expenses incurred.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.104. ENTIRE CONTRACT. A group accident and health

insurance policy must provide that the policy and any application

attached to the policy constitute the entire contract between the

parties.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.105. STATEMENT MADE BY POLICYHOLDER OR INSURED. A

group accident and health insurance policy must provide that:

(1) in the absence of fraud, a statement made by the

policyholder or an insured is considered a representation and not

a warranty; and

(2) a statement made by the policyholder or an insured may not

be used in any contest under the policy, unless a copy of the

written instrument containing the statement is or has been

provided to:

(A) the person making the statement; or

(B) if the statement was made by the insured and the insured has

died or become incapacitated, the insured's beneficiary or

personal representative.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.106. DISTINCTION BASED ON MARITAL STATUS PROHIBITED.

A group accident and health insurance policy must include a

provision that prohibits a distinction on the basis of the

marital status or lack of marital status between an insured and

the other parent in the determination of the dependents or the

beneficiaries of the insured, or both.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.107. EVIDENCE OF INSURABILITY. A group accident and

health insurance policy must state the conditions, if any, under

which the insurer reserves the right to require an individual

eligible for insurance to provide evidence of individual

insurability satisfactory to the insurer as a condition of

obtaining part or all of the coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.108. EXCLUSION OR LIMITATION OF COVERAGE FOR

PREEXISTING CONDITIONS. (a) A group accident and health

insurance policy must specify the additional exclusions or

limitations, if any, applicable under the policy with respect to

a disease or physical condition of an insured, not otherwise

excluded from the insured's coverage by name or specific

description effective on the date of the insured's loss, that

existed before the effective date of the insured's coverage under

the policy.

(b) An exclusion or limitation described by Subsection (a) may

apply only to a disease or physical condition for which the

insured received medical advice or treatment during the 12 months

before the effective date of the insured's coverage.

not apply to a loss incurred or disability beginning after the

earlier of:

(1) the end of 12 consecutive months, beginning on or after the

effective date of the insured's coverage, during which the

insured has not received medical advice or treatment in

connection with the disease or physical condition; or

(2) the second anniversary of the effective date of the

insured's coverage.

(d) This section does not apply to:

(1) a credit accident and health insurance policy; or

(2) a group accident and health insurance policy subject to

Chapter 1501.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.109. ADJUSTMENT OF PREMIUMS OR BENEFITS IF AGE OF

INSURED IS MISSTATED. (a) A group accident and health insurance

policy under which the premiums or benefits vary by age must

specify an equitable adjustment of premiums or benefits, or both,

to be made if the age of an insured has been misstated.

(b) The provision required by Subsection (a) must contain a

clear statement of the method of adjustment to be used.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.110. DEADLINE FOR NOTICE OF CLAIM. (a) A group

accident and health insurance policy must provide that written

notice of a claim must be given to the insurer not later than the

20th day after the date of the occurrence or beginning of any

loss covered by the policy.

(b) Failure to give notice within the time prescribed by

Subsection (a) does not invalidate or reduce any claim if it is

shown that:

(1) it was not reasonably possible to give the notice within

that time; and

(2) notice was given as soon as was reasonably possible.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.111. CLAIM FORMS. (a) A group accident and health

insurance policy must provide that the insurer will furnish to

the person making a claim or to the policyholder for delivery to

a person making a claim the forms usually provided by the insurer

for filing a proof of loss.

(b) If the forms for a proof of loss are not provided before the

16th day after the date the insurer received notice of a claim

under the policy, the person making the claim is considered to

have complied with the requirements of the policy as to proof of

loss on submitting, within the time set in the policy for filing

proof of loss, written proof covering the occurrence, character,

and extent of the loss for which the claim is made.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.112. DEADLINE FOR CLAIM. (a) A group accident and

health insurance policy must provide that:

(1) in the case of a claim for a loss other than a claim for a

loss of time for disability, written proof of the loss must be

provided to the insurer not later than the 90th day after the

date of the loss; and

(2) in the case of a claim for loss of time for disability:

(A) written proof of the loss must be provided to the insurer

not later than the 90th day after the beginning of the period for

which the insurer is liable; and

(B) subsequent written proofs of the continuance of the

disability must be provided to the insurer at intervals as

reasonably required by the insurer.

(b) Failure to provide written proof of a loss within the time

prescribed by Subsection (a) does not invalidate or reduce a

claim if:

(1) it was not reasonably possible to provide written proof of

the loss within that time;

(2) written proof of the loss is provided as soon as reasonably

possible; and

(3) unless the claimant does not have the legal capacity to

provide proof of loss, proof of loss is provided not later than

the first anniversary of the date the proof of loss is otherwise

required.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.113. PROMPT PAYMENT OF BENEFITS REQUIRED. A group

accident and health insurance policy must provide that:

(1) all benefits payable under the policy, other than benefits

for loss of time, must be paid not later than the 60th day after

the date the proof of loss is received; and

(2) subject to written proof of loss, all accrued benefits

payable under the policy for loss of time must be paid at least

monthly during the period for which the insurer is liable, and

that any balance remaining unpaid at the end of that period must

be paid as soon as possible after the proof of loss is received.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.114. PAYMENT OF BENEFITS. (a) A group accident and

health insurance policy must provide that all benefits of the

policy, other than benefits for loss of life, must be paid to the

insured or the insured's assignee.

(b) A group accident and health insurance policy must provide

that, subject to the provisions of the policy, benefits for loss

of life of an insured must be paid to:

(1) the beneficiary designated by the insured or the

beneficiary's assignee;

(2) the family member specified by the policy terms, if the

policy contains conditions relating to family status; or

(3) the estate of the insured, if the designated or specified

beneficiary is not living at the time the insured dies.

that if any benefits are payable to the estate of an individual

or to an individual who is a minor or is otherwise not competent

to give a valid release, the insurer may pay the benefits, up to

an amount established by the commissioner, to any individual

related by consanguinity or affinity to the individual who is

considered by the insurer to be equitably entitled to the

benefits.

(d) This section does not apply to:

(1) a credit accident and health insurance policy; or

(2) a group contract issued by a group hospital service

corporation.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.115. RIGHT TO CONDUCT PHYSICAL EXAMINATION OR AUTOPSY.

A group accident and health insurance policy must provide that

the insurer has the right and opportunity to:

(1) conduct a physical examination of an individual for whom a

claim is made when and as often as the insurer reasonably

requires during the pendency of the claim under the policy; and

(2) in the case of a death, require that an autopsy be

conducted, unless the autopsy is prohibited by law.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.116. LEGAL OR EQUITABLE ACTIONS; LIMITATIONS. A group

accident and health insurance policy must provide that an action

at law or in equity may not be brought to recover on the policy:

(1) before the 61st day after the date written proof of loss is

filed as required under the policy; or

(2) after the third anniversary of the date on which written

proof of loss is required under the policy to be filed.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.117. CONTINUATION OR CONVERSION OF COVERAGE. (a) A

group accident and health insurance policy must describe the

continuation of group coverage and any conversion coverage

provided in accordance with Subchapter F.

(b) Subsection (a) does not apply to a credit accident and

health insurance policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER D. GROUP ACCIDENT AND HEALTH INSURANCE: COVERAGE FOR

DEPENDENTS

Sec. 1251.151. COVERAGE FOR CERTAIN GRANDCHILDREN. (a) A group

policy or contract of insurance for hospital, surgical, or

medical expenses incurred as a result of accident or sickness,

including a group contract issued by a group hospital service

corporation, that provides coverage under the policy or contract

for a child of an insured must, on payment of a premium, provide

coverage for any grandchild of the insured if the grandchild is:

(1) unmarried;

(2) younger than 25 years of age; and

(3) a dependent of the insured for federal income tax purposes

at the time the application for coverage of the grandchild is

made.

(b) Coverage for a grandchild of the insured under this section

may not be terminated solely because the covered grandchild is no

longer a dependent of the insured for federal income tax

purposes.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.152. OPTIONAL COVERAGE FOR SPOUSES AND DEPENDENTS.

(a) For purposes of this section, "dependent" includes:

(1) a child of an employee or member who is:

(A) unmarried; and

(B) younger than 25 years of age; and

(2) a grandchild of an employee or member who is:

(A) unmarried;

(B) younger than 25 years of age; and

at the time the application for coverage of the grandchild is

made.

(b) A group accident and health insurance policy may provide

coverage for the spouse or a dependent of an employee or member.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.153. OPTIONAL CONTINUATION OF DEPENDENTS' BENEFITS ON

DEATH OF INSURED. (a) A group accident and health insurance

policy that provides for the payment by the insurer of benefits

for members of the family or dependents of an insured may provide

for a continuation of all or part of those benefits after the

death of the insured.

(b) Insurance provided by benefits described by Subsection (a)

is not life insurance under Title 7.

period subject to any other policy provisions relating to the

termination of a dependent's coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.154. COVERAGE FOR ADOPTED CHILDREN. A group policy or

contract of insurance for hospital, surgical, or medical expenses

incurred as a result of accident or sickness, including a group

contract issued by a group hospital service corporation, that

provides coverage for the immediate family or a child of an

insured may not exclude from coverage or limit coverage of a

child of the insured solely because the child is adopted. A child

is considered to be the child of an insured if the insured is a

party to a suit in which the insured seeks to adopt the child.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER E. GROUP ACCIDENT AND HEALTH INSURANCE: GENERAL

PROVISIONS

Sec. 1251.201. CERTIFICATE OF INSURANCE; NOTICE OF SEPARATE

AVAILABLE COVERAGE. (a) An insurer issuing a group policy under

this chapter shall provide to the policyholder for delivery to

each employee or member of the insured group:

(1) a certificate of insurance that:

(A) summarizes the essential features of the insurance coverage

of the employee or member, including the annual deductibles,

annual and lifetime policy limits, and maximum out-of-pocket

expenses under the policy; and

(B) states the person to whom benefits are payable; and

(2) a notice that informs the employee or member of the

availability of and premiums for a rider or separate insurance

policy that would provide coverage in addition to the coverage

provided under the policy.

(b) If dependents are included in the coverage, an insurer is

not required to provide more than one certificate or notice for

each family unit.

certificate may be delivered electronically.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.030(a), eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

939, Sec. 1, eff. September 1, 2005.

Sec. 1251.202. NOTICE REGARDING CERTAIN EMPLOYER HEALTH BENEFIT

PLANS. (a) In this section, "standard health benefit plan"

means a plan offered under Chapter 1507.

(b) If an employer offers to employees a standard health benefit

plan, the employer shall:

(1) provide a copy of the disclosure statement provided to the

employer by the plan issuer under Section 1507.006 or 1507.056

to:

(A) each employee:

(i) before the employee initially enrolls in the plan, unless

the employee received notice under Paragraph (B) on or after the

90th day before the date the employee initially enrolls; and

(ii) not later than the 30th day before the date the employee

renews enrollment in the plan; and

(B) each prospective employee before the prospective employee is

hired by the employer; and

(2) obtain a copy of the notice signed by the employee or

prospective employee at the time the notice is provided.

Added by Acts 2005, 79th Leg., Ch.

939, Sec. 2, eff. September 1, 2005.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

730, Sec. 2G.001, eff. April 1, 2009.

SUBCHAPTER F. CONTINUATION OR CONVERSION PRIVILEGE ON TERMINATION

OF COVERAGE UNDER GROUP POLICY

Sec. 1251.251. CONTINUATION OF GROUP COVERAGE REQUIRED;

EXCEPTION. (a) An insurer or group hospital service corporation

that issues policies that provide hospital, surgical, or major

medical expense insurance coverage or any combination of those

coverages on an expense incurred basis shall, as required by this

subchapter, provide continuation of group coverage for employees

or members and their eligible dependents, subject to the

eligibility provisions prescribed by Section 1251.252.

(b) This subchapter does not apply to an insurance policy that

provides benefits only for expenses incurred because of a

specified disease or an accident.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.252. ELIGIBILITY FOR CONTINUATION OF GROUP COVERAGE.

(a) An employee, member, or dependent is entitled to

continuation of group coverage if:

(1) the individual's coverage under the group policy is

terminated for any reason other than involuntary termination for

cause, including discontinuance of the group policy in its

entirety or with respect to an insured class; and

(2) the individual has been continuously insured under the group

policy, or under any group policy providing similar benefits that

the policy replaces, for at least three consecutive months

immediately before termination.

(b) For purposes of Subsection (a), involuntary termination for

cause does not include termination for any health-related cause.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.253. REQUEST FOR CONTINUATION OF GROUP COVERAGE. An

employee, member, or dependent must provide to the employer or

group policyholder a written request for continuation of group

coverage not later than the 60th day after the later of:

(1) the date the group coverage would otherwise terminate; or

(2) the date the individual is given, in a format prescribed by

the commissioner, notice by either the employer or the group

policyholder of the right to continuation of group coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

550, Sec. 2, eff. June 19, 2009.

Sec. 1251.254. PAYMENT OF CONTRIBUTIONS. Except as provided by

this section, an employee, member, or dependent who elects to

continue group coverage under this subchapter must pay to the

employer or group policyholder each month the amount of

contribution required by the employer or policyholder, plus two

percent of the group rate for the coverage being continued under

the group policy. A payment under this section must be made not

later than the 45th day after the date of the initial election

for coverage and on the due date of each payment thereafter.

Following the first payment made after the initial election for

coverage, the payment of any other premium shall be considered

timely if made on or before the 30th day after the date on which

the payment is due.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

550, Sec. 3, eff. June 19, 2009.

Sec. 1251.255. TERMINATION OF CONTINUED COVERAGE. (a) Group

coverage continued under this subchapter may not terminate until

the earliest of:

(1) the date the maximum continuation period provided by law

would end, which is:

(A) for any employee, member, or dependent not eligible for

continuation coverage under Title X, Consolidated Omnibus Budget

Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.)

(COBRA), nine months after the date the employee, member, or

dependent elects to continue the group coverage; or

(B) for any employee, member, or dependent eligible for

continuation coverage under COBRA, six additional months

following any period of continuation coverage provided under

COBRA;

(2) the date failure to make timely payments would terminate the

group coverage;

(3) the date the group coverage terminates in its entirety;

(4) the date the insured is or could be covered under Medicare;

(5) the date the insured is covered for similar benefits by

another plan or program, including:

(A) a hospital, surgical, medical, or major medical expense

insurance policy;

(B) a hospital or medical service subscriber contract; or

(6) the date the insured is eligible for similar benefits,

whether or not covered for those benefits, under any arrangement

of coverage for individuals in a group, whether on an insured or

uninsured basis; or

(7) the date similar benefits are provided or available to the

insured under any state or federal law other than continuation

coverage under Title X, Consolidated Omnibus Budget

Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.)

(COBRA).

(b) Not later than the 30th day before the end of the

continuation period described by Subsection (a)(1) that is

applicable to the individual, the insurer shall:

(1) notify the individual that the individual may be eligible

for coverage under the Texas Health Insurance Risk Pool as

provided by Chapter 1506; and

(2) provide to the individual the address for applying to that

pool.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

550, Sec. 4, eff. June 19, 2009.

Sec. 1251.256. CONVERSION OF GROUP POLICY. (a) An insurer may

offer a conversion policy to each employee, member, or dependent

who is covered under a group accident and health insurance policy

that is terminating.

(b) If offered, an issuer shall issue a conversion policy

without evidence of insurability if a written application for the

policy and payment of the first premium are made not later than

the 31st day after the date of termination.

benefits for conversion policies.

(d) The insurer may provide the conversion coverage on an

individual or group basis.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.257. PREMIUM FOR CONVERTED POLICY. (a) An insurer

shall determine the premium for a converted policy issued under

this subchapter in accordance with the insurer's table of premium

rates for coverage that was provided under the group policy. The

premium:

(1) must be based on the type of converted policy and the

coverage provided by the policy; and

(2) may be based on the age and geographic location of each

individual to be covered.

(b) The premium for the same coverage and benefits under a

converted policy may not exceed 200 percent of the premium

determined for the group policy in accordance with Subsection

(a).

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.258. BENEFITS UNDER CONVERTED POLICY. The

commissioner by rule shall establish minimum standards for

benefits under converted policies issued under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.259. TERMINATION OF CONVERTED POLICY. Conversion

coverage under this subchapter for an insured may not terminate

until the earlier of:

(1) the date failure to make timely payments would terminate

coverage; or

(2) the date of an event specified by Section 1251.255(a)(4),

(5), (6), or (7) for termination of continued group coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.260. NOTICE OF CONTINUATION AND CONVERSION PRIVILEGES.

(a) An employer that provides to its employees group accident

and health insurance coverage that includes a group continuation

or conversion privilege on termination of coverage shall give

written notice of the continuation or conversion privileges under

the policy to each employee or dependent insured under the group

and affected by the termination.

(b) The commissioner by rule shall establish minimum standards

for the notice required by this section.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER G. CONTINUATION OF GROUP COVERAGE FOR CERTAIN FAMILY

MEMBERS AND DEPENDENTS

Sec. 1251.301. CONTINUATION OF GROUP COVERAGE. A group policy

or contract delivered, issued for delivery, renewed, amended, or

extended in this state, including a group contract issued by a

group hospital service corporation, that provides insurance for

hospital, surgical, or medical expenses incurred as a result of

accident or sickness must include an option for each individual

covered by the policy or contract because of a family or

dependent relationship to an individual who is a member of the

group for which the policy or contract is provided to continue

coverage with the group if the individual's eligibility for

coverage under the policy or contract ends because of:

(1) the severance of the family relationship; or

(2) the retirement or death of the group member.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.302. ELIGIBILITY FOR CONTINUED COVERAGE. A family

member or dependent of an insured is eligible for continued

coverage under this subchapter if the family member or dependent:

(1) has been a member of the group for a period of at least one

year; or

(2) is an infant under one year of age.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.303. PHYSICAL EXAMINATION NOT REQUIRED. An individual

who exercises the option to continue group coverage under this

subchapter may not be required to take and pass a physical

examination as a condition to continuing coverage.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.304. SCOPE OF COVERAGE. (a) An individual covered

under group continuation coverage under this subchapter is

entitled to coverage that is identical in scope to the coverage

provided under the group health insurance policy or contract. An

exclusion that was not included in the health insurance policy or

contract may not be included in the group continuation coverage.

(b) If the group policyholder or contract holder replaces the

health insurance policy or contract within the period prescribed

by Section 1251.310(3), an individual covered under group

continuation coverage may obtain coverage identical in scope to

the coverage under the replacement group policy as provided by

this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.305. AMOUNT OF PREMIUM. Except as provided by Section

1551.064, the premium for continuation of a spouse or dependent

on the group health insurance policy or contract may not be more

than the premium charged under the group policy or contract for

the individual had the family relationship not been severed.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.306. PAYMENT OF PREMIUMS. (a) An individual covered

under group continuation coverage under this subchapter shall pay

premiums for the coverage directly to the group policyholder or

contract holder.

(b) The coverage must provide the individual with the option of

paying the premiums in monthly installments.

individual to pay a monthly fee of not more than $5 for

administrative costs.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.307. NOTICE OF CONTINUATION OPTION. Except as

provided by Section 1551.064, at the time a health insurance

policy or contract is issued, the group policyholder or contract

holder shall give written notice to each group member and each

dependent of a group member covered by the policy or contract of

the continuation option under this subchapter.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.308. NOTICE OF SEVERANCE OF FAMILY RELATIONSHIP;

NOTICE OF DESIRE TO EXERCISE OPTION. (a) Except as provided by

Section 1551.064, each group health insurance policy or contract

must require a group member to give written notice to the group

policyholder or contract holder not later than the 15th day after

the date of any severance of the family relationship that might

activate the continuation option under this subchapter. Written

notice under this subsection may be given by the group member's

dependent.

(b) On receipt of notice under Subsection (a), the group

policyholder or contract holder shall immediately give written

notice of the continuation option under this subchapter to each

affected dependent of the group member.

member, the group policyholder or contract holder shall

immediately give written notice of the continuation option under

this subchapter to each dependent of the group member. The notice

must state the amount of the premium to be charged and must be

accompanied by any necessary enrollment forms.

(d) Not later than the 60th day after the date of the severance

of the family relationship or the retirement or death of the

group member, a dependent must give written notice to the group

policyholder or contract holder of the individual's desire to

exercise the continuation option under this subchapter. Coverage

under the health insurance policy or contract remains in effect

during the period prescribed by this subsection if the policy or

contract premiums are paid.

(e) If a dependent does not give written notice of the

individual's desire to exercise the continuation option under

this subchapter within the time prescribed by Subsection (d), the

option expires.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.309. CONTINUATION OF CERTAIN COVERAGES. (a) Any

period of previous coverage under the health insurance policy or

contract, including a policy or contract executed under Chapter

1551, must be used in full or partial satisfaction of any

required probationary or waiting periods provided in the contract

for dependent coverage.

(b) If a health insurance policy or contract provides to a group

member continuation rights to cover the period between the time

the member retires and the time the member is eligible for

coverage by Medicare, those same continuation rights must be made

available to the group member's dependents.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.310. TERMINATION OF CONTINUED COVERAGE. The coverage

of an individual who exercises the continuation option under this

subchapter continues without interruption and may not be canceled

or otherwise terminated until:

(1) the insured fails to make a premium payment within the time

required to make the payment;

(2) the insured becomes eligible for substantially similar

coverage under another plan or program, including a group health

insurance policy or contract, hospital or medical service

subscriber contract, or medical practice or other prepayment

plan; or

(3) the third anniversary of:

(A) the severance of the family relationship; or

(B) the retirement or death of the group member.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER H. BLANKET ACCIDENT AND HEALTH INSURANCE: ELIGIBLE

POLICYHOLDERS

Sec. 1251.351. COMMON CARRIER OR MOTOR VEHICLE RENTAL OR LEASING

COMPANY. (a) A blanket accident and health insurance policy may

be issued to:

(1) a common carrier or the operator, owner, or lessor of a

means of transportation to cover a group of individuals who may

become passengers defined by reference to their travel status on

the common carrier or means of transportation; or

(2) an automobile or truck rental or leasing company to cover a

group of individuals who may become renters, lessees, or

passengers defined by their travel status on the rented or leased

vehicles.

(b) The common carrier, the operator, owner, or lessor of a

means of transportation, or the automobile or truck rental or

leasing company is the policyholder under a policy to which this

section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.352. EMPLOYERS. (a) A blanket accident and health

insurance policy may be issued to an employer to cover any group

of employees, dependents, or guests defined by reference to

specified hazards incident to an activity or operation of the

employer.

(b) The employer is the policyholder under a policy to which

this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.353. EDUCATIONAL INSTITUTIONS. (a) A blanket

accident and health insurance policy may be issued to a college,

school, or other institution of learning, to a school district or

school jurisdictional unit, or to the head, principal, or

governing board of such an educational unit to cover students,

teachers, or employees.

(b) The institution, head, principal, or governing board is the

policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.354. RELIGIOUS, CHARITABLE, RECREATIONAL, EDUCATIONAL,

OR CIVIC ORGANIZATION. (a) A blanket accident and health

insurance policy may be issued to a religious, charitable,

recreational, educational, or civic organization, or a branch of

the organization, to cover any group of members or participants

defined by reference to specified hazards incident to an activity

or operation sponsored or supervised by the organization or

branch.

(b) The organization or branch is the policyholder under a

policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.355. SPORTS TEAM OR CAMP. (a) A blanket accident and

health insurance policy may be issued to a sports team or camp or

the sponsor of a sports team or camp to cover members, campers,

employees, officials, or supervisors.

(b) The sports team, camp, or sponsor is the policyholder under

a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.356. GOVERNMENTAL OR VOLUNTEER EMERGENCY SERVICES

ORGANIZATION. (a) A blanket accident and health insurance

policy may be issued to a governmental or volunteer fire

department or fire company, first aid or civil defense

organization, or similar governmental or volunteer organization

to cover a group of members or participants defined by reference

to specified hazards incident to an activity or operation

sponsored or supervised by the organization.

(b) The governmental or volunteer organization is the

policyholder under a policy to which this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.357. NEWSPAPER OR OTHER PUBLISHER. (a) A blanket

accident and health insurance policy may be issued to a newspaper

or other publisher to cover the publisher's carriers.

(b) The publisher is the policyholder under a policy to which

this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.358. ASSOCIATION. (a) A blanket accident and health

insurance policy may be issued to an association, including a

labor union, to cover any group of members or participants

defined by reference to specified hazards incident to an activity

or operation sponsored or supervised by the association.

(b) To be eligible to obtain a blanket accident and health

insurance policy, an association must:

(1) have a constitution and bylaws; and

(2) have been organized and be maintained in good faith for

purposes other than that of obtaining insurance.

this section applies.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.359. COVERAGE FOR OTHER RISKS. (a) A blanket

accident and health insurance policy may be issued to cover any

risk or class of risks other than a risk described by this

subchapter that, as determined by the commissioner, is eligible

for blanket accident and health insurance.

(b) The commissioner may make a determination under Subsection

(a) based on an individual risk, a class of risks, or both.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER I. BLANKET ACCIDENT AND HEALTH INSURANCE: GENERAL

PROVISIONS

Sec. 1251.401. INDIVIDUAL APPLICATION AND CERTIFICATE NOT

REQUIRED. (a) An individual application from an insured under a

blanket accident and health insurance policy is not required.

(b) An insurer is not required to provide a certificate to each

insured under a blanket accident and health insurance policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

Sec. 1251.402. LIABILITY OF POLICYHOLDER NOT AFFECTED.

Subchapter H and this subchapter do not affect the legal

liability of a policyholder for the death of or injury to a

member of a group.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

SUBCHAPTER J. REGULATION OF OUT-OF-STATE GROUP ACCIDENT AND

HEALTH INSURANCE COVERAGE

Sec. 1251.451. APPLICABILITY OF CERTAIN LAWS TO OUT-OF-STATE

GROUP ACCIDENT AND HEALTH INSURANCE COVERAGE. (a) Chapters 1365

and 1368 and Subchapters A and C, Chapter 1451, apply to:

(1) a certificate of insurance issued to a resident of this

state under a group accident and health insurance policy

delivered, issued for delivery, or renewed outside this state; or

(2) a certificate issued to a resident of this state under a

policy delivered, issued for delivery, or renewed outside this

state by a group hospital service corporation.

(b) Subsection (a) does not apply to a specified disease or

limited benefit policy.

Added by Acts 2003, 78th Leg., ch. 1274, Sec. 3, eff. April 1,

2005.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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