Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 26 - EMPLOYER-RELATED HEALTH BENEFIT PLAN REGULATIONS › Subchapter A - DEFINITIONS, SEVERABILITY, AND SMALL EMPLOYER HEALTH REGULATIONS › Section 26.9 - Exclusions, Limitations, Waiting Periods, Affiliation Periods, Preexisting Conditions, and Restrictive Riders

Current through Reg. 49, No. 28; July 12, 2024
(a) All
				  health benefit plans that provide coverage for small employers and their
				  employees must comply with the following requirements.
(1) A small employer carrier may not exclude
				  any eligible employee or dependent (including a late enrollee who would
				  otherwise be covered under a small employer health benefit plan), except to the
				  extent permitted under Insurance Code §
											1501.156
				  (concerning Employee Enrollment; Waiting Period).
(2) A small employer carrier may not limit or
				  exclude (by use of rider, amendment, or other provision of the plan, applicable
				  to a specific individual) coverage by type of illness, treatment, medical
				  condition, or accident, except for preexisting conditions or diseases or an
				  affiliation period, as permitted under Insurance Code Chapter 1501 (concerning
				  Health Insurance Portability and Availability Act).
(3) A preexisting condition provision in a
				  small employer health benefit plan may not apply to expenses incurred on or
				  after the expiration of the 12 months following the effective date of coverage
				  of the enrollee or late enrollee, except as authorized by paragraph (9)(B) of
				  this subsection.
(4) A small
				  employer health benefit plan may not limit or exclude initial coverage of a
				  newborn child of a covered employee. Any coverage of a newborn child of an
				  employee under this subsection terminates on the 32nd day after the date of the
				  birth of the child unless notification of the birth and any required additional
				  premium are received by the small employer carrier not later than the 31st day
				  after the date of birth. A small employer carrier must not terminate coverage
				  of a newborn child if the carrier's billing cycle does not coincide with this
				  31-day premium payment requirement, until the next billing cycle has occurred
				  and there has been nonpayment of the additional required premium, within 30
				  days of the due date of the premium.
(5) A small employer health benefit plan may
				  not limit or exclude initial coverage of an adopted child of an insured. An
				  adopted child of an insured may be enrolled, at the option of the insured,
				  within either:
(A) 31 days after the insured
				  is a party in a suit for adoption; or
(B) 31 days of the date the adoption is
				  final.
(6) Coverage of
				  an adopted child of an insured under paragraph (5) of this subsection
				  terminates unless notification of the adoption and any required additional
				  premium are received by the small employer carrier not later than either:
(A) the 31st day after the insured becomes a
				  party in a suit in which the adoption of the child by the insured is sought;
				  or
(B) the 31st day after the date
				  of the adoption. A small employer carrier may not terminate coverage of an
				  adopted child if the carrier's billing cycle does not coincide with this 31-day
				  premium payment requirement, until the next billing cycle has occurred and
				  there has been nonpayment of the additional required premium, within 30 days of
				  the due date of the premium.
(7) For purposes of paragraphs (4) and (6) of
				  this subsection, "received by the small employer within a specified period"
				  means that the item(s) must be either received or postmarked by the specified
				  period.
(8) If a newborn or adopted
				  child is enrolled in a health benefit plan or other creditable coverage within
				  the periods specified in paragraph (4) or (5) of this subsection, and
				  subsequently enrolls in another health benefit plan without a significant break
				  in coverage, the other plan may not impose any preexisting condition exclusion
				  or affiliation period with regard to the child. If a newborn or adopted child
				  is not enrolled within the periods specified in paragraph (4) or (5) of this
				  subsection, then in accordance with paragraph (9) of this subsection, the
				  newborn or adopted child may be considered a late enrollee or excluded from
				  coverage until the next open enrollment period.
(9) A small employer carrier must choose one
				  of the methods set forth in subparagraph (A) or (B) of this paragraph for
				  handling requests for enrollment as a late enrollee in any health benefit plan
				  subject to this subchapter. The small employer carrier must use the same method
				  for all small employer health benefit plans.
(A) The eligible employee or dependent may be
				  excluded from coverage and any application for coverage rejected until the next
				  annual open enrollment period and, once enrolled, may be subject to a 12-month
				  preexisting condition provision or, in the case of an HMO, may be subject to a
				  60-day affiliation provision, as described by Insurance Code §§
												1501.102
				  -
				  1501.104
				  (concerning Preexisting Condition Provision; Treatment of Certain Conditions as
				  Preexisting Prohibited; and Affiliation Period).
(B) The eligible employee or dependent's
				  application may be accepted immediately and the employee or dependent enrolled
				  as a late enrollee during the plan year. If so enrolled, the preexisting
				  condition provision imposed for a late enrollee may not exceed 18 months or, in
				  the case of an HMO, the affiliation period may not exceed 90 days from the date
				  of the late enrollee's application for coverage.
(C) The provisions of subparagraphs (A) and
				  (B) of this paragraph do not apply to eligible employees or dependents under
				  the special circumstances listed as exceptions under the definition of late
				  enrollee in §
												26.4 of
				  this title (relating to Definitions).
(D) Examples for applying subparagraphs (A)
				  and (B) of this paragraph, in the case of both insurers and HMOs: Individual A
				  requests coverage on October 1, 2014, after the enrollment period of July 1,
				  2014, through July 31, 2014, has ended. The next annual open enrollment period
				  is July 1, 2015, through July 31, 2015. The effective date of coverage for
				  persons enrolling during an open enrollment period is the beginning of the plan
				  year, which is September 1 of each year.
(i)
				  If the carrier is an insurer and has elected to exclude all applicants
				  requesting late enrollment until the next open enrollment period, Individual A
				  must reapply for coverage in July 2015 and the carrier may apply up to a
				  12-month preexisting condition period from the effective date of coverage, and
				  as with any other enrollee, the preexisting condition period would begin on
				  September 1, 2015, and expire on September 1, 2016.
(ii) If the carrier is an insurer and has
				  elected to accept applications for late enrollment immediately and enroll the
				  applicant during the plan year, the carrier may apply up to an 18-month
				  preexisting condition period from the date of application. If Individual A
				  applied for coverage on October 1, 2014, the preexisting condition period would
				  begin on that date and expire on April 1, 2016.
(iii) If the carrier is an HMO and has
				  elected to exclude all applicants requesting late enrollment until the next
				  open enrollment period, Individual A must reapply for coverage in July 2015,
				  and the carrier may apply up to a 60-day affiliation period, as with any other
				  enrollee.
(iv) If the carrier is an
				  HMO and has elected to accept applications for late enrollment immediately and
				  enroll the applicant during the plan year, the carrier may apply up to a 90-day
				  affiliation period from the day Individual A applied for coverage.
(10) A preexisting
				  condition provision in a small employer health benefit plan may not apply to
				  coverage for a disease or condition other than a disease or condition for which
				  medical advice, diagnosis, care, or treatment was recommended or received from
				  an individual licensed to provide the services under state law and operating
				  within the scope of practice authorized by state law during the six months
				  before the effective date of coverage.
(11) A small employer carrier may not treat
				  genetic information as a preexisting condition described by Insurance Code
				  §
											1501.002 (concerning
				  Definitions) in the absence of a diagnosis of the condition related to the
				  information.
(12) A small employer
				  carrier may not treat a pregnancy as a preexisting condition described in
				  Insurance Code §
											1501.002.
(13) A preexisting condition provision in a
				  small employer health benefit plan does not apply to an individual who was
				  continuously covered for an aggregate period of 12 months under creditable
				  coverage that was in effect up to a date not more than 63 days before the
				  effective date of coverage under the small employer health benefit plan,
				  excluding any waiting period under the previous coverage. For example,
				  Individual A has coverage under an individual policy for six months beginning
				  on May 1, 2014, through October 31, 2014, followed by a gap in coverage of 61
				  days until December 31, 2014. Individual A is covered under an individual
				  health plan beginning on January 1, 2015, for six months through June 30, 2015,
				  followed by a gap in coverage of 62 days until August 31, 2015. Individual A's
				  effective date of coverage under a small employer health benefit plan is
				  September 1, 2015. Individual A has 12 months of creditable coverage and would
				  not be subject to a preexisting condition exclusion under the small employer
				  health benefit plan.
(14) In
				  determining whether a preexisting condition provision applies to an individual
				  covered by a small employer health benefit plan, the small employer carrier
				  must credit the time the individual was covered under creditable coverage if
				  the previous coverage was in effect at any time during the 12 months preceding
				  the effective date of coverage under a small employer health benefit plan. Any
				  waiting period that applied before that coverage became effective also must be
				  credited against the preexisting condition provision period. For instance,
				  Individual B is covered under an individual health insurance policy for 18
				  months beginning May 1, 2014, through November 30, 2015, followed by a
				  four-month gap in coverage from December 1, 2015, to March 31, 2016. On April
				  1, 2016, Individual B is covered under a group health plan for three months
				  through June 30, 2016, followed by a two-month gap in coverage until August 31,
				  2016. Individual B's coverage became effective on September 1, 2016. Under this
				  example, since there was a significant break in coverage, to determine the
				  length of creditable coverage, the small employer carrier counts the creditable
				  coverage the individual had for the 12-month period preceding the effective
				  date of the individual's coverage under the small employer health benefit plan.
				  Individual B has creditable coverage of six months and the issuer of the small
				  employer health benefit plan may impose a preexisting condition limitation for
				  six months on Individual B.
(15) A
				  small employer may establish a waiting period in accordance with Insurance Code
				  §
											1501.156.
				  On completion of the waiting period and enrollment within the time frame
				  allowed by §
											26.7(h)
				  of this title (relating to Requirement to Insure Entire Groups), coverage must
				  be effective no later than the next premium due date. Coverage may be effective
				  at an earlier date as agreed between the small employer and the small employer
				  carrier.
(16) An HMO may impose an
				  affiliation period in accordance with Insurance Code §
											1501.104, if
				  the period is applied uniformly without regard to any health-status-related
				  factor. The affiliation period may not exceed two months for an enrollee, other
				  than a late enrollee, and may not exceed 90 days for a late enrollee. An
				  affiliation period under a plan must run concurrently with any applicable
				  waiting period under the plan. An HMO may not impose any preexisting condition
				  limitation, except for an affiliation period.
(17) The imposition of an affiliation period
				  by an HMO does not preclude application of any applicable waiting period as
				  determined by the employer for all new entrants under a health benefit
				  plan.
(18) An affiliation period
				  provision in a small employer health benefit plan does not apply to an
				  individual who would not be subject to a preexisting condition limitation in
				  accordance with paragraphs (12) and (13) of this subsection.