Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 3 - LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES › Subchapter S - MINIMUM STANDARDS AND BENEFITS AND READABILITY FOR INDIVIDUAL ACCIDENT AND HEALTH INSURANCE POLICIES › Section 3.3018 - Policy Definition of Preexisting Condition

Current through Reg. 49, No. 28; July 12, 2024
(a) Subject to the conditions set forth in
				  subsection (b) of this section, a policy subject to this subchapter may contain
				  provisions limiting or denying coverage based on the existence of a preexisting
				  condition or conditions. "Preexisting condition" may not be defined to be more
				  restrictive than the following: Preexisting condition means the existence of
				  symptoms which would cause an ordinarily prudent person to seek diagnosis, care
				  or treatment within a five year period preceding the effective date of the
				  coverage of the insured person or a condition for which medical advice or
				  treatment was recommended by a physician or received from a physician within a
				  five year period preceding the effective date of the coverage of the insured
				  person. This does not prohibit an insurer, using an application form designed
				  to ask questions concerning the health or medical history of a prospective
				  insured and on the basis of the answers on that application, from fully
				  underwriting in accordance with that insurer's established standards. It does,
				  however, prohibit an insurer that elects to use a simplified application from
				  reducing or denying a claim on the basis of the existence of a preexisting
				  condition that is defined more restrictively than above.
(b) In regards to individual hospital,
				  medical or surgical coverage:
(1) no
				  preexisting condition provision shall apply to an individual who was
				  continuously covered for an aggregate period of 18 months by creditable
				  coverage (as defined in §
											3.3002 of
				  this title (relating to Definitions)) that was in effect up to a date not more
				  than 63 days before the effective date of the coverage, excluding any waiting
				  period, and whose most recent creditable coverage was under a group health
				  plan, governmental plan or church plan, as such plans are defined in §
											3.3002 of
				  this title.
(2) In determining
				  whether a preexisting condition provision applies to an individual whose most
				  recent creditable coverage was under a group health plan, governmental plan or
				  church plan, but who does not have aggregate creditable coverage totaling 18
				  months, the insurer shall credit the time the individual was previously covered
				  under creditable coverage if the previous coverage was in effect at any time
				  during the 18 months preceding:
(A) the first
				  day coverage is effective, if there is not a waiting period; or
(B) the day that the individual files a
				  substantially complete application for coverage, if there is a waiting
				  period.
(3) When
				  determining the applicability of preexisting condition provisions in accordance
				  with paragraphs (1) and (2) of this subsection, an insurer of individual
				  hospital, medical or surgical coverage shall comply with required notices,
				  disclosures and other applicable provisions of Chapter 21, Subchapter K of this
				  title (relating to Certification of Creditable Coverage).
(4) The application of paragraphs (1) and (2)
				  of this subsection are demonstrated by the following examples:
(A) Individual A: Not subject to any
				  preexisting condition limitation:
(i)
				  Relevant insurance history: Individual A was covered under an individual policy
				  for 12 months beginning on January 1, 1996, through December 31, 1996, followed
				  by a gap in coverage of 58 days until February 28, 1997. Individual A then was
				  covered under a group health plan beginning on March 1, 1997, for six months
				  through August 30, 1997, followed by a gap in coverage of 61 days until October
				  31, 1997.
(ii) Present coverage:
				  Individual A applies for individual hospital, medical and surgical coverage on
				  November 1, 1997, and the insurer issues the coverage on December 1,
				  1997.
(iii) Applicability of
				  preexisting condition prohibited: Pursuant to paragraph (1) of this subsection,
				  the insurer offering the individual hospital, medical and surgical coverage
				  cannot apply any preexisting condition provision to Individual A because: A's
				  most recent past creditable coverage was under a group health plan; A has 18
				  months of creditable coverage--six months under the group plan and 12 months
				  under the previous individual plan--up to a date not more than 63 days from the
				  effective date of the coverage (excluding the one-month waiting period); and
				  there were no significant breaks--i.e., more than 63 days--in the 18 months of
				  creditable coverage.
(B)
				  Individual B: Subject to preexisting condition provision:
(i) Relevant insurance history: Individual B
				  had coverage under a group health plan for 12 months beginning on January 1,
				  1996, through December 31, 1996, followed by a gap in coverage of 58 days until
				  February 28, 1997. Individual B then was covered under an individual health
				  insurance policy beginning on March 1, 1997, for six months through August 30,
				  1997, followed by a gap in coverage of 61 days until October 31,
				  1997.
(ii) Present coverage:
				  Individual B applies for a policy offering individual hospital, medical and
				  surgical coverage on November 1, 1997, and is issued coverage on December 1,
				  1997.
(iii) No exemption from
				  preexisting condition provisions: Under paragraph (1) of this subsection, the
				  insurer offering the individual hospital, medical and surgical coverage can
				  fully apply any preexisting condition provision to Individual B, because B's
				  most recent coverage was under an individual health plan, rather than a group
				  health plan, governmental plan or church plan. Unless an insured's most recent
				  creditable coverage was under a group health plan, governmental plan or church
				  plan, the insurer is not required to take into account any of the insured's
				  past creditable coverage under either paragraphs (1) or (2) of this
				  subsection.
(C)
				  Individual C: Twelve-month credit against preexisting condition period:
(i) Relevant insurance history: Individual C
				  was covered under an individual health insurance policy for 18 months beginning
				  January 1, 1996, through June 30, 1997, followed by a four-month gap in
				  coverage from July 1, 1997, to October 31, 1997. On November 1, 1997,
				  Individual C was covered under a group health plan for three months, through
				  January 31, 1998, followed by a two-month gap in coverage.
(ii) Present coverage: Individual C applies
				  for a policy offering individual hospital, medical and surgical coverage on
				  March 1, 1998, and is issued coverage on June 1, 1998.
(iii) Twelve-month credit applied: Individual
				  C's most recent creditable coverage was under a group health plan, so the
				  insurer must perform a creditable coverage analysis. However, C is not eligible
				  to be exempt from a preexisting condition provision under paragraph (1) of this
				  subsection, because of the significant break (four months) in C's creditable
				  coverage. Under paragraph (2) of this subsection, an insurer must then total up
				  the creditable coverage in the 18 months preceding the effective date of the
				  policy, excluding the waiting period. Because the waiting period in this
				  scenario is three months, the insurer essentially must look back to the start
				  of the waiting period--i.e., the application date of March 1, 1998--and count
				  back 18 months from there. In the 18 months between September 1, 1996, and
				  March 1, 1998, Individual C had total of 12 months creditable coverage--nine
				  months from September 1, 1996, to June 1, 1997, and three months from October
				  1, 1997, to January 31, 1998. Accordingly, the insurer must credit 12 months
				  against any preexisting condition period.
(D) Individual D: Six months credit against
				  preexisting condition period:
(i) Relevant
				  insurance history: After being uninsured for a number of years, Individual D
				  was covered under a governmental plan from March 1, 1997, to September 30,
				  1997, followed by a 31-day gap in coverage.
(ii) Present coverage: Individual D applies
				  for a policy offering individual hospital, medical and surgical coverage on
				  November 1, 1997, and is issued coverage on December 1, 1997.
(iii) Six-month credit applied: Individual
				  D's most recent creditable coverage was under a governmental plan, so the
				  insurer must perform a creditable coverage analysis. However, D is not eligible
				  to be exempt from a preexisting condition provision under paragraph (1) of this
				  subsection, because D has no other past coverage that could count towards an
				  18-month aggregate total of creditable coverage. Under paragraph (2) of this
				  subsection, an insurer must give Individual D a six-month credit against any
				  preexisting condition period.