Consumer's Guide to Getting and Keeping Health Insurance in Texas
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.
INDIVIDUAL HEALTH INSURANCE SOLD BY PRIVATE INSURERS WHEN DO INDIVIDUAL HEALTH INSURERS HAVE TO SELL ME A POLICY?
In Texas, your ability to buy an individual health insurance policy from a private insurance company depends on your health status.
In general, companies that sell individual health insurance in Texas are free to turn you down because of your health status and other factors. When applying for individual health insurance, you will be asked questions about health conditions you have now or had in the past. Depending on your health status, insurers might refuse to sell you coverage or offer to sell you a policy that has special limitations on what it covers. If you are turned down or offered a policy with reductions or restrictions, you may be eligible for coverage from the Texas Health Insurance Risk Pool.
In Texas, newborns, adopted children, and children placed for adoption are automatically covered under the parentsý individual health insurance for the first 31 days, if the plan provides coverage for dependents. The health plan may require that the parent enroll the child within the 31 days in order to continue coverage beyond the 31 days.
Under Texas law, your grandchild may be covered under your individual health insurance policy. In order for your grandchild to qualify for coverage, your policy must cover dependents and your grandchild must be under 25 years old, unmarried, and dependent on you.
Under Texas law, your disabled child may remain covered under your fully insured group plan into adulthood. This applies if your child was already disabled and covered under the plan before he or she reached the limiting age for dependent . You will be required to submit proof of your childýs continued incapacity and dependency within 31 days following the date your child reaches the limiting age and periodically thereafter.
WHAT WILL MY INDIVIDUAL HEALTH INSURANCE POLICY COVER?
It depends on what you buy. Texas does not require health insurers in the individual market to sell standardized policies. Health plans can design different policies and you will have to read and compare them carefully. Health plans are required to provide you with written descriptions of their products so that you can compare the differences.
Make sure that the policy that you purchase covers all your needs. By law, all insurers in Texas must offer at least one plan that includes coverage for many required state mandated benefits, such as childhood immunizations and mammograms. However, Texas does permit insurers that sell individual health insurance to offer one or more Consumer Choice Benefits Plans, which are lower- cost plans that do not include all of mandated benefits normally covered in other insurance plans (for example, chemical dependency treatment or osteoporosis screening).
WHAT ABOUT COVERAGE FOR MY PRE-EXISTING CONDITION?
If you buy an individual health insurance policy from an HMO, you will not face a pre-existing exclusion period. HMOs in Texas cannot impose pre-existing exclusion periods.
If you are buying a non-HMO individual health insurance policy in Texas, there are different ways insurers are allowed, at the time you purchase the policy, to exclude coverage for your pre-existing conditions. The insurer can impose an elimination rider. An elimination rider is an amendment to your health insurance contract that temporarily or permanently excludes coverage for a health condition, body part, or body system.
An individual health insurer may also impose a pre-existing condition exclusion period. Pre-existing condition exclusion periods cannot exceed 24 months. 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 insurerýs opinion, would have sought care. This is called the prudent person standard.
After you purchase your individual health insurance policy, insurers can still exclude coverage for a pre-existing condition, even if it wasnýt 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.
Pregnancy may be considered a pre-existing condition in an individual health insurance policy. However, genetic information cannot be used as a basis for a pre- existing condition.
Individual health insurers have to give you credit for your prior continuous coverage if your most recent coverage was under a group, government, 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, 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.
WHAT CAN I BE CHARGED FOR MY INDIVIDUAL HEALTH INSURANCE POLICY?
Generally, in Texas, there are no limits on how much individual premiums can vary due to age, gender, health status, family size, and other factors. In addition, when you renew your individual health insurance, an insurer can increase your premiums. However, premium increases must be applied to all persons in your class and not on an individual basis. A class may be grouped by age, sex, or by each individual health insurance product.
CAN MY INDIVIDUAL HEALTH INSURANCE POLICY BE CANCELED?
Your coverage cannot be canceled because you get sick. This is called guaranteed renewability. You have this protection provided that you pay the premiums, do not defraud the company, and, in the case of managed care plans, continue to live in the plan service area. However, guaranteed renewability does not protect you from having your premiums go up at renewal, and premiums can also increase within limits as you age or your health declines. Some insurance companies sell temporary health insurance policies. Temporary policies are not guaranteed renewable. They will only cover you for a limited time, such as 6 months. If you want to renew coverage under a temporary policy after it expires, you will have to reapply and there is no guarantee that the health plan will be-reissued at all or at the same price.
COBRA AND STATE CONTINUATION COVERAGE WHEN DO I HAVE TO BE OFFERED COBRA COVERAGE?
If you are leaving your job and you had group health plan, you may be able to stay in your group health plan for an extended time through COBRA and/or state continuation coverage. The information presented below was taken from publications prepared by the U.S. Department of Labor. You should contact it for more information about your rights under COBRA. To qualify for COBRA continuation coverage, you must meet 3 criteria: First, you must work for an employer with 20 or more employees. If you work for an employer with 2-19 employees, you may qualify for state continuation coverage. (See below.) Second, you must be covered under the employerýs group health plan as an employee or as the spouse or dependent child of an employee. Finally, you must have a qualifying event that would cause you to lose your group health plan.
COBRA QUALIFYING EVENTS
For employees Voluntary or involuntary termination of employment for reasons other than gross misconduct Reduction in numbers of hours worked For spouses Loss of coverage by the employee because of one of the qualifying events listed above Covered employee becomes eligible for Medicare Divorce or legal separation of the covered employee
- Death of the covered employee For dependent children Loss of coverage because of any of the qualifying events listed for spouses
- Loss of status as a dependent child under the plan rules Each person who is eligible for COBRA continuation can make their own decision. If your dependents were covered under your employer plan, they may independently elect COBRA coverage as well. You must be notified of your COBRA rights when you join the group health plan, and again if you qualify for COBRA coverage. The notice rules are somewhat complicated and you should contact the U.S. Department of Labor for more information.
In general, if the event that qualifies you for COBRA coverage involves the death, termination, reduction in hours worked, or Medicare eligibility of a covered worker, the employer has 30 days to notify the group health plan of this event. However, if the qualifying event involves divorce or legal separation or loss of dependent status, YOU have 60 days to notify the group health plan. Once it has been notified of the qualifying event, the group health plan has 14 days to send you a notice about how to elect COBRA coverage. Each member of your family eligible for COBRA coverage then has 60 days to make this election. Once you elect COBRA, coverage will begin retroactive to the qualifying event. You will have to pay premiums dating back to this period.
SPECIAL SECOND CHANCE TO ELECT COBRA FOR TRADE- DISLOCATED WORKERS
A second COBRA election period may be available for TAA eligible people who did not elect cobra when it was first offered. The second election period can be exercised 60 days from the 1st day of TAA eligibility, but in no case later than 6 months following loss of coverage. Coverage elected during this second election begins retroactive to the beginning of the special election period ý not back to qualifying event. Certain people who lost their job-based health coverage because of the impact of imports on their employers have a limited second chance to elect COBRA. People who are receiving benefits from the Trade Adjustment Assistance (TAA) Program are eligible for a federal income tax credit (the Health Coverage Tax Credit, or HCTC) that will pay 65% of their premiums. For some laid off workers, TAA benefits begin after their 60-day period to elect COBRA continuation coverage has expired. In this circumstance, TAA-eligible people have a second 60-day period, starting on the date of their TAA eligibility, to elect COBRA. (However, in no case can COBRA be elected more than 6- months following the original qualifying event (i.e. layoff) that caused the loss of group health plan coverage.) When COBRA is elected during this special, second election period, coverage starts on the first date of the special election period. Any time that has elapsed between the original qualifying event and the first date of the special election period is not counted as a lapse in coverage in determining continuous coverage history. To qualify as HIPAA eligible, you must choose and use up any COBRA or state continuation coverage available to you.
WHAT WILL COBRA COVER?
Your covered health benefits under COBRA will be the same as those you had before you qualified for COBRA. For example, if you had coverage for medical, hospitalization, dental, vision, and prescription drug benefits before COBRA, you can continue coverage for all of these benefits under COBRA. If these benefits were covered under more than one plan (for example, a separate health insurance and dental insurance plan) you can choose to continue coverage under any or all of the plans. Life insurance is not covered by COBRA. If your employer changes the health benefits package after your qualifying event, you must be offered coverage identical to that available to other active employees who are covered under the plan.
WHAT ABOUT COVERAGE FOR MY PRE-EXISTING CONDITION?
Because your group coverage is continuing, you will not have a new pre-existing condition exclusion period under COBRA. However, if you were in the middle of a pre-existing condition exclusion period when your qualifying event occurred, you will have to finish it.
WHAT CAN I BE CHARGED FOR COBRA COVERAGE?
You must pay the entire premium (employer and employee share, plus a 2% administrative fee) for COBRA continuation coverage. The first premium must be paid within 45 days of electing COBRA coverage. If you elect the 11-month disability extension, the premium will increase to 150% of the total cost of coverage. See below for more information about the disability extension. If you lost your group health plan 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 COBRA coverage. This credit is called the Health Coverage Tax Credit (HCTC), and is equal to 65% of the cost of qualified coverage, including COBRA (see page 31). 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 (see page 31).
HOW LONG DOES COBRA COVERAGE LAST?
COBRA coverage generally lasts up to 18 months and cannot be renewed. However, certain disabled people can opt for coverage up to 29 months, and dependents are sometimes eligible for up to 36 months of COBRA continuation coverage, depending on their qualifying event.
HOW LONG CAN COBRA COVERAGE LAST? Qualifying event(s) Eligible person(s) Coverage Termination Employee 18 months * Reduced hours Spouse Dependent child Employee enrolls in Medicare Spouse 36 months Divorce or legal separation Dependent child Death of covered employee Loss of ýdependent childý status Dependent child 36 months * Certain disabled persons and their eligible family members can extend coverage an additional 11 months, for a total of up to 29 months. Usually, COBRA continuation coverage ends when you join a new health plan. However, if your new plan has a waiting period or a pre-existing condition exclusion period, you can keep whatever COBRA continuation coverage you have left during that period. For specifics, ask your former employer or contact the U.S. Department of Labor. COBRA coverage also ends if your employer stops offering health benefits to other employees. COBRA coverage might end if you are in a managed care plan that is available only to people living in a limited geographic area and you move out of that area. However, if you are eligible for COBRA and are moving out of your current health planýs service area, your employer must provide you with the opportunity to switch to a different plan, but only if the employer already offers other plans to its employees. Examples of the other plans your employer may offer you are a managed care plan whose service area includes the area you are moving to, or another plan that does not have a limited service area.
WHAT ABOUT STATE CONTINUATION COVERAGE
If your employer, regardless of size, offers a fully insured group health plan, you may also be eligible for continuation coverage under some Texas laws that are similar to COBRA. Eligibility requirements for state continuation coverage are similar to those for COBRA. However, in most cases, state continuation coverage does not last as long as COBRA would otherwise last. To get state continuation coverage, you must have been covered under your fully insured group health plan for a minimum length of time and you must request state continuation coverage and make your first premium payment within a certain time limit. Ask your former employer or the Texas Department of Insurance about state continuation coverage if you think it applies to you HEALTH INSURANCE RISK POOL (THE HEALTH POOL) Texas has a risk pool program, called the Texas Health Insurance Risk Pool that offers health coverage for persons who are HIPAA eligible and for people with expensive health conditions who are unable to buy individual coverage.
WHEN CAN I GET COVERAGE FROM THE TEXAS HEALTH INSURACE RISK POOL?
If you are HIPAA eligible, you can buy health insurance from the Health Pool. To be HIPAA eligible, you must meet certain criteria No matter where you live in the U.S., if you are HIPAA eligible you are guaranteed the right to buy individual health insurance of some kind with no pre-existing condition exclusion periods. In Texas, you are guaranteed the right to buy coverage only from the Health Pool. To be HIPAA eligible, you must meet all of the following: You must have had 18 months of continuous creditable coverage, at least the last day of which was under a group health plan. You also must have used up any COBRA or state continuation coverage for which you were eligible. You must not be eligible for Medicare, Medicaid or a group health plan. You must not have health insurance. (Note, however, if you know your group coverage is about to end, you can apply for coverage for which you will be HIPAA eligible.) You must apply for health insurance for which you are HIPAA eligible within 63 days of losing your prior coverage. HIPAA eligibility ends when you enroll in an individual plan, because the last day of your continuous health coverage must have been in a group plan. You can become HIPAA eligible again by maintaining continuous coverage and rejoining a group health plan. If you are not HIPAA eligible, there are many different ways to qualify for coverage through the Health Pool. You are eligible if: o You are eligible for the Health Coverage Tax Credit (HCTC) (see page 31). o You were turned down for coverage by an insurer or HMO because of your health; o You received a certificate from an agent saying that the agent would be unable to find coverage for you because of your health; o You were offered coverage by an insurer, but the health plan contained an elimination rider that would have reduced the benefits you would receive from the health plan; o You were offered coverage by an insurer or HMO, but it would have been more expensive than buying coverage from the Health Pool; or o You have been diagnosed with a serious health condition, for example, cancer, epilepsy, or AIDS. o You only need to show that you are eligible in one of these ways in order to get Health Pool coverage. The Texas Health Insurance Risk Pool requires that you not be eligible for other, similar employer-based coverage before you can get coverage from the Health Pool. You may not be eligible for the Health Pool if you were offered COBRA or state continuation coverage and didnýt elect the coverage or didnýt exhaust the coverage. The Health Pool can deny eligibility until the time that you would have otherwise exhausted COBRA or state continuation coverage had you elected it. The Health Pool offers family coverage, so if one person in your family qualifies, your family can get Health Pool coverage. Each person in your family will be assessed a separate premium.
WHAT WILL THE TEXAS HEALTH INSURANCE RISK POOL COVER?
Coverage includes hospital and physician care, maternity services, prescription drugs, treatment for serious mental health illness, and other services. Four plan options are available with varying deductibles and coinsurance maximums. All plans are preferred provider organization (PPO) plans. This means that when you receive care from a health care provider within the network, the plan will pay more than if you get care from a provider outside the network.
WHAT ABOUT COVERAGE FOR MY PRE-EXISTING CONDITION?
If you are HIPAA eligible or eligible for the HCTC, your health coverage will not be subject to a pre-existing condition exclusion when you enroll in the Health Pool. If you are not HIPAA or HCTC eligible, you may have a 12-month pre-existing condition exclusion period when you first enroll in the Health Pool. When you enroll, the Health Pool will look back 6 months to see if you had a condition for which you actually received a diagnosis, medical advice, or treatment. Pregnancy can be considered a pre-existing condition. Elimination riders are not permitted on the Health Pool plans. If your break in coverage is less than 63 days and you had 12 months of prior coverage, no pre-existing condition exclusion will be imposed when you join the Health Pool. Even if your break in coverage is 63 days or more, the Health Pool will give you credit for any coverage that was in effect in the 12 months prior to the effective date of your coverage. The Health Pool considers creditable coverage to include most types of prior individual or group health plan that you may have had.
WHAT CAN I BE CHARGED FOR HEALTH POOL COVERAGE?
Premiums will vary based on the health plan you choose, your age and gender, the geographic area where you live, and whether you smoke. Health Pool rates are limited to twice the amount that a healthy person who bought a similar plan sold by a private insurer would pay. For example, a 24-year-old man who was a non-smoker would pay $144 to $388 in monthly premiums, depending on which deductible option he chose and what part of the state he lived in. On the other hand, a 64-year-old man who was a non-smoker would pay $445 to $1194 in monthly premiums, depending on the deductible option he chose and where he lived. Please note that rates may have changed since this guide was written, so contact the Health Pool administrator for the most current information.
HOW LONG DOES TEXAS HEALTH INSURANCE RISK POOL COVERAGE LAST?
Coverage under the Health Pool is renewable as long as you pay your premiums, continue to reside in Texas, and meet other eligibility requirements. If you cancel your Health Pool coverage, you will not be able to reapply for coverage under the Health Pool for 12 months, unless you are HIPAA eligible or you can show a good faith reason for canceling