Texas Health Insurance Laws and Consumer Protections
Numerous state and federal laws make it easier for people with preexisting conditions to get or keep health insurance, or to change from one health plan to another. A federal law, known as the Health Insurance Portability and Accountability Act (HIPAA), sets national standards for all health plans. In addition, states can pass different laws for the health plans they regulate (fully insured group health plans and individual health insurance), so your protections may vary if you leave Texas. Neither federal nor state laws protect your access to health insurance in all circumstances. So, please read this guide carefully.
The following information summarizes how federal and state laws do – or do not – protect you as a Texas resident.
How am I Protected in Texas?
In Texas, as in many other states, your health insurance options are somewhat dependent on your health status. Even if you are sick, however, the laws protect you in the following ways.
- Coverage under your group health plan (if your employer offers one) cannot be denied or limited, nor can you be required to pay more, because of your health status. This is called nondiscrimination.
- All health plans in Texas must limit exclusion of preexisting conditions. There are rules about what counts as a preexisting condition and how long you must wait before a new group health plan will begin to pay for care for that condition. Generally, if you join a new health plan, your old coverage will be credited toward the preexisting condition exclusion period, provided you did not have a long break in coverage.
- When you apply for an individual health insurance policy, insurance companies may not turn you down, charge you more or impose a preexisting condition exclusion period because of your genetic information. In addition, insurance companies are not allowed to even ask about your genetic tests or family history when you apply for coverage.
- Your health insurance cannot be canceled because you get sick. Most health coverage is guaranteed renewable. (see Individual Health Plans for Individual Coverage, and Small Employer or Self-Employed Person for Small Group Coverage)
- If you leave your job, you may be able to remain in your old group health plan for a certain length of time. This is called COBRA or state continuation coverage. It can help you when you are between jobs or waiting for a new health plan to cover your preexisting condition. There are limits on what you can be charged for this coverage.
- If you lost your group health plan because of involuntary termination of employment that occurred between September 1, 2008 and December 31, 2009, you may be eligible for a federal tax credit that can help you pay for your COBRA or state continuation coverage premiums for up to nine months.
- If you lose your group health plan and meet other qualifications, you will be HIPAA eligible. If so, you can buy an individual health insurance policy from the Texas Health Insurance Pool. You will not face a new preexisting condition exclusion period.
- If you are not HIPAA eligible and have had difficulty obtaining affordable individual health insurance because of your health condition, you may also be eligible for Texas Health Insurance Pool coverage. If you qualify for this coverage because of health reasons and you have had no previous health coverage, you may face a new preexisting condition exclusion period. There are limits on what you can be charged for a Pool policy.
- If you are a small employer buying a fully insured small group health plan, you cannot be turned down because of the health status, age, or any factor that might predict the use of health services of those in your group. All health insurance policies for small employers must be sold on a guaranteed issue basis. However, the insurance carrier can turn you down if your small business does not meet the participation or contribution requirements.
- If you are a small employer buying a fully insured group health plan, there are limits on what you can be charged due to health status, age, gender, or occupation of those in your group.
- As a small employer, you may not be turned down or charged more because of the genetic information of a member of your group. In addition, insurance companies are not allowed to even ask about genetic tests or family history of people in your group when you apply for coverage. (see Small Employer or Self-Employed Person)
- If you have low or modest household income, you may be eligible for free or subsidized health coverage for yourself or members of your family. The Texas Medicaid program offers free health coverage for pregnant women, families with children, elderly and disabled individuals with very low incomes. In addition, some women diagnosed with breast or cervical cancer may be eligible for medical care through Medicaid. Another program, the Texas Children’s Health Insurance Program (CHIP) offers subsidized health coverage for certain uninsured children.
- If you believe you may be at risk for cancer but are uninsured or underinsured, you may be eligible for screening and treatment. The Texas Breast and Cervical Cancer Services program provides free cancer screenings for qualified residents. Some women diagnosed with breast or cervical cancer through this program may be eligible for medical care through Medicaid.
- If you lost your health insurance and are receiving benefits from the Trade Adjustment Assistance (TAA) Program, you may be eligible for a federal income tax credit to help you pay for new health coverage. This credit is called the Health Coverage Tax Credit (HCTC), and is equal to 80% of the cost of qualified coverage, including COBRA and a policy offered through the Texas Health Insurance Risk Pool.
- If you are a retiree aged 55-65 and receiving benefits from Pension Benefit Guarantee Corporation (PBGC), then you may be eligible for the HCTC.
Limits of Protection in Texas
As important as they are, the federal and state health insurance reforms are limited. Therefore, you also should understand how the laws do not protect you.
- If you change jobs, you usually cannot take your old group health plan with you. Except when you exercise your federal COBRA or state continuation rights, you are not entitled to take your actual group health plan with you when you leave a job. Your new health plan may not cover all of the benefits or include the same doctors that your old health plan did. (See Group Health Plans.)
- Employers are not required to provide health benefits for their employees, so if you change jobs, you may find that your new employer does not offer you health coverage. Employers are only required to make sure that any health benefits they do offer do not discriminate based on health status.
- If you get a new job with health benefits, your coverage may not start right away. Employers can impose waiting periods before your health benefits begin. HMO’s can impose affiliation periods. (see Group Health Plans)
- If you have a break in coverage of 63 days or more, you may have to satisfy a new preexisting condition exclusion period when you join a new group health plan. (see Group Health Plans)
- Even if your coverage is continuous, there may be a preexisting condition exclusion period for some benefits if you join a group health plan that covers benefits your old group plan did not. For example, say you move from a group plan that does not cover prescription drugs to one that does. You may have to wait up to one year before your new health plan will pay for drugs prescribed to treat a preexisting condition. (see Group Health Plans)
- If you work for certain non-federal public employers in Texas, not all of the group health plan protections may apply to you.
- If you are HIPAA eligible, your only guaranteed access to individual health insurance is through the Texas Health Insurance Pool. (see Individual Health Plans)
- In Texas, your access to individual health insurance depends on your health status. Private insurers are not prohibited from turning you down, charging more, or limiting coverage due to your health. (see Individual Health Plans)
- The law does not limit what you can be charged for individual health insurance. You can be charged substantially higher premiums because of your health status, age, gender, and other characteristics. (see Individual Health Plans)
- If you move away from Texas, you may not be able to buy individual health insurance in another state unless you are HIPAA eligible. (see Individual Health Plans)
- If you are a small employer, you may be charged more for health insurance if someone in your group is sick. While there are limits on what you can be charged based on health status, generally premiums can be significantly higher if someone in your group has a serious health condition. Also, the insurance carrier can turn you down if your small business does not meet the participation or contribution requirements. (see Small Employer or Self-Employed Person)