Those who purchase individual coverage are usually those who do not have access to insurance through their job. The laws have changed under the Affordable Care Act, and now all insurers must accept every applicant regardless of their health. Other options for those who have difficulty finding insurance are COBRA, the Texas Health Insurance Risk Pool, and the health insurance exchange.
Individual Coverage Laws
Underwriting & Conditions
Texas health insurance applicants used to be judged heavily on their medical conditions, history, and current health status when being considered for an individual plan in the past. Health insurance companies no longer have the right to deny anyone in Texas coverage due to their health and other factors, such as medications and Body Mass Index as before. Insurers must accept any applicant and provide them a fair premium regardless of their health, gender, or weight. Rates can only increase based on age and tobacco use, and everyone qualifies for coverage.
In the past, if a person had a preexisting medical condition or took medications, they could be issued an exclusion period for up to 24 months. However, if the health plan did not ask the person about their conditions prior to enrollment, they could only impose a maximum exclusion period of 12 months. Texas individual insurers could also issue elimination riders, which were basically permanent exclusion periods where the plan will never cover a service related to a member’s preexisting condition. Preexisting conditions are evaluated by the prudent person standard in Texas, which includes health problems that a person may or may not have received care for within the look-back period. Texas has a maximum look-back period of 60 months.
Before health reform, Texas insurers could not decline, rate up, or give an exclusion period to an applicant due to their genetic information, which is a family history of medical conditions and the results of genetic testing. Those who experienced immense rate ups, exclusions, or denial of coverage could apply for the Texas Health Insurance Pool. Individuals who are HIPAA eligible could also apply for the risk pool.
Now, all Texas residents can apply for coverage without having rates increase for reasons other than age and smoking. No insurers can issue exclusions or elimination riders. Medical conditions do not dictate your eligibility for health insurance on the private market, whether you enroll in individual or group coverage.
Newborns and adopted children are automatically covered under their insured parent’s policy for the first 31 days after birth or adoption. During this period, the parent is encourage to enroll the child as a dependent in order to receive full benefits after 31 days. Grandchildren can also qualify as dependents on an individual health plan if their grandparent, the policyholder, is their guardian. The child must be under 25 years old and not married. Young adults up to age 26 can receive coverage through their parent’s individual plan, regardless of residence, occupation, marital status, or health. Adult children with disabilities are also eligible to stay on their parent’s health plan beyond age 26 if they are still financially and otherwise dependent on their parents or guardians.
Texas insurers can rate up an applicant’s premium based on age and tobacco use under federal law. If you decide to renew your health plan for another term, your premiums will rise according to annual inflation and due to your increase in age (only if you reach a different age group). Premium rates can only be higher for tobacco users and older individuals. You cannot be charged more if you have a hazardous occupation, are female, or have a medical condition.
Individual coverage cannot be canceled on the grounds of illness. If you get sick during the course of your plan year, your health plan will stay the same and your premiums will not increase. Health insurers are also required to ask their plan members if they wish to renew their policies at the end of the year in order to continue their benefits under this provision. This law helps individuals keep their coverage when they need it most and not be discriminated against.
Health plans in Texas are not permitted to rescind, or cancel, anyone’s plan unless they have lied on their application, committed fraud, or been reluctant to pay their premiums. If any of these apply, an insurer has the right to rescind your policy. Rescissions are not allowed for health reasons or any other reason besides those listed.