Your Health Care Coverage

(En Español)

(December 2012)

Getting sick can be expensive, especially if the illness is serious. Even minor illnesses and injuries can cost thousands of dollars to diagnose and treat. Health care coverage helps you get the care you need and protects your family from financial losses if someone becomes sick or is injured.

This publication provides information about health care coverage in Texas. You can also visit www.TexasHealthOptions.com to learn more about health coverage and your choices. TexasHealthOptions.com is free service of the Texas Department of Insurance.

Note: For more information and regular updates about health care reform, visit TDI’s Federal Health Care Reform Resource Page at www.tdi.texas.gov/consumer/cpmhealthcare.html.

Health Plan Basics

Health care plans pay for most, and sometimes all, of the costs of illnesses and injuries. The most common types of plans are

indemnity plans
fee for service plans
managed care plans.

Indemnity Plans

With an indemnity plan, you can go to any doctor or hospital, but you will have to pay for the entire cost of the service when you receive it. You must then ask your insurance company for reimbursement.

You will have to pay the difference between the doctor or hospital charge and the amount your policy covers. If the doctor or hospital charges more than what your insurance policy will pay, you will have to pay for whatever the company doesn’t pay.

For example, if your plan covers a $20 office visit and your doctor charges $25, you will pay $25 out-of-pocket and then give the receipt to your plan. Once the plan approves the claim, it should reimburse you $20.

Fee-for-Service Health Plans

With a fee-for-service plan, you can go to any doctor or hospital. The doctor or hospital will usually bill your insurance company for the company’s share of the costs. Your insurance company pays a percentage of the cost, rather than a dollar amount.

For example, if your plan pays 70 percent of the cost of a covered service, you would pay the remaining 30 percent. The percentage the insurance company pays depends on the type of plan you have, but fee-for-service plans must pay at least 50 percent of the cost of covered services after you pay your deductible.

Managed Care Health Plans

Managed care plans contract with networks of doctors and hospitals to provide your care. Some managed care plans require you to use doctors and hospitals within the plan’s network for all routine care. Others pay for care from any doctor or hospital, but offer financial incentives for you to use doctors and hospitals in the network.

In general, the trade-off with a managed care plan is that your choice of doctors and hospitals is limited but the out-of-pocket costs are lower. The network doctors and hospitals can charge lower rates because they have a built-in clientele from the plans. Managed care plans also control costs by focusing on preventive care in an attempt to avoid serious medical conditions that might require more expensive treatment.

Managed care plans will only pay for covered services the plan deems as medically necessary. If the plan covers prescription drugs, it may have a list – called a formulary – of drugs it will cover.

There are four types of managed care plans, each with a different level of choice:

Health maintenance organizations (HMO) plans usually require you to use doctors and hospitals within the HMO’s network. There are exceptions for medical emergencies and for medically necessary services that you can only receive outside your network.
Your primary care physician will oversee your general medical care and provide referrals to specialists.
Preferred provider plans (PPP) are similar to HMOs but are more flexible. PPPs offer financial incentives for you to use doctors in their networks. Although you don’t have to go to doctors and hospitals in the PPP’s network, your costs will be lower if you do. PPPs don’t require you to choose a primary care physician, and you don’t have to get a referral to see an out-of-network doctor or specialist.
Point-of-service (POS) plans are a combination of HMOs and PPPs. You will be required to choose a primary care physician, but you may visit out-of-network doctors without a referral. If you use doctors and hospitals outside the network, you’ll have to pay more for your health care. A POS plan may exclude the option for out-of-network care for certain medical conditions. POS coverage is usually offered as an add-on to the plan – called a rider – for an additional fee.
Exclusive provider organization plans (EPO) require you to use doctors and hospitals in the EPO’s network, except for emergency care and medically necessary services you can only receive outside of the network.

Group vs. Individual Health Plans

Most people get health coverage as part of a group – such as an employer, professional association, or other organization – that offers health coverage to its employees or members. Others buy individual health coverage directly from an agent or insurance company. Individual plans usually cost more and may cover fewer conditions than plans offered through employers or other group plans. Group plans are typically less expensive because they spread the risk of claims over a larger number of people.

Individual Health Plans

Insurance companies and HMOs sometimes sell coverage directly to individuals. These policies can cover the individual only or can include a spouse and dependents.

Common Types of Individual Health Plans

HMO plans pay for covered health services within the HMO’s network of doctors and hospitals. You may need to receive pre-authorization (permission in advance) before getting care outside the network.
Major medical policies cover hospital stays and doctors’ services in and out of the hospital. They may also be offered as PPP plans.
Hospital surgical policies cover only expenses directly related to hospital and surgical services, such as daily room rates, surgery, and doctor charges.
Hospital indemnity policies pay up to a maximum limit for each day you are in the hospital.
Specified or dread disease policies only cover specific illnesses listed in the policy, such as cancer or HIV/AIDS. Companies may offer this coverage as a rider to individual coverage.
Short-term policies are generally used to offer you medical and financial protection when you are between traditional health insurance plans. Short-term coverage is typically less expensive than traditional coverage and usually doesn’t limit which doctors or hospitals you may visit.

Insurance companies will consider your medical history and other health factors when deciding whether to sell you a plan. They may deny your application or only offer a plan with an exclusionary rider that limits your benefits for certain conditions.

Group Health Plans

Most Texans with health care coverage are members of an employer-sponsored plan. Employers commonly offer group plans as part of an employee benefits package. Some trade unions, professional associations, churches, and other organizations also offer group health plans.

Employers and groups aren’t required to offer health coverage to their employees and members. Those that do offer health coverage aren’t required to contribute toward plan premiums. However, some insurance companies may require participating employers to pay 50 percent or more of an employee’s premiums.

Common Types of Group Plans

State and federal laws for group plans differ depending on the size and nature of the group. Texas law requires large-employer plans to provide certain benefits that small-employer plans aren’t required to provide.

The most common types of group health plans include the following:

Small-employer plans are provided by businesses with two to 50 eligible employees. Eligible employees are full-time employees who usually work at least 30 hours a week. They may not have another health plan or be seasonal, part-time, or substitute workers. If a small employer offers a plan, it must offer it to all eligible employees equally.

State law prohibits small employer plan rates from increasing more than 15 percent per year due to members’ health status. State law also requires guaranteed issue for small employer health plans. This means that a company can’t refuse to sell a policy to a small employer solely because of the employees’ health status.

Large-employer or other group plans are offered by businesses that don’t meet the small employer requirements and don’t self-fund. Other groups -- such as churches, trade unions, and professional associations -- may also offer the plans. If a large employer offers only an HMO plan, the law requires the HMO to offer a POS option.

Large employers may offer coverage to a specific class of employees – such as executives – and not offer coverage to everyone else. However, if employers offer coverage to a certain class, they must offer it to all employees in the class equally. They are also prohibited from using health status as a reason for not offering coverage to a particular group or excluding an employee from plan membership.

Self-funded plans are governed by the federal Employee Retirement Income Security Act (ERISA). They are often called ERISA plans. Employers who self-fund their health plans pay the costs of their employee’s health care themselves, rather than purchasing coverage from an insurance company or HMO. Coverages may vary by plan and employer, but are generally more inclusive and extensive than other plans. Employers who self-fund their health plans may require employees to contribute to the cost of the plan.

The U.S. Department of Labor (DOL) regulates self-funded plans, but there are only a few federal requirements. TDI has very limited authority over self-funded plans. These plans have their own procedures for complaints and dispute resolution, so it’s important to read your benefits handbook carefully. Questions and unresolved complaints should be directed to the DOL's Employee Benefits Security Administration (EBSA). For more information, call 1-866-444-EBSA (3272) or 972-850-4500.

A Multiple Employer Welfare Arrangement (MEWA) is a plan offered by employers from a group of businesses that have joined together to offer medical coverage. Self-funded MEWAs are regulated by the U.S. Department of Labor and TDI. They must obtain a license from TDI unless an authorized company has assumed 100 percent of the MEWA’s liabilities.

Covering Dependents

If you have dependent children and grandchildren on your plan, they can get coverage until the age of 25. The plan may not require that the child live with the parent or within the geographical service area.

The federal health care reform law requires individual or employer plans to provide coverage for children – not grandchildren -- up to age 26. Employer plans in effect before the law was enacted can waive the requirement until 2014 for children who can get insurance through their employer.

Children with mental or physical disabilities who can’t financially support themselves may continue to receive coverage after age 25.

Large-employer plans that offer dependent coverage must also provide coverage for children up to age 25. Except for emergency care and authorized referrals, an HMO plan can require dependent students to return to the plan’s service area to receive health care services.

Self-funded plans may offer dependent coverage, but it’s not required by state law.

If two spouses are covered by separate health plans and both plans cover their dependents, the parent whose birthday occurs first during the calendar year pays first. However, if that parent’s plan reaches its benefits maximum, the second parent’s plan can take effect. In the event of a divorce, a court usually determines which parent’s plan is a dependent’s primary coverage.

Preexisting Conditions

If you currently have a medical problem or have had one in the recent past, it may meet a plan’s definition of a preexisting condition. You must disclose any preexisting conditions in health plan applications.

Plans may require you to wait months or sometimes years, before paying benefits for treatment related to a preexisting condition. Companies selling individual plans may decide not to cover you because of the condition or may insist on a policy rider that excludes treatment for the condition. Except for association plans, group plans may not insist on a policy rider that excludes treatments for certain conditions.

The federal health care reform law prohibits health plans from denying coverage or applying preexisting condition exclusions to coverage for children under age 19. The same will be true for adults and dependent children age 19 and older beginning in 2014.

Waiting Periods

The maximum preexisting condition waiting period is two years for an individual health plan and one year for employer-sponsored health plans.

Some plans may require a standard waiting period before new members receive any benefits, regardless of whether they have a preexisting condition. If this is the case, your preexisting condition waiting period begins with the start of the standard waiting period.

If you’re switching from one health plan to another or have recently had health coverage, you may have a shorter waiting period before your preexisting conditions are covered as long as there is not a gap in coverage longer than 63 days. Prior coverage reduces your coverage on a month-for-month basis.

The following table summarizes how health plans handle preexisting conditions:

	Group Plan	Individual Plan
Definition of a preexisting condition	You received diagnosis, care, or treatment within six months prior to joining an employer-sponsored plan, or one year prior to joining a non-employer group plan	You had symptoms likely to cause you to seek medical advice, diagnosis, care, or treatment, or a condition for which you received medical advice, diagnosis, care, or treatment, within five years prior to joining the individual plan.
Waiting period before a preexisting condition is covered	12 months for plans offered by employers; up to 24 months for non-employer plans (from churches, unions, associations, etc). Plans may also impose a general waiting period for up to 90 days for all coverage.	Up to 18 months (12 months for those 65 or older).
Prior coverage	Your waiting period is reduced on a month-for-month basis. If previous coverage lasted 12 months, there is no waiting period for an employer group plan. However, coverage is only required at the level of the prior plan. Plans may not include a rider specific to the employee that eliminates coverage for the preexisting condition.	Prior coverage is credited on a month-for-month basis. Plan may refuse to accept you because of a preexisting condition or may include a rider eliminating coverage for the condition.

Health Plan Costs

With any type of health plan, you’ll have out-of-pocket costs. The costs will vary by the type of plan you have. The following are some of the costs you may have to pay:

Premiums. A premium is a fee you pay to participate in a health plan. Employers who offer health plans usually pay some or all of the employee's premium costs, but they aren’t required to do so.
Deductibles. A deductible is an amount that you must pay for a covered medical service or medication before your plan will begin to pay. You’ll usually have to meet a deductible each year.
Copayments. Copayments are amounts you pay each time you go to the doctor, fill a prescription, or receive a covered health service. Some managed care plans cap the amount of your out-of-pocket costs for copays and deductibles over a certain period, usually a year. When you reach this amount, your plan will pay 100 percent of the costs for the remainder of the period.
Coinsurance. Coinsurance is the amount you pay once you have met the deductible. The coinsurance will vary by plan. In Texas, health plans generally must pay at least 50 percent of the cost of covered services after the deductible has been met. As with deductibles, the higher the amount you pay in coinsurance, the lower your premium will be.

Plan comparisons
	Fee for Service	Preferred Provider Plan (PPP)	Point of Service (POS)	Health Maintenance Organization (HMO)	Exclusive Provider Organization (EPO)
	Fee for Service	Managed Care
More choice, may be more expensive … << >> … Less choice, may be less expensive
Summary	Total choice of doctors and hospitals	Choice of doctors and hospitals, but you pay less if you use doctors and hospitals in the network	Choice of doctors and hospitals, but you pay less if you use doctors and hospitals in the network	Choice of doctors and hospitals usually limited to network	Choice of doctors and hospitals in the plan’s network, but will exclude benefits to doctors and hospitals outside the network
Primary care physician	No	No	Yes, for in-network services	Yes	No
Geographic restrictions	Coverage available anywhere you live or travel in the U.S.	Network coverage may be limited to a specific service area in the state	In-network coverage is limited to a specific service area in the state; limited benefits while traveling	Coverage is limited to a specific service area in the state; limited benefits while traveling	Coverage is limited to a specific service area in the state; limited benefits while traveling
Filing claims	Doctors and hospitals often bills insurers each time you receive care; at times, however, you will have to pay in full and file for reimbursement	You usually don’t have to file in-network claims; you may have to pay out-of-network doctors and hospitals in full and file for reimbursement	You usually don’t have to file in-network claims; you may have to pay out-of-network doctors and hospitals in full and file for reimbursement	You usually don’t have to file claims	You usually don’t have to file claims
Average annual premiums	Generally highest of four options	Usually lower than fee for service	Usually lower than PPP	Generally lowest of all options, but may depend on employer plan	Could be lowest of the options, but may be more or the same as an HMO option
Deductibles	Yes	Yes	Usually only for out-of-network care	Depends on plan	Could be required or offered for a lower premium
Copayments	Possibly	Possibly	Yes, if in network	Yes	Could be required or offered for a lower premium
Coinsurance	Often required, or often offered for lower premium	Often required, or often offered for lower premium	Yes	Possibly	Could be required or offered for a lower premium

Health Plan Benefits

Health plans are classified as either state-mandated plans or consumer choice plans.

State-mandated plans (SMP) provide certain required minimum features and coverages.

Consumer choice plans (CCP) don’t include all of the state-mandated benefits. These plans must give members a list and description of the benefits that aren’t covered. Read your policy or explanation of coverage to know what coverages you have.

The Minimum Required Benefits chart lists the minimum required benefits for consumer choice and state-mandated health plans for PPP and HMO plans. The requirements are different for individual, small-employer, large-employer plans, and association plans.

Note: SMP denotes a state-mandated plan and CCP denotes a consumer choice plan. Benefits labeled "yes" must be included as part of the plan; benefits labeled "no" are not required; and benefits labeled "offer" must be offered, but you may decline any or all of them.

Visit the Mandated Benefits page for more information.

Your Rights and Protections

Appealing a Denial

Most plans have a process to appeal denied claims. After you’ve exhausted your appeal rights, you can request that an Independent Review Organization (IRO) – an independent third-party certified by TDI – review the denial. The plan must accept the IRO’s decision and pay for the review.

Plans are required to give you an independent review request form when they deny a treatment and again if they deny your appeal. You can skip the appeal process if you or your doctor believes your condition is life threatening.

You have a right to an independent review for denials of

treatments that the plan doesn’t consider medically necessary
treatments that the plan considers experimental or investigational
medications that aren’t on the plan’s formulary that your doctor says are medically necessary.

An independent review is not available if your plan doesn’t cover the denied service or treatment or if your plan is not required to participate in the IRO review process.

For questions or more information about IROs, call TDI’s Managed Care Quality Assurance Office at 1-866-554-4926 or 322-4266 in Austin.

Your Rights in an HMO

Texas law requires HMOs to make covered health care services available within a certain distance of your home or office. Under certain circumstances, HMOs must allow members with ongoing, disabling, or life-threatening illnesses to use specialists as their PCPs.

HMOs and PPPs must also

have enough personnel and facilities
allow members to continue seeing doctors and hospitals that are no longer in the network for a certain period under special circumstances -- such as a terminal illness, disability, life-threatening condition, or pregnancy -- as long as the doctor or hospital agrees to continue treatment at the contracted rate
pay for emergency care to stabilize medical conditions that are serious enough for immediate medical care, including the care of a fetus if you’re pregnant. If a facility outside the HMO’s network provides the emergency treatment, the member may be transferred to a network hospital and doctor after the patient’s condition is stabilized
allow the use of out-of-network doctors and hospitals when medically necessary covered services aren’t available within the network
prohibit their network doctors and hospitals from balance billing.

Your Rights in a Group Plan

Plans may not generally cancel or refuse to renew a plan based on health, but they may use health factors to set premiums.

Plans may not offer or deny coverage to select employees in a group or charge different rates to employees in the same group. Plans must offer employers at least 60 days notice before premium increases take effect and 90 days notice before discontinuing a plan.

Large employers may set rules that determine which groups of employees are eligible for enrollment but may not base the rules on employee health. A large employer plan must accept or reject the entire group of individuals who meet the employer’s criteria and who choose coverage.

Plans must allow new employees at least 31 days from the first day of employment to decide if they want to enroll in a plan, as well as offer a 31-day open enrollment period each year to allow existing employees to join the plan. Employees experiencing a life changing event -- such as a birth, adoption, marriage, or loss of other coverage because of divorce or death -- may enroll before the next annual enrollment period.

Shopping for Coverage

Determine what coverage you want and need in a health plan. Choose the plan based on your needs. The higher a plan’s deductibles, copays, and coinsurance, the lower the premiums but the more you’ll have to pay out of your own pocket.
Consider factors other than cost. A company’s financial rating and history of consumer complaints are other important considerations.
Make sure your company is licensed by TDI. Guaranty associations pay the claims of licensed insurance companies – but not HMOs -- that become financially unstable or bankrupt. If your company isn’t licensed, your claims could go unpaid. You can learn a company’s financial rating from an independent rating organization, its complaints history, and its license status by calling TDI’s Consumer Help Line at 1-800-252-3439 or 463-6515 in Austin or by viewing company profiles on our website at www.tdi.texas.gov.
Get several quotes and compare policies. Ask several companies and agents for price quotes and compare the rates and coverage packages. When comparing prices, make sure you understand the benefits of each policy.
Visit TexasHealthOptions.com to learn about your options and to help find agents and companies selling insurance in your area.
Take your time. Don’t be pressured into buying a policy. Ethical agents will not pressure you into buying a policy before you know what you want and need.
Ask your friends, family, and doctor for health plan recommendations. Ask these questions before buying a health plan:
- Will the plan allow you to visit your choice of doctors and hospitals?
- Are there limits on medications, referrals to specialists, or treatments and surgeries?
- Are there benefit limits per person, family, illness, treatment, or hospital stay?
- What are the rules for out-of-network emergency care?
- Does the plan have annual or lifetime maximums?
Examine any policy for the following limitations:
- Coverage. Does the plan exclude important medical conditions?
- Coinsurance. Does the plan require you to pay a high percentage of any claims?
- Deductible. Does the plan require you to pay a high fixed amount (deductible) before the plan pays anything?
- Annual maximums. Does the plan have maximum amounts that it will pay?

Note: The federal health care reform law prohibits plans from placing lifetime limits on your coverage. They also must start phasing out annual dollar limits.

Additional Precautions

Fill out all applications accurately and completely. If you knowingly provide incorrect, incomplete, or misleading information, especially about a preexisting condition, the company could cancel your coverage or deny benefits. Never sign a blank policy application, and check any information the agent fills in on the form. Make payments by check or money order payable directly to the insurance company or HMO, not the agent, and ask for a signed receipt on the company’s letterhead.
Make sure you have the full name, address, and phone number of your agent and company. You can check an agent’s or company’s license status by calling the Consumer Help Line or visiting our website.
Never pay more than two month’s premiums until you have received a copy of your policy, HMO certificate, or group membership certificate.
Use the state required 10-day free-look to read the policy, during which you can change your mind and receive a refund. If you return a policy, send it by certified mail and ask for a return receipt.

Health Plan Rates

Companies set their own premiums. TDI doesn’t regulate or approve health plan rates. Small-employer and large-employer plans are required to tell you about any premium increases 60 days before they take effect.

In general, companies base health plan rates on the following factors:

Coverages. The more health conditions your plan covers, the more the company might have to pay. Premiums are higher for plans with a lot of coverages
Deductibles. Plans with higher deductibles usually have lower premiums.
Number of covered dependents. Adding a spouse or dependent children to your plan will raise your premiums because the plan will have to pay more for their coverage.
Number of group plan participants. Group plans are usually less expensive than individual plans. As group size increases, administrative costs per plan member decline. Also, smaller groups and individuals usually buy health coverage based on members’ needs, which increases the likelihood of claims. This is less likely if the claims risk is distributed across a larger group.
Claims experience. You will probably pay more if you’ve filed claims in the past.
Age. Older people usually require more frequent and more expensive health care. Your premium will reflect your age or the ages of the members in your group plan.
Gender. Young males typically have lower medical costs than young females, particularly during childbearing years. This changes with age until medical costs for males grow larger than those for females in the late 50s and early 60s. Plans with a greater percentage of young females or older males generally have higher rates.
Geography. Health costs vary by area because of the difference differences in cost of living, medical practices, and the amount of medical competition in the area.
Industry. If you are in an employer-sponsored plan, your rates may be affected by the nature of your profession. Industries with more dangerous jobs and a higher number of accidents will have higher medical claims costs than others. High employee turnover in some industries can also result in higher administrative costs for the plan.

Handling Rate Increases

Premiums usually rise faster for individual plans since there is no employer or other plan sponsor to help pay the cost. If your premiums are increasing beyond your ability to pay, you may be able to save money by asking your company to revise your plan.

The company might help you save money by raising your deductibles or copays, increasing your maximum out-of-pocket payment, or changing your coverage. Make sure that you don’t drop coverage that you need. Work with your company to create a plan that includes coverages for any current or anticipated medical issues.

Important! When switching health insurance companies, be aware of the effective date of your policy. Most companies don’t begin coverage until they approve your application and deliver your policy. A lapse in coverage may leave you vulnerable if you’re sick or injured and can result in longer preexisting condition waiting periods.

Fees and Charges

If you are concerned about doctor and hospital fees and charges, check with your plan to see if the doctor’s or hospital’s treatment cost estimate is within the usual and customary range. Be sure to keep records of whom you talk to and when.

You will generally pay more if you have a managed care plan and you visit an out-of-network provider. There are some protections in cases where PPP enrollees are balance billed by out-of-network hospitals and doctors.

Balance billing happens when a doctor or hospital who doesn’t contract with the managed care plan bills you for the difference between the amount the health plan pays and the amount the doctor or hospital charges. Texas has protections for consumers who have been balanced billed. For more information visit TDI’s Consumer Guide to Health Care Billing web page at www.tdi.texas.gov/consumer/cpmbalancebilling.html.

Filing Claims

State law requires insurance companies and HMOs (in the case of claims filed for out-of-area or emergency care) to pay claims promptly and fairly and penalizes them if they don’t. The prompt-payment law doesn’t apply to self-funded ERISA plans even though they may use an insurance company or HMO to administer the health plan.

If a company denies your claim for any reason, it must provide a written explanation.

If you are not satisfied:

ask them to show you the policy language they used to deny the claim
ask the doctor or hospital to send a letter explaining anything unusual about the procedure or the amount charged.

Approval of treatment is not the same as approval for payment. You may still need to file a claim after the procedure. Companies can refuse payment for portions of approved treatment if they are unnecessary expenses.

Handling Complaints

Avoid surprises by knowing your coverages and verifying your benefits. Your health plan covers only the medical care specifically described in the policy or HMO contract.

Also ask about limitations or exclusions before receiving treatment.

It's unlikely your plan will reimburse 100 percent of your bill. You will usually have to pay deductibles, coinsurance, and copayments.

Your company may have grounds for denying or limiting the size of your claim if a hospital’s or doctor’s fees are higher than the usual and customary charges. Usual and customary charges may be based on fees charged by other doctors and hospitals in your area, or typical fees compiled by an independent rating service or an insurance company.

Most companies have a toll-free telephone information and complaint line, and some companies provide special mediation or arbitration procedures for handling complaints.

If you are unable to resolve the matter, you may file a complaint against an insurance company or HMO with TDI. You may file several ways:

on our website at www.tdi.texas.gov/consumer/complfrm.html
by email at ConsumerProtection@tdi.texas.gov
by fax at 512-475-1771
by mail at
Texas Department of Insurance
Consumer Protection (111-1A)
P.O. Box 149091
Austin, TX 78714-9091
in person or by delivery service at
Texas Department of Insurance
Consumer Protection (111-1A)
333 Guadalupe St.
Austin, Texas 78701

For complaints against physicians, physician's assistants, or acupuncturists, call the Texas Medical Board at 1-800-201-9353 (Complaint Hotline) or visit its website at www.tmb.state.tx.us/consumers/.

For complaints about health care facilities, call the Texas Department of State Health Services at 1-888-973-0022 (Complaint Hotline) or visit its website at www.dshs.state.tx.us/hfp/ .

For complaints against pharmacists and pharmacies, call the Texas State Board of Pharmacy at 1-800-821-3205 or 305-8000 in Austin or visit its website at www.tsbp.state.tx.us/.

Losing Coverage

Losing Individual Coverage

Insolvency

An insurance company may become insolvent if it can’t pay its policyholders’ claims, has debts that exceed its assets, or does not have enough capital.

Guaranty associations pay claims for insolvent companies up to certain limits specified in state law. The Texas Life and Health Insurance Guaranty Association pays claims for life insurance, health insurance, and annuities.

The guaranty association doesn’t cover claims against HMOs, MEWAs, self-funded ERISA health benefit plans, and fraternal benefit societies. If an HMO is unable to pay its claims, state law authorizes the commissioner of insurance to assign the HMO’s members to another licensed HMO in the area.

Cancellation

Individual plans that cover hospital, medical, and surgical expenses are guaranteed renewable. This means your insurance company can’t deny renewal of your policy without reason or just cause, even on the grounds of health-related factors. A company can legally cancel your coverage for other reasons, including:

failure to pay your premiums or late payment
intentional misrepresentation of personal information in your policy application
filing a false claim or committing fraud against the company.

Companies may discontinue a particular plan as long as it drops the plan for all policyholders. If the company drops the plan, it must offer the policyholders who lose coverage the right to purchase another plan that it offers. If a company withdraws from the Texas market entirely, it may not re-enter the market for five years.

The federal health care reform law prohibits health plans from canceling policies after they’re issued, unless you commit fraud or made intentional misrepresentations.

Losing Group Coverage

If you have a group health plan, you may lose your coverage for various reasons, including

losing your job
reduction to part-time status
terminating your membership in the association or group sponsoring the plan.

Group plans must continue to offer coverage to certain dependents for up to three years if the loss of coverage was caused by death, retirement, or divorce. To qualify, a dependent must have been covered by the group policy for one year or be less than 1 year old. Dependent benefits are the same as those provided by the group health plan. Continuation of coverage will end early if dependents get new coverage, premiums are not paid, or the group policy is terminated.

COBRA Protection

If you lose your group coverage for employment-related reasons, you may be able to continue your coverage under COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA is a federal law that gives employees – and some retired employees – the right to continue group health coverage for a certain period of time. COBRA coverage can end early if your employer stops offering a group health plan.

COBRA affects employers who employ 20 or more people and applies to all employer health benefit plans they offer, except plans sponsored by the federal government and certain church-related organizations. Employees aren’t eligible for COBRA benefits if they lose their coverage because of involuntary termination for cause. Employees who stay at a job, but lose coverage eligibility because of a reduction in the number of hours they work, are usually eligible.

An employee’s spouse qualifies for COBRA coverage when the employee becomes eligible for COBRA or Medicare, divorces, or dies. An employee’s children qualify for COBRA if the employee becomes eligible for COBRA or the child loses dependent child status under the rules of the health benefit plan.

An employee, spouse, or dependent child has 60 days after qualifying for COBRA coverage to decide whether to enroll. If they decide to enroll, they must pay the full premium and a 2 percent administrative fee. Coverage may continue for a minimum of 18 months and up to 42 months, depending on the situation.

Your COBRA coverage will be the same as the coverage you had with your employer’s plan before you left. For instance, if your employer plan covered medical, dental, and vision, you will receive the same benefits with your COBRA policy. However, you must pay the full price of COBRA coverage yourself.

If you elect continuation of HMO coverage through COBRA and move out of the service area, you will be covered only for emergency services. For more information, contact the EBSA.

State Continuation of Group Coverage

Texas law requires some group plans to continue coverage for an additional six months after your COBRA coverage ends. For state continuation to apply, your plan must have been issued by an insurance company or HMO subject to Texas insurance laws and rules.

In addition, you must have been continuously covered under the group contract for at least three consecutive months immediately before the end of your employment. Your termination may be for any reason except involuntary termination for cause.

If you’re not eligible for COBRA coverage, you can continue your group coverage for nine months. The continuation period begins immediately after your termination.


If you are eligible for COBRA as a…	COBRA applies for...		Texas continuation applies for...	For a total continuation period of…
Primary plan member (direct employee)	18 months	+	6 months	24 months
Secondary plan member (spouse, ex-spouse or dependent child)	36 months	+	6 months	42 months
If you are not eligible for COBRA as a…
Primary or secondary plan member;	0 months	+	9 months	9 months

Note: State continuation applies only to group health benefit plans issued by insurance companies and HMOs that are subject to the Texas Insurance Code. State continuation does not apply to employer self-funded (ERISA) health care plans, which are exempt from state insurance laws.

If you have a disability that meets the standards of the Social Security Administration, your coverage period may be extended by an additional 11 months.

State and federal law requires employers to tell you about continuation of coverage within 30 days from the end of your employment. If you want to continue your insurance coverage, you must notify your employer in writing no later than the 60th day after coverage was terminated.

Other Coverage Options

If you don’t work for an employer that offers a health plan and you can’t afford or qualify for an individual plan, there are other options such as the Texas Health Insurance Pool and the Pre-existing Condition Insurance Plan. However, these coverages are either very limited, very expensive, or both. Before considering these options, there are a few things you should do:

Make sure you apply with multiple insurance companies and HMOs. Each has its own set of rules and guidelines for accepting policyholders.
Look into professional organizations, churches, or trade unions that offer group plans. If you have a health condition, check with state and national nonprofit groups for people with similar conditions.

If you are denied coverage based on your medical history, verify that the information the insurance company has is current and correct. Many insurance companies use the Medical Information Bureau (MIB) to verify medical history. MIB provides its member companies with brief coded reports of applicants’ medical history. For more information, call MIB at 1-866-692-6901 or visit its website at www.mib.com.

Texas Health Insurance Pool (Health Pool)

The health pool offers health insurance to Texans who can’t find coverage because of their preexisting medical conditions and to certain people who have recently lost their employer-sponsored health coverage.

The health pool is generally the most comprehensive option you will find if you can’t get traditional coverage. The policy offers major medical coverage similar to coverage offered in the commercial individual market. Premium rates vary based on your age, gender, tobacco use, and residential ZIP code, without regard to health status. Premium rates may be up to twice the standard rate in the individual health insurance market.

For more information, including eligibility requirements and benefits information, call the Health Pool at 1-888-398-3927 or 1-800-735-2989 (TDD) or visit its website at www.txhealthpool.org.

Pre-Existing Condition Insurance Plan (PCIP)

The Pre-Existing Condition Insurance Plan (PCIP) (also called the federal high-risk pool) is another option for Texans who can’t get health insurance. To qualify, you must have been without coverage for at least six months and must have a preexisting condition. PCIP is a temporary federal program that runs until health care coverage exchanges become effective in 2014. Premium costs for participants will be comparable to what an individual without preexisting conditions would pay to purchase insurance.

For more information, call PCIP at 1-866-717-5826 or visit its website at www.pcip.gov/

There are also several federal, state, and local groups and agencies that offer help with health coverage or low-cost care. The following agencies and programs may be able to help:


	Agency / Program	Description	Contact
Federal	Medicare	Federal health insurance program for people 65 and older and certain people under age 65 with disabilities	1-800-MEDICARE (633-4227) www.medicare.gov
	TRICARE	Health plan for active duty and certain retired U.S. military personnel	1-800-403-3950 (families and doctors and hospitals) www.mytricare.com 1-800-444-5445 (Humana Military Tricare South) www.humana-military.com
	U.S. Department of Veterans Affairs	Offers health care for veterans	1-877-222-VETS (8387) www.va.gov
State	Medicaid (administered by the Texas Health and Human Services Commission)	State/federal health insurance program for low-income Texans	1-800-252-8263 www.hhsc.state.tx.us/medicaid/index.html
	Texas Health Steps	Provides medical and dental checkups and care to children from birth to age 21 who are on Medicaid	1-877-THSTEPS (847-8377) www.dshs.state.tx.us/thsteps/default.shtm
	Children’s Health Insurance Program (CHIP)	Provides health care to children of families who earn too much money for Medicaid but can’t afford health insurance	1-877-KIDS-NOW (543-7669) www.chipmedicaid.com/
	Texas Department of Assistive and Rehabilitative Services	Provides rehabilitative services, including vocational training, for Texans with disabilities	1-800-628-5115 1-866-581-9328 (TTY) www.dars.state.tx.us
Local	Hill-Burton Program	Federally funded program that contracts with local hospitals, clinics, and nursing homes to provide free or low-cost care to individuals eligible because of income. Services vary by provider and may not be available in all areas	1-800-638-0742 www.hrsa.gov/gethealthcare/affordable/hillburton/
	2-1-1	Provides free information about services in your area	2-1-1 www.211texas.org/211/
	Indigent Health Insurance	Health care for some indigent Texas	Local county courthouse

For More Information or Assistance

For answers to general insurance questions, for information about filing an insurance-related complaint, or to report suspected insurance fraud, call the Consumer Help Line between 8 a.m. and 5 p.m., Central time, Monday-Friday, at 1-800-252-3439 or 463-6515 in Austinor visit our website at www.tdi.texas.gov.

You can also visit www.HelpInsure.com to help you shop for automobile, homeowners, condo, and renters insurance, and www.TexasHealthOptions.com to learn more about health care coverage and your options.

For printed copies of consumer publications, call the 24-hour Publications Order Line at 1-800-599-SHOP (7467) or 305-7211 in Austin.

To report suspected arson or suspicious activity involving fires, call the State Fire Marshal’s 24-hour Arson Hot Line at 1-877-4FIRE45 (434-7345).

The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company.

For more information contact:

Texas Department of Insurance

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