81R2457 AJA-D
By: Shapleigh S.B. No. 303
A BILL TO BE ENTITLED
AN ACT
relating to application for and cancellation or rescission of
health benefit plan coverage.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle A, Title 8, Insurance Code, is amended
by adding Chapters 1220 and 1221 to read as follows:
CHAPTER 1220. APPLICATION FOR AND ISSUANCE OF HEALTH BENEFIT PLAN
COVERAGE
SUBCHAPTER A. APPLICATION FOR INDIVIDUAL HEALTH BENEFIT PLAN
COVERAGE
Sec. 1220.001. DEFINITION. In this subchapter, "individual
health benefit plan" means:
(1) an individual accident and health insurance policy
to which Chapter 1201 applies; or
(2) individual health maintenance organization
coverage.
Sec. 1220.002. UNIFORM APPLICATION QUESTIONS. (a) The
commissioner by rule shall establish uniform information and health
history questions for use in all individual health benefit plan
application forms.
(b) An application for individual health benefit plan
coverage may only contain questions adopted under this section.
(c) The standard information and health history questions
adopted under this section must:
(1) contain clear and unambiguous information and
questions designed to ascertain the applicant's health history; and
(2) be based on the medical information that is
reasonable and necessary for medical underwriting purposes.
(d) A question adopted under this section regarding whether
an applicant has been diagnosed or treated for a specific health
condition must also specify an amount of time before the date of the
application during which an occurrence of the diagnosis or
treatment must be disclosed and before which an occurrence of the
diagnosis or treatment is not required to be disclosed.
Sec. 1220.003. FILING AND APPROVAL OF APPLICATION FORM.
(a) An individual health benefit plan issuer may not use an
application form for individual health benefit plan coverage unless
the form has been filed with the department and approved by the
commissioner.
(b) The commissioner shall, not later than the 30th day
after the date an application form is submitted for approval under
this section, approve or deny approval for the form. The
commissioner shall approve the form if it meets the requirements of
this chapter and other applicable provisions of this code.
(c) The commissioner by rule shall adopt procedures for
filing and approval of application forms under this section.
[Sections 1220.004-1220.050 reserved for expansion]
SUBCHAPTER B. ISSUANCE AND UNDERWRITING OF INDIVIDUAL AND GROUP
HEALTH BENEFIT PLAN COVERAGE
Sec. 1220.051. APPLICABILITY OF SUBCHAPTER. (a) This
subchapter applies only to a health benefit plan that provides
benefits for medical or surgical expenses incurred as a result of a
health condition, accident, or sickness, including an individual,
group, blanket, or franchise insurance policy or insurance
agreement, a group hospital service contract, or an individual or
group evidence of coverage or similar coverage document that is
offered by:
(1) an insurance company;
(2) a group hospital service corporation operating
under Chapter 842;
(3) a fraternal benefit society operating under
Chapter 885;
(4) a stipulated premium company operating under
Chapter 884;
(5) an exchange operating under Chapter 942;
(6) a health maintenance organization operating under
Chapter 843;
(7) a multiple employer welfare arrangement that holds
a certificate of authority under Chapter 846; or
(8) an approved nonprofit health corporation that
holds a certificate of authority under Chapter 844.
(b) Notwithstanding any provision in Chapter 1551, 1575,
1579, or 1601 or any other law, this chapter applies, to the extent
the plan or coverage is individually underwritten, to a health
benefit plan issuer with respect to:
(1) a basic coverage plan under Chapter 1551;
(2) a basic plan under Chapter 1575;
(3) a primary care coverage plan under Chapter 1579;
and
(4) basic coverage under Chapter 1601.
(c) Notwithstanding any other law, this chapter applies to a
health benefit plan issuer with respect to a standard health
benefit plan provided under Chapter 1507.
Sec. 1220.052. EXCEPTION. This subchapter does not apply
with respect to:
(1) a plan that provides coverage:
(A) for wages or payments in lieu of wages for a
period during which an employee is absent from work because of
sickness or injury;
(B) as a supplement to a liability insurance
policy;
(C) for credit insurance;
(D) only for dental or vision care;
(E) only for hospital expenses; or
(F) only for indemnity for hospital confinement;
(2) a Medicare supplemental policy as defined by
Section 1882(g)(1), Social Security Act (42 U.S.C. Section 1395ss);
(3) a workers' compensation insurance policy; or
(4) medical payment insurance coverage provided under
a motor vehicle insurance policy.
Sec. 1220.053. ISSUANCE OF COVERAGE: COMPLETION OF
UNDERWRITING REQUIRED. Before issuing a health benefit plan
policy, contract, or evidence of coverage, the health benefit plan
issuer must complete a reasonable investigation of the applicant's
health history information, including:
(1) ensuring that the information submitted on the
application form and the material submitted with the application
form is complete and accurate; and
(2) resolving all reasonable questions arising from
the application form or materials submitted with the application
form or any information obtained by the health benefit plan issuer
as part of the plan issuer's verification of the accuracy and
completeness of the application form.
Sec. 1220.054. DOCUMENTATION OF UNDERWRITING REQUIRED. A
health benefit plan issuer shall document all information collected
during an underwriting review process.
Sec. 1220.055. WRITTEN UNDERWRITING STANDARDS REQUIRED. A
health benefit plan issuer shall adopt and implement written
medical underwriting policies and procedures and file those written
policies and procedures with the department.
Sec. 1220.056. PROVISION OF APPLICATION INFORMATION
REQUIRED; SUPPLEMENTAL UNDERWRITING. (a) Not later than the 10th
day after the date a health benefit plan issuer issues a health
benefit plan policy, contract, or evidence of coverage to an
applicant for coverage under the plan, the plan issuer shall send to
the applicant:
(1) a copy of the applicant's application;
(2) a copy of the policy, contract, or evidence of
coverage issued to the applicant; and
(3) a notice that states that:
(A) the applicant should review the completed
application carefully and notify the plan issuer not later than the
30th day after the date the applicant receives the notice of any
inaccuracy in the application;
(B) any intentional material misrepresentation
or intentional material omission in the information submitted in
the application may result in the cancellation or rescission of the
applicant's health benefit plan coverage; and
(C) the applicant should retain a copy of the
completed written application for the applicant's records.
(b) If an applicant submits new health history information
within the 30-day period prescribed by Subsection (a), the health
benefit plan issuer shall complete a reasonable investigation of
the applicant's health history information with respect to that new
information, including:
(1) ensuring that the new information submitted by the
applicant, in conjunction with the material submitted with the
application form, is complete and accurate; and
(2) resolving all reasonable questions arising from
the new information submitted by the applicant or any information
obtained by the plan issuer as part of the plan issuer's
verification of the accuracy and completeness of the new
information.
CHAPTER 1221. CANCELLATION OR RESCISSION OF INDIVIDUAL HEALTH
BENEFIT PLAN COVERAGE
Sec. 1221.001. DEFINITION. In this chapter, "individual
health benefit plan" has the meaning assigned by Section 1220.001.
Sec. 1221.002. GROUNDS FOR CANCELLATION OR RESCISSION. An
issuer of an individual health benefit plan policy or contract may
not cancel or rescind the coverage under the policy or contract
unless:
(1) there was a material misrepresentation or material
omission in the information submitted by the applicant in the
written application to the health benefit plan issuer before the
issuance of the policy or contract that would prevent the policy or
contract from being issued;
(2) the health benefit plan issuer completed the
investigation of the applicant's health history information in
accordance with Sections 1220.053 and 1220.056(b);
(3) the health benefit plan issuer demonstrates that
the applicant intentionally misrepresented or intentionally
omitted material information on the application to obtain health
benefit plan coverage;
(4) the application form was approved by the
commissioner under Section 1220.003; and
(5) the health benefit plan issuer sent the applicant
a copy of the completed application with a copy of the policy or
contract issued in connection with the application with the notice
required by Section 1220.056(a).
SECTION 2. The change in law made by this Act applies only
to a health benefit plan policy, contract, or evidence of coverage
delivered or issued for delivery on or after January 1, 2010. A
policy, contract, or evidence of coverage delivered or issued for
delivery before that date is governed by the law in effect
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2009.