Continuation of Benefits Coverage (COBRA) - Texas

Summary of differences between federal and state regulations

Federal COBRA applies to employers who offer group health plans, and have 20 or more employees, but state laws may also apply. Under the Texas law all employers are covered. State law includes the following provisions:

• Coverage continues if employee is terminated for any reason other than involuntary termination for cause. (§1251.252)
• Coverage continues if participant has been continuously insured under the plan for at least three consecutive months immediately before termination. (§1251.252)
• Participant must request coverage continuation in writing not later than the 60th day after the later of: (1) the date the group coverage would otherwise terminate; or (2) the date the individual is given notice by either the employer or the group policyholder of the right to continuation of group coverage. (§1251.253)
• Plan participants who elect coverage continuation must pay, each month, the amount of contribution required by the employer or policyholder, plus two percent of the group rate for the coverage being continued under the group policy. Payment must be made not later than the 45^thday after the date of the initial election for coverage and on the due date of each payment thereafter. There is a 30-day grace period for payments after the initial payment. (§1251.254)

• Coverage continuation must not terminate until the earliest of: (1) nine months after the date the employee, member, or dependent elects to continue the group coverage; (2) if eligible for federal COBRA, six additional months following such continuation coverage; (3) the date failure to make timely payments would terminate the group coverage; (4) the date the group coverage terminates in its entirety; (5) the date the insured is or could be covered under Medicare; (6) the date the insured is covered for similar benefits by another plan or program; (7) the date the insured is eligible for similar benefits, whether or not covered for those benefits, under any arrangement of coverage for individuals in a group, whether on an insured or uninsured basis; or (8) the date similar benefits are provided or available to the insured under any state or federal law (except COBRA). (§1251.255)
• Employers that provide to their employees group accident and health insurance coverage that includes a group continuation or conversion privilege on termination of coverage must give written notice of the continuation or conversion privileges under the policy to each employee or dependent insured under the group and affected by the termination. (§1521.260)
• The plan must include an option for each individual covered because of a family or dependent relationship to an individual who is a member of the group for which the policy or contract is provided to continue coverage with the group if the individual's eligibility for coverage under the policy or contract ends because of: (1) the severance of the family relationship; or (2) the retirement or death of the group member. (§1251.301)
• A family member or dependent of an insured is eligible for continued coverage if the family member or dependent: (1)  has been a member of the group for a period of at least one year; or (2) is an infant under one year of age. (§1251.302)
• The plan cannot require participants to take and pass a physical examination as a condition to continuing coverage. (§1251.303)
• Continuation coverage must be identical in scope to the coverage provided under the group health plan. (§1251.304)
• The premium for continuation of a spouse or dependent may not be more than the premium charged under the group plan for the individual had the family relationship not been severed. (§1251.305)
• The plan may require the individual to pay a monthly fee of not more than $5 for administrative costs. (§1251.306)
• When the plan is issued, the group policyholder or contract holder must give written notice to each group member and each dependent of a group member covered by the policy or contract of the continuation option. (§1251.307)
• The plan must require a group member to give written notice to the group policyholder or contract holder not later than the 15^thday after the date of any severance of the family relationship that might activate the continuation option. On receipt of such notice, the group policyholder or contract holder must immediately give written notice of the continuation option under this subchapter to each affected dependent of the group member. Also, on receipt of notice of the death or retirement of a group member, the group policyholder or contract holder shall immediately give written notice of the continuation option. Participants have 60 days after the date of the severance of the family relationship or the retirement or death of the group member to provide notice of the individual's desire to exercise the continuation option. (§1251.308)
• Coverage continuation must continue until (1) the insured fails to make a premium payment within the time required to make the payment; (2) the insured becomes eligible for substantially similar coverage under another plan or program, including a group health insurance policy or contract, hospital or medical service subscriber contract, or medical practice or other prepayment plan; or (3) the third anniversary of either the severance of the family relationship; or the retirement or death of the group member. (§1251.310)
• The plan must provide that if the employees covered by the plan stop work because of a labor dispute, coverage continues on timely payment of the premium, for each employee who: (1) is covered under the policy on the date the work stoppage begins; (2) continues to pay the employee's individual contribution; and (3) assumes and pays during the work stoppage the contribution due from the employer. (1253.052)
• SB 1771 includes temporary provisions, set to expire September 1, 2013, that allow certain individuals who became eligible for the state continuation coverage between September 1, 2008 and February 16, 2009, to elect such coverage beginning September 1, 2009 and ending 60 days after the date on which the individual receives a notice about this election period. The bill requires the notice to also include certain information and forms relating to the federal American Recovery and Reinvestment Act of 2009, which created a premium assistance program foe federal COBRA and state continuation coverage programs that allows eligible former employees to receive a 65 percent premium subsidy for up to nine months from the first month the premium reduction applies to the individual. The period of continuation coverage under these provisions begins with the first period of coverage beginning on September 1, 2009 and does not extend beyond the date the coverage would have ended if it had been elected during the election period required previously. The bill specifies that this 60-day election period is to be disregarded for purposes of determining a 63-day period referred to in federal and stat law as creditable coverage for preexisting conditions (see HIPAA portability).

State

Contact

Texas Department of Insurance

Regulations

Texas Insurance Code, Title 8, Subtitle B, Chapter 1251 Group and Blanket Health Insurance

Texas Insurance Code, Title 8, Subtitle B, Chapter 1253 Cancellation of Group Coverage in Certain Circumstances

§1253.052. Continuation of group accident and health insurance during labor dispute required for certain policies

Federal

Contact

Employee Benefits Security Administration (EBSA)

Regulations

26 CFR 54.4980B-1 et seq.