Section 26.306 - Exclusions, Limitations, Waiting Periods, Affiliation Periods, Preexisting Conditions, and Restrictive Riders(a) A large employer carrier may not exclude any eligible employee who meets the participation criteria or an eligible dependent, if dependent coverage is offered to enrollees under a large employer health benefit plan (including a late enrollee, who would otherwise be covered under a large employer's health benefit plan), except to the extent permitted under Insurance Code §§ 1501.102 - 1501.106 (concerning Preexisting Condition Provision; Treatment of Certain Conditions as Preexisting Prohibited; Affiliation Period; Waiting Period Permitted; and Certain Limitations or Exclusions of Coverage Prohibited) and 1501.601 - 1501.609 (concerning Participation Criteria; Coverage Requirements; Exclusion of Eligible Employee or Dependent Prohibited; Declining Coverage; Minimum Contribution or Participation Requirements; Employee Enrollment; Waiting Period; Coverage for Newborn Children; Coverage for Adopted Children; and Coverage for Unmarried Children).(b) A preexisting condition provision in a large employer health benefit plan may not apply to expenses incurred on or after the expiration of the 12 months following the effective date of coverage of the enrollee or late enrollee, except as authorized by subsection (h)(2) of this section.(c) A preexisting condition provision in a large employer health benefit plan may not apply to coverage for a disease or condition other than a disease or condition for which medical advice, diagnosis, care, or treatment was recommended or received from an individual licensed to provide those services under state law and operating within the scope of practice authorized by state law during the six months before the effective date of coverage.(d) A large employer carrier may not treat genetic information as a preexisting condition described by Insurance Code § 1501.102 in the absence of a diagnosis of the condition related to the information.(e) A large employer carrier may not treat a pregnancy as a preexisting condition described by Insurance Code § 1501.102.(f) A preexisting condition provision in a large employer health benefit plan may not apply to an individual who was continuously covered for an aggregate period of 12 months under creditable coverage that was in effect up to a date not more than 63 days before the effective date of coverage under the large employer health benefit plan, excluding any waiting or affiliation period. For example, Individual A has coverage under an individual policy for six months beginning on May 1, 2014, through October 31, 2014, followed by a gap in coverage of 61 days until December 31, 2014. Individual A is covered under an individual health plan beginning on January 1, 2015, for six months through June 30, 2015, followed by a gap in coverage of 62 days until August 31, 2015. The effective date of Individual A's coverage under a large employer health benefit plan is September 1, 2015. Individual A has 12 months of creditable coverage and would not be subject to a preexisting condition exclusion under the large employer health benefit plan.(g) In determining whether a preexisting condition provision applies to an individual covered by a large employer benefit plan, the large employer carrier must credit the time the individual was covered under previous creditable coverage if the previous coverage was in effect at any time during the 12 months preceding the effective date of coverage under a large employer health benefit plan. If the previous coverage was issued under a health benefit plan, any waiting or affiliation period that applied before that coverage became effective also must be credited against the preexisting condition provision period. For instance, Individual B is covered under an individual health insurance policy for 18 months beginning May 1, 2014, through November 30, 2015, followed by a four-month gap in coverage from December 1, 2015, to March 31, 2016. On April 1, 2016, Individual B is covered under a group health plan for three months through June 30, 2016, followed by a two-month gap in coverage until August 31, 2016. The effective date of Individual B's coverage under a large employer health insurance policy is September 1, 2016. Under this example, since there was a significant break in coverage, to determine the length of creditable coverage, the large employer carrier counts the creditable coverage the individual had for the 12-month period preceding the effective date of the individual's coverage under the large employer plan. Individual B has creditable coverage of six months and the issuer of the large employer health benefit plan may impose a preexisting condition limitation for six months on Individual B.(h) A large employer carrier must choose one of the methods set forth in paragraph (1) or (2) of this subsection for handling requests for enrollment from a late applicant in any health benefit plan subject to this subchapter. The large employer carrier must use the same method in regard to all health benefit plans. (1) The employee or dependent may be excluded from coverage and any application for coverage rejected until the next annual open enrollment period and, on enrollment, may be subject to a 12-month preexisting condition provision or, in the case of an HMO, may be subject to a 60-day affiliation provision, as described by Insurance Code §§ 1501.102 - 1501.104.(2) The employee or dependent's application may be accepted immediately and the employee or dependent enrolled as a late enrollee during the plan year, in which case the preexisting condition provision imposed for a late enrollee may not exceed 18 months or, in the case of an HMO, the affiliation period may not exceed 90 days, from the date of the late enrollee's application for coverage.(3) The provisions of paragraphs (1) and (2) of this subsection do not apply to employees or dependents under the special circumstances listed as exceptions under the definition of late enrollee in § 26.4 of this title (relating to Definitions).(4) Examples for applying subparagraphs (A) and (B) of this paragraph, in the case of both insurers and HMOs: Individual A requests coverage on October 1, 2014, after the enrollment period of July 1, 2014, through July 31, 2014, has ended. The next annual open enrollment period is July 1, 2015, through July 31, 2015. The effective date of coverage for persons enrolling during an open enrollment period is the beginning of the plan year, which is September 1 of each year. (A) If the carrier is an insurer and has elected to exclude all applicants requesting late enrollment under health benefit plans subject to this subchapter until the next open enrollment period, Individual A must reapply for coverage in July 2015, and the carrier may apply up to a 12-month preexisting condition period from the effective date of coverage and, as with any other enrollee, the preexisting condition period would begin on September 1, 2015, and expire on September 1, 2016.(B) If the carrier is an insurer and has elected to immediately accept applications for late enrollment under health benefit plans subject to this subchapter and enroll the applicant during the plan year, the carrier may apply up to an 18-month preexisting condition period from the date of application. If Individual A applied for coverage on October 1, 2014, the preexisting condition period would begin on that date and would expire on April 1, 2016.(C) If the carrier is an HMO and has elected to exclude all applicants requesting late enrollment under health benefit plans subject to this subchapter until the next open enrollment period, Individual A must reapply for coverage in July 2015, and the carrier may apply up to a 60-day affiliation period, as with any other enrollee.(D) If the carrier is an HMO and has elected to immediately accept applications for late enrollment under health benefit plans subject to this subchapter and enroll the applicant during the plan year, the carrier may apply up to a 90-day affiliation period from the day Individual A applied for coverage.(i) An HMO may impose an affiliation period if the period is applied uniformly to each enrollee without regard to any health-status-related factor. The affiliation period may not exceed two months for an enrollee, other than a late enrollee, and may not exceed 90 days for a late enrollee. An affiliation period under a plan must run concurrently with any applicable waiting period under the plan. An HMO may not impose any preexisting condition limitation, except for an affiliation period.(j) A large employer may establish a waiting period under Insurance Code § 1501.606(b) applicable to all new entrants under the health benefit plan during which a new employee is not eligible for coverage. The large employer must determine the duration of the waiting period. A large employer carrier may not apply a waiting period or other similar limitation of coverage (other than an exclusion for preexisting medical conditions or an affiliation period consistent with Insurance Code §§ 1501.102 - 1501.106 and 1501.601 - 1501.609, with respect to a new entrant, that is longer than the waiting period established by the large employer for all other employees. On completion of the waiting period and enrollment within the time frame allowed by § 26.305(a) of this title (relating to Enrollment), coverage must be effective no later than the next premium due date. Coverage may be effective at an earlier date, as agreed on by the large employer and the large employer carrier.(k) A large employer health benefit plan may not, by use of a rider or amendment applicable to a specific individual, limit or exclude coverage by type of illness, treatment, medical condition, or accident, except for a preexisting condition or affiliation period permitted under Insurance Code §§ 1501.102 - 1501.106 and 1501.601 - 1501.609.(l) To determine if preexisting conditions exist, a carrier must determine the source of previous or existing coverage of each eligible employee meeting the participation criteria at the time the employee or dependent initially enrolls into the health benefit plan provided by the large employer carrier. The large employer carrier has the responsibility to contact the source of previous or existing coverage to resolve any questions about the benefits or limitations related to any previous or existing coverage in the absence of a creditable coverage certification form.28 Tex. Admin. Code § 26.306
The provisions of this §26.306 adopted to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; Amended by Texas Register, Volume 42, Number 19, May 12, 2017, TexReg 2557, eff. 5/17/2017