State Continuation is a state-based requirement similar to COBRA that applies to group health insurance policies of employers with fewer than 20 employees. In some states, state continuation coverage rules also apply to larger group insurance policies and add to COBRA protections post COBRA.
For a complete list of states (and DC) and information about their continuation rules, please Click Here.
The information in this Learning Center is about Texas State Continuation (TSC) only.
Texas law allows employees of smaller fully insured employers (fewer than 20 employees) to keep the same group health insurance coverage for up to nine months after loss of a job or loss of coverage because of a reduction in work hours. Texas also allows TSC for up to six months post COBRA.
An employee, member, or dependent is entitled to continuation of group coverage if:
(1) the individual’s coverage under the group policy is terminated for any reason other than involuntary termination for cause, including discontinuance of the group policy in its entirety or with respect to an insured class; and
(2) the individual has been continuously insured under the group policy, or under any group policy providing similar benefits that the policy replaces, for at least three consecutive months immediately before termination.
An employee, member, or dependent must provide to the employer or group policyholder a written request for continuation of group coverage 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, in a format prescribed by the commissioner, notice by either the employer or the group policyholder of the right to continuation of group coverage.
Except as provided by this section, an employee, member, or dependent who elects to continue group coverage under this subchapter must pay to the employer or group policyholder 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. A payment under this section must be made not later than the 45th day after the date of the initial election for coverage and on the due date of each payment thereafter. Following the first payment made after the initial election for coverage, the payment of any other premium shall be considered timely if made on or before the 30th day after the date on which the payment is due.
Group coverage continued under this subchapter may not terminate until the earliest of:
(1) the date the maximum continuation period provided by law would end, which is:
(A) for any employee, member, or dependent not eligible for continuation coverage under Title X, Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.) (COBRA), nine months after the date the employee, member, or dependent elects to continue the group coverage; or
(B) for any employee, member, or dependent eligible for continuation coverage under COBRA, six additional months following any period of continuation coverage provided under COBRA;
(2) the date failure to make timely payments would terminate the group coverage;
(3) the date the group coverage terminates in its entirety;
(4) the date the insured is or could be covered under Medicare;
(5) the date the insured is covered for similar benefits by another plan or program, including:
(A) a hospital, surgical, medical, or major medical expense insurance policy;
(B) a hospital or medical service subscriber contract; or
(C) a medical practice or other prepayment plan;
(6) 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
(7) the date similar benefits are provided or available to the insured under any state or federal law other than continuation coverage under Title X, Consolidated Omnibus Budget Reconciliation Act of 1985 (29 U.S.C. Section 1161 et seq.) (COBRA).
CONTINUATION OF GROUP COVERAGE. A group policy or contract delivered, issued for delivery, renewed, amended, or extended in this state, including a group contract issued by a group hospital service corporation, that provides insurance for hospital, surgical, or medical expenses incurred as a result of accident or sickness must include an option for each individual covered by the policy or contract 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.
A family member or dependent of an insured is eligible for continued coverage under this subchapter 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.
For additional information, please contact TCO or refer to This Link.