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Health Insurance in Texas

In Texas, health insurance is a contract in which a health insurance company agrees to pay for some or all of an insured's medical expenses in exchange for a premium. Insurance policies follow the principle of cost-sharing. That is, you pay some of the cost of your healthcare. You normally must meet a deductible and make copayments and coinsurance in addition to the monthly premiums.

There are two types of health insurance in Texas: private and public insurance. Private insurance includes plans obtained as an individual or group directly from an insurer or the marketplace. Public insurance is provided through government programs like Medicare, Medicaid, and Children's Health Insurance Program (CHIP).

The two most notable types of private health insurance in Texas are:

  • ACA-compliant health insurance (any group coverage or health insurance purchased on individual state or federal health marketplace)
  • Short-Term health insurance (due to some limitations in coverage, it is usually purchased with an accompanying Supplemental policy)



Health insurance policies protect the insured from unexpected and frequently costly medical bills that arise from emergencies. Hospital and medical expenses, loss of income from disability, and long-term care expenses are the three main types of losses and benefits covered by most insurance policies. Some of the plans may also provide preventive services. Preventive services usually include screening tests and medical checkups.

A health insurance policy may be limited or comprehensive. A limited health insurance policy only covers particular accidents or diseases, while a comprehensive policy covers all accidents or illnesses that are not specifically excluded.

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How Does Health Insurance Work in Texas?

The Texas Department of Insurance (TDI) regulates health insurance in Texas. It regulates health insurance according to the Texas Insurance Code and all federal laws and regulations relating to health insurance. The main federal laws that guide health insurance in Texas include:

Under Texas state law, state residents are not required to get health insurance, and currently approximately one out of five Texas residents have no reliable health insurance coverage.

The primary purpose of health insurance in Texas is to provide a person and their family with healthcare when they fall sick or get injured. ACA-compliant insurance also covers preventive health services, which involve screenings and counseling sessions on medical issues like blood pressure, cancer, cholesterol, depression, etc. Insurance companies provide health coverage for individuals and groups. Group health insurance is usually obtained through employment or membership of an association, union, or church.

Health insurance premiums in Texas are paid by the insured person every month. The cost of premiums is determined primarily based on:

  • The age of the insured
  • Residence location of the insured
  • Tobacco and nicotine usage
  • Whether the policy covers only the individual or their family


Whether gender and health factors, including medical history or disability, are considered - depends on the type of Texas health insurance plan. If the plan falls under the Affordable Care Act (ACA), these factors are not considered. However, such factors are considered in non-ACA plans (such as Short-Term health insurance), and may constitute grounds for denial of health insurance coverage. To sum up: ACA-compliant insurers do not discriminate and treat everyone equally, while non-ACA compliant Texas insurers may deny coverage based on the conditions chosen by the insurer.

For individual plans of any type of Texas health insurance, monthly premiums are fixed for one year. The cost usually increases upon the next year's renewal, as a result of the insured's age and (usually) higher health care costs. By federal law, insurance companies have to justify increasing the policy rate by more than 10%.

For group plans, the insurance company determines the premiums based on the whole group as a single entity. An employer may decide to pay all or part of the employees' premiums. However, if an employee seeks to include their family members in the health plan, the employer is not required to contribute to those premiums.

All health policies in Texas usually require the insured to cover part of the health care cost through cost-sharing. The insured must normally satisfy a deductible, pay copayments, and coinsurance in addition to premiums. No copayments or coinsurance need be made for the remainder of the plan year once the limit has been reached. Premiums, on the other hand, must be paid monthly, regardless of the use of the policy.

Health insurance coverages differ based on the selected plan. The coverage standards for plans obtained through work and those obtained directly from an insurance company may vary. Even among workplace plans, the rules differ depending on whether you work for a small or large company.

Individual and small-employer plans are required by federal law to include ten types of healthcare services known as Essential Health Benefits (EHBs). Texas also mandates that some plans include specific health benefits.

Health insurance in Texas can be obtained through any of the following means:

How Does Individual Health Insurance Work in Texas?

Individual health insurance is the type that an individual purchases for themself, not as part of a group or association. When you purchase an individual health insurance in Texas, you sign a contract between you and the insurer, in which you agree to pay a set monthly premium fee for the coverage up to the limits pre-set by the plan.

Premium is a fee you pay to your insurance company periodically - usually monthly - to keep the coverage active. When you start using insurance, you also have to make out-of-pocket payments in the form of deductibles, copays, or coinsurance. A deductible is the total amount you pay until your health insurance provider begins to cover healthcare costs according to the terms of the plan. The moment you meet your deductible, your insurer begins to cover an agreed percentage or amount of your healthcare expenses. The other percentage or amount will be covered by you in the form of copays or coinsurance, respectively. Your coinsurance and copay are usually listed on your insurance ID card.

Insurance providers usually have agreements and work with health professionals and institutions. These people are considered "in-network" professionals and institutions. Whenever you receive services or supplies from them, you get them at a discounted cost, which was pre-negotiated as part of your insurance. This agreement helps you save on medical expenses by the virtue of simply having an active insurance policy, without filing a claim. Your insurer maintains a list of such in-network providers. If you use an out-of-network provider, you do not get a pre-negotiated discount.

The world of insurance changes, so every year you should speak to your Texas health insurance agent, to check if there are better insurance products on the market that fit your needs and budget better. A good and proactive agent does this assessment for their current clients at least once a year.

Individual health insurance may be purchased from the Texas health marketplace, through an agent, or directly from an insurer. Insurance companies and health maintenance organizations (HMOs) sell major medical health insurance plans. These plans are also called comprehensive coverage or Qualified Health Plans (QHP). There are four main types of qualified health plans in Texas:

  • Exclusive provider benefit plans (EPOs)
  • Health maintenance organizations (HMOs)
  • Preferred provider benefit plans (PPOs)
  • Point of service plans (POS).


Texas health marketplace insurers sell health plans only during an open enrollment period. Under some exemptions (also known as qualifying events), you may be able to qualify for coverage outside of enrollment period. This is called a Special Enrollment Period. An example of a qualifying event is a loss of a job, divorce, change in family size, or involuntary loss of coverage. If this applies to you, you may be able to enroll outside of the open enrollment period. You may also be eligible if you have been the victim of misrepresentation or fraud by an agent or insurer.

You can buy other types of health insurance, like short-term, accident, or critical illness, at any time of the year from an insurance company.

What Are Alternative Health Plans in Texas?

Alternative health plans allow Texans the flexibility to get health coverage without paying the non-subsidized high premium cost of ACA insurance. The most commonly purchased alternative health insurance plan in Texas is Short Term Insurance, accompanied by a matching Hospital Indemnity plan.

Alternative health plans offer coverage for important health matters and serve as a good way to save money, particularly for healthy people. They can be a suitable alternative for people who are healthy, who do not need health services or prescriptions on a regular basis, and do not have major pre-existing conditions. Alternative health plans are frequently beneficial for those who require urgent coverage or need a health plan that would kick-in in case of an emergency.

The cost savings of alternative health plans in Texas come with a host of drawbacks that the prospective insured should be aware of, prior to buying the plan. Alternative health plans do not provide traditional major (ACA-compliant) medical coverage.

Alternative health insurance plans are frequently not regulated by the state and usually do not have to comply with the Texas Department of Insurance rules and regulations. Because of this, Texas residents covered by alternative health plans are usually not counted in the published "insured" statistic.

Texas alternative health plans include:

TIP: Always discuss your insurance needs with a Texas-licensed health insurance agent who has a selection of options from different insurance companies. Ask your agent for at least 3 options, compare all coverages side by side, and don't forget to always read the exclusions first.

SHORT TERM HEALTH insurance :

Texas is one of the few states that allows the sale of Short Term insurance. A short-term medical plan may not cover all or some of the essential health benefits. Usually, short-term health insurance does not cover pre-existing conditions and does not qualify as minimum essential coverage, the way ACA insurance does. In some cases of multi-year short-term Texas plans, a select set of pre-existing conditions may be covered after a year or more of continuous coverage.

Short-term plans are usually issued for 12 months or less; however in Texas, short-term health insurance can sometimes be renewed for up to three annual terms.

Short Term health insurance often provides fewer benefits and lower coverages than traditional medical plans. When a short-term insurance expires, it does not auto-renew. You must apply and purchase a new one. If you develop certain health conditions during the policy, you might not be able to get another short-term policy from this insurer at the expiration of the existing coverage. To purchase a traditional (ACA-compliant) health plan, you may have to wait until open enrollment (usually November through December).

LIMITED BENEFITS HEALTH plans in Texas

There are several kinds of limited benefit plans, which only pay for some healthcare costs. Limited benefit plans are usually used as supplemental to each other and to major health insurance plans. Discuss your health coverage needs with a Texas-licensed health insurance professional, to find out how limited benefits health plans can supplement your insurance and possibly save you money.

  • Hospital indemnity insurance: This type of Texas supplemental insurance plan pays for the costs of being hospitalized that may not be covered by other insurance. Hospital indemnity insurance pays for an insured's stay in a hospital or ICU for a covered sickness or injury. There is no one-size-fits-all for this type of health insurance, as each hospital indemnity plan is unique. Some policies include a fixed benefit of admittance to the hospital, an overnight stay, and each overnight stay in an ICU. While others may cover emergency treatment and pay a benefit paid for some outpatient procedures.
  • Accident-only plans: only provide coverage for an accident that causes death, dismemberment, disability, or medical care. It only pays the bills for the losses that arise from accidents, not sickness.
  • Specific disease plans: provide various benefits for a particular illness, like cancer or heart disease. It may be paid as a scheduled, fixed-dollar amount of indemnity for particular medical procedures or events, for example, chemotherapy or other cancer treatments.
  • Fixed-indemnity plans: They pay a set amount periodically (like daily, weekly, or monthly) when the insured is hospitalized. Payment is not based on the medical cost but on the time spent in the hospital.
  • Critical illness insurance: Critical illness insurance in Texas pays a lump-sum cash benefit to help cover expenses associated with a serious qualifying illness in the policy. The serious qualifying illness could be heart attack, cancer, organ transplant, paralysis, stroke, or any condition specified in the policy.

SUBSCRIPTION HEALTH PLANS

Texas subscription health plans are sometimes called direct care or concierge care plans. Basically, members pay a subscription fee (monthly or annually) to use a doctor or service, which is part of the plan. Additional charges may apply for each visit, lab work, or other services. If you require care that is not covered by your subscription plan, you may be responsible for the entire cost.

DISCOUNT HEALTH PLANS

Texas discount health plan members pay a monthly fee in exchange for lower prices on certain health care services. Discount plans usually cover vision, hearing, or pharmaceutical services. They are not standard health plans, although they may use the term "PPO" (preferred provider organization) to represent their provider network.

ASSOCIATION HEALTH PLANS

Health plans offered by associations generally vary. Some are set up by member-based associations, while others are set up by employers. Association plans are not always subject to state and federal regulations, and they may not cover as many services as big medical plans. If you must join an association to purchase a plan, carefully consider the membership dues, the plan's coverage, and its customer reviews.

DIRECT PRIMARY CARE PLANS

This is an agreement between a patient and a doctor in which the patient pays the doctor a monthly, quarterly, or annual fee for specific basic medical care services.

TELEHEALTH and TELEMEDICINE

Some Texas health insurance plans cover Telemedicine services. Make sure to discuss your options with a qualified health insurance agent.

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How Does Group Insurance Work in Texas?

Group insurance in Texas may be obtained through employment or membership of an association. The majority of Americans get health insurance through their jobs, but not all employers offer group insurance.
Group health insurance plans generally provide coverage at a lower premium compared to the plans purchased on the individual health market. Additionally, the employer pays at least 50% of the total premium, leaving a smaller and more manageable payment to the employee. Group insurance premiums may be raised because of changes in medical costs, employee age, and employee tobacco use. However, it cannot change because of an employee's health. All group health insurance plans in Texas are compliant with the federal Affordable Care Act (ACA) rules and regulations.
There are different requirements for group insurance, depending on the size of the employer. The group insurance market is separated into two categories: small and large.
Under Texas insurance law, a small group is a business or association with two to 50 people, irrespective of the number of working hours. Small group plans must cover a minimum set of federal essential health benefits (EHB). Insurance companies usually consider the employer's geographic location, and employees' ages and tobacco use to determine the premium to charge.
Large groups are groups of at least 51 people. Large employer plans are exempt from covering federal EHBs and can base premiums on an employer group's health status and claims experience. Except for consumer choice plans, which can remove some state-mandated benefits, large employer plans must cover certain benefits specified by Texas state law.
Multiple employers can obtain health insurance as a group through association health plans. Some arrangements are not mandated to conform with all federal and state small employer plan regulations because there may be more than 50 employees participating.
Employers should be aware that the association is the policyholder when choosing an association health plan. That implies that the employer has no say in benefits, administration, whether the policy is terminated, renewed, or changed by the insurance company. Employers should review contracts to ensure that they understand the terms and conditions.
Always speak with a state-licensed insurance professional, to see what group insurance option suits your needs the best and why.

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What Is Commercial Health Insurance?

Commercial health insurance is any health insurance not obtained from a government program, like Medicare, Medicaid, or CHIP. It is administered and provided by private companies. Commercial health insurance may be bought privately or provided by an employer. Commercial health insurance is available as a fee-for-service plan or as part of a managed care plan. There is no major difference between commercial health insurance and private health insurance.

Commercial health insurance pays medical expenses and disability income. Group health insurance, disability income insurance and workers' compensation insurance are the three common examples of commercial health insurance.

Texas Disability Income Insurance

Disability insurance is designed to make periodic payments to the insured, when the insured cannot work because of an injury or illness. The benefits of the Texas disability income insurance are decided based on the insured's past earnings. The definition of disability in disability income insurance varies. It can be the disability to carry out the duties of the insured's occupation or any occupation. An "any occupation" definition will only pay benefits if the insured cannot perform any of the duties of the occupation for which they are qualified due to education, training, or experience. The more broad term "own occupation" delivers a better advantage to the insured. It pays benefits when the insured cannot carry out tasks of their own occupation because of sickness or accident.

Texas disability insurance comes as individual or group insurance. They differ in the following ways:

  • Individual disability insurance normally specifies a set amount of coverage, whereas group plans frequently specify a percentage of the worker's income.
  • Short-term disability insurance group plans typically have maximum benefit periods of 13 to 52 weeks (the most frequent being 26 weeks), with weekly benefits ranging from 50% to 100% of the individual's income. Individual short-term plans often have benefit periods ranging from six months to two years.
  • Long-term disability insurance group plans have maximum benefit periods of more than two years, with monthly benefits often limited to 60% of an individual's monthly salary.
  • Minimum participation standards apply to group disability plans as well. Before being eligible for coverage, the employee must typically have worked for 30 to 90 days.
  • Payouts from group disability insurance plans are frequently added as an extra benefit, on top of any other workers' compensation benefits.
  • Some Texas group disability insurance policies exclusively cover only non-occupational disabilities.

Texas Workers' Compensation Insurance

Workers' compensation insurance covers work-related injuries or illnesses of employees by paying for medical care and treatment. It may also pay a part of their lost income. When an employee dies as a result of a work-related injury or illness, Workers' Comp pays burial expenses and benefits to their family. Workers' compensation insurance exists because most employees' health plans do not include payment of work-related injuries and illnesses. Workers' compensation insurance is not a requirement in Texas.

Generally, Texas workers' compensation does not pay benefits to employees when:

  • They intentionally caused their own injuries.
  • The injury occurred because they were playing around or were intoxicated.
  • The injury occurred outside work or while participating in an off-duty sport or a social event on their own time.
  • Another person caused the injury for non-work-related reasons.
  • The injury was caused by an "act of God," like a flood or hurricane, unless the job has frequent high exposure to these types of events.



The TDI's Division of Workers' Compensation (DWC) is in charge of workers' compensation in Texas. An employer that does not provide workers' compensation insurance may lose legal protection against most lawsuits, which may be launched by the injured employees. If the employer who did not get Workers' Comp coverage is sued, they cannot argue the following in court:

  • That the injury was caused due to the employee's negligence or another employer's negligence
  • That the injured employee was aware of the danger and accepted it.



If the employer does not offer workers compensation coverage, they usually must:

  • File an annual notice with DWC.
  • Post notices in offices and workplaces, informing employees about this fact.
  • Tell new employees in writing that workers' compensation does not cover them.
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How Does Health Insurance for Seniors Work in Texas?

Seniors may find it difficult to keep up with rising healthcare costs as their income declines. There are many healthcare coverage options for seniors in Texas. They include Medicare, Medicaid, private insurance plans, Medigap, Medicare Advantage, and long-term care insurance.

Medicare

Medicare is a federal health insurance program for persons over 65 years old who have worked full time for at least ten years. Medicare is divided into four parts:

Part A (hospital insurance) covers hospitalization, inpatient care in a skilled nursing facility, hospice care, and home health care. It is financed through a portion of the payroll tax (FICA) during the person's employment and is usually given free of charge to most seniors who receive social security benefits.

Part B (medical insurance) covers medical services in or out of the hospital, including doctor's visits, lab tests, clinical trials, mental health care, preventive care, and surgeries. It is financed from monthly premiums paid by the insured and from the general revenues of the federal government.

Part C (Medicare Advantage) - Medicare Advantage plans are sold by private Medicare-approved companies. These plans include:

  • Health Maintenance Organizations (HMO)
  • Medicare Medical Savings Account Plans (MSA)
  • Preferred Provider Organizations (PPO)
  • Private Fee-for-Service Plans (PFFS)
  • Special Needs Plans (SNP)



Except for hospice care and some care in eligible clinical research studies, Medicare Advantage plans must cover all of the services offered by Original Medicare. These plans may have lower out-of-pocket expenses than Original Medicare. Extra coverage may be available, including vision, hearing, dental, and other health and wellness programs, as well as prescription drugs.

Part D (prescription drugs) - It covers prescription drug costs. It is an optional coverage provided through private prescription drug plans (PDPs) that contract with Medicare.

The Texas Health Information, Counseling, and Advocacy Program is a legal program that helps Texas residents find and sort through Medicare options available in the state.

Medicaid

Medicaid is a health insurance program funded by both state and federal government. It is administered by individual states, usually the state's Department of Public Welfare. The Texas Health and Human Services Department (THHS) runs the state's Medicaid program. Medicaid provides health insurance coverage for persons whose income and resources cannot meet the cost of necessary medical care.

To qualify for Medicaid, one must meet income and other eligibility requirements, (being over 65 years is one of them). Once it is confirmed that you are eligible, the Texas Medicaid program provides coverage for the following services for elderly persons:

  • Medical specialists and mental health care

  • Hospital services and care

  • Laboratory and x-rays tests

  • Medicine and vaccines

  • Regular checkups at the doctor

  • Treatment of special health needs and pre-existing conditions

  • Vision and hearing care

  • Long-term services and supports, such as:

    • Home care and personal care.
    • Having somebody take your child to their medical appointments.
    • Nursing home care.
    • Inpatient mental health facility.
    • Care for persons that have intellectual disabilities.


Persons who qualify for Medicaid are called "dual eligible" because Medicare may also cover them.

Medigap

While Medicare in Texas covers most healthcare needs, a few noticeable gaps are not covered unless you get Medicare Supplement Insurance, also called "Medigap." Medigap policies cover deductibles, copayments, or coinsurance that Medicare does not cover. Private insurance companies sell Texas Medigap policies, which are used after Medicare pays its part of the approved amount for covered healthcare expenses.

Medigap or Medicare Supplement is not the same thing as the Medicare Advantage Plan. Medigap only complements the benefits provided by an original Medicare plan.

Medigap policies do not cover long-term care, dental or vision care, eyeglasses, hearing aids, or private duty nursing care. Prescription drugs are not covered by Medigap plans purchased after 2006.

Other things to keep in mind concerning Medigap:

  • Only persons with Medicare Part A (hospital insurance) and Part B (medical insurance) are eligible for Medigap plans.
  • In the six months following your 65th birthday, you should enroll for Medigap coverage. If you do not, insurers may refuse coverage due to a pre-existing condition, or you may have to pay a higher premium. When this happens, contact a licensed Texas insurance agent to consider your options.
  • Standard Medigap coverage is guaranteed renewable.
  • Only one individual is covered by Medigap coverage. A married couple that wants Medigap insurance must get separate policies.
  • In addition to the Medicare Part B coverage you purchased, the Medigap coverage is paid directly to an insurance company.

Long-Term Care insurance

In Texas, long-term care insurance provides coverage for persons who can no longer live an independent lifestyle and require living assistance at home or in a nursing home facility. This might be as a result of an illness, disability, or Alzheimer's disease.

There are many ways to access long-term care in Texas:

  • Personal cash or savings
  • Medicaid
  • Medicare
  • Riders to a life insurance policy or annuity
  • Long-term care insurance


To get long-term care insurance, check the list of companies in Texas that sell long-term care insurance and reach out to a health insurance agent to help you sort through the possible options.

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What Are Additional or Stand-Alone Health Insurance Options?

Additional or stand-alone options are plans that cover anything that basic medical coverage does not cover. These are also called supplemental health insurance. They provide additional medical coverage and contribute to other costs not covered by primary insurance plans like copayments and deductibles. Supplemental health insurance helps with medical and out-of-pocket expenses. They are only sold to people who have basic medical coverage. Some examples include dental insurance, vision insurance, and hearing (and hearing-aid) insurance.

Another additional option is travel health insurance. It can be obtained as part of a comprehensive travel insurance coverage or a stand-alone plan. International travel health insurance provides health insurance coverage for people traveling out of the country.

What Health Insurance Rights Do I Have in Texas?

When shopping for a Marketplace (ACA-compliant) insurance plan in Texas, you have the following rights:

  • An insurance company or HMO cannot deny you health coverage during open enrollment
  • A pre-existing condition cannot be the basis for denial of health coverage
  • Your premium rate will be decided based on three factors only:



1. Age
2. Place of residence
3. Tobacco usage


  • An insurer must provide you with plan summary documents that allow you to compare plans. These documents include a summary of benefits and coverage (SBC), an outline of coverage, and health plan disclosures.
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Below are general tips that you should take note of when shopping for health insurance in Texas:

  • You should know how much you will have to pay. Premiums are lower in plans with larger deductibles, copayments, and coinsurance. When you get care, you will have to pay extra out of pocket.
  • Consider factors other than cost. Call the TDI Consumer HelpLine at (800) 252-3439 to learn about an insurance company's financial rating and complaints history.
  • Seek assistance from a licensed agent or a broker. If you purchase health insurance through the federal marketplace, you can receive free assistance selecting a plan. For further information, contact the marketplace by calling (800) 318-2596
  • Only buy health insurance from licensed businesses and agencies. If you purchase insurance from an unlicensed company, your claim may be denied if the company goes bankrupt. To find out if a company or agent is licensed, call the TDI Consumer HelpLine at (800) 252-3439.
  • Compare coverages by obtaining multiple quotes. Understand what each plan entails. Make sure your doctors are in the plan's network if you want to keep them. If they are not, you may need to switch doctors or find an insurer who works with your doctor of choice. Also, double-check that your medications are on the plan's approved drug list. Drugs that are not on the plan's list are not covered.
  • Use the TDI health plan shopping guide to learn more about the questions you should ask before deciding on what health insurance to buy.



Complete and accurately fill out your application. An insurance provider may cancel your coverage or refuse to pay your claims if you intentionally mislead or leave something out.