Download BILL ANALYSIS

BILL ANALYSIS
Office of House Bill Analysis
H.B. 189
By: Burnam
Insurance
2/18/2001
Introduced
BACKGROUND AND PURPOSE
Although the Texas Insurance Code provides for mental health parity in health insurance
contracts, it does not provide for mental health parity in long-term disability policies. Long-term
disability coverage ensures that employees receive income replacement in the event that the
employee becomes disabled. Typically, most long-term disability policies cover physical
disorders due to an employee disability or illness through age 65, but mental disorders are
covered for a period not to exceed 24 months. The limit on mental health disorder coverage
precludes long-term income replacement in the event that an employee becomes disabled
because of a mental illness. House Bill 189 provides for mental health parity in long-term
disability insurance products.
RULEMAKING AUTHORITY
It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any
additional rulemaking authority to a state officer, department, agency, or institution.
ANALYSIS
House Bill 189 amends the Insurance Code to prohibit an insurance policy or evidence of
coverage from being delivered, issued for delivery, or renewed if the terms of the policy or
evidence of coverage excludes or reduces the payment of benefits to or on behalf of an insured or
enrollee because of a mental illness, disease, or disorder, unless that exclusion or limitation is
equally applicable to all other physically disabling conditions. Each disability policy or plan
must provide parity in benefits for mental and physical disabilities. The bill provides that a
provision in an insurance policy or evidence of coverage that violates these provisions is void.
The bill provides that provisions related to parity in certain disability insurance benefits only
apply to a disability insurance policy or plan issued under certain policies or an evidence of
coverage as defined by the Texas Health Maintenance Organization Act.
House Bill 189 also provides that a violation of parity in certain disability insurance benefits is
an unfair and deceptive act or practice in the business of insurance for purposes of provisions
related to unfair competition and unfair practices and is subject to specified sanctions and
penalties. In addition, the bill provides that approval by the commissioner of insurance of the
policy or product form or other form used by the policy or plan issuer under any Texas law,
including provisions regarding policy form approval or evidence of coverage and charges, is not
a defense to an action brought under unfair competition and unfair practices provisions with
respect to a violation of parity in certain disability insurance benefits.
EFFECTIVE DATE
September 1, 2001, and applies only to an insurance policy, contract, or evidence of coverage
delivered, issued for delivery, or renewed on or after January 1, 2002.
HBA-NRS H.B. 189 77(R)