The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) permits employees to continue their group health coverage if they leave the group for certain specified reasons. According to federal law, when comparing state and federal continuation rights, employees may use the law that is most favorable to their situation. The Texas continuation and conversion requirements cover hospital, surgical, and major medical plans sponsored by all employers, regardless of size, but do not cover self-insured plans (TX Insurance Code Sec. 1251.251et seq.). The maximum continuation period for individuals not covered by federal COBRA is 9 months. For individuals covered by federal COBRA, 6 additional months of continuation coverage under Texas law must be provided following any period of continuation coverage provided under COBRA.
Employees and their spouses and dependents not covered by federal COBRA who were covered for the previous 3 months must be allowed to continue group coverage for 9 months after the employee loses coverage for most reasons. Continuation does not have to be provided for coverage that ended because the employee was "terminated for cause." In addition, continuation does not have to be provided if:
• Termination of the group coverage occurred because the person failed to pay any required premium;
• Any discontinued group coverage was replaced by similar group coverage within 31 days;
• The person is or could be covered by Medicare; or
• The person is covered for similar benefits by another hospital, surgical, medical, or major medical expense insurance policy; hospital or medical service subscriber contract; medical practice plan; any other prepayment ...