Texas group health continuation after coverage ends

What Texas continuation does

Texas state continuation lets an eligible person stay in the employer’s group plan for a limited period after coverage would otherwise stop. The person usually pays the full group contribution plus a 2% administrative amount. The option preserves the existing group coverage rather than creating a new individual policy, so the plan’s network, benefits, deductibles, and exclusions continue to matter. It is a bridge, not permanent coverage or a guarantee that the employer will keep sponsoring the plan indefinitely.

Which plans and people are covered

Texas Insurance Code §1251.251 applies to group policies providing hospital, surgical, or major-medical expense coverage on an expense-incurred basis. The statutory continuation subchapter excludes policies that pay benefits only for a specified disease or accident. Eligibility under §1251.252 generally requires the person’s group coverage to end for a reason other than involuntary termination for cause and at least three consecutive months of coverage immediately before termination. Importantly, a health-related termination is not treated as termination for cause for this eligibility test.

Election is deadline-driven

The employee, member, or dependent must give the employer or group policyholder a written election no later than 60 days after the later of two dates: the date coverage otherwise ends, or the date the person receives the prescribed notice of the continuation right. The later-date rule means the notice date can extend the decision window, but it is unsafe to assume an employer will provide a late notice or that an oral request counts. Keep a dated copy of the election and proof of delivery.

Premium and payment timing

Under §1251.254, the person pays monthly the employer or policyholder contribution amount plus 2% of the group rate for the continued coverage. The initial payment is due within 45 days after the election. Later payments are due on the scheduled due date, with a 30-day grace period after that due date. The law’s formula is not necessarily the same as the former employee’s payroll deduction: the employer’s contribution is included, so continuation can cost substantially more than the employee paid while working.

How long coverage lasts

If the individual is not eligible for federal COBRA, Texas continuation can last nine months from election. If the person is eligible for COBRA, Texas law can add six months after the COBRA continuation period. Continuation may end earlier when another statutory condition occurs, including failure to pay, becoming eligible for other group coverage, or the group coverage ending under the governing rules. Read the full statute and plan notice for the precise termination events; do not treat the maximum period as a guaranteed minimum.

State continuation and federal COBRA are different

Federal COBRA generally covers qualifying plans of employers with at least 20 employees and uses its own qualifying events, notices, election periods, premium ceiling, and continuation periods. Texas continuation is a state-law right that can apply to fully insured plans outside COBRA’s employer-size reach, and Texas law also supplies the six-month extension for a person who has exhausted COBRA. A self-funded employer plan is generally governed by federal law rather than state insurance mandates. Identify whether the plan is fully insured or self-funded before deciding which rule applies.

Practical example and decision checklist

Suppose an employee has been covered for a year and loses the job for a non-health reason. If the plan is a fully insured Texas major-medical group policy, the employee may qualify after coverage ends. The employee should compare the plan’s full monthly price with marketplace coverage, confirm provider access and drug coverage, calendar the later-of-termination-or-notice deadline, submit a written election, and calendar both first payment and recurring payment dates. A dependent should make sure the election explicitly names each person who wants to continue.

Exam approach

For a Texas state-continuation question, look for the policy type, three-month coverage history, reason coverage ended, written election, 60-day later-of rule, premium amount, payment windows, and duration. Memorize the core figures: 3 months of prior coverage; 60 days to elect after the later date; employer contribution plus 2%; 45 days for the first payment; 30-day grace for later payments; up to 9 months without COBRA or 6 months after COBRA. Do not confuse this with federal COBRA’s separate rules.

Notice quality and proof of election

The statutory right is useful only if the eligible person receives enough information to act. A notice should identify who qualifies, the election address or recipient, the deadline, the amount due, and how long coverage may continue. When the explanation is incomplete, request the missing details in writing while protecting the earliest plausible deadline. A person should save the envelope or electronic timestamp, the election, delivery confirmation, first invoice, and payment receipt. If an employer uses a benefits administrator, confirm that the administrator actually received the election rather than assuming a portal submission completed every step. Continuation is also tied to the group policy’s changing status. An employer may change carriers, discontinue a class, or terminate the entire plan. Ask whether the election preserves the former contract or moves the person to replacement coverage and whether deductibles reset. A new policy can alter network access, drug formularies, and cost-sharing even when it is described as continuation. The statutory maximum is not necessarily the best financial choice: compare total premium and likely out-of-pocket expenses with a marketplace plan, Medicaid eligibility, or a spouse’s employer plan.

Map the three dates before acting

Write down the date the coverage ends, the date the notice arrives, and the date the written election is delivered. The legal election window uses the later of the first two dates, while the first contribution window begins after election. These clocks can therefore start on different days. A calendar reminder should include a few days of buffer for mailing, weekends, portal downtime, and payment processing. Ask the plan administrator to confirm receipt and the coverage effective date in writing.