HBA-NRS H.B. 189 77(R) BILL ANALYSIS Office of House Bill AnalysisH.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.