1. (a) The purpose of this subchapter is to address requirements and set minimum standards of benefits for any conversion policy issued in accordance with a conversion privilege provided under a group health benefit plan. Under Insurance Code, Article 3.51-6, §1(d)(3), a conversion privilege is required with respect to any employee, member, or dependent whose insurance under a group policy has been terminated for any reason (except involuntary termination for cause), including discontinuance of the group policy in its entirety or with respect to any insured class, and who has been continuously insured under the group policy (and under any policy providing similar benefits which it replaces) for at least three months immediately prior to termination. A conversion may be provided either through an individual conversion policy or through establishment of a group conversion trust as authorized under Insurance Code, Article 3.51-6, §1(a)(5). References to a conversion policy mean either a group policy or individual policy (except as otherwise indicated).
2. (b) The provisions of this subchapter shall apply to any insurer, or group hospital service corporation subject to Insurance Code, Chapter 20, which issues policies providing hospital, surgical, or major medical expense insurance or any combination of these coverages on an expense-incurred basis. However, the provisions of this subchapter shall not apply to policies providing benefits for a specified disease or diseases only or for accident only or group Medicare supplement insurance or group CHAMPUS supplement insurance. With respect to any defined minimum standards for conversion policies, the provisions of this subchapter shall apply equally to any insurer or group hospital service corporation subject to Insurance Code, Chapter 20, issuing any other conversion policy.

Source Note:The provisions of this §3.501 adopted to be effective December 30, 1993, 18 TexReg 9759.