State RegulationsTX specificDifficulty 2/5
When a Texas small employer plan applies a preexisting condition exclusion to a newly eligible employee, what must the issuer do?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under TIC Chapter 1501, a preexisting condition exclusion in the Texas small employer market must be offset by the employee's prior creditable coverage, so that time already spent covered counts against the exclusion period. This portability rule is what keeps a change of jobs from restarting the exclusion clock, and it applies without regard to where a diagnosis was made or to whether the employee has previously worked for another employer.
Why the other options are wrong
- A) Prior employment is what makes credit for prior coverage relevant; the exclusion is not limited to employees new to the workforce.
- B) The exclusion is not keyed to where the condition was diagnosed, so a hospital-diagnosis limitation is not the rule.
- D) Disregarding prior creditable coverage is precisely what the chapter forbids; the exclusion must be reduced by it.
Memory hook
Prior coverage travels with the employee - the clock does not restart at a new job.