Texas Health Insurance - What To Do If Your Insurance Company Closes
It's a fact that sometimes even the best companies go under
. Insurance companies are no different. If your Texas health insurance company closes, you may find yourself stranded, wondering what options you have now. Why would a health insurance company close? This only happens when the amount of debt exceeds the amount of money coming in. Fortunately, Texas has state laws in place that can help soften the blow if this should ever happen.
When the state recognizes an insurance company is in trouble, they'll have a district judge put it in receivership. This allows the insurance commissioner to come in and see if he can overhaul the company financially. If it can't be saved, then other measures need to be taken. The commissioner usually appoints an SDR (special deputy receiver) to liquidate, or sell off, all the company's assets to pay off its debtors. This is where guaranty associations kick in. Every insurance company in the state of Texas must belong to a guaranty association. This includes Texas health insurance companies. Guaranty companies are basically insurance policies for insurance companies. How do they work?
Guaranty associations are grouped together by insurance types. In this case, Texas health insurance companies belong to the same association. They use their assessments to pay off the debts a company may have. So for example, XYZ Texas Health Company fails. The assessments in the guaranty association they are a part of will be used to pay outstanding policies and any other money that the company owes. What if the company isn't a part of a guaranty association? This will never happen. All insurance companies in Texas are required by law to be a part of a guaranty association.
However, not all insurance companies that sell Texas health insurance are authorized to do so. Make sure that when you purchase health insurance, the company you're buying from can legally sell insurance in Texas. This will almost guarantee that you will have your policies taken care of even if the company winds up shutting down. You can find out if your company is licensed at the Texas Department of Insurance website. Even if your company is licensed, selling off its assets and paying off its creditors takes a lot of time. It's not unusual for these processes to take years. If you don't hear anything, be patient. It takes a while to find out if there's enough money left over to pay all the money that's owed.
by: Charles Peeler
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