Texas Senate Bill 51, the 2005 insurance law codified at Insurance Code Sections 843.210 and 1301.0061, sets clear employer rules for ending an employee’s group health coverage: the employer keeps paying premiums, and the HMO or PPO carrier keeps providing coverage, until the end of the month in which the employer tells the carrier the person is no longer eligible.1Texas Capitol. SB 51, 79th Legislature – Enrolled Text Retroactive terminations that leave a former employee with denied claims are what the law was written to prevent.
The Notification Rule in Plain Terms
When an employee loses eligibility for the group plan, the employer has to notify the carrier. Coverage and premium liability then run through the end of the month the notice is received. Report an October termination in December, and the employer owes October, November, and December premiums; the former employee has coverage for all three months.2Texas Department of Insurance. Adopted Rules – 28 TAC Sections 21.4001-21.4003
Carriers are required to remind employers of this obligation. If the carrier bills monthly, the reminder appears on each monthly statement and describes the carrier’s preferred methods for receiving termination notifications.3FindLaw. Texas Insurance Code Section 843.210
The Late-Month Grace Period
A narrow grace period softens the rule for terminations at the tail end of a month. If an employee loses eligibility within the last seven calendar days of the month, the employer is treated as having given notice that same month so long as the carrier receives the notice within the first three business days of the following month, not counting Saturdays, Sundays, or legal holidays.2Texas Department of Insurance. Adopted Rules – 28 TAC Sections 21.4001-21.4003
Miss that three-day window and the employer owes an additional full month of premiums, whether or not the former employee used any medical services.4NABIP Texas. Senate Bill 51 Announcement
Advance Notice as an Escape Hatch
The end-of-month premium obligation disappears if the employer gives the carrier at least 30 days’ advance notice that an individual will be leaving the group. In that case, coverage and premium liability end on the date the individual actually departs.2Texas Department of Insurance. Adopted Rules – 28 TAC Sections 21.4001-21.4003
How the Notice Must Be Sent
Employer and carrier agree on a method for immediate written notification. Acceptable channels include an online portal, email, or fax. Electronic notices are presumed received on the date they are submitted. Hand-delivered notices are presumed received when the delivery receipt is signed. For mailed notices, the date of receipt is the date the communication is tendered to the U.S. Postal Service.2Texas Department of Insurance. Adopted Rules – 28 TAC Sections 21.4001-21.4003
When the Rule Does Not Apply
Several situations take an employer out of the premium-and-coverage continuation obligation under 28 TAC Section 21.4003:
- The departing employee obtains successor coverage that takes effect before the end of the required coverage period. The employer may be required to verify the new plan.
- The plan is non-contributory, meaning the employer makes no financial contribution toward premiums.
- The individual dies. Premium and coverage obligations end at death.
- The individual stays in the eligible group but voluntarily drops coverage, for example at open enrollment.
- An entire group ends its plan with the carrier.2Texas Department of Insurance. Adopted Rules – 28 TAC Sections 21.4001-21.4003
Which Plans Are Covered
SB 51 reaches fully insured group health plans sold in Texas, including HMO medical plans, PPO medical plans, HMO dental and vision plans, and PPO vision plans offered as single health care service plans.5My Benefit Advisor. Texas Potentially Eases Premium Liability
Self-funded employer plans are not subject to the law. Those plans fall under the federal Employee Retirement Income Security Act, which preempts state insurance mandates.6KFF. Health Policy 101 – The Regulation of Private Health Insurance Because many large employers self-fund, SB 51’s rules land most heavily on small and mid-size employers that buy group coverage from a carrier.
The 2025 Waiver Change Under SB 1332
For nearly twenty years the penalty for a late notice was rigid: an extra full month of premium, with no exception, even if the former employee never sought care. Senate Bill 1332, signed by Governor Greg Abbott on May 31, 2025, changed that. The bill took effect immediately after receiving two-thirds votes in both chambers.7UnitedHealthcare. Texas SB 1332 Impacting Carrier Compliance8Texas Capitol. SB 1332, 89th Legislature – Enrolled Text
SB 1332 adds a new subsection (e) to both Sections 843.210 and 1301.0061. Carriers may now waive an employer’s premium liability for months following a late termination notice, but only if the former employee received no covered services after the month in which eligibility actually ended. If the former employee did use covered services during the gap, the carrier cannot grant a waiver.8Texas Capitol. SB 1332, 89th Legislature – Enrolled Text
The waiver is discretionary. Carriers may grant it; they are not required to. Employers still bear financial risk from a missed deadline, and as of mid-2026 the Texas Department of Insurance has not adopted implementing regulations for SB 1332.7UnitedHealthcare. Texas SB 1332 Impacting Carrier Compliance
Carrier-Specific Procedures
Two of the largest Texas carriers have published how they handle SB 51 and SB 1332 together.
UnitedHealthcare points employers to the Clerical Errors provisions in Section 6 of each UHC group policy, which allow retroactive premium adjustments within defined timeframes. UHC recommends employers work through their broker or UHC representative for case-by-case retroactive adjustments under the new law.7UnitedHealthcare. Texas SB 1332 Impacting Carrier Compliance
Blue Cross Blue Shield of Texas adopted a policy effective June 1, 2025 that lets an employer or broker request a retroactive termination and premium refund for an employee up to 60 days after the termination date. Approval is at BCBSTX’s discretion and requires that the employee received no covered care after the termination date. Requests go through the Blue Access for Employers portal or the Group Membership Service Center.9Blue Cross Blue Shield of Texas. Change to Employer Premium Refund Law
The practical takeaway is unchanged by the 2025 amendment: notify the carrier the moment an employee loses eligibility, or use the 30-day advance notice route when the departure date is known in advance. Waivers and refunds exist now, but neither is guaranteed.