Insurance Laws Specific to the State of Texas

Each individual state in the United States has its own specific laws and regulations regarding insurance, usually highlighting what types of insurance and what minimums of coverage are mandatory for residents to have. Though it varies by state, we find commonalities between many states. The most prominent state insurance laws tend to cover auto insurance, as people are the most at risk for accidents and injuries on the road. Additionally, health, home, life, and long-term care insurance can also have regulations and mandatory minimums set by the state. It is important for residents to have knowledge of these requirements in order to avoid facing penalty, which is typically a fee. For instance, in the state of Texas, historically there has been a fee that is collected from individuals who do not have certain types of insurance, or do not meet the minimum requirements set by the state for their insurance policies. This fee is collected when they file their taxes, and is called the ‘Shared Responsibility Payment’. This fee is collected from those who can afford to, but choose not to purchase state required insurance.

Auto Insurance
While auto insurance is not technically required for drivers in Texas, Texas law does require that drivers show proof that they can pay for the accidents they cause. Many drivers ensure their abilities to do so by purchasing auto liability insurance. Auto liability insurance ensures that drivers will have coverage when needing to repair or replace the other driver’s vehicle, other damaged property, and/or the injured party’s medical expenses. Texas law requires that drivers have at least $30,000 of coverage for injuries, up to $60,000 total per accident, and at least $25,000 of coverage for property damage. This basic plan requirement is commonly referred to as 30/60/25 coverage. Most insurance policies will cover damages and expenses when you, someone in your family, or someone borrowing your car with permission are at fault for causing an accident.

Though these are just the requirements for auto liability insurance coverage, drivers may want to consider buying more liability coverages. In instances where a multi-vehicle accident is caused (which is common on busy Texas highways), the other driver’s car is totaled, or injuries exceed the $30,000 minimum requirement for coverage, the driver who caused the accident may have to pay the rest of the coverages out of pocket. This puts people at great financial risk, as failure to cover expenses, whether it be through insurance, out of pocket, or both, becomes difficult and costly, and may result in a lawsuit being brought forth by the opposing party from the accident.

On top of liability insurance, some additional insurance coverages for drivers to consider include:
● Collision coverage
● Medical payments coverage
○ Covers you and your passengers medical bills
○ Coverage if you are hurt as a passenger in someone else’s car
○ Coverage if you are injured by a vehicle while walking or biking
● Personal injury protection
● Uninsured/underinsured motorist coverage
○ Includes coverage in hit-and-run cases
● Towing and labor coverage

Health Insurance
Prior to 2019, the health insurance requirements were very similar to auto insurance requirements in the state of Texas. The same ‘Shared Responsibility Payment’ fee applied to those without adequate auto insurance was also applied to health insurance up until this past year. Beginning in 2019, the ‘Shared Responsibility Payment’ fee no longer applied in cases where people could afford health insurance but chose not to purchase it.

While some states require their own health insurance mandates, and still enforce the fee on state taxes for people not meeting the requirements for health coverage, this is no longer the case in Texas. While the Affordable Care Act still says you must have health insurance, there is no longer a federal tax penalty for it, as it has been “zeroed”. It remains, however, required to report your health insurance coverage on your federal tax return. As many states have passed their own health insurance requirements and mandates since this change was brought by the Affordable Care Act, Texas is not among that list of states, and the penalty is no longer applied on Texas state taxes. Even though there are no longer penalty fees for Texas residents, it is still required by state and federal law that people have and report minimum essential coverage, or report if they do not have the minimum coverage.

The following types of health coverage meet the Texas and Affordable Care Act minimum essential health care requirements:
● An individual insurance plan
○ Can be purchased on your own
○ Can be purchased through Healthcare.gov
● Plan provided by employer
● Medicare or Medicaid
● TRICARE
○ U.S. Military coverage
● Veterans health care program
● Peace Corps coverage

The following are not included in the minimum essential health care requirements:
● Vision coverage
● Dental coverage
● Workers’ compensation
● Specific condition coverages
● Plans that offer discounted medical services

Other Insurance Coverages to Consider
Many other common insurance coverages, used by many residents, are not considered a requirement. These include, but are not limited to, home insurance, life insurance, and long-term care insurance.

Though home insurance is not a requirement in the state of Texas, it is extremely common for residents to purchase it, because of the coverage and protection of your home, and other larger, more valuable assets.

Life insurance is not required by Texas state law, but is common. Life insurance is not necessarily essential for everyone, and you should only consider life insurance if you have people, particularly family and children, who rely on you financially. It is important to consider the fact that insurance agencies can deny you coverage if you are considered high risk, primarily due to failure of a qualifying medical examination, and/or the determination by the insurance company that you are considered high risk due to your health, job, and/or other habits.

As mentioned before, Medicare and Medicaid are among one of the ways to pay for long-term care, as this can fall under the coverages of health insurance or life insurance; however, there are options to purchase long-term care insurance as its own entity. Long-term care insurance typically covers:
● Care in a nursing home/assisted living center
● Care and services provided at home
● Other services (coverage varies by policy)
○ Hospice care
○ Continued care after a hospital stay
○ Help with household activities
○ Caregiver training (for family)

Long-term care insurance rates are typically calculated by your age, health, location, and the amount/duration of the needed benefits. The insurance provider has the option to raise your rates, and the cost of long-term care typically increases over time; however, keep in mind that your rates can not be increased because of worsened health conditions.

If you have questions about a personal injury case, contact a personal injury lawyer, like the office of the Brandy Austin Law Firm, for more information.