In January 2006, Texas enacted Senate Bill 51 (SB 51), a law that states that employee terminations may occur only in the same month that they are reported. Under SB 51, an employee’s coverage cannot be retroactively terminated. That individual’s premium must be paid through the end of the month in which the insurance company is notified of the cancellation.
Example: An employee terms with the employer on April 20, 2010. The employer notifies Nextep and/or the insurance carrier on May 6, 2010. The terminated employee termination date of coverage will be May 31, 2010. Under the SB 51 requirements, the employer is responsible for premium payment for the entire month of May, in which the employer notified the carrier.
To safeguard your company from paying an extra month’s premiums, it is crucial to notify Nextep immediately of any employee terminations.