Texas Health Insurance and HMO Law
7.7% of the exam 2 min
The 10 health and HMO questions of the Texas law section: newborn and dependent coverage, chemical dependency, Medicare supplements, HIV testing rules, long-term care, small employer plans, the Affordable Care Act, and HMOs.
Mandated coverage: newborns, dependents, chemical dependency
A plan with maternity or newborn coverage may not exclude or limit a newborn's initial coverage for a period of time, congenital defects, or the state-required newborn screening tests (TIC 1367.003; 28 TAC 3.3403). For employer health plans a dependent includes a spouse, a child younger than 25, and a child of any age who is medically certified as disabled and dependent (TIC 1501.002). Chemical dependency coverage must be no less favorable than coverage for physical illness, with the same limits, deductibles and coinsurance (TIC 1368.005).
Medicare supplements, HIV testing and long-term care
Medicare supplement plans are standardized by letter, give a 30-day free look, and since MACRA no plan covering the Part B deductible (C or F) may be sold to someone newly eligible on or after January 1, 2020 (28 TAC 3.3306). HIV testing must be required of everyone in the same class, and no adverse decision may rest on it without two positive ELISA tests confirmed by a Western Blot (28 TAC 21.705); questions designed to establish sexual orientation are banned (21.704). Long-term care policies must be at least guaranteed renewable (3.3822), the outline of coverage must be delivered before the application is presented (3.3832), and the activities of daily living are bathing, continence, dressing, eating, toileting and transferring (3.3804).
Small employer plans and the Affordable Care Act
A small employer carrier must issue a health plan to any small employer that elects coverage, regardless of health status; a group with only two eligible employees must enroll both (28 TAC 26.8). An eligible employee works full time, usually at least 30 hours a week (TIC 1501.002). Under the ACA, individuals and small businesses buy through the Marketplace, where premium tax credits and cost-sharing reductions are available; non-grandfathered plans are guaranteed issue, cover ten essential health benefits including mental health, pediatric dental and vision, and preventive services without cost sharing, and let children stay on a parent's plan to 26. Employers must notify employees about the Marketplace.
HMOs
An HMO issues an evidence of coverage, and every form that is part of it must be approved by the commissioner before use (28 TAC 11.501, 11.506). An HMO may cancel or nonrenew only for nonpayment or another reason the commissioner's rules allow (TIC 843.208). It often pays primary care physicians by capitation, a fixed amount per enrollee regardless of services (843.002). If an enrollee chooses no primary care physician, the HMO may assign one in the zip code nearest the enrollee's home or work (843.315). When covered, medically necessary care is not available in the network, the HMO must pay for it out of network (28 TAC 11.1611).
Where people lose points
✗ "A dependent child in Texas is covered to 26 under TIC 1501.002."
✓ The Texas definition says younger than 25; the federal ACA separately requires dependent coverage to age 26 where a plan covers dependents.
✗ "A Medicare supplement free look is 10 days."
✓ It is 30 days.
✗ "Long-term care may be optionally renewable."
✓ Nothing less favorable than guaranteed renewable is allowed.
✗ "An HMO can assign me any doctor in the state."
✓ An assigned primary care physician must be in the zip code nearest home or work.
✗ "Small group carriers may screen out a sick employee."
✓ Small employer plans are guaranteed issue regardless of health status.
Numbers to memorize
| Newborn coverage | From birth, congenital defects included (TIC 1367.003) |
| Dependent child age | Under 25, or any age if disabled (TIC 1501.002) |
| Medicare supplement free look | 30 days |
| HIV adverse decision | 2 ELISA + Western Blot (28 TAC 21.705) |
| LTC renewability | At least guaranteed renewable (28 TAC 3.3822) |
| Eligible employee | Full time, usually 30+ hours (TIC 1501.002) |
| HMO cancellation | Nonpayment or reason in rule (TIC 843.208) |
| Capitation start | Within 60 days of PCP selection (TIC 843.315) |
Test yourself
No answers here on purpose — retrieving them is the practice. Drill this domain if any of these stall you.
- Name the six activities of daily living.
- Why can a person newly eligible for Medicare in 2026 not buy Plan F?
- When must the LTC outline of coverage be delivered in an agent sale?
- List three of the ACA's ten essential health benefits.
- What is capitation?
Go deeper on these
- Texas health insurance mandates, Medicare supplements and the ACA
- Texas HMO rules for the life and health exam