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Texas Health Insurance and HMO Law: Practice Questions

20 free practice questions with explanations. Pick an answer for each, then check your score.

Exam weight: 10 of 30 Texas questions (7 health, 3 HMO) on the Texas state-law portion of the Life and Health agent exam. Updated 2026-11-04.

Quick study guide

About 10 Texas questions come from this area: roughly 7 on health insurance and 3 on HMOs.

Required benefits

Newborns: a plan that covers maternity or additional newborn children can't exclude or limit a newborn's initial coverage before the 61st day after birth, or exclude congenital defects (TIC 1367.003). S.B. 896 (2025) set the 61-day period for plans issued or renewed on or after January 1, 2026 (older material and 28 TAC 3.3403 still say 31). Employer plans may end a newborn's coverage on day 61 unless they receive notice of the birth and any extra premium by day 60. Chemical dependency: group health plans must cover it no less favorably than physical illness, with the same deductibles and coinsurance (TIC 1368.005); individual policies are exempt. In the state employees' program, a dependent includes a spouse and an unmarried child under 26 (TIC 1551.004).

Medicare supplement and long-term care

Rule	Medicare supplement	Long-term care
Renewal	Guaranteed renewable; cancel only for nonpayment or material misrepresentation	At least guaranteed renewable
Free look	30 days	30 days (or more if the policy allows)
Key paperwork	Replacement notice signed by applicant and agent	Outline of coverage before the application is presented

A Medigap policy replacing one in force for at least six months can't start a new preexisting-condition or waiting period. Written notice of a positive HIV test goes to a physician the applicant names, or else the state health department.

Small groups and the ACA

A small employer has 2 to 50 employees (TIC 1501.002). Participation is usually 75% of eligible employees, rounded down; a two-employee group needs 100% (28 TAC 26.8). Texas uses the federally run Marketplace, HealthCare.gov, because Texas didn't set up its own exchange (ACA section 1321). Cost-sharing reductions come only with a Silver plan. The 10 essential health benefits include mental health and substance use disorder services, preventive care and pediatric oral and vision care, but not adult dental. Employers must tell new hires about the Marketplace.

HMOs

An HMO provides or arranges care on a prepaid basis; its evidence of coverage is the document issued to an enrollee stating the coverage (TIC 843.002). It may cancel only for nonpayment or reasons the commissioner's rules allow (TIC 843.208): 15 days' written notice for fraud, 30 days if the enrollee doesn't live or work in the service area, and a grace period of at least 30 days (28 TAC 11.506). An assigned primary care physician must be in the zip code nearest the enrollee's home or work (TIC 843.315(e)). If a covered service isn't available in network, the HMO must process a referral within five business days and pay at the in-network level (28 TAC 11.1611).

Practice questions

A Texas health benefit plan that covers newborn children is renewed on March 1, 2026. Under the current Texas Insurance Code, the plan may NOT exclude or limit a newborn's initial coverage before:
1. A.The 15th day after birth
2. B.The child's first birthday
3. C.The 31st day after birth
4. D.The 61st day after birth
Show answer
Answer: D. TIC 1367.003, as amended by S.B. 896 (2025), bars a plan that covers maternity or additional newborn children from excluding or limiting initial coverage before the 61st day after birth, or excluding congenital defects. The change applies to plans delivered, issued or renewed on or after January 1, 2026. The old figure was 31 days, which still appears in 28 TAC 3.3403 and older study material, but the statute controls.
Source: Texas content outline III.A.1; Texas Insurance Code § 1367.003; S.B. 896 (89th Legislature, 2025), enrolled text; 28 TAC § 3.3403
Under the Texas Employees Group Benefits Act definition in TIC 1551.004, which person qualifies as a dependent of a participating employee?
1. A.The employee's 30-year-old brother who lives with the employee
2. B.The employee's unmarried 24-year-old daughter
3. C.The employee's married 22-year-old son
4. D.The employee's healthy 28-year-old stepson
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Answer: B. TIC 1551.004 defines a dependent as the employee's spouse, an unmarried child younger than 26, a child of any age who is mentally or physically incapacitated and dependent on the employee, and certain wards. The married son fails the unmarried test, the healthy 28-year-old is over the age limit, and a brother is not a child.
Source: Texas content outline III.A.2; Texas Insurance Code § 1551.004
A Texas employer's insured group health plan covers chemical dependency treatment. Under TIC 1368.005, that coverage generally must:
1. A.Be limited to outpatient counseling
2. B.Have a deductible at least double the deductible for physical illness
3. C.Be no less favorable than coverage for physical illness, with the same deductibles and coinsurance
4. D.Be offered only as an optional rider at extra cost
Show answer
Answer: C. TIC 1368.004 requires group health benefit plans to cover necessary care and treatment of chemical dependency, and 1368.005 says that coverage may not be less favorable than coverage for physical illness generally, with the same durational limits, dollar limits, deductibles and coinsurance. The chapter applies to group plans; individual policies are exempt under 1368.003.
Source: Texas content outline III.A.3; Texas Insurance Code § 1368.005; Texas Insurance Code § 1368.003 (exceptions)
A Texas Medicare supplement insured has paid every premium on time. Her health has worsened sharply. Under 28 TAC 3.3306, the insurer may cancel or refuse to renew her policy only for:
1. A.Any reason, with 31 days' written notice
2. B.Deterioration of health or high claims
3. C.Nonpayment of premium or material misrepresentation
4. D.Reaching age 85
Show answer
Answer: C. Texas rules require every Medicare supplement policy to be guaranteed renewable: the issuer may not cancel or nonrenew solely because of health status, and may do so only for nonpayment of premium or material misrepresentation. Age and claims experience are not allowed grounds, and notice alone does not create a right to cancel.
Source: Texas content outline III.B.2; 28 TAC § 3.3306 (minimum benefit standards)
A Texas Medicare supplement policy is delivered on June 1. Under 28 TAC 3.3308, the policyholder may return it for a full premium refund if not satisfied for any reason within:
1. A.10 days of delivery
2. B.30 days of delivery
3. C.60 days of delivery
4. D.20 days of delivery
Show answer
Answer: B. 28 TAC 3.3308 requires a notice on or attached to the first page of a Medicare supplement policy saying the policyholder may return it within 30 days of delivery and have the premium refunded if not satisfied for any reason. Don't confuse it with the shorter free-look periods some other policies have.
Source: Texas content outline III.B.1; 28 TAC § 3.3308 (required disclosure provisions)
A client's Medicare supplement policy has been in force for two years. An agent replaces it with another insurer's Medicare supplement policy. Under Texas rules, the new policy:
1. A.May impose a waiting period only for conditions treated in the past year
2. B.May impose a new six-month preexisting-condition period
3. C.Must be issued without a replacement notice
4. D.May not impose any preexisting-condition, waiting, elimination or probationary period
Show answer
Answer: D. Under 28 TAC 3.3306, when a Medicare supplement policy replaces one that has been in effect for at least six months, the replacing policy may not apply any preexisting-condition, waiting, elimination or probationary period. Under 28 TAC 3.3309 the agent must also give the applicant a replacement notice before the policy is issued, signed by applicant and agent, with a signed copy kept by the insurer.
Source: Texas content outline III.B.1; 28 TAC § 3.3306; 28 TAC § 3.3309 (application forms and replacement coverage)
A life insurer's HIV test for a Texas applicant is confirmed positive. The applicant did not name a physician to receive results. Under 28 TAC 21.704, the insurer must give written notice of the positive result to:
1. A.The state health department
2. B.The applicant's beneficiary
3. C.The agent who took the application
4. D.The applicant's employer
Show answer
Answer: A. HIV test results are confidential. The rule requires written notice of a positive result to go to a physician the applicant designates or, if none is designated, to the state health department (the rule still uses its old name, the Texas Department of Health), so the applicant can be told as the law requires. Employers, agents and beneficiaries are not among the people an insurer may tell.
Source: Texas content outline III.C; 28 TAC § 21.704
Under 28 TAC 3.3822, the renewal provision of a long-term care policy issued in Texas must be at least as favorable as:
1. A.Optionally renewable
2. B.Cancelable at the insurer's option
3. C.Guaranteed renewable
4. D.Conditionally renewable
Show answer
Answer: C. Texas bars long-term care policies with renewal terms less favorable to the policyholder than guaranteed renewable or noncancelable. Guaranteed renewable lets the insurer raise premiums by class but not cancel; noncancelable also fixes the premium. Optionally or conditionally renewable policies would let the insurer drop the insured, which the rule doesn't allow.
Source: Texas content outline III.D; 28 TAC § 3.3822
An agent is meeting a client to sell an individual long-term care policy in Texas. Under 28 TAC 3.3832, when must the agent deliver the outline of coverage?
1. A.Within 30 days after the policy is issued
2. B.Before presenting the application
3. C.With the policy at delivery
4. D.Only if the client asks for it
Show answer
Answer: B. For agent solicitations, the long-term care outline of coverage must be delivered before the application or enrollment form is presented; for direct-response sales it goes with the application. It must be a freestanding document with no advertising, and it explains the right to return the policy within 30 days for a full refund.
Source: Texas content outline III.D; 28 TAC § 3.3832
A Texas small employer has five eligible employees, and the carrier uses the standard 75% participation requirement. Under 28 TAC 26.8, how many eligible employees must enroll?
1. A.Three
2. B.Five
3. C.Four
4. D.Two
Show answer
Answer: A. Coverage is available if at least 75% of eligible employees participate (TIC 1501.154), and 28 TAC 26.8 says a fractional result is rounded down: 75% of five is 3.75, so three is enough. A small employer with only two eligible employees must have 100% participation. A small employer is one with 2 to 50 employees (TIC 1501.002).
Source: Texas content outline III.E.1; 28 TAC § 26.8; Texas Insurance Code § 1501.154
Why do Texas residents shop for individual coverage on HealthCare.gov rather than a state-run exchange?
1. A.Only employers may buy through a state-run exchange.
2. B.Under ACA section 1321, the federal government runs the exchange in a state that doesn't set up its own, and Texas didn't.
3. C.The Texas Department of Insurance operates HealthCare.gov.
4. D.Texas law bans individual health insurance sold outside the Marketplace.
Show answer
Answer: B. ACA section 1321 (42 U.S.C. 18041(c)) directs the Secretary of Health and Human Services to establish and operate the exchange in any state that does not elect to run its own. The Texas Department of Insurance points Texans to the federal marketplace at HealthCare.gov. Individual plans can still be bought directly from insurers, but premium tax credits require buying through the marketplace.
Source: Texas content outline III.F.1; 42 U.S.C. § 18041 (ACA § 1321); Texas Department of Insurance: Health care coverage guide
A Marketplace applicant qualifies for both a premium tax credit and cost-sharing reductions. She wants the lower deductible and copays that cost-sharing reductions provide. Which plan must she choose?
1. A.Any Bronze plan
2. B.A Silver plan
3. C.A Gold plan
4. D.A Catastrophic plan
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Answer: B. Cost-sharing reductions under ACA section 1402 (42 U.S.C. 18071) apply only to Silver plans bought through an exchange. She can use her premium tax credit with a Bronze or Gold plan, but she would lose the extra savings on deductibles, copays and coinsurance.
Source: Texas content outline III.F.2; HealthCare.gov: Cost-sharing reductions; 42 U.S.C. § 18071 (ACA § 1402)
Which benefit is one of the ACA's essential health benefits that Marketplace plans must cover?
1. A.Routine dental care for adults
2. B.Oral and vision care for children
3. C.Eyeglasses for adults
4. D.Custodial nursing home care
Show answer
Answer: B. ACA section 1302 (42 U.S.C. 18022) lists 10 categories of essential health benefits, including mental health and substance use disorder services, preventive and wellness services, and pediatric services including oral and vision care. HealthCare.gov notes that adult dental and vision coverage are not essential health benefits, and custodial long-term care isn't on the list.
Source: Texas content outline III.F.3; 42 U.S.C. § 18022 (ACA § 1302); HealthCare.gov: What Marketplace health insurance plans cover
Under the ACA's employer notice rule (Fair Labor Standards Act section 18B), what must a covered employer give each new employee when hired?
1. A.A free Silver plan through the Marketplace
2. B.A copy of the insurer's annual statement
3. C.A COBRA election form
4. D.A written notice about the Marketplace, possible premium tax credit eligibility and possible loss of the employer contribution
Show answer
Answer: D. 29 U.S.C. 218b requires covered employers to give each employee written notice at the time of hiring that explains the exchange and how to contact it, that the employee may qualify for a premium tax credit if the employer plan pays less than 60% of allowed costs, and that buying through the exchange may mean losing the employer contribution. COBRA notices are a separate requirement triggered by a qualifying event.
Source: Texas content outline III.F.4; 29 U.S.C. § 218b (notice to employees)
Under TIC 843.002, what distinguishes a health maintenance organization from a traditional indemnity insurer?
1. A.It reimburses members for any provider they choose, with no network.
2. B.It is exempt from regulation by the Texas Department of Insurance.
3. C.It arranges for or provides health care services to enrollees on a prepaid basis.
4. D.It may only cover hospital stays.
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Answer: C. The Texas HMO Act defines an HMO as a person who arranges for or provides a health care plan to enrollees on a prepaid basis, and defines a health care plan as providing or arranging for services on a prepaid basis, as distinguished from indemnifying for their cost. HMOs work through a delivery network, cover more than hospital care and are regulated by the Texas Department of Insurance.
Source: Texas content outline IV.A; Texas Insurance Code § 843.002
In Texas HMO law, the certificate, agreement or contract issued to an enrollee that states the coverage the enrollee is entitled to is called the:
1. A.Certificate of authority
2. B.Outline of coverage
3. C.Summary plan description
4. D.Evidence of coverage
Show answer
Answer: D. TIC 843.002 defines evidence of coverage this way. Under 28 TAC 11.501 an evidence of coverage, including its applications and riders, can't be used in Texas until the commissioner approves it, and each Texas enrollee is entitled to one, electronically or on paper by request (28 TAC 11.506). A certificate of authority is the HMO's license to operate, not a coverage document.
Source: Texas content outline IV.B; Texas Insurance Code § 843.002; 28 TAC § 11.501
A Texas HMO finds that a group enrollee committed fraud in the use of services. Under 28 TAC 11.506, the HMO may cancel the enrollee's coverage after giving at least:
1. A.No notice at all
2. B.15 days' written notice
3. C.60 days' written notice
4. D.90 days' written notice
Show answer
Answer: B. TIC 843.208 lets an HMO cancel or nonrenew only for failure to pay or another reason in the commissioner's rules. 28 TAC 11.506 allows cancellation for fraud or fraud in the use of services after at least 15 days' written notice, and after 30 days' notice if the enrollee doesn't live, work or reside in the service area. Health status is never a permitted reason.
Source: Texas content outline IV.C; Texas Insurance Code § 843.208; 28 TAC § 11.506
A Texas HMO enrollee with individual coverage misses a monthly premium due several months after the first payment. Under 28 TAC 11.506, what happens?
1. A.Coverage ends the day the premium is missed.
2. B.The HMO may cancel only after giving 60 days' written notice.
3. C.The HMO must keep coverage in force for 90 days and may not charge for late payment.
4. D.Coverage stays in effect during a grace period of at least 30 days; if the premium still isn't paid, coverage may be canceled after the 30th day.
Show answer
Answer: D. Texas HMO contracts must include a grace period of at least 30 days for any premium after the first, during which coverage remains in effect, and the HMO may add a late-payment charge. If payment isn't received, coverage may be canceled after the 30th day, and the enrollee can be held liable for services received during the grace period if the contract discloses this. For nonpayment of an individual contract, no extra written notice is required.
Source: Texas content outline IV.C; 28 TAC § 11.506; Texas Insurance Code § 843.208
A Texas HMO enrollee doesn't choose a primary care physician at enrollment, so the HMO assigns one. Under TIC 843.315(e), the assigned physician must be located:
1. A.Within the zip code nearest the enrollee's residence or place of employment
2. B.Within 100 miles of the HMO's home office
3. C.In the county where the employer is headquartered
4. D.Anywhere in the HMO's statewide network
Show answer
Answer: A. TIC 843.315(e) requires an assigned primary care physician or provider to be in the zip code nearest the enrollee's home or workplace. The HMO must tell the enrollee who was assigned and that the enrollee may choose a different one, and the enrollee may reject the assignment at any time.
Source: Texas content outline IV.D; Texas Insurance Code § 843.315
A Texas HMO enrollee needs a medically necessary covered specialist service that no network provider can deliver within network adequacy standards. Her network doctor requests a referral. Under 28 TAC 11.1611, the HMO must:
1. A.Require her to switch to a PPO plan
2. B.Pay only 50% of the out-of-network charge
3. C.Process the referral within five business days of receiving the documentation and cover the care at the in-network benefit level
4. D.Deny the request because the service is out of network
Show answer
Answer: C. When medically necessary covered services aren't available in the network, the HMO must, at a network provider's request, process the referral within the time the circumstances require, never more than five business days after receiving reasonably requested documentation. The care is covered at the same benefit level as network care, and the HMO must help her find a provider who won't bill more than her cost-sharing (TIC 1271.055).
Source: Texas content outline IV.E; 28 TAC § 11.1611; Texas Insurance Code § 1271.055

Where these questions come from: Texas content outline (Pearson VUE #124401, effective 1 Sep 2026), Life and Health agent state-specific content, sections III: Texas statutes and rules pertinent to accident and health insurance only, and IV: Texas statutes and rules pertinent to health maintenance organizations (HMOs). See how we write questions.