Life and Health Insurance · Texas statutes and rules pertinent to health maintenance organizations · 10 min read
Texas HMOs: evidence of coverage, enrollment, cancellation and claims
- Identify the mandatory elements, filing standards, and cost-sharing rules for a Texas health maintenance organization evidence of coverage.
- Determine the enrollment, dependency, and child coverage requirements under Texas law, including medical support orders and newborn provisions.
- Apply Texas regulatory notice periods and conditions for contract cancellation and discontinuation of individual coverage, and the deadline for HMO poststabilization care decisions.
HMO Definitions and the Evidence of Coverage
A health maintenance organization (HMO) arranges for or provides a health care plan, limited health care service plan, or single health care service plan to enrollees on a prepaid basis (Tex. Ins. Code §843.002(14)). A health care plan provides or arranges for health care services on a prepaid basis through insurance or otherwise, as distinguished from indemnity (Tex. Ins. Code §843.002(12)). An HMO delivery network arranges for these services directly or indirectly through contracts and subcontracts with physicians and providers (Tex. Ins. Code §843.002(15)). When compensation to a physician or provider uses a predetermined payment per enrollee for a specified period without regard to the quantity of services provided, that payment method is capitation (Tex. Ins. Code §843.002(4)).
Under Texas law, each enrollee residing in Texas is entitled to an evidence of coverage under a health care plan (Tex. Ins. Code §1271.002(a)). An enrollee is an individual enrolled in a health care plan, including covered dependents (Tex. Ins. Code §843.002(8)). An evidence of coverage is any certificate, agreement, or contract, including a blended contract, issued to an enrollee stating the coverage to which the enrollee is entitled (Tex. Ins. Code §843.002(9)). A blended contract is a single document providing a combination of indemnity and health maintenance organization benefits, including a single policy, certificate, or evidence of coverage (Tex. Ins. Code §843.002(3)). It is vital to note that an evidence of coverage is not a health insurance policy as defined by the Texas Insurance Code (Tex. Ins. Code §1271.003).
Before an evidence of coverage or amendment may be issued, delivered, or used in Texas, it must be filed for review and approved by the commissioner (28 TAC §11.501(a)). Forms considered part of the evidence of coverage include group agreements, subscriber certificates, applications, riders, endorsements, and schedules of benefits (28 TAC §11.501(a)). Each evidence of coverage form must have a unique form number and be individually approved by the commissioner before being issued, delivered, or used in Texas (28 TAC §11.501(b)). For matrix filings, the filing fee is $100 per individual evidence of coverage provision, up to a maximum fee of $500 (28 TAC §11.501(c)).
An evidence of coverage may be delivered electronically by agreement between the HMO, insurer, or group hospital service corporation and the subscriber or person entitled to receive it (Tex. Ins. Code §1271.002(d)). However, an HMO delivering an evidence of coverage electronically must provide a paper copy on request (28 TAC §11.506(a)). The toll-free telephone number for information and complaints must appear on the face page of the contract or certificate (28 TAC §11.506(b)(1)). The face page of an agreement is the first page containing written material, or the first page inside the cover for booklets (28 TAC §11.506(b)(1)(A)-(B)).
Common mistakes
- Believing that an expression of dissatisfaction regarding medical necessity is handled as a standard HMO complaint. A provider's or enrollee's expression of dissatisfaction or disagreement with an adverse determination is excluded from the definition of a complaint, but dissatisfaction with procedures for its review or appeal is included (Tex. Ins. Code §843.002(6)).
- Assuming that an HMO can cancel a child's coverage when the parent moves out of the service area if that child is covered under a medical support order. Texas rules prohibit cancelling a child subject to a medical support order because the child does not reside, live, or work in the service area, and permit such a child to reside anywhere in the United States (28 TAC §11.506(b)(3)(A)(v), (b)(8)(A)(iv)).
- Thinking an agent can alter an HMO contract to fit a client's situation. Texas rules state that no agent has the authority to change an HMO contract form or waive any of its provisions (28 TAC §11.506(b)(10)).
- Confusing the notice timelines for market withdrawals. Withdrawing a specific product line requires 90 days written notice to enrollees, whereas completely discontinuing all individual basic health care coverage requires 180 days written notice to the commissioner and enrollees, along with a 5-year market lockout (28 TAC §11.506(b)(3)(D)(v)-(vi)).
Key points
- An evidence of coverage is issued to an enrollee under a prepaid health care plan and is not considered a health insurance policy under the Texas Insurance Code (Tex. Ins. Code §843.002(9), §1271.003).
- Basic HMO copayments cannot exceed 50% of the cost of services, annual copayments are capped at 200% of the annual premium, and in-network deductibles are barred except in consumer choice benefit plans (28 TAC §11.506(b)(2)(A)-(B)).
- If children are eligible under an evidence of coverage, the stated limiting age for an unmarried child, including an unmarried grandchild, is 25; an HMO may provide benefits to a dependent grandchild living in the enrollee's household. Newborns are covered for the initial 31 days, with 31 days to give notice, and a child whose coverage is required by a medical support order may live anywhere in the United States (Tex. Ins. Code §1271.006(a)-(b); 28 TAC §11.506(b)(8)(A)(iv), (D)(v)).
- Cancellations require specific notice: at least 30 days for non-premium nonpayment or geographic moves, and at least 15 days for fraud; nonpayment of premium on individual contracts can occur without written notice after the 30-day grace period (28 TAC §11.506(b)(3)(A)-(D), 28 TAC §11.506(b)(12)).
- Discontinuing a particular type of individual coverage in a service area requires 90 days' written notice; discontinuing all individual basic health care coverage there requires 180 days' written notice and prevents the HMO from re-entering that service area's individual market for five years (28 TAC §11.506(b)(3)(D)(v)-(vi)).
- HMOs must approve or deny requested poststabilization care within the time appropriate to the circumstances, never more than one hour after the request; the emergency-care definition uses a prudent-layperson standard, and an HMO must include the specified balance-billing notice in an explanation of benefits connected to a service or supply from a non-network physician or provider (Tex. Ins. Code §843.002(7), §1271.008(a); 28 TAC §11.506(b)(9)(E)(ii)).
The full lesson continues with 4 more sections with exam tips, audio in English and Spanish and 5 Check yourself questions.
- 1 month
$53.99$26.99 - 3 months
$158.99$79.49 - Lifetime
$323.99$161.99
One payment, no subscription.
See Life and Health plansAlready a member? Log in
25 practice questions on this exam
Each Life and Health practice test has 25 original questions with the answers explained. No account needed.
Open the Life and Health practice testsOriginal lesson written for Life and Health Insurance practice · updated October 31, 2026. Exam names are trademarks of their owners; tests.global is not affiliated with them.