Health Insurance Basics & Individual Policies: TX-LH practice questions

Health Insurance Basics & Individual Policies TX-LH-06-423

David recently moved to Texas and enrolled in a new health insurance plan. He learns that for his plan, he must select a Primary Care Physician (PCP) from a specific network, and all specialist visits require a referral from his PCP. If he goes to an out-of-network provider on his own, the services will not be covered at all, except in emergencies. What type of managed care plan does David most likely have?

Exclusive Provider Organization (EPO) Point of Service (POS) Health Maintenance Organization (HMO) Preferred Provider Organization (PPO)

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The answer is C: Health Maintenance Organization (HMO)

David's plan features, such as requiring a PCP, needing referrals for specialists, and having no coverage for out-of-network care he seeks on his own (except emergencies), are characteristic of a Health Maintenance Organization (HMO). A Texas HMO must still approve and pay for a referral to a non-network provider when a medically necessary covered service is not available in its network (Insurance Code §1271.055). PPOs offer more flexibility to see out-of-network providers (though at a higher cost). POS plans combine aspects of HMOs and PPOs, allowing out-of-network care with referrals. EPOs are similar to HMOs in network restriction but may not always require a PCP or referrals for specialists within the network.

Source: Insurance Code §1271.055

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Health Insurance Basics & Individual Policies TX-LH-06-441

Patricia enrolls in a managed care plan in Houston. The plan covers only in-network providers, except in emergencies or when no network provider offers a medically necessary service, but she does not have to choose a primary care physician and can see in-network specialists without a referral. Which managed care arrangement most closely matches Patricia's plan?

EPO HMO Indemnity PPO

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The answer is A: EPO

An Exclusive Provider Organization (EPO) limits coverage to in-network providers like an HMO, paying out of network generally only in an emergency or when a medically necessary service is not available from a network provider (Insurance Code §§1301.0052, 1301.0053). Like a PPO, it usually does NOT require a PCP or referrals to see specialists. PPOs allow out-of-network coverage. HMOs require both a PCP and referrals. Indemnity plans have no network restrictions.

Source: Insurance Code §1301.0052

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Health Insurance Basics & Individual Policies TX-LH-06-443

Rebecca's employer offers an HMO with a low monthly premium and very low copays for in-network care. Rebecca lives in a rural part of Texas where the HMO network is limited. Which characteristic of an HMO should she most carefully evaluate before enrolling?

Whether the HMO uses fee-for-service reimbursement Whether the HMO has guaranteed renewability Whether her preferred doctors are in-network Whether the HMO offers a Health Savings Account

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The answer is C: Whether her preferred doctors are in-network

An HMO generally covers only in-network care, except in emergencies. A Texas HMO must also, at a network doctor's request, allow a referral to a non-network provider and fully reimburse it when a medically necessary covered service isn't available in its network (Insurance Code §1271.055), but that rule doesn't reach an out-of-network doctor she simply prefers when the network offers the care. If her preferred or local doctors are not in the network, she will usually have to switch providers or pay for that care herself. HMOs typically use capitation, not fee-for-service. HSA eligibility depends on HDHP coverage, whatever the network type, so it is not an HMO trait to weigh. Renewability is a separate issue.

Source: Insurance Code §1271.055

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Health Insurance Basics & Individual Policies TX-LH-06-480

Wendy's HMO plan denies coverage for an out-of-state ER visit she had during a weekend trip to Colorado. She incurred the visit because of a sudden severe allergic reaction. What is the most likely outcome under typical HMO rules?

On appeal, it should be covered because emergencies are an exception. Wendy is responsible for the entire cost regardless of circumstances. The denial stands — HMOs never cover out-of-network care. Coverage requires advance approval from the PCP, even for emergencies.

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The answer is A: On appeal, it should be covered because emergencies are an exception.

HMOs generally do not cover out-of-network care — except for emergencies. A sudden severe allergic reaction is a textbook emergency, and HMO plans (and federal law) generally require coverage of emergency services regardless of network status. Wendy should appeal the denial.

Reviewed in our October 2026 Texas fact-check.

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Health Insurance Basics & Individual Policies

Why not ?

Why not ?

Rebecca's employer offers an HMO with a low monthly premium and very low copays for in-network care. Rebecca lives in a rural part of Texas where the HMO network is limited. Which characteristic of an HMO should she most carefully evaluate before enrolling?

Why not ?

Wendy's HMO plan denies coverage for an out-of-state ER visit she had during a weekend trip to Colorado. She incurred the visit because of a sudden severe allergic reaction. What is the most likely outcome under typical HMO rules?

Why not ?

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