Texas Life & Health: Health Insurance Basics & Individual Policies

Correct

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

Correct

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

Correct

The answer is C: Dread disease policies cover only one or a few named diseases, often cancer.

A dread disease (or specified disease) policy provides coverage for only one specific disease or a very limited list of diseases — most commonly cancer. A critical illness policy is broader, covering a larger list of named conditions (heart attack, stroke, kidney failure, organ transplant, etc.). Both are limited benefit policies and not substitutes for major medical.

Reviewed in our October 2026 Texas fact-check.

Correct

The answer is B: No — a concussion is not a listed covered condition.

Critical illness policies only pay benefits when the insured is diagnosed with one of the SPECIFICALLY LISTED covered conditions. A concussion is not among the covered conditions in Felipe's policy, so no benefit is paid. Critical illness policies are narrowly defined — buyers must read the schedule of covered illnesses carefully.

Reviewed in our October 2026 Texas fact-check.

Correct

The answer is A: Major medical pays the bills; disability replaces part of her income.

Major medical insurance covers medical expenses (hospital bills, surgery, treatment). Disability income insurance replaces a portion of lost income when the insured is unable to work due to illness or injury, after the elimination period is satisfied. They serve different functions and do not overlap.

Reviewed in our October 2026 Texas fact-check.