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Texas Health Insurance Exam Study Guide — Transcript

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0:00Welcome to the Texas State Specific
0:01Health Insurance Exam Study Guide from
0:04My Insurance Guide. This audio guide was
0:06created specifically to help you prepare
0:09for the Texas portion of your health
0:10insurance licensing exam, and it is
0:13designed to be beginner-friendly.
0:15Whether this is your very first time
0:17studying insurance or you are just
0:19wrapping up your national content, you
0:22are in the right place.
0:23Before we dive in, let's talk about how
0:26the Texas licensing exam actually works
0:29because understanding the structure of
0:30the exam before you sit down to take it
0:33can make a big difference.
0:35The Texas health insurance exam is made
0:38up of two types of questions.
0:40The first type covers general insurance
0:42knowledge,
0:43the national content that applies no
0:46matter what state you are in.
0:48The second type covers Texas specific
0:50laws, rules, and regulations. Here is
0:53something that trips a lot of people up.
0:55Those two types of questions are not
0:57separated into two different sections on
0:59the exam. They are mixed together
1:01throughout the entire test. So, as you
1:04are sitting there taking the exam, you
1:06will not always know whether the
1:07question in front of you is a national
1:09question or a Texas specific one. That
1:12means you need to be equally prepared
1:15for both.
1:16Now, let's talk about your score. To
1:18pass the Texas exam, you need to earn a
1:20scaled score of 70 or higher.
1:23You might be thinking, "Okay, that
1:25sounds like 70%." But, it is actually a
1:28little more specific than that. Texas
1:31uses what is called scaled scoring,
1:33which means the exam takes into account
1:36the difficulty level of the particular
1:38version of the test you received. Not
1:40every version of the exam is identical,
1:43and scaled scoring makes sure that no
1:45one is unfairly penalized for getting a
1:47harder set of questions. So, rather than
1:49just counting how many you got right,
1:52the scoring system adjusts based on the
1:54difficulty of your specific exam. The
1:56bottom line is that you need to aim to
1:58truly know the material, not just scrape
2:01by.
2:02Let's talk about how many questions you
2:04will actually see on the state-specific
2:06portion. If you are testing on the life
2:08and health combined track, there are 30
2:11scoreable state-specific questions on
2:13your exam, plus five additional pretest
2:16questions for a total of 35 state
2:19questions.
2:20If you are testing on the health only
2:21track, there are 25 scoreable
2:24state-specific questions, plus those
2:26same five pretest questions, for a total
2:29of 30.
2:30Here is something important to
2:31understand about those five pretest
2:33questions.
2:34They are not scored. They do not count
2:37toward your final result at all.
2:39Pearson VUE includes them to test out
2:41potential future exam questions, but
2:44here is the catch. You will have
2:46absolutely no way of knowing which
2:49questions are the pretest questions and
2:52which ones are the real scored
2:53questions.
2:55They look exactly the same. So, the only
2:57smart approach is to treat every single
3:00question as if it counts, because as far
3:03as you know, it does.
3:05One last thought before we get into the
3:07content, you will notice as you listen
3:09through this guide that we call out
3:11specific numbers, time frames, and
3:13definitions very deliberately.
3:16That is intentional. The Texas state
3:18exam is heavily focused on those
3:20details. Things like how many days an
3:23agent has to report a change of address,
3:25or exactly how long a grace period
3:27lasts, depending on how a premium is
3:29paid.
3:30Those kinds of specific numbers show up
3:32on the exam constantly, and we are going
3:35to make sure you know every single one
3:37of them. Every time you hear a specific
3:39number or deadline in this guide, make a
3:42note of it.
3:43Those are the details that separate
3:44people who pass from people who have to
3:47come back and try again.
3:49Let's get started. Chapter 1. The Texas
3:52Commissioner of Insurance. Let's start
3:55with the person who runs the show when
3:56it comes to insurance regulation in
3:58Texas.
3:59That person is the Texas Commissioner of
4:02Insurance.
4:03The Commissioner is the head of the
4:05Texas Department of Insurance, which is
4:07also referred to throughout this guide
4:09simply as TDI.
4:11Think of the Commissioner as the top law
4:13enforcement officer specifically for the
4:15insurance industry in Texas.
4:18Their job is to make sure that insurance
4:20companies and agents are following the
4:21rules, that the marketplace is operating
4:24fairly, and that consumers, meaning the
4:27people buying insurance, are protected.
4:30The Commissioner's authority comes from
4:32the Texas Insurance Code, which is the
4:34body of law that governs everything
4:36related to insurance in the state of
4:38Texas.
4:39When you hear the phrase Texas Insurance
4:41Code throughout this guide, just know it
4:44means the official rulebook that every
4:46insurer and agent in Texas is required
4:49to follow.
4:50One of the most important powers the
4:52Commissioner has is the authority to
4:54examine the books and records of any
4:56insurance carrier doing business in
4:58Texas.
4:59The word carrier here just means an
5:01insurance company.
5:03So, if TDI wants to look at an insurance
5:05company's financial records to make sure
5:07they are in good shape and following the
5:10law, they have the legal authority to do
5:12that.
5:13This examination power exists to protect
5:16consumers.
5:17If an insurance company is in financial
5:19trouble, TDI needs to know about it
5:22before that company starts failing to
5:24pay claims.
5:25The Commissioner also has the power to
5:27investigate complaints.
5:29If a consumer files a complaint against
5:31an insurance company or an agent, TDI
5:34can open an investigation to look into
5:36it.
5:37Now, if that investigation leads to a
5:40formal hearing, meaning an official
5:42legal proceeding, the Commissioner
5:44cannot just surprise the company or
5:46agent with one.
5:48Proper written notice must be provided
5:50before any formal hearing takes place.
5:53This protects everyone's right to due
5:55process, which just means the right to
5:57know what you are being accused of and
5:59to have a fair chance to respond.
6:02If the commissioner finds that an
6:03insurer or agent has violated the Texas
6:06Insurance Code, they have the power to
6:08impose what are called administrative
6:10penalties.
6:11An administrative penalty is essentially
6:14a fine. It is a financial consequence
6:16that the commissioner can require
6:18someone to pay for breaking the rules.
6:21Finally, the commissioner can issue what
6:23is called a cease and desist order. The
6:26phrase cease and desist simply means
6:28stop what you are doing. If an insurance
6:31company or an agent is engaged in
6:33conduct that violates Texas law, the
6:35commissioner can issue an official legal
6:37order requiring them to stop
6:39immediately.
6:40This is one of the more powerful
6:42enforcement tools TDI has because it can
6:45halt unlawful activity right away,
6:47rather than waiting for a lengthy legal
6:49process to play out.
6:51Importantly, when a cease and desist
6:53order is issued, a hearing must also be
6:56scheduled.
6:57This again comes back to due process.
6:59The person or company receiving the
7:01order has the right to a formal
7:03proceeding where they can present their
7:04side of the situation. Chapter 2.
7:08Key insurance definitions under Texas
7:10law.
7:11Before we get into the rules that agents
7:13and insurers must follow, we need to
7:15make sure you understand some
7:17foundational definitions.
7:19Texas law uses specific language that
7:21has very precise legal meanings, and the
7:24exam will test you on those meanings
7:26directly.
7:28Let's go through each one.
7:30The first term is certificate of
7:32authority. A certificate of authority is
7:35the official permission that an
7:36insurance company must receive from TDI
7:39before or is allowed to do business in
7:41Texas.
7:42Think of it like a business license, but
7:44specifically for insurance companies.
7:47Without a certificate of authority, an
7:49insurer cannot legally sell, issue, or
7:52deliver insurance policies in the state
7:54of Texas.
7:56Operating without one is a violation of
7:58the Texas Insurance Code. This is
8:01important to understand because it means
8:03not just any insurance company can come
8:05into Texas and start selling policies.
8:08They have to go through an approval
8:10process first.
8:11Next is the concept of transacting
8:13insurance. This one is worth paying
8:16close attention to because Texas defines
8:18it very broadly.
8:20Under Texas law, transacting insurance
8:23includes any act of soliciting,
8:25negotiating, or effectuating an
8:27insurance contract.
8:29Let's break those words down. Soliciting
8:31means reaching out to someone to try to
8:34get them interested in buying insurance.
8:37Negotiating means working through the
8:39terms of a policy with a potential
8:40buyer.
8:41And effectuating means completing or
8:43finalizing the insurance contract.
8:46If you are doing any one of those three
8:48things, Texas considers you to be
8:50transacting insurance, and that means
8:52you need a license.
8:54This is why it is not enough to just
8:56hand someone a brochure and say you are
8:58only providing information. If your
9:00actions fall into any of those three
9:02categories, you are transacting
9:04insurance under Texas law.
9:07Now, let's talk about how Texas
9:08classifies insurance companies based on
9:10where they are organized. There are
9:12three categories, and the exam loves to
9:15test on these. The first is a domestic
9:18insurer. A domestic insurer is one that
9:20was organized, meaning formed and
9:22incorporated, under the laws of the
9:24state of Texas.
9:26It is a Texas company in the truest
9:28sense. The second is a foreign insurer.
9:32Despite what the word foreign might make
9:34you think, this does not mean a company
9:36from another country. In insurance, a
9:38foreign insurer is one that was
9:40organized under the laws of a different
9:42US state, but is licensed to do business
9:44in Texas. So, a company incorporated in
9:47California that also sells policies in
9:49Texas would be considered a foreign
9:51insurer in Texas.
9:53The third is an alien insurer. An alien
9:56insurer is one that was organized under
9:58the laws of a country other than the
10:00United States.
10:02So, a company based in and incorporated
10:04under the laws of Canada or the United
10:06Kingdom, for example, would be an alien
10:08insurer if it were doing business in
10:10Texas.
10:12Next, let's cover the difference between
10:14stock companies and mutual companies.
10:17Both are types of insurance companies,
10:19but they are owned differently.
10:21A stock insurance company is owned by
10:23shareholders, just like any other
10:25corporation.
10:27Those shareholders invest money into the
10:28company, and in return, they own a piece
10:31of it and may receive dividends if the
10:34company is profitable.
10:36A mutual insurance company, on the other
10:38hand, is owned by its policyholders.
10:41The people who buy insurance from a
10:42mutual company are also, in a sense, the
10:45owners of that company.
10:47Mutual companies may also pay dividends,
10:50but those dividends go back to the
10:52policyholders rather than to outside
10:54investors.
10:55The key difference to remember is simply
10:57who owns the company.
10:59Shareholders for stock companies,
11:01policyholders for mutual companies.
11:04The last definition in this chapter is
11:07fraternal benefit societies.
11:09A fraternal benefit society is a type of
11:11nonprofit organization that is built
11:14around a common bond among its members,
11:16such as a religious affiliation, an
11:19ethnic background, or a professional
11:21association.
11:23These organizations provide
11:24insurance-like benefits to their
11:26members, such as life insurance or
11:28health coverage.
11:30What makes them distinct is that they
11:32are member owned and non-profit, and
11:34they are regulated separately from
11:36traditional insurance companies under
11:38their own section of the Texas Insurance
11:40Code. If you see the phrase Fraternal
11:43Benefit Society on the exam, the key
11:45ideas to associate with it are
11:47non-profit, member owned, and common
11:50bond. Chapter 3, Texas Licensing
11:53Requirements.
11:55Now that you understand who regulates
11:56the insurance industry in Texas and what
11:59some of the key definitions mean, let's
12:01talk about what it actually takes to
12:03become a licensed insurance agent in
12:05Texas and what your ongoing
12:07responsibilities are once you have that
12:10license. There are two main types of
12:12licenses to be aware of. The first is an
12:15agent license. This is the individual
12:17license that a person needs in order to
12:20sell, solicit, or negotiate insurance in
12:23Texas. If you are a human being who
12:25wants to go out and help people buy
12:27insurance policies, this is the license
12:29you need. The second is an agency
12:32license. This is the license required
12:35for a business entity, meaning a
12:37company, a corporation, or a partnership
12:40that wants to transact insurance in
12:42Texas.
12:43So, if you decide to open your own
12:45insurance agency as a business, that
12:47business itself needs its own separate
12:49license in addition to you having your
12:52individual agent license. Now, let's
12:55spend some time on the temporary license
12:57because this is an area the exam tests
12:59on frequently, and there are several
13:01specific details you need to know. A
13:04temporary license is exactly what it
13:06sounds like. A short-term license that
13:09allows someone to begin working as an
13:10insurance agent while they prepare to
13:13get their full permanent license. In
13:15Texas, a temporary license is valid for
13:18180 days. That is your window to pass
13:22the state licensing exam and get your
13:24permanent license in place.
13:26Write that number down, 180 days.
13:30Here is something critically important
13:32about the temporary license. It cannot
13:34be renewed and only one will ever be
13:37issued to you in your lifetime.
13:39You do not get a second chance at a
13:41temporary license. If your 180 days
13:44expire and you have not passed the exam
13:47and obtained your permanent license, you
13:49will need to start the application
13:51process over from scratch.
13:53There is no extension and there is no
13:56renewal.
13:57To get a temporary license, you must
13:59have a sponsoring insurer.
14:01That means an insurance company has to
14:03agree to bring you on, supervise you,
14:06and take responsibility for your
14:08training.
14:09That sponsoring insurer is required to
14:12provide you with at least 40 hours of
14:13training and that training must be
14:16completed within the first 30 days of
14:18your temporary license being issued.
14:21So, not only does the training have to
14:22happen, it has to happen quickly.
14:25Within that first month.
14:27There is one more rule about temporary
14:29licenses that you absolutely need to
14:31know for the exam.
14:33A temporary license holder cannot
14:35receive commissions on what is called
14:37controlled business.
14:39Controlled business refers to insurance
14:41policies sold to your own family members
14:43or close personal associates.
14:46The rule exists to prevent someone from
14:48getting a temporary license purely for
14:50the purpose of writing policies on their
14:52own family and collecting commissions
14:54before fully entering the profession.
14:57So, if you hold a temporary license,
14:59selling policies to people in your
15:01personal circle and earning a commission
15:03on those sales is not allowed. Not
15:06everyone who has any connection to the
15:08insurance industry is required to hold a
15:10license.
15:11Texas law carves out certain exemptions
15:14and exceptions for specific individuals
15:17and specific types of transactions.
15:19The exam may present scenarios where
15:21someone appears to be transacting
15:23insurance, but actually falls under one
15:25of these exemptions.
15:27The key takeaway is simply that
15:29exemptions exist. Not every person
15:31involved in an insurance-related
15:33activity is automatically required to be
15:35licensed.
15:37Once you have your license, there is one
15:39more step before you can actually go out
15:41and sell for a specific insurance
15:43company.
15:44That step is called appointment. Being
15:47licensed gives you the legal authority
15:49to sell insurance in Texas, but before
15:52you can represent a specific insurer,
15:54meaning a specific insurance company,
15:57that company must formally appoint you.
16:00Think of the appointment as the insurer
16:02saying, "We authorize this person to
16:04sell our products."
16:05You cannot transact business on behalf
16:07of an insurer until that appointment is
16:10in place.
16:11If you want to represent multiple
16:13insurance companies, each one must
16:15appoint you individually.
16:17Let's talk about continuing education
16:19because your obligations do not end once
16:21you have your license.
16:23Texas requires licensed agents to
16:25complete 24 credit hours of continuing
16:27education every 2 years. Of those 24
16:31hours, at least three of them must be
16:33specifically focused on ethics.
16:35These requirements exist to make sure
16:37that agents stay current with changes in
16:40the law, new products, and professional
16:42standards.
16:44Failing to complete your continuing
16:45education on time can put your license
16:47at risk.
16:49Agents are also required to maintain
16:51records of their transactions.
16:53This means keeping documentation of the
16:55policies you sell, the applications you
16:58take, and the business you conduct.
17:01TDI has the authority to review these
17:03records, so maintaining them accurately
17:05and keeping them organized is part of
17:07your professional responsibility as a
17:10licensed agent.
17:11Now, let's talk about what can happen to
17:13your license. TDI has the authority to
17:17deny a license application if an
17:19applicant does not meet the requirements
17:21or has something in their background
17:23that raises concerns. Licenses also must
17:26be actively renewed on a required
17:28schedule. If you miss your renewal
17:30deadline, your license lapses, which
17:33means it is no longer valid and you
17:35cannot legally transact insurance until
17:37the situation is resolved. Beyond denial
17:41and expiration, TDI can also take more
17:44serious disciplinary action against a
17:46license.
17:47If an agent violates the Texas Insurance
17:49Code or engages in conduct that makes
17:52them unfit to hold a license, TDI can
17:55suspend the license temporarily, revoke
17:57it entirely, or terminate it. These are
18:01serious consequences and they underscore
18:03why it is so important to conduct
18:05yourself ethically and in full
18:07compliance with Texas law.
18:10Finally, there are certain things that
18:12happen in your personal or professional
18:14life that you are legally required to
18:16report to TDI.
18:18The first is a change of address. If you
18:21move, you must notify TDI within 30
18:24days. That is a specific number, 30
18:27days, and the exam will test it. The
18:30second is a felony conviction. If you
18:33are convicted of a felony, you must
18:35report that to TDI. The third is any
18:38administrative action taken against your
18:40license in any jurisdiction. So, if
18:43another state takes action against your
18:45insurance license or if any other
18:47regulatory body takes a formal action
18:49against you in a professional capacity,
18:52Texas requires you to report that to TDI
18:54as well.
18:56These notification requirements exist so
18:58that TDI always has accurate, up-to-date
19:01information about the people who are
19:03licensed to sell insurance to Texas
19:05consumers. Chapter 4, Marketing
19:08Practices and Unfair and Prohibited
19:10Trade Practices.
19:12This chapter covers one of the most
19:14heavily tested areas on the Texas State
19:16exam.
19:17The terms in this chapter appear on the
19:19exam frequently, and the questions are
19:21often designed to test whether you truly
19:24understand the difference between
19:25similar-sounding concepts.
19:27Do not just skim this section. Take your
19:30time, make sure each definition is clear
19:33in your mind, and pay close attention to
19:35the places where we point out how two
19:37terms differ from each other.
19:39Knowing these definitions cold could be
19:41the difference between passing and not
19:43passing.
19:45Let's go through each one.
19:46The first is unfair claims, methods, and
19:49practices. This refers to improper
19:51behavior by an insurer when handling a
19:53claim. Remember, when a policyholder
19:56files a claim, they are asking the
19:58insurance company to pay a benefit they
20:01are owed under their policy.
20:03Unfair claims practices include things
20:05like unreasonably delaying the
20:07processing of a claim, denying a claim
20:10without a valid reason, or paying out
20:12less than what the policyholder is
20:14actually owed. Again, without a
20:17legitimate justification.
20:19The law exists to make sure that
20:20insurance companies actually do what
20:23they promised to do when someone needs
20:25to use their coverage.
20:27Next is false advertising. This one is
20:29straightforward. False advertising means
20:32making statements in any advertisement
20:34that are materially false or misleading
20:37about a policy or about an insurance
20:39company.
20:40The word materially here is important.
20:42It means the false or misleading
20:44information is significant enough that
20:47it could actually influence someone's
20:49decision about whether to buy a policy.
20:52Putting out advertising that deceives
20:54consumers is a violation of Texas law.
20:57Misrepresentation is related to false
20:59advertising, but it is more personal and
21:02direct. Misrepresentation happens when
21:04an agent misstates the terms, benefits,
21:07or conditions of a policy to a prospect
21:10or to an existing policy holder.
21:13So, where false advertising involves
21:14putting out deceptive information
21:16through ads or marketing materials,
21:19misrepresentation typically happens in a
21:21one-on-one interaction. Like telling a
21:24client that a policy covers something it
21:26actually does not. Or downplaying a
21:29significant exclusion.
21:31Both are prohibited, but the context is
21:33different.
21:34Now, let's talk about defamation. In the
21:37context of insurance, defamation means
21:39making false statements about a
21:41competitor. Meaning another insurance
21:43company or another agent with the intent
21:46to damage their reputation.
21:48The key word here is false.
21:50Sharing an honest, accurate opinion
21:52about a competitor is not defamation.
21:55But making up or spreading lies about a
21:57competing insurer or agent in order to
22:00steer business away from them crosses
22:02the line into a prohibited practice
22:04under Texas law.
22:06This brings us to a concept that is
22:08often confused with defamation, and that
22:10is twisting.
22:12Twisting and defamation are both about
22:14making misleading statements, but they
22:17target completely different people.
22:19Here is the distinction, and this is
22:21important.
22:22Defamation targets a competitor.
22:25Twisting targets a policy holder's own
22:28existing policy.
22:29Twisting happens when an agent makes
22:31misleading comparisons or leaves out
22:34important information about a policy
22:35holder's current policy in order to
22:38convince that person to lapse it,
22:40surrender it, or replace it with a new
22:42one.
22:43Typically a policy the agent will earn a
22:45commission on.
22:46So, if an agent tells a client that
22:48their current policy is terrible or
22:50barely covers anything, and those
22:52statements are exaggerated or outright
22:55false, that agent may be engaging in
22:57twisting.
22:59The motivation is usually financial.
23:02Getting the client to buy a new policy
23:04so the agent earns a new commission.
23:06Twisting is prohibited because it can
23:08cause real financial harm to the policy
23:10holder who may lose valuable benefits
23:13they had built up in their existing
23:14policy.
23:16Next is rebating. Rebating means giving
23:19or offering anything of value to a
23:21person as an incentive to get them to
23:23purchase an insurance policy when that
23:26thing of value is not specified in the
23:28policy itself.
23:30In other words, you cannot offer someone
23:32a gift, a cash kickback, a discount on
23:35something else, or any other special
23:37benefit in exchange for buying a policy
23:39from you.
23:40The policy is the product and the only
23:43things that should come with it are what
23:44is written in the policy.
23:47Rebating may seem harmless, almost like
23:49good customer service, but it is
23:51prohibited because it creates an uneven
23:53playing field and can undermine the
23:56integrity of the marketplace.
23:58Fraud is next and it is one of the most
24:01serious violations on this list.
24:03Insurance fraud means intentionally
24:06misrepresenting or concealing material
24:08facts in connection with an insurance
24:10transaction.
24:12The word intentional is what separates
24:14fraud from an honest mistake.
24:17If an agent knowingly lies about
24:19something significant like hiding a
24:21client's medical history on an
24:23application or falsifying claim
24:25documents
24:27that is fraud.
24:29Fraud can result in criminal charges,
24:31not just administrative penalties,
24:33making it far more serious than most of
24:35the other violations in this chapter.
24:38Boycott, coercion, and intimidation
24:40refer to using pressure, either
24:42individually or in coordination with
24:44others, to force parties in the
24:46insurance marketplace to do business on
24:49certain terms.
24:50For example, if a group of agents agreed
24:52to collectively refuse to work with a
24:54particular insurer unless that insurer
24:57met their demands, that could constitute
24:59a boycott.
25:01Coercion and intimidation involve using
25:03threats or forceful pressure to get
25:06someone to act in a particular way in an
25:08insurance transaction.
25:10All of these behaviors are prohibited
25:12because they interfere with the free and
25:14fair operation of the marketplace.
25:17Commingling is a term that specifically
25:19applies to how an agent handles money.
25:21Commingling means mixing funds that
25:23belong to clients or that represent
25:26insurance premiums with the agent's own
25:28personal funds.
25:30For example, if a client gives you a
25:32premium payment, and instead of
25:34forwarding it to the insurer, you
25:35deposit it into your personal bank
25:37account along with your own money, that
25:40is commingling, even if you fully intend
25:42to pay the insurer later. Mixing those
25:45funds together is a violation.
25:47Agents are required to keep client and
25:49premium funds completely separate from
25:52their own finances at all times.
25:55The last prohibited practice in this
25:56chapter is unfair discrimination.
26:00Discrimination in insurance is not
26:02always illegal.
26:03Insurers are allowed to charge different
26:05premiums based on legitimate risk
26:07factors like age or health status.
26:10What is not allowed is unfair
26:12discrimination, which means treating
26:14insureds differently based on
26:16characteristics that are protected under
26:17Texas law and that are not actually
26:20related to the risk being insured. For
26:22example, an insurer cannot charge
26:25someone a higher premium or deny them
26:27coverage based on their race, religion,
26:29or national origin.
26:31The distinction the exam wants you to
26:33understand is the difference between
26:35legitimate underwriting decisions based
26:37on actual risk and discriminatory
26:39decisions based on characteristics that
26:42have nothing to do with risk.
26:44Take a moment to review these terms in
26:46your mind before moving on.
26:48Unfair claims practices, false
26:51advertising, misrepresentation,
26:53defamation, twisting, rebating, fraud,
26:57boycott, coercion, and intimidation,
26:59commingling, and unfair discrimination.
27:02Each one has a specific meaning, and the
27:05exam will present scenarios designed to
27:07test whether you can identify which
27:09prohibited practice is being described.
27:12The more clearly you understand each
27:14definition, especially the differences
27:16between terms like defamation and
27:18twisting, the better prepared you will
27:20be. Chapter 5.
27:22Agent duties and responsibilities.
27:25Being a licensed insurance agent in
27:27Texas is not just about making sales.
27:30It comes with a set of professional and
27:32legal obligations that you are expected
27:35to uphold every single day.
27:37This chapter covers what Texas law
27:39requires of you as an agent, and
27:41understanding these duties is important
27:44both for the exam and for your career.
27:47The most foundational concept in this
27:48chapter is the idea of a fiduciary duty.
27:52The word fiduciary comes from the Latin
27:53word for trust, and that is exactly what
27:56it means in practice.
27:58As a licensed agent in Texas, you have a
28:00fiduciary duty to two different parties
28:02at the same time.
28:03The first is the insurer, meaning the
28:06insurance company you represent. The
28:08second is the policy holder, meaning the
28:10client who is purchasing the insurance.
28:13Having a fiduciary duty to both parties
28:15means that you are in a position of
28:17trust with both of them simultaneously,
28:19and you are legally and ethically
28:21obligated to act in a way that honors
28:24that trust on both sides.
28:26What does that look like in practice? It
28:28means you must act honestly in all of
28:31your dealings. It means you must be
28:33competent. You need to actually know and
28:36understand the products you are selling
28:38so that you can explain them accurately.
28:41And it means you must act in your
28:42client's best interest.
28:44That last point is especially
28:46significant. Your job is not simply to
28:48sell as many policies as possible.
28:51Your job is to help your clients find
28:53coverage that genuinely meets their
28:55needs.
28:56Recommending a policy that is not
28:58appropriate for a client just because it
29:00pays you a higher commission, for
29:02example, would be a violation of your
29:04duty to act in their best interest.
29:07Now, let's talk about commission sharing
29:09because this is an area where agents
29:11sometimes run into trouble and where the
29:14exam will test your knowledge of a very
29:16specific rule.
29:18Agents in Texas are allowed to share
29:20their commissions with other people, but
29:22only under one condition.
29:24The person they are sharing with must
29:26also be a licensed insurance agent.
29:29That is the rule.
29:30You may share commissions with licensed
29:32agents.
29:33You may not share commissions with
29:35unlicensed individuals under any
29:37circumstances. It does not matter if the
29:39unlicensed person helped you find the
29:41client, referred the business to you, or
29:44assisted with the sale in some way.
29:47If they do not hold a valid insurance
29:49license, sharing a commission with them
29:51is a violation of Texas law.
29:54This rule exists to protect the
29:55integrity of the licensing system and to
29:58ensure that everyone who financially
30:00benefits from the sale of insurance is
30:02properly licensed and accountable.
30:04Chapter 6, The Texas Life and Health
30:07Insurance Guarantee Association.
30:09One of the concerns that people
30:11sometimes have when buying insurance is
30:13this.
30:14What happens if the insurance company
30:16goes out of business?
30:17It is a fair question.
30:19You have been paying premiums faithfully
30:21and then the company that was supposed
30:23to pay your claims can no longer do so.
30:26This is exactly the problem that the
30:28Texas Life and Health Insurance
30:30Guarantee Association was created to
30:32solve.
30:33The Guarantee Association is a safety
30:35net.
30:36When a licensed insurance company in
30:38Texas becomes insolvent, meaning it has
30:41failed financially and can no longer
30:43meet its obligations, the Guarantee
30:45Association steps in to protect
30:47policyholders.
30:49The goal is to make sure that people do
30:51not simply lose their coverage or their
30:53benefits just because the company that
30:55issued their policy went under.
30:58It is important to understand what types
31:00of policies the Guarantee Association
31:02covers.
31:03It covers life insurance policies,
31:05health insurance policies, and annuity
31:08contracts that were issued by member
31:10insurers.
31:11The phrase member insurers is key here.
31:15Insurance companies that are licensed to
31:16do business in Texas are generally
31:19required to be members of the Guarantee
31:21Association.
31:22That membership is part of what makes
31:24the protection system work. However, the
31:27Guarantee Association does not cover
31:29everything, and the exam will absolutely
31:32test you on what falls outside its
31:34protection.
31:35There are four categories you need to
31:37know.
31:38First, self-funded employer plans are
31:40not covered. A self-funded plan is one
31:43where the employer itself pays claims
31:45directly, rather than purchasing a
31:47traditional insurance policy.
31:49Because no licensed insurer is involved
31:52in the way a traditional policy works,
31:54these plans fall outside the Guarantee
31:56Association's scope.
31:58Second, certificates issued by fraternal
32:00benefit societies are not covered. You
32:03will recall from chapter 2 that
32:05fraternal benefit societies are
32:07regulated separately from traditional
32:09insurers, and that separate regulation
32:11extends to the Guarantee Association as
32:13well.
32:14Third, HMO coverage is not covered by
32:17the Guarantee Association. Health
32:20maintenance organizations operate under
32:22a different regulatory framework, and
32:24their members are not protected by this
32:26particular safety net.
32:28Fourth, policies issued by non-admitted
32:30insurers are not covered. A non-admitted
32:33insurer is one that has not been
32:34licensed by TDI to do business in Texas.
32:38Because they are not part of the
32:39regulated Texas insurance market and are
32:42not members of the Guarantee
32:43Association, their policy holders do not
32:46receive its protections.
32:48This is one of the reasons why working
32:50with admitted licensed insurers matters
32:52so much. Now, let's talk about your
32:54responsibilities as an agent related to
32:57the Guarantee Association. Texas law
32:59requires you to provide applicants with
33:02a written disclosure notice about the
33:04Guarantee Association before or at the
33:06time they apply for a policy.
33:09This notice informs the consumer that
33:11the Guarantee Association exists and
33:13explains the basic protections it
33:15provides.
33:16Giving that notice is not optional. It
33:19is a legal requirement.
33:21However, and this is important, there is
33:23a line you are not allowed to cross.
33:26You cannot use the existence of the
33:28Guarantee Association as a sales tool.
33:31In other words, you cannot tell a
33:33prospect something like, "Do not worry
33:35about whether this company is
33:37financially strong because the Guarantee
33:39Association will cover you no matter
33:41what."
33:42Using the Guarantee Association's
33:44protections to encourage someone to buy
33:46a policy, especially to gloss over
33:49legitimate concerns about an insurer's
33:51financial stability,
33:52is prohibited.
33:54The disclosure is meant to inform
33:55consumers of a protection that exists,
33:58not to be used as a marketing pitch.
34:01Chapter 7,
34:02Required health policy provisions under
34:04Texas law.
34:06This chapter covers the rules that Texas
34:08law requires to be built into health
34:10insurance policies.
34:12Some of these provisions are unique to
34:14Texas, meaning they go beyond what
34:16federal law requires.
34:18Others are standard mandatory provisions
34:20that must appear in every health
34:22insurance policy sold in the state.
34:24And at the end of this chapter, we are
34:26going to spend significant time on Texas
34:29prompt pay rules, which are among the
34:31most number heavy and heavily tested
34:33topics on the entire state exam.
34:36Pay close attention throughout this
34:38chapter, and every time you hear a
34:40specific number, write it down.
34:43Let's start with the two coverage
34:44mandates that are unique to Texas.
34:47The first is newborn coverage. Under
34:49Texas law, health insurance policies
34:52must provide coverage for a newborn
34:53child from the moment of birth, not from
34:56the date the parents call to add the
34:58baby to the policy,
35:00not from the date the insurer processes
35:02the paperwork, from the moment of birth.
35:05This is an important consumer protection
35:07because newborns sometimes require
35:09immediate medical attention, and Texas
35:12law ensures that coverage is in place
35:14from day one of that child's life.
35:17The second Texas-specific mandate is
35:19coverage for chemical dependency.
35:22Texas law requires that health insurance
35:24policies include coverage for the
35:26treatment of chemical dependency, which
35:28includes things like substance abuse
35:30treatment and rehabilitation. This is a
35:33coverage requirement that the state has
35:35determined is important enough to
35:37mandate across the board.
35:39Now, let's move into the standard
35:41mandatory provisions. These are the
35:43provisions that Texas law requires to be
35:45included in every individual health
35:47insurance policy.
35:49Think of them as the baseline rules of
35:51the road for how health policies must
35:53work in this state.
35:55The first mandatory provision is the
35:57grace period. A grace period is the
35:59amount of time after a premium due date
36:01during which a policyholder can still
36:03make their payment without losing their
36:06coverage. If someone misses a payment,
36:08they do not immediately lose their
36:10insurance. They have a grace period to
36:12catch up.
36:13Here is where it gets specific, and this
36:16is one of the most tested number sets on
36:18the entire Texas state exam. The length
36:21of the grace period depends on how often
36:23the policyholder pays their premium.
36:26If premiums are paid on a weekly basis,
36:28the grace period is 7 days. If premiums
36:31are paid on a monthly basis, the grace
36:33period is 10 days. For all other payment
36:36modes, meaning quarterly, semi-annual,
36:39or annual, the grace period is 31 days.
36:42Say those numbers out loud right now. 7
36:45days for weekly, 10 days for monthly,
36:4831 days for everything else.
36:51You need to have those memorized cold
36:53before you walk into the exam room.
36:55The next provision is reinstatement. If
36:58a policy lapses, meaning coverage has
37:00ended because premiums were not paid
37:02even within the grace period, Texas law
37:05gives the policy holder the opportunity
37:07to reinstate that policy and bring it
37:09back into force.
37:11However, the insurer is allowed to
37:13require the policy holder to provide
37:15proof of insurability before agreeing to
37:18reinstate.
37:19Proof of insurability essentially means
37:22demonstrating that the person is still
37:23an acceptable risk to insure, often
37:26through a health questionnaire or
37:28medical exam.
37:29Next is incontestability.
37:31This provision protects policy holders
37:34from having their insurer come back
37:35years later and try to void their policy
37:38based on a misrepresentation that was
37:40made on the original application.
37:43After a policy has been in force for a
37:45certain period of time, the insurer
37:47generally loses the right to contest the
37:50policy on those grounds.
37:52This gives policy holders long-term
37:54security and peace of mind that their
37:56coverage will not be yanked away from
37:58them after they have been paying into it
38:00for years.
38:02The notice of claim provision requires
38:04that when a loss occurs, the insured
38:06must notify the insurance company within
38:09a reasonable amount of time.
38:11The policy will specify what that time
38:13frame is.
38:14This notification kicks off the claims
38:16process and lets the insurer know that a
38:18claim is coming.
38:20Related to that is the proof loss
38:22provision.
38:24After a loss occurs, the insured must
38:26submit written proof of that loss to the
38:28insurer.
38:30Under Texas law, that written proof of
38:32loss must be submitted within 90 days of
38:35the loss occurring.
38:36If it is not reasonably possible to
38:38submit within 90 days, for example, if
38:41the insured was incapacitated, it must
38:44be submitted as soon as reasonably
38:46possible.
38:47But 90 days is the standard deadline,
38:50and that is the number to remember.
38:52The time of payment of claims provision
38:54is straightforward. Once the insurer has
38:56received proper proof of loss, the claim
38:59must be paid immediately.
39:01Texas law does not allow insurers to sit
39:04on an approved claim.
39:06Once they have what they need, and they
39:07have accepted the claim, payment must
39:10follow promptly.
39:11The physical examination and autopsy
39:13provision gives the insurer certain
39:15rights during the claims process.
39:18Specifically, while a claim is pending,
39:20the insurer has the right to have the
39:22insured physically examined by a doctor
39:24of the insurer's choosing.
39:26And in the case of a death claim, the
39:28insurer has the right to request an
39:30autopsy, as long as that is not
39:32prohibited by state law in the
39:34circumstances involved. These rights
39:36exist so that the insurer can verify the
39:39legitimacy of a claim.
39:40The legal actions provision sets the
39:42boundaries for when a policy holder can
39:45sue their insurance company over a
39:47claim.
39:48Under Texas law, no legal action can be
39:50brought against an insurer until at
39:52least 60 days after the insured has
39:55submitted their proof of loss.
39:57This gives the insurer a reasonable
39:59window to handle the claim before being
40:01taken to court.
40:03On the other end, the policy holder
40:04cannot wait forever to file a lawsuit.
40:07Legal action must be initiated no later
40:10than 3 years after the loss occurred.
40:12So, the window for legal action is no
40:15sooner than 60 days after proof of loss
40:18and no later than 3 years after the
40:20loss.
40:21Both numbers are testable. The change of
40:24beneficiary provision establishes that
40:26the policy holder has the right to
40:28change who receives the benefits under
40:30their policy.
40:32This right belongs to the policy holder
40:34unless they have made what is called an
40:36irrevocable beneficiary designation.
40:39An irrevocable designation means the
40:41policy holder has given up the right to
40:44change that beneficiary without the
40:46beneficiary's consent.
40:48As long as the designation remains
40:50revocable, the policy holder is free to
40:52update it at any time. The last standard
40:55provision in this section covers
40:57misstatement of age or gender. If it is
40:59discovered that the insured's age or
41:01gender was stated incorrectly on the
41:03application, whether intentionally or by
41:06accident, the policy is not
41:08automatically voided. Instead, the
41:11benefit amount is adjusted. The insurer
41:13will calculate what benefit the premium
41:15that was actually paid would have
41:17purchased had the correct age or gender
41:19been used from the beginning. And that
41:21adjusted amount becomes the benefit
41:23payable.
41:24This is a fair resolution that protects
41:26both parties.
41:28Now, let's shift into one of the most
41:29important and heavily tested topics on
41:32the Texas State Exam. Texas prompt pay
41:35rules. Texas is what is called a prompt
41:38pay state. That means Texas law sets
41:40specific legal deadlines for how quickly
41:43insurance companies must handle claims.
41:46These are not suggestions. They are
41:48legal requirements and failing to meet
41:50them carries serious financial
41:52consequences for the insurer.
41:54There are three separate timelines you
41:56need to know and you need to keep them
41:58straight because the exam will test each
42:00one individually.
42:02Timeline one is the acknowledgement
42:04timeline. Within 15 calendar days of
42:07receiving notice of a claim, the insurer
42:10must do three things.
42:12They must acknowledge that they received
42:14the claim. They must begin an
42:16investigation into the claim.
42:18And they must request any additional
42:20items, forms, or information they need
42:22from the claimant in order to process
42:24it.
42:2615 calendar days.
42:28That is the clock for the first
42:29timeline.
42:31Timeline two is the accept or reject
42:33timeline.
42:34After the insurer has received all of
42:36the required documentation from the
42:38claimant, everything they asked for in
42:41that initial request, they have 15
42:43business days to notify the claimant in
42:45writing of whether they are accepting or
42:48rejecting the claim.
42:49Notice that this timeline is measured in
42:51business days, not calendar days.
42:54That distinction matters and could show
42:56up on the exam. Now, if the insurer
42:59genuinely needs more time and cannot
43:02make a decision within those 15 business
43:04days, they are allowed to extend the
43:06deadline.
43:07But only if they send the claimant
43:09written notice explaining that they need
43:11more time and why.
43:14That extension gives them an additional
43:1545 days to make their decision.
43:18So, the extended window is 15 business
43:20days plus up to 45 more days with proper
43:24written notice.
43:25Timeline three is the payment timeline.
43:28Once the insurer has accepted a claim,
43:31meaning they have decided they are going
43:33to pay it, they must actually send that
43:35payment within five business days.
43:38Five business days from acceptance to
43:40payment. That is the final deadline in
43:43the prompt pay sequence.
43:45Now, let's talk about what happens when
43:47an insurer does not follow these rules.
43:49If an insurer violates any of the prompt
43:51pay deadlines, they do not just have to
43:54pay the claim they already owed. They
43:56also owe the claimant 18% annual
43:58interest on the amount of the claim,
44:01calculated from the date the payment was
44:03due until the date it is actually made.
44:06On top of that, the insurer may also be
44:08required to pay the claimant's
44:10reasonable attorney's fees. So, dragging
44:13out a claim improperly is not just a
44:14regulatory violation,
44:16it becomes significantly more expensive
44:19for the insurer the longer it goes on.
44:22Let's do a quick recap of the prompt pay
44:24numbers before we move on because these
44:27are critical.
44:2815 calendar days to acknowledge the
44:30claim,
44:3115 business days to accept or reject
44:34after receiving complete documentation
44:36with a possible 45-day extension if
44:39proper written notice is given.
44:42Five business days to pay once the claim
44:44is accepted and 18% annual interest as
44:48the penalty for late payment. Know every
44:51one of those numbers. Chapter 8,
44:53Medicare supplement in Texas.
44:56Before we get into the Texas specific
44:58rules, let's make sure we have a clear
45:00picture of what Medicare supplement
45:02insurance actually is because
45:04understanding the product makes the
45:06rules much easier to absorb.
45:08Medicare is the federal health insurance
45:10program primarily designed for people
45:12who are 65 years old or older
45:15as well as certain younger people with
45:17disabilities.
45:19While Medicare covers a lot, it does not
45:21cover everything.
45:23There are gaps, things like deductibles,
45:25co-payments, and coinsurance that the
45:28Medicare beneficiary is responsible for
45:30paying out of their own pocket.
45:33Medicare supplement insurance, which is
45:35sometimes called Medigap, is private
45:37insurance that is designed to fill in
45:39those gaps. It helps pay for the costs
45:42that original Medicare leaves behind.
45:44At the federal level, Medicare
45:46supplement policies are standardized.
45:49That means the federal government has
45:50defined a specific set of plans labeled
45:53plan A through plan N and every insurer
45:56that sells Medicare supplement must
45:59offer those plans with the same core
46:01benefits.
46:02You cannot have one company's Plan G
46:04covering different things than another
46:06company's Plan G.
46:08The standardization exists so that
46:10consumers can make apples-to-apples
46:12comparisons when shopping for coverage.
46:15Now, on top of those federal standards,
46:17Texas has its own layer of rules that
46:19apply to Medicare supplement policies
46:21sold in this state.
46:23Texas requires that all Medicare
46:25supplement policies meet minimum benefit
46:27standards, which means every policy sold
46:30in Texas must include at least the
46:32baseline level of coverage the state has
46:34determined is necessary to adequately
46:36protect consumers.
46:39Let's talk about open enrollment because
46:41this is a significant consumer
46:43protection.
46:44There is a federal open enrollment
46:46window for Medicare supplement that
46:48begins when a person is at least 65
46:50years old and is enrolled in Medicare
46:53Part B.
46:54That window lasts for 6 months.
46:57During this 6-month open enrollment
46:59period, insurers are prohibited from
47:01doing two things.
47:02They cannot deny an applicant coverage
47:05and they cannot impose pre-existing
47:07condition exclusions.
47:09In other words, during open enrollment,
47:11your health history does not matter.
47:13The insurer must accept you and must
47:16cover you without penalizing you for
47:17conditions you already have.
47:20This is a powerful protection and it is
47:22one that applicants should be made aware
47:24of.
47:25Outside of that open enrollment window,
47:27insurers generally can underwrite
47:29Medicare supplement applications,
47:31meaning they can evaluate your health
47:33and potentially decline you or charge
47:35you more based on your medical history.
47:38However, there are certain situations
47:40called guaranteed issue situations where
47:43an individual has the right to purchase
47:45a Medicare supplement policy regardless
47:47of their health, even outside of open
47:50enrollment.
47:51These situations arise when certain life
47:53events occur.
47:55For example, if someone loses their
47:57employer sponsored health coverage or if
47:59their current Medicare supplement
48:01insurer becomes insolvent and can no
48:03longer honor their policy, those events
48:06trigger a guaranteed issue right.
48:08The individual gets to buy a new
48:10Medicare supplement policy and the
48:12insurer cannot turn them away based on
48:14health status.
48:16The key concept here is that specific
48:18triggering events create a protected
48:20right to coverage. Now, let's discuss
48:22replacement rules. When an agent helps a
48:25client replace an existing Medicare
48:27supplement policy with a new one, there
48:30are specific duties that both the agent
48:32and the insurer must fulfill.
48:34These duties are centered around
48:36disclosure. Making sure the client fully
48:39understands what they are giving up with
48:41their old policy and what they are
48:43gaining with the new one.
48:45The replacement rules exist to protect
48:47consumers from being talked into
48:48switching policies when doing so is not
48:51actually in their best interest.
48:53Agents must provide required disclosure
48:55documents and the insurer has its own
48:58obligations to review and document the
49:00replacement as well.
49:02One of the most important numbers in
49:03this entire chapter and one that is very
49:06commonly tested is the free look period
49:09for Medicare supplement policies. When a
49:12consumer purchases a Medicare supplement
49:14policy in Texas, they have 30 days to
49:17review it and decide whether they want
49:19to keep it.
49:20If during that 30-day window, they
49:22decide the policy is not right for them,
49:24they can return it and receive a full
49:26refund of any premiums paid. This is
49:29called the free look period and the
49:31reason this number is so important is
49:33that it is different from the free look
49:34period on most other health insurance
49:36policies.
49:37For most standard health policies, the
49:39free look period is 10 days. For
49:42Medicare supplement policies in Texas,
49:44it is 30 days.
49:46That difference is a favorite exam
49:47question and as a preview for the next
49:50chapter, long-term care policies in
49:52Texas, also carry that same 30-day free
49:55look period, not the standard 10 days.
49:58So, if you see Medicare supplement or
50:00long-term care on the exam, and a
50:02question about the free look period
50:04comes up, the answer is 30 days.
50:07Finally, let's briefly cover
50:09cancellation.
50:11Texas law governs when and how a
50:13Medicare supplement policy can be
50:15canceled.
50:16These rules are designed to protect
50:18policyholders, particularly older
50:20consumers who depend on their Medicare
50:22supplement coverage, from having their
50:25policies canceled arbitrarily or without
50:27proper notice.
50:29The specific grounds and procedures for
50:31cancellation are established in the
50:33Texas Administrative Code, and the
50:36overarching principle is that
50:37cancellations must follow a defined
50:39legal process that gives the
50:41policyholder appropriate notice and
50:43protections. Chapter nine,
50:46AIDS testing requirements.
50:48This chapter covers a topic that is
50:50specific to the underwriting process,
50:52the process by which an insurance
50:54company evaluates an applicant and
50:56decides whether to offer them coverage
50:58and at what price.
51:00Specifically, we are going to talk about
51:02the rules Texas has put in place around
51:04testing applicants for HIV and AIDS.
51:07First, let's establish the basic
51:09framework. In Texas, insurers are
51:12permitted to test applicants for HIV and
51:14AIDS as part of their underwriting
51:16process. This is legal. However, it is
51:19not a free-for-all. Texas law surrounds
51:22this practice with strict rules designed
51:24to protect applicants' rights, their
51:26privacy, and their dignity.
51:29Simply being allowed to conduct the test
51:31does not mean an insurer can do it
51:33however they want.
51:34The first and most fundamental rule is
51:36that written consent is required before
51:38any HIV test can be conducted.
51:41The insurer cannot simply order a test
51:43without the applicant's knowledge or
51:45agreement.
51:46The applicant must be informed that
51:48testing will take place and they must
51:50provide their written consent before the
51:53test is administered.
51:54This is a non-negotiable requirement
51:56under Texas law.
51:58If an insurer conducts an HIV test
52:01without obtaining written consent first,
52:03they have violated the law regardless of
52:05what the test results show.
52:07The second major protection is
52:09confidentiality. HIV test results are
52:12strictly confidential under Texas law.
52:14That means the insurer cannot freely
52:16share or disclose those results.
52:19The results may only be disclosed in
52:21circumstances that are specifically
52:23permitted by law.
52:24This protection exists because of the
52:26deeply personal nature of HIV-related
52:29health information and the potential
52:31consequences, social, professional, and
52:34otherwise, that a person could face if
52:37that information were improperly shared.
52:39As an agent, you should understand that
52:41confidentiality around HIV test results
52:44is not just an ethical expectation. It
52:47is a legal requirement.
52:49The third rule addresses what an insurer
52:51can do with a positive test result.
52:53If an applicant tests positive for HIV,
52:57the insurer cannot use that positive
52:59result as the sole basis for denying
53:01coverage without following proper
53:03procedures. In other words, there is a
53:05process that must be followed. The
53:08insurer cannot simply receive a positive
53:10result and immediately issue a denial
53:12letter without taking the required
53:14steps.
53:15What those proper procedures involve
53:17includes things like confirmatory
53:19testing and appropriate notification to
53:21the applicant.
53:23The point is that a single positive test
53:25result on its own is not sufficient
53:28justification under Texas law to deny an
53:31applicant coverage without going through
53:32the required process first. Finally,
53:35Texas law includes anti-discrimination
53:38protections that prevent insurers from
53:40improperly using HIV related information
53:43in their decision-making.
53:45The information gathered through HIV
53:47testing must be used only for its
53:49legitimate underwriting purpose. It
53:52cannot be used in ways that go beyond
53:54what the law permits, and it cannot be
53:56used to discriminate against applicants
53:59in ways that violate their legal
54:00protections.
54:02These protections reflect Texas's
54:03recognition that HIV status is a
54:06sensitive category of personal health
54:08information that requires an extra layer
54:10of legal safeguarding beyond what
54:12applies to routine medical information.
54:15Chapter 10.
54:16Long-term care insurance in Texas.
54:19Long-term care is a topic that many
54:21people do not think about until they or
54:24someone they love actually needs it. And
54:26by that point, it is often too late to
54:28plan effectively.
54:30As an insurance agent, understanding
54:32long-term care insurance and the rules
54:34that govern it in Texas is an important
54:36part of serving your clients well.
54:39This chapter covers what long-term care
54:41insurance is, what Texas requires of
54:43these policies, and what your specific
54:45duties are as an agent selling them.
54:48Let's start with the basics. Long-term
54:50care insurance is designed to help pay
54:52for services that a person needs when
54:55they can no longer fully care for
54:56themselves due to a chronic illness, a
54:59disability, or the natural effects of
55:01aging.
55:02These are not services that treat a
55:04medical condition in the traditional
55:06sense.
55:07They are services that help a person
55:08with the basic activities of daily
55:10living.
55:11Things like bathing, dressing, eating,
55:13and moving around.
55:15Long-term care is expensive, and without
55:18insurance, the cost of these services
55:20can devastate a family's finances very
55:23quickly.
55:24Texas requires that all long-term care
55:26policies sold in the state meet certain
55:28minimum standards.
55:30These standards cover three main areas.
55:33The first is benefit triggers, which are
55:35the specific conditions that must be met
55:37before the policy will begin paying
55:39benefits. For example, most long-term
55:42care policies require that a person be
55:44unable to perform a certain number of
55:46activities of daily living before
55:49benefits kick in. The second area is
55:51definitions of disability, meaning how
55:54the policy defines what it means to need
55:56long-term care. The third area is
55:58covered services, meaning the policy
56:01must clearly define what types of care
56:03it will and will not pay for. Speaking
56:06of covered services, let's go through
56:08the levels of care that long-term care
56:10policies in Texas may cover.
56:13The first is skilled nursing care. This
56:15is the highest level of care provided by
56:18licensed medical professionals such as
56:20registered nurses or physical
56:22therapists. Skilled nursing care is
56:25typically provided in a nursing facility
56:27and involves medically necessary
56:29treatment that requires professional
56:31training to deliver.
56:33The second level is intermediate care.
56:35This is also provided by medical
56:37professionals, but on a less frequent
56:39basis than skilled nursing care.
56:42It is for people who need some
56:43professional medical oversight, but not
56:46around the clock.
56:47The third level is custodial care. This
56:50is the type of care that most people
56:52picture when they think of long-term
56:53care.
56:54It involves helping someone with the
56:56basic activities of daily living,
56:58bathing, dressing, eating, toileting,
57:02and similar tasks.
57:04Custodial care does not require a
57:05licensed medical professional to
57:07provide. The fourth level is home health
57:10care. This covers care that is delivered
57:12in the person's own home rather than in
57:15a facility. It can include skilled
57:17nursing visits, therapy, and assistance
57:20with daily activities, all provided in
57:22the familiar setting of the person's
57:24residence.
57:25The fifth level is adult day care. This
57:28involves care provided at a facility
57:30during daytime hours, allowing a person
57:32who lives at home to receive
57:33supervision, social interaction, and
57:36some level of assistance during the day
57:38while their family caregiver is at work
57:41or otherwise unavailable.
57:43Now, let's talk about what you as an
57:45agent are required to do when selling a
57:47long-term care policy.
57:49Texas law mandates specific disclosures
57:52that must be provided to every
57:53applicant. You must give the applicant
57:56two documents at the time of
57:57application. The first is an outline of
58:00coverage, which is a standardized
58:02summary of the policy's benefits,
58:04limitations, and exclusions written in
58:06plain language so the applicant can
58:08understand what they are buying.
58:10The second is a shopper's guide, which
58:12is a document created by TDI that helps
58:15consumers understand long-term care
58:17insurance in general and how to evaluate
58:20their options.
58:21Both of these documents must be provided
58:23at the time of application, not after
58:25the policy is issued.
58:27One of the required features that every
58:29long-term care policy must offer is
58:31inflation protection.
58:33Long-term care costs tend to rise over
58:36time and a benefit amount that seems
58:38adequate today may fall far short of
58:41covering actual costs 10 or 20 years
58:43from now when the policyholder actually
58:45needs care.
58:47Inflation protection is a feature that
58:49increases the policy's benefit amount
58:51over time to help keep pace with rising
58:54costs.
58:55Texas law requires that insurers offer
58:57this feature to every applicant.
58:59Importantly, the applicant does not have
59:02to accept it. They can decline inflation
59:04protection if they choose, but you as
59:07the agent must offer it, and you must
59:09document whether the applicant accepted
59:11or declined it.
59:12That documentation requirement is not
59:15optional.
59:16Another feature that must be offered
59:18with every long-term care policy is
59:20nonforfeiture benefits. Here is the
59:23situation this feature addresses.
59:25Long-term care policies are often
59:27purchased years or even decades before
59:30they are ever needed.
59:32Over that long period of time, a
59:33policyholder might reach a point where
59:36they can no longer afford to keep paying
59:38premiums.
59:39Without non-forfeiture benefits, if they
59:41stop paying, they would simply lose the
59:43policy and get nothing back for all the
59:46premiums they had paid over the years.
59:48Non-forfeiture benefits protect against
59:51that outcome. If the policyholder stops
59:53paying premiums after a certain point,
59:56they retain some level of benefit rather
59:58than walking away empty-handed. Like
1:00:01inflation protection, this feature must
1:00:03be offered to every applicant, and the
1:00:06applicant can choose whether or not to
1:00:08include it in their policy.
1:00:10As we mentioned in the previous chapter,
1:00:12the free look period for long-term care
1:00:14policies in Texas is 30 days.
1:00:17This is the same extended free look
1:00:19period that applies to Medicare
1:00:21supplement policies, and it is longer
1:00:23than the 10-day free look that applies
1:00:25to most other health insurance policies.
1:00:29When a long-term care policy is
1:00:30delivered to the purchaser, they have 30
1:00:33full days to review it, decide it is not
1:00:35right for them, return it, and receive a
1:00:38complete refund of any premiums paid.
1:00:41This is an important consumer protection
1:00:43given the complexity of long-term care
1:00:45policies and the significant financial
1:00:47commitment they represent.
1:00:50Now, let's talk about a uniquely Texas
1:00:52program that is especially important for
1:00:54clients who are concerned about
1:00:55protecting their assets as they age. It
1:00:58is called the Texas Long-Term Care
1:01:00Partnership Program.
1:01:02To understand why this program matters,
1:01:04you first need to understand a little
1:01:06bit about Medicaid.
1:01:08Medicaid is a joint federal and state
1:01:10program that pays for long-term care
1:01:12services for people who have very
1:01:14limited financial resources. However, to
1:01:17qualify for Medicaid, a person generally
1:01:19must spend down most of their assets
1:01:21first. In other words, they have to use
1:01:24up most of what they own before Medicaid
1:01:26will step in and help pay for their
1:01:29care.
1:01:30This spend down requirement can be
1:01:32financially devastating for people who
1:01:34have spent a lifetime saving and
1:01:36building assets they hoped to leave to
1:01:38their families.
1:01:39The Texas Long-Term Care Partnership
1:01:41Program addresses this problem by
1:01:44creating a direct link between private
1:01:46long-term care insurance and Medicaid
1:01:48eligibility.
1:01:50Here is how it works.
1:01:52If a person purchases a partnership
1:01:53qualified long-term care policy and that
1:01:56policy pays out benefits, the dollar
1:01:58amount of those benefits is protected
1:02:01from the Medicaid spend down
1:02:02requirement. So, if a person's
1:02:04partnership policy pays out $100,000 in
1:02:08long-term care benefits, they are
1:02:10allowed to keep $100,000 in assets and
1:02:13still qualify for Medicaid once their
1:02:15policy benefits are exhausted.
1:02:18Without the partnership program, those
1:02:20assets would have had to be spent down
1:02:22before Medicaid would help.
1:02:25This program gives Texans a powerful
1:02:27incentive to purchase long-term care
1:02:29insurance because doing so not only
1:02:31helps pay for their care, but also
1:02:33protects what they have worked to build.
1:02:36Finally, when an agent helps a client
1:02:38replace an existing long-term care
1:02:40policy with a new one, specific duties
1:02:43apply.
1:02:44Just as with Medicare supplement
1:02:46replacement, the agent must ensure that
1:02:48the client fully understands what they
1:02:50are giving up with their current policy
1:02:52and what the new policy offers in
1:02:54comparison.
1:02:55Required disclosure documents must be
1:02:57provided and the agent must document the
1:03:00replacement appropriately.
1:03:02These rules exist because replacing a
1:03:04long-term care policy is not always in
1:03:06the client's best interest and the law
1:03:08requires that agents take the process
1:03:10seriously and handle it with full
1:03:12transparency. Chapter 11, small group
1:03:15health insurance in Texas.
1:03:18Small businesses are the backbone of the
1:03:20Texas economy and a significant portion
1:03:22of Texans get their health insurance
1:03:24through their employer.
1:03:26This chapter covers the rules that apply
1:03:28specifically to small group health
1:03:30insurance.
1:03:32The coverage that small businesses
1:03:33purchase to provide health benefits to
1:03:36their employees.
1:03:37Understanding these rules matters both
1:03:39for the exam and for your future clients
1:03:42because many of the people you will work
1:03:44with as an agent will be small business
1:03:46owners trying to do right by their
1:03:48teams. The very first thing you need to
1:03:51know is how Texas defines a small
1:03:53employer.
1:03:54Under Texas law, a small employer is a
1:03:57business that employs between two and 50
1:03:59employees. That is the definition. Two
1:04:03to 50. If a business has only one
1:04:05employee, meaning just the owner, it
1:04:08does not qualify as a small employer for
1:04:10purposes of these rules. And if a
1:04:12business grows beyond 50 employees, it
1:04:15moves into the large group market which
1:04:17operates under a different set of rules.
1:04:20So anytime you see a question about
1:04:22small group health insurance in Texas,
1:04:24anchor yourself to that definition
1:04:26first. Two to 50 employees. Now let's
1:04:29talk about guaranteed issue. This is one
1:04:32of the most important protections in the
1:04:33small group market. Guaranteed issue
1:04:36means that a small employer cannot be
1:04:38denied group health coverage based on
1:04:41the health status of its employees.
1:04:43Think about what that means in practice.
1:04:46If a small business owner wants to
1:04:47purchase group health insurance for
1:04:49their team, the insurer cannot look at
1:04:52the medical histories of the employees
1:04:54and say, "We are not going to cover your
1:04:56group because too many of your workers
1:04:58have pre-existing conditions." That kind
1:05:01of denial is not allowed. The insurer
1:05:03must offer coverage to eligible small
1:05:05employers regardless of how healthy or
1:05:08unhealthy the workforce happens to be.
1:05:11This protection exists because without
1:05:13it, small businesses with even one or
1:05:15two employees who have significant
1:05:17health issues might find it impossible
1:05:20to obtain group coverage at all.
1:05:22Closely related to guaranteed issue is
1:05:24guaranteed renewal.
1:05:26Once a small employer has obtained group
1:05:28health coverage, the insurer is
1:05:30generally required to renew that
1:05:32coverage when the policy term ends.
1:05:35The insurer cannot simply decide at
1:05:37renewal time that they no longer want to
1:05:39cover a particular small group and walk
1:05:41away.
1:05:43There are specific statutory exceptions,
1:05:45meaning specific situations defined by
1:05:47law,
1:05:48where an insurer is permitted to
1:05:50non-renew a small group policy, such as
1:05:53the employer failing to pay premiums or
1:05:55the insurer deciding to exit the small
1:05:57group market entirely in Texas. But
1:06:00outside of those defined exceptions,
1:06:02renewal is guaranteed. This gives small
1:06:05employers the stability and
1:06:06predictability they need to plan their
1:06:08employee benefits from year to year.
1:06:12Let's talk about pre-existing condition
1:06:14limitations. A pre-existing condition is
1:06:17a health condition that a person had
1:06:19before their insurance coverage began.
1:06:22Historically, insurers could exclude
1:06:24coverage for those conditions for a
1:06:26period of time after a new policy took
1:06:28effect. Under both Texas law and the
1:06:31federal Affordable Care Act, the ability
1:06:33of insurers to impose pre-existing
1:06:35condition limitations in the small group
1:06:38market is significantly restricted.
1:06:40The practical result for most small
1:06:42group plans is that employees cannot be
1:06:45denied coverage or have their benefits
1:06:47limited simply because they had a health
1:06:49condition before joining the plan. This
1:06:52protection works hand in hand with the
1:06:54guaranteed issue rules to make sure that
1:06:56small group coverage is genuinely
1:06:59accessible to the employees who need it.
1:07:01Next are rating restrictions. Even
1:07:04though insurers must offer coverage to
1:07:06small groups regardless of health
1:07:07status, they are still allowed to charge
1:07:10premiums, and those premiums can vary to
1:07:12some degree. However, Texas law places
1:07:16limits on how much premiums can vary
1:07:18within the small group market.
1:07:20These rating restrictions prevent
1:07:22insurers from effectively pricing
1:07:24certain small groups out of the market
1:07:26by charging them premiums so high that
1:07:28coverage becomes unaffordable.
1:07:30The restrictions create guardrails
1:07:32around how much an insurer can adjust
1:07:34rates based on factors like the age of
1:07:36the group's employees or the industry
1:07:38the business operates in.
1:07:40The specific rating rules are designed
1:07:42to keep the small group market
1:07:44functional and accessible for businesses
1:07:46of all types.
1:07:48Finally, small group health plans in
1:07:50Texas are required to hold an open
1:07:52enrollment period for employees on an
1:07:54annual basis.
1:07:56Open enrollment is the designated window
1:07:58of time each year during which employees
1:08:01can sign up for coverage, make changes
1:08:03to their existing coverage, or add or
1:08:06remove dependents from their plan.
1:08:08Outside of open enrollment, employees
1:08:11generally cannot make changes to their
1:08:13coverage unless they experience a
1:08:15qualifying life event, something like
1:08:17getting married, having a baby, or
1:08:19losing other coverage, which triggers a
1:08:22special enrollment period.
1:08:24The annual open enrollment requirement
1:08:26ensures that every employee has a
1:08:28regular, predictable opportunity to
1:08:30participate in the group health plan
1:08:32their employer is offering. Chapter
1:08:35>> 12.
1:08:36Affordable Care Act Texas Tested
1:08:38Provisions.
1:08:39The Affordable Care Act, which most
1:08:41people refer to simply as the ACA, is a
1:08:45federal law that made sweeping changes
1:08:47to how health insurance works across the
1:08:49entire country.
1:08:51While the ACA is a national law, there
1:08:54are specific provisions within it that
1:08:56are now testable on the Texas State
1:08:57Exam.
1:08:59This chapter covers those provisions. We
1:09:01are not going to cover every aspect of
1:09:03the ACA, just the pieces that Pearson
1:09:06VUE has specifically identified as
1:09:09content you need to know for the Texas
1:09:11licensing exam. Let's start with the
1:09:13health insurance marketplace.
1:09:16The ACA created what are called health
1:09:18insurance exchanges, which are also
1:09:20referred to as marketplaces.
1:09:22These are essentially organized
1:09:24platforms where individuals and families
1:09:26who do not have access to affordable
1:09:28employer-sponsored coverage can shop for
1:09:31and purchase health insurance.
1:09:33The plan sold through the marketplace
1:09:35must meet ACA standards, and eligible
1:09:38buyers may qualify for financial
1:09:40assistance to help cover the cost.
1:09:43Here is the Texas specific piece of
1:09:45this. Some states chose to build and
1:09:47operate their own state-run marketplace.
1:09:50Texas did not. Texas operates through
1:09:53the federally facilitated marketplace,
1:09:55which means that Texas residents who are
1:09:57shopping for marketplace coverage do so
1:09:59through the federal government's
1:10:00website, which is healthcare.gov.
1:10:03As an agent working in Texas, you need
1:10:06to know that when your clients are
1:10:07looking for marketplace coverage,
1:10:09healthcare.gov is where they go.
1:10:12Now, let's talk about the financial
1:10:13assistance that is available to people
1:10:15who purchase coverage through the
1:10:17marketplace.
1:10:18There are two main types. The first is
1:10:20premium tax credits. A premium tax
1:10:23credit is a subsidy, meaning financial
1:10:25help from the government, that reduces
1:10:27the amount a person has to pay for their
1:10:29monthly health insurance premium.
1:10:32Whether someone qualifies for a premium
1:10:34tax credit and how large that credit is
1:10:36depends on their household income and
1:10:38the size of their family.
1:10:40People with lower incomes receive larger
1:10:42credits, which make their premiums more
1:10:44affordable.
1:10:46The second type of financial assistance
1:10:48is cost-sharing reductions.
1:10:50Where premium tax credits help with the
1:10:52monthly cost of the premium itself,
1:10:54cost-sharing reductions help lower what
1:10:56the person pays when they actually use
1:10:59their insurance.
1:11:00Things like deductibles, co-payments,
1:11:03and out-of-pocket maximums.
1:11:05Cost-sharing reductions are available to
1:11:07people who fall within certain income
1:11:09ranges and who purchase a specific tier
1:11:11of Marketplace plan.
1:11:13Together, premium tax credits and
1:11:15cost-sharing reductions make Marketplace
1:11:18coverage significantly more accessible
1:11:20for people who might not otherwise be
1:11:22able to afford it.
1:11:24Next, let's cover essential health
1:11:25benefits.
1:11:27The ACA requires that all plans sold in
1:11:29the individual and small group markets,
1:11:32including Marketplace plans, must cover
1:11:34a defined set of 10 categories of
1:11:36services called essential health
1:11:38benefits.
1:11:40The idea behind this requirement is that
1:11:42health insurance should actually cover
1:11:44the things people need most, not just
1:11:46provide bare-bones coverage that leaves
1:11:48major gaps. While all 10 categories are
1:11:51required, the Texas exam specifically
1:11:54calls out three of them. So, let's focus
1:11:56there.
1:11:57The first is mental health and substance
1:11:59use disorder services.
1:12:01Before the ACA, many health insurance
1:12:04plans either excluded mental health
1:12:05coverage entirely or provided much more
1:12:08limited mental health benefits than they
1:12:10did for physical health conditions.
1:12:13The ACA requires that mental health and
1:12:15substance use disorder services be
1:12:17covered as an essential health benefit,
1:12:20and further requires that those benefits
1:12:22be provided on par with medical and
1:12:24surgical benefits.
1:12:25This is called mental health parity. And
1:12:28it means insurers cannot treat mental
1:12:30health conditions as less worthy of
1:12:32coverage than physical ones.
1:12:34The second essential health benefit
1:12:36called out for the Texas exam is
1:12:38pediatric services. ACA-compliant plans
1:12:42must cover health services for children,
1:12:44including pediatric dental and vision
1:12:46care.
1:12:47This ensures that children have access
1:12:49to the preventive and developmental care
1:12:51they need during their formative years.
1:12:54The third is preventive and wellness
1:12:56services.
1:12:57This is a provision that many consumers
1:12:59really appreciate once they understand
1:13:01it. ACA compliant plans are required to
1:13:04cover a broad range of preventive
1:13:06services at no cost sharing to the
1:13:08patient. That means no deductible, no
1:13:11co-payment, and no co-insurance for
1:13:13covered preventive services.
1:13:15Things like annual wellness visits,
1:13:17certain screenings, and recommended
1:13:19vaccinations fall into this category.
1:13:22The intent is to encourage people to get
1:13:24preventive care before health problems
1:13:26become serious and expensive, which is
1:13:29better for individuals and better for
1:13:31the overall cost of health care.
1:13:33The last topic in this chapter is
1:13:35employer notification responsibilities.
1:13:38The ACA places certain obligations on
1:13:41employers to make sure their employees
1:13:43know about the health insurance
1:13:45marketplace and understand their
1:13:47options. Specifically, employers are
1:13:50required to provide written notice to
1:13:51their employees informing them that the
1:13:54marketplace exists, explaining that they
1:13:56may be eligible for financial assistance
1:13:59if the employer's coverage does not meet
1:14:01certain affordability and adequacy
1:14:03standards, and letting them know that if
1:14:06they choose marketplace coverage instead
1:14:08of the employer's plan, they may lose
1:14:10any employer contribution toward their
1:14:12health benefits. This notification
1:14:15requirement ensures that employees are
1:14:17not left in the dark about their
1:14:18options. Even if an employer offers
1:14:21group health coverage, employees have
1:14:23the right to know that the marketplace
1:14:25exists as an alternative and to
1:14:27understand the tradeoffs involved in
1:14:29choosing between the two. Chapter 13,
1:14:32certificate of coverage.
1:14:34This chapter covers a document that
1:14:36plays an important role in protecting
1:14:38people as they move from one health
1:14:40insurance plan to another.
1:14:42It is called a certificate of coverage,
1:14:45and while it may not be the most
1:14:46glamorous topic in this study guide, it
1:14:49is one that has real practical
1:14:50significance for your future clients and
1:14:53is something the exam expects you to
1:14:54understand.
1:14:56Let's start with what a certificate of
1:14:57coverage actually is. When a person is
1:15:00covered under a group health insurance
1:15:02plan, meaning employer-sponsored
1:15:04coverage, they are entitled to receive a
1:15:06certificate of coverage.
1:15:08This is an official document issued by
1:15:10the insurer that confirms the person was
1:15:12covered under that plan.
1:15:15It spells out the key details of their
1:15:16coverage, including what benefits they
1:15:19had, when their coverage began, and when
1:15:22it ended.
1:15:23Think of it as a formal record of the
1:15:25insurance coverage a person carried.
1:15:27Now, let's talk about why this document
1:15:30matters so much. The most important
1:15:32function of a certificate of coverage
1:15:34comes into play when a person loses
1:15:36their group health coverage and needs to
1:15:39transition to a new plan.
1:15:41This is where the concept of portability
1:15:43comes in.
1:15:45Portability in the context of health
1:15:46insurance means the ability to carry
1:15:49certain rights and protections with you
1:15:51as you move from one plan to another.
1:15:54Here is the specific protection
1:15:56portability provides.
1:15:57Many health insurance plans have what
1:16:00are called pre-existing condition
1:16:01waiting periods. A waiting period means
1:16:04that when you first join a new plan,
1:16:06coverage for a condition you already had
1:16:08before joining may be delayed for a
1:16:10certain period of time. However, if you
1:16:13can demonstrate that you had prior
1:16:15continuous coverage, meaning you were
1:16:17not uninsured for a significant gap of
1:16:19time before joining the new plan,
1:16:22that prior coverage can be used to
1:16:24reduce or even eliminate the waiting
1:16:26period on your new plan. The coverage
1:16:28you had before is called creditable
1:16:30coverage, and the certificate of
1:16:32coverage is the document that proves you
1:16:34had it. So, in practical terms, when
1:16:36someone leaves a job and loses their
1:16:38group health insurance, that certificate
1:16:41of coverage becomes a valuable document.
1:16:43If they move to a new employer's plan or
1:16:46purchase individual coverage, they can
1:16:48present that certificate to demonstrate
1:16:50their prior creditable coverage and
1:16:53potentially avoid having to wait out a
1:16:55pre-existing condition exclusion period
1:16:58on their new plan.
1:16:59Here is the rule that makes this
1:17:01protection truly effective, and it is a
1:17:03detail the exam will test. The insurer
1:17:07is required to issue the certificate of
1:17:09coverage automatically when a person's
1:17:11coverage terminates. The insured does
1:17:14not have to ask for it. They do not have
1:17:16to fill out a form or make a phone call
1:17:18requesting the document. The insurer is
1:17:20legally obligated to provide it upon
1:17:22termination of coverage without being
1:17:24prompted.
1:17:26This automatic issuance requirement
1:17:28exists because the people who need this
1:17:30document most are often dealing with
1:17:32stressful life transitions. Losing a
1:17:34job, going through a divorce, or facing
1:17:37other major changes. And they may not
1:17:39even know the document exists or that
1:17:42they need to ask for it.
1:17:44By requiring automatic issuance, Texas
1:17:47law ensures that people receive this
1:17:48important protection without having to
1:17:51navigate an additional bureaucratic
1:17:52hurdle at an already difficult time.
1:17:55Chapter 14. HMO definitions. We have now
1:18:00reached the section of this guide that
1:18:01covers health maintenance organizations,
1:18:04which are almost always referred to
1:18:06simply as HMOs.
1:18:08HMOs are a distinct type of health
1:18:10coverage that operates differently from
1:18:13traditional insurance, and Texas has its
1:18:15own set of rules governing how they
1:18:17work.
1:18:18This chapter focuses on the foundational
1:18:20definitions you need to understand
1:18:22before we get into the specific rules in
1:18:25the chapters that follow. Get these
1:18:27definitions clear in your mind now
1:18:29because everything else in the HMO
1:18:31section builds on them.
1:18:33Let's start with what an HMO actually
1:18:36is. A health maintenance organization is
1:18:39an entity that either directly provides
1:18:41or arranges for comprehensive health
1:18:43care services for its members.
1:18:46The key distinction between an HMO and
1:18:48traditional health insurance is in how
1:18:50the coverage works. With traditional
1:18:52health insurance, you receive care, the
1:18:55provider bills the insurer, and the
1:18:57insurer pays its share.
1:18:59With an HMO, the member pays a prepaid
1:19:02premium, meaning they pay a set amount
1:19:04each month regardless of how much care
1:19:06they use. And in return, the HMO makes
1:19:10sure that comprehensive health care
1:19:11services are available to them through a
1:19:14network of providers. The emphasis is on
1:19:16providing and coordinating care, not
1:19:19just reimbursing for it after the fact.
1:19:22Now, let's talk about one of the most
1:19:23important and most frequently tested
1:19:25concepts in the entire HMO section. That
1:19:28concept is the service area. Every HMO
1:19:32in Texas must define a specific
1:19:34geographic area, a region, a set of
1:19:36counties, or a defined territory within
1:19:39which it provides covered services to
1:19:41its members. This is called the service
1:19:44area. As an HMO member, you are expected
1:19:47to use providers and facilities that are
1:19:49located within that service area.
1:19:51If you go outside the service area to
1:19:53seek care from a provider that is not
1:19:55part of the HMO's network, the HMO
1:19:58generally is not obligated to cover that
1:20:00care.
1:20:02The service area concept is fundamental
1:20:04to how HMOs operate. And it is something
1:20:07the exam returns to repeatedly. Know it
1:20:09well.
1:20:10However, there is a critically important
1:20:12exception to the service area rule, and
1:20:15this is one of the most common trap
1:20:17questions on the Texas State Exam.
1:20:19Even though HMOs normally only cover
1:20:22care received within their service area,
1:20:24there is one situation where that rule
1:20:26does not apply.
1:20:28That situation is a medical emergency.
1:20:31If an HMO experiences a genuine medical
1:20:34emergency,
1:20:35meaning a sudden, serious condition that
1:20:38requires immediate treatment to prevent
1:20:40serious harm,
1:20:42the HMO must cover that emergency care
1:20:45regardless of where it occurs.
1:20:48It does not matter if the member is
1:20:49traveling out of state, in a part of
1:20:51Texas that is outside the service area,
1:20:54or even in another country. Emergency
1:20:56care must be covered. And here is the
1:20:58second part of that rule that makes it
1:21:00especially important for the exam. That
1:21:03emergency care must be covered without
1:21:05prior authorization.
1:21:07Prior authorization means getting
1:21:09approval from the HMO before receiving
1:21:12care. Normally, HMOs require prior
1:21:15authorization for many types of
1:21:17services. But in a genuine emergency, a
1:21:20person cannot be expected to stop and
1:21:22call their HMO to get approval before
1:21:25seeking treatment.
1:21:26Texas law recognizes this reality, and
1:21:29the rule is clear.
1:21:31Emergency care, anywhere, anytime, no
1:21:35prior authorization required.
1:21:37If you remember nothing else from this
1:21:39chapter for the exam, remember that.
1:21:42Next, let's define the evidence of
1:21:44coverage. When someone enrolls in an
1:21:46HMO, they do not receive a traditional
1:21:49insurance policy the way they would with
1:21:51a standard health insurance plan.
1:21:54Instead, they receive a document called
1:21:56an evidence of coverage.
1:21:58This document serves the same basic
1:22:00purpose as a policy.
1:22:02It tells the member what services are
1:22:04covered, what their rights are as an
1:22:06enrollee,
1:22:07what their financial obligations are,
1:22:09and how the plan works. But it is
1:22:11important to know the terminology
1:22:13because the exam will use the phrase
1:22:15evidence of coverage specifically in the
1:22:18context of HMOs. If you see that phrase,
1:22:21you are in HMO territory. Now, let's
1:22:24make sure you understand who the players
1:22:26are when it comes to HMO membership.
1:22:29There are two terms to know. The first
1:22:31is subscriber. The subscriber is the
1:22:34primary insured person. The individual
1:22:36who has enrolled in the HMO plan,
1:22:38typically through their employer or on
1:22:41their own.
1:22:42The second term is enrollee. Enrollees
1:22:45include the subscriber and any
1:22:47dependents who are covered under the
1:22:48plan, such as a spouse or children. So,
1:22:52the subscriber is always one specific
1:22:54person, but there may be multiple
1:22:56enrollees under a single subscription.
1:22:59Think of it this way.
1:23:00The subscriber is the account holder and
1:23:03the enrollees are everyone covered under
1:23:05that account.
1:23:07The last definition in this chapter is
1:23:09participating provider. A participating
1:23:11provider is a doctor, hospital, clinic,
1:23:14or other healthcare professional or
1:23:16facility that has entered into a
1:23:18contract with the HMO to provide
1:23:20services to its members.
1:23:22Because they have contracted with the
1:23:24HMO, participating providers have agreed
1:23:27to accept the HMO's negotiated rates for
1:23:29their services.
1:23:31As an HMO member receiving care from a
1:23:34participating provider within the
1:23:35service area is the expected and
1:23:38intended way to use your coverage.
1:23:40Going to a provider who has not
1:23:42contracted with the HMO, called a
1:23:44non-participating provider, generally
1:23:47means the HMO will not cover that care,
1:23:50with the emergency exception we already
1:23:52discussed being the most significant
1:23:53departure from that rule. Chapter 15.
1:23:57Evidence of coverage.
1:23:59In the previous chapter, we introduced
1:24:01the evidence of coverage as the document
1:24:03HMO enrollees receive in place of a
1:24:06traditional insurance policy.
1:24:08In this chapter, we are going to go
1:24:10deeper into what that document must
1:24:12contain and why it matters for both
1:24:14enrollees and agents.
1:24:17Let's start with the most fundamental
1:24:18purpose of the evidence of coverage.
1:24:21This document is the enrollee's primary
1:24:23reference for understanding their HMO
1:24:25plan.
1:24:26Everything an enrollee needs to know
1:24:28about how their coverage works should be
1:24:30findable in this document.
1:24:33Texas law sets specific requirements for
1:24:35what must be included in it. And those
1:24:37requirements exist to make sure that
1:24:40enrollees are never left guessing about
1:24:42what their plan covers or how to use it.
1:24:45The evidence of coverage must clearly
1:24:47describe all covered services.
1:24:49This means the document cannot be vague
1:24:51or general about what the HMO will pay
1:24:54for.
1:24:55It must spell out in clear and
1:24:57understandable language exactly which
1:24:59health care services the member is
1:25:01entitled to receive through the plan.
1:25:04This gives enrollees the ability to know
1:25:06in advance whether a particular service
1:25:08or treatment will be covered before they
1:25:10seek it out.
1:25:11Just as important as knowing what is
1:25:13covered is knowing what is not covered.
1:25:17The evidence of coverage must also
1:25:18clearly describe all exclusions.
1:25:21An exclusion is a service, condition, or
1:25:24situation that the plan specifically
1:25:26does not cover.
1:25:28Exclusions are a normal part of any
1:25:30insurance or managed care product, but
1:25:32enrollees have a right to know what they
1:25:34are up front. A document that clearly
1:25:36lays out exclusions protects both the
1:25:39enrollee, who will not be blindsided by
1:25:41a denied claim, and the HMO, which has
1:25:44put the enrollee on notice about the
1:25:46limits of the plan.
1:25:48The evidence of coverage must also
1:25:50clearly explain all cost sharing
1:25:52requirements.
1:25:53Cost sharing refers to the portions of
1:25:55health care costs that the enrollee is
1:25:58responsible for paying out of their own
1:26:00pocket.
1:26:01This includes things like copayments,
1:26:03which are fixed dollar amounts paid at
1:26:05the time of a visit, deductibles, which
1:26:08are amounts the enrollee must pay before
1:26:10the plan begins covering certain
1:26:12services, and any coinsurance, which is
1:26:15the percentage of costs the enrollee
1:26:17shares with the plan after the
1:26:19deductible is met. Enrollees need to
1:26:22understand their cost-sharing
1:26:23obligations before they use their
1:26:25coverage so that they are not surprised
1:26:28by bills they did not expect. Finally,
1:26:31the evidence of coverage must include a
1:26:32clear description of the grievance
1:26:34procedures available to the enrollee.
1:26:37A grievance procedure is the formal
1:26:38process an enrollee follows when they
1:26:41have a complaint or dispute with the
1:26:43HMO. For example, if they believe a
1:26:46claim was wrongly denied or if they feel
1:26:49they were not provided a service they
1:26:50were entitled to.
1:26:52Knowing how to file a grievance and what
1:26:54the process looks like is an important
1:26:56right for every enrollee. And Texas law
1:26:59requires that the evidence of coverage
1:27:01make that process clear and accessible.
1:27:04Beyond its contents, there is an
1:27:06important distinction about the evidence
1:27:08of coverage that the exam expects you to
1:27:10understand. A traditional health
1:27:13insurance policy works on a
1:27:14reimbursement model. You receive care,
1:27:17the provider charges for it, and the
1:27:19insurer reimburses some or all of that
1:27:22cost.
1:27:23The insurer is somewhat removed from the
1:27:25actual delivery of care. Their role is
1:27:27primarily financial. An HMO works
1:27:30differently. The HMO does not simply sit
1:27:33back and write checks after care is
1:27:35delivered. Instead, it directly arranges
1:27:38for or provides the health care services
1:27:41its members need through its network of
1:27:43participating providers.
1:27:45The HMO is involved in the delivery of
1:27:47care itself, not just the payment for
1:27:50it. This is a fundamental difference in
1:27:52the nature of the product. And it is
1:27:54reflected in the fact that HMO members
1:27:56receive an evidence of coverage rather
1:27:58than a traditional insurance policy.
1:28:01The document's very name, evidence of
1:28:03coverage, reflects the nature of the
1:28:05relationship. It is evidence that the
1:28:07member is entitled to receive the
1:28:09services the HMO has committed to
1:28:12providing. Chapter 16, HMO non-renewal
1:28:16and cancellation.
1:28:18One of the most vulnerable moments for
1:28:20any insured person is when their health
1:28:22coverage ends. This is especially true
1:28:25for HMO members who have built
1:28:27relationships with specific
1:28:29participating providers within their
1:28:31plan's network and who may be in the
1:28:33middle of ongoing treatment when their
1:28:34coverage terminates.
1:28:36This chapter covers the rules Texas law
1:28:38puts in place to protect HMO enrollees
1:28:42when cancellation or non-renewal occurs.
1:28:44Let's start with the notice requirement.
1:28:47Before an HMO can cancel or non-renew a
1:28:50member's coverage, it must provide
1:28:52proper advance written notice.
1:28:54This requirement is not a formality.
1:28:57It is a meaningful protection.
1:28:59When someone is about to lose their
1:29:01health coverage, they need time to find
1:29:03alternative coverage, transition their
1:29:05care to a new plan's providers, and make
1:29:08informed decisions about their health
1:29:10care.
1:29:11Receiving written notice in advance
1:29:13gives them that time. Springing a
1:29:15cancellation on someone without warning
1:29:17would leave them potentially exposed and
1:29:20without the ability to plan.
1:29:22Texas law recognizes this and requires
1:29:24that the notice be provided in writing
1:29:27and in advance of the coverage ending.
1:29:29Now, let's talk about non-renewal
1:29:31specifically.
1:29:32Not every insurance product can simply
1:29:34be non-renewed at the insurer's
1:29:36discretion.
1:29:37For HMO coverage in Texas, specific
1:29:40statutory grounds must exist before an
1:29:43HMO can choose not to renew a member's
1:29:45coverage.
1:29:46The word statutory here means defined by
1:29:49law. In other words, the reasons for
1:29:51non-renewal are not left up to the HMO
1:29:54to decide on a case-by-case basis.
1:29:57The law specifies what those acceptable
1:29:59reasons are and if the HMO's reason for
1:30:02wanting to non-renew does not fall
1:30:04within those legally defined grounds,
1:30:06they cannot do it.
1:30:08This protection prevents HMOs from
1:30:10arbitrarily dropping members who have
1:30:12become expensive to cover or who have
1:30:15developed serious health conditions that
1:30:17require significant care.
1:30:19Without this protection, the people who
1:30:21need their coverage the most would be at
1:30:23the greatest risk of losing it.
1:30:26The most important enrollee protection
1:30:27in this chapter is the right to
1:30:29continuation of care.
1:30:31Here is the situation this rule
1:30:33addresses.
1:30:34Imagine an HMO member who is in the
1:30:36middle of an active course of treatment.
1:30:39Perhaps they are receiving chemotherapy,
1:30:41recovering from surgery, or being
1:30:43treated for a serious condition that
1:30:45requires ongoing medical attention.
1:30:48Now, imagine their HMO coverage is
1:30:50terminated either through cancellation
1:30:53or non-renewal.
1:30:55Without the right to continuation of
1:30:56care, that member could find themselves
1:30:59abruptly cut off from the providers who
1:31:01have been managing their treatment,
1:31:03potentially at a critical point in their
1:31:05recovery.
1:31:06Texas law protects against this outcome.
1:31:09When an HMO member's coverage terminates
1:31:12while they are in the middle of an
1:31:13active course of treatment, they have
1:31:15the right to continue receiving that
1:31:17treatment from their current providers
1:31:19for a period of time even after their
1:31:21coverage officially ends.
1:31:23This right to continuation of care
1:31:25ensures that the end of an insurance
1:31:27relationship does not mean the abrupt
1:31:29end of medical treatment for someone who
1:31:31is in genuine need. The providers
1:31:34involved are generally required to
1:31:35continue the care under the terms of the
1:31:38HMO's reimbursement arrangements during
1:31:40this transition period, giving the
1:31:42patient time to either obtain new
1:31:44coverage or complete the active course
1:31:46of treatment in a medically appropriate
1:31:48manner.
1:31:50Taken together, these three protections,
1:31:52advance written notice, statutory
1:31:55grounds for non-renewal, and the right
1:31:57to continuation of care,
1:31:59reflect a consistent principle that runs
1:32:01throughout Texas insurance law, the
1:32:04people who depend on their insurance
1:32:06coverage deserve to be treated fairly,
1:32:08to have their rights clearly defined,
1:32:10and to have meaningful protections in
1:32:12place for the moments when they are most
1:32:14vulnerable. Chapter 17, HMO enrollment.
1:32:19Understanding how people get into an HMO
1:32:21plan is just as important as
1:32:23understanding what the plan covers once
1:32:25they are in it.
1:32:27This chapter covers the rules governing
1:32:29enrollment in HMO plans in Texas,
1:32:31including when people can sign up, what
1:32:34happens when life changes unexpectedly,
1:32:36and who can be covered under a member's
1:32:38plan.
1:32:40Let's start with open enrollment. An
1:32:42open enrollment period is a designated
1:32:44window of time during which eligible
1:32:47individuals can sign up for HMO
1:32:49coverage, make changes to their existing
1:32:51plan, or add or remove dependents.
1:32:55Outside of this window, enrollment is
1:32:57generally not permitted. The open
1:32:59enrollment period exists to create
1:33:01structure and predictability in the
1:33:03enrollment process, which helps HMOs
1:33:06manage their membership and plan their
1:33:08networks and resources appropriately.
1:33:11For most employer-sponsored HMO plans,
1:33:14open enrollment happens once a year,
1:33:16giving employees a regular and reliable
1:33:18opportunity to make decisions about
1:33:21their health coverage for the coming
1:33:22year. The existence of an open
1:33:24enrollment window might seem restrictive
1:33:26at first. If you miss the window, you
1:33:29simply have to wait until next year?
1:33:31In most cases, yes, but there is an
1:33:34important exception, and that exception
1:33:37is built around what are called
1:33:38qualifying life events.
1:33:40A qualifying life event is a significant
1:33:43change in a person's life circumstances
1:33:45that creates a special enrollment period
1:33:48outside of the regular open enrollment
1:33:50window.
1:33:51When a qualifying life event occurs, the
1:33:53individual has a limited period of time
1:33:55to enroll in or make changes to their
1:33:58HMO coverage without waiting for the
1:34:01next open enrollment period.
1:34:03The logic behind this rule is
1:34:05straightforward. Life does not always
1:34:07happen on a schedule that lines up with
1:34:09open enrollment periods, and certain
1:34:11life changes directly affect a person's
1:34:14health insurance needs in ways that
1:34:16cannot reasonably wait months until the
1:34:18next enrollment window opens.
1:34:21The types of events that qualify vary,
1:34:23but they generally fall into
1:34:25recognizable categories.
1:34:27Getting married is a qualifying life
1:34:29event because two people are now forming
1:34:31a household and may need to coordinate
1:34:34their coverage.
1:34:36Having a baby or adopting a child is a
1:34:38qualifying life event because a new
1:34:41dependent has entered the family and
1:34:43needs to be covered.
1:34:45Losing other health coverage is a
1:34:46qualifying life event. For example, if
1:34:49someone loses their job and their
1:34:51employer-sponsored coverage ends, they
1:34:53cannot simply be left without any path
1:34:55to obtaining new coverage until the next
1:34:58open enrollment period arrives.
1:35:00Divorce or legal separation can also be
1:35:03a qualifying life event, particularly
1:35:05when it affects the coverage of a spouse
1:35:07or children who were enrolled under the
1:35:09other spouse's plan.
1:35:11In each of these situations, the
1:35:13qualifying life event triggers a special
1:35:15enrollment window, typically lasting a
1:35:17limited number of days, during which the
1:35:20affected individual can take action to
1:35:22enroll or update their coverage.
1:35:25The last topic in this chapter is
1:35:27dependent enrollment. Under Texas HMO
1:35:30statutes, there are rules that govern
1:35:32who can be enrolled as a dependent under
1:35:34a subscriber's plan.
1:35:36Generally speaking, eligible dependents
1:35:38include a spouse and dependent children
1:35:41up to a certain age.
1:35:43The specific age limits and eligibility
1:35:45criteria for dependent children are
1:35:47defined by law and by the terms of the
1:35:49specific plan.
1:35:51What is important to understand for the
1:35:53exam is that Texas HMO law establishes
1:35:57rules around dependent enrollment to
1:35:59ensure consistency and fairness in how
1:36:02plans define and treat the family
1:36:04members of their subscribers.
1:36:07When a dependent becomes eligible
1:36:09through birth, adoption, marriage, or
1:36:11another qualifying event, the dependent
1:36:14enrollment rules define how and when
1:36:16that person can be added to the plan.
1:36:19Chapter 18,
1:36:20out-of-network claims. We touched on the
1:36:23concept of the service area and the
1:36:25network of participating providers back
1:36:27in chapter 14.
1:36:29You will recall that HMO members are
1:36:31generally expected to receive their care
1:36:33from providers who are within the HMO's
1:36:36network and service area.
1:36:38But what happens when that is simply not
1:36:40possible?
1:36:41What happens when a member needs care
1:36:43and there is no in-network provider
1:36:45available to provide it?
1:36:47That is exactly what this chapter
1:36:49addresses.
1:36:50Texas HMO law recognizes that there are
1:36:53situations where an enrollee may need to
1:36:55receive care from a provider who is
1:36:58outside of their HMO's network.
1:37:01The most obvious example is a medical
1:37:03emergency, which we already covered in
1:37:05detail. But emergencies are not the only
1:37:08situation where out-of-network care
1:37:10might become necessary.
1:37:12There are circumstances where the HMO's
1:37:14network simply does not include a
1:37:16provider who can deliver a specific type
1:37:19of care that the member needs. Perhaps
1:37:21the member requires a highly specialized
1:37:24procedure and no in-network provider in
1:37:26the service area performs it. Perhaps
1:37:29all of the in-network providers for a
1:37:31particular specialty have full patient
1:37:33loads and cannot see the member within a
1:37:36reasonable time frame.
1:37:38In situations like these, the member may
1:37:40need to go outside the network and Texas
1:37:43law has rules to address what happens
1:37:45when they do.
1:37:46The core protection that Texas HMO law
1:37:49provides in the out-of-network context
1:37:51is protection against unexpected balance
1:37:53billing.
1:37:55To understand why this matters, you need
1:37:57to understand what balance billing is.
1:37:59When a provider treats an HMO member,
1:38:02there is a difference between what the
1:38:03provider charges for their services and
1:38:06what the HMO has agreed to pay.
1:38:09In-network providers have contracts with
1:38:11the HMO that establish agreed-upon
1:38:13rates, so those providers accept
1:38:16whatever the HMO pays as payment in full
1:38:18and cannot bill the member for the
1:38:20difference.
1:38:21Out-of-network providers, however, have
1:38:24no such contract with the HMO.
1:38:26Without legal protections in place, an
1:38:28out-of-network provider could
1:38:30potentially bill the member for the full
1:38:32difference between their standard
1:38:33charges and whatever the HMO paid,
1:38:37a practice called balance billing.
1:38:39That difference can be substantial,
1:38:41sometimes amounting to thousands of
1:38:43dollars that the member had no reason to
1:38:45expect they would owe.
1:38:48Texas HMO law protects enrollees from
1:38:51this outcome in certain circumstances.
1:38:54Specifically, when an enrollee receives
1:38:56out-of-network care in a situation where
1:38:59in-network care was not reasonably
1:39:01available, such as in an emergency or
1:39:04when the network lacks an appropriate
1:39:05provider,
1:39:07the enrollee cannot be held responsible
1:39:09for amounts beyond what they would have
1:39:11paid had they received in-network care.
1:39:14In other words, the financial exposure
1:39:16for the member is capped at the
1:39:18in-network level even though the care
1:39:20was delivered out of network.
1:39:22The dispute over the remaining amount
1:39:24becomes a matter between the HMO and the
1:39:27out-of-network provider, not something
1:39:29the enrollee is caught in the middle of.
1:39:32This protection is meaningful in
1:39:33practice because it removes a
1:39:35significant source of financial
1:39:37uncertainty for HMO members.
1:39:40People should be able to seek necessary
1:39:42medical care without fear that a gap in
1:39:44their network or an unavoidable
1:39:46emergency will expose them to a bill
1:39:49they could never have anticipated and
1:39:51cannot afford to pay.
1:39:53Texas law steps in to make sure that
1:39:55when out-of-network care is genuinely
1:39:57necessary and unavoidable, the member is
1:40:00not left holding the full financial
1:40:01burden of that situation. Review key
1:40:04numbers and deadlines. You have made it
1:40:07through all of the content in this Texas
1:40:09state-specific study guide and that is a
1:40:12significant accomplishment. But before
1:40:14we wrap up, we want to leave you with
1:40:16something you can come back to again and
1:40:19again as your exam date approaches.
1:40:22This final segment is a rapid-fire
1:40:24review of every important number,
1:40:26deadline, and threshold covered in this
1:40:29guide.
1:40:30These are the details that show up on
1:40:32the Texas state exam constantly and
1:40:35having them locked into your memory
1:40:36before you walk into that testing center
1:40:39could make all the difference.
1:40:41Listen through this segment multiple
1:40:43times. Say the answers out loud before
1:40:45we give them.
1:40:46Quiz yourself. The goal is for these
1:40:49numbers to become automatic. So
1:40:51automatic that when you see a question
1:40:53about them on the exam, the answer comes
1:40:56to you immediately without having to
1:40:57think hard about it. Let's go through
1:41:00them. What scaled score do you need to
1:41:02pass the Texas insurance licensing exam?
1:41:0570.
1:41:06How many scorable state-specific
1:41:08questions are on the life and health
1:41:10combined track? 30 plus five unscored
1:41:14pretest questions. How many scorable
1:41:17state-specific questions are on the
1:41:19health only track? 25 plus five unscored
1:41:23pretest questions.
1:41:24How many continuing education hours must
1:41:27a Texas agent complete every two years?
1:41:3024 hours. Of those continuing education
1:41:34hours, how many must specifically cover
1:41:37ethics?
1:41:38At least 3 hours.
1:41:40If you move to a new address, how many
1:41:42days do you have to notify TDI?
1:41:4530 days. How long is a temporary license
1:41:48valid in Texas?
1:41:50180 days. Can a temporary license be
1:41:54renewed? No. Ever.
1:41:57Only one temporary license will ever be
1:41:59issued to any person.
1:42:01How many hours of training must a
1:42:03sponsoring insurer provide to a
1:42:05temporary licensee and within what time
1:42:08frame? At least 40 hours of training
1:42:11completed within the first 30 days.
1:42:14What is the grace period for a health
1:42:16insurance policy with weekly premium
1:42:18payments? 7 days. What is the grace
1:42:21period for a health insurance policy
1:42:24with monthly premium payments?
1:42:2610 days.
1:42:28What is the grace period for a health
1:42:30insurance policy with any other payment
1:42:32mode? Quarterly, semi-annual, or annual.
1:42:3731 days.
1:42:39Under Texas prompt pay rules, how many
1:42:41calendar days does an insurer have to
1:42:44acknowledge receipt of a claim, begin an
1:42:46investigation, and request necessary
1:42:49documentation?
1:42:5015 calendar days.
1:42:53After receiving all required
1:42:55documentation, how many business days
1:42:57does an insurer have to accept or reject
1:43:00a claim?
1:43:0115 business days. If an insurer cannot
1:43:04make a decision within that window, how
1:43:07many additional days can they take if
1:43:09they provide proper written notice
1:43:10explaining why?
1:43:1245 additional days. Once a claim is
1:43:15accepted, how many business days does
1:43:17the insurer have to send payment?
1:43:20Five business days. What is the
1:43:22financial penalty for an insurer that
1:43:24violates Texas prompt pay deadlines? 18%
1:43:28annual interest on the unpaid claim
1:43:30amount plus reasonable attorney's fees.
1:43:33What is the free look period for a
1:43:35Medicare supplement policy in Texas?
1:43:3830 days.
1:43:39What is the free look period for a
1:43:41long-term care policy in Texas?
1:43:4430 days.
1:43:45What is the standard free look period
1:43:47for most other health insurance
1:43:48policies?
1:43:5010 days.
1:43:51How is a small employer defined under
1:43:54Texas law?
1:43:55A business with two to 50 employees.
1:43:58How long does a person have after
1:44:00passing the Texas licensing exam to
1:44:02submit their license application through
1:44:04Sircon?
1:44:06One year.
1:44:08What is the license application fee in
1:44:09Texas? $50. What is the written proof of
1:44:13loss deadline under Texas health policy
1:44:16provisions?
1:44:1790 days from the date of the loss or as
1:44:20soon as reasonably possible.
1:44:22What is the earliest a policy holder can
1:44:24bring legal action against an insurer
1:44:27after submitting proof of loss?
1:44:29No sooner than 60 days after proof of
1:44:31loss is submitted.
1:44:33What is the latest a policy holder can
1:44:35bring legal action against an insurer?
1:44:38No later than 3 years after the loss
1:44:40occurred.
1:44:41How long is the federal Medicare
1:44:43supplement open enrollment window?
1:44:466 months beginning when a person is at
1:44:48least 65 years old and enrolled in
1:44:50Medicare Part B.
1:44:52How is the HMO emergency care rule
1:44:55summarized?
1:44:56Emergency care must be covered anywhere
1:44:59at any time with no prior authorization
1:45:02required.
1:45:03And finally, can an HMO member be
1:45:06balanced billed for out-of-network care
1:45:08when that care was necessary because
1:45:11in-network care was not available?
1:45:13No.
1:45:14The member's financial responsibility is
1:45:16capped at the in-network level.
1:45:19That is every key number and deadline
1:45:21from this guide. If you went through
1:45:23that list and there were answers you did
1:45:25not know immediately, go back and review
1:45:28the chapters where those topics are
1:45:29covered. Then, come back and run through
1:45:32this closing segment again.
1:45:34Keep doing that until every single
1:45:36answer is automatic.
1:45:38You have put in the work. You have
1:45:40studied the content. Now, go pass that
1:45:42exam. Good luck.

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