Health insurance questions on the Texas exam blend the national plan structures you must know with Texas's own mandates, continuation rights, and consumer protections written into the Texas Insurance Code (TIC). This standalone guide first reviews how medical plans are built—managed care, cost-sharing, group vs. individual—then centers Texas law: mandated benefits, state continuation for small employers, conversion rights, HMO regulation, and the prompt-pay timelines that protect insureds. Learn the structures, then nail the Texas add-ons.

Medical plan types (the national base)

Medical plans differ mainly in how they manage access and cost:

• HMO (Health Maintenance Organization) — care coordinated through a primary care physician (PCP); in-network only except emergencies; often low deductible but strict referrals. Texas regulates HMOs under TIC Chapter 843 and issues them a certificate of authority through TDI.
• PPO (Preferred Provider Organization) — a network with lower cost in-network but out-of-network allowed at higher cost; no PCP gatekeeper. Texas regulates preferred-provider plans under TIC Chapter 1301.
• EPO and POS — hybrids blending HMO and PPO features.
• Indemnity / fee-for-service — pays a share of charges with broad provider choice.

Cost-sharing terms run across all of them: premium, deductible, copayment, coinsurance, and an out-of-pocket maximum. Plans are sold group (employer) or individual, and the Affordable Care Act (ACA) sets the federal floor—guaranteed issue, no health rating, coverage of pre-existing conditions, essential health benefits, and dependent coverage to age 26. Texas enforces this federal floor and adds its own requirements on top.

Texas mandated benefits

Texas requires that certain benefits, when a health policy is issued, be included or offered. The exam tests the concept of state mandates and a few recurring examples. Commonly mandated or required-to-offer items include:

• Newborn and adopted-child coverage from the moment of birth or placement, with timely enrollment notice.
• Mammography / cancer screening benefits.
• Diabetes equipment, supplies, and self-management education.
• Maternity and child health supervision services.
• Emergency care without unreasonable network barriers, including Texas's strong balance-billing / surprise-billing protections.
• Mental health / substance-use parity consistent with federal law.

If an exact statutory detail is unclear, answer at the principle level: Texas requires policies to provide or offer these mandated benefits, and an insurer cannot simply omit them.

Continuation of coverage (Texas state continuation)

Federal COBRA lets employees of larger employers (generally 20+ employees) continue group coverage after a qualifying event—commonly up to 18 months (and 36 months for certain dependent events). Texas fills the gap for small employers and adds an extension through its own continuation law in the Texas Insurance Code:

• State continuation applies to groups too small for federal COBRA (fewer than 20 employees).
• Texas also provides additional continuation (commonly cited as up to 6 more months) for those who have exhausted federal COBRA.
• The insured generally must elect continuation within a short window and pay the premium to keep it active.

So the pairing to remember: federal COBRA for 20+ employers; Texas state continuation for the small groups below that line, plus a short post-COBRA extension. (Verify the current continuation periods, as these change.)

Conversion rights

Separate from continuation, Texas group health plans typically grant a conversion privilege: when group eligibility ends and continuation is exhausted, the individual may convert to an individual policy without proving insurability. Key points:

• Conversion is guaranteed issue—no new medical underwriting.
• The converted policy may carry different (often higher) premiums and somewhat different benefits.
• The insured must usually apply and pay within a set period after group coverage ends.

Conversion matters most for people who would otherwise be uninsurable; the exam frames it as a protection that prevents a coverage gap.

Required provisions and consumer timelines

Texas health policies carry standard required provisions and several timelines worth memorizing as concepts:

• Grace period — time to pay a late premium before lapse (length varies by premium mode).
• Free-look — a short period to return a new policy for a refund (often 10 days on health, longer for senior products).
• Incontestability — after the policy has been in force a set time (commonly 2 years), the insurer generally cannot contest it for misstatements.
• Texas Prompt Pay Act — Texas requires insurers and HMOs to pay, deny, or audit clean claims within statutory windows (commonly cited as 30 days for electronic and 45 days for paper clean claims); late payments accrue penalties. (Verify current day counts.)
• Guaranteed renewability — individual ACA-compliant plans renew regardless of health.

Key terms at a glance

Common exam traps

• Mixing up COBRA and state continuation. Federal COBRA is for 20+ employers; Texas continuation covers the small groups below that threshold and adds a short post-COBRA extension.
• Thinking conversion requires underwriting. Conversion is guaranteed issue—no health questions.
• Forgetting newborn coverage starts at birth. It is automatic for a set period, subject to enrollment notice.
• Assuming an HMO covers out-of-network non-emergencies. Generally it does not, except true emergencies.
• Confusing continuation with conversion. Continuation extends the group plan; conversion moves you to an individual policy.
• Ignoring the Prompt Pay Act. Texas penalizes insurers and HMOs that miss clean-claim deadlines—a frequently tested Texas distinctive.
• Overstating the free-look. Ordinary health free-look is short (often ~10 days); senior products get longer.

Quick recap

Texas medical-plan questions start from the national structures—HMO (PCP-gatekept, in-network, TIC Chapter 843), PPO (out-of-network allowed, TIC Chapter 1301), and indemnity—plus the ACA floor of guaranteed issue, no health rating, covered pre-existing conditions, and dependents to age 26. Texas layers on mandated benefits (newborn from birth, mammography, diabetes, maternity, mental-health parity), strong surprise-billing protections, and fills the COBRA gap with its own state continuation for small employers under 20 plus a short post-COBRA extension, while federal COBRA handles 20+ employers. When coverage ends, the conversion privilege provides a guaranteed-issue individual policy with no underwriting, and standard provisions—grace period, ~10-day free-look, 2-year incontestability, and the Texas Prompt Pay Act—protect the insured. Keep continuation, conversion, mandates, and prompt-pay straight and the Texas health section is very winnable.