Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Accident, Health and HMOHard
A Texas-based HMO is reviewing its financial solvency. Under Texas regulations, what is the minimum net worth requirement for a Health Maintenance Organization (HMO) that has been in operation for more than 5 years?
- A$2,000,000
- B$3,000,000
- C$1,500,000
- D$1,000,000
Show answer & explanationAnswer & explanation
Correct answer: B. $3,000,000
Texas Insurance Code and related regulations state that an HMO that has been in operation for more than 5 years must maintain a minimum net worth of $3,000,000. This ensures financial stability and ability to meet obligations.
Why the other options are wrong
- A. $2,000,000 is also not the specified minimum net worth for established HMOs in Texas.
- C. $1,500,000 is not the specified minimum net worth for established HMOs in Texas.
- D. $1,000,000 is often a minimum for initial licensure or for HMOs in their first few years, but not for established HMOs.
Texas HMO Minimum Net Worth
In Texas, an HMO that has been in operation for more than 5 years must maintain a minimum net worth of $3,000,000 to ensure financial stability and protect enrollees.
- Applies to established HMOs (>5 years).
- Minimum required net worth is $3,000,000.
- Ensures solvency and ability to provide services.
Memory trick: After 'five' years, a Texas HMO needs 'three million' to stay 'strong'.