Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Accident, Health and HMOHard
A Texas-based HMO is undergoing a financial audit. To maintain its certification, what is the minimum net worth the HMO is required to maintain under Texas law?
- A$1,000,000
- B$2,000,000
- C$500,000
- D$1,500,000
Show answer & explanationAnswer & explanation
Correct answer: D. $1,500,000
Under Texas Insurance Code, an HMO is required to maintain a minimum net worth of $1,500,000. This financial solvency requirement ensures the HMO has sufficient assets to meet its obligations to enrollees.
Why the other options are wrong
- A. This is incorrect; the minimum net worth is higher.
- B. This is incorrect; the minimum net worth is lower than this amount.
- C. This is incorrect; the minimum net worth is higher.
Texas HMO Minimum Net Worth
Under Texas law, Health Maintenance Organizations (HMOs) are required to maintain a minimum net worth of $1,500,000 to ensure financial solvency and their ability to meet obligations to enrollees.
- Required for all certified HMOs in Texas.
- Amount is $1,500,000.
- Ensures financial stability and ability to pay claims/provide services.
- Subject to audit by the TDI.
Memory trick: An HMO needs '1.5 Million' in the bank to keep its 'health' in Texas.