Under TIC 843.002, how does a "health care plan" differ from ordinary health insurance that indemnifies for the cost of health care services?
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Why D is correct
Under TIC 843.002, a health care plan is a plan under which a person undertakes to provide, arrange for, pay for, or reimburse any part of the cost of health care services, and that consists in part of providing or arranging for those services on a prepaid basis, as distinguished from indemnifying for the cost of the services. The distinguishing feature is the service commitment on a prepaid basis, not the regulator, the distribution channel, or the identity of the payee. This is why an HMO enrollee's benefits flow through the HMO's delivery network rather than through unrestricted reimbursement of whatever provider the patient happens to choose.
Why the other options are wrong
- A) HMOs are regulated by the department under Insurance Code Chapter 843; a health care plan is not outside the department's jurisdiction.
- B) Chapter 843 contemplates individual, group, and conversion coverage, so a health care plan is not confined to employer groups.
- C) That reverses the distinction: an indemnity policy reimburses the cost of services, while an HMO provides or arranges the services themselves.
Memory hook
Prepaid service commitment, not indemnity for the bill.