State RegulationsTX specificDifficulty 1/5
Under 28 TAC 3.3306(b)(1)(E)(ii), for which of the following reasons may a Texas issuer cancel a Medicare supplement policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
28 TAC 3.3306(b)(1)(E)(ii) states that an issuer may not cancel or nonrenew a Medicare supplement policy for any reason other than nonpayment of premium or material misrepresentation. The insured's health, claims history, or place of residence within Texas are not grounds for cancellation. Practically, a Texas agent handling a cancellation notice should check which ground the issuer asserted, because a cancellation based on anything other than premium nonpayment or material misrepresentation is improper.
Why the other options are wrong
- A) Deteriorating health is specifically not a permitted ground. Medicare supplement policies are held on a guaranteed renewable basis, and health status does not justify cancellation.
- C) Moving within Texas does not affect the policy. A Medicare supplement policy travels with the insured and is not tied to a county of residence.
- D) Claims experience is not a cancellation ground. The insured contracted for the right to use the coverage, and heavy utilization cannot be used to end the policy.
Memory hook
Cancel med supp for unpaid premium or material misrepresentation, nothing else.