State RegulationsTX specificDifficulty 3/5
What distinction does the Texas Medicare supplement cancellation rule draw between cancellation and nonrenewal of a Medicare supplement policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under 28 TAC 3.3306(E), cancellation and nonrenewal are two separately regulated acts. Cancellation ends an in-force policy mid-term and is confined to the grounds stated in the rule, whereas nonrenewal ends coverage as of the end of a policy term and is governed on its own terms. Practically, an insurer cannot treat either mechanism as a general exit triggered by unfavorable loss experience, and the two are not allocated by whether the coverage is written on a group or an individual basis.
Why the other options are wrong
- A) The rule does not collapse the two together, and unfavorable loss experience is not itself a ground for either action.
- B) Nonrenewal is not abolished, and cancellation is not available at the insurer's unrestricted discretion.
- D) The cancellation and nonrenewal rules are not divided along group versus individual lines; both apply regardless of how the coverage is written.
Memory hook
Cancel equals mid-term and for cause; nonrenew equals term end on its own rules.