A New York Medicare supplement policyholder develops serious health problems and submits several large claims. At renewal, the insurer refuses to continue the coverage on that basis. Is the refusal permissible?

Why B is correct

Under the New York Insurance Law, Medicare supplement policies are guaranteed renewable, which means the insurer must renew the coverage as long as the premiums are paid and may not refuse renewal because of the insured's health status or claims history. Nonrenewal is confined to narrow grounds such as nonpayment of premium or fraud, so a refusal based on the insured's growing claims is impermissible no matter how the insurer frames it. The Department of Financial Services treats such a refusal as a violation of the guaranteed renewability requirement.

Why the other options are wrong

• A) Excessive claims are not a permissible nonrenewal ground; guaranteed renewability exists precisely so that insureds who become sick keep their coverage.
• C) Deteriorating health is not a permitted ground for refusing renewal; the renewal guarantee does not depend on the insured's medical condition.
• D) Proper notice does not convert an impermissible ground into a permissible one; a health-based or claims-based nonrenewal is invalid however it is communicated.

Memory hook

Getting sicker is never a reason to lose a guaranteed renewable policy.