For insolvencies occurring after January 1, 2010, one Tennessee insured holds a basic hospital and major medical policy, and another holds a long-term care policy from the same insolvent insurer. Under T.C.A. § 56-12-204, how do the guaranty association's caps differ between these coverage types?

Why C is correct

T.C.A. § 56-12-204(c) applies a special schedule to post-2010 insolvencies: basic hospital, medical, surgical, and major medical coverage is protected up to $500,000, while long-term care and disability income coverage are protected up to $300,000 each, and limited or supplemental health coverage up to $100,000. The elevated major medical ceiling also drives the exception to the $300,000 per-life aggregate. Candidates who assume one uniform health cap will misprice the protection for both of these insureds.

Why the other options are wrong

• A) $100,000 is the cap for limited and supplemental health coverage, not for basic hospital and major medical or long-term care.
• B) $300,000 is right for long-term care but understates the $500,000 available for basic hospital, medical, surgical, and major medical coverage.
• D) The two figures are reversed; major medical enjoys the higher ceiling, and long-term care is capped at $300,000.

Memory hook

Post-2010 health split: big medical $500,000, LTC and disability $300,000, supplemental $100,000.