State RegulationsTX specificDifficulty 3/5
A Texas resident holds a Medicare Supplement policy issued by a life and health insurer that the department has placed into liquidation. Which Texas Life and Health Guaranty Association health coverage limit applies to that Medicare Supplement policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under TIC Chapter 463, the Association's health coverage limits are tiered: $500,000 for basic hospital, medical-surgical and major medical coverage; $300,000 for disability income and long-term care; and $200,000 for all other types of health coverage, which includes Medicare Supplement. Because a Medicare Supplement policy is neither basic hospital, medical-surgical or major medical coverage nor disability income or long-term care, it falls into the $200,000 residual bucket per insured life. Knowing the tier matters when an agent explains to a client what would happen if the insurer failed.
Why the other options are wrong
- A) $100,000 is the life insurance net cash surrender and withdrawal value cap and has no application to health coverage.
- B) $300,000 covers disability income and long-term care benefits, not Medicare Supplement coverage.
- C) $500,000 is reserved for basic hospital, medical-surgical and major medical coverage; Medicare Supplement is not in that tier.
Memory hook
Supplement lands in the leftover $200K bucket.