State RegulationsTX specificDifficulty 2/5
A Texas insurer sells a hospital indemnity policy that it advertises as designed to fill the gaps left by Medicare, although the policy is not labelled a Medicare supplement. How is the policy treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under the Texas Medicare supplement rules at 28 TAC 3.3301-3.3310 and 3.3312-3.3313, a policy is regulated as a Medicare supplement when it is advertised, marketed or designed to provide coverage that supplements Medicare, regardless of the name the insurer puts on it. The practical consequence is that the insurer cannot sidestep the minimum standards by renaming the product: what the policy is sold to do controls, not the label on the cover page.
Why the other options are wrong
- A) Hospital indemnity is not exempt as a form when the policy is marketed to fill Medicare's gaps; the standards attach to the way it is sold.
- B) Delivery through an association or group does not remove a Medicare supplement policy from the minimum standards.
- D) The insurer's chosen label is not controlling; advertising, marketing and design determine whether the policy is a Medicare supplement.
Memory hook
What it is sold to do beats what it is called.