State RegulationsVA specificDifficulty 2/5
A Virginia Medicare supplement policyholder has paid premiums for years without a lapse in coverage. The insurer announces it will stop renewing his policy because his claims have been unusually high. What is wrong with the insurer's position?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Virginia's Medicare supplement framework, including Va. Code § 38.2-3605 and the Bureau of Insurance's Medigap rules, makes these policies guaranteed renewable. Renewability means the coverage continues as long as the insured pays the premiums; the insurer cannot cancel or nonrenew because the insured got older, sicker, or used more benefits. The insurer's remedies for an unprofitable block of business run through filed premium levels for entire rating classes, not through singling out costly individuals for nonrenewal.
Why the other options are wrong
- A) Advance notice does not authorize a nonrenewal the guaranteed-renewable requirement forbids in the first place.
- B) Swapping the insured into a pricier comparable policy to escape his claims history defeats renewability; renewal of the policy itself is what the law requires.
- D) There is no premium-refund condition attached to renewability; the protection operates directly against claims-based nonrenewal.
Memory hook
Guaranteed renewable: pay the premium, keep the policy — high claims can't evict you.