State RegulationsMI specificDifficulty 2/5
A Michigan small employer's health plan has an expensive claims year, and the carrier notifies the employer that coverage will not be renewed solely because of that claims experience. Under Michigan's small-employer renewability rules, what is the result?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
M.C.L. 500.3711 requires small-employer health coverage to be renewable, limiting a carrier's ability to decline renewal to grounds permitted by law, such as nonpayment of premiums. A carrier cannot use one expensive claims year as the stated basis for nonrenewal, and premium refunds or peer-group consent provide no lawful substitute.
Why the other options are wrong
- A) Claims-based cancellation is exactly what the renewability requirement in M.C.L. 500.3711 forecloses.
- B) Refunding premiums does not create a lawful ground to nonrenew a guaranteed-renewable small group.
- C) Other groups' consent is irrelevant to the carrier's renewal obligation.
Memory hook
Bad claims year is no exit — small plans renew by law.