State RegulationsNY specificDifficulty 2/5
A small employer in Yonkers applies for group medical coverage. Several employees have serious chronic health conditions, and the carrier wants to refuse the group for that reason. Under Reg 145, what must the carrier do?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under Reg 145 (11 NYCRR Part 360), which governs availability of coverage in the small group market, insurers doing small group business in New York must make coverage available to eligible small employers and may not turn a group away because of the health status or claims experience of its employees. A refusal or surcharge keyed to chronic conditions would violate the availability rules enforced by the Department of Financial Services.
Why the other options are wrong
- A) Health status is not a permissible basis on which to refuse small group coverage; availability does not depend on it.
- B) Availability attaches to the eligible group as a whole; the insurer may not carve out the conditions of particular employees as the price of acceptance.
- C) A premium surcharge tied to the employees' health conditions is equally impermissible under the small group availability rules.
Memory hook
The small group door swings for everyone: sick employees cannot close it.