Under the Texas small employer health benefit plan law, such a plan must be renewed at the option of the plan sponsor except for certain specified reasons. Which of the following is a permitted reason for nonrenewal?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under the guaranteed renewal requirement of TIC 1501, a carrier may nonrenew only for reasons such as nonpayment of premium or contributions, fraud or intentional misrepresentation by the plan sponsor, failure to satisfy the plan's participation or contribution requirements, or discontinuation of the coverage, and a discontinuation must be carried out uniformly across the market with notice to the department rather than selectively in a single county. Adverse claims experience or an individual's illness is never a ground for nonrenewal, which is what makes the renewal right meaningful to a small employer whose workforce has become expensive to insure.
Why the other options are wrong
- A) A covered person's diagnosis is a health-status factor and cannot be used to nonrenew a small employer health benefit plan.
- C) Claims experience is not one of the permitted nonrenewal grounds under TIC 1501; renewal is guaranteed at the sponsor's option.
- D) Discontinuation must be applied uniformly in the market with departmental notice; dropping coverage in a single county is a selective exit TIC 1501 does not permit.
Memory hook
Renewal is guaranteed: pay the premium, meet participation, tell the truth.