State RegulationsTX specificDifficulty 2/5
A small Texas employer applies to a small group health benefit plan issuer for coverage. The issuer discovers that the group's claims experience under its prior carrier was very high and declines to issue. Under the Texas small group eligibility rules, the issuer's action is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under 28 TAC 26.8, an issuer of small group health benefit plans must make coverage available to a small employer that satisfies the eligibility requirements, and it cannot refuse to issue because of the group's prior claims experience or the health status of its employees and dependents. The rules prescribe what an issuer may consider in eligibility and rating, and a group's unlucky claims history is not on that list. The practical consequence is that an agent presented with such a declination should challenge it rather than shop the group elsewhere on the same basis.
Why the other options are wrong
- B) Guaranteed availability in the small group market removes claims experience as a basis for refusing to issue.
- C) Agreeing to a higher deductible does not make an otherwise improper declination lawful.
- D) Documenting the claims history does not create a ground for declination the rules do not allow.
Memory hook
Small group: if the group qualifies, the coverage must be issued.