State RegulationsTX specificDifficulty 2/5
A Texas small employer plan covers a newly enrolled employee who is later diagnosed with a chronic illness. The issuer proposes to attach a rider excluding that condition from the employee's coverage. Under the Texas small employer health benefit plan statute, this is:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under TIC 1501, small employer health benefit plan coverage is delivered on a guaranteed basis at the group level and without health-status underwriting of the individuals within the group, so an eligible employee or dependent cannot be excluded or have benefits cut back because of health status or a pre-existing condition. The employee's consent does not cure a prohibited exclusion, because the restriction protects the structure of the small group market rather than merely the individual's preference, and a willing employer cannot bargain it away either.
Why the other options are wrong
- A) Individual consent cannot authorize a coverage exclusion the statute prohibits.
- B) The employer's willingness to pay more does not make a health-status exclusion lawful.
- C) A condition that develops after enrollment is covered illness, not a basis for carving it out of the plan.
Memory hook
No riders that cut out a sick employee in the small group market.