State RegulationsCO specificDifficulty 3/5
A Colorado leasing company supplies employees to several client employers and arranges group health coverage for those leased employees. Under Colorado small-employer rules, how must rates for the leased employees be determined?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Colorado's leasing-arrangement rules (Colorado Insurance Regulation 4-6-10, applied with the rating framework of C.R.S. § 10-16-105.6) do not allow a leasing company to aggregate its client employers into one large group to escape small-employer rating. Rates for leased employees must be consistent with each lessee employer's group characteristics, just as if the lessee were the employer.
Why the other options are wrong
- A) Treating the leasing company as one exempt large group is precisely what the leasing rules prevent.
- C) Leased employees remain connected to an employer group for coverage purposes; individual rates are not required.
- D) Private negotiation cannot override the rating rules; rates must follow the statutory framework.
Memory hook
Leasing does not launder group size — rates follow the lessee's group.