State RegulationsNY specificDifficulty 3/5
Each of the following is a permissible reason for a small employer carrier in New York to refuse renewal of a small employer group's coverage EXCEPT:
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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 (Reg 145)), small employer coverage is guaranteed renewable, but the guarantee is not absolute: an insurer may refuse renewal for reasons such as nonpayment of premiums, fraud in obtaining the coverage, or discontinuance of the product or withdrawal from the small-group market under the rules of the Superintendent of Financial Services. What the insurer may never do is refuse renewal because of the health status or claims of a covered person, so a single employee's serious diagnosis is not a permissible ground.
Why the other options are wrong
- A) Nonpayment of premiums is a traditional and permissible ground for refusing renewal of health coverage, including small-group plans.
- B) Fraud in obtaining the coverage defeats the policyholder's rights, and the insurer may refuse renewal on that basis.
- C) When an insurer discontinues its product or withdraws from the small-group market, nonrenewal is permitted under the applicable rules.
Memory hook
Drop a group for fraud or unpaid premium, never for someone getting sick.