Difficulty: Medium

Average Score: 72%

With respect to small group health benefit plans, a carrier may discontinue coverage or may refuse to renew such a plan if the employer

Rationale

A carrier may discontinue coverage if the employer fails to pay the premium prior to the end of the grace period.

Non-payment of premiums is a legitimate reason for a health benefit plan carrier to discontinue coverage or refuse renewal, as it directly affects the financial viability of the plan.

A (employs fewer than 15 full-time employees.) YOUR ANSWER

The number of full-time employees does not inherently justify the discontinuation of coverage. Many health benefit plans are designed to serve small groups, and the employer's size alone is not a valid reason for termination or non-renewal under most regulations unless specific thresholds are established in the policy.

B (has filed for bankruptcy in the prior year.) YOUR ANSWER

While bankruptcy may raise concerns regarding an employer's financial stability, it is not a specific reason that allows a carrier to terminate health coverage. Carriers must adhere to regulatory guidelines that typically do not allow discontinuation based solely on an employer's financial status unless there are additional breaches of contract.

C (has a supplemental plan with a competing carrier.) YOUR ANSWER

Having a supplemental plan with another carrier does not provide valid grounds for discontinuation of an existing plan. Employers often utilize supplemental plans to enhance their coverage, and this choice should not impact the primary plan's continuity under the terms set forth in most contracts.

D (fails to pay the premium prior to the end of the grace period.) CORRECT

Failure to pay premiums is a clear violation of the terms of the health benefit plan, allowing the carrier to discontinue coverage. The grace period is designed to offer a buffer for payment, but once that period ends without receipt of payment, the carrier is within its rights to terminate the coverage.

Conclusion

In summary, a carrier may terminate a health benefit plan if the employer fails to pay premiums by the end of the grace period, as this constitutes a breach of the contractual agreement. Other scenarios, such as employee count, bankruptcy filings, or having supplemental coverage, do not meet the necessary criteria for coverage discontinuation. Understanding these stipulations is essential for both employers and carriers to maintain compliance with health benefit regulations.

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