Question 61

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

A carrier has the right to discontinue coverage or refuse to renew a small group health benefit plan if the employer does not pay the premium before the grace period ends, highlighting the importance of timely payment in maintaining coverage.

A) employs fewer than 15 full-time employees.

This option is incorrect because the number of full-time employees an employer has does not automatically justify the discontinuation of health coverage. Regulations typically allow coverage to continue regardless of the number of employees, provided other conditions are met.

B) has filed for bankruptcy in the prior year.

While bankruptcy may influence an employer's financial stability, it does not serve as a valid reason for a carrier to discontinue coverage. Many provisions exist to protect coverage during financial distress, making this option not applicable in this context.

C) has a supplemental plan with a competing carrier.

This option is incorrect as having a supplemental plan with another carrier does not provide grounds for discontinuation of the primary health benefit plan. Carriers cannot refuse renewal based solely on the existence of competing coverage.

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

This option is correct because failing to pay premiums within the specified grace period is a contractual obligation that, if not met, gives the carrier the right to discontinue coverage. This reflects standard practices in insurance agreements.

Conclusion

The correct answer, option D, clearly outlines a specific reason that allows a carrier to discontinue coverage, whereas the other options do not align with valid grounds for termination of health benefit plans. Understanding the conditions under which coverage can be discontinued is crucial for employers to maintain their health benefits.