(a) Issuance of Coverage in the Small-Group Market -- In General. Subject to subsections (b)-(e) of this section, each health insurance issuer that offers health insurance coverage in the small-group market in Arkansas:

(1) Must accept every small employer in Arkansas that applies for that health insurance coverage; and

(2) Must accept for enrollment under the health insurance coverage every eligible individual as defined in § 23-86-303(8) who applies for enrollment during the period in which the individual first becomes eligible to enroll under the terms of the group health plan and may not place any restriction which is inconsistent with § 23-86-306 on an eligible individual's being a participant or beneficiary.

(b) Special Rules for Network Plans. (1) In General. In the case of a health insurance issuer that offers health insurance coverage in the small-group market through a network plan, the health insurance issuer may:

(A) Limit the employers that may apply for that health insurance coverage to those with eligible individuals who live, work, or reside in the service area for the network plan; and

(B) Within the service area of the network plan, deny that health insurance coverage to the employers if the health insurance issuer has demonstrated, if required, to the Insurance Commissioner that:

(i) It will not have the capacity to deliver services adequately to enrollees of any additional groups because of its obligations to existing group contract holders and enrollees; and

(ii) It is applying this subsection uniformly to all employers without regard to the claims experience of those employers and their employees and their dependents or any health status-related factor relating to such employees and dependents.

(2) One-Hundred-Eighty-Day Suspension Upon Denial of Coverage. Upon denying health insurance coverage in any service area in accordance with subdivision (b)(1)(B) of this section, a health insurance issuer may not offer health insurance coverage in the small-group market within the service area in this state for a period of one hundred eighty (180) days after the date the health insurance coverage is denied.

(c) Application of Financial Capacity Limits. (1) In General. A health insurance issuer may deny health insurance coverage in the small-group market in Arkansas if the health insurance issuer has demonstrated to the commissioner that:

(A) It does not have the financial reserves necessary to underwrite additional health insurance coverage; and

(B) It is applying this subdivision (c)(1) uniformly to all employers in the small-group market in Arkansas consistent with applicable Arkansas law and without regard to the claims experience of those employers and their employees and their dependents or any health status-related factor relating to such employees and dependents.

(2) One-Hundred-Eighty-Day Suspension Upon Denial of Health Insurance Coverage.

(A) Upon denying health insurance coverage in connection with group health plans in accordance with subdivision (c)(1) of this section, a health insurance issuer in Arkansas may not offer health insurance coverage in connection with group health plans in the small-group market in this state for a period of one hundred eighty (180) days after the date the health insurance coverage is denied or until the health insurance issuer has demonstrated to the commissioner that the health insurance issuer has sufficient financial reserves to underwrite additional health insurance coverage, whichever is later.

(B) The commissioner may provide for the application of this subsection on a service-area-specific basis.

(d) Exception to Requirement for Failure to Meet Certain Minimum Participation or Contribution Rules -- In General. Subsection (a) of this section shall not be construed to preclude a health insurance issuer from establishing employer contribution rules or group participation rules for the offering of health insurance coverage in connection with a group health plan in the small-group market, as allowed under Arkansas law.

(e) Exception for Coverage Offered Only to Bona Fide Association Members. Subsection (a) of this section shall not apply to health insurance coverage offered by a health insurance issuer if the health insurance coverage is made available in the small-group market only through one (1) or more bona fide associations as defined in § 23-86-303(2).