A. Except as provided in Subsection B of this section, a health benefit plan subject to the Small Group Rate and Renewability Act shall be renewable to all eligible employees and dependents at the option of the small employer, except for the following reasons:

(1) nonpayment of required premiums;

(2) fraud or misrepresentation of the small employer, or with respect to coverage of an insured individual, fraud or misrepresentation by the insured individual or that individual's representative;

(3) noncompliance with plan provisions;

(4) the number of individuals covered under the plan is less than the number or percentage of eligible individuals required by percentage requirements under the plan; or

(5) the small employer is no longer actively engaged in the business in which it was engaged on the effective date of the plan.

Eligibility classifications may not be changed if any individual is eliminated, due to the change, who was insured immediately prior to the change without first receiving the approval of the superintendent.

B. A small employer carrier may cease to renew all plans under a class of business. The carrier shall provide notice to all affected health benefit plans and to the superintendent in each state in which an affected insured individual is known to reside at least ninety days prior to termination of coverage. A carrier which exercises its right to cease to renew all plans in a class of business shall not:

(1) establish a new class of business for a period of five years after the nonrenewal of the plans without prior approval of the superintendent; or

(2) transfer or otherwise provide coverage to any of the employers from the nonrenewed class of business unless the insurer offers to transfer or provide coverage to all affected employers and eligible employees and dependents without regard to case characteristics, claim experience, health status or duration of coverage.

C. A small employer carrier may not change eligibility classifications upon renewal or replacement within twelve months of its termination of its own coverage if the change in classification eliminates from coverage any individual who was insured previous to the change and would have continued to be insured if the change in eligibility had not occurred.

History: Laws 1991, ch. 153, § 6.

Applicability. — Laws 1991, ch. 153, § 11 made the provisions of the act applicable to each health benefit plan for a small employer under the Small Group Rate and Renewability Act that is delivered, issued for delivery, renewed or continued in this state after July 1, 1991 and provided that the date a plan is continued or renewed is the first rating period that commences after June 14, 1991.