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513B.5 Provisions on renewability of coverage.

1. Except as provided in subsection 2, a health benefit plan subject to this subchapter is renewable to all eligible employees and dependents at the option of the small employer, except for one or more of the following reasons:

a. Nonpayment of required premiums.

b. Fraud or misrepresentation of the small employer, or with respect to coverage of an insured individual, fraud or misrepresentation by the insured individual or the individual's representative.

c. Noncompliance with plan provisions.

d. 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.

e. The small employer is no longer actively engaged in the business in which it was engaged on the effective date of the plan.

f. Repeated misuse of a provider network provision.

g. The commissioner finds that the continuation of the coverage is not in the best interests of the policyholders or certificate holders, or would impair the carrier's ability to meet its contractual obligations. If nonrenewal occurs as a result of findings pursuant to this paragraph, the commissioner shall assist affected small employers in finding replacement coverage.

2. A small employer carrier may cease to renew all plans under a class of business, or all classes of business in a defined geographic region if the carrier is a health maintenance organization. The small employer carrier shall provide notice at least one hundred eighty days prior to termination of coverage to all affected health benefit plans and to the commissioner in each state in which an affected insured individual is known to reside. A small employer carrier which exercises its right to cease to renew all plans in a class of business shall not do either or both of the following:

a. Establish a new class of business for a period of five years after the nonrenewal of the plans without prior approval of the commissioner.

b. Transfer or otherwise provide coverage to any of the employers from the nonrenewed class of business unless the small employer carrier 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.

3. A small employer carrier may replace an existing health benefit plan with a new health benefit plan. The premium rate for the new plan shall be developed pursuant to section 513B.4 and must reflect the claim experience of the previously existing plan.

4. A small employer carrier shall not discontinue the sale or active marketing of a particular class of plan or plans, unless the carrier withdraws from all marketing in this state directed at the small employer or has obtained specific approval from the commissioner to do so. The commissioner may approve the discontinuance upon a demonstrated finding that the continued sale or active marketing of a particular class of plan or plans will endanger the solvency of the carrier or does not advance the purposes of this section.

Section History: Recent form

91 Acts, ch 244, § 5; 92 Acts, ch 1167, § 8, 9; 93 Acts, ch 80, § 6

Internal References

Referred to in § 513B.10, 513B.17A

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Last update: Mon Jan 27 16:05:08 CST 1997
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