Maryland Life and Health Insurance License Practice Exam

Under what condition can a group health policy's renewal be denied according to HIPAA?

1. Health status of the employees

2. Violation of contribution or participation rules

3. Failure to make premium payments

4. Changes in company structure

The correct answer is: Violation of contribution or participation rules

A group health policy's renewal can be denied based on a violation of contribution or participation rules, as stipulated by HIPAA regulations. Under HIPAA, group health plans can set certain participation thresholds that must be met in order for the plan to remain valid and for the employer to be eligible for renewal. If a group fails to meet these specified criteria—such as a minimum number or percentage of employees participating in the plan—the insurer has the right to refuse renewal. This provision is designed to ensure that group plans maintain a risk pool that is sufficient for the insurer to operate effectively. While health status, premium payments, and changes in company structure are all important factors in the management of health plans, they do not fall under the specific HIPAA guidelines for denying the renewal of a group health policy. Health status, for instance, cannot be used as a basis for differential treatment in renewal under HIPAA protection against discrimination based on health information. Similarly, failures related to premium payments typically result in termination rather than denial of renewal, and structural changes within a company may necessitate adjustments in the policy but do not automatically result in the denial of renewal.