If a small employer fails to meet the eligibility threshold, what may occur to coverage?

• A. The plan automatically renews with no changes
• B. The employer loses eligibility to offer coverage
• C. If not met, insurer may not renew coverage
• D. The plan converts to a dental plan

Answer: (C)

The main idea here is that small-group plans are tied to minimum eligibility requirements. If the employer no longer meets those requirements (for example, not enough eligible employees or other participation rules aren’t met), the insurer has the option to discontinue the group coverage at its next renewal. In practice, this means the coverage may not be renewed at the end of the policy period, and employees would need to seek coverage through another market (such as the individual market or another group option if the threshold is later met again).

This is why the best answer is that, if the threshold isn’t met, the insurer may not renew coverage. The other options don’t fit because automatic renewal with no changes ignores the consequence of not meeting eligibility, and saying the employer loses eligibility to offer coverage is a broader, less precise result than the insurer simply choosing not to renew. Converting to a dental plan isn’t relevant to the eligibility issue.