Under what circumstance can an insurer discontinue a small employer group medical plan?

An insurer can discontinue a small employer group medical plan if the insurer decides to stop offering that particular plan to all employers. This situation indicates a broader business decision by the insurer rather than one that reflects the actions or circumstances of just a single employer.

When an insurer discontinues a plan for all groups, it must adhere to specific requirements, including providing notice to policyholders. The rationale behind this rule is that it maintains fairness and consistency across all employers within that specific group, avoiding the perception of discrimination or unfair treatment of individual employers based on their claims history or workforce size.

In contrast to this correct answer, the other circumstances do not typically justify an insurer's discontinuation of a plan. For instance, filing a high number of claims does not provide grounds for discontinuation as such action could lead to potential discrimination against employers simply based on their health care needs. Similarly, a reduction in the employer's workforce might not be a valid reason for discontinuation, as coverage is generally designed to be responsive to varying employment situations. Changes in state regulations could influence how plans must be offered but would not directly give an insurer the right to terminate a specific employer's coverage without proper legal grounds.