Virginia State Life, Health and Annuities Practice Exam

The correct choice reveals a key protection for small employers under health insurance regulations. An insurer is prohibited from refusing the renewal of a small employer health insurance plan specifically due to the overuse of medical services by the employees. This is aligned with the principle of community rating, which is designed to prevent insurers from discriminating against small groups based on health status or claims experience.

This means that while other factors such as increased employee turnover or high claims history may trigger questions related to risk and could potentially influence the terms of renewal or premiums, they do not provide grounds for outright refusal of renewal. The underlying goal of such regulations is to ensure that small businesses continue to have access to health coverage without being penalized for their employees' health care needs.

Minimum enrollment requirements typically relate to the number of employees needed to establish a group plan, and failing to meet these requirements can indeed affect policy renewals. However, in the case of overusing medical services, the fundamental intent is to protect the small group's access to health insurance, irrespective of their medical usage patterns. This regulation promotes fairness and stability within the small group market.