(a) Except as provided by Insurance Code §1501.109 (concerning Refusal to Renew; Discontinuation of Coverage), a small employer carrier must renew any small employer health benefit plan at the option of the small employer, unless:
  (1) the premium has not been paid as required by the terms of the plan;
  (2) the small employer has committed fraud or intentional misrepresentation of a material fact. An intentional misrepresentation of a material fact does not include any misrepresentation related to health status;
  (3) the small employer has not complied with a material provision of the health benefit plan relating to premium contribution, group size, or minimum participation requirements;
  (4) the small employer has no enrollee, in connection with the plan, who resides or works in the service area of the small employer carrier or in the area where the small employer carrier is authorized to do business; or
  (5) membership of an employer in an association terminates, but only if coverage is terminated uniformly without regard to a health-status-related factor of a covered individual.
(b) A small employer carrier may refuse to renew the coverage of an eligible employee or dependent for fraud or intentional misrepresentation of a material fact by that individual and with respect to an eligible employee or dependent who is a subscriber or enrollee in an HMO, for the reasons specified in §11.506 of this title (relating to Mandatory Contractual Provisions: Group, Individual and Conversion Agreement and Group Certificate). The coverage is also subject to any policy or contractual provisions relating to incontestability or time limits on certain defenses. An intentional misrepresentation of a material fact does not include any misrepresentation related to health status.
(c) A small employer carrier may not cancel a small employer health benefit plan except for the reasons specified for refusal to renew under Insurance Code §1501.108 (concerning Renewability of Coverage; Cancellation), and subsections (a) and (b) of this section. A small employer carrier may not cancel the coverage of an eligible employee or dependent except for the reasons specified for refusal to renew under Insurance Code §1501.108 and subsections (a) and (b) of this section.
(d) A carrier is not prevented from seeking any legal remedies against a person who fraudulently misrepresents health status during the initial application for coverage. Legal remedies available to a carrier do not include cancellation or nonrenewal.
(e) Other small employer health benefit plans, provided through individual policies, must be guaranteed renewable for life or until maximum benefits have been paid, or may be guaranteed renewable with the only reasons for termination being those set out in Insurance Code §1501.108 and §1501.109 and this subchapter. All other health benefit plans issued to small employers must be renewed at the option of the small employer, but may provide for termination in accordance with Insurance Code Chapter 1501 (concerning Health Insurance Portability and Availability Act), and this subchapter.

Source Note: The provisions of this §26.15 adopted to be effective April 9, 1996, 21 TexReg 2648; amended to be effective March 5, 1998, 23 TexReg 2297; amended to be effective April 6, 2005, 30 TexReg 1931; amended to be effective May 17, 2017, 42 TexReg 2539