What is the requirement for the replacing insurer when XYZ Company seeks to change their group health coverage?

When XYZ Company seeks to change their group health coverage, the replacing insurer is required to accept all individuals who were eligible under the previous plan. This requirement is crucial because it ensures continuity of coverage for employees transitioning from one group health plan to another. By accepting all eligible individuals, the new insurer protects employees from losing their health coverage during the switch, which could create gaps in healthcare access.

This provision is in place to promote fairness and to minimize the risk of adverse selection, where only the healthiest individuals would seek new coverage, leaving the previous insurer with a disproportionate number of high-risk individuals. It reflects the principle of portability in health insurance, which is essential for maintaining comprehensive healthcare options for employees when their employer changes insurers.

The other options involve actions that either reject coverage or create barriers that might negatively impact those transitioning from an existing group plan. Thus, the requirement to accept all eligible individuals under the previous plan is vital for a smooth transition in group health coverage.