In California, for an association to sponsor group health insurance for its members, which requirement must be satisfied?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under California law governing eligible groups (CIC Sections 10270.5 through 10270.57), an association may be an eligible group only if it was formed for a purpose other than obtaining insurance and has a genuine common interest among its members. This prevents groups from being created merely to buy insurance, which would concentrate bad risks and undermine the spread of loss. The members share a common bond such as a profession, trade, or fraternal purpose, and coverage is offered on a group basis under a master policy. These requirements keep the association plan actuarially sound and are a standard CA-specific testing point.
Why the other options are wrong
- B) An association covers its members, not its employees; the employer-employee relationship is the basis of a different eligible group, not an association group.
- C) California group eligibility does not require members to reside in a single county; associations commonly span the state or the nation.
- D) Governmental bodies are a separate eligible group category; an association is a private membership organization, not a government unit.
Memory hook
A real association sells its trade, not its insurance; insurance must be a sideline, not the reason to join.