Medical Expense✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Underwriting of a large group medical plan is primarily based on:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Large groups have enough members that their own claims history is statistically credible, so insurers underwrite them through experience rating — projecting the group's future costs from its past claims, industry, age and sex mix, and geographic area. Because risk is spread across a large number of covered lives, individual medical underwriting of each member is generally not used. This contrasts with small groups, where the law requires guaranteed issue and rating is constrained by rules intended to keep coverage available and affordable.
Why the other options are wrong
- B) Large group pricing is not based on individual member health; the group's aggregate experience is the rating basis.
- C) A flat community rate for all employers describes community rating, not the experience rating used for large groups.
- D) The health of a single executive is immaterial to the statistically credible experience of a large group.
Memory hook
Big groups get graded on their own track record — claims history, not individual checkups.