Underwriting for a large group medical plan is typically based primarily on:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Large group underwriting rests on the law of large numbers: because a large group generates a statistically credible volume of claims, the insurer prices the coverage from the group's own experience — prior claim history, industry classification, demographics, and the plan design chosen — rather than from the medical history of each individual employee. Individual risk selection is largely absent, which is why eligibility in large groups is generally open to all employees regardless of health. Small groups, by contrast, may receive more medical underwriting because their own claims data are not yet credible.
Why the other options are wrong
- B) Individually underwriting each employee is characteristic of small-group or individual coverage, not of large groups with credible aggregate experience, so this reverses the rating logic.
- C) Dependent health is a component of overall group experience but is not the sole or primary basis for large group rating, so this answer narrows the factors far too much.
- D) Owner credit scores are not a rating factor for group medical coverage, which is priced on claims and risk-pool characteristics rather than on personal finances.
Memory hook
Big group = big data. The insurer reads the group's own claim history, not each employee's medical chart.