An insurer will not write a group health plan for a three-person employer, but will consider the group once at least a substantial minimum number of employees enroll. The main reason for this minimum participation requirement is to:

Why A is correct

Insurers require minimum participation in group coverage so that the group constitutes a large enough, stable pool for the law of large numbers to operate. With only a handful of lives, a single large claim can overwhelm premium assumptions. The requirement also limits adverse selection, because broader participation brings in healthy and unhealthy members alike, making the group's loss experience more predictable.

Why the other options are wrong

• B) Minimum participation does not guarantee that individuals never claim; claims remain uncertain and inevitable for some members.
• C) Group coverage may still involve underwriting or eligibility rules; the minimum size requirement does not eliminate underwriting.
• D) Commission is unrelated to pool size requirements; the requirement is an actuarial and anti-selection safeguard.

Memory hook

Minimum headcount = enough dice rolls for the odds to behave. Three people are not a pool, they are a prayer.