In California's small group health insurance market, what does guaranteed issue require of an insurer?
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
Guaranteed issue in the small group market means an insurer must accept every eligible small employer that applies, without regard to the health status of the employer's employees or any dependents. Neither the employer nor the employees can be turned down for coverage because of medical conditions, and the insurer cannot exclude an employee due to a preexisting condition. In exchange for this obligation, rating rules allow insurers to vary premiums only on limited factors such as age, geography, and family composition, not on health status. The combination of guaranteed issue and restricted rating protects small groups that could not otherwise obtain coverage.
Why the other options are wrong
- B) Guaranteed issue forbids denial based on industry or health risk; high-risk industries and sick employees cannot be rejected.
- C) Medical underwriting of individual employees is the opposite of guaranteed issue; the insurer takes all eligible employees without health screening.
- D) Individual claims-based pricing is not permitted; small group rates are community-rated on a limited set of allowed factors.
Memory hook
Guaranteed issue = take every small employer as-is; health and industry never close the door.