State RegulationsTX specificDifficulty 3/5
Several self-employed Texans with no common employer or business relationship form an association and apply for small group health coverage. Under the Texas small group eligibility rules, the issuer may decline the application because:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under 28 TAC 26.8, eligibility for small group coverage presupposes a genuine group, meaning a bona fide employer with eligible employees standing in a real employment relationship. A collection of individuals who associate only to buy insurance is not an eligible group, and the issuer may decline the application on that basis. That is a legitimate eligibility screen, unlike declining because the group is small, because a member is pregnant, or because the members happen to work in different industries.
Why the other options are wrong
- A) Being small is the defining feature of the small group market and is never a basis for declination.
- B) Working in different industries does not defeat eligibility where a bona fide employer-employee relationship otherwise exists.
- C) Pregnancy is a health status factor and cannot be used to refuse to issue a small group policy.
Memory hook
No real employer, no small group policy.