Under California law, which requirement must an association meet to qualify as an eligible group for group health coverage?
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
For an association to qualify as an eligible group for health coverage in California (CIC Section 10270.5 and related sections), it must have been formed in good faith for purposes other than obtaining insurance. This rule prevents a group of people from organizing a shell association merely to buy coverage as a group, which would defeat underwriting and invite adverse selection. The association's primary purpose must be something else — trade, professional, or community activity — with group insurance as an incidental benefit of membership.
Why the other options are wrong
- B) An association formed solely to purchase insurance fails the good-faith purpose test; that is exactly the arrangement California law rejects.
- C) No minimum membership threshold of 1,000 is required by the California qualified-group rules for associations.
- D) Purchasing coverage from an unlicensed insurer is prohibited; coverage must come from a licensed carrier.
Memory hook
Associations must have a life outside insurance. Formed for golf, not for group policies — insurance as a sideline, not the mission.