Under which circumstance can an insurance company offer group health insurance?

An insurance company can offer group health insurance when the sponsoring group provides an employer-employee relationship. This is because group health insurance is typically designed to cover a defined group of individuals who have a common bond, such as employment. In this arrangement, the employer acts as the sponsor for the group policy and is responsible for paying part or all of the premiums, which can result in lower costs for the employees. This structure not only fosters a sense of community among the group members but also ensures that the policy can be offered under specific regulations that govern employer-sponsored health plans.

Other options involve circumstances that do not meet the criteria for a legitimate group health insurance plan. For example, unrelated members or groups formed for illegal purposes lack the necessary cohesion or purpose required for a valid insurance arrangement. Similarly, a group that is merely formed to obtain reduced rates does not merit group insurance because it is not centered around an ongoing relationship, like that between an employer and employees, which is fundamental to group insurance policies.