State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 3/5
Which statement is correct regarding self-funded association plans sold in California?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California prohibits self-funded association health plans marketed to small employers and individuals — a specific A&H exam point. Such arrangements leave members exposed to unfunded claims, and California law requires health coverage to be provided through licensed, regulated carriers. This is a distinctive California rule versus other states that allow association plans.
Why the other options are wrong
- B) Small employers in California buy through licensed carriers (including Covered California), not through self-funded association plans.
- C) If they existed, they would still be regulated; in California they are prohibited outright rather than merely regulated.
- D) No member-count threshold legalizes self-funded association health plans in California; the prohibition is not size-based.
Memory hook
California: association self-funded health plans = illegal. The state trusts licensed carriers, not clubs that promise to pay.