Most people have a general idea of the nature of ‘group' health insurance coverage. The most common type of group coverage is provided thru your employer. Many employers provide group health coverage as a benefit to their employees, either by paying the entire premium or sharing in the premium. With group health insurance, a single policy covers a specific group of people. 

Because of this special nature, insurance companies have to make certain that the number of people covered by a group policy stays at or above a certain minimum level. Some states also have their own regulations that control the minimum number of people required under a group plan. The number can differ from state to state so check local regulations.

In order to be considered a group, the entity must have the same employer or other commonality. There are many different types of groups that may be considered. For our purposes, we will consider an employer/employee group.

A single master policy is issued to an entity representing the group of people. We will call this the employer. It is the employers responsibility to apply for coverage for the group, own and hold the master policy and collect and make premium payments to the insurer when due.

Eligibility and eligibility period.
In an individual policy, where each person is evaluated separately in terms of risk, the normal practice in a group policy is to include all eligible employees regardless of physical condition or age.

One condition must be met for all people regardless of their physical condition before they may be included in a group plan, is that they must apply for coverage during a specified eligibility period. Failing to enroll during that time period will result in a requirement to take a physical examination and they will be selected on an individual basis just as if the policy were an individual policy. An initial 90 day employment period is typical for group coverage, after which the employee has a 31 day eligibility period. If the employee fails to apply during that eligibility period, then the employee will be required to take a physical examination and must qualify as if on an individual basis.

This is how an insurer can afford to cover a group of people without individual selection. Otherwise some people might choose not to enroll until they discover they have an illness or they become disabled. Requiring a physical exam after the eligibility period helps to preclude this event.