Short answer: Yes, if it meets an IRS exception: generally, coverage offered to all full-time employees, based on a uniform percentage of pay or the insurer’s coverage brackets, with any health screening limited to a questionnaire and no physical. Texas law lets an employer group life policy cover as few as 2 employees.
The IRS’s general rule is that life insurance is not group term life unless it is provided to at least 10 full-time employees at some time during the year. Employees who could enroll but decline still count.
A smaller employer still qualifies if all of these are met: any evidence of insurability is limited to a medical questionnaire completed by the employee without a physical; the coverage goes to all full-time employees (or all who provide evidence the insurer accepts); and the amount is a uniform percentage of pay or follows the insurer’s coverage brackets. In applying this, employees denied coverage because they are 65 or older, work 20 hours or less a week or 5 months or less a year, or have not finished a waiting period of up to 6 months are ignored.
On the insurance side, the Texas Insurance Code requires an employer group life policy to cover at least 2 employees when issued, and if employees pay nothing, it must cover all eligible employees (except those whose evidence of insurability the insurer rejects). Amounts must follow a plan that prevents individual selection.