What is a Policyholder for Health Insurance?
Just the Essentials...
- Policyholder is a legal term that denotes the owner of a health insurance policy.
- A policyholder is the person who can name beneficiaries and assign coverage for a spouse, significant other, or other legal dependents.
- “Policyholder” describes the owner of insurance policies whether sponsored by employers, purchased for families, or individuals.
- Employer plans use a group policyholder, and invited individuals are allowed options for participation from the group policyholder.
- “Policyholder” is the source for determining covered beneficiaries under an insurance policy.
What is a Policyholder for Health Insurance?
In health insurance terms, a “policyholder” is the legal owner of a health insurance policy. A policyholder for health insurance may or may not be the sole beneficiary, but they have the power to determine beneficiaries of a health insurance policy. Policyholders are also usually the signatories on an insurance contract with the health insurance provider.
As the primary signee, the policyholder determines who can benefit from the terms of coverage and health insurance protection. In group insurance, the policyholder is known as a group policyholder.
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What is a Health Insurance Policy?
A health insurance policy is a contract that contains agreements to provide insurance coverage for health and medical care at a price. This price is known as a monthly premium. The health insurance provider agrees to pay for medically necessary treatment and services that fall under the terms of this contract.
The passage of the Affordable Care Act (ACA) in March 201 changed the essential content of all health insurance contracts to provide:
Before the ACA, ownership of health insurance policies was far more complex. For example, it used to be next to impossible for those with pre-existing health conditions to obtain health insurance. Thanks to the ACA, insurers must accept all applicants, regardless of whether or not they have a pre-existing condition.
Ownership of a health insurance policy is a right for all eligible applicants, and you can exercise your right to enroll in a health insurance policy during an annual Open Enrollment Period. If you miss your chance to apply during the OEP, qualifying life circumstances may qualify you for a Special Enrollment Period.
Policyholder vs. Beneficiary: Ownership is Key
The structure of health insurance in the United States puts ownership at the center of the transaction. Insurance companies offer different types of health insurance plans for different owners. One type is for groups, owned by a group policyholder. The other is for individuals and families, owned by an individual policyholder.
Policies set terms to include fees for the contract and any conditions that a policyholder must meet before insurance benefits kick in. In all cases, providers and policyholders make the policy agreement that forms the contract for health insurance.
As mentioned before, the policyholder is the insured person in most individual cases. As the owner, the policyholder has the power to name others as beneficiaries or insured parties. Beneficiaries simply have the authority to use the policy for its benefits. In most cases, the policyholder and beneficiary are one and the same.
Benefits for Policyholders and Beneficiaries
The insured party, or beneficiary, has rights granted by the policyholder to use the policy and get:
- Cost sharing
- Insurance benefits
- Other protections of coverage
The policyholder is legally responsible for payment of premiums and other incurred costs. Policyholders can make agreements that the beneficiary will pay deductibles, copays, and coinsurance as a condition of receiving insurance coverage.
Group Policyholders, and the Basics of Group Policies
Group health insurance policies are the primary source of health insurance coverage for most Americans. Employer-based health insurance plans offer employees financial security, and employers use health insurance benefits to attract and retain talented workers.
In a group plan, the employer pays some or all of the premiums. They may also provide further assistance to cover out-of-pocket expenses and deductibles. Coverage for group policies is essentially the same for all members, and ACA reforms have improved the content of all health insurance plans.
For group health insurance, the policyholder is known as a “group policyholder”, and is typically the company or organization that sponsors or promotes health coverage for individuals and their dependents. The best example of a group plan is an employer-sponsored health insurance plan for employees.
A group policyholder for health insurance may be a:
- Beneficial association
- Labor organization
- Special entity organized for the purpose of handling group health insurance
Group policyholders assign benefits to employees or other members with a certificate of insurance. This certificate is proof and authority to receive benefits from an insurer. More often than not, this proof of eligibility for coverage comes in the form of an ID card.
What’s the Takeaway?
The role of policyholder for health insurance is extremely important, whether you’re a group policyholder or a policyholder for an individual plan. As the policyholder, you are the person named on the contract for insurance, and you serve as the owner of the plan. All of the terms apply to the persons that you select as beneficiaries.
Beneficiaries of health insurance are insured parties that use health insurance coverage for health and medical services. The policyholder is the insured person in family and individual coverage, and can be the sole beneficiary.
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