Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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The lowdown...

  • The policyholder is the signatory to the Insurance contract and the owner
  • The policyholder may or may not be the insured person or beneficiary of the insurance agreement
  • As owner of the policy, the policyholder can name the insured person or beneficiary
  • In group insurance, the policyholder may be the sponsor and the insured parties may be designated as enrollees, certificate holder, or subscriber

In health insurance, the policyholder has a critical role in carrying out a health insurance plan. The policyholder has very different roles in individual and family coverage than in the small or large group setting.

In the individual or family setting, the policyholder is often the insured person, or someone directly connected to the insured beneficiaries. For example, a parent that buys a policy for a dependent child or household member is a policyholder.

In the group setting, the policyholder is rarely the beneficiary. It is a structure for distributing health coverage to eligible participants. Comparison shopping is the proven way to select benefits in an employer-sponsored insurance plan.

Compare the health insurance marketplace. Enter your zip code into our free comparison tool to find the plan that’s right for you!

Policyholder is the Owner

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The owner of the policy can do things that no one else can do. He or she can assign benefits, coverage, and name participants. The policyholder can put another person in the position of an owner by sale or assignment.

The owner can dispose of the policy in any way they choose.

The policyholder may also be a sponsor such as an association or labor organization that names subscribers and issues a credential for participation in the benefits and services.

The below-listed items describe some common examples of policyholders.

  • If insured though policy of parent, then the parent is the policyholder
  • If insured through an employer, then the employer is the policyholder
  • If insured through a group plan, then the plan administrator is the policyholder.

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Group Insurance Policyholder

Group insurance is an important part of health insurance coverage in the US.

Before the Affordable Care Act, most people got their coverage through employment or a person covered through employment. In group insurance situations, the policyholder is not the insured person; it is the organization that sponsors the insurance plan.

The group policyholder can take a number of forms including employers, labor organizations, or associations.

The group policyholder authorizes the insured beneficiaries to participate in the health services and benefits called for in the insurance contract.

These persons often get a certificate of insurance in the name of the policyholder with a distinct ID number for each insured beneficiary. These arrangements can include account based programs to help pay expenses.

Policyholder as Insured Party

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The policyholder is often the insured beneficiary in the individual and family market. This role for the policyholder is to select the insurance coverage and negotiate the best terms available. The other insured parties may be household members and dependents.

The contract between the policyholder and the insurance company and the policyholder designates others that may participate in the benefits as part of the contract.

The policyholder remains the sole party authorized to make changes in the agreement with the insurance provider.

Policyholder for another Person

The insurance company charges additional fees when the policyholder insures other individuals such as a spouse, children, or dependents. Family policies have the essential structure of an individual policy.

The important distinction is that the other persons are members of a plan but cannot make changes to the contract, coverage, and terms.

Members can choose among limited options such as a choice of medical care provider but cannot alter the terms of the insurance agreement; the policyholder can change the terms.

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Duties of Members and Certificate Holders

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The policyholder is the signatory on the contract with the insurance company. The policyholder is legally responsible for payment of the premiums, copays, deductibles, and all charges.

The group settings put the responsibility on the certificate holder, but the policyholder is responsible in the end. Employers and sponsors use various methods such as payroll deductions to handle employee contributions to premiums and expenses.

  • Coinsurance is the agreed amount of cost sharing paid by the consumer. Most often expressed as a percentage of the allowed cost, the consumer must pay coinsurance for each covered benefit or service according to the terms of the agreement.
  • Copays are relatively small charges that insurance providers apply to nearly every service. The exceptions may be in the prevention and wellness services required by Obamacare at no additional costs. Members and certificate holders must pay copays.
  • Deductibles are the customer spending required before the insurance begins paying the agreed costs sharing amounts. Once past the deductible limit, the insurance company pays 100 percent of each covered essential benefit.
  • Out-of-pocket expenses are health care expenses and health-related expenses as well as the above-mentioned copays and deductibles. Once past the out-of-pocket limit, the insurer pays the costs of covered benefits. Members and certificate holders typically pay the out-of-pocket expenses.

Member Options

Participating beneficiaries can make some choices in the benefits and services offered by the insurance plan. They can choose among the options presented for medical care, preventive services, and wellness.

They must spend out-of-pocket to reach the deductible limit, and they choose when and where to spend. The range of choices may be considerable, but they do not change the terms of the premium agreement.

Only the policyholder can change the basic terms of service.

Understanding the role of the policyholder is a key to understanding insurance. The policyholder is the owner and alone can make certain decisions and choices about the benefits and beneficiaries.

In a group setting, the policyholder is the employer or another sponsor, and it handles payments and distributes the memberships.

Comparison shopping is an excellent tool for selecting insurance options for members and certificate holders. Enter your zip code below to get started!