A policyholder on a health insurance plan is an individual, group, or third party that owns the plan and has the right to exercise the contract terms. Namely, they have the power to make decisions that affect the policy, such as adding additional coverage, changing coverage limits, and naming beneficiaries.
In most cases, because the policyholder is the one who purchased the policy, they’re also the insured person. However, some policyholders may choose to insure another person, such as their spouse or parent, and be named as the beneficiary instead.
Table of Contents
Decoding Health Insurance Jargon: Understanding The Policyholder
Health insurance can be confusing to navigate, especially when it comes to understanding the difference between the policyholder, the insured, and the beneficiary. Simply put, the policyholder is the person or entity that purchases and owns the policy.
The insured is the person covered by the policy, and the beneficiary is whoever receives the policy’s benefits in the event of a claim. Now that you have a better idea of these terms, let’s delve deeper into the role and what it means for your health insurance plan.
Roles and Responsibilities of the Policyholder
The policyholder owns the health insurance plan and has the power to make decisions regarding the policy. However, this also means their actions could affect everyone on the plan. Here’s what their responsibilities are:
- Paying premiums: The one who purchased the health insurance plan is responsible for paying the insurance premiums on time. Failure to do so may result in the policy lapsing, leaving the insured person unprotected.
- Providing accurate information: You must also provide accurate and complete information about your health, medical history, lifestyle habits, and other relevant factors that could affect the health insurance premiums. Omitting details or lying could lead to policy cancellation or claim denial.
- Updating personal information: You’re also responsible for updating all personal information on time to ensure your health insurance coverage reflects your current situation.
- Understanding coverage and policy terms: Before signing on the dotted line and purchasing health insurance, you must fully understand the terms and conditions to know your rights and responsibilities.
- Filing claims: While many hospitals will fill claims for you, it’s ultimately the policy subscriber who is responsible for ensuring claims are submitted and providing documentation to receive compensation for medical expenses.
- Coordinating with healthcare providers: If you have health insurance but visit an out-of-network provider, your insurer may not cover the medical expenses. So, you may need to coordinate with healthcare providers, such as doctors and hospitals, to ensure they’re in-network providers.
- Managing policy beneficiaries: The policyholder is the only one with the power to name beneficiaries on the policy, as well as add or remove them.
The Policy Subscriber’s Influence on Policy Options
Because health insurance companies take into consideration factors such as age, tobacco use, and where you live, your own eligibility for plan options directly affects everyone on the plan. Whatever plan you enroll in is the one that any dependents on your plan will also have. For example, everyone on the plan would be subject to the same deductibles, copayments, and benefits.
Types of Policyholders
Policyholders do not always have to be an individual. They can sometimes be groups such as unions or third parties such as guardians.
Individual
If you purchase a health insurance policy under your own name, you’re considered an individual policy subscriber. Many individuals purchase their own health insurance directly from an insurance company or the marketplace because they’re not eligible for coverage through an employer, spouse, or parent’s plan.
Group
The policyholder of health insurance policies can often be groups and organizations, such as the company you work for. In other words, if you enroll in health insurance through your employer, your employer is the policyholder, while you’re the insured. These employer-sponsored health insurance policies are called group plans, and your employer typically pays a portion of the premiums.
Third-Party
Third parties such as a power of attorney or a guardian can also become policyholders. A power of attorney, or POA, is a legal document that gives someone the right to make financial or medical decisions on your behalf. The POA can take effect as soon as you sign it or only become effective if you’re incapacitated. A guardian appointed by the court to oversee the affairs of someone who’s incapacitated could also become a third-party policyholder for health insurance purposes.
Common Situations
Various scenarios could arise during your time as the policy subscriber on a health insurance plan. Here’s how to deal with each situation.
Changing the Policyholder
There could be various reasons why one would want to transfer ownership of a health insurance policy. For example, if the policy subscriber undergoes a major life change, such as a divorce or marriage, and wants to transfer ownership of the health insurance plan to their spouse or ex-spouse. However, note that some health insurance plans may not allow you to change policyholders.
Policyholder Disputes
Problems with a health insurance provider often arise when an individual is denied coverage for medical services already provided or was paid a lesser amount than what the claim is worth. If you face any of these issues as the policy subscriber, try contacting the insurance company’s claims representatives or customer service department. If your dispute is still unresolved after reaching out to your insurer, consider consulting an attorney with experience in the health insurance field.
Death of the Policyholder
Individuals and their families who lose health insurance because of certain situations, such as death, can choose to continue their health benefits for a limited period of time, according to the Consolidated Omnibus Budget Reconciliation Act (COBRA). So, if the deceased was covered by an employer’s group health insurance plan, their loved ones who were also covered under the policy may still be eligible for coverage.
In the case of individual health insurance plans, the death of the primary policyholder counts as a Qualifying Life Event (QLE). A QLE triggers a Special Enrollment Period (SEP), a window of time outside the Open Enrollment Period where the deceased individual’s family members can enroll in a new marketplace health insurance plan.
Another route the surviving family members can take is to apply for a new private individual/family health insurance program through an insurance company.
All in All
While policyholders can modify and cancel a health insurance plan, they’re also responsible for paying premiums and ensuring the policy is up to date to avoid lapses. In short, their actions affect everyone on the health insurance plan. If you’re the subscriber of your health insurance, having a thorough understanding of your role can help you make informed decisions regarding your healthcare options and safeguard your loved ones’ well-being.