Assignment of Benefits
The insured's direction to the insurer to pay benefits directly to the provider, standard in network plans and common by standing direction in indemnity claims.
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Practice This Concept
A policyholder signs a form directing the insurer to pay a hospital directly for a hospitalization that has already occurred. Under insurance contract law, this action is best described as:
An assignment of benefits — permissible, because it transfers an accrued right to payment rather than the policy itself — Health insurance is a personal contract: it covers a particular insured, and the policy itself generally cannot be assigned to substitute a different person as the insured without the insurer's consent. However, an insured may assign the right to receive benefits that have already accrued — as when a hospital bills directly and the insured directs payment to it. That is an assignment of benefits, a routine and permissible transaction that does not change who is insured under the policy.
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