In group health insurance, the employer sponsors a plan for its employees. Which statement correctly describes the master policy and certificates?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Group health insurance is built on a single master contract issued to the group policyholder — typically the employer. Each covered employee (and dependent) does not receive a separate policy; instead the employee receives a certificate of coverage, which summarizes the benefits, exclusions, and conditions of the master policy. This structure lets one contract cover many members while each member still has written evidence of the coverage they hold. Certificates are evidence of coverage under the master policy rather than independent contracts, a fundamental group insurance concept tested under AH-III.B.1a.
Why the other options are wrong
- B) Group members receive certificates, not individual policies; only the group policyholder holds the master contract with the insurer.
- C) A master policy is issued to the group policyholder, not to each employee; individual certificates are the documents distributed to members.
- D) The roles are reversed: the employer holds the master policy and employees receive certificates.
Memory hook
One master contract to the employer; certificates to the crowd. Certificates prove, they don't insure.