In a group health insurance plan, which document is issued to the employer and which to the employees?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A group health plan is built on the master contract, issued by the insurer to the group policyholder — the employer. The master contract sets out the full terms, benefits, and conditions of coverage. Covered employees are not parties to the master contract; instead each receives a certificate of coverage that summarizes the benefits, exclusions, and the employee's rights under the master policy. This two-document structure distinguishes group coverage from individual insurance, where the policyholder holds the actual contract. A certificate does not replace the master contract; the master policy governs the insurer's obligations, and the certificate simply tells the employee what those obligations are in plain terms.
Why the other options are wrong
- B) The documents are reversed: the employer holds the master contract and the employees hold certificates.
- C) Group coverage does not produce identical individual policies for the employer and each employee; the master-contract-and-certificate structure governs.
- D) Employees do receive certificates; the certificate is the employee's summary of coverage under the master contract.
Memory hook
Master contract = the employer's big book. Certificate = the employee's pocket summary of what the big book says.