Massachusetts Health & Accident Insurance Practice Exam

In group health insurance, who typically holds the master contract?

1. The individual insureds

2. The insurance company

3. The employer

4. The state government

The correct answer is: The employer

In group health insurance, the master contract is typically held by the employer. This is because the group policy is designed to cover a group of individuals, often employees of a company, under a single policy. The employer acts as the policyholder and is responsible for managing the policy, including premium payments and communication with the insurance company. By holding the master contract, the employer allows the insurance provider to offer coverage to all eligible employees as a single entity rather than managing individual policies for each employee. This arrangement often results in lower premiums due to the risk pooling effect, where the costs of health care services can be spread across the larger group. The individual insureds do not hold the master contract because they are considered part of the group rather than separate policyholders. The insurance company issues the master contract to the employer but does not hold it themselves as they are the provider of the insurance. The state government is typically not involved in holding master contracts for group insurance, although it may regulate the insurance industry.