So, you’ve got this small business, and you want to offer group health insurance for your employees. Choosing a group health insurance plan can be difficult – health insurance is complicated, we’re not going to lie. It’s not the easiest thing in the world to get the hang of. We’re going to go over five different money-related group health insurance terms you might encounter in your noble quest for group health insurance.
However, before we go any further we have to start out by saying that when each of these group health insurance terms applies depends entirely on the health insurance plan. What’s covered, what’s not covered, and the patient’s portion of the bill is all determined by the plan. (So pretty much your employees will be at the mercy of the group health insurance plan you choose – no pressure!)
Anyways, here’s the very simplified version of the answers to the following:
- What’s a health insurance premium?
- What’s a health insurance deductible?
- What’s a copay?
- What is coinsurance?
- What is out of pocket maximum?
Let’s get rolling with defining these group health insurance terms.
What’s a health insurance premium?
The premium is the amount you pay for the insurance policy. When we’re talking about group health insurance, you as the employer contribute a portion of the premium and your employees contribute a portion of the premium, which is usually deducted from their paycheck. (Unless you decide to completely cover your employees’ health insurance.) Then that chunk of their paycheck goes towards paying the premium.
What’s a health insurance deductible?
The deductible of the health insurance plan is the amount of money your employee would have to pay before their healthcare expenses are covered by insurance. Now, the part that can be a little confusing is that the deductible may only apply to certain portions of the plan. Or the plan might not have a deductible. That’s why it’s super important to look at the plan closely and ask plenty of questions about how that deductible is going to work. Where health insurance is concerned, it’s always a good idea to get things decoded and explained – and, as we said, to ask lots and lots of questions.
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What’s a copay?
The copay of the plan is the fee the employee will have to pay every time they go to a doctor or healthcare provider. The plan may have copays for different types of services – for example, there might be a $30 for primary care, a $50 copay for a professional, a $350 copay for the ER, and a $10 copay for prescription medications. (Again, this is an area that you really have to look at the plan to see how the copay is going to work.)
What’s co-insurance?
Co-insurance is the percentage split of the medical bill between the carrier and the employee (a.k.a. the participant in the plan). For example, a typical coinsurance could be 80-20, meaning that the insurance company would cover 80% of the cost of services rendered while the employee would be responsible for the remaining 20%. Again, what the coinsurance split is and when it’s going to apply depends on the plan. (It may only apply after the employee has met their deductible.) Here’s another area where you might need to ask some questions and get some answers. Remember – questions are your friend! Health insurance is difficult to understand. No one will fault you for asking for clarification or for double-checking things or asking about these group health insurance terms.
What’s the out-of-pocket maximum?
The out-of-pocket maximum of the plan is the maximum amount of money your employee would have to pay before insurance starts covering 100% of the medical bill. Basically, after the deductible of the plan and the coinsurance and all of that has been factored into the bill, the employee will be left with their portion of the expenses. Once the employee hits the out-of-pocket maximum, insurance will start covering the expenses. The out-of-pocket maximum depends on the plan.
Each plan is different.
Some group health insurance plans will have a higher deductible and copays, but lower premiums. Other plans will have a higher premium, but lower deductibles and copays. When you’re choosing group health insurance, you have to consider what kind of plan will work best for your employees. It’s important to not just look at the premium when you’re evaluating different plans. Sure, the premium looks like the “price-tag” and it’s the section that you as the employer will be paying either in part or in full. But as you can see, there are other costs associated with health care that can depend entirely on the plan itself, and those are costs that your employees will have to bear.
Need help with your group health insurance?
Our team is here to help you find the group health insurance that’s right for your business and your employees. We’re also really good at breaking things down and making insurance easy. You don’t have to worry about being befuddled or bamboozled by group health insurance terms. You have questions, and we have the answers. Get started with your small business group health insurance quotes by filling out our online quote form or giving us a call today.