When hiring a new team member, you focus on their qualifications, where they fit into your team, and how they can contribute to the company’s goals. You invest time in orientation for new employees, so they’ll know how to perform their jobs effectively, but do you spend time explaining their benefits as well?
Healthcare benefits can be confusing, especially for employees who are new to the workforce or those who have not had their own benefits plan before. How well do your employees understand their healthcare plans? Do they know what premiums and deductibles are? How about the difference between a copay and co-insurance? What is a High Deductible Health Plan? So much information is available on employee benefits that it can be overwhelming to sift through during a short open enrollment period. Here are some basic terms employees need to know to fully utilize benefits offered.
Let’s start with the premium. When talking about any kind of insurance, the premium cost is simply how much you pay each month for your coverage. When you are enrolled in a group medical plan through an employer, your premium payments are taken out of your paycheck as pre-tax deductions. The total monthly premium cost is generally broken down over your pay cycles throughout each month.
Deductible and Co-Pay
The deductible is the amount you are required to pay out of your pocket for medical expenses each calendar year before the carrier begins to pay a portion of the medical claims. This cost is applied to any diagnostic testing, such as lab work, x-rays or MRIs. It can also be applied to out-patient visits or inpatient hospital stays. Once you’ve met your deductible, you may have to pay a co-insurance, or a set percentage of the claim for medical services. That percentage could be any amount from 20 percent to 70 percent, depending on the plan and whether the services are in-network or out-of-network.
Group medical plans are written to cover preventive care at 100% with no requirement to meet the deductible. Some plans also include co-pays for doctor’s visits with no requirement to meet the deductible first. A co-pay is a flat rate paid at the doctor’s office when seen by the doctor for an illness or injury. It can be any amount set by the insurance carrier, and it the amount may vary for a primary care physician, specialist or urgent care visits.
High Deductible Health Plan
This type of plan requires that the entire cost of the deductible be paid up front. That cost can include doctor visits, emergency room visits and prescription drugs. Once the deductible is met, your medical and prescription services can be covered up to 100 percent, depending on the plan. The High Deductible Health Plan is designed to work in coordination with a Health Savings Account (HAS). The deduction for HSA contributions are also taken on a pre-tax basis. Those accounts are subject to an annual maximum limit for single coverage and for family coverage.
These are just a few key terms to help you better communicate with employees regarding their benefits. Employee benefits are essential in keeping your team members happy and healthy, as well as reducing turnover.
Staff One HR provides support for clients and employees for their healthcare, vision, dental and other benefits, such as 401(k) retirement plans. For more information about healthcare terminology, employee benefits, or HR services, contact Staff One HR or email the author directly at firstname.lastname@example.org.