Understanding Key Health Insurance Terms
The language of health insurance can be confusing but understanding some key terms will help your employees comprehend the basics of your organization’s plan, allowing them to make smart decisions that will benefit their family. Rather than feeling confused, encourage them to review the following key terms and ask questions when necessary.
Premium – sometimes referred to as contributions, payroll deductions, or per pay costs, are the amount employees pay each month for covered health insurance.
Copay – the fixed amount the employee pays for health care services, such as $25 for a doctor’s visit. After your copay, the insurance pays the balance of the bill.
Deductible – a fixed dollar amount the employees pay each plan year for health care services before their health insurance begins to pay.
Coinsurance – the percentage of costs the employee will pay. If your organization’s plan has a deductible, typically the deductible needs to be met before coinsurance begins. Let’s say your coinsurance is 20%, your employees will have an 80:20 plan. To provide your employees with an example, they may go to the doctor and it costs $100 total. When they receive the the bill, they pay $20 and insurance pays 80.
Out of pocket maximum – the highest amount your employee will have to pay for services in a plan year. If their out of pocket max is $5,000, once they’ve spent $5,000 on deductibles copays and coinsurance, their health insurance will pay 100% of the remaining costs for the year.
If your employees have any further questions regarding these key health insurance terms, they should contact their dedicated benefit guardian.
