Small businesses looking to offer health insurance to employees should be familiar with the conditions, plans, and terms used to make the best choice for their company and employees. They will also want to be able to explain some of the crucial health insurance terms to their employees, so that they can also make the best choice for themselves and their families.
It’s also important to ask the right questions when you are searching for group health insurance plans. We have a whole blog post dedicated to these questions that you, as a small business owner, will want to ask. We hope that these questions will help guide your decision-making, and we hope this quick guide to the most common health plan terms will help you help your employees.
5 Crucial Health Insurance Terms to Understand
#1 Coinsurance
This is the percentage of a provided service that the patient will pay for the service after the patient has met their deductible. For example, some insurance policies cover certain scans, treatments, or lab tests at 80%, meaning the patient is responsible for the remaining 20% of the cost.
#2 Co-pay/Co-payment
Co-pays are pre-determined flat rate fees set out in each insurance policy. They represent what the patient has to pay for a specific in-network service or prescription drug. For example, a person may need to pay $20 to see a PCP (Primary Care Physician), but $40 to see a specialist (such as an orthopedic doctor). Some policies also set co-pays for prescriptions. Co-pays count toward the maximum out-of-pocket expenses on a patient’s policy but not toward the deductible. (Note: Co-pays generally do not apply to out-of-network healthcare services, however, you often will need to cover most or all of the service.)
#3 Deductible: High deductible, zero deductible
A deductible is a set amount that the insured person has to pay for covered medical services before the health insurance company begins to pay its share of the medical services. Most plans will cover certain prescription drugs or services such as preventive medical care before the plan member meets their deductible. This amount and these stipulations vary and are laid out in each individual health insurance plan.
#4 Out-of-pocket maximum
This is the maximum amount a member pays for care within a plan year or calendar year (depending on the way the plan is set up). After the member has paid this set amount within the year, the health insurance provider pays 100% of covered medical expenses for the rest of the year.
#5 Monthly premium
A monthly premium is the amount a plan member pays each month for their health insurance plan. It’s very important to pay the premiums on time each month to prevent an interruption in your health insurance coverage.
More Information and Health Insurance Terms
We know there are a LOT of health insurance terms to grasp (HMO, PPO, oh my!), so we also put together a much more comprehensive guide to these terms for your convenience. For more information on why it’s a good idea for your small business to offer health insurance, check out our blog post on the benefits of offering health insurance to your small business employees and this post on the ROI of offering employer-sponsored health insurance plans. To learn more about how deductibles work, read this blog post.
Why Turn to a PEO for Health Insurance?
One of the secrets to health insurance affordability is size. (It’s why large companies are able to access lower prices for healthcare coverage. Not really fair for smaller-sized businesses.) Decent bands together small businesses to give them the size and scale they need to access affordable health insurance. We do this through a PEO model, which means we also take over your payroll, HR and other business administration headaches. Read more on why more Texas small businesses are turning to Decent’s PEO.
If you’d like more information on Decent and our affordable health insurance plans and PEO services, contact us here or give us a call at (512) 643-4173.
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