Deciphering Open Enrollment Terminology

Deciphering Open Enrollment Terminology

With many of our clients preparing for Open Enrollment we wanted to share with you a few of the most common questions we get from employees this time of year.  Share these terms in your open enrollment communications to help employees gain a better understanding of the plans they are being offered.

What’s the Difference Between a Deductible and an Out-of-Pocket Maximum?

  • Deductible: the amount you must pay before your health plan starts to pay benefits. This doesn’t include services covered by a copay or covered in full before the deductible, such as preventive care.
  • Out-of-pocket maximum: the total amount you must pay during the plan year for all in-network treatment covered by your plan, including the deductible, copays and coinsurance. 

What is a coinsurance?

Coinsurance is the amount of a claim or a bill that you must pay after you’ve met your deductible; it’s your share of the cost of a healthcare service (the insurance company pays the rest). So, if a plan has 20% coinsurance, you will be responsible for 20% of any bill and the health insurance company will pay the other 80%. Your coinsurance doesn’t kick in until the deductible is met. Put simply, coinsurance is a shared paid amount between the insured person and the insurance company. 

What’s an embedded deductible?

The term ‘embedded deductible’ means that an individual doesn’t have to meet the family deductible in order for coinsurance to kick in. Once a person covered under a family plan reaches the individual deductible, all covered expenses for that individual will be paid at the coinsurance amount even when the family deductible has not been satisfied. Once another person or a combination of persons meet the remaining portion, the family deductible would be considered satisfied. 

What’s an embedded out-of-pocket maximum?

An embedded out-of-pocket maximum works in the same way an embedded deductible works. Once a person covered under a family plan reaches the individual out-of-pocket maximum, all covered expenses for that individual will be paid at 100% even when the family out-of-pocket maximum has not been satisfied. Once another person or a combination of persons meet the remaining portion, the family out-of-pocket maximum would be considered satisfied. 

What’s the difference between my deductible and premium?

Your deductible is how much you pay for medical care before your insurance kicks in. If you have a $1,000 deductible, you will have to spend $1,000 of your own money until your insurance starts footing the bill. Your premium is the monthly membership fee you pay in exchange for health coverage. Usually, if your plan has a higher deductible, your premium is lower. And if your plan has a lower deductible, your premium will probably be higher. 

Do I lose the money in my HSA if I don’t use it during the year?

No, that money is yours and rolls over from year to year. It’s different from a flex spending account(FSA), which is a “use or lose it” account. 

 

As always, the Client Advocate Center is available to you and your employees to assist with benefit and claim questions.

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