Making well-informed health plan decisions can be difficult because its grown and become so complex. To help understand its important to breakdown the lingo of the health insurance industry.
Research shows that employees have a lack of understanding when it comes to key terms like coinsurance and deductibles. So, before employees can use their health insurance, they need to understand it.
Yes. A lot of people in the Utah are not familiar with many of the terms used in health insurance. UnitedHealthcare did a survey that showed only 6% of Americans could identify the 4 basic health insurance terms – plan premium, deductible, coinsurance and out-of-pocket.
Health insurance premiums are no different than life insurance or your basic auto insurance premiums. The premium is the amount that the employer pays each month to offer the insurance coverage to their employees. The biggest difference is that the employer pays a portion and then the remaining portion is taken out of the employee’s paycheck.
It is very common for a small business employer to pay between 75%–80% of their employee’s health plan premiums.
A deductible is the amount you pay for covered service before the insurance plan takes over and pays for the rest. For example – If you have a $1,000 deductible plan, the member will pay the first $1,000 of the covered expenses. Once you’ve reached your deductible, then you’ll be responsible for the copayment or coinsurance for a covered expense.
There are many services that are covered within a health benefit plan. Covered services tend to be things like emergency room coverage, doctor visits, outpatient surgeries, pharmacy costs. Most things you’d normally think about when using your insurance are typically covered.
The things that are not covered or are an additional cost would be considered “out of network”. If you choose to go to a provider outside of that in-network coverage, you’ll either not have insurance coverage or the service may be at an additional out-of-pocket cost.
Coinsurance is a percentage of the cost of the covered health care service. Before you reach your out of pocket your coinsurance percentage is 20%. Once that deductible has been met you pay 10%
Example: Your service cost $100 and you have already met the deductible on your plan. A 20% coinsurance would mean that your cost would be $20. The insurance would pick up the rest.
An easy way to explain this down would be to break this down into 3 steps.