Author: Sam Boore, Employee Benefits Executive
“I have insurance already, thanks.” This is a usual response I would get when providing options to protect gaps in health insurance products. Which would lead me to ask, “Do you really know what your exposure is?” In almost every instance, the answer was no.
Health insurance carriers design health plans to transfer some of the risk (costs) to you through four insurance concepts: deductibles, co-insurances, co-pays, and out-of-pocket-maximums, yet most of us with insurance don’t really know what we have.
A 2020 study by PolicyGenius surveyed 2,000 consumers and found that 96% overestimated their understanding of these concepts – only 4% knew how to properly define all four terms. Your employees are most likely in the same boat.
Your Exposures
Below are definitions of each insurance concept:
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Deductible: A specified amount of money an insured (you) must pay before an insurance company will pay a claim
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Co-Insurance: Health care cost sharing between you and the insurance company, until the out-of-pocket maximum is met
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Out-of-Pocket Maximum: The maximum amount of money you will pay for medical services in a calendar year
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Co-Pay: A fee you pay when you see a doctor, specialist, pickup prescriptions, or use facilities (typically anywhere from $10 to $150)
To find out what you have in your health insurance plan, start by grabbing your Summary of Benefits and Coverage (SBC). If you don’t have a copy, you can get one by logging into your insurance carrier’s website or by requesting a copy from your HR department. Deductibles, co-insurances, and out of pocket maximums are defined in standalone sections, while co-pays are littered throughout for each service one might need, such as: primary care visits, specialist visits, labs and imaging, emergency room visits, prescriptions, and urgent care visits.
Practical Example
Now, we’ll view a hypothetical situation to help illustrate how the plans work.
ABC Employer offers their employees a health plan with the following:
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Deductible – $2,000
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Co-Insurance – 0%
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Primary Care Co-Pay – $10
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ER Co-Pay – $75 (unless admitted)
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Out-Of-Pocket Maximum – $6,350
Jane Doe works at ABC Employer and utilizes the employee health benefits to insure herself. One evening, she decides to take her dog out for a walk. As darkness sets in, Jane steps into a hidden pothole and falls on her wrist. She’s certain she broke it. She heads to the emergency room to use her health insurance for the first time this plan year. After checking in and verifying her insurance, Jane gets an x-ray, has her wrist set and cast, and checks out.
The checkout counter charges her $75 co-pay immediately. From here, Jane gets to go home and recover. The hospital will then file the claim with the insurance company. About a week or two later, Jane will get her explanation of benefits (EOB) in the mail, which will illustrate the costs of care for her treatment. Another week or two later, Jane receives the bill(s) totaling $2,000. This is her deductible amount, and the insurance carrier will pay all the costs beyond this amount.
Unfortunately, accidents, injuries, and illnesses happen and for this visit Jane paid out of her pocket $75 for a co-pay and $2,000 on her deductible. The good news is she has met her deductible for the year, and because she has a plan with 0% coinsurance, the only out-of-pocket expenses she will incur beyond this visit will be co-pays (unless she receives care from an out-of-network provider).
How InterLutions Helps Credit Unions
At InterLutions, we not only help find the best health plan for your credit union, but we also discuss ways to protect your employees’ exposure. We have solutions that would have paid Jane as much or more than she paid out of her own pocket, eliminating her exposure and reducing the impact on her household – all for less than an hour’s wage, per week. Since four out of five households still operate paycheck to paycheck, these health plan supplements can offer peace of mind.
For a free consultation and to build a better benefits package for your credit union, please contact InterLutions.