10 Things Your Employees Need to Know about Health Plans
While it’s no surprise that the #1 employer benefits challenge is rising healthcare costs, employee benefits education is a strong second. And, the two are related.
Not understanding the basics of how a plan works can significantly drive up healthcare costs for your employees. If you or a loved one has faced unexpected medical bills, you’ve felt the stress and limbic system response.
There are a ton of health insurance gotchas, but I’ve narrowed this down to 10 things every employee should know about their health plan.
1. Health plans vary by employer!
Employees don’t realize that health plan design is unique to each employer, and even the "same" health plan can vary by employer. A common behavior during enrollment is to poll friends and family to try to determine the “best” health plan. That’s why it’s so important for your company to educate employees about the specifics of your plan.
2. How a deductible works
Provide a foundation by explaining how deductibles and the out-of-pocket limit work.
* In-network, covered preventive care is typically paid 100% by insurance, regardless of where you stand with your deductible.
** Insurance pays 100% of covered, in-network expenses. You must still continue to pay your monthly premiums to maintain your coverage. The deductible and OOP costs reset on the renewal date of your company’s plan, which may or may not align with the calendar year.
3. What counts toward a deductible
Does: Money you pay out-of-pocket for health care services that are a covered benefit of your health plan count towards your annual deductible. Coinsurance also counts.
Doesn't: Copays don't count toward your deductible (although they do count towards the out-of-pocket limit). The monthly premium cost doesn't apply towards your deductible, either. Think of your premium like a monthly gym membership—you pay for the right to go regardless of whether you use it.
Also, be aware, depending on your health plan's rules, the amount paid toward an out-of-network deductible might not count toward the in-network deductible.
4. Always ask, "Is this in my network?"
A very common, costly mistake is asking a provider, "Do you take my insurance?" While many doctors and hospitals will accept your insurance, it doesn't mean they are in your network. And, as the insurance policyholder, it's your responsibility to make sure you only use in-network providers and facilities.
Insurance carriers and health care providers pool together in advantageous networks. A network is a group of healthcare providers (including doctors and hospitals) who work for pre-negotiated, lower rates.
5. What counts toward an out-of-pocket (OOP) limit
Does: Costs that contribute towards your out-of-pocket (OOP) limit include deductibles, copays, coinsurance for eligible, in-network medical expenses.
Doesn't: The OOP limit does not count premiums, balance billing amounts for out-of-network providers or other out-of-network costs, or expenses that aren't covered by the health plan.
6. What happens when you go out-of-network (OON)
Imagine you're at a restaurant, and you just ordered a bottle of wine off the menu without knowing its price. It's like that.
When you go out of network, you pay a larger part of the cost-share for those services than you would for the same services provided by an in-network provider. This may include the deductible, coinsurance, and other out-of-pocket amounts.
An out-of-network provider can bill you for anything over the amount your plan allows. This is called balance billing. A network doctor has agreed not to do that.
What you pay when you are balance billed doesn’t count towards your deductible or out-of-pocket (OOP) maximum. And some plans don’t cover any out-of-network benefits (except in the case of an emergency).
7. Preventive care is... free!
This is good news that most employees don't realize. Health plans generally cover 100% of preventive care—regardless of where you stand with your deductible. Preventive care typically includes:
- All well-baby visits
- One wellness visit/annual physical per year per adult
- Flu shots and vaccinations
- Prostate exams
- Well-woman visits
8. Qualifying Life Event (QLE)
When it comes to making health plan elections or changes, employees typically don't understand the strict rules are from the IRS, not you as the employer. It's useful to specifically call that out:
Due to IRS guidelines, you cannot make changes to your health insurance benefits outside of your employer's annual open enrollment period unless you experience a qualifying life event (QLE).
A QLE is a change in your situation—like getting married, having a baby, or losing health coverage—that can make you eligible for a special enrollment period. But the clock is ticking...
9. Mid-year carrier changes
When an employer grows from small to large group insurance, they'll typically make immediate health plan changes to take advantage of the better rates and improved coverage.
If you change medical carriers, it's important that your employees:
A) Understand that medical procedures and prescriptions that require prior authorization can vary from carrier to carrier. The service provider or prescribing doctor must get another approval from your new carrier.
- Resubmit any prescription Prior Authorization that is in place
- Resubmit any Precertification for medical services
B) Ensure their doctor is in-network.
C) Request "Continuity of Care", if applicable. If your current doctor or provider is no longer in-network, very specific situations may qualify for transition of care.
- If your request is approved, you can continue to see your doctor for a transitional period only (not forever)
- The most common example is for pregnancy (other examples include chemo, post-surgical care/surgeries performed in stages, organ transplant, substance abuse treatment, mental illness treatment)
- Your new health plan would treat these medical bills as if you received in-network care
10. How a Consumer-Driven Health Plan (CDHP) works
Assuming your company has a good plan design, the annual out-of-pocket costs associated with a CDHP are typically significantly lower than a traditional PPO. However, you pay 100% out-of-pocket until you meet your plan's deductible (and cost-sharing kicks in with your insurance).
Personally, I'm a big fan of the CDHP/Health Savings Account (HSA) combination—you can read why here. You just don't want your people to be caught off guard.
I could go on and on and on...
I hope you found this information helpful. Employee benefits education is something Lumity handles on behalf of our clients, but it's a personal passion of mine. Healthcare and benefits are extremely complicated, and I like to think I do my part to help folks avoid costly mistakes.