Employee benefits can be a complex landscape, filled with acronyms and unfamiliar terms. In fact, more than 50% of American adults report that they don’t have a clear understanding of their health insurance. Many people are confused because they reach adulthood without ever learning the basics of health insurance terminology. Illiteracy about health insurance is costly to employees and employers alike. Educating employees on common benefits lingo can help them make informed decisions and maximize their benefits.
We have created a list of the most common terms to help your employees understand and better utilize their health benefits:
- Ancillary (or Voluntary) Benefits: Supplemental benefits not included in most traditional group health insurance plans.
- Co-payment: An amount you pay as your share of the cost for a medical service or item, like a doctor’s visit. Co-pays are most common for emergency room, urgent care and prescription drugs. In some cases, you may be responsible for paying a co‐pay as well as a percentage of the remaining charges.
- Co-insurance: Your share of the cost for a covered health care service, usually calculated as a percentage (like 20%) of the allowed amount for the service. For example, if your plan has a 30% co-insurance rate, the carrier will pay 70% of the allowed amount while you pay the balance.
- Deductible:The amount you owe for covered health care services before your health insurance or plan begins to pay. For example, many plans require an individual to pay $1,000 in cumulative deductibles before they begin paying out.
- Dependent Coverage: Health insurance coverage extended to the spouse and unmarried children up to age 26 who are totally or substantially reliant on their parents for support, thereby defined as “dependent children”.
- Explanation of Benefits (EOB): Every time you use your health insurance, your health plan sends you a record called an “explanation of benefits” (EOB) or “member health statement” that explains how much you owe. The EOB also shows the total cost of care, how much your plan paid and the amount an in-¬network doctor or other healthcare professional is allowed to charge a plan member (called the “allowed amount”).
- Formulary: A list of prescription drugs covered by a health plan that often has different tiers based on the type of covered medication. Prescription medicines listed in one tier may cost you more than those in another tier.
- In-Network Provider: A provider who has a contract with your health insurer or plan to provide services to you at a discount. In-Network providers have contracted with the insurance carrier to accept reduced fees for services provided to plan members. Using in-network providers will cost you less money.
- Open Enrollment: A period during which a health insurance company is required to accept applicants without regard to health history.
- Out-of-Network Provider: A provider who doesn’t have a contract with your health insurer or plan to provide services to you at a pre-negotiated discount. You’ll pay more to see an out-of-network provider.
- Out-of-Pocket Maximum: The limit or most you’ll pay out of your own pocket for services during your insurance plan period (usually one year).
- Premium: The amount you pay for your health insurance or plan each month.
- Qualifying Life Event (QLE): A change in your life that allows you to make changes to your benefits’ coverage outside of the annual open enrollment period. These changes include a change in marital status (marriage, divorce, death of spouse), a change in the number of eligible children (birth, adoption, death, aging-out), and a change in a family member’s benefits eligibility under another plan (losing a job, Medicare or Medicaid eligibility, etc.)
Understanding the terms and acronyms can feel like learning a new language, so it’s helpful to educate your employees. With a good understanding of what some healthcare “benefits lingo” means, it will be easier to find a plan that meets the needs and budget of your company and employees!