Teach your employees how to use their health insurance so they don’t make the mistake I did.
Do you provide your employees with access to group medical insurance? It’s a great benefit to offer, but the premium is expensive. More than likely your employees have to pay part of that premium. But that’s just the beginning. It gets even more expensive if they actually have to use it.
Not understanding how it works and therefore how to use it, is a huge mistake that will end up making your employees upset. When that happens, you’ve lost the good will associated with providing the insurance and what was once a perk now becomes a privation (which is lack of the usual comforts or necessaries of life).
My personal experience:
On January 30th I was riding my Mountain bike on some technical single track in the rocky hills above the Salt River in Mesa, Arizona, the Haws trail system, when I hit a rock and flew off my bike twisting my ankle as it unclipped from the pedal. I immediately knew it wasn’t good. The pain was intense and my ankle swelled up big and tight. I had to crawl out of the dirt hole along the side of the trail where I was lodged under a big bolder. Thankfully my helmet saved me from a massive head injury. My riding buddies helped me back onto the trail and down the hill to the road. From there, a super friendly Canadian couple drove me back into town. My wife picked me up and we went to the Gilbert Emergency Hospital, and that is where I made an amateur mistake.
I assumed that the facility was in the network of my current provider. I did not think to question it since I had been there before. But that was a while ago and my insurance company was different. Even if it had been the same company, provider networks can change from year to year and I should have checked before showing up. After an x-ray and spending not more than 5 minutes with a doctor, I was done. I paid about $700 upon checking out and I chalked it up to my deductible and left. Two months later I get a bill from the hospital for an additional $2,100!
That’s when I learned this facility was out of network. I checked my policy and saw that the out-of-network deductible applied. My insurance paid nothing. An expensive lesson for a situation where I know better, but didn’t take the time to ask the right question.
Key elements you need to understand:
Many of us learn how to use our insurance by trial and error, racking up large bills because we don’t understand how our health insurance works. A little education can go a long way. There are certain key terms that you should teach your employees and help them minimize their cost by using the benefit wisely.
In-Network and Out-of-Network:
The network is the group of providers, doctors and facilities, that your insurance company has contracted with to provide services. They negotiate favorable rates which helps reduce costs. In-network services cost you a lot less than out-of-network services. And in some cases, out of network services are not covered at all.
The deductible is the amount you pay before the insurance company will start paying. But the deductible doesn’t apply to every service. Due to the Affordable Care Act, all plans must cover 100% of the cost for preventative health services. Which are things like blood pressure screening and immunizations, drug and alcohol counseling, obesity testing and few more benefits. The deductible is often much higher for out-of-network services, and in my case it is $5,000 verses $1,500 for in-network services. The deductible resets each plan year.
Most people are familiar with co-pays. It’s the flat fee you pay toward services like doctor visits, urgent care trips, or prescriptions. If you walk into a doctor’s office, the copay applies and in most cases, the amount you pay DOES NOT count toward you deductible. In other words, the amount you have to pay toward your deductible doesn’t go down by the amount of your co-payments.
Out of pocket maximum:
This is the most you’ll have to pay in any give plan year towards covered services. HOWEVER, the actual out of pocket max might be more than the amount you see printed in the summary plan description – you have to keep reading. For example, my plan says this:
The out-of-pocket maximum does not include any of the following costs and, once you’ve reached the out of pocket maximum, you’ll still be required to pay these costs:
Any charges for non-covered health services:
The amount Benefits are reduced if you do not obtain prior authorization as required. This is important. If I get treatment that required pre-authorization and I didn’t get that authorization then the plan will pay a reduced amount. Not only will I have to pay the difference but, the amount I pay doesn’t count toward my out of pocket max.
Charges that exceed eligible expenses:
This is one of those dirty little secrets that most people don’t find out about until it’s too late. This is referred to as balance billing. This is when a provider bills you for the difference between their charges and the amount allowed by your insurance company. For example, if the provider’s charge is $100 and the allowed amount is $70, the provider might bill you for the remaining $30. An in-network provider is prohibited from balance billing – just another reason to not go to an out of network provide, like I stupidly did.
The out-of-pocket max resets annually.
Not to be confused with co-pays, they are not the same thing. Once you reach your deductible, you’ll have to pay a percentage of the remaining costs—this is the co-insurance amount. Here is an explanation of how it works from CIGNA:
Let’s say you have a policy with a 20% co-insurance. That means the insurance company will pay 80% of covered services after your deductible has been met and you pay the remaining 20%. But you won’t have to pay that 20% forever. You pay until you reach your out-of-pocket maximum—perhaps that is $6,350, depending on your Cigna plan. Then, Cigna will cover the rest of qualifying medical expenses for that calendar year.
- A little education can go a long way
- Don’t go out of network if you can avoid it.
- Teach your employees the key terms.
- in-network vs out-of-network
- maximum out of pocket