Words of Wisdom
A-D
ACA
Think of ACA as another way of saying Health Care Reform. By definition, ACA is an acronym for Affordable Care Act. Health Care Reform and the Affordable Care Act are essentially two names for the same thing, the updated rules governing health care plans that went into effect in 2010.
The ACA had the greatest impact on Small Group Health Plans from 2-49 covered employees, giving us Metal Level programs and Member Level rates.
Co-Insurance
Think of co-insurance as splitting the bill with someone else, or in the case of medical bills, splitting the bill with your insurance carrier.
For example, if you and a friend went to lunch, and you split the bill 50/50, in insurance terms, that was a 50% coinsurance as you each paid 50% of the bill. If your friend was feeling generous and picked up 80% of the bill, and let you only pay 20% of the bill, then that would be an 80/20 coinsurance. 80/20 coinsurance is one of the most popular coinsurance percentages in the health care industry, with the carrier paying 80% and the insured paying the 20%.
Co-Pay
Think of a copay as a flat or fixed dollar amount that is required to pay for certain common medical expenses such as doctor office visits, urgent care visits, or prescription drugs.
For example, if your health care plan had a $30 copay for doctor visits, that would simply mean that you would pay $30 for the cost of your medical exam with your doctor.
Sometimes…your doctor could perform additional medical services over and above the medical exam, such as provide stitches or take x-rays, or perform other services that could then be subject to your plan deductible or coinsurance. This is important to know this could add additional costs to your doctor visit, over and above your copay.
Or, For Example, if your health care plan had a $50 copay for urgent care, that would simply mean that you would pay $50 for the cost of an urgent care visit. Or, For Example, if your health care plan had a $250 copay for emergency room visits, that would simply mean that you would pay $250 for the cost of an emergency room visit…I think you’re getting the picture now!
Deductible
Think of a deductible, as the amount of initial medical expenses that are initially your full responsibility to pay. In other words, if you are buying a $1000 deductible health plan, you could say ‘I am responsible for paying the first $1000 of my medical expenses’. Once you satisfy your deductible, in most cases, your health insurance plan will then begin to cover or start to pay some or all of your additional medical expenses.
In most cases, deductibles are managed on a calendar year basis (from January 1st to December 31st, regardless of the effective date of your health plan. That means that each January 1st, your deductible starts over again.
When covering dependents, most plans apply a maximum of two deductibles to the entire family, regardless of how many dependents are covered. In other words, if you have a $1000 deductible plan, and you are covering a family of 5 individuals, there would be a maximum of two $1000 deductibles applicable to the entirety of the family, each calendar year.
E-I
HDHP
An HDHP is a High Deductible Health Plan that is the only approved health plan to be paired with an HSA. Unique to the HSA, is that all covered medical services are initially subject to the annual plan deductible, before any benefit is payable, with the constant exception of routine physical exam / wellness coverage that is covered at 100%. So outside of routine care, all services are covered the same way.
This might feel like self-insuring your initial health care expenses, up to your plan deductible, which is really a healthy way to understand an HSA program. Once your deductible is met, the HDHP will then begin to cover additional medical expenses.
The primary advantages of an HDHP/HSA combination is that the HDHP is among the lowest cost programs, and when paired with an HSA allows you to pay for a significant portion of your health care expenses with pre-tax dollars.
HMO
An HMO is a Health Maintenance Organization, or a type of managed care health plan that requires covered members to utilize a Primary Care Physician (PCP) as their medical gatekeeper, and provider of routine and minor health care services. In most cases, the PCP will be responsible for referring a member to a participating specialist for more acute care needs.
HMO programs require all medical services to be provided by participating HMO providers, and thus do not cover medical services provided by non-participating medical providers.
Generally speaking, HMO health plans are the least expensive health plan alternative, due to their effective managed care process.
HSA
An HSA is a Health Savings Account that must be paired with a High Deductible Health Plan (HDHP). The HSA is thee most tax-favored health insurance program, allowing for the highest pre-tax contributions of any health plan alternative. (Please see our section on HSA ‘the best long-term health plan strategy) to learn more about these awesome programs
J-M
Member Level Rates
Think of member level rates simply as another way to say ‘age rating’ or rates that are based on the age of each covered person in a family.
Metal Level Plans
Think of Metal Level Plans as plans that have been judged from good to great, based on their overall level of coverage provided to your employees and their families. The ACA law includes a mathematical formula for insurance companies to determine the average overall benefit percentage provided under a health care plan, even if it does not look like it from the benefits that you see in a metal level plan summary.
The ACA limits small employers covering between 2-49 employees, to purchasing only Metal Level plans. Each carrier will offer several different plans that fall under each Metal Level definition, so you will have far more than just 4 different types of health plans to choose from for your team.
- Bronze: A Bronze health plan provides an overall 60% benefit level or equivalent
- Silver: A Silver health plan provides an overall 70% benefit level or equivalent
- Gold: A Gold health plan provides an overall 80% benefit level or equivalent
- Platinum: A Platinum health plan provides an overall 90% benefit level or equivalent
N-R
Out-of-pocket Maximum or True Out-of-pocket Maximum (TROOP)
There is an annual cap to your financial liability of covered services under your health plan. This is called the Out-of-Pocket Maximum or True Out-of-Pocket Maximum (TROOP). Throughout the year, any expenses attributed to deductible, coinsurance or copays are added up towards your Out-of-Pocket Maximum. This is tracked by your insurance carrier throughout each plan year. Once you hit your Out-of-Pocket Maximum for the year, the rest of your covered medical expenses are covered at 100% by your insurance carrier.
For Example, if you have a $1000 deductible plan, with 80/20% coinsurance, miscellaneous copays for various services and a $6000 Out-of-Pocket Maximum, your total financial liability for covered services under your health plan would be $6000 for the plan year, regardless of the total cost of medical expenses paid for by your health plan. In the event of covering dependents, there are typically two Out-of-Pocket Maximums applicable per family. So in the prior example of a $6000 Out-of-Pocket Maximum per person, a family would be limited to $12,000 in Out-of-Pocket Maximum expenses should two or more individuals incur significant medical expenses during the year.
POS
A POS plan is a Point of Service plan (not what you are thinking), that operates much like an HMO, with the requirement of a PCP selection. POS plans also require specialty care to be referred by your PCP plans. However, POS plans do provide a reduced level of coverage for non-participating or out-of-network providers.
Generally speaking, POS plan pricing falls somewhere in between that of an HMO plan and a PPO plan.
PPO
A PPO plan is a Preferred Provider Organization and provides the greatest flexibility in provider selection. PPO plans do not require the selection of a PCP and also allow you to self-refer to a participating specialist for more acute care needs.
PPO plans also offer a reduced level of coverage for services provided by out-of-network or non-participating providers.
Generally speaking, PPO plans are among the highest cost programs as they do not include the managed care cost controls that are part of both the HMO or POS plans.
Premium(s)
Think of premium as a fancy term for how much your health care plan will cost each month. Whether you call it a premium, or cost of insurance, all health care plans bill for their premiums on a monthly basis. Furthermore, the premiums that you are initially quoted are typically guaranteed for twelve months at a time.
Prescription Drug Categories
Prescription drug coverage is included in all ACA Metal Level health plans. While the copay may vary, essentially the same drugs are covered under all health plan options. However, what does change, is the required copay that applies to different prescription drug categories.
Prescriptions now fall under 3 distinct categories, as follows:
- Generic: Lowest cost prescription alternative
- Brand: Higher-cost prescription alternative
- Specialty: Highest cost prescription alternative
Further, each of the three prescription categories have two levels of coverage known as preferred and non-preferred. Generally speaking, preferred drugs in each category have a lower copay and non-preferred drugs in each category have a higher copay.
All drug card copays count towards your health plans annual Out-of-Pocket maximum. Once you or a covered dependent reach your annual Out-of-Pocket maximum, your remaining prescription drugs will be covered at 100% for the rest of the plan year.
Primary Care Physician or PCP
Health Maintenance Organization (HMO) plans and Point of Service (POS) plans both require the selection of a Primary Care Physician or PCP. Think of your PCP as your medical gate keeper, who provides routine and minor care, but will be responsible for referring you to participating specialists for more serious health conditions.
If you are purchasing an HMO or POS plan for your company, each team member and their covered dependents will select a participating PCP from your insurance carriers network during their enrollment. (Participating providers can be found at the link below for each carrier – provide link to carrier networks) PCP’s can be changed during the course of the plan year, and each covered family member can have a different PCP.
Covered members will be required to see their PCP for their routine physical exams and all minor health care issues. Should a covered member need to see a specialist, some plans will require the PCP to refer a participating specialist, while other plans will allow a covered member to self-refer to any participating specialist within the carriers network.
Routine or Preventive Care / Annual Check Up
Regardless of your health plan selections for your team, ALL ACA plans include 100% coverage for annual routine physical exams for all covered family members, including many age specific tests and immunizations. All of which, are covered by your health plan at 100% and are not subject to any deductible, copay or coinsurance.
Preventive health care is one of the most important habits we can build into a healthy lifestyle, so please be sure to utilize and promote the free wellness coverage that is included in your new health plan. (You can find promotional wellness materials in our Team Education Section of our site)
