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As a business owner, you know that offering an insurance program is a significant investment for your company. Of course, it’s not just your investment; your employees are also paying into their insurance plans with their equally hard-earned money. So when you pay for insurance, you want to make sure that you and your staff are making the most of it.
One way to maximize the chances for success is to make sure employees are fully informed of the available benefits, how they work and what to expect – before they select their plans. Unfortunately, many employees don’t fully understand all aspects of their insurance during Benefits Enrollment, and as a result, are often unhappy with their coverage later on.
The good news is that you have the ability to help employees make sense of their plans. Here are some frequently asked questions that employees have when choosing their benefits, along with associated answers. These answers will help you provide your employees with the information and confidence they need to pick the plan that’s best for them.
How do I know which benefits to select?
Think about the expenses you might face in the coming year, as well as your financial circumstances and family health history. Your Aflac benefits advisor can help you develop a personalized plan that’s right for you.
How are claims paid?
By submitting a claim, you’re asking your insurer to pay benefits based on the terms of your plan. Once your claim has been reviewed and approved, you – or your doctor, dentist or hospital – will receive payment.
What are out-of-pocket-costs?
Out-of-pocket medical costs are expenses you must pay that are not covered by insurance. Examples include deductibles, coinsurance and copayments.
What is a deductible?
A deductible is the dollar amount you have to pay before your insurance kicks in. For example, if your deductible is $2,000, you must pay all medical expenses out of pocket up to that amount.
If you own an Aflac policy, your cash benefits can be used to help pay your deductible and any leftover medical bills, the mortgage or rent, utilities or other expenses you may have. They’re your benefits, so you can use them your way.
How many chances do I have to reach my deductible?
A deductible doesn’t need to be reached in the course of one medical event, but can be accumulated over multiple events during the course of a year.
Do I have to hit my deductible every year?
In order for your insurance to kick in, you must hit your deductible — but there’s no penalty for not reaching it. One thing to know: If you consistently fail to reach your deductible, you should look into other plans that may be more beneficial for you.
Do co-payments made to service providers count toward meeting my deductible?
It varies depending on your insurance plan, but most plans do not count copayments as money spent to meet your deductible. Check with your health insurance provider to find out the requirements of your plan.
What’s the difference between coinsurance and a copay?
Coinsurance is the percentage of your medical bill that you have to pay after you’ve reached your deductible, while a copay is a flat amount that must be paid. Some health plans have either coinsurance or a copay, while others may have neither or both. For example, if you have a $1,000 hospital bill and your coinsurance is 20 percent and your copay is $100, you would pay $300: 20% coinsurance = $200 plus $100 copay. Your insurance company would cover the remaining $700.
If you have Aflac, your cash benefits can be used to help pay your deductible, your portion of coinsurance, your copay or any other expenses you may have. It’s up to you.
How is an out-of-pocket maximum different from a deductible?
A deductible is the amount you need to pay before your insurance kicks in, while an out-of-pocket maximum is the most you would have to pay in a year of your own money. After you reach your out-of-pocket maximum, your insurance will cover 100 percent of all expenses, including co-pays or co-insurance.
What is a flexible spending account?
A flexible spending account, also known as an FSA, allows you to set untaxed money aside for out-of-pocket medical expenses like deductibles, copays, coinsurance, prescription drugs and more. Because FSAs contain only pretax dollars, they are a great way to save money on health care-related expenses. To fund your FSA, you’ll take a certain pretax dollar amount out of each paycheck to keep in a savings account that’s used only for medical expenses. Most FSAs require all of the money in the account to be used by the end of the year or it will be lost. Talk to your employee benefits administrator for more information.
Is an FSA the best option for me?
This option is best for those with consistent, larger expenses. If you’re young and healthy, an FSA may not be the right choice for you — but if you have an ongoing condition or anticipate upcoming medical needs, an FSA may be the right choice. Take stock of your health and think about your projected expenses for the next year before deciding if this is the right choice for you.
Is an FSA in addition to health insurance, or an alternative to health insurance?
An FSA could be both. Some employers offer to contribute to an FSA account in lieu of health insurance, or you can sign up for an FSA to cover out-of-pocket costs not covered by our existing insurance plan.
What are ancillary benefits?
Ancillary benefits are types of insurance offered in addition to employer sponsored health plans. Most often they include dental, vision and life insurance.
What are supplemental benefits and do I need them?
Supplemental benefits are types of insurance policies that pay you cash benefits to help cover expenses that may not be covered by your health insurance, like: Dental, Vision, Life, Accident, Hospital, Cancer, Short-term disability, Long-term disability and more.
Supplemental insurance complements your health insurance coverage, and also offers you full control over which benefits you have. The cash benefits paid by supplemental plans can help protect your financial future, giving you the funds you need to pay your bills in the event you have a covered accident or illness.
Do I have to choose an insurance plan during Benefits Enrollment? What happens if I don’t?
You don’t have to enroll in your employer’s plan. But in general, coverage offered by employers is less expensive than coverage purchased through the health care market.
If you miss benefits enrollment, there may be certain qualifying events that allow you to enroll outside of your approved enrollment window, like getting married, divorced or gaining a dependent. Otherwise you must wait until next year’s benefits enrollment period to apply for insurance.
I’m already on my spouse’s or family member’s insurance plan. Can I still apply for supplemental insurance with my employer?
Yes. You are able to apply for supplemental insurance – or any other insurance for that matter – even if you are already covered on a spouse’s or family member’s plan. However, unless you’ve gotten married, divorced or gained a dependent, you can only sign up for health insurance plans during benefits enrollment.
Can I cancel my insurance?
You can cancel your health insurance at any time by contacting your provider by phone or online. Once again, unless you’ve gotten married, divorced or gained a dependent, you can only sign up for health insurance coverage during benefits enrollment, so make sure to time your cancellation right and have other insurance coverage ready so you continue to be protected.
Insurance can be an overwhelming topic. Because your company’s benefits package is critical to your employees’ happiness and well-being, this glossary breaks down key terms you need to know.
Ancillary vs. supplemental benefits
Ancillary benefits are primarily those most known and requested by employees in addition to employer-sponsored health plans. They can include group dental, vision and life insurance, and employer-paid short- or long-term disability.
Supplemental benefits are also employer-sponsored, but are optional and paid for by employees through payroll deduction. These benefits cover an array of categories (e.g., pretax deductions for qualified expenses, theft protection and health benefits such as employee-paid dental, etc.). Supplemental health benefit categories often include coverage for critical illness, cancer, accidents and others.
Short for “benefits administration technology,” ben-admin is used in the industry to refer to benefits management – establishing, offering and maintaining the benefits packages offered to employees. Because this can be difficult for all types and sizes of employers, multiple services and electronic tools have been developed to help businesses with this task. HR solutions companies, brokers and insurers have all developed some level of solutions, which vary in capacity and cost to employers.
Broker vs. career agent
A broker is a representative who “shops” from a variety of insurance companies on behalf of the employer. An agent, on the other hand, can exclusively represent one provider (or the partner products authorized by that provider) or be independent and act as a shopper for employers.
Core benefits, also known as basic benefits, often vary from employer to employer. While some employers may only include a health plan as their core benefit, others may include health, dental, vision and life insurance as core benefits.
It’s the technology that helps administer open enrollment and keeps track of employees’ benefits selections. The industry has started to combine ben-admin and enrollment capabilities into single platforms that vary in capabilities, reliability and cost.
Group vs. individual underwriting
Group underwriting is designed for employers that want to leverage the power of headcount, spreading risk for the insurance company. This usually makes it easier for all employees to get insured, whether it is in the form of lower rates or simply being able to obtain coverage.
Individual underwriting should always be considered because it tends to favor smaller groups, especially ones with younger and healthier employees. It’s smart to compare since both platforms have developed competitive features that may benefit a small business.
Implies that coverage is guaranteed without completing a questionairre or medical exam. Most guaranteed-issue clauses come with specific requirements or limitations, which vary from insurer to insurer.
Refers to the rule that as long as premiums are paid, the insurer cannot drop the covered person. Pairing guaranteed renewability with rate stability is a favorable combination for employees.
Minimum participation requirements
They’re the conditions or requirements established in order to issue desired coverage. They may include a condition in order to receive a lower rate, a qualification for a specific product or feature, or a minimum number or percentage of committed participants.
Underwriting is how insurers assess whether or not they are willing to take on the risk of insuring an individual or group of people. Can include questionnaires or medical examinations. When terms like minimum or simplified are used in underwriting, it means there will be a lower number of questions or steps to qualify for insurability.
We've assembled resources to help you prepare for and navigate the places of an effective Benefits Enrollment.
1 "Can business owners participate in an FSA, HSA, or HRA?" Author: Lauren Perales. www.zenefits.com.