6 Group Health Insurance Terms You Need to Know

We'll explain 6 group health insurance terms.

If you’re worried about choosing a group health insurance plan, you’re not the only one. Finding the right health insurance plan for your employees can be especially tricky, and all of the terms involved in healthcare don’t make the choice any easier. Figuring out health insurance lingo like premiums, coinsurance, copays, deductibles, and out-of-pocket maximums can seem like learning a new language. In many ways it is, but we’ve broken down some of the basic terms to give you a starting point. So, let’s start your group health insurance 101.

What Are the Most Important Group Health Insurance Terms?

Before we get into the nitty-gritty, it’s extremely important to note that each part of your group health insurance plan works together. As to how they work together and how much of one part will work with another depends entirely on the type of plan that you choose. So, when negotiating and shopping for group health insurance policies, it’s important to ask your agent for a thorough understanding of the different ways that specific services and bills can be covered in one group health insurance policy versus another.

Now that that’s out of the way, these are some basic terms that are found in almost every group health insurance policy:

  • Premium
  • Deductible
  • Network
  • Copay
  • Co-insurance
  • Out-of-Pocket Maximum

Let’s break things down.

What is a health insurance premium?

A health insurance premium is basically the monthly bill. It’s the price that someone has to pay each month to even participate in a plan. If you offer a group health insurance plan to your employees, according to the ACA you must pay at least 50 percent of the lowest employee-only plan that complies with the ACA.

After that, it just depends on how much more you’d like to contribute to each employee’s health plan or if you’d like to cover their entire premium (which can give you some great advantages in the hiring market). If you decide not to or can’t afford to cover your employees’ premiums, the rest of the amount will come out of your employees’ paychecks.

What is a health insurance deductible?

The deductible of a health insurance plan is the amount of money a plan participant (in this case, your employee) will have to pay before the insurance company starts helping with their medical bills. Some plans don’t have deductibles, in which case, the insurance company will just start paying a part of the participant’s medical cost when the plan starts.

More commonly, though, deductibles accumulate throughout your plan year. So, if your employee health plan’s deductible is $500, they could end up paying $500 for one service, or they could have a series of $100 doctor bills during the plan year. In either scenario, they’d still meet their $500 deductible.

What usually scares people are deductible amounts. Deductibles are usually in the hundreds or low thousands price range, BUT that doesn’t necessarily mean your employees will be stuck paying the entire deductible for a service all at once. That’s why group health insurance plans have networks!

The deductible, copay, premium, and so on depend on the group health insurance plan.

What is a group health insurance network?

Depending on the type of group health insurance plan you choose, there will be a specific “network” of doctors, professionals, and facilities that your insurance carrier specifies for each plan. A network is essentially a partnership between the insurance carrier and a medical doctor, professional, or facility. These partnerships are important because the insurance company works with these medical entities to charge your employees negotiated rates on the services they receive.

So, this is largely where the type of group health insurance plan you choose affects the kind of care that your employees can get and where they can go to get it. (No pressure or anything!) That’s why, when choosing a group health insurance plan, it’s important for you and your agent to know your employees’ medical needs so they get the type of group health insurance coverage they need.

Our insurance professionals are masters at learning your employees’ health insurance needs, breaking down each plan, and giving you quotes for group health insurance policies that will fit your business. Call us today or fill out our online form to start comparing rates on the plans that you and your employees deserve.

What is a health insurance copay?

A health insurance copay is probably a term you’ve heard a lot, even before you’ve started looking through health insurance plans as a business owner. If you’ve ever gone to a doctor, at some point during the appointment, they’ll ask you for a copay. A copay is a fee charged by your medical professional or facility just for receiving their services.

Copays are usually different amounts depending on the services you receive. For example, a primary care doctor visit may have a copay of $20, while a visit to a neurologist may have a copay of $80, or an ER visit may have a copay of $400. It all depends on the plan you have and the medical facility you visit. Most times, you can take a look at your insurance card to find out how much your copays are, but it never hurts to ask your agent for more than that brief outline.

What is coinsurance?

Co-insurance is a little tricky, but unfortunately, it’s a core part of what makes up some group insurance plans. Coinsurance is the percentage split of the medical bill that insurance shares with your employee. Coinsurance rates may only apply after your employee has met their deductible, or it may be effective for their whole plan year. A co-pay also has nothing to do with coinsurance. They are two different fees serving two different purposes.

Let’s say that a typical coinsurance split is 80-20, with the insurance paying 80 percent of a medical bill, and the participant paying 20 percent. One of your employees, Christina, goes to visit her primary care doctor. The nurse at the front tells her that her copay for that visit is $20. A few weeks later, she gets a bill from the doctor’s office for $200. If her coinsurance rates have kicked in at the typical rate, her insurance would pay 80 percent of that rate ($160), and she would pay the other 20 percent ($40) on top of the copay that she’s already paid for her doctor visit.

What is the Out-of-Pocket Maximum (OOP)?

Finally, there is an out-of-pocket maximum for each plan – which is the maximum amount that your employee can pay for the covered medical expenses in their plan year. After they have reached that limit, insurance will cover ALL of their in-network medical expenses. An out-of-pocket maximum is not necessarily the same as a plan’s deductible. There are a variety of scenarios that could happen when relating your deductible to your OOP.

  • Your plan could set your deductible and your OOP at the same amount and all of your medical expenses could count towards both.
  • Your plan could set your OOP higher than your deductible, but once you meet your deductible, you only pay a certain amount on your medical expenses until you meet your OOP.
  • Your plan could set your deductible and OOP at different amounts and require you to meet each one separately.

Also, depending on the plan, certain expenses may count toward your deductible and not your OOP or vice versa.

Got it all? If not, it’s entirely okay. This is all to say that questions are your friend! Never be afraid to ask your agent about the ins and outs of your group health insurance plan. They know it’s tricky to navigate on your own. We know it’s not easy to navigate on your own.

That’s why our insurance professionals are here to make finding the perfect group health insurance plan as easy as possible. We ask you the easy questions about your business and use our insurance knowledge to provide you with the best coverage and rates to compare for your particular business. We want to help you make an informed decision when you’re shopping for health insurance as a business owner. (And we can also help you with workers’ comp insurance  and other small business insurance coverages if that’s something you’re looking for!)

Call us today to start comparing plans or fill out our online form so you know that you don’t have to navigate the world of group health insurance alone.