When it comes to understanding the world of employee benefits, we know it’s not a simple walk in the park for anyone outside of the industry. There are complex terms and dozens of acronyms that can make reading about a relatively simple concept, like health insurance, sound like a pop quiz for a collegiate-level Latin class.
Employee benefits can be a tricky subject for any working person, even if you’ve enrolled in them time and time again. Health insurance and employee benefits markets are continually changing. Each year, new changes emerge in the marketplace, open enrollment dates change up, and the choice of group plans gets increasingly difficult to analyze. But not to fear – here at Burnham Benefits, we strive to empower our staff, clients, and potential clients with the knowledge necessary to make the best decisions for their wellness. These FAQs cover the basics to take the mystery out of coverage terms.
1. What is a Deductible?
A deductible is the amount of money you or your dependents must pay toward a health claim before your organization’s health plan makes any payments for health care services rendered. For example, a plan participant with a $100 deductible would be required to pay the first $100, in total, of any claims during a plan year.
2. What is Coinsurance?
On top of your deductible, coinsurance is a provision in your health plan that shows what percentage of a medical bill you pay and the percentage a health plan pays.
3. What is an Out-of-pocket Maximum (OOPM)?
An OOPM is the maximum amount (deductible and coinsurance) that you will have to pay for covered expenses under a plan. The plan will cover eligible expenses at 100 percent once the OOPM is reached.
4. What is an Explanation of Benefits (EOB)?
An EOB is a description your insurance carrier sends to you explaining the health care benefits that you received and the services for which your health care provider has requested payment.
5. What is a Preferred Provider Organization (PPO)?
A PPO is a group of hospitals and physicians that contract on a fee-for-service basis with insurance companies to provide comprehensive medical service. Your out-of-pocket costs may be lower than in a non-PPO plan If you have a PPO.
6. What is Utilization Management (UM)?
Utilization Management is the process of reviewing the appropriateness and the quality of care provided to patients. UM may occur before (pre-certification), during (concurrent) or after (retrospective) medical services are rendered.
For example, your health plan may require you to seek prior authorization from your UM company before admitting you to a hospital for nonemergency care. This would be an example of pre-certification. Your medical care provider and a medical professional at the UM company will discuss what is the best course of treatment for you before care is delivered. UM can reduce unnecessary hospitalizations, treatment, and costs.
7. What is a High Deductible Health Plan (HDHP)?
An HDHP is a type of insurance plan that offers a low premium offset by a high deductible. Because of the low cost of the plan, the insurer will not cover most medical expenses until the deductible is met. As an exception, preventive care services are typically covered before the deductible is met. HDHPs are often designed to be compatible with health savings accounts (HSAs), which are tax-advantaged accounts that can be used to pay for qualified out-of-pocket medical expenses before the HDHP’s deductible is met.
Do you have additional questions about employee benefits? Burnham Benefits wants to help! Contact our benefits experts today by visiting our site.