Health insurance terms : a refresher


Are you reviewing health insurance terms and/or insurance providers at the end of the year ? Do you need to educate employees on the fundamental concepts related to their health insurance scheme ?

In this episode, you will review terms around the financial contribution that plan members need to know, and review which services may be added to or excluded from the insurance scheme. Employees, as well as HR, can benefit from understanding how these  core concepts in healthcare insurance affect them directly.


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Health insurance terms : what do plan members have to pay themselves ?
Health insurance terms : what are exclusions in a health insurance scheme ?


Hello and welcome to this episode of Compensation Insider. As we are in the renewal period for many companies to review whether they will change the content or the provider for their health insurance schemes, I wanted to go through a certain number of health insurance terms that will be useful for HR but also for employees, so that they understand how the system works for them and how the different elements work together.

Health insurance terms : Financial aspects for the plan members

So the first term is premium. The premium is the amount that is paid for providing the health insurance, whether the insurance is used or not. An employee might not go to see a single doctor during the year, yet the health insurance premium still needs to be paid. Usually the payment is split between the employee and the employer, where the employer often takes the majority of the payment. It’s really often maximum to have the employee pay 50% of the health insurance premium.

Once you are insured, you go to the hospital or to see a doctor and there are a number of things that even as a plan member, you need to pay. The plan member is either the employee or their dependents if they are illegible, depending on the insurance and the family composition of the employee.

The first payment is called copay. It does not exist in all insurance plans, but when it exists, it’s the dollar amount which is paid by the plan member at the time of getting the service. It’s typically a flat fee. So in Dubai, for example, that might be 50 dirhams every time you go see a doctor. That’s before any other costs are decided or attributed to the employee or to the health insurance.

Then the second element of payment is the deductible. The deductible is an amount which is paid upfront by the plan member for benefiting from the services that are provided under the plan. Basically it’s the amount paid by the employee before the insurance company starts to share the cost of treatment with the employee.

It’s like an out of pocket expense, and it’s often stated as an annual amount, which means that if let’s say a doctor visit is 25 euros and you have a copay of 100 euros, and you go to see your GP every month, for example because you need to renew some prescription, then in that case, it’s as if you’d have to cover the full cost of the first four visits out of pocket. So you have to pay that amount before you start sharing the cost with the insurance policy.

Once you get to that amount of deductible being paid, then the co-insurance is going to kick in, which means that a remainder of the cost is going to be split between the plan member and the insurance company. It’s typically a percentage of the cost. For example, the plan member is responsible for 20% of the cost.

Now, most policies will have an out-of-pocket maximum which is included in the policy, which means that it’s the maximum that a plan member would have to pay in a year, be it for copay, for deductible or for coinsurance before the insurance covers hundred percent of the cost.

This is very important for people who have either long diseases that necessitate regular visits to the doctor or in case somebody gets cancer for example. They’re protected by the out of pocket maximum, which means that the cost for the employee will never be above that amount. Once they’ve reached that out of pocket maximum, the insurance will cover a hundred percent of the cost.

Health insurance terms : inclusions and exclusions related to the services covered by the health insurance

When you go visit that doctor to the clinic or to the hospital, there are two types of providers : in-network and out-of-network providers.

The plan comes with a list of service providers who are included in the plan. As a plan member, if you go to an in-network provider, your health insurance card is accepted and the employee only gets charged as per their insurance plan.

But if you go to an out-of-network provider, you must pay in full and then they will have to file for reimbursement by the insurance company. The cost may or may not be covered in full and the end cost might be higher, because the out-of-network providers have not negotiated specific prices for the different services beforehand with the insurance companies. So out-of-network providers tend to be overall more expensive for the employee, for the employer and for the insurance company.

Sometimes you get an option for a rider or optional additional coverage, which is things that are offered for an additional premium. For instance, you might have a choice to add more maternity cover, more dental, more cover for preexisting conditions and so on.

Talking of which, a preexisting condition is a disease or health condition that existed before the person enrolled in the plan. That could be things like asthma or diabetes. Pre-existing conditions will usually only be covered by the insurance after a period of time has passed since the first enrollment. That waiting period is often six months.

It means that once an employee joins your company and joins your health insurance plan, if they have a preexisting condition, they might not be covered for any claims related to that condition in the first six months. It could also be that some preexisting conditions might not be insured at all. So you have to be cautious of those.

Exclusions are typically services or diseases which are not covered by the insurance company. A temporary exclusion is the waiting time for preexisting condition before it becomes covered by the insurance.

Exclusions could exist around access to certain hospitals or clinics that are specifically denied in the scheme. If the employee goes there, it’s a full exclusion and sometimes does not get even reimbursed at all, unless there’s a pre-approval by the insurance company for a reason, X or Y.

There are also often exclusions for some specific treatments. Depending where you are, and depending on your company, some treatments like fertility issues treatments, psychological or psychiatric treatment for personality or behavioral disorders, sleep disorders, cosmetic surgery, obesity treatment, addiction treatment, and so on, might not be included in the services that are paid for through the health insurance scheme.

So that’s it. I hope that you found this useful. Don’t hesitate to share it with your employees at the time you’re communicating about the renewal of your incentive scheme or even throughout the year.

This is good information for people to have, so that they understand how much of costs they might have to be out of pocket of when they go use health services. Education will help them to hopefully choose a provider who is in-network, to make sure that they have as little as possible that they need to pay by themselves before they get reimbursed.

Thank you very much and see you next week on Compensation Insider !

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