Health Insurance 101: The Basics
Employee Benefits are an important part of your employment package but often are confusing to understand. Our mission here is simple…..let’s keep this stuff simple!! I mean really, we can get as convoluted as you want to, we can get mired in the minutia, get caught in the quagmire of copays and deductibles. We can drop terms like “use it or lose it”, “grandfathered plan”, “essential health benefit” yada yada yada…. But if nobody understands what we are talking about, it means nothing!! As brokers and human resources personnel we deal with this all the time and sometimes take it for granted that everyone knows this stuff. NEWS FLASH……they don’t. Keeping this in mind, I am starting my blogging journey off with a series of articles that I hope will help to educate folks on this crazy world of Health Insurance and other Employee Benefits.
Health Insurance Basics
How Does Health Insurance Work?
OK, so let’s make this painless. At its core health insurance, like all others, is an agreement between you and an insurer. You pay premiums, copays, deductibles and so on. They pay the rest.
Health insurance works by spreading the cost of care among large groups. So premiums paid by you also helps pay for the care of others. In groups, most folks are healthy and do not need much healthcare. A small minority is usually responsible for most of the healthcare usage. Sharing this risk is a huge part of what makes health insurance work. Especially considering that at one point or another we will all be part of that minority that are high utilizers.
In addition to spreading financial risk, health insurance also improves access to health care services. Studies have shown that, compared to those who are insured, people without health insurance receive fewer options in health services, or their care is delayed. Health insurance not only protects individuals from catastrophic expenses, it also improves access to important routine, preventive and primary care services.
There are several different types of health insurance that provide a range of coverage for medical expenses. Expenses vary based on how much coverage someone signs up for and the number of family members he or she decides to cover. Some types of insurance allow individuals to set aside pre-tax income to use at a later date.
Depending on the type of health insurance coverage, either the individual pays costs out of pocket and is then reimbursed, or the insurer makes payments directly to the provider.
After every visit to a health care provider, you will get a document called an explanation of benefits (EOB) that shows how much your insurance will pay and the amount your out-of-pocket expenses will be.
There are 2 types of health insurance Group and Individual. Group is the type of insurance you get from your employer, trade organization or the government. Individual is what you get on your own.
Stay tuned for our next episode of Benefits 101 where we delve into to the ever exciting world of Terminology. Until then, remember, I live for this stuff so you don’t have to!!
Steve Corbin joined our agency in 2014 and is VP of Employee Benefits. He is a veteran of the health insurance industry, where he spent most of his career working with large commercial and municipal clients. His in-depth knowledge of employee benefits is a proven asset to our clients. Steve will work tirelessly on your behalf to be sure your company’s employee benefit needs are met.