Welcome to Health Insurance 101

*Disclaimer from Trainual

Please note that this template is not an official medical document. And its information is for general knowledge and educational purposes only — not to provide advice on how to structure your organization's processes and/or policies. Meaning, this template should never be taken in place of legal or medical advice. 

To use, you will need to customize this template to meet all your company's requirements. So, please update it with any and all relevant information before rolling it out (like deleting this step)!

Open Enrollment is Coming!

We're heading into our health insurance open enrollment period. We know you're excited!

We know health insurance can be a bit of a challenge to understand (is the world's biggest understatement). So, we've put together this super informative (and fun) training to help you out. 

The name of the game is benefits education! Going into your plan selection, we want you to be armed with a whole heap of insurance knowledge. That way, your enrollment process is as straightforward and painless as possible.

If you have questions about anything in this training, please contact the HR department.

Health Insurance Terms & Other Things You Should Know

Explanation of Benefits (EoB)

The Explanation of Benefits (EoB) is a receipt for each charge processed with your insurance. You'll get it either by mail or electronically after each charge. Processed means that the healthcare provider has sent the bill, and that the insurance company has sent it back with the full amount they agree to pay (called the amount payable).

The Explanation of Benefits is your one source of truth for every healthcare expense. It is the thing that lets you know if you are being overcharged for service and gives you fighting power to obtain a refund.

For example:

Let's say you go in for surgery. And you're required to pay $800 upfront because that’s what the doctor's office thinks you’ll be responsible for. 

After your surgery, you get your Explanation of Benefits in the mail. And it states that you're only responsible for $500. That means your healthcare provider owes you $300. You can then take the EoB to your doctor and show them that they overcharged you.

Your doctor's office will also receive notice when a bill is processed. So they likely already know and have started processing your refund (but talking to them might make it go faster). They cannot keep your overpayment. (They risk being shut down if they do, and this is strictly monitored.) BUT it can take many months to get that reimbursement if you don’t check-in.

Deductible

A deductible is what you agree to pay out of pocket before your insurance carrier pays any portion of the bill. After you meet the deductible, the rest of the bill generally falls to a coinsurance. Meaning, your insurance will cover a predetermined percentage of the bill. For anything subject to a deductible, you'll need to pay every dollar in the EoB until you meet the deductible. But this does NOT mean that you will pay every dollar billed, however.

When insurance is in-network with a healthcare provider, the insurance company and the healthcare provider have entered into a contract. The contract lays out how much the insurance carrier agrees to pay for any charge. Charges are designated by something called CPT codes. For each code, an insurance company negotiates a pay rate. And it usually is a percentage of the full price.

For example:

Let’s say you have a physical therapy (PT) appointment, and PT is a benefit subject to your deductible. In that appointment, the therapist did an evaluation, manual therapy, and therapeutic exercise. The PT company would then send a bill to the insurance carrier that looked like this:

97001 - 1 unit   $265/Unit

97110 - 2 units  $130/unit

97140 - 1 unit   $130/unit

This does NOT mean that the amount payable is $655. This is where that contract comes in. The insurance company will have an agreed percentage of the cost that they will cover. (Each code will have a different percentage.) To keep things simple, let’s say all the PT codes are 50%. The total bill would be $655. But your insurance company has agreed to pay $327.50. This is the total payable. 

In other words, you still benefit from having insurance. But you are responsible for the full amount payable until that deductible has been met (or satisfied in insurance lingo).

This DOES mean that you could get the same treatment for a lower cost at another healthcare provider if they were better at negotiating this contract. But most of the time, you will not have access to the full cost information until the bill has been processed. 

If you look up costs per service on your health insurance portal, you will generally see something like this:

"Any cost information on this page is an estimate only. See more information below about participating providers, available services, and these estimates."

The healthcare provider will also not have access to this information until the bill is processed. They will only see these “estimates” as well. We know this sounds crazy, but no insurance representative you have access to can see this specific, guaranteed information either (just the estimates). This does NOT mean that the information will change based on who is processing the bill.

Individual vs. Family

In any healthcare insurance plan, there is an individual deductible and a family deductible. And whichever deductible is met first is the one that counts. 

If you meet your individual deductible first, then your applicable expenses alone are covered by a coinsurance. But if your family deductible is met first, everyone on your health plan has their applicable expenses covered by a coinsurance!

To be clear, each person on your health plan will have an individual deductible. Every dollar spent on applicable expenses by each person on your plan will feed to the family deductible as well as to their own individual deductible.

For example:

On your plan, there is a $600 individual deductible and a $1000 family deductible (this is not realistic - it’s just for simplicity). In your family, you have yourself, your spouse, and your two children (Tommy and Suzie).

To date, your applicable healthcare expenses break down to:

You: $500

Spouse: $300

Tommy: $100

Suzie: $100

In this example, you've met your family deductible first, and it takes precedence over individual deductibles. Moving forward, all your applicable healthcare expenses will change to a coinsurance - even though no one person met their individual deductible.

Coinsurance

Meeting your deductible does NOT mean that you’re done paying for your healthcare expenses. After the deductible comes the coinsurance (pronounced "co-insurance," not "coin-surance").

A coinsurance is where the insurance company pays a percentage of the total amount payable, and you pay the remainder up to your Out of Pocket Maximum.

Let’s go back to the PT example from the previous step:

97001 - 1 unit      $265/Unit

97110 - 2 units    $130/unit

97140 - 1 unit      $130/unit

The total payable is $327.50. So say you have an 80/20 coinsurance (80% paid by the insurance company, 20% paid by you), your insurance would pay $262 of the total payable. And you would only be responsible for the remaining $65.50. 

The most common coinsurance splits are 90/10, 80/20, and 70/30. But they can be any percentage splits.

Out of Pocket Maximum

You may have noticed in the previous step that I mentioned the Out of Pocket maximum. This is the amount that, after it has been met, your insurance will come in and pay 100% of healthcare expenses that apply to the Out of Pocket Max (applicable expenses). 

This is where they get a little fuzzy! This does NOT necessarily mean that you won’t be paying a dime for healthcare costs for the rest of the year. There will be some expenses that do not apply to the Out of Pocket Max. For example, in some cases, copays are not applicable. Meaning, you can meet your Out of Pocket Max and still be responsible for your copays. Similarly, any expense that is not in-network would not apply to your in-network Out of Pocket Max.

Like your deductible, there is an individual Out of Pocket Max and a family Out of Pocket Max. And whichever is met first counts. If you meet your individual Out of Pocket, then your applicable expenses are covered alone. If your family Out of Pocket Max is met first, then everyone on your health plan has their applicable expenses covered as well!

To be clear, each person on your health plan will have an individual Out of Pocket max. Every dollar spent on applicable expenses will feed into the family Out of Pocket Max as well as the person's individual Out of Pocket Max.

For example:

On your plan, there is a $600 individual Out of Pocket Max and a $1000 family Out of Pocket Max (this is not realistic - it’s just for simplicity). In your family, you have yourself, your spouse, and your two children (Tommy and Suzie).

To date, your applicable healthcare expenses break down to:

You: $500

Spouse: $300

Tommy: $100

Suzie: $100

In this example, you met your family Out of Pocket Max first, and it takes precedence over individual Out of Pocket Max. Moving forward, all your applicable healthcare expenses will be covered at 100% - even though no one person met their individual Out of Pocket Max.

Copay

Wait, didn’t we already talk about this?

NO! We talked about a coinsurance, which is very different. If something on your plan is covered by a copay, it is generally not subject to a deductible. It will be noted very plainly if it is subject to both. (It is EXTREMELY rare for something to be subject to both a deductible and a copay - like 99.9% of the time it will be one or the other). In other words, a copay is a guaranteed price for that service.

If a coinsurance is 20%, it could be $10 or $50 depending on the services provided (CPT* codes billed) and the negotiated rate of charges. If it’s a copay, it is one flat fee.

*CPT codes are the numerical codes used primarily to identify medical services and procedures furnished by qualified healthcare professionals (QHPs) Oi! So many acronyms!

Let’s go back to our favorite Physical Therapy example:

If something is covered by a co-insurance it could look like this:

97001 - 1 unit   $265/Unit

97110 - 2 units  $130/unit

97140 - 1 unit   $130/unit

The total payable is $327.50. So say you have an 80/20 coinsurance (80% paid by the insurance company, 20% paid by you), your insurance would pay $262 of the total payable. And you would only be responsible for the remaining $65.50.

OR it could look like this:

97001 - 1 unit      $265/Unit

97110 - 2 units    $130/unit

97140 - 1 unit      $130/unit

In this second example, let’s say they’re all negotiated at 30% instead. The total bill is still $655, but the total payable is only $196.50. So if you have an 80/20 coinsurance (80% paid by the insurance company, 20% paid by you), your insurance would pay $157.20. And you would only be responsible for paying $39.30. 

Same service, different negotiated rat. Meaning, different patient responsibility (the amount that you are responsible for paying).

If you have a COPAY for physical therapy visits, say $25/visit, then that is what you owe per visit, period. It does not matter what CPT codes charged or what the negotiated rate is - you will only ever owe $25/visit.

More often than not, if you have a high deductible, most benefits will fall to your deductible/co-insurance. But if you have a lower deductible, they will likely fall to a copay.

Qualifying Life Event

So what is a qualifying life event? Well, these happen when you have a massive change in your life that may require you to add or drop coverage.

A qualifying life event could be any of these situations:

1. Get married
2. Have a kid
3. Adopt a child
4. Legally separate or get divorced
5. Experience a death in the family
6. Someone on the plan turns 26 (and loses prior coverage under a parent's/ guardian's plan)
7. Move to a new location (most of our plans are national, so this is not always applicable)
8. Experience involuntary loss of previous coverage

If you elect coverage during this open enrollment and a qualifying life event, contact [someone on our HR team]. And they will work with [our insurance provider] to start a QLE open enrollment period. All you'll have to do is provide the necessary documentation, and we'll take care of making the necessary changes! 

Just so you know — you only have 30 days from the time of the qualifying event to submit a QLE!  and QLE's often make it so that you can add or drop coverage, not necessarily that you will be able to change the plan you elected.

Justworks has a really awesome resource if you have more specific questions about QLEs. But you can also reach out to [someone on our HR team] with any questions or to help you straighten things out. 

FSA (Flexible Spending Account)

Medical expenses can be seriously expensive! Thank goodness for FSA and HSA accounts!

FSA: Flexible Spending Account

An FSA is an account that you can set aside pre-tax dollars for medical expenses for anyone on your plan throughout the year. This is awesome if you know you’ll have to shell some cash out on medical expenses this year and want to set aside some money to make sure it’s ready when you need it. 

An FSA is really cool if you're on a plan that does not come with an HSA but still want to have money available for medical expenses. 

But it does have one huge drawback. If you have not used every cent in your FSA account by the end of the year, you lose it forever. It’s a real Cinderella carriage/pumpkin situation.

The good news is that there is A LOT that you can use FSA dollars on. Medical expenses, medications, dental work, bandaids, ace wraps, sunscreen, chiropractic care, breastfeeding classes, and more included!

Allowable expenses are decided by the IRA (dang IRA). You can find a pretty comprehensive list here.

Special note for any person in need of menstrual hygiene products, those are (newly) included as eligible expenses for both FSA and HSA dollars! You can finally get those products without being taxed twice for them!

The maximum annual contributions for FSA accounts are $2750.

HSA (Health Savings Account)

HSA: Health Savings Account

Similar to an FSA, an HSA is an account that you can set aside pre-tax dollars for eligible medical expenses for anyone on your plan in any given year. You can find a list of eligible expenses here.

Pro Tip: Look for the ones with the checkmarks next to them to tell you if they are eligible, and if they have any restrictions.

However, an HSA is different from an FSA in a few ways. HSAs are only available for high deductible health plans (HDHP). And everything that you put into an HSA can be rolled over year over year. Meaning, if you don’t have any medical expenses this year, you can still use those funds next year! But once you turn 65 years old, you can no longer contribute to your HSA account. But you CAN still use your remaining HSA funds for medical expenses!

Special note for any person in need of menstrual hygiene products, those are (newly) included as eligible expenses for both FSA and HSA dollars! You can finally get those products without being taxed twice for them!

You may be wondering what happens if you use your HSA for non-medical expenses (or non-eligible medical expenses). Well - you will have to pay income tax on the funds used. Plus, a 20% penalty if you’re under 65. And it will be very, very, very complicated. (0/10 do not recommend.)

One thing you can do with your HSA funds outside of using them on eligible medical expenses is to invest them in mutual funds! Reach out to the HR department to learn more!

This is AWESOME because they will stay with you for life or until you use them all. So if you contribute to your HSA with long term medical expenses in mind (and let them grow through investments), you could REALLY be doing yourself a favor! Did you know that the average person age 19 to 44 spends between $3 and $5k on medical expenses per year? But the average person 65 and older spends over $10k+ per year? Saving and investing funds for those expenses could be a huge game-changer for you!

The maximum annual contributions for HSA accounts are $3,550 for individuals and $7,100 for families. If you are over the age of 55, you can legally contribute an additional $1,000 annually as “catch up funds.”

In-Network vs. Out-of-Network

Let’s talk about In-Network and Out-of-Network health care costs. Mainly, what do they mean?

Simply put, In-Network means that those healthcare providers are contracted (have agreed upon a set of terms and literally signed a contract) with your insurance. Out-of-Network providers are not. 

Now, this is where it gets a little complicated. Though hospitals and healthcare facilities may accept your insurance, that does NOT mean that everyone who treats you will be In-Network. A healthcare facility can also say they accept your insurance if they accept Out-of-Network benefits. (But this means less money for them and significantly higher costs for you!)

This mostly rears its ugly head during emergency situations, childbirth, and surgeries. Because there are often so many different providers involved (surgeons, anesthesiologists, and so on), there's a high risk that some of them may not be In-Network for you!

Just a tad more bad news, Out-of-Network benefits are completely separate from In-Network benefits. Think of them as 2 buckets that you put money into every time you have a healthcare expense. Your In-Network bucket is full, while your Out-of-Network bucket remains completely empty. 

Dollars do not transfer between the two. So technically, you have 2 deductibles and out of pocket maximums to meet if you receive services from both In-Network and Out of Network providers. And the Out-of-Network costs will be MUCH higher.

The good news is that Out-of-Network benefits are still better than nothing. If you are in an emergency situation and you can’t ask each individual provider if they're in-network, you will at least be partially covered. You will owe more, but you will not owe everything billed. (Remember the whole negotiated rate deal we went over in the deductible section? It’s like that.)

Prior Authorization

For some services, you’ll notice that they require prior authorization (usually for really pricey medical expenses like surgeries or durable medical equipment). This does not mean that you need to obtain the prior authorization yourself - you actually won’t be able to. Instead, your healthcare provider is responsible for getting authorization before they perform the service.

Generally, when you go to schedule the service, the provider’s office will check your benefits and see that prior authorization is required. They will either schedule you far enough out that they’ll have time to get the authorization. Or they will wait until they obtain it to schedule anything.

If the authorization is denied, it’s because the medical team at the insurance company has deemed that the service is not medically necessary. There IS an appeals process that the healthcare provider’s administrative office can go through, so initial denial is not the end of the road!

Doctor's Offices Can't Guarantee Benefits

Working with insurance companies can be frustrating. They aren’t required to guarantee benefits to anyone (not you and definitely not your healthcare providers). And they don't always provide the visibility you expect.

When a doctor's office or another healthcare provider verifies your benefits, they’re just calling the insurance company or looking it up on the website to see if it's covered. They could call 4 times and get 4 different answers on what you’ll owe for services. And that can be super frustrating for you and your medical provider. The reason it’s still worth it for them is that they can give you a ballpark figure on what you’ll owe, so you can make an educated decision and not feel blindsided.

The point here is to let you know that a healthcare provider can only quote you the amount that they were quoted. And you should always do your own research as well, so you can prepare. 

Before you get care, look into your benefits for that service yourself (especially if it's likely to be more expensive like an MRI). When it comes to your benefits, you should be more of an expert than any healthcare provider you visit!

Meds May Not Fall Into Tiers

You know how your plan has tiers of pharmacy benefits (cleverly titled Tier 1, Tier 2, Tier 3, etc)? Well... they're a bit misleading. Sure, some medications (maybe even most medications) fall into one of those tiers. BUT not all of them! 

Some medications will still fall to your deductible. Meaning, you could have to pay through the roof. Remember how we talked about different HCPs having different contracted rates per CPT code? The same thing applies here. If your medications fall to your deductible, you should shop around at a few pharmacies. The same medication might cost you $100 at Walgreens, but $350 at CVS.

Plan Options

General Considerations to Keep in Mind

The most important thing to keep in mind when you’re choosing a healthcare plan is if something happens, you are on the hook for every dollar of your deductible. Fall and break an ankle? Deductible. A piano falls from the sky and hit you? Deductible. Land wrong after a skydive? Deductible! Even healthy people who don’t usually have problems can have accidents.

You should also consider any regular claims you plan to have. Your medications or specialist visits (like physical therapy) may fall to your deductible. And this goes for everyone on your healthcare plan. 

This doesn’t mean that it’s never worth it to go for a high deductible health plan. Go for it, if you: 

• Don’t have regular medical claims.
• Can build up your HSA.
• Need the lower monthly premium.

Just make sure that if you end up on the hook for your deductible, you won’t be buried by it.

How Does Changing Health Plans Work?

Changing health plans isn't as complicated as it seems! The hardest part is wrapping your head around will be the deductible/out of pocket running on a calendar year (Jan-Dec) and renewals running on our plan year (Nov-Oct). And honestly, it’s super easy!

Whatever you have met of your deductible from your old plan transfers to your new plan.

For example, your old plan has a $1500 deductible that you’ve already met. But you switch to a $500 deductible plan. You will have already met your new plan's deductible (and $1500 toward your Out of Pocket) until your deductible resets Jan 1.

Shortly before open enrollment begins, well present all your options. You’ll have a couple of weeks to review the plans before open enrollment ends, and you need to make a choice. During that time, an HR representative will be hosting open office hours to review the plans with you 1:1 and help you choose the right one for you and your family!

You will submit your decision on our benefits platform. (It’s as simple as a click of the button.)

EXAMPLE: UH 1 Plan Overview

Key Information about this Plan

Monthly Premiums 

• $29 monthly premium for employee-only coverage
• $301 monthly premium for employee + kids coverage
• $369 monthly premium for employee + spouse coverage
• $709 monthly premium for family coverage
• $500 individual deductible / $1000 family deductible
• $2500 individual out of pocket max / $5000 family out of pocket max
• Most benefits fall to copays
• Coinsurance is 80/20

Who is this plan right for?

You are the only one on this plan, and you think you will probably have some medical expenses this year. (Such as doctor visits, regular expensive prescription medication, or surgery you've been putting off.)

You can absolutely sign up for employee + (kids/spouse/family) plans. But the premiums are highest on this plan for employee + (kids/spouse/family) coverage.

What’s the bottom line?

This plan has the richest coverage (which means a lower cost for services). And it's great if you anticipate regular/expensive medical needs this year!

Extra, Extra, Read All About It!

Given that this plan is our richest plan, there are no extras included. The extra is that this plan comes with the lowest out of pocket cost per service!

Full info about this plan

You can get a full overview of this plan by clicking here.

Coverage Hot Topics

Primary Care Provider

So... do I really need a primary care physician (PCP)? While it may not seem like a big deal to forgo a PCP when you’re healthy, it's a great idea to get in with one before you need them. I am not a medical expert, so I won’t go into the health or logistical reason!

But there are quite a few services that require a referral from a PCP to get started! Sometimes your insurance company needs a referral to pay for a service. For example, you can’t get an MRI or an X-ray without having it ordered.

Many specialists and other services require a referral BEFORE you book an appointment with them. And you're going to want to have a PCP on-call who already knows you and your medical history. That way, you can get your referral faster and make your appointment sooner.

As for insurance billing for PCP visits, you can owe more than what is listed next to “PCP” on your card. That number is the cost of consulting with your PCP. But there are things that they could do that would be charged separately - such as labs (blood work, urine testing, etc.), immunizations, and wellness exams. The good news is that some of those charges (often preventative care) are covered at or near 100%! But some aren’t. So always go in knowing that the full cost will depend on what occurs during the visit.

Mental Health

Mental Health benefits are especially important and, generally speaking, hard to figure out. And a lot of mental health practices don't even accept insurance (strictly out of pocket pay). That's because until VERY recently, reimbursement rates were so low that accepting them meant they couldn't stay in business. 

Many insurance companies are re-evaluating that decision since the mental health revolution. And as demand increases for this service and stigma subsides, the benefits get better. But right now, mental health benefits are hugely varied depending on your plan. Sometimes, they're subject to your deductible. Sometimes, just a co-insurance and no deductible, or a copay. And sometimes they’re even covered 100%!

The total cost depends on your actual plan AND your diagnosis. If your diagnosis is not recognized by the American Psychiatric Association, it might not be covered. 

Dermatology

A dermatologist is considered a specialist, so your coverage will depend on what you owe for specialist visits. HOWEVER, that does not mean that you would only owe the “specialist” copay or coinsurance/deductible. You can receive a variety of different services from a dermatologist, and each service will be a separate charge from the “specialist visit” charge. 

So, on your insurance card, you'll see something like: 

PCP: $25

Specialist: $50

This is just the office visit charge, or what you pay to consult with a PCP (Primary Care Physician) or specialist. If they do something other than the consultation (such as tests, procedures, or imaging), then you might owe more than $25 or $50. The total amount will depend on the services provided. 

Chiropractor

Chiropractic care is also hard to pin down when it comes to coverage. Some plans cover it all with a $20 copay. Some have it fall to the deductible or don’t cover it at all. To note, if chiropractic care falls to your deductible, you should be prepared to pay $100+ per visit. This goes back to CPT codes and what is done in each visit (see the “deductible” step if you need a refresher).