While medical plans in the US can be complex to navigate, to ensure you understand the plan you're enrolling in, we've compiled a list of Insurance terms to help you break down your plan.
In this Article
Understanding Your Plan & Premium
Cost & Coverage: Deductibles & Out-of-Pocket Expenses
Savings Accounts: Build Your Health Fund
Networks & Providers: Where You Can Get Care
Plan Types: Choose What Works for You
Enrollment: When You Can Make Changes
Medications: Understanding Your Pharmacy Coverage
Key Insurance Concepts
[ACCORDION] Carrier
This is the insurance company that Deel partners with to provide access to benefits. The insurance carrier will provide access to the network of providers, process claims when members receive care, bill the members for their share of the costs of services, and reimburse the provider for the remaining costs.
For Deel's medical plans, the carriers are Aetna and Kaiser Permanente.
[/ACCORDION]
[ACCORDION] Member
A person enrolled in a plan. This can either be the employee or any of the dependents enrolled in the plan.
[/ACCORDION]
[ACCORDION] Subscriber
The employee of the client who is enrolled in the plan
[/ACCORDION]
[ACCORDION] Dependents
A subscriber's enrolled family members. Eligible dependents include:
- Spouses
- Registered Domestic Partners – Note that domestic partner premiums are post tax, meaning the dependent portion of the premium is liable for taxes.
- Children
- Foster children, step children, children of a domestic partner
Eligible dependents do NOT include:
- Parents/Grandparents
- Siblings of the subscriber
- Grandchildren
- Girlfriends/boyfriends that are not domestic partners (if you get a question on this, ask for help as it can be tricky!)
[/ACCORDION]
[ACCORDION] Situs
Where a company is headquartered. This is relevant because companies headquartered in New York can only offer plans with the prefix of NY.
[/ACCORDION]
Understanding Your Plan & Premium
[ACCORDION] Plan names
These plan names have three parts:
- The network, or the name Aetna has given to the group of providers who they have partnered with to provide better rates for care to the members. If a plan has NY, NorCal, ACO UT, or another regional prefix, that means those plans are limited to be offered to companies sitused in those regions or states
- The deductible level
- The coinsurance percentage
[/ACCORDION]
[ACCORDION] Premium
The Monthly fee for Health Insurance. Generally speaking this is a pre-tax deduction from an employee's paycheck.
[/ACCORDION]
[ACCORDION] Who pays the premium
Typically, it is divided between the employer and the employee. The employer can cover the entire premium, but there are rules around how much an employee can be charged for the premium.
[/ACCORDION]
Cost & Coverage: Deductibles & Out-of-Pocket Expenses
[ACCORDION] Deductible
The amount a member must pay out of pocket for covered services before the insurance carrier begins to pay.
[/ACCORDION]
[ACCORDION] Individual Deductible
The "individual" deductible is the amount an employee needs to pay out of pocket if they are the only person enrolled in their medical plan.
[/ACCORDION]
[ACCORDION] Family Deductible
"Family" refers to any plan tier that includes a dependent. For example, if an employee is enrolled in coverage for themselves and their spouse, they would be subject to the family deductible. If an employee is enrolled in coverage for themselves, their spouse, and their children, they would also be subject to the same family deductible.
[/ACCORDION]
[ACCORDION] Embedded Deductible
No individual is responsible for meeting more than their individual deductible, even if they are on a family plan. In most scenarios, your plan will have an embedded deductible.
[/ACCORDION]
[ACCORDION] Non-Embedded Deductible
The total family deductible would need to be met before the plan starts paying for health care services by any individual family member.
[/ACCORDION]
[ACCORDION] Copay
A set dollar amount a member pays for a specific type of service or visit. Copays typically do NOT count towards a deductible, but they do count towards an out of pocket maximum. POS, PPO, and HMO plans have copays, HDHPs do not.
[/ACCORDION]
[ACCORDION] Coinsurance
The percentage of the cost of a service that a member will be responsible for after a deductible is met. On the SBC and ROI form, this is the member's percentage of cost. For example, if a plan is listed as having 10% coinsurance, then the member will be responsible for 10% of the cost of the service. If the plan is listed as having 0% coinsurance, then there is no out of pocket cost for the member.
[/ACCORDION]
[ACCORDION] Out of Pocket Maximum
The most a member would need to pay for qualifying services in the plan year. Once a member meets their out-of-pocket maximum, then they no longer would need to pay anything out of pocket for the costs of their care. If a member hits their out-of-pocket maximum, they do still need to pay their premium.
[/ACCORDION]
[ACCORDION] First Dollar Coverage
A member has to pay 100% of the costs until they meet their deductible. This is typically a rule for a High Deductible Health Plan
[/ACCORDION]
Savings Accounts: Build Your Health Fund
[ACCORDION] High Deductible Health Plan (HDHP)
Plans where a member needs to pay the entire amount of their deductible before the plan will cover any costs for care. These plans are attractive to employees because they typically have lower premiums, and can be paired with a Health Savings Account, or HSA.
[/ACCORDION]
[ACCORDION] Health Savings Account (HSA)
An account that can be paired with a High Deductible Health Plan. Subscribers can put away pre-tax dollars deducted from their paycheck to be used for qualified medical expenses. Additionally, employers can also elect to contribute to an employee's HSA. HSA funds are pre-tax and roll over year over year, and the account is technically owned by the employee, which means if they were to leave their company the funds in their HSA would be owned by them, not the company.
[/ACCORDION]
[ACCORDION] Flexible Spending Account
An employer-sponsored benefit account that allows employees to set aside pre-tax dollars directly from their paycheck to pay for eligible out-of-pocket expenses. FSA funds are exempt from federal income, Social Security, and Medicare taxes, effectively reducing the account holder's overall taxable income. Unlike HSAs, FSAs are owned by the employer, meaning unused funds generally operate under a "use-it-or-lose-it" rule at the end of the plan year (though employers may offer a limited rollover or grace period), and the account is forfeited if the employee leaves the company.
[ACCORDION] Healthcare FSA
A specific type of FSA designed to pay for qualified medical, dental, vision, and prescription expense out-of-pocket costs for the employee, their spouse, and qualifying dependents. Uniquely, the full annual elected amount is available on the first day of the plan year (uniform coverage rule), regardless of how much the employee has contributed via paycheck deductions up to that point.
[/ACCORDION]
[ACCORDION] Dependent Care FSA
A specific type of FSA used to cover pre-tax eligible expenses related to the care of qualifying dependents while the account holder (and spouse, if married) works, looks for work, or attends school full-time. Eligible expenses include adult daycare, preschool, before- or after-school care, and child daycare for children under age 13. Unlike a Healthcare FSA, funds are strictly subject to a pay-as-you-go model and only become available as they are actually deducted from the employee's paycheck.
[/ACCORDION]
Networks & Providers: Where You Can Get Care
[ACCORDION] Network
A pre-negotiated group of providers that a carrier has a set reimbursement agreement for.
[/ACCORDION]
[ACCORDION] In-Network
A group of providers that have agreed to a pre-negotiated rate of reimbursement for services. In-Network providers typically have significantly lower costs for members.
[/ACCORDION]
[ACCORDION] Out of Network
Providers that set their own rates for services. For plans that cover out of network providers, insurance companies will typically reimburse a set dollar amount to these providers, leaving members' costs much higher.
[/ACCORDION]
[ACCORDION] Managed Choice
This is the network of providers that most of the Aetna plans operate on. When a member wants to search the Aetna website for a provider, most of the time this is what the member will choose for the network when asked.
If your client offers an HMO plan, a CMED plan, or an ACO UT plan, reach out for assistance.
[/ACCORDION]
Plan Types: Choose What Works for You
[ACCORDION] PPO
Preferred Provider Organization. These plans offer both in and out-of-network coverage. Generally open access, meaning no referral is needed to see a specialist.
[/ACCORDION]
[ACCORDION] POS
Point of Service. These plans offer both in and out of network coverage. Main difference between PPO is that POS plans are gated. Members must designate a Primary Care Physician (PCP) and get referrals to see specialist providers.
[/ACCORDION]
[ACCORDION] EPO
Exclusive Provider Organization. In-network care only. Members do not need a referral to see a specialist, but out of network care is not covered, and any out of network care received will be paid 100% by the member.
[/ACCORDION]
[ACCORDION] HMO
Health Maintenance Organization. In-network care only. Members must designate a Primary Care Physician (PCP) and get referrals to see specialist providers. Out-of-network care is not covered, and any out-of-network care received will be paid 100% by the member.
[/ACCORDION]
[ACCORDION] HDHP
High Deductible Health Plan. A plan with a higher deductible and lower premiums that qualifies members for Health Savings Account (HSA) eligibility. An HDHP can be structured with any network design (HMO, PPO, or EPO) and allows members to save pre-tax dollars for medical expenses.
[/ACCORDION]
Enrollment: When You Can Make Changes
[ACCORDION] Open Enrollment
A one-time enrollment event where employees can enroll in coverage, change their plan, and add or drop any eligible dependents. Enrollment can only occur during open enrollment, when an employee is hired, or when they experience a Qualifying Life Event.
[/ACCORDION]
Why is this only an option once a year? Why can't we change our benefits whenever we want?
By limiting the enrollment window to once a year, we are creating a balanced risk pool within the plan, preventing people from only signing up when they need medical care, and stabilizing healthcare costs overall.
If medical plans and employee enrollments could be changed at any time, employees may be incentivized to only sign up for care when they need it, which means the premiums that are paid to the insurance company would not cover the costs of care paid to providers by the insurance company.
Qualifying Life Event
A significant life change that allows an employee to enroll or change their health insurance outside of open enrollment. When an employee experiences a qualifying life event, they will need to notify their employer to open up a special enrollment window, or a 30-day period where they can change their coverage elections. Examples of a qualifying life event include:
- Event: Marriage. Action: Add their spouse or drop coverage to join a spouse's plan.
- Event: Birth or adoption of a child. Action: Add their child to their coverage.
- Event: Loss of other health coverage (e.g. spouse loses job-based insurance). Action: Enroll in coverage
- Event: Change in employment status (e.g. full-time to part-time). Action: Enroll in coverage.
- Event: Divorce. Action: Remove spouse from coverage or enroll in coverage (eg if they were previously enrolled in their spouse's coverage).
- Event: Turning 26. Action: If an employee is turning 26 and was previously enrolled in their parent's coverage, they can enroll in coverage. If an employee's dependent child is turning 26 they can drop them in coverage.
-
Event: Death of plan holder. Action: Remove dependents from coverage or enroll in coverage (eg if they were previously enrolled in their spouse's coverage).
Medications: Understanding Your Pharmacy Coverage
[ACCORDION] Generic
A drug that is an exact copy of an original brand name drug and contains the exact same active ingredients, but cost significantly less than the brand name. Typically, when a drug is developed, the developer will have a patent, and sell it under one brand name for a limited amount of time. When that time limit expires, other distributors can develop and sell that drug under a generic name for a significantly lower price.
[/ACCORDION]
[ACCORDION] Preferred Brand
Drugs that do not have a generic alternative that an insurance company has determined to be the most cost-effective.
[/ACCORDION]
[ACCORDION] Brand Drugs
Drugs sold under a specific brand name.
For example, in the United States Tylenol is the brand name for Acetominophen. Both have the same ingredients, but Tylenol is the original brand name. These tend to be more expensive.
[/ACCORDION]
[ACCORDION] Specialty
High-cost medications that treat complex and rare health conditions. These drugs typically require special handling and may need to be administered in a health care setting. Patients typically work closely with their providers when receiving specialty medication, and it can typically only be administered by a medical professional.
[/ACCORDION]