How Employer Health Insurance Works
Many employers offer health insurance benefits for employees, and 50% of civilian employees participated in a workplace medical care plan in 2022. New employees are generally offered benefits after they’re initially hired, but they may have to wait until after a probationary period for insurance and other benefits to start. You’ll have to wait until open enrollment to sign up for benefits or make any changes to your existing benefits package if you’re not a new employee. The open enrollment period is often from Nov. 1 through Dec. 15, with the new plan starting on Jan. 1, but it can vary by employer. You’ll also be entitled to special enrollment if you have a significant life change like losing health coverage from a spouse, marriage, divorce, or adopting or having a child. The premium for your insurance coverage is typically deducted from your pay each pay period. Depending on the specifics of your employer’s benefits package, the company may pay for part of the cost.
How To Choose Your Coverage
It’s important to look beyond the monthly premium you’ll have to pay to maintain your health insurance when you’re choosing a health plan. But you should also consider:
The deductible: This is the amount you pay for covered services before your insurance kicks in and takes over. For example, you would pay the first $3,000 in health care costs if you have a $3,000 deductible. Your insurance would pay after that according to the terms of your plan. You may not have to meet the deductible to have some services covered, like primary care doctor visits.Coinsurance: This is a percentage you pay for a covered service or medical supply. You might pay 20% of the cost of visits to a specialist.Copayments: This is a set dollar amount you pay for a service or supply. You might pay $30 for a 30-day supply of a brand name prescription.The out-of-pocket maximum: This is the most you will pay out-of-pocket for covered medical costs in a year.
Employee Coverage Options
Employers often offer a range of benefits for your health and wellbeing. Typical options include:
Medical
The health insurance portion of your employee benefits package will vary depending on the specific plan you choose. It may be provided through different types of health insurance plans, such as a health maintenance organization (HMO) or preferred provider organization (PPO) plan. Both of these plans have a provider network. Find out what basic procedures are covered in each plan. Many plans offer free wellness visits and preventive care, so check to see if the plan you choose offers these options.
Vision
Find out what type of exams are covered if you want to add vision insurance to your benefits. Make sure you understand the out-of-pocket expenses and what type of eyeglasses or contact lenses are covered. Some plans allow for only one pair of prescription glasses per year. Some employers offer a vision discount plan rather than vision insurance. You pay for vision care but at a discounted price with a discount plan.
Dental
Good oral health is an important part of wellness, so many employers provide dental insurance to employees. There are several types of dental plans. The employee pays for services and is reimbursed by the insurance company with a direct reimbursement (DR) plan. Most DR plans allow you to see the dentist of your choice, although services may be discounted when choosing a dentist in a preferred provider network. Indemnity plans pay a specific predetermined amount for specific services, such as fillings, extractions, or crowns, regardless of the actual charge for the service. Preventive care and cleanings may be covered at no charge under some plans, so look for this option as well.
Life
Some employers offer life insurance to their employees. It’s typically for a benefit that would be equal to one to three times your annual salary. You can purchase a supplemental life insurance policy in addition to the employee policy provided by your company if you think you need more than this. Employer life insurance might be a good option to consider if you have a serious medical condition and can’t find life insurance on the open market because you can often obtain life insurance with guaranteed acceptance during open enrollment with your employer or upon your initial hiring. But there may be a limit to the amount of life insurance you can get on a guaranteed acceptance basis.
Disability
Many employers offer some form of disability insurance, which helps make up for lost income if you’re unable to work due to a non-work-related health condition. Your employer may offer short-term coverage, which lasts up to six months, and/or long-term coverage, which can last for five years or more.
Other Plan Considerations
Some employers offer plans that help with health care costs. The availability of these options varies by employer. One option is a flexible spending account (FSA), which allows you to save pre-tax dollars to apply toward medical expenses such as copays, deductibles, and other out-of-pocket medical costs. Most FSA plans have a “use it or lose it” rule. You must use the money in the account by the end of the year. Health savings accounts (HSAs) are similar to FSAs except they can only be used with a high-deductible health plan. But the funds roll over from year to year. Health reimbursement arrangements (HRAs) are employer-funded health care accounts. You can be reimbursed for medical expenses from the account, and unused funds can be rolled over.
The Bottom Line
Choosing your employee benefits can be complicated. Take the time to review your options and ask questions about anything you’re unclear about. Consider opting in for life and disability coverage in addition to choosing a health insurance plan because these are both valuable benefits. Make sure you know when open enrollment for benefits is scheduled so you don’t miss it if you want to make changes. If you have a significant life event, let your human resources department know so you can make appropriate changes to your coverage.
