Newbie’s guide: Employer health insurance

Unravel the complexities of employer health insurance – discover coverage details, enrollment guidance and the connection between your health and finances.

You know that health insurance is a big deal. But you haven’t really had to think about it until now.

Whether you’re  turning 26  and can’t be on your parents’ health plan anymore, you finally landed a gig that provides insurance coverage or you just don’t know where to start with paperwork, we’re covering the basics so that you can make the right choices for you.

If you’re ready to take advantage of your employer’s health insurance plans, here are a few things you’ll need to know first.

1. You can’t just enroll in a health plan any time you want:

Open enrollment is the time frame that you can enroll in health insurance with your employer or make changes to your current plan. It typically happens once or twice per year and lasts for several weeks.

You may also enroll in health insurance when you are a new employee (usually anytime from 0-90 days after hire), or when you have a major life change such as getting married, losing your current health insurance or having a baby.

2. Health insurance companies LOVE to use initials:

So be prepared for lots of acronyms like HMO, PPO and HDHP, which are types of health insurance plans you might be offered. Here’s the lowdown on them:

• An  HMO  (Health Maintenance Organization) is a network of doctors, nurses and other medical providers that you can visit as part of your plan. You will likely be asked to choose a Primary Care Physician that's your go-to doctor.
• A  PPO  (Preferred-Provider Organization) is similar to an HMO plan, but typically costs more and gives you greater flexibility in who you see for medical care.
• A  HDHP  (High Deductible Health Plan) costs very little monthly, but you can expect to pay more out of your pocket for doctor visits, prescriptions and other services. Many HDHPs are offered with an  HSA (Health Savings Account), which lets you put pre-tax dollars into a savings account that you can use to pay for those medical visits. If you opt for this type of plan, you may want to also check out our tips for building an emergency fund.
• Additional types of plans include POS and EPO. Check out health insurer Aetna’s plan descriptions for a good overview.

3. There are lots of words for the money you owe:

For example, a monthly premium is the set amount you pay for health insurance each month. When you purchase health insurance through your job, this amount is deducted from your paychecks.

• Out of Pocket expenses:  This is the amount you personally owe. Many insurance plans cap the amount you pay for medical expenses in a single year at a certain dollar amount.
• Copay:  This is the amount that you will pay out of pocket for a doctor visit, medical service or prescription drug. So, if your health insurance plan says you have a $20 copay for a standard doctor visit and you get the flu, you’ll pay $20 cash when you visit the doctor for treatment. The rest of the cost of that visit is paid by your insurance company.
• Deductible:  This is the dollar amount that you’ll need to pay per year in order for your full health insurance benefits to kick in.

Example: Your health insurance plan says it covers 80% of an emergency room visit (after deductible), and your deductible is $1,000. That means after you’ve paid $1,000 out-of-pocket for your various doctor visits, medications etc. during the year, you’ll only pay 20% of the cost of your trip to the ER.

If you have only paid $200 for medical expenses this year and the emergency room visit costs $300, you’ve only paid $500 total toward your deductible. So, you’ll have to pay the full $300 for the ER visit out of your own pocket, since you haven’t met your $1,000 deductible yet.

• Co-Insurance:  This is a fancy way of saying “the amount of a medical bill you’ll be responsible for paying.”

Example: You have already reached your $500 deductible this year by paying for a few doctor visits for a chronic condition. You receive a bill from your allergy specialist for $280. Your insurance plan covers 50% of specialist visits after your deductible is met. So, you’ll pay $140 coinsurance for your visit.

4. You’ll save money by seeing “in-network” doctors:

If you have a plan with a network of providers, like a PPO or HMO, the cost to see a medical professional who is not on your plan is higher. Visit your health insurer’s website to see a list of in-network doctors — if you choose from this list, you’ll pay less out-of-pocket. The good news is that preventive care like routine physicals and annual women's visits are typically covered by every plan.

Adulting like a pro

There’s no denying that health coverage is important. Having insurance for your preventive care (annual visits) is just as important as having it in case of an accident; appointment and hospital stays without insurance add up quickly! Under the Affordable Care Act, anyone can get insurance, but it's great to have the option to purchase yours through your job.

The most important detail to remember is that you’re not alone. The benefits specialists at your company are prepared for questions that new employees typically have. So, don’t be afraid to ask!

You may also want to check with your parents, relatives and friends to see which plans worked best for them and why. Each person’s situation is different, so choose the plan that works best for your current needs. Once you make your choice and sign up, you’ll feel better knowing that you’re prepared for whatever comes your way.