What Employee Health Insurance Options Are Right for You?
If your employer offers insurance in its employee benefits package, you’ll need to decide which plan is best for you. There's a lot to consider, including how much the plan costs each month, what it covers, and the type of plan. Learn more about the typical employee health insurance options.
How Employer Health Insurance Works
Many employers offer health insurance benefits for employees, and 51% of civilian employees participate in a workplace medical care plan. New employees are generally offered benefits after they are initially hired. They may have to wait until after a probationary period for insurance and other benefits to start.
If you are not a new employee, you will have to wait until open enrollment to sign up for benefits or make any changes to your existing benefits package. The open enrollment period is often from November 1 through December 15, with the new plan starting on January 1, but it varies by employer. You'll also be entitled to a 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 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. Your company’s human resources department can give you specific details about enrollment and what portion (if any) of the benefits is paid for by your employer.
How to Choose Your Coverage
It's important to look beyond the premium (the amount you pay) when choosing a health insurance plan. You should also consider:
- The deductible: This is the amount you pay for covered services before your insurance starts to pay. For example, a $3,000 deductible means you pay the first $3,000 in health care costs. After that, your insurance pays 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 well-being. Here are typical options.
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.
PPOs pay less for medical procedures or office visits if you use an out-of-network doctor. HMOs may not pay anything toward out-of-network care unless it's an emergency.
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.
If you choose to add vision insurance to your benefits, find out what type of exams are covered, the out-of-pocket expenses, and what type of eyeglasses or contact lenses are covered. Some plans will allow for only one pair of prescription glasses per year. Some employers offer a vision discount plan rather than vision insurance. With a vision discount plan, you pay for vision care but at a discounted price.
Good oral health is an important part of wellness, so many employers provide dental insurance to employees. There are several types of dental plans. With a direct reimbursement (DR) plan, the employee pays for services and is reimbursed by the insurance company. 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 pre-determined 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.
Dental insurance plans do not always cover orthodontic care, so if you have a child who needs braces, make sure you choose a plan that includes this option.
Some employers offer life insurance to their employees. It's typically for a benefit that would be one to three times your annual salary. If you need more life insurance, you can always purchase a supplemental life insurance policy in addition to the employee policy provided by your company. If you have a serious medical condition and can’t find life insurance on the open market, employer life insurance may be a good option to consider, since you can typically obtain life insurance with guaranteed acceptance during open enrollment with your employer or upon your initial hiring. There may be a limit to the amount of life insurance you can get on a guaranteed acceptance basis.
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, and 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. In addition to choosing a health insurance plan, consider opting in for life and disability coverage, as both of those are 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.