There are a lot of terms associated with employee benefits that can make the entire process of choosing a plan overwhelming for both employees and the employer. Therefore, to make the subject of employee benefits less daunting for everyone involved, here are some commonly misunderstood open enrollment terms that employers need to address:
While this term is straightforward to most, it does have a tendency to create confusion as well. The deductible refers to the amount of money that an employee is responsible for paying out of pocket for medical expenses before the health insurance portion kicks in.
The deductibles for today's health insurance plans are on the rise. In fact, a recent survey revealed the average deductible for a family insurance plan increased by 12 percent between 2015 and 2016. This means that the average family will need to spend more money out-of-pocket for medical expenses before insurance kicks in.
This is obviously a pain point for employees, and employers can speak with their insurance partners to come up with creative employee benefits solutions to help offset this increased financial burden.
2. HSA and FSA
These two acronyms for Health Savings Account (HSA) and Flexible Spending Account (FSA) are frequently mentioned during the open enrollment period, but some employees don't have a clear understanding of how these two accounts differ.
An HSA works in conjunction with a high-deductible health insurance plan and allows employees to pay for medical related expenses tax-free. The money in this account can roll over year-to-year.
On the other hand, an FSA can allow you to save for medical-related expenses in a similar way that an HSA offers, but the savings does not roll over each year.
Since there seems to be a lot of confusion about these two terms, it would wise for employers to walk through these two terms in detail in their employee benefits education programs.
3. Out-of-Pocket Maximum
This term refers to the cap of money that an individual would be responsible for paying out of their own pocket each year. Once the out-of-pocket maximum is met by the individual, the insurance then pays all healthcare services at 100% for the remainder of the year. The out-of-pocket maximum can vary depending on the insurance plan that is chosen, and in most plans both co-pays and deductibles go towards this out-of-pocket maximum.
Most employees want to know that their financial position will not be completely wiped out by a catastrophic event, and an out-of-pocket maximum can prevent this from happening. However, since there seem to be a lot of questions surrounding how an out-of-pocket maximum is met, this is an important topic that employers should address with their employees.
Our goal at Summerlin-Roberts is to provide a smooth open enrollment season for our clients and serve as a valuable resource. Please contact us for additional tips for helping your employees choose the right employee benefits plans for their individual needs.