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HR Support on Employee Health Care Insurance
Editor's Note: Employers need to understand the terms of their insurance contracts.
Overview: Health care insurance provides protection against the risk of medical expenses and generally provides coverage for doctor visits, hospital stays, medicines and other medical expenses defined in the contract. Issuers of group health insurance can assess the risk associated with an employer's group and develop a financial arrangement typically in the form of a monthly insurance premium.
A health insurance policy or contract is a written document that defines the type and amount of health care services covered, and, if both parties agree, are renewable on a periodic basis, usually annually. In employer group health plans, employees usually share the cost of their health plan with their employer by paying their share of premium contributions and by paying deductibles, co-payments and co-insurance.
- The premium is the amount paid to purchase coverage from the insurance provider.
- The deductible is the amount that the participant pays before any medical services are covered by the health plan.
- A co-payment is a flat fee that a participant pays for a particular service or item. The rest of the cost is covered by the insurer.
- Co-insurance is the percentage of the cost that a participant pays for a health care service after the deductible has been met.
Tracy Morley, SPHR, Legal Editor
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HR guidance on the importance of understanding health care insurance.