Group health insurance is a policy you purchase to offer to your eligible employees as a benefit. The benefit of group health coverage for your employees is a reduction in premium costs — premiums may be lower for the group than they would be if employees purchased an individual healthcare policy. Plus, as an employer, you may also share in the premium costs or pay them entirely, providing even further benefit for employees. For you as an employer, healthcare coverage helps your employees stay in good health and get the preventive care they need to fend off many common conditions that can affect their ability to work.
There's more to consider when choosing a healthcare coverage plan for your employees than cost. It's important to compare plans carefully in terms of coverage, premium, deductible, provider network, coinsurance and copayment amounts, prescription coverage, and other factors.
Depending on the size of your company and the mix of employee healthcare needs your plan must meet, you may offer more than one choice in healthcare plan. For example, a young, single worker in good health might choose an option with a lower premium and higher deductible, while someone who is taking care of a family or managing a chronic condition might be willing to pay a higher premium for more complete coverage.
Common Healthcare Coverage Terms to Know:
- Premium. The amount you pay to the healthcare policy carrier each month to maintain your coverage. Premium costs are often the first number you will look at as an employer searching for healthcare coverage for your employees. However, remember to balance premium amounts against copayments, deductibles, coinsurance, and other factors. Some employers pay for 100 percent of healthcare premiums, while others opt to share premium costs with employees.
- Coinsurance. The amount (usually a percentage of the total bill) that must be paid for covered healthcare services after any deductible or copayment amount has been paid. May be limited to certain services, such as hospitalization or diagnostic tests.
- Copayment. The required dollar amount paid upfront at the time you receive a healthcare service.
- Deductible. The amount a member is required to pay out of pocket annually before the healthcare insurance company will begin providing coverage for healthcare claims. Monthly premiums do not count toward deductible amounts.
- Out-of-Pocket Costs. Maximum out-of-pocket costs represent the health policy holder's total annual financial liability for healthcare, including copayments, coinsurance, and deductibles. This is an important factor for you to consider when choosing a healthcare plan for your employees.
First Commonwealth Bank and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.