Employer-provided health insurance is a popular benefit offered by many companies to their employees. In fact, according to the National Compensation Survey, 56% of private industry workers in the United States had access to employer-sponsored health insurance plans in March 2021. In this article, we will explore how employer-provided health insurance works and what you need to know as an employee.
What is Employer-Provided Health Insurance?
Employer-provided health insurance is a type of health insurance that is offered by an employer to its employees as part of their benefits package. The employer pays for all or a portion of the premiums for the health insurance plan, and the employee may be required to contribute to the cost as well.
Types of Employer-Provided Health Insurance Plans
There are various types of employer-provided health insurance plans, and the type of plan offered by an employer can vary depending on factors such as the size of the company and the industry it operates in. Here are some of the different types of employer-provided health insurance plans:
1. Health Maintenance Organization (HMO) Plans
HMO plans typically require employees to choose a primary care provider who coordinates their healthcare needs. Employees must receive all non-emergency medical treatment from providers within the HMO network, except in emergency situations.
2. Preferred Provider Organization (PPO) Plans
PPO plans allow employees to visit any healthcare provider they choose, but visits to in-network providers are generally less expensive than out-of-network providers.
3. Point of Service (POS) Plans
POS plans are a combination of HMO and PPO plans. They require employees to choose a primary care provider like an HMO plan, but also allow employees to visit out-of-network providers for certain services.
4. High-Deductible Health Plans (HDHPs)
HDHPs typically have lower monthly premiums but higher out-of-pocket costs, including deductibles and copayments. These plans are often paired with a Health Savings Account (HSA), which allows employees to save pre-tax dollars to pay for healthcare costs.
How Employer-Provided Health Insurance Works
Employer-provided health insurance works by pooling the risk of healthcare costs for a group of employees. The employer pays for all or a portion of the premiums for the health insurance plan, and the employee may be required to contribute to the cost as well. The insurance carrier then pays for medical expenses incurred by covered employees.
Here’s how the process typically works:
1. Enrollment Period
Employers typically offer an enrollment period once a year during which employees can select their health insurance plan. This is an opportunity for employees to evaluate the different plans offered by the employer and choose the plan that best meets their needs.
2. Premiums and Co-Pays
Once an employee selects a health insurance plan, they will be responsible for paying any monthly premiums or co-pays associated with the plan. Employers may deduct these amounts from the employee’s paycheck, or the employee may pay these amounts directly to the insurance carrier.
3. Provider Network
Employees should verify that their preferred healthcare providers are in the provider network of the selected health insurance plan. Visiting out-of-network providers may result in higher out-of-pocket costs for the employee.
4. Medical Expenses
When an employee receives medical treatment, the healthcare provider will submit a claim to the insurance carrier for payment. The insurance carrier will then review the claim and determine if the medical treatment is covered under the employee’s health insurance plan. If it is, the insurance carrier will pay the healthcare provider directly for the covered medical expenses.
5. Explanation of Benefits (EOB)
After the insurance carrier pays a medical claim, the employee will receive an Explanation of Benefits (EOB) statement. This statement details the medical services received, the amount charged, and the amount covered by the insurance plan. The employee will be responsible for paying any remaining costs not covered by the insurance plan.
Conclusion
Employer-provided health insurance is a valuable benefit offered by many companies to their employees. Understanding how these plans work can help employees make informed decisions when selecting a health insurance plan. By understanding the different types of employer-provided health insurance plans, the enrollment process, premiums and co-pays, provider networks, and medical expenses, employees can maximize the benefits of their health insurance plan while minimizing their out-of-pocket costs.
