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How To Enroll A New Employee on Your Small Business Health Insurance

New employees usually have a waiting period that is decided by the company before they will be eligible for health insurance coverage. The same waiting period applies to employees that falls in the same employment class and it is usually designated on the employers application.

It can be very helpful if the HR department sends reminders to employees to complete the necessary forms in a timely manner to ensure that they enroll in the health plan prior to the effective date to avoid exclusions and penalties.

Please don’t hesitate to contact one of our Group or Company Health Insurance agents at (816) 322 6350 to further assist you or visit our website at www.HeritageKC.com

What is the difference between an Embedded Deductible and a Non-embedded Deductible?

Embedded Deductible: To receive plan benefits, each family member that is covered under the plan must satisfy only their individual deductible and not the deductible for the entire family. Traditional PPO health plans usually have embedded deductibles.

If you have for instance a family plan with an embedded deductible of $3000 with an individual deductible of $1000 and medical bills of $1000 are incurred by a family member and this individual deductible is met, subsequent medical bills will be paid by the insurance company even though the family deductible of $3000 has not been met yet.

Non-Embedded Deductible: This means that before any benefits can be received, the deductible that applies to the whole family must be met first. The deductible can be paid be a single family member or several different members.

If your family health insurance plan has for instance a deductible of $5000 and one person incurs medical expenses of $2000, another member $1000 and yet another member $2000, the deductible will be met for the entire family.

What is the difference between a Calendar and Plan Year?

Calendar Year – Regardless of a company renewal date, all applicable yearly maximums and deductibles are re-set on January 1st every year.

Plan Year – All yearly maximums and deductibles will be re-set on the company’s renewal date.

What is a Deductible?

Deductibles are usually based on a yearly amount and this amount must be met by the insured person or family before the insurance company will cover any costs.

Drug Prescriptions: What are tiers?

Prescription drugs fall into different groups or tiers:

1. Generic or Tier 1 – This tier is usually applicable to the lowest cost drugs and sometimes branded drugs with a lower price will fall into this tier as well.

2. Preferred or Tier 2 – This applies to the more expensive generic or brand name drugs. Your insurance company will usually have a list of preferred drugs if you have to take a brand name drug.

3. Non-Preferred or Tier 3 – Most insurance companies don’t want their members to get prescriptions for tier 3 drugs because it is the more expensive brand name drugs.

4. Specialty or Tier 4 – Prescriptions for these newly approved pharmaceutical drugs are discouraged since it is so expensive.

What does Out-of Network mean?

Out-of-Network usually refers to hospitals or health care providers and in particular ones that does not have a contract for reimbursements at a negotiated rate with your insurance company.

Health insurance companies usually offer coverage for out-of-network providers but your part of the cost payable will be considerably higher than if you saw an in-network provider.

What is a Qualifying Event?

A qualifying event can cause an individual to lose health coverage due to a change in his or her personal life. It may include, but is not limited to, one of the the following:

Divorce

Birth

Marriage

Death

Dependent or spouse becomes eligible for Medicare or Medicaid

Spouse or dependent loses coverage by Medicaid or Medicare

Change in dependent eligibility status

Spouse becomes employed or eligible for benefits

Full-time or part-time change in the employment status of a dependent or spouse

What is considered a risk in company insurance?

A risk is something the insurance company considers to determine if they will underwrite an insurance policy for a particular group because there’s always the possibility that the particular group will exceed the expected level which will result in financial loss.

Sometimes very small groups obtain group insurance to provide coverage for individuals with known health problems which is often the only way to get coverage for such persons.

What is a mandate benefit?

State law requires that insurers include specific coverage in a contract called a mandate benefit. Coverage that are mandated includes coverage for nervous and mental disorders, hospice care and newborn children in some states and most states require that coverage for substance-abuse treatment be provided.

What is coinsurance?

Most group health insurance plans include a feature called coinsurance which basically represents the percentage of covered expenses that the health insurance company and the employees will be responsible for respectively.

80 persent coinsurance is the most common one and means that the insurer will pay 80 percent of the expenses and the employee 20 percent.

Must the deductible for each person have to be paid to receive reimbursement in the case of insured employees with dependent coverage?

 Expenses will be covered only when the deductible has been met by each person covered under a group health insurance plan although to limit a family’s exposure for health care expenses, plans usually include some type of family deductible.

The family deductible is usually two or three times the individual deductible and for this to be satisfied the covered member’s combined expenses are accumulated and some plans require that the full individual deductible be met by at least one family member before the family deductible can be satisfied.

What is covered expenses and are there any limits applicable?

A covered expense is an eligible expense that will be reimbursed partly or completely to the individual covered under a group or small business health insurance plan.

Doctor visits are a covered expense under most health insurance plans for instance which means that the insurer will reimburse the fee up to the amount stipulated in the plan.

This does not mean that coverage is unlimited though. Comprehensive and base plus plans have limits on the expenses which they will reimburse and coinsurance and a deductible is sometimes applicable as well.

Insurers restrict covered expenses in various ways like limiting the number of visits or days for skilled nursing care or home health care. Another way is to cap allowable payments for a certain service or procedure.

Is it acceptable for an employer to communicate directly with an insurance company?

In order to purchase group or small business health insurance, it is acceptable for an employer to communicate directly with a group insurance company although the coverages can be very different and premium rates can vary considerably.

Since many employees don’t have enough employees with the expertise and time to do comparison shopping, most employers prefer to deal with an intermediary person or liaison who have the necessary knowledge and expertise to determine the group insurance needs and objectives.

This person will then assist the employer to obtain competitive quotes from different insurers, design a plan to meet the employers criteria and take care of the purchasing.

How does individual and small business health insurance differ?

A person wanting to purchase individual health insurance must undergo a medical examination and answer a general health questionnaire to prove insurability to the insurance company. If the insurer finds the applicant’s medical history, age and/or bad habits unacceptable, the application may be declined or a policy with limitations on the coverage may be issued.

This is not the case with group insurance though since the insurer knows that even if there are a few employees that are not in good health, they will be compensated for by the healthy employees to keep the balance.

Are Group or Small Business Insurance Better Than Insurance for Individuals?

The biggest advantage of group insurance over individual insurance is that all employees will be provided protection regardless of existing health conditions. No evidence of insurability is required with group insurance which means that the individual with existing health problems can get coverage as well.

Servicing one plan for many employees helps to keep the cost down for group plans, they have more liberal benefits and are in general more flexible as well.

What are the most popular protection plans provided by employers?

This of course differs from company to company but the insurance coverage mostly provided by employers includes medical or health insurance, disability, life insurance and accidental death and dismemberment which is also know as AD&D.

It may even include dental and vision, legal,accident and travel protection depending on the employer.

What does PPO mean?

This is an association (Preferred Provider Organization) that provides health care services to a group of hospitals, dentists and/or doctors at pre-arranged fees.

Eliminate the burden of handling employee benefits and compliance.