Insurance Broker
An insurance broker is the middleman between prospective policyholders and commercial insurance carriers. To speed up the search for coverage, brokers compare carrier plans, analyzing each plan’s pros, cons, and costs. Ultimately, brokers work to provide their clients with options and help their business’ bottom line.
Insurance Quote
An insurance quote shows the cost of insurance policy options. Insurance carriers create quotes based on basic information about the prospective policyholder, such as age, sex, and location. For example, when compiling group insurance quotes, an insurance provider may calculate rates based on the group’s medical history. When working with a broker, a prospective policyholder will often acquire quotes from several carriers to compare which company offers the best rate.
Group Health Insurance
Group health insurance, also known as a group health plan, is health insurance provided by an employer, union, or association to its currently employed members. Former employees do not receive coverage from group health insurance, as eligibility is based on current employment status.
General Liability Insurance
General liability insurance covers businesses from claims of injury or property damage to
someone’s belongings and claims of personal injuries like libel or slander.
Business Property Insurance
Business property insurance protects a business’ owned or rented physical building as well as the business’ operational tools or equipment.
Business Income Insurance
Business income insurance reimburses businesses for any income lost from incidents like fire, wind, or theft.
Premium
A premium is the price a policyholder pays for an insurance policy. Insurance carriers charge a premium in exchange for coverage, meaning premiums are essentially their income. Insurers typically charge monthly, semiannual, or annual premiums, depending on the plan. However, if the policyholder fails to pay the premium, their policy is at risk of cancellation. Premiums can come in many forms, including self-insured, level-funded, and dividend-eligible plans.
Deductible
A deductible is the amount of money a policyholder must pay for a health care service before their insurance plan begins coverage. For example, a $3,000 deductible indicates that the policyholder would cover up to $3,000 worth of services themselves before they can use insurance for coverage. After policyholders pay their deductibles, they only pay a copayment or coinsurance for covered services.
Copayment
A copayment, also known as a co-pay, is the fixed amount a policyholder pays for a
covered healthcare service either before or after they pay their deductible. For example, if you refill a prescription, the amount you pay for the medication is your copay. This covers your portion of the cost.
Coinsurance
Coinsurance is the percentage of a health care service a policyholder pays after
the deductible is paid. For example, a health insurance plan will establish its allowed amount, which is the maximum amount a plan will pay for a covered health service. So if your plan’s allowed amount for an office visit is $100 and your coinsurance is 10%, you will pay 10% of $100, or $10, for the office visit if you have paid your deductible. Then, the insurance provider will pay for the remaining amount. However, if you have not paid your full deductible, you will pay the $100 out of pocket. Coinsurance depends on usual customary and reasonable, or UCR. The UCR is sometimes used to determine a carrier’s allowed amount, as it determines the price of a medical service in a certain location based on what other providers in the area charge for the same or similar medical service.
High Deductible Health Plan (HDHP)
A high-deductible health plan is a health insurance plan with an above-average deductible for medical expenses. HDHPs often include larger annual deductibles but also offer lower monthly premiums.
Benefits
The benefits of a group health insurance plan include the items or services covered under the health insurance plan. These benefits are typically outlined in the health insurance policy’s cover documents and include services like vision health, critical illness, long-term care, and more.
The Affordable Care Act
The Affordable Care Act, also known as Obamacare, is an extensive reform law that broadens health insurance coverage. Enacted in 2010, the ACA was designed to encourage employers to offer affordable health insurance coverage to eligible employees. The ACA requires that businesses of 50 or more full-time employees offer affordable health insurance to at least 95% of their full-time employees, including dependents. The ACA defines affordable healthcare as insurance plans that are no more than 9.7% of the employee’s family income. They must also provide their employees with a notice of coverage and available benefits, an outline of offered plans and employee costs, and an annual confirmation of offered benefits. Employers then show proof of compliance by filling out government forms. If they fail to do so, employers may suffer significant financial penalties.
Applicable Large Employer (ALE)
An applicable large employer is a business with an average of at least 50 full-time employees and is subject to the Affordable Care Act’s coverage requirements. Under the ACA, employees are considered full-time if they work at least 30 hours weekly.
Exclusion
An exclusion is a product or service not covered by health insurance. Health insurance providers will not reimburse policyholders for exclusions, which can include treatments like cosmetic procedures, pregnancy and fertility treatments, and behavioral and personality disorder services.
Insurance Renewal
An insurance renewal occurs at the end of an insurance policy period. Once the policy is no longer in effect, insurance carriers may adjust coverages and premiums before the next policy period begins. The policyholder is then faced with the decision if they would like to renew their policy for another period or find a new plan. Typically, policies are in effect for a year before it’s time to renew.
Open Enrollment
Open enrollment is when individuals or groups can sign up for health insurance or change their plans. If an individual or group misses the enrollment period, they typically cannot apply for coverage until the next open enrollment period, which happens every fall.
Health Savings Account (HSA)
A health savings account, or HSA, is a personal savings account for certain health care costs. HSAs allow users to withdraw money tax-free if the money goes toward qualified medical expenses like deductibles, copayments, or coinsurance. Other examples of medical costs that an HSA could cover include acupuncture, ambulance costs, therapy, and more.
Health Reimbursement Arrangement (HRA)
A health reimbursement arrangement, or HRA, is an employer-funded account that helps employees pay for medical expenses outside their insurance plan. Each year, employers put a fixed amount of money into an employee’s HRA for qualified medical services like ambulance costs, prescription drugs, etc. The money is available to eligible employees at the beginning of the year. However, unused funds could roll over into the following year, depending on the plan.
Flexible Spending Account (FSA)
A flexible spending account, or FSA, is an employer-sponsored account that allows employees to pay for out-of-pocket medical costs with tax-free funds. Employees typically use money from their FSA to cover copayments, deductibles, qualified prescription drugs, insulin, or medical devices.
Individual Coverage Health Reimbursement Arrangement (ICHRA)
An individual coverage health reimbursement arrangement, or ICHRA, is an alternative to traditional job-based health coverage. Under an ICHRA, businesses of any size can reimburse their employees, tax-free, for qualified medical expenses like monthly premiums, copayments, and deductibles. ICRAs are an excellent solution for ALEs looking to satisfy the Affordable Care Act’s employer mandate. ICRHAs allow employees to choose any plan and insurance company on the market, rather than being restricted to a small pool of options. However, before using an ICHRA, employers should consider their arrangement’s administration and expenses.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
A qualified small employer health reimbursement arrangement, or QSEHRA, allows small businesses that don’t have group health insurance to reimburse their employees for qualified medical costs. QSEHRA reimbursements are not subject to federal taxation as long as the employees are enrolled in insurance plans that meet the minimum essential coverage requirements of the Affordable Care Act.
Professional Employment Organization (PEO)
A professional employment organization, commonly referred to as PEO, is a human resources company hired by a business to oversee certain administrative functions like employee benefits, compensation, and payroll. Small companies typically outsource PEOs for human resource operations and expertise.
Health Maintenance Organization (HMO)
A health maintenance organization is a health insurance plan that contracts a network of physicians and medical providers to offer their services at a reduced cost. Though HMOs are a more affordable option, these plans often limit a policyholder’s selection of healthcare providers. Insurance will not cover their services if a policyholder ventures outside of the network.
Preferred Provider Organization (PPO)
A preferred provider organization, or PPO, is a health insurance plan that creates a contracted network of participating doctors, hospitals, and other medical providers with an insurance company. This network is formed so the insurance company can offer medical services at a lower cost, meaning a policyholder will pay more for them outside their PPO network.
Exclusive Provider Organization (EPO)
An exclusive provider organization, or EPO, is a health insurance plan that only allows policyholders to get health care from medical providers within an exclusive network. The insurer will not cover medical services outside of the EPO network except in some emergency circumstances.
Point of Service Plan (POS)
A point of service, or POS, is a health insurance plan that offers various benefits depending on whether the policyholder uses healthcare providers in or outside the network. A POS combines HMO and PPO plans, as policyholders must choose an in-network primary medical provider but still have the option to seek out out-of-network services.
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