Regardless of how long an employee has been in the working world, they’ve probably only experienced open enrollment a couple of dozen times. That’s because it happens just once a year. So, prepare to cut them some slack if they can’t remember the difference between an HSA and an FSA.
It would be helpful if there was a guide to give your employees before open enrollment as a way to answer any questions. Well, as it turns out, there actually is.
According to the CMS.gov website, “Under the Affordable Care Act, health insurers and group health plans will provide the 180 million Americans who have private insurance with clear, consistent and comparable information about their health plan benefits coverage. Specifically, the regulations will ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices. The forms include:
- An easy-to-understand summary of benefits and coverage.
- A uniform glossary of terms commonly used in health insurance coverage such as “deductible” and “co-payment.”
Periodically, these documents are updated or revised, with the most recent changes affecting organizations with open enrollment taking place on or after April 1. As you’d probably expect, the U.S. Department of Labor has tons of great information. But, probably the most helpful – and employee friendly – is the Glossary of Health Coverage and Medical Terms. It does a great job of outlining some of the most commonly used terms and even includes a few illustrated examples to help employees understand how the cost is shared between the employee and the provider.
Other Open Enrollment Terms
Interestingly, Open Enrollment isn’t included in the Glossary of Health Coverage and Medical Terms. As a result, we’ve included a definition below:
Open Enrollment is the time when individuals and employees may sign up for, add, drop or simply make changes to their health insurance. In accordance with the Affordable Care Act, individual health insurance will have open enrollment windows, which apply both in and outside of the exchanges. While dates may vary based on individual employers, those looking to acquire health insurance through the Healthcare.gov marketplace for the 2023 coverage year must select their plan options between November 1, 2022 through January 31, 2023.
Embedded Vs. Non-Embedded Deductibles
Although the Glossary of Health Coverage and Medical Terms does a nice job of explaining what a deductible is, it fails to mention that there are two different types of deductibles – embedded or non-embedded deductible. Both are broken out below and I’ve included an image to help outline an example for each.
Plans with an embedded deductible actually have two separate parts, the individual deductible and the family deductible. This provides family members with the opportunity to have the insurance provider cover their medical bills in advance of meeting the entire dollar amount for the family deductible. Think of it as individual deductibles embedded in the overall family deductible. There are two ways coverage will go into effect for the health plan to begin paying for medical expenses.
The first is on the individual level. If any member of the family has had enough personal healthcare expenses to satisfy their individual deductible, the health plan will begin paying for this person’s expenses. The catch here is that they will only pay for this individual’s expenses and not those of other family members, until the combined expenses of one or more of the other members bring the total to the full family deductible amount.
The second way coverage will go into effect is if the sum of all family member expenses meets the total family deductible. If it does, the health plan begins paying for expenses for the entire family, even if certain family members haven’t contributed to their individual deductibles.
Plans with non-embedded deductibles are pretty straightforward – the sum of the entire family’s deductible must be met before the health plan begins to cover expenses. There really aren’t any rules as to how the deductible is met, it can either be a combination of all expenses or there could be one individual whose medical expenses satisfy all of the family deductible. Only when the entire deductible is met will the health plan begin paying for covered expenses for the individuals. The exceptions for this include cosmetic procedures, which cannot be included as part of your deductible, and preventative care services – flu shots, mammograms, etc. – that, under the Affordable Care Act, must be paid for by your health plan provider.
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