Small Business Health Insurance Terms Everybody Needs to Know
Published on June 20, 2018
Like businesses in other industries, health insurance companies have their own lingo. Knowing these terms can help you when you’re looking for a plan, and even afterwards when you’re making use of your small business health insurance plan. For instance, you’re likely to see words like coinsurance, deductible, co-payment, and premium in most policy descriptions. If you don’t know what these terms mean, you may make mistakes that you’ll regret later.
Understanding basic health insurance terms
At eHealth, you can find a complete glossary of health insurance words; however, you can also spend just a couple of minutes here to pick up the basics.
This list defines the four most common words that tend to confuse people who aren’t familiar with medical plans:
Most of the time, insurance professionals refer to the price of the policy as a premium. They typically quote you a monthly premium. Some insurance companies also offer options to pay on a different schedule, like quarterly, semi-annually, or annually. They might even discount your premium somewhat if you offer to pay for more time upfront. Some kinds of group medical plans may even calculate their premium weekly or twice a month to coincide with different pay schedules. When you compare premiums, make sure you’re comparing the price of coverage for the same amount of time.
With most insurance plans, you’ll need to meet a deductible before your insurance plan kicks in and cost-sharing begins. You should also find out if these are annual or per-incident deductibles. With small business health insurance, each individual or family will typically be responsible for meeting their plan’s deductible, not the whole group.
Note these other important points about deductibles:
- Not all insurance policies or even services within one policy will have a deductible. For instance, many HMO plans don’t require you to meet a deductible.
- Some policies will have a different deductible for different services. For example, you may commonly find that the deductible for prescriptions is lower than for medical services. Similarly, deductibles for office visits will probably cost less than they do for visits to an emergency room.
Some health insurance plans have set costs for certain common medical services or products. For instance, you may have a co-payment of $20 for a doctor’s visit or different copays for covered prescriptions. Insurance companies may also charge a higher co-payment for a hospital or emergency room visit. Most of the time, you will have a deductible or a copay, but in some cases, but you may find a plan that has both.
Insurers typically use coinsurance to refer to the percentage of the bill that you will have to pay once you’ve met your deductible. Unlike co-payments, this is a percentage of the cost . This initial payment might not cover any lab work or medical tests that the doctor performs or orders. If your insurance company covers these medical services at 80 percent, then the additional 20 percent of the cost that you must pay would be your coinsurance amount. Mostly, you should understand that insurers may not cover all kinds of medical services the same way.
Each plan has its own terms and limitations, so be sure to check the official plan documents to understand how that specific plan works. This article is only for general education.
How to shop for plans
Now that you have a few basic small business health insurance terms under your belt, you can start shopping for a quality group plan if you don’t have one yet.
Visit eHealth’s group health insurance page to get free, instant quotes on plans in your area.