Your company’s open enrollment season has arrived, and you only have a certain amount of time to choose or change your employee benefit selections for you and your family. Benefits can be complicated, with legal terms and jargon that aren’t always easy to understand or remember each year.
Here are some important definitions that can help you make better benefit decisions, and even save you money in the process.
1. Voluntary benefits
Voluntary benefits are employee-paid insurance coverage options you can opt into at work for additional financial protection, and may include life insurance, disability insurance, accident insurance, a pre-paid legal plan or even pet insurance. These coverage options are often available at affordable group rates, and can be paid for through a simple payroll deduction each pay period.
A deductible is the amount you must pay out of pocket each year before your insurance begins paying your medical costs. So if your deductible is $1,000, generally you’ll pay 100 percent of your healthcare expenses until your medical bills reach that amount.
3. Out-of-pocket maximum
An out-of-pocket maximum is the most amount of money you’ll be required to pay for medical costs during the year. Once you reach your maximum, your insurance typically pays 100 percent of costs.
Co-insurance is the amount you’re required to pay as your share of medical costs, after you’ve met your annual deductible. So if your health insurer’s allowed amount for a doctor’s office visit is $100 and your co-insurance is 20 percent, your cost will be $20, and the insurance company will pay the remaining $80.
5. PPO Plan
A PPO, or preferred provider organization, is a health insurance plan that allows you to visit healthcare providers both in- and out-of-network for care. It’s an expansion of what’s typically offered under a health maintenance organization (HMO) plan, but may have higher monthly premiums.
6. HMO Plan
An HMO, or health maintenance organization, is a health insurance plan that allows you to visit healthcare providers that are in-network only, and you must choose a primary care physician. These plans are often less expensive, with lower monthly premiums and copays for doctor’s visits.
7. Heath Savings Account (HSA)
A health savings account (HSA) is a tax-advantaged savings account where you can set aside money through payroll deductions to help pay for medical expenses like copays, prescription medications or other expenses related to diagnosing, treating or preventing illnesses. HSA funds can roll over at the end of the year.
To use an HSA in 2018, you must have a deductible of at least $1,350 for individual coverage or $2,700 for families. Employees can contribute up to $3,450 to HSAs for individual insurance plans, or $6,900 for family plans.
8. Flexible Spending Account (FSA)
A flexible spending account (FSA) is another type of tax-advantaged savings account where you can set aside money through payroll deductions to help pay for qualified medical expenses. FSA funds don’t roll over at the end of the year, so during open enrollment, you’ll have to decide how much money you want to set aside. If you don’t use it all by the end of the year, you may forfeit the balance.
Employees can set aside up to $2,650 in 2018, and if you have a spouse with an FSA, he or she can contribute the same amount.
It’s important to take a close look at your benefit selections each year to make sure you’re choosing the best options for you and your family. If you have questions, be sure to reach out to your human resources representative for more information.
When it comes to selecting benefits, we understand it can be difficult to determine what’s right for you and your family. Click here to learn about a flexible range of benefits that can be customized based on your lifestyle.