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Employer-Sponsored
Health Insurance |
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While benefits are indeed decreasing and premiums/contribution
amounts rising, employer-sponsored health insurance
is still one of the greatest benefits offered
by any company. According to the Human Resources
research firm William M. Mercer, 91% of companies
offering health insurance require employee contributions.
While this does create cost for the employee,
the ability to purchase health insurance in bulk
still allows companies to provide coverage to
employees for a much lower cost than could be
possible were the policies purchased independently. |
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In 90 percent of businesses, the employees are
asked to make a contribution to the health insurance
plan. This “contribution” typically
comes in the form of weekly or bi-weekly deductions
taken out of your gross pay (that is before taxes
are taken out). While some companies do provide
free health care and/or dental insurance, this
is exceedingly rare so be prepared for the deductions
from your paycheck. All of those deductions are
then combined with the employer contribution to
form what amounts to the premium for the policy. |
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In addition to premiums, participants in employer-sponsored
health care insurance programs can often expect
to contend with deductibles and co-pay requirements
that can really add up to some serious “out-of-pocket”
expenses for those covered by employer health
insurance plans. |
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Deductible |
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Assume that an employer health insurance plan
dictates that a participant must pay a $250 deductible
as part of the plan. What that means is that the
insured must use and pay for $250 worth of approved
health care services before the insurance company
will begin paying their coverage. Therefore, when
budgeting, it is often wise to allow for greater
out-of-pocket healthcare expenses in the beginning
of the calendar year when those deductibles need
to be paid. |
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Co-Pay |
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The idea of the co-pay confuses a lot of
people but it won’t once they really understand
its purpose and that is: To discourage the overuse
of medical services by those participating in
the health insurance plan. Basically, even after
a deductible has been paid, the insured is asked
in some health insurance plans to make a “co-payment”
each time they see the doctor, use a prescription
card, etc. |
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This co-pay is typically a nominal amount compared
with the actual cost of the services but can amount
to 20% or more in some cases and thus drastically
increase the actual costs of health care even
though you have insurance. While the co-pay does
lower premium costs, it can really be inconvenient
for someone needing to see the doctor but not
having the money to constantly make the co-pay
requirements (this is especially true for those
required to make a co-pay for use in a prescription
drug plan and needing multiple medications each
month). |
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While there are some companies offering
very custom-tailored health insurance plans for
their employees, most can be broken down into
two different categories: PPO & HMO. |
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