What are Cost Sharing Plans?
Cost-sharing refers to how the costs of health plans are shared between the employer and the employee, this occurs when the employee has to pay for a medical service or health care cost that is not covered by his health insurance. Cost-sharing is usually done in these two ways;
A health insurance premium is the total amount of money that should be paid in advance in order obtain full coverage for a particular level of health care services. Usually, the insurance premiums are billed to be paid on a monthly basis. In this case, the employer is required to pay a portion of the health care premium and deduct the remainder from the employees’ salaries. It is also important to note that most health care providers require the employer to pay at least half of the premium cost for their employees. Employers could also require employees to pay some or all of the premium cost for their dependents, such as a children or spouse.
Sharing Cost at the Time of Service
Cost can also be shared at the time of receiving medical care and can take the form of copayments, co-insurance, and deductibles.
Copayment: A copayment (also called copay) is a fixed fee a patient is required to pay at the time of receiving the service. After the patient must have paid this fee ranging from $10 to $40, the plan then pays 100% of the balance as long as the medical service received is included in the insurance coverage.
Co-insurance: Co-insurance payments are payments a patient is required to pay after receiving health care services. These payments are typically a small percentage of the service cost usually ranging from 10% to 30%. This, however, does not apply when a patient visits a doctor or health care unit that is outside the network of the health service provider.
Deductibles: Deductibles is the amount of money a patient is required to pay before the plan pays anything, more like an activation payment. Most times, deductibles apply to all services such as office visits, hospital accommodation, and even laboratory tests. However, some health care plans do not charge deductibles for office visits. It is also important to note that; the higher the deductible, the lower the premium in that plan.
Generally, the greater the premiums, the lower the cost shared at the time of service and vice versa. Having known this, some of the decisions you will have to make include;
What amount or percentage of the employee-only premium will you require the employees to cover?
What amount or percentage of the premium for dependents will you require the employees to cover?
What level of out-of-pocket expenses (copayments, co-insurance, deductibles, and so on) will your employees and their dependents incur when they get care?