What's covered? Medical insurance covers the costs of physician and surgeon fees, hospital rooms, and prescription drugs. Dental and optical care might be offered as part of an overall benefits package, sometimes offered as separate pieces, and sometimes not covered at all. Coverage can sometimes include the employee's family (dependents).
Who pays? Employers usually pay all or part of the premium for employee medical insurance. Often employees pay a percentage of the monthly premium. Even if the employer does not pay the entire monthly premium, the cost is often lower than if you bought the insurance as an individual.
Life insurance protects your family in case you die. Insurance benefits are paid all at once to the designated beneficiaries of the policy — usually a spouse or children.
You can get life insurance through an employer if they sponsor a group plan. Company-sponsored life insurance plans are standard for almost all full-time workers in medium and large firms across the country. You can also buy it privately in the marketplace, but this is usually more expensive.
These are the nine professional treatment categories:
- Diagnostic. Examination to determine the existence of dental disease. X-rays and routine oral examinations fall into this category.
- Preventative. Procedures to preserve and maintain dental health. Topical cleaning, space maintainers, fluoride treatments fall into this category.
- Restorative. Procedures for the repair and reconstruction of natural teeth.
- Endodontics. Treatment of dental-pulp disease within existing teeth. Root canal therapy is an example of this type of procedure.
- Periodontics. Treatment of the gums and other supporting structures of the teeth, primarily for maintenance or improvement of the gums.
- Oral Surgery. Tooth extraction and other surgery of the mouth and jaw.
- Prosthodontics. Replacement of missing teeth and the construction, replacement, and repair of artificial teeth and similar devices.
- Orthodontics. Correction of abnormal tooth position through repositioning of natural teeth.
- Pedodontics. Treatment of children who do not have all their permanent teeth. In addition to these nine areas, the typical dental plan also includes provision for palliative treatment (i.e., procedures to minimize pain, including anesthesia), emergency care, and consultation.
These nine different types of procedures are usually categorized into three or four general groupings for purposes of plan design. Following are the four groupings of coverage in the dental policies.
- Preventative - preventative and diagnostic expenses. These are types of dental services most members receive during a routine dental checkup or visit.
- Basic- all minor restorative procedures, endodontic, periodontic and oral surgery expenses. To restore decayed or fractured teeth; remove diseased or damaged natural teeth; treat oral disease; and repair dentures, bridges, crowns, inlays and onlays.
- Major - major restorative work (e.g., Prosthodontics) These services are to replace missing natural teeth with artificial ones and to restore severely decayed or fractured teeth.
- Orthodontic - orthodontic expense
Pedodontic care generally falls into the first two groupings.
Types of Plans
There are usually two major types of dental plans being offered to employees; scheduled and non-scheduled plans. The two most popular types of plans are:
Scheduled plans - Scheduled Plans are categorized by a listing of fixed allowances for each procedure. For example, the plan might pay $40 for a cleaning and $400 for root canal therapy. In addition, the scheduled plan might include deductibles and coinsurance.
Non scheduled plans are usually referred to as comprehensive plans. They cover some percentage of the "reasonable and customary" charges, or the charges most commonly made by dentist in the community. This means that the usual and customary charge level will cover the full cost of the procedure for the 90 percent of the claims submitted in that geographical area. To contain cost, some insurance company may consider 70 or 80 percent of the claims as the definition of "reasonable and customary" charges. It is wise to inquire about the definition with the specific insurance company. Nonscheduled plans generally include a deductible, typically a calendar-year deductible of $25 or $50, and reimburse at different levels for different procedures. Preventive expenses typically are covered in full or at very high reimbursement levels. Reimbursement levels for other procedures usually are then scaled down from the preventive and dignostic level.
A typical plan will look like the following; this is just an example:
- Deductible $50 for single and $150 for a family.
- Preventative coverage is at 100%. The deductible is waived.
- Basic coverage is covered at 80%. The deductible will be applied first, then the expenses are covered 80% by the insurance company and 20% is responsible by the member/insured.
- Major coverage is covered at 50%. The deductible will be applied, then the expenses are covered 50% by the insurance company and 50% is responsible by the member/insured.
- Preventative, basic and major coverages usually have an annual maximum of benefit (i.e., $1,000 a year)
- Orthodontic coverage is covered at 50%. The deductible will be applied, then the 50% of the expense will be covered by the insurance company and the 50% is responsible by the member/insured. There usually is a lifetime maximum for this benefit (i.e. $1,000 lifetime maximum)
There are many different ways to write the dental policy under the nonscheduled plans. The deductible, coinsurance, and annual maximum dollar amount of benefit can vary. Orthodontic coverage can have different deductible, coinsurance, and lifetime maximums. The deductibles may or may not be applied to preventative coverages. The coinsurance will vary from 50% to 100% and the annual maximum on the coverage can vary from $500-$2,000. In addition, the policy can be written with and with out Major benefit or orthodontic benefit.
Vision insurance is a type of health insurance that entitles you to specific eye care benefits defined in the policy.
Vision insurance policies typically cover routine eye exams and other procedures, and provide specified dollar amounts or discounts for the purchase of eyeglasses and contact lenses. Some vision insurance policies also offer discounts on refractive surgery, such as LASIK and PRK.
Potentially high costs of routine eye examinations and prescription eyewear can be of real concern, especially for large families. You might be able to defray at least some of these costs by looking into acquiring vision insurance for yourself or better understanding the plan your company already provides.
Vision insurance only supplements regular health insurance. Regular health insurance plans protect you against financial loss due to unexpected eye injury or disease.
Vision insurance, on the other hand, is a wellness benefit designed to reduce your costs for routine, preventive eye care such as eye exams, eyewear and other services.
Disability insurance replaces all or part of the income that is lost when a worker is unable to perform their job because of illness or injury. This benefit is not commonly offered. There are two main types of disability insurance:
• Short-term disability insurance begins right away or within a few weeks of an accident, illness, or some other disability. For example, someone hurt in a car accident would be offered a few paid weeks to recover.
• Long-term disability insurance provides benefits to an employee when a long-term or permanent illness, injury, or disability renders the individual unable to perform her/his job duties. For example, an employee with spinal injuries could be entitled to long-term disability benefits until retirement age.
Retirement benefits are funds set aside to provide people with an income or pension when they end their careers.
Retirement plans fit into two general categories:
• In defined benefit plans, sometimes called pension plans, the benefit amount is pre-determined on the basis of salary and years of service. In these plans, the employer bears the risk of the investment.
• In defined contribution plans (such as a 401k plan), employer or employee contributions are specified, but the benefit amount is usually tied to investment returns, which are not guaranteed.
As the U.S. health coverage environment evolves, working Americans increasingly are turning to voluntary employee benefits to supplement core coverage. Voluntary benefits can offer added financial security to employees, with no direct costs incurred by employers.
Insurers including Kanawha Insurance Company, a Humana company, are responding to this need. Through comprehensive voluntary benefit products and services, employees are gaining access to enhanced coverages that otherwise might not be available to them.
Voluntary disability insurance provides benefits over and above basic health insurance, offering eligible employees income protection insurance in the form of benefits that partially replace income lost as a result of a disabling non-occupational accident or illness. When such an event takes away the ability to bring home a paycheck, voluntary disability insurance coverage can help fill the gap as payments may be used for any purpose including ongoing bills such as rent, mortgages, educational expenses, food, and car payments.
Plan variables may include:
- Combination benefits covering accidents, sickness or both
- Coverages including off-the-job coverage, 24-hour coverage or both
- Elimination periods, which are the number of continuous days (beginning with the first day of total disability) before any monthly benefit amount is payable
- Benefit periods for which monthly income benefits are payable after the elimination period ends (such periods often include choices of 90 days, six months, one year, two years or three years)
- Portability, depending upon whether the plans are offered on an individual or group chassis and the length of time an employee is employed before employment is terminated (either voluntary or involuntary)
- Optional riders covering categories such as emergency accidents, outpatient sickness, hospital indemnity and COBRA
Voluntary life insurance plans allow employers to provide, at no cost to them, life insurance to eligible employees at rates that reflect group economies of scale. Some products offer “life and lifestyle” insurance in one policy, which can be accessed when health, life and death circumstances require. Considered life insurance, such products allow employees to receive a benefit while living.
Two primary types of life insurance are term life and whole (or permanent) life.
Term life insurance, an original or “pure” insurance form, offers protection for a specified period of time and builds no cash value. If the insured dies during the specified term, policy benefits are paid to beneficiary/ies. Products offer varying durations and benefit amounts and often include embedded benefits for terminal illness and AD&D. Coverage durations can be annual renewable or “level” for periods such as 10, 15, 20 and 30 years, during which the premiums remain unchanged. Coverage may be portable and riders for items such as critical illness/total disability, quality of life, increasing death benefits, AD&D and families are often available.
Whole life insurance can play a role in meeting current as well as future financial needs. Consisting of a permanent life insurance policy that protects the policyholder through his/her life, whole life insurance offers a completion of premiums at a predetermined age. Features of whole life plans include premiums that remain level throughout the life of the policy, guaranteed renewable protection that cannot be reduced and accumulated cash values that can be withdrawn (upon the policy’s surrender), borrowed against as a loan, annuitized or used to purchase extended or reduced paid-up insurance. Some whole life plans may also include dividends paid annually and guaranteed cash values.
As health care costs continue to rise, the value of supplemental insurance coverage increases. Voluntary health insurance serves as supplemental insurance to an individual’s existing health insurance plan, helping employees meet their financial obligations when they are hospitalized or incur expenses when receiving outpatient or inpatient treatment. Cash benefits can be used to help offset the loss of income, experimental treatments, transportation to doctors and treatment facilities, or for normal living expenses.
Offering protection beyond basic health coverage, voluntary accident insurance provides supplemental on- or off-the-job coverage and may cover deductibles and other services standard health care coverage may not provide. Some voluntary accident insurance products can be both a reimbursement and an indemnity insurance policy – expense reimbursements paid are for actual charges or up to the maximum amount stipulated per selection.
Embedded benefits of accident insurance may include:
- Accident medical expense
- Ambulance benefit
- Hospital confinement
- Optional benefits/riders such as accident total disability, hospital intensive care, bone fracture and dislocation, and coverage for spouse and children
When an individual is first diagnosed with cancer, heart attack or stroke, his or her life is interrupted in many ways: physically, emotionally and economically. Employers demonstrate their concern for their employees who face such challenges by offering voluntary specified disease (including cancer) insurance. Such plans help an individual’s ability to maintain adequate earnings for everyday living expenses.
Benefits for voluntary specified disease insurance including cancer expense policies may be paid either through a lump sum or an annually restorable policy.
Premiums for lump sum policies do not increase with age and are typically payable until the policy is paid up at a specified age (or predetermined number of years), or until a claim is incurred. Often, specified disease lump-sum policies offer a return of premium rider, which allows premiums to be refunded if the policy remains continuously in force and no claim is paid during the term of the policy.
Lump sum cash payments typically allow benefits to be used for any purpose, including:
- To help offset the loss of income
- Deductibles, copayments and scheduled benefit limitations
- Treatments considered experimental
- Transportation expenses to and from doctors and treatment facilities
- Normal living expenses (mortgages, car payments, utility bills, child care, groceries, credit card bills, etc.)
Annually restorable policies help offset expenses incurred for treatment of covered diseases. Payments typically are more focused toward inpatient or outpatient services as well as supplies and treatments such as hospital room and board; drugs and medicines; laboratory services; and medical or surgical services.
Features of such plans may include:
- Annually restorable benefits
- Travel and wellness benefits
- Payment in addition to other coverage
- No deductibles
- Portable coverage
- Issue ages (often ranging from late teens to early 70s)
- Family coverage
- Guaranteed renewable for life
Administrative Services (Section 125)
Benefiting both employers and employees with potential tax savings, Section 125 of the Internal Revenue Code allows employees to designate pretax dollars toward insurance premiums, medical care and dependent care expenses. These funds are not subject to Social Security, Federal and most state taxes, thus lowering an employee’s tax liability. In turn, lower payrolls can potentially reduce employers’ payroll tax costs and, in turn, reduce Federal and/or state unemployment tax contributions and workers’ compensation premiums.