Learn the lingo: how to decode health insurance policies and spot red flags

After a grueling interview process, you’ve been offered the job—congrats! Now comes the (arguably even more grueling) administrative tasks to be completed before signing your contract. Among these tasks is the review and enrollment in your employer’s healthcare program (if you’re joining a company with more than 50 employees). But between the acronyms and insurance jargon throughout the plans, it can be hard to know exactly what you’re looking at. Is it a good health insurance plan or is it just presented to seem that way? How do you choose between two plans? Are there any red flags to be aware of? Lucky for you, we’ve broken down the enigma that is the health insurance policy, and are providing you with a comprehensive guide to better understand exactly what you’re signing up for.

Why do I need health insurance?

Like any insurance, health care coverage is primarily for those “better safe than sorry” situations. If you never got sick, never went to the doctor, and never filled a prescription, you’d never need it—but you’d also have to pay out-of-pocket for wellness visits and other basics that could help keep you that way.

Under the Affordable Care Act (ACA, or Obamacare), most Americans are required to have “minimum essential health coverage.” If you don’t have such coverage, a handful of states charge a penalty at tax time. Currently, there’s no federal fee or fee in New York for not having health insurance—but without it, you’re liable for 100% of any medical debt you incur.

Will my employer offer health insurance?

Your employer is required to offer health insurance that meets the ACA minimum requirements if they employ an equivalent of 50 full-time employees. The type of insurance an employer offers is called “group” health insurance, the group, in this case, being you and the rest of your company.

Online healthcare comparison company eHealth reports that group coverage—also referred to as employer-based health insurance—can be significantly better than the coverage you can purchase as an individual or for your family on your own. eHealth also states that about half of companies, regardless of size, offer group health insurance to their employees. But just how much will they cover? According to a 2021 report by the Kaiser Family Foundation (KFF), on average, employers cover 83% of the premium for single coverage and 72% of the premium for family coverage.

Coverage between jobs

Even if an employer offers health insurance, they can choose to make you wait for up to 90 days before you can take advantage of their group benefits; a policy put in place by the US Department of Labor and known as the ACA Waiting Period. This policy means that if you’re transitioning jobs or starting from scratch, you could find yourself stuck without coverage for the interim.

One option to fill in the gap between jobs is COBRA, where you pay out of pocket for the entire cost of your former employer’s insurance plan on a monthly basis. You’re legally entitled to COBRA for up to 36 months. Costs can be high because your employer is no longer offsetting the premium (the full amount the insurance company charges).

Alternatively, you can buy temporary Marketplace coverage, either through New York State if you’re a New Yorker, or through the federal government (Obamacare) if you live in a state without its own Marketplace coverage.

If your employer is exempt from offering group health insurance, you can use the Marketplaces above to buy your own coverage permanently. Both state and federal Marketplace insurance offer assistance to people or families earning below certain benchmarks.

What do all these terms mean?

There are over 900 health insurance companies operating in the US., and each of them could offer dozens of unique plans. Luckily, your employer or Marketplace will have narrowed it down to a handful of choices, but there are still many terms to know if you hope to make sense of them all:

• Open Enrollment is the limited period of time each year where you can enroll in or change health benefits, either through your employer or through a Marketplace
• The exception to open enrollment is a Qualifying Life Event (QLE)—a special enrollment period triggered by a life change, most notably turning 26, getting married, having a baby, or leaving/starting a job
• A deductible is the amount you pay out of pocket before your insurance plan starts to pay (with the exception of wellness visits and other basic needs, which most plans will cover right away). Often a more expensive plan will have a lower deductible and vice versa
• PPO—Preferred Provider Organization—is one of the most popular coverage options. PPOs tend to be more expensive and offer more out-of-network coverage, meaning you have a much larger pool of options, including private physicians that don’t take insurance at all
• HMO—Health Maintenance Organization—is another one of the most popular coverage options. HMOs require you to use in-network doctors (doctors who accept the plan) and usually require referrals to visit specialists, but typically there is no deductible to reach, meaning costs could be lower
• Both employer-sponsored and Marketplace plans will offer single coverage (just you), coverage for you and your spouse or partner, coverage for you and your children, or coverage for you, your spouse or partner, and all of your children. Per the New York State Department of Financial Services, it’s typically up to your employer whether or not your unmarried domestic partner is eligible for your family plan.

Red flags in an insurance plan

As well-prepared as you may now be to evaluate your potential employer’s insurance plans, there are some red flags to be aware of before making your decision on whether or not to accept the job offer. Greg Autuori, VP of Strategy & Benefit Operations at employee benefits broker Bennie, says to look out for the following warning signs when evaluating a company’s policy:

• If your potential employer does not share information about the benefits program, its vendors, or its payroll contribution costs prior to you signing your offer; in other words. if your potential employer withholds any information about the benefits program, especially if you ask directly
• If your potential employer is not up-front about the waiting period associated with their benefits. This can cause you to make costly mistakes when managing the end date of your current benefits or COBRA coverage
• If your potential employer does not provide the carrier’s plan documents or summaries upon request
• If your potential employer does not disclose the amount of the coverage premiums that they are covering on your behalf
• If your potential employer does not offer to assist you with your enrollment or better understanding your benefit options (either directly, or through a third-party service)

Finally, remember that if you’re unhappy with the proposed health insurance plan of your potential employer, you can negotiate certain elements of it, including lowering the waiting period if there is one, asking for subsidized targeted health programs, and asking about wellness incentives. Be well!

Photo: Welcome to the Jungle

Follow Welcome to the Jungle on Facebook, LinkedIn, and Instagram, and subscribe to our newsletter to get our latest articles every day!