Voluntary Benefits
Published by Trustmark Voluntary Benefits on December 9th, 2019
If you feel lost when it comes to your health insurance and benefits, you’re not alone. Only 52 percent of employees say they understand their health benefits “well” or “extremely well” and even fewer employees, 43 percent, say they have a good understanding of their non-health benefits.1 With all of the lingo and fine print, it can be tough to translate the information you’re given about insurance. That’s why we put together a list of commonly misunderstood insurance terms to help you better understand your coverage.
1. High-deductible health plan
To understand a high-deductible health plan (HDHP), you first need to know what a deductible is. A deductible is the amount you pay each year for your healthcare before your insurance kicks in and starts paying. The deductible amount resets on a yearly basis. As the name implies, a high-deductible health plan has a relatively high deductible, meaning that when you need healthcare, you pay more before insurance starts covering costs. The trade-off for these plans is that the monthly payments can be much cheaper. Currently, the minimum deductible amount that classifies a high-deductible health plan is $1,350 per individual and $2,700 per family.2
2. Co-insurance
Even after you’ve paid your deductible amount for the year, you may still be responsible for paying coinsurance on healthcare. Coinsurance is a percentage you pay for a health care service once your deductible amount has been paid. For example, if your coinsurance is 30% and your treatment cost $100, you’ll pay $30 for that treatment if you’ve already paid your deductible.
3. Out-of-pocket maximum
Your policy most likely has an out-of-pocket maximum. The out-of-pocket maximum is an amount that, once you reach it, your insurance begins to cover 100 percent of costs. As an example, let’s say you had a $1500 deductible and a $2,000 out-of-pocket maximum. You could pay a $1500 deductible, then be responsible for $500 in coinsurance before reaching your out-of-pocket maximum. After that, your expenses would be covered completely by insurance.
4. Voluntary benefits
Voluntary benefits such as accident, critical illness or hospital insurance complement your medical insurance. These products help account for any out-of-pocket costs that aren’t covered by your medical plan. Voluntary benefits are especially useful if you have a high-deductible health plan because they help fill coverage gapsand protect you from paying high medical bills toward your deductible. Another key feature of owning a voluntary benefit policy is that your coverage is not tied to your employer, you own your policy. Which leads us to…
5. Portability
Portability means that you can take your insurance policy with you even after you change jobs or retire. Portability is typically associated with voluntary benefits because, as we noted, you own your policy, not your employer. Once you purchase a voluntary benefits policy, you can keep your coverage as long as you continue paying the policy premium. You just need to set up payment when changing employers (since typically they are deducted directly from your paycheck when you sign up).
6. Separation period
A separation period is a pre-determined length of time that needs to pass between making claims. For instance, if you have a critical illness policy with a 3-month separation period and you make a claim for a heart attack, you aren’t able to receive benefits for a health event within the next 3 months. Separation periods vary from policy to policy and some actually don’t have any at all, meaning you could experience back-to-back health events and still receive a benefit for each claim.
At Trustmark, we try to keep things simple, but you still may run into some tricky terms, so we'll continue to try and translate for you. For now, a few more examples can be found in our first version of the insurance translation guide. We will continue to grow this series to help build your insurance confidence and knowledge to better understand your benefits coverage.
1Employee Benefit Research Institute. Health and Workplace Benefits Survey. 2017.
2HealthCare.gov. High Deductible Health Plan (HDHP).
1. High-deductible health plan
To understand a high-deductible health plan (HDHP), you first need to know what a deductible is. A deductible is the amount you pay each year for your healthcare before your insurance kicks in and starts paying. The deductible amount resets on a yearly basis. As the name implies, a high-deductible health plan has a relatively high deductible, meaning that when you need healthcare, you pay more before insurance starts covering costs. The trade-off for these plans is that the monthly payments can be much cheaper. Currently, the minimum deductible amount that classifies a high-deductible health plan is $1,350 per individual and $2,700 per family.2
2. Co-insurance
Even after you’ve paid your deductible amount for the year, you may still be responsible for paying coinsurance on healthcare. Coinsurance is a percentage you pay for a health care service once your deductible amount has been paid. For example, if your coinsurance is 30% and your treatment cost $100, you’ll pay $30 for that treatment if you’ve already paid your deductible.
3. Out-of-pocket maximum
Your policy most likely has an out-of-pocket maximum. The out-of-pocket maximum is an amount that, once you reach it, your insurance begins to cover 100 percent of costs. As an example, let’s say you had a $1500 deductible and a $2,000 out-of-pocket maximum. You could pay a $1500 deductible, then be responsible for $500 in coinsurance before reaching your out-of-pocket maximum. After that, your expenses would be covered completely by insurance.
4. Voluntary benefits
Voluntary benefits such as accident, critical illness or hospital insurance complement your medical insurance. These products help account for any out-of-pocket costs that aren’t covered by your medical plan. Voluntary benefits are especially useful if you have a high-deductible health plan because they help fill coverage gapsand protect you from paying high medical bills toward your deductible. Another key feature of owning a voluntary benefit policy is that your coverage is not tied to your employer, you own your policy. Which leads us to…
5. Portability
Portability means that you can take your insurance policy with you even after you change jobs or retire. Portability is typically associated with voluntary benefits because, as we noted, you own your policy, not your employer. Once you purchase a voluntary benefits policy, you can keep your coverage as long as you continue paying the policy premium. You just need to set up payment when changing employers (since typically they are deducted directly from your paycheck when you sign up).
6. Separation period
A separation period is a pre-determined length of time that needs to pass between making claims. For instance, if you have a critical illness policy with a 3-month separation period and you make a claim for a heart attack, you aren’t able to receive benefits for a health event within the next 3 months. Separation periods vary from policy to policy and some actually don’t have any at all, meaning you could experience back-to-back health events and still receive a benefit for each claim.
At Trustmark, we try to keep things simple, but you still may run into some tricky terms, so we'll continue to try and translate for you. For now, a few more examples can be found in our first version of the insurance translation guide. We will continue to grow this series to help build your insurance confidence and knowledge to better understand your benefits coverage.
1Employee Benefit Research Institute. Health and Workplace Benefits Survey. 2017.
2HealthCare.gov. High Deductible Health Plan (HDHP).
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Written by Trustmark Voluntary Benefits
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