Health Insurance Cost Sharing

It is important to understand what effects changes to employer-sponsored insurance plans will have on healthcare benefits and whether you will have to incur additional out-of-pocket expenses.

Some of the features of health insurance plans adopted by employers to share the costs of health insurance include deductibles, co-payments, co-insurance, and out-of-pocket maximums. Payments associated with these options have to be made for physician office visits and hospital stays, among other health insurance services.

A 2006 annual survey on employer-sponsored health insurance plans conducted by the Kaiser Family Foundation and the Health Research and Educational Trust shows the following:

Deductibles

The majority of employees are enrolled in employer-sponsored health insurance plans with no general deductibles. Most employees are members of health maintenance organizations (HMOs) and point-of-service (POS) plans, while one-third are enrolled in PPO plans.

Of those employees enrolled in plans without general deductibles, many have to make co-payments or pay for other charges when they are hospitalized or have outpatient surgery. 60% of employees enrolled in HMOs and 55% enrolled in PPOs and POS plans have to pay fees for hospitalization due to cost sharing.

POS plans have the highest deductibles on average, followed by PPOs and HMOs for employees enrolled in single- and family-coverage deductible plans.

Employees of smaller firms have higher deductibles compared with those working for large firms.

Cost Sharing for Physician Office Visits

The majority of employees have to pay fixed co-payments rather than percentages of costs when they visit physicians. Most of those enrolled in plans with co-payments must pay between $15 and $25 per visit.

Hospital Cost Sharing

In addition to annual plan deductibles, nearly half of employees face hospital cost sharing. Hospital cost sharing may be required in the form of fixed dollar amounts (co-payments) or co-insurance. The average fixed payment per hospitalization is $231, while the average co-insurance rate is 17% for each hospital admission.

Out-of-Pocket Maximums

Partial or total limits on out-of-pocket maximums may not apply to all required cost sharing under an employee's plan, including plan deductibles. Cost sharing in the forms of deductibles, prescription drug expenses, and certain services is treated differently by different plans. Some plans include these costs as out-of-pocket expenses when calculating members' maximums, while some do not, forcing employees to bear higher financial burdens.

Most family-coverage plans have out-of-pocket maximums of less than $4,000, while fewer than half of those enrolled in plans with separate, per-person out-of-pocket maximums pay less than $3,000 for family coverage.

You should be aware of changes to your employer's health insurance plan and any corresponding increases in the maximum amount you will be required to pay out of pocket. This will help you to plan for potential medical expenses.