Where the explanation usually breaks.
"My premium counts toward the deductible."
It doesn't.
The premium keeps coverage active. Care itself is paid through cost sharing: the deductible, copays and coinsurance. Premiums don't count toward the out-of-pocket maximum either.
"A copay covers the whole visit."
It covers the visit, not everything done during it.
A $30 copay for an office visit can still be followed by a separate bill for lab work or a procedure. The EOB shows how each piece was processed.
"Coinsurance is a percentage of my bill."
It's a share of the allowed amount.
The plan applies coinsurance to its allowed amount, not to what the provider first charged, so check the math against the allowed amount on the EOB.
"After the maximum, everything is paid."
Only cost sharing for covered in-network care counts.
Premiums, services the plan doesn't cover and a lot of out-of-network charges sit outside it, so they keep adding up after it's reached.
"It all starts over in January."
Your plan year decides.
Plan years don't all begin on January 1. Give employees the reset date from your plan documents, in writing.
Explain the plan year in three stages.
One sentence per term, then show how they line up.
- Premium: keeps coverage on, used or not.
- Deductible: what you pay for certain services before the plan shares the cost.
- Copay: a flat dollar amount for some services.
- Coinsurance: your share of the allowed amount, as a percentage.
- Out-of-pocket maximum: the most you pay in a plan year in cost sharing for covered in-network care.
Illustrative only: one person on a plan with a $2,000 deductible, then 20% coinsurance, a $30 copay for primary care that skips the deductible, and an out-of-pocket maximum of $6,000.
Stage one, before the deductible. For services under the deductible, the employee pays the full allowed amount. Primary-care visits still cost $30.
Stage two, sharing the cost. Once $2,000 has gone toward the deductible, the employee pays 20% of each allowed amount and the plan pays 80%.
Stage three, at the ceiling. When qualifying payments reach $6,000, the plan picks up cost sharing for covered in-network care for the rest of the plan year.
Real plans add wrinkles, such as services with their own deductible, so use your SBC's figures with your team.
A refresher you can send this week.
Sample note to employees: "A quick refresher before you book care. Your premium keeps your medical coverage active, and it's separate from what you pay when you use care. For many services you pay the allowed amount until you reach the deductible, then a percentage called coinsurance. Some visits have a flat copay instead, though lab work during the visit can be billed separately. Once your covered in-network costs reach the out-of-pocket maximum, the plan pays those costs for the rest of the plan year. Your plan's numbers are in the Summary of Benefits and Coverage: [link]. Questions? Ask [name]."
If your plan pairs a high deductible with an HSA, add a line from our account talking points.
What to keep handy, and when to call us.
Keep these within reach
The SBC for each plan, and the plan year dates. The family rules: coverage can carry a per-person and a family deductible, so learn whether one member can satisfy their own before the family amount is met, and how the per-person out-of-pocket cap works. The carrier's member app or portal. Our EOB walkthrough.
Call us when
A bill doesn't line up with the EOB and what's already been paid. A service went to the deductible when the employee expected a copay. A claim was denied; start with our denied-claim guide. The same question keeps coming back, a sign a short group session would help. For client teams we also help with claims advocacy, though we can't promise outcomes.
What HR teams ask us about cost sharing.
Should HR tell an employee what a procedure will cost?
No. Point them to the SBC for the plan's terms, then to the carrier and the provider for the specific service, including facility, lab and authorization questions. A number from HR can sound like a promise the plan never made.
Do premiums count toward the out-of-pocket maximum?
No. They sit outside it, as do uncovered services and a lot of out-of-network charges. Our network guide covers the out-of-network side.
Employees keep getting caught by the deductible. Is that a plan problem?
Sometimes. The deductible, the copays and the coinsurance level are plan design choices you can revisit at renewal, and we model those trade-offs when we quote group health plans. Sometimes the plan is fine and the explanation needs work.
Where the definitions come from.
HealthCare.gov explains the Summary of Benefits and Coverage and the out-of-pocket maximum, and CMS publishes a guide to reading an explanation of benefits. General information, not legal or tax advice.
Want us to explain it to your team?
We run live virtual, group and one-on-one sessions at no extra fee for client teams, in person around Puget Sound and by video statewide.