Administration

Understanding Your Benefits: Some key terms to help with plan selection

This is the second in a series in which Penn State Employee Benefits staff explain key concepts, terms and processes to help faculty and staff better understand and use their health benefits.

Read the first article, an overview of how health care works, here.

Choosing the most appropriate health plan can be a daunting task, but one which warrants careful attention because it may have far-reaching implications for an individual’s financial, physical and emotional well-being.

When comparing the two PPO plans available to Penn State employees, it is important to understand that they each provide the same level of medical coverage and the same provider network. The difference between the two plans lies with the various out-of-pocket medical expenses associated with them. Before selecting a plan, an employee should become familiar with the various out-of-pocket expenses related to each plan so that they may minimize the amount they spend on medical care.

A recurring out-of-pocket expense related to both medical plans is the health care contribution. This expense represents the employee’s share of the total health care premium, and is deducted from the employee's paycheck. Penn State pays the remainder of the premium. Employees can see the amount that Penn State pays for their premium compared to their own payroll contribution by logging into ESSIC (https://app3.ohr.psu.edu/essic/ ) and selecting “Total Compensation” on the left side of the screen.

While the payroll deduction represents a fixed expense throughout any plan year, other out-of pocket expenses are contingent upon medical care utilization and spending. For this reason, these expenses may vary during any plan year, and it is important for employees to understand each type of expense and how it will impact the overall cost of their health care. The following are some terms related to out-of-pocket medical expenses:

Deductible: The deductible is a set dollar amount a plan member pays for qualified medical expenses each year before insurance starts to pay claims. The deductible for each of Penn State’s plans is different, as is the deductible for the type of enrollment, such as an individual, two-person or family. To see the deductibles for the Penn State plans, please see the Price Comparison Chart on the Employee Benefits page of the Office of Human Resources website at http://ohr.psu.edu/benefits/insurance/health/plan-comparison/.

Co-insurance:  Once a plan member’s deductible has been satisfied for a specific calendar year, any remaining medical expenses are paid on a cost-sharing basis, with Highmark paying one portion, and the Penn State member paying the other. The portion that is paid by the Penn State member is called co-insurance, and is usually determined as a percentage of the remaining claims. For each of the Penn State plans, the co-insurance is 10 percent of Highmark’s allowable charge for the remaining medical expenses after the plan member’s deductible has been satisfied.

Co-payment: A co-payment is a fixed payment that a plan member pays each time that person receives medical care. Co-payments do not count toward the deductible, nor do they count toward that person’s out-of-pocket maximum (see below). Penn State’s PPO Blue plan has co-payments associated with it and they vary with the type of provider used: The co-payment is $10 for a general office visit, $20 for a specialist visit, and $100 for an emergency room visit. The $10 co-payment is waived for Penn State employees and their insured dependents who visit a Centre County Hershey Medical Group Provider for a general office visit.  To see a list of Hershey Medical Group providers in the University Park area, go to http://ohr.psu.edu/pshmg/.

Co-insurance Out-of-Pocket Maximum: The Co-insurance Out-of-Pocket Maximum represents the highest dollar amount that a member would pay in co-insurance payments during any plan year before Highmark begins to pay claims at 100 percent. At Penn State, the out-of-pocket maximum varies by plan type and the enrollment category, such as individual, two-person or family. To see a comparison between the out-of-pocket maximums for the Penn State plans, please go to http://ohr.psu.edu/benefits/insurance/health/plan-comparison/

It is important to note that the amounts for deductible, co-insurance and out-of-pocket maximum are calculated from the “allowed amount” of the provider’s charge. Sometimes called the “discounted rate”, these charges represent the amount Highmark will reimburse a provider, and may be significantly lower than the provider’s actual charge. Employees may see a comparison between the provider’s charge and the discounted rate for their own claims by consulting their Explanation of Benefits Forms, or by logging into the Highmark website at https://www.highmarkblueshield.com/home/, selecting the “Claims” tab at the top of the page, and then clicking on each individual claim.

Last Updated June 1, 2015

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