Health Insurance Basics: Part 3

Health Insurance Basics: Part 3

Insurance Costs

Consumers typically pay the following types of costs when they have insurance.

  • Premium: The premium is an amount of money a consumer pays for a health insurance plan. The consumer and/or their employer usually make this payment bi-weekly, monthly, quarterly, or yearly. The premium must be paid regardless of how many services, if any, the consumer uses.
  • Cost Sharing: Cost sharing is the share of costs for covered services that consumers must pay out of pocket. This term generally includes deductibles, coinsurance, and copayments, or similar charges, but it doesn’t include premiums, balance billing amounts for out-of-network providers, or the cost of non-covered services. Cost sharing in Medicaid and Children’s Health Insurance Program also includes premiums.
  • Deductible: The amount a consumer must pay for covered health care services received before their plan begins to pay. For example, if a consumer’s deductible is $1,000, their plan won’t pay anything until the consumer has paid $1,000 for covered health care services. A plan with an overall deductible may also have separate deductibles that apply to specific services or groups of services. For example, a plan may have separate in-network and out-of-network deductibles.
  • Copayment: A fixed amount ($20, for example) that a consumer pays for a covered health care service after they’ve paid their deductible.
  • Coinsurance: The percentage of the costs of a covered health care service that a consumer pays (for example, 15% of the cost of a prescription) after paying a deductible.

See Appendix A for examples of how cost sharing works.

Tips to Know:
  • Sometimes consumers with most types of health insurance don’t have to pay any cost sharing for certain services. This is often true for preventive services like flu shots and some cancer screenings. The goal is to keep enrollees healthy and catch health problems early.
  • Many health insurance plans have an out-of-pocket maximum. This is the most a consumer could pay during a coverage period (usually one year) for their share of the costs of covered services. After they meet this limit, the plan will usually pay 100% of the allowed amount. This limit never includes the premiums, balance-billed charges, or care that the consumer’s plan doesn’t cover. Some plans don’t count all of a consumer’s copayments, deductibles, coinsurance payments, out-of-network payments, or other expenses toward this limit.
  • In the majority of situations, the most important document for tracking health insurance costs is usually called an Explanation of Benefits (EOB). The EOB is a summary of health care charges that a health plan may send after a consumer receives medical care. It is not a bill. It shows the consumer how much their provider is charging the health plan for the care they received, and the amount the plan will cover. If the plan does not cover the entire cost, the provider may send the consumer a separate bill, unless prohibited by law.
Appendix A

Examples of Health Insurance Cost Sharing

This appendix provides some examples of how health insurance cost sharing works for consumers. These examples show different outcomes depending on whether a consumer has met their deductible and whether their health insurance includes out-of-network coverage. This information is intended to illustrate some of the basic steps that are typically used to calculate cost sharing in the absence of consumer surprise billing protections (or when such protections don’t apply).

A consumer receives covered items or services from an in-network provider or facility.

If the services are covered by the consumer’s health plan and furnished by an in-network provider or facility, the amount a consumer pays will vary based on whether the consumer has met their in-network deductible as well as the level of their coinsurance. Note the “allowed amount” is the maximum payment the plan will pay for a covered health care item or service and is generally the basis for cost-sharing calculations. In the next two examples, assume the consumer’s health plan specifies that coinsurance is 20 percent of the allowed amount after the consumer has met a $2,000 deductible for in-network coverage.


The consumer receives covered items or services from an out-of-network provider.

If the covered items or services are received out-of-network, a consumer’s billed amounts will vary based on whether the consumer’s health plan provides any out-of-network coverage and whether the consumer has met their out-of-network deductible.

In some circumstances, the No Surprises Act may limit what a consumer may be billed in each of the following examples. See the No Surprises Act: Overview of Key Consumer Protections.

In the next two examples, the plan covers out-of-network services with consumer coinsurance of 40 percent after the consumer has met a $4,000 deductible for out-of-network services. If the consumer has not paid anything toward the out-of-network deductible, the provider would bill the consumer for the full amount of the charges if the charges are less than $4,000 (example 4). If the consumer has already paid their full deductible, a provider might balance bill a consumer for the difference between what the provider receives from the health plan and the provider’s initial billed amount (example 5).

Originally posted on

Compliance Recap March 2024

Compliance Recap March 2024


Beginning in 2024, most employers obligated to report under the Affordable Care Act (ACA) must file returns electronically by March 31, 2024. Employers filing fewer than 10 returns a year are allowed to use paper filing. Since March 31 falls on a weekend, the deadline this year is April 1, 2024.
Applicable large employers (ALEs) and smaller employers with self-insured health plans are required to e-file Forms 1095-C or 1095-B, as well as the accompanying Forms 1094-C or 1094-B, using the IRS’ Affordable Care Act Information Returns (AIR) system. Employers can apply for a 30-day extension for filing these forms by submitting Form 8809 by the original due date.


For employers offering a health savings account (HSA), contributions toward the 2023 HSA limits and corrections for the 2023 calendar year must be made by April 15, 2024. Employers and employees can contribute to HSAs and make adjustments until the tax filing deadline, which is typically the individual’s tax filing due date.

Contributions that exceed the annual allowed limit are subject to a 6% tax on the excess contribution. That tax is assessed each year that the excess funds and their earnings remain in the account. Additionally, excess contributions are taxed as income.

Remember that using HSA funds for non-qualified expenses can result in significant penalties. Individuals under age 65 who use HSA money for non-qualified expenses will face a 20% penalty and pay income taxes on the withdrawal. After age 65, HSA funds may be used for non-qualified expenses without incurring the 20% penalty, however the funds will be considered taxable income.


Employers should ensure that employees are aware of the annual contribution limits and the deadline for contribution adjustments, as well as potential tax penalties.


The third season of Prescription Drug Data Collection (RxDC) reporting is underway, with the annual deadline set for June 1 each year, reporting on the previous calendar year. The Consolidated Appropriations Act requires all group medical plans to file a report with the Centers for Medicare & Medicaid (CMS) detailing the cost and other medical data for the group health plans’ prescription drug and other benefits, excluding excepted benefits. RxDC reporting is mandatory regardless of the group’s insurance status, size, or whether it is a grandfathered plan.

The filing must be completed electronically through the CMS Enterprise Portal. While employers are ultimately responsible for RxDC filing, most third-party administrators (TPAs) pharmacy benefit managers (PBMs) contracted to provide services to the group health plan will assist or submit filings on behalf of the group health plan.

Changes for 2024 RxDC Reporting

The average monthly premium calculation has been simplified. Instead of calculating per member per month, this is stated as the total annual premium divided by 12.

CMS has introduced restrictions on data aggregation. Data in files D1 and D3 through D8 must match the level of detail in the D2 file. This means that if the D2 data is specific to an employer’s plan, the data in files D3 through D8 must be equally specific.

  • Insurance carriers will handle RxDC reporting on behalf of employers with fully insured plans. However, employers should confirm with carriers that the reporting has been completed and provide any necessary information.
  • Employers with self-insured plans have final responsibility for RxDC filing. If they rely on TPAs or PBMs to assist with filing, it’s crucial to ensure that it is completed on time.

On March 20, the New York City Council enacted a provision allowing an individual to initiate a private legal action against employers for non-compliance with the Earned Safe and Sick Time Act (ESSTA).

Individuals may now file lawsuits for alleged violations of the Act directly in court, bypassing the need to file an administrative complaint with the Department of Consumer and Worker Protection. Legal action can be initiated within two years from the date the individual became aware or should have been aware of the alleged violation and may seek penalties, injunctive and declaratory relief, legal fees, costs, and other pertinent damages against the violating entity or individual.

Under the Act, the amount of safe and sick leave provided is contingent on the size of the employer.

  • Employers with 100 or more employees are required to provide up to 56 hours of paid leave annually.
  • Employers with 5 to 99 employees must offer up to 40 hours of paid leave annually.
  • Small employers with four or fewer employees and an annual net income exceeding $1 million are obligated to provide up to 40 hours of paid leave. In contrast, if the employer’s net income is less than $1 million, they are only required to offer up to 40 hours of unpaid leave annually.
  • Employers with one or more domestic workers must provide up to 40 hours of paid leave annually, with an increase to 56 hours for employers with 100 or more domestic workers.

Eligible employees are entitled to use accrued safe and sick leave immediately, including newly hired personnel. In cases of unforeseen leave, employers cannot mandate advance notice but can request documentation for absences exceeding three consecutive workdays. Employers must provide employees with written policy details regarding safe and sick leave, including information about accrued, utilized, and total leave balances, either on paystubs or via an accessible electronic system.

Significant amendments to the were implemented on October 15, 2023, to clarify the Act:

  • The assessment of an employer’s size is based on the total number of employees nationwide, determined by the peak number of concurrently employed staff within a calendar year.
  • Full time, part-time, joint employees, and employees on leave of absence are included in the employee count for determining employer size.
  • Employees telecommuting from outside New York City are not considered employed within the city.
  • Employees based outside of New York City that are “expected to regularly perform work in New York City during a calendar year” will be counted, but only for hours worked by the employee within New York City.

In light of these developments, it is imperative for New York City employers to thoroughly review their safe and sick leave policies to ensure full compliance and mitigate the risk of potential litigation.


Q: If an employee carries her full family on a qualified high deductible health plan (QHDHP) but her children are mandated to also be enrolled in Medicaid, can she contribute the full family amount to her health savings account (HSA)?

A: If the owner of the HSA (employee) is only eligible for the HDHP and the employee has enrolled in family coverage, the employee can contribute the full family limit to the HSA even if the employee’s dependents are not otherwise eligible due to Medicaid.

Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.

This information is general in nature and provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.
©2024 United Benefit Advisors
Benefits 101: What Is Hospital Indemnity Insurance?

Benefits 101: What Is Hospital Indemnity Insurance?

No matter whether it is anticipated or unexpected, a hospital stay is expensive.  According to, the average 3-day hospital stay in the United States costs around $30,000.  Health insurance will cover some of the costs if you are admitted to the hospital, but you may have other out-of-pocket costs.  Hospital Indemnity Insurance can help cover expenses that result from a hospital visit and unexpected emergencies.

What is Hospital Indemnity Insurance?

Hospital Indemnity Insurance is a supplemental insurance policy that that can be added to an existing insurance plan to cover costs due to having to stay in the hospital; it provides cash payments for hospital-related expenses. Because the money is paid directly to you, you can use the money however you want.   It’s typically used to cover daily living expenses, to make up for lost income or to pay for out-of-pocket medical expenses, such as your deductible, copay or coinsurance.

Unlike medical plans, there are no deductibles to meet with a hospital indemnity plan.  As soon as you incur a qualified event, you can file a claim and start receiving benefits.  Hospital indemnity policies pay out a set amount of money depending on the medical service performed. With this payment model, called a fee-for-service model, you don’t have to worry about in-network versus out-of-network coverage since you receive the same payout regardless of your medical provider.

What Does a Hospital Indemnity Policy Cover?

The coverage your plan will provide depends on your plan selection but generally, most plans cover:

  1. Hospital Stay (with or without surgery)
  2. Intensive Care Unit (ICU) Stay
  3. Critical Care Unit (CCU) Stay

Some plans may also cover:

  1. Outpatient Surgery
  2. Ambulances
  3. Emergency Room Visits
  4. Outpatient X-Ray or Diagnostic Images

Accident Insurance vs. Hospital Indemnity Insurance

The biggest difference between accident and hospital indemnity insurance is that accident coverage pays out after specific accidents, while indemnity coverage pays out after certain types of hospital stays. Both serve as supplementary health plans designed to aid with expenses not covered by your primary medical insurance.

Accident insurance pays out after a qualifying injury, such as burns, a broken arm or a laceration. Conversely, hospital indemnity coverage is triggered by specific hospital care, typically termed as inpatient hospital care. Both policies offer cash payouts that can go towards your healthcare expenses, or daily living expenses such as food and rent.

8 Unique Employee Perks That Don’t Require a Big Budget

8 Unique Employee Perks That Don’t Require a Big Budget

Free and low-cost employee benefits are perks that don’t cost you much financially. These perks are often simple to provide and help enhance an existing employee benefits package. Including non-traditional benefits in a job offer shows employees your values; they’re a promise to both current and potential employees that you’ll support them and treat them right. In the competitive race for talent, employers might consider providing the following affordable employee perks to appeal to workers:
  •  Health Savings Accounts (HSAs) or Flexible Savings Accounts (FSAs) – Even if an organization cannot provide comprehensive healthcare benefits, providing FSAs or HSAs enables employees to allocate pre-tax funds for medical expenses, easing their financial load.
  • Prioritizing Work/Life Balance – With remote work now more common as a result of the pandemic, most employees expect and appreciate greater flexibility in the workplace.  In fact, 67% of people think having work/life balance is more important than their pay and employee benefits combined.  Hybrid work, Paid Time Off (PTO), and flexible work hours allow employees to juggle other responsibilities, such as caring for young children or aging parents.
  • Learning and Professional-Development Opportunities – Establishing a culture that supports continuous learning can help foster a mindset of growth and professional development among your workforce.   Investing in professional growth opportunities, such as conferences, workshops, online courses or mentorships, demonstrates a commitment to their long-term success.”
  • Mental Health Perks – Mental health is just as important as physical health and more and more employers are prioritizing it. Offering an Employee Assistance Program (EAP) that includes therapy sessions and support, mindfulness apps, and mental health days are a few ideas to encourage strong mental health.
  • Paid Volunteer Time – Encouraging community engagement is possible for employers through the provision of paid time off, allowing employees to volunteer with charitable organizations. Giving back to the community not only instills a sense of purpose and fulfillment but also can strengthen team bonds.
  • Employee Recognition Programs – An “emotional salary” contributes to an employee’s sense of being adequately rewarded at work, playing a significant role in job satisfaction.  When employees experience a sense of value, recognition, and appreciation for their contributions, they are more likely to enjoy their work and find it meaningful.  Employers can implement a system to publicly acknowledge and reward employees for their work.
  • Financial Education Workshops – More employees today want guidance to increase their financial literacy. To address this demand, employers can offer resources or workshops focusing on personal finance management, budgeting, and retirement planning. Empowering employees with financial literacy can enhance overall well-being and relieve stress.
  • Summer Hours and/or Casual Dress Code – Allowing casual dress on certain days allows workers to be themselves which contributes to a sense of belonging in the workplace.  This could include casual Fridays or a relaxed dress code during the hot summer months.  Additionally, closing an hour or two early on a Friday demonstrates flexibility and can improve employees’ work/life balance during vacation season.
You don’t need to have a fat wallet or offer more employee benefits than your competitors to win over top talent. These low or no-cost perks that employees value create a fulfilling work environment that, in turn, attracts and retains top talent!
Benefits 101: Embedded vs. Non-Embedded Deductibles

Benefits 101: Embedded vs. Non-Embedded Deductibles

Everyone needs health insurance but many people don’t fully understand it.  One important concept to understand is your deductible.  A deductible is the amount of money that must be paid for covered services before the health insurance company begins paying for expenses.

For an individual plan, the deductible is straightforward.  But family plans are a bit more complex.

Embedded vs. Non-Embedded Deductibles

Family health insurance plans can have one of two types of deductibles:

  • Embedded Deductible (includes an individual and family deductible)
  • Non-Embedded (Aggregate) Deductible (includes only a family deductible)

Understanding the specific type in your plan and how it operates can help you prepare for out-of-pocket healthcare costs.

Embedded Deductible:  Each family member has an individual deductible in addition to the overall family deductible. Meaning if an individual in the family reaches his or her deductible before the family deductible is reached, his or her services will be paid by the insurance company.   However, these will be paid solely for that family member.  Once multiple family members’ medical expenses add up and surpass the family deductible, the insurer would begin to pay covered medical expenses for all members of the family.  This applies even if a member did not meet their individual deductible.

Typically, embedded deductibles are exactly half of the entire family deductible.  For example, the family could have a deductible of $10,000 and individual deductibles of $5,000 for every covered member of the family.

Embedded Deductible Example

Ashley and Robert have a family health plan that covers them and their two children.  Each family member has a $4,000 individual deductible, and they have a $8,000 family deductible.  Ashley meets her $4,000 deductible after giving birth to their son in March who was in the hospital for an extra week.  Their daughter, Emma, has surgery in May and meets her $4,000 individual deductible in April, which means the family deductible of $8,000 has now been met.  Later in the year, when Robert needs shoulder surgery, he only owes a co-payment because the family deductive was already met.

Non-Embedded Deductible: There is no individual deductible.  So, the overall family deductible must be reached, either by an individual or by the family, for the insurance company to pay for services.  The non-embedded deductible is most common in high insurance health plans.

Non-Embedded (Aggregate) Deductible Example

Marc and his family have a health plan with a non-embedded deductible.  The family deductible is $10,000.  Son Ben dislocated his shoulder and medical care cost $700.  Daughter Victoria had acute appendicitis that required surgery costing $3,300.  Marc had an accident while working on his farm which resulted in a hospital stay costing over $6,000.  The combined out-of-pocket expenses from Marc, Ben, and Victoria’s medical treatments met the family deductible.  Any further medical care for anyone in the family will be covered by the insurance company according to the plan benefits.

No matter what type of deductible your health plan uses, keep in mind that you must personally cover that amount before your insurance kicks in. When you understand how deductibles work and how it impacts your family’s household budget, you can make wise, informed choices to set aside funds for your family’s medical expenses.