Deductibles

Introduction

Group Health Insurance Deductibles, Excesses and Co-Pays

A deductible, also commonly known as an excess, is the amount of money which the policyholder will contribute to the cost of their own medical treatment under a group health insurance plan.

Choosing whether to include a deductible on your group’s health insurance coverage, the deductible amount, and even the type of deductible being utilized, can be an extremely difficult process for businesses and groups worldwide. In many cases, no matter how flexible the deductible options on offer, staff may be unhappy that they are required to pay anything for the cost of their treatments – even if it is only a token amount.

However, the benefit to adding a deductible to a company’s health insurance scheme can immediately be seen in the lower overall premium which the group can expect to pay for their medical protection. As such, discussions about deductibles, excesses and co-pays on group health insurance policies often see key stakeholders navigating a difficult topic whilst weighing employee satisfaction against lowered expenditure.

CCW Global can help companies, groups and clubs of all sizes choose the health insurance deductible which is right for the members of a specific group, and can often help to tailor the deductible options which are given to group members who may have differing seniority levels.

What Deductibles are Available for Group Health Insurance?

Per Condition Deductible

The most common form of deductible available on group health insurance policies is a Per-Condition deductible.

This type of deductible is widely used by both international and domestic health insurance companies worldwide, and will mean that a group member is responsible for contributing towards the cost of care of each individual medical condition for which they seek treatment.

For example; a group has a health insurance policy which includes a $100 per condition deductible for all members. This means that each individual in the group would be required to pay for $100 of their medical treatment each time they receive treatment for a new condition.

With this deductible, if an individual insured through the group receives treatment for a sore throat, and the cost of the doctor consultation is $200, then they would need to pay $100 with the insurance covering the remaining $100. If the member returns to the doctor for additional treatment in relation to the sore throat, all further costs of care will be covered by the insurer due to the fact that the member has already paid the deductible associated with the condition.

If the member returns to the doctor for treatment of a migraine unrelated to the sore throat, the member would be required to pay the deductible associated with the treatment of the new condition.

Annual Deductibles

An annual deductible works in the same way as a per-condition deductible, except that the deductible applies on all treatment for the year. This means that the insured individual is responsible for covering the costs of their medical treatment up to the deductible amount, with all additional healthcare received that year being covered by the group health insurance policy.

For example; a group has a $500 annual deductible on a health insurance policy. Group members would then be responsible for paying for the first $500 in healthcare costs for the year, with any additional costs above $500 being covered under the plan.

An annual deductible re-sets each time the policy is renewed. This means that members of the group must be aware of the plan renewal date, and leaves the possibility for unhappy employees who may have overlooked the fact that the deductible has re-set following renewal. However, outside of these considerations, an annual deductible on a group health insurance policy is an easy way to ensure transparency in regards to how much contribution is required from group members.

Co-Insurance and Co-Payments

Similar to a deductible, a Co-Insurance or Co-Pay is a portion of the overall cost of treatment which the insured individual is required to contribute to their medical expenses. However, unlike a deductible, a Co-payment is not a fixed amount but is rather a percentage of the overall costs which will be paid for out of the member’s pocket.

While Co-insurance is more prevalent with American health insurance companies, some international health insurance providers will include co-insurance for specific policy benefits - including outpatient consultations and specialist procedures – in addition to the standard deductible.

As previously stated, a Co-Pay is a percentage of the overall costs which the insured is expected to contribute towards their care. If, for example, a policy has a 20 percent Co-Pay and a doctor’s consultation costs $100, then the insured group member would be required to contribute $20 towards the cost of their care.

Generally, Co-Insurance and Co-Payments will work on a per-condition basis; meaning that the co-pay will need to be factored each time an insured member visits the doctor for separate treatments. However, due to the fact that Co-Pays generally have more complicated implementation mechanisms, it is important that any group considering the purchase of a health insurance plan fully understand how their Co-Payments may impact employees and group members.

Considerations

Group Health Insurance Deductible Considerations

Split Level Deductibles

Premium Reductions

Deductible Options

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Split Level Deductibles

Due to the fact that CCW Global can tailor a group health insurance policy to meet the specific requirements of companies and businesses worldwide, it is possible to offer different levels of deductibles to employees of differing seniority.

This would happen through a group scheme where, for example, company directors may be offered more comprehensive levels of protection than ordinary employees. The two classes of coverage (Directors and Employees) would then be able to obtain different deductible levels.

This can have a significant impact on policy premiums, especially if the lower class of coverage is treated as catastrophe protection – meaning that the business can save a substantial amount of money whilst still providing necessary protection.

Premium Reductions

Choosing to include a deductible on a group health insurance plan will normally a significant reduction in the overall cost of the business – allowing companies and businesses an additional tool to control their employee benefits expenditure.

Deductibles mean that groups will contribute towards the costs of their own healthcare in some way; meaning that the risk for the insurer is lowered. This lower risk means lower claims expenditure on the part of the insurance company, and consequently comes back to the group in the form of premium savings.

As such, it is important to realize that a group health insurance plan with a $0 deductible will normally be much more expensive than a group health insurance plan which has elected to include some form of excess on the plan.

Deductible Options

If a company or group has decided to include deductibles on its health insurance offering to members, then it is possible to choose from a wide range of price points to fit with the group’s ability to pay for healthcare.

Starting at $0, group health insurance deductibles can be accessed up to $2,500 or $5,000 per condition or per year. This enables the group to make a stronger decision about what is right for members, without having to try and fit all of the membership into a one-size-fits-all solution.

Ranged deductible options become even more powerful when looking at different classes of coverage within the group; directors vs ordinary employees, for example. In this case, directors may be more able to pay for the costs of their own medical treatment, so a higher deductible may be more applicable. However, a case could be made that the directors’ long years of service to the organization may mean a lower deductible is more in line with their benefits package.

Quotation

Free Group Health Insurance Deductible Consultations

CCW Global is able to provide no-risk no-obligation consultations to companies who are considering obtaining a deductible on their group health insurance coverage. Our expert brokers will work with your key organizational stakeholders to fully understand the identity of the group, and work with the company to identify which types of deductible would be more appropriate on the policy.

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