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Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest.
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If your employer offers insurance in its employee benefits package, you’ll have to decide which plan is best for you. There's a lot to consider, including how much the plan will cost you each month, what it covers, and the type of plan. Learn more about the typical employee health insurance options.
Many employers offer health insurance benefits for employees, and 50% of civilian employees participated in a workplace medical care plan in 2022. New employees are generally offered benefits after they're initially hired, but they may have to wait until after a probationary period for insurance and other benefits to start.
You'll have to wait until open enrollment to sign up for benefits or make any changes to your existing benefits package if you're not a new employee. The open enrollment period is often from Nov. 1 through Dec. 15, with the new plan starting on Jan. 1, but it can vary by employer. You'll also be entitled to special enrollment if you have a significant life change like losing health coverage from a spouse, marriage, divorce, or adopting or having a child.
The premium for your insurance coverage is typically deducted from your pay each pay period. Depending on the specifics of your employer's benefits package, the company may pay for part of the cost.
It's important to look beyond the monthly premium you'll have to pay to maintain your health insurance when you're choosing a health plan. But you should also consider:
Employers often offer a range of benefits for your health and wellbeing. Typical options include:
The health insurance portion of your employee benefits package will vary depending on the specific plan you choose. It may be provided through different types of health insurance plans, such as a health maintenance organization (HMO) or preferred provider organization (PPO) plan. Both of these plans have a provider network.
PPOs pay less for medical procedures or office visits if you use an out-of-network doctor. HMOs may not pay anything toward out-of-network care unless it's an emergency.
Find out what basic procedures are covered in each plan. Many plans offer free wellness visits and preventive care, so check to see if the plan you choose offers these options.
Find out what type of exams are covered if you want to add vision insurance to your benefits. Make sure you understand the out-of-pocket expenses and what type of eyeglasses or contact lenses are covered. Some plans allow for only one pair of prescription glasses per year. Some employers offer a vision discount plan rather than vision insurance. You pay for vision care but at a discounted price with a discount plan.
Good oral health is an important part of wellness, so many employers provide dental insurance to employees. There are several types of dental plans.
The employee pays for services and is reimbursed by the insurance company with a direct reimbursement (DR) plan. Most DR plans allow you to see the dentist of your choice, although services may be discounted when choosing a dentist in a preferred provider network.
Indemnity plans pay a specific predetermined amount for specific services, such as fillings, extractions, or crowns, regardless of the actual charge for the service. Preventive care and cleanings may be covered at no charge under some plans, so look for this option as well.
Dental insurance plans do not always cover orthodontic care, so make sure you choose a plan that includes this option if you have a child who needs braces.
Some employers offer life insurance to their employees. It's typically for a benefit that would be equal to one to three times your annual salary. You can purchase a supplemental life insurance policy in addition to the employee policy provided by your company if you think you need more than this.
Employer life insurance might be a good option to consider if you have a serious medical condition and can’t find life insurance on the open market because you can often obtain life insurance with guaranteed acceptance during open enrollment with your employer or upon your initial hiring. But there may be a limit to the amount of life insurance you can get on a guaranteed acceptance basis.
Many employers offer some form of disability insurance, which helps make up for lost income if you're unable to work due to a non-work-related health condition. Your employer may offer short-term coverage, which lasts up to six months, and/or long-term coverage, which can last for five years or more.
Some employers offer plans that help with health care costs. The availability of these options varies by employer.
One option is a flexible spending account (FSA), which allows you to save pre-tax dollars to apply toward medical expenses such as copays, deductibles, and other out-of-pocket medical costs. Most FSA plans have a “use it or lose it” rule. You must use the money in the account by the end of the year.
Health savings accounts (HSAs) are similar to FSAs except they can only be used with a high-deductible health plan. But the funds roll over from year to year.
Health reimbursement arrangements (HRAs) are employer-funded health care accounts. You can be reimbursed for medical expenses from the account, and unused funds can be rolled over.
Choosing your employee benefits can be complicated. Take the time to review your options and ask questions about anything you're unclear about. Consider opting in for life and disability coverage in addition to choosing a health insurance plan because these are both valuable benefits.
Make sure you know when open enrollment for benefits is scheduled so you don't miss it if you want to make changes. If you have a significant life event, let your human resources department know so you can make appropriate changes to your coverage.
Significant life events, also referred to as qualifying life events (QLEs), include circumstances such as losing your existing coverage, changes in your family or household such as divorce or having a child, or moving to a different zip code. You qualify for a special enrollment period if you expense a significant life event.
Money you save in these types of plans is typically not taxed. You might be able to contribute with pre-tax dollars. Tax withholding is calculated on the balance of your pay that's left after you've saved a portion of your income to one of these plans. Or you can claim a tax deduction for the amounts you save. You won't pay tax on the money you withdraw, either, as long as you use it toward eligible medical expenses.
