Benefits have been much discussed these last few months and seem to promote a vocabulary all their own. The term “benefits” refers to medical insurance, vision insurance, dental insurance, and life insurance.  The vast majority of cost comes from the medical insurance. Caps, composites, and co-pays are among a never-ending stream of terms that seem to confuse an already perplexing topic.  I hope to shed a little light on this topic. 

Caps

          A hard cap is a limit on the amount of money the employer would pay for benefits.  This refers to the amount the employer pays for benefits coverage, the cost of the premiums.  This does not limit the amount of overall coverage. It is a cap or limit on what the employer pays towards the cost of benefits coverage.  With a hard cap, the employee is responsible for costs that exceed the amount paid by the employer.

There is also a cap known as a soft cap.  A soft cap occurs when the employer pays the lowest premium cost and the employee who accepts the lowest priced plan incurs no cost.  Any employee selecting the more expensive plan must make up the difference in premium cost.

Composite vs. Tier

There are two ways to calculate the premium paid for a group of employees.  A composite rate treats all employees the same regardless of being single, married, or having a dependent(s). The tier rate charges different rates for employees depending on their status: single, married, and number of dependents.  Currently, FUSD uses a composite rate.

Opt-Out

To “Opt-Out” of fringe benefits allows an employee to decline fringe benefits and receive monetary compensation instead.  FUSD does not allow employees to opt-out and receive monetary compensation.

Co-Pay

A co-pay is the amount paid by an employee (or dependent) when services are rendered.  A $10 co-pay for a doctor’s office visit means the employee (or dependent) must pay $10 out of his/her pocket for the office visit.

HMO VS PPO

HMO’s (health maintenance organization) & PPO’s (preferred plan provider) are two types of medical insurance.  A HMO and PPO differ in one major way: a HMO requires participants to visit doctors inside of their network only, while a PPO contracts with “preferred” providers while allowing members to visit non-network doctors although at a higher rate.  A HMO requires members to receive most or all of their health care from a network provider.  If a member of a HMO needs to see a specialist with the network, a referral is required from a member’s primary care doctor.  The primary care physician (PCP) manages and coordinates all health care for members of a HMO.