Another year is coming to an end. You’re probably wrapping up (or starting) your holiday shopping, planning for get-togethers and trying to balance it all at work, home and in your personal life. No biggie… right?
The end of the year also means that your benefits may be changing in just a few short weeks! Each year, your employer is required to update their insurance and benefit offerings to adjust to new IRS regulations. With those changes in benefits also comes a new Summary of Benefits and Coverage (SBC) for you to digest.
But what exactly is a summary of benefits and coverage, and why is it important? Let’s dive into the reasons behind new plan summaries, how to read a summary of benefits and coverage, and how you can use yours to get the most out of your benefits throughout 2023!
What is a Summary of Benefits and Why Does it Matter?
We know what you're thinking. Benefits and insurance are already complicated enough. Between trying to understand technical insurance lingo and navigating how to use that lingo to actually use your benefits, the whole process can be quite confusing. But don’t worry, we got you!
According to CMS.gov, a Summary of Benefits and Coverage (SBC) is “a concise document detailing, in plain language, simple and consistent information about health plan benefits and coverage.” It acts as a quick reference you can use to understand the costs associated with the services your health plan covers. A new summary is necessary each year because the government places varying maximums and minimums that affect how your insurance actually pays for services.
It’s so important to pay close attention to your summary of benefits because it offers you an easy-to-digest guide for comparing costs that can have a significant impact on your finances throughout the year.
How to Understand your Benefits Summary
A summary of benefits usually has a few common sections but may vary depending on your organization and insurance provider. Let’s break down each of them and how to interpret their language.
- Basic Information
The top of your summary of benefits will generally tell you all the basics of your coverage including: your employer, the insurance company used, the coverage period and coverage types. It may also include important links or phone numbers you can call should you need further assistance.
- Important Questions
This section offers Frequently Asked Questions you might have about your benefits and provides answers and why each topic matters. The Important Questions section will detail plan limits, network inquiries and deductibles that you’ll need to know when using your benefits.
- Common Medical Events
In this section, you can view a breakdown of common medical events that you may experience in a year. It explains the medical event, any services you might need to address the event and what you can expect your insurance to pay, depending on whether the provider you choose is within your network.
- Excluded Services
This section will let you know any services or procedures that may not be covered under your plan. This may only be a quick list of items, so it’s always best to reference your full policy and plan documents or refer to your HR administrator for more details.
- Coverage Examples
In this section, you can view a breakdown of how your insurance plan may affect the cost of some common procedures. It’s important to note that this section does not act as a cost estimator as service prices may vary by provider. But it does offer a more in-depth look at what you may expect to pay.
Common Terms to Know When Reading your Summary of Benefits
Your summary of benefits may include a glossary of terms or links to help you understand some of the more technical jargon used. But if it does not, Healthcare.gov offers an in-depth Glossary of Health Coverage and Medical Terms that may be of use.
Here are just nine of those terms that you may commonly run into while reading your summary of benefits.
- Allowed Amounts
This is the maximum payment the plan will pay for a covered health care service. May also be called "eligible expense", "payment allowance", or "negotiated rate."
A request for a benefit (including reimbursement of a health care expense) made by you or your health care provider to your health insurer or plan for items or services you think are covered.
Your share of the costs of a covered health care service, calculated as a percentage (for example, 20%) of the allowed amount for the service. You generally pay coinsurance plus any deductibles you owe.
A fixed amount (for example, $15) you pay for a covered health care service, usually when you receive the service. The amount can vary by the type of covered health care service.
An amount you could owe during a coverage period (usually one year) for covered health care services before your plan begins to pay. An overall deductible applies to all or almost all covered items and services. A plan with an overall deductible may also have separate deductibles that apply to specific services or groups of services.
The facilities, providers and suppliers your health insurer or plan has contracted with to provide health care services.
A decision by your health insurer or plan that a health care service, treatment plan, prescription drug or durable medical equipment (DME) is medically necessary. Sometimes called prior authorization, prior approval or precertification. Your health insurance or plan may require preauthorization for certain services before you receive them, except in an emergency.
The amount that must be paid for your health insurance or plan. You and/or your employer usually pay it monthly, quarterly, or yearly.
An individual or facility that provides health care services. Some examples of a provider include a doctor, nurse, chiropractor, physician assistant, hospital, surgical center, skilled nursing facility, and rehabilitation center.
Using that Knowledge to your Advantage
Once you’ve read and understood your summary of benefits, it’s important to know how to use that information to plan for your upcoming year. For example, are there any medical procedures you may need? Routine checkups? Do any of the kids need braces? Understanding your summary of benefits will help you better plan for those procedures as you’ll have a better idea of the cost.
Then, you can plan how to utilize your supplemental benefits like HSA, FSA, HRA, and DCA to cover any out-of-pocket expenses after your insurance is applied. Plus, getting an idea of your expected medical expenses will help you better allocate any employer-sponsored contributions, so you don’t have to forfeit any leftover funds at the end of the year.
Enter 2023 with Confidence!
If you’re still unsure about how to interpret your summary of benefits, don’t worry. You’re not alone! Benefits change, technology shifts and every year millions of people are still left wondering “what’s actually covered?”
If this sounds like you, the best first step is to contact your organization’s Human Resources administrator. They can help ensure you have all the necessary documents submitted and the files you need to understand and utilize your 2023 benefits. They might even offer additional financial resources and tools to set you up for success.
At Clarity Benefit Solutions, our mission is to make employee benefits easy and affordable. For over 30 years, our goal has been to provide meaningful solutions for today’s challenges while creating opportunities for the future.