What Is an Out-of-Pocket Maximum?
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
An “out-of-pocket maximum” is a common health insurance term that you may not fully understand. Your out-of-pocket maximum can provide financial protection in years when you need a lot of treatment by capping the total amount you spend on medical expenses. Understanding your out-of-pocket maximum can significantly impact your financial planning and ability to manage medical expenses. This article provides an overview of out-of-pocket maximums.
Overview of Out-of-Pocket Maximums
Your out-of-pocket maximum is the maximum amount of money you must pay for covered health care services during a specific period, typically a year. Once you’ve reached your out-of-pocket maximum, the insurance plan will typically cover 100% of your covered, in-network health care costs for the rest of the year. At the end of your policy year, your out-of-pocket maximum will typically reset.
Understanding how your out-of-pocket maximum works in practice can help you be aware of how it will impact your finances. For example, imagine that your health insurance plan has an out-of-pocket maximum of $6,000 per year, a $1,000 deductible and a 20% coinsurance. In this scenario, you will pay your $1,000 deductible upfront when you use your plan and an additional 20% of all covered medical expenses afterward. Your insurance company will pay the remaining 80% of covered medical expenses as you continue to incur medical costs for the year. Your medical spending will accumulate until you reach your out-of-pocket maximum of $6,000. Once you reach this limit, your insurance company will typically pay for 100% of your covered health care costs for the rest of the year.
Expenses That Count Toward Your Out-of-Pocket Maximum
The exact details regarding expenses that count toward your out-of-pocket maximum may vary with your health care plan, so it’s important to read the fine print. Your out-of-pocket maximum will typically include various expenses incurred during the policy year, such as deductibles, copayments and coinsurance. However, some plans don’t count all of your copayments, deductibles, coinsurance or other expenses toward this limit. Additionally, your monthly premiums and out-of-network expenses won’t usually count toward your out-of-pocket maximum.
Selecting an Out-of-Pocket Maximum
You can typically choose from various health care plans with different out-of-pocket limits. You should keep in mind that plans with lower out-of-pocket maximums usually have higher premiums. Conversely, health care plans with higher out-of-pocket maximums generally have lower premiums. However, some employers only offer one option. If this is the case, it’s important that you note what your out-of-pocket maximum is. You may be eligible for lower out-of-pocket maximums if you earn under certain income thresholds or meet other requirements.
Conclusion
Your out-of-pocket maximum is essential for managing health care costs and providing peace of mind in times of medical need. It allows you to anticipate and allocate funds for your health care expenses and can help you avoid catastrophic health care bills that could otherwise lead to financial hardship.
Contact your employer if you have further questions regarding your health insurance.
- Published in Blog
PBM Drug Pricing Transparency Bill Heads to Senate
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
The Senate Committee on Commerce, Science and Transportation recently advanced a bill to increase pharmacy benefit manager (PBM) transparency and combat what some legislators called “deceptive practices.” The proposed bill received bipartisan support in the committee, with an 18-to-9 vote, and is supported by many health care and consumer organizations.
The Pharmacy Benefit Manager Transparency Act identifies activities that would be unlawful for PBMs to engage in, including the following:
- Spread pricing, a practice in which PBMs charge health plans and payers more for prescription drugs than they reimburse pharmacies
- Clawing back reimbursement payments from pharmacies
Additionally, PBMs would be required to direct 100% of any rebate to the plan or payer and disclose the cost and reimbursement to the health plan.
PBMs were initially formed to process claims and negotiate lower drug prices with drug makers. Today, they administer prescription drug plans for hundreds of millions of Americans and manage many aspects of the prescription drug process for health insurance companies, self-insured employers, unions and government programs. This includes developing lists of covered medications, negotiating rebates from drug manufacturers and contracting with pharmacies for reimbursement. According to the Pharmaceutical Care Management Association, PBMs play a positive role in creating savings and options and providing expertise for employers regarding prescription drug benefit design and coverage.
What’s Next?
Since PBMs have largely operated out of the view of regulators and consumers, this bill could impact how PBMs operate, potentially increasing prescription drug transparency. There’s currently no timeline for the Senate to consider the bill. Last year, the Senate Committee on Commerce, Science and Transportation passed the same bill, but it was never put to a full vote on the Senate floor.
Employers should continue to monitor the situation closely. [B_Official] will keep you apprised of notable changes.
- Published in Blog
Fuel Efficiency Best Practices for Fleets
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Improving the fuel efficiency of a company’s fleet of vehicles can have many financial and environmental benefits, especially with fuel prices on the rise. Fuel can be one of the largest and most difficult expenses to predict and control. Therefore, it’s important for vehicle fleet managers to conserve fuel, maximize efficiency and reduce vehicle emissions by implementing fuel-efficient policies, technology and maintenance strategies.
Best Practices
Managing a fleet’s fuel usage—even for just a couple of vehicles—can feel overwhelming. The following are ways to reduce fleet fuel costs and make operations more efficient:
- Monitor driving patterns. A U.S. Department of Transportation report found that there can be as much as a 35% difference in fuel consumption between a good and poor driver. Monitoring speeding, braking and acceleration patterns can indicate whether drivers are using good practices on the road or operating inefficiently.
- Cut engine idling. Idling can burn a quarter to a half gallons of fuel per hour. To reduce fuel and oil waste:
- Turn off the engine while waiting or making deliveries.
- Turn off the engine while stuck in traffic.
- Do not idle to warm up the engine.
- Improve route efficiency. Route efficiency can be improved with GPS tracking technology to ensure operations are streamlined and drivers don’t spend their day and fuel driving back and forth.
- Remove unnecessary weight from vehicles. Every extra 100 pounds in a vehicle can increase gas costs by up to $0.03 cents per gallon, which can quickly add up over the course of hundreds of thousands of gallons across multiple vehicles. Only travel with necessary packages or equipment.
- Schedule maintenance. Preventive and regular maintenance can reduce fuel costs, extend the lifespan of fleet vehicles and ensure the safety of drivers and the community.
- Check the tire pressure. Tires should be inflated to 75% of the recommended pressure; underinflated tires can significantly lower a vehicle’s average gas mileage. Checking the tire pressure should be a mandatory part of the pre-trip safety check since it not only improves the cost per mile but also helps the vehicle respond properly in unsafe situations.
- Dispatch the closest vehicle. Business margins and fuel efficiency can be improved by dispatching the closest vehicle to a new delivery or appointment. Fleet-tracking programs can help automate dispatching and routing.
- Leverage a fleet telematics solution. A fleet telematics solution can help managers gain data and insight into fleet status in terms of individual vehicle performance and overall operations, allowing them to make changes that will help fuel efficiency.
- Provide incentives. Fleet managers can encourage efficient driving by offering drivers incentives, such as recognition or special privileges.
- Implement driver training. Providing drivers with training regarding fuel-efficient habits can increase their awareness of fuel efficiency on the road. It can help them be mindful of things like keeping gears low when accelerating, changing gears early, driving at slower speeds and learning to read the road more effectively.
By implementing policies and practices that monitor and reward fuel-efficient behavior, fleet operations can reduce fuel costs. For more risk management guidance, contact us today.
- Published in Blog