How Deductibles and Copayments Impact Employers

Given today’s tough economy and the upward spiral of health care costs, businesses are particularly concerned about expenses, and that concern often includes group health insurance plans.

To help control the cost of providing group health insurance, some employers want to increase employees’ out-of-pocket costs through higher deductibles or co-payments.

Deductibles or co-payments are two of the most basic elements of health-insurance plans.

What are deductibles and co-payments, and how do they work?

Both deductibles and co-payments have fixed costs in a particular plan. A deductible represents the amount of money that the individual has to pay before many of the policy’s benefits kick in. Typically, these deductibles are calculated on a yearly basis.

For example, if a plan has a $500 deductible, then the individual has to pay out-of-pocket for medical expenses until they reach the $500 threshold. After that, the policy-provider then begins to pay its portion and the individual is then only responsible for paying the policy’s regular premiums.

Naturally, a plan with a low monthly premium will bring higher deductibles.

Co-payments are also established upfront when a plan is chosen. Co-pays, as they are often called, are what an individual pays out-of-pocket every time they see a doctor or purchase a medication. These payments, which could be $25, say, for a visit to a primary care physician, are important to insurance providers because they help individuals to share in the expense of the visit but also because they may deter individuals from visiting doctors unless there is a legitimate reason.

Plans with lower co-payments will likely have higher monthly premiums.

There are many variables for employers to consider when shopping around for group health insurance plans. Co-payment fees and deductible amounts are just two factors to consider.

Another way to save money on group health insurance is to have employees contribute more to their monthly premiums.

Regardless of what plan is ultimately selected, it is imperative for employers to take their time and speak at length with various providers about the different options. Employers also will want to consider the various tax incentives and benefits that can be derived as a business providing group health insurance.

Bradley Palmer is with offering Florida Group Health Insurance. To learn more about group health insurance, visit

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