Offering health insurance to your employees? Understanding premiums, deductibles, and copays under a group health plan isn’t just helpful — it’s a game-changer for both you and your team.

Let’s take a look at the three key health insurance terms and what they mean.

What is a health insurance premium?

The amount the employer pays (or the cost the employer and employee share) for employer-sponsored health insurance coverage. In most cases, premiums may be paid monthly, although deductions from an employee’s payroll may be taken weekly, twice monthly, or every two weeks.

What is a deductible?

A deductible is a fixed dollar amount (for example, $500), which an insured employee or a covered family member must pay for health care service before their health insurance plan begins to pay.

If the plan deductible is $500, the plan will not pay anything until $500 is paid toward the deductible for covered health services (that are subject to the deductible). The deductible may not apply to all services covered under your health plan.

Under the Affordable Care Act, some preventive care services may be covered without a deductible. This could change in 2025 depending on a lawsuit challenging some preventive care services. The U.S. Supreme Court is expected to review and rule on this case in 2025.

If an insured person switches health plans during the current calendar year, some insurers may offer a credit for amounts paid toward the deductible under a prior group health insurance plan. This is sometimes referred to as a Deductible Credit Transfer.

What is an insurance copayment?

A copayment is a fixed dollar amount (for example, $30) that must be paid for a covered health care service when visiting a provider. This amount is usually due at the time the service is provided – not billed after the fact.

The amount could vary based on the type of covered service. An office visit co-payment may differ from an emergency room co-payment.

A related term is an in-network copayment (co-payment). This is a fixed amount (for example, $25) due for covered health care services to providers contracted with your health insurance plan. In-network co-payments are usually less than out-of-network co-payments.

An out-of-network copayment (or co-payment) is a fixed payment due for covered services at out-of-network providers. Out-of-network copayments are typically higher than copayments at in-network providers.

If you and your employees have questions about other health insurance-related terms, you will find many terms defined on the HeyHealthInsurance.com website.

Your broker can also be a valuable resource to you and your employees.

Shopping for Coverage? Talk with a Broker

Your insurance agent or employee benefits broker can help you compare plans and find the right balance for your employees’ needs – and your budget. If you do not have a current broker, it’s easy to search for one online at MyCalChoice.com.