Sterling Risk Advisors
FAQ - Sterling Risk Advisors - Insurance Brokerage, Risk Management


With over 60 years of combined expertise, Sterling Risk Advisors has found that employees have common questions, many of which can be answered quickly and conveniently as follows:

 What is a Deductible?  What is coinsurance?  
 What is COBRA?  Can I make a change to my coverage election?  
 What is FMLA?  What is a qualifying event?  
 What is Open Enrollment?  What is a Health Savings Account (HSA)?  
 What is a formulary drug?  What is an Explanation of Benefits?  
  What is the elimination period on a disability policy?  
  What is an In-Network versus an Out-of-Network benefit?  


What is a Deductible?
The deductible is a clause in the insurance policy stating that the first given dollar amount for certain services is the responsibility of the insured and will not be reimbursed by the insurance carrier. For example, if a claim is made and the insured has a deductible of $500, they are responsible for paying the first $500 of an insurance claim and then the insurer will cover the remainder of the claim (minus any applicable coinsurance) up to the limit of the policy. (Back to Top)
What is Coinsurance?
Having a health plan that requires you to pay a coinsurance rate essentially means that you will split the cost of your healthcare with your insurance carrier. For instance, if your health plan has an 80/20 coinsurance rate, your insurance plan pays for 80% of your eligible medical expenses and you are responsible for the remaining 20%. (Coinsurance rates of 70/30 and 90/10 are also common). To compensate for the possibility that a catastrophic medical loss could cause you severe financial distress, many major health insurance carriers include what is known as a “coinsurance cap” or stop-loss limit in their plans. The provision sets limits on your potential out-of-pocket costs per year. Such caps generally range from $2,000 to $3,000.  (Back to Top)
What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, is a law passed by the U.S. Congress that mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving employment. COBRA includes amendments to the Employee Retirement Income Security Act of 1974 (ERISA). A qualifying employer is generally an employer with 20 or more full time equivalent employees. Among the "qualifying events" listed in the statute are loss of insurance coverage due to (1) the death of the covered employee, (2) termination or a reduction in hours (which can be the result of resignation, discharge, layoff, strike or lockout, medical leave or simply a slowdown in business operations) that causes the worker to lose eligibility for coverage, (3) divorce, which normally terminates the ex-spouse's eligibility for benefits, or (4) a dependent child reaching the age at which he or she is no longer covered. COBRA imposes different notice requirements on participants and beneficiaries, depending on the particular qualifying event that triggers COBRA rights. COBRA also allows for longer periods of extended coverage in some cases, such as disability or divorce, than others, such as termination of employment or a reduction in hours.  (Back to Top)
Can I make a change to my coverage election?
In line with the Internal Revenue Service guidelines, you can change your election if you have a qualifying change in status during the plan year. This includes marriage, divorce, death, change in coverage, change in cost, (except when the provider is a relative), dependent enrolled in school, birth/adoption or a change in employment. However, the adjustment in your election must be relevant to the change in status and the requested election change has to be in line and consistent with the event.  (Back to Top)
What is FMLA?
The Family and Medical Leave Act of 1993 is a United States labor law allowing an employee to take unpaid leave due to a serious health condition that makes the employee unable to perform his job, or to care for a sick family member, or to care for a new son or daughter (including by birth, adoption or foster care). Generally, the Act ensures that all workers are able to take extended leaves of absence from work to handle family issues or illness without fear of being terminated from their jobs by their employers or being forced into a lower job upon their return.  (Back to Top)
What is a qualifying event?

A Qualifying Event is a change in your family status and includes the following:

  • A change in the number of dependents (such as birth, adoption, placement for adoption, or death of a dependent);
  • A change in legal marital status (such as marriage, death of spouse, divorce, legal separation, or annulment);
  • A change in employment status (such as termination or commencement of employment of the employee, spouse, or dependent);
  • A change in work schedule (such as an increase or decrease in the number of hours of employment by the employee, spouse, or dependent, a switch between full-time and part-time status, a strike or lockout, or commencement or return from an unpaid leave of absence);
  • A change in the place of residence or work site of the employee, spouse, or dependent; 
  • The dependent satisfies or ceases to satisfy the requirements for unmarried dependents (such as attainment of age or student status).  (Back to Top)
What is a Health Savings Account (HSA)?
A Health Savings Account is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a qualified High Deductible Health Plan (HDHP). The funds contributed to the account are not subject to income tax, but can only be used to pay for qualified medical expenses. Over a period of time, if medical expenses are low and contributions are made to the HSA, the account can accumulate significant assets that can be used for health care tax free or used for retirement on a tax deferred basis.  (Back to Top)
What is an Explanation of Benefits?
The Explanation of Benefits (EOB) is a detailed statement that is sent by insurance carriers to both the insured and providers. These statements provide necessary information about claim payment information and patient responsibility amounts that may still be owed to the provider. As the insured, you should review this to make sure that you are aware of the reimbursement from your insurance carrier and use it to understand the insured’s financial responsibility.  (Back to Top)
What is the elimination period on a disability policy?
Every disability policy imposes a waiting period, also known as the elimination period. This is the number of days you must be disabled before you begin to receive benefits. If the elimination period is short, such as 30 or 60 days, the premium will be higher. A longer elimination period may strain your finances more when you are initially disabled, but you will be charged a lower premium. Most experts recommend that you select an elimination period of 60 - to 90 days. The first check is usually paid 30 days after the waiting period.  (Back to Top)
What is Open Enrollment?

Open Enrollment is the time of the year when you may make changes to your employee benefit plans such as:

  • Electing to enroll yourself and your eligible dependents in one of the benefit plans offered; AND/OR
  • Adding or deleting eligible dependents to your insurance coverage; AND/OR
  • Changing plan options.  (Back to Top)
What is an In-Network benefit versus an Out-of-Network benefit?
An in-network provider is a physician, facility, or other provider that has agreed to supply covered services to their members at a negotiated rate with their insurance carrier. When a covered person uses an in-network provider, you will receive a higher payment from the plan than when an out-of-network provider is used.
An out-of-network provider is a physician, facility, or other provider that has not contracted with the selected medical plan. Covered persons are responsible for charges over the fee schedule amount when an out-of-network provider is used; this generally is not in the insured’s best financial interest.  (Back to Top)
What is a formulary drug?
A formulary drug is one that the insurance plan has put on a preferred listing of drugs, called a formulary. The formulary is a comprehensive list of preferred generic and brand-name drugs covered under your outpatient prescription drug benefit subject to applicable limits and conditions. (Back to Top)
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