Explanation of benefits (401(k), health insurance, stock options)

On your first day of employment, you will begin by filling out various kinds of paperwork, including tax forms and health insurance. These forms can be complicated if you are not prepared.   It is very important that you fill them out properly, so take the time to brush up on your terminology before your first day.  If you decide to sign up for your company’s insurance plan, take the time to read over your plan in detail and ask lots of questions of your insurance representative. The decision you make about your insurance is a very important one because you are usually only allowed to change your plan once a year during the period known as “open enrollment.”  Listed below are different options and explanations of a standard plan so that you may become familiar with them. 

Deductible – The amount you are required to pay for medical expenses before your insurance applies.
 
Co-payment – The fee you pay every time you visit a doctor.
 
Premium – Your monthly payment for insurance coverage.  Your employer may pay some of your premium.
 
PCP – Primary Care Physician: The family doctor you often need to contact before you can see a specialist. 
 
Out-of-pocket maximum – The most money you will have to pay in a calendar year for “reasonable” and “customary” care.  Your insurance will cover the costs above this amount.
 
Pre-existing condition – Any condition that you currently have which may need medical attention in the future.
 
HMOs – Health Maintenance Organization.  When you sign up for an HMO, your insurance company will give you a list of doctors that are in your “network.”  If you visit a doctor that is outside of your network, you are responsible for your bill in its entirety.  An HMO is less expensive but less flexible.  You must also receive referrals to specialists or your insurance company will not cover that visit.
 
PPOs – Preferred Provider Organization.  This if often your most flexible plan but will be the most expensive.  Under a PPO you do not have to choose one main doctor, which means you do not need referrals.
 
POS – Point of Service.  This plan is part HMO and part PPO.  It is moderately priced and with a moderate amount of flexibility.  You must go your in-network PCP for an initial visit, but you can see an in or out of network specialist with a referral from your PCP.
 
Short term insurance – This is coverage for up to six months while you in between health insurance. It is intended to cover you in the event of an emergency.
 
401(k) – Employer-sponsored plan that allows an employee to save for retirement while deferring income taxes on the saved money and earnings until withdrawal. The employee elects to have a portion of her wage paid directly, or "deferred," into her 401(k) account. Some companies offer a “match program” in which they match the amount of money you put into your 401(k) up to a set percentage.
 
Also on your first day of employment, your employer will ask you to fill out a W-4 tax form.  The W-4 form lets you decide how much will be taken from your pay check and paid to the Federal Government.
 
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