Insurance Billing Basics
Here's an introduction to the basics of insurance billing for group insurance plans, including who pays invoices, when invoices are generated, and the basics of insurance-related deductions for employees.
Invoices and Carrier Payments
- The carrier bills the company. Bills are usually generated approximately a month in advance.
- Insurance coverage must be paid for in full before the coverage takes effect, so companies will pay for the next month's coverage the month prior.
- The company pays the full invoice directly to the carrier by the due date.
- Zenefits does not pay insurance bills on behalf of companies.
- Since the carrier directly bills the company, any administration issues or billing requests (for example, a request for paper statements in place of electronic billing) need to be communicated directly to the carrier by the client, not to Zenefits.
Employee Deductions for Coverage
- The company withholds any employee portion of premiums from their paychecks.
- For example, an employer contributes 50% to employee's medical plan. The monthly premium is $500. The company pays the full $500 to the carrier and withholds $250 from the employee’s pay that month. If the employee is paid twice a month, withholding is $125/ pay period for a total of $250/ month.
- Employee deductions are pre-tax deductions.
- The deductions will occur during the month of coverage, rather than before.
- For example, the company receives the invoice for September coverage from the carrier in August and pays in August. Employees will pay for their September coverage over the course of their paychecks in the month of September.
- The invoice received from the carrier usually does not break out deductions amounts on the invoice itself, though few carriers may show details. These details can also be found in the administrator's Zenefits dashboard by clicking the Benefits Administration application.
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