Understanding Health Insurance

Health insurance is a necessity that many struggle to fully understand.  It is important to understand what your insurance coverage allows and how the insurance billing process works.  This is a discussion that happens daily in the clinic, because many people do not understand what their insurance benefits really mean.  A better understanding of health insurance will allow you to make more informed decision and help to reduce some of the anxiety that comes along with getting the care that you need.

The Deductible

Most health insurances have a deductible. I typically explain that the deductible is your “buy in” for your health insurance.  Therefore until your deductible is met, you are responsible for the health care bills that you accumulate.  It is not uncommon for deductibles to be in the realm of $5,000 per year.  This means that you are responsible for the first $5,000 of your health costs prior to your insurance “kicking in”.  In addition, your health insurance will often offer a contracted rate for medical visits.  This contracted rate is often a significant reduction from the amount billed.  Providers will often have to process their billing before being able to quote you specific contracted rates, as these vary among different health plans.

Share of Cost

Once you have met your deductible, your health insurance will then begin to offer coverage for all or part of your healthcare costs.  Health plans will quote you a percentage that is covered, whether that percent is 40% or 100% covered.  Many health plans will offer an 80% coverage after your deductible, meaning that you have a 20% share of the cost or “co-insurance”.   This is again in reference to the contract rate that your insurance has established with that provider.  Consequently in this example, you would be responsible to pay your 20% of the contract rate for any service that your health insurance has set for the remainder of the year.

Out of Pocket Maximum

Many health plans will have a maximum amount that you are responsible to pay in a given year, this is the “out of pocket max”.  Typically every dollar that you spend for your healthcare in a given year is applied to this out of pocket maximum.  This usually includes: payment towards your deductible, share of cost payments, and copay amounts.  Once the out of pocket maximum is reached, you are typically covered at 100% for the remainder of the year.  You would not be responsible to pay share of cost or co-insurance for services until your health plan renews.  Your deductible and out of pocket max both start over at the beginning of your plan year.

Copayment

A copay is an amount that has been set by your health plan.  This amount is charged each time that you see certain types of providers.  If your copay is $45 dollars to see a specialist, this amount will be charged with each visit with this provider.  Your copay amount will often vary by different types of provider.  This means that you may have a different copay amount for your family doctor or for seeing a specialist.  You may also still have a share of cost amount that is due after the billing process has been complete.  Even though you have paid your copay, you may still be billed for services once the billing cycle has been completed.  The good news: Your copay amount will typically count towards your out of pocket maximum.

The best bit of advice that I can give about health insurance is to call your health plan.  They ultimately make the final decision on your coverage and benefits.  You have the right to have your benefits explained to you.  A better understanding of your health benefits makes all of the difference when making decisions about your healthcare.

-By Brett Qualls, PT, DPT, OCS

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