Understanding the nuances of health insurance is sometimes like trying to decipher inter-planetary orbits ... in Chinese. And yet for majority of us, next to mortgages and student loans, it is a vital part of our finances that we need to budget for. Here, I break down some definitions and some particulars about commercial health insurance that everyone needs to know about.
Not All Health Insurance Policies Are Created Equal! ... and they are not all "good" either...
There are a lot of limitations and particulars about your health insurance you need to know about. Some restrict your access to a specific group of providers (e.g., Providence providers). Some restrict you to only being seen for a limited amount of time and others limit your coverage by the amount of visits. Then others refuse to pay out without prior authorization first. Before you embark on any healthcare visits, it is important to ask some key questions:
1) Is the healthcare provider I want to see in or out of network?
In-network providers generally are lower in cost to you than out-of-network providers. However, you must weigh in the quality of your visits against the cost you anticipate. There are times when out-of-network providers give you unprecedented quality of service that is worth paying for.
2) How much is my deductible?
A deductible is the amount you would have to pay completely out of pocket before you enjoy the discounts and benefits your insurance company provides. Sometimes copays do not apply to the deductible, so this is good to know.
3) What is my copay/coinsurance?
This is the amount you are liable for per visit. A copay is a straight, even amount per visit; whereas a coinsurance is a percentage of the total bill. So for instance, if the total bill for the visit comes out to $150 and your coinsurance is 20%, you will be responsible for $30 of that visit.
4) How much will each visit cost me?
Unfortunately, for almost all providers, we cannot immediately come up with this accurate amount. Services rendered in healthcare are most usually timed - meaning the amount billed depends on how much time was spent performing the service. Without knowing precisely what the practitioner did and for how long (which is only determined at the end of the day) there is no way to know what the exact bill will be. Additionally, each health insurance company pay out at different rates for different services. The best that most providers can do is give you a rough estimate of what your bill will be - so be sure to ask for this*. This applies to all healthcare providers, including family health visits and ER visits.
* FYI, Stride Strong PT charges a prepayment of $100 per visit for when the deductible is not met.
5) Are there any limitations for my visit?
- Mentioned before, some health insurances request that a prior authorization be made before having some healthcare services are performed. This usually goes by way of a form sent to the insurance company by your provider to request allowance to begin service. Make sure your provider is on top of this and all necessary formalities are made prior to being seen.
- Another limitation commonly set is a referral from your family physician. A slip of paper from your family doctor is all that is needed to be on file to justify the service.
- Visit capitation or allowable dollars capitation limits the maximum you can use in your benefit year. Patients need to watch this closely, because they could be liable for all services rendered above this capitation - which could get very expensive very quickly.
6) What is my Out of Pocket Maximum?
This is the maximum you would have to pay out of pocket for your benefit year. After this number is reached, almost all of your future healthcare visits will be 100% covered by your health insurance - so long as formalities and limitations are respected.
7) When does my benefit year start and end?
This is crucial to know because your benefits will reset after the end date. Meaning, your deductible and out-of-pocket maximum will reset - and so will you capitations.
High Deductible Health Plans
With healthcare costs ever-increasing, companies are opting to insure their employees with High Deductible Health Plans. At Stride Strong, we have seen patients with deductibles as high as $10,000. To offset the out of pocket costs of meeting these deductibles, we encourage the use of FSA's, HRA's and HSA's to pay for them. These are good sources of tax-sheltered money that are either contributed by your employer, or taken automatically from your paycheck. The money in these accounts can also be used to cover medical expenses other than medical bills - contact lens, prescription costs, etc. To determine the difference between FSA's, HRA's and HSA's, here is a good website that compares them. To find out more how to take advantage of these accounts, ask your HR manager for more information.