UNDERSTANDING YOUR HEALTH INSURANCE
Understanding your insurance coverage can feel complicated. We’ve compiled a list of common definitions and terms to help you navigate your healthcare. If you need further assistance, contact your insurance provider for help.
Allowable charge—sometimes known as the “allowed amount,” “maximum allowable,” and “usual, customary, and reasonable (UCR)” charge, this is the dollar amount considered by a health insurance company to be a reasonable charge for a specific medical service or supply.
Copayment—A flat fee for certain medical expenses. For example, you may pay $25 for a doctor’s visit at the time of your appointment. Depending on your insurance, this may be the only charge for that visit, or you could receive an additional bill for services later, such as if the visit included a blood test. Your insurance may not cover the blood test, or it may cover part of it, and you are responsible for the remainder of the cost. The insurance company will send you information about what they covered, and the doctor’s office will send you a bill for the remainder.
Deductible—the amount of money you must pay each year to cover eligible medical expenses before your insurance policy begins covering the majority of your healthcare costs. For example, if you have a $2,000 deductible, you may have to pay all of your healthcare costs for the year until you have paid $2,000. After your health care costs have reached more than $2,000, your insurance company begins to pay for your services and your coinsurance begins. Some insurance plans require you to meet your deductible before you can begin to use co-pays, while others allow copays before you meet your deductible. Be sure you understand your co-payment arrangement before scheduling an appointment.
Coinsurance— After you have met your deductible for the year, your insurance usually pays a percentage of your healthcare, and you are responsible for the rest. For example, after you have paid the first $2,000 of your healthcare bills and you have met your deductible, your insurance pays for 80% of your healthcare, and you are responsible for the remaining 20%. For example, before you have met your deductible, you may be responsible for 100% of the cost of a $100 blood test, but after you have met your deductible you are only responsible for 20%, or $20. These percentages vary based on your insurance plan and if you are seeing an in-network provider or out-of-network provider.
Explanation of Benefits (EOB)—the health insurance company’s written explanation of how they paid a medical claim. It contains detailed information about what the company paid and what portion of the costs you are required to pay. So if you go to the doctor and they order blood work that your insurance partially covers, you will receive a statement from your insurance company letting you know how much it cost, how much they paid, and how much you will pay the doctor. This is not a bill. Your doctor will send you a separate bill with information on how to pay them directly.
Insurance Premium—the amount of money you pay monthly for your insurance. This payment does not count towards your out-of-pocket maximum or your deductible.
Medicaid—a health insurance program that provides health benefits to low-income individuals who cannot afford a government-sponsored Marketplace plan or other commercial plans. Medicaid is funded by both the federal and state government and is managed by the state.
Medicare—the federal health insurance program that provides health benefits to Americans age 65 and older. Medicare has two parts: Part A, which covers hospital services and Part B, which covers doctor services. Some insurance policies exist to help cover the gaps that Medicare does not cover.
Network—the group of doctors, hospitals and other health care providers that your insurance company works with to provide you the healthcare you need. You will often pay less for services received from providers in your network.
Out-of-network provider—a healthcare professional, hospital or pharmacy that is not part of a health plan’s network of preferred providers. You will often pay more for services received from out-of-network providers.
Out-of-pocket maximum—the most money you will pay during a year for coverage. It includes deductibles, copayments, and coinsurance, but is in addition to your regular premiums. For example, if your out-of-pocket maximum is $10,000, and your healthcare costs more than that in one calendar year, the insurance company will pay all expenses for the remainder of the year. All monies you pay in copay, coinsurance, and deductible go towards this. Out-of-network services may not apply towards your maximum, and they are not covered after you have reached it. Services your insurance does not cover generally (i.e., acupuncture) are still not covered after the maximum has been met.
Preventive Care – Thanks to the Affordable Care Act, preventive care is exempt from cost sharing, and many insurance companies cover the cost of an annual wellness check-up with your physician or just require you to pay the copay. This can be tricky, though, so watch out. If you ask your physician a question, the information they give back to you may or may not be considered preventive care, and you could receive a bill for it. Any additional services, such as vaccines, blood work, or in-office treatments that occur during your annual checkup are also not included. This is confusing and leads to frustration for many people. Be sure to remind your physician and their aids at the beginning of the appointment that you are there for your annual wellness checkup, and to alert you before saying or doing anything that could be billed to you.
Primary Care Physician –many insurance plans require that you visit your regular family medicine physician before seeing a specialist. So if you are having allergies, and want to see an allergist, you would be required to make an appointment with your regular doctor, or primary care physician, who will determine whether a specialist visit is warranted. If they feel it is, they will give you a referral, and you can book an appointment to see the specialist they recommend. Be sure to verify that specialist is covered by your insurance. If your insurance requires this step, they may not pay for any services billed them by a specialist if you skip seeing your primary care physician.
Kassidy has purchased a Silver Plan through the healthcare.gov marketplace. Her Insurance Premium is $300 a month, with a Deductible of $2,500 and an Out-of-Pocket Maximum of $10,000. She has an insurance plan with a $50 copay for her regular doctor’s visit, $75 for specialists and $20 for medications (her type of plan allows her to use her copays before she meets her deductible).
Kassidy pays her monthly premium of $300 every month, and in June she begins to have health problems and makes an appointment with her Primary Care Physician (her plan requires she meet with her physician to get a specialist referral). She pays her $50 copay and sees her doctor, who orders some blood tests, gives her a vaccination, and refers her to a specialist. She later receives a bill from the Doctor’s office for the blood work and the vaccination, which she pays.
When she sees the specialist, she pays $75 for her copay and the specialist writes her a prescription. She pays $20 for her prescription, and the insurance company pays the rest. She continues to see her specialist, paying $75 per visit and also paying additional costs for other services performed by her specialist. She has more blood tests and a couple of treatments during her visits, which she pays the full cost of.
By August, she has met her $2,500 deductible. She continues to make her copayments for her specialist visits and prescriptions, but now instead of receiving bills for 100% of her additional costs, her insurance pays for 80% of those costs, and she only pays 20%.
By October, her health care bills, including her copayments but not her premium, (the $300 which she has continued to pay monthly) has reached over $10,000. Her insurance company now begins to cover 100% of the costs associated with her healthcare. She no longer has co-pays for her visits or her medications. However, she is still responsible for the costs of medical services her insurance doesn’t cover, so she still pays the full cost if she chooses to visit an acupuncturist or a massage therapist.
In January, her plan resets and she begins paying her medical costs again until she has met her deductible.