Prescription for Your Health – Health Insurance
Before you go to your doctor, you need to know the ins and outs of your health insurance plan.
- What is your deductible?
- Do you have a co-pay?
- Is this doctor in your network?
- Do you have a PPO, HMO, Medicare or Medicaid?
Choosing a plan can be tricky. Unfortunately, you get what you pay for. You may save money on the front end but you will experience many obstacles when you attempt to see top notch specialists from top hospitals. So as the old adage goes, “An ounce of prevention is often worth a pound of cure.”
Things to consider…
What does “after deductible” mean.
It means that for services subject to coinsurance, your insurance company will pay 100%, fully covered. As an example, say you have a plan with a $1,000 deductible with 0% coinsurance. You would need to pay $1 ,000 off the bat, then the coinsurance comes into play.
Do copays count towards out of pocket max?
Starting in 2014, copays must count toward the out-of-pocket maximum. This standard is mandated by healthcare reform and applies to all plans, except grandfathered ones. However, it must be noted that whether copays count toward the deductible depends on the plan/carrier.
What does it mean when there is no copay?
In the United States, copayment is a payment defined in an insurance policy and paid by an insured person each time a medical service is accessed.
Is it better to have a higher deductible for health insurance?
For the insurer, a higher deductible means you are responsible for a greater amount of your initial health care costs, saving them money. For you, the benefit comes in lower monthly premiums. If you have a high-deductible plan, you are eligible for a Health Savings Account (HSA).
What does it mean if there is no deductible?
If your coinsurance is 70/30, this means that you are responsible for paying 30% of your total medical bill and your insurance company is responsible for the other 70% (after your deductible is met).
Here are some commonly used insurance and healthcare terms (in alphabetical order):
Allowed Amount – The highest amount your insurance company will cover (pay) for a service.
Benefit Period – When services are covered under your plan. It also defines the time when benefit maximums, deductibles and coinsurance limits build up. It has a start and end date. It is often one calendar year for health insurance plans.
For example: You may have a plan with a benefit period of January 1 through December 31 that covers 10 physical therapy visits. The 11th or more session will not be covered.
Coinsurance – A certain percent you must pay each benefit period after you have paid your deductible. This payment is for covered services only. You may still have to pay a copay. For example: Your plan might cover 80 percent of your medical bill. You will have to pay the other 20 percent. The 20 percent is the coinsurance.
Coinsurance Limit (or Maximum) – The most you will pay in coinsurance costs during a benefit period.
Condition – An injury, ailment, disease, illness or disorder.
Contract – The agreement between an insurance company and the policyholder.
Copayment (Copay) – The amount you pay to a healthcare provider at the time you receive services. You may have to pay a copay for each covered visit to your doctor, depending on your plan. Not all plans have a copay.
Covered Charges – Charges for covered services that your health plan paid for. There may be a limit on covered charges if you receive services from providers outside your plan’s network of providers.
Covered Person – Any person covered under the plan.
Covered Service – A healthcare provider’s service or medical supplies covered by your health plan. Benefits will be given for these services based on your plan.
Deductible – The amount you pay for your healthcare services before your health insurer pays. Deductibles are based on your benefit period (typically a year at a time). For example: If your plan has a $2,000 annual deductible, you will be expected to pay the first $2,000 toward your healthcare services. After you reach $2,000, your health insurer will cover the rest of the costs.
Emergency Medical Condition – A medical problem with sudden and severe symptoms that must be treated quickly. In an emergency, a person with no medical training and an average knowledge of health/medicine could reasonably expect the problem could:
- Put a person’s health at serious risk.
- Put an unborn child’s health at serious risk.
- Result in serious damage to the person’s body and how his or her body works.
- Result in serious damage of a person’s organ or any part of the person.
Experimental or Investigational Drug, Device, Medical Treatment or Procedure – These are not approved by the US. Food and Drug Administration (FDA) or are not considered the standard of FSA (Flexible Spending Account) – An FSA is often set up through an employer plan. It lets you set aside pre-tax money for common medical costs and dependent care. FSA funds must be used by the end of the term-year. It will be sent back to the employer if you don’t use it. Check with your employer’s Human Resources team. The can provide a list of FSA-qualified costs that you can purchase directly or be reimbursed for.
HMO (Health Maintenance Organization) – Offers healthcare services only with specific HMO providers. Under an HMO plan, you might have to choose a primary care doctor. This doctor will be your main healthcare provider. The doctor will refer you to other HMO specialists when needed.
Services from providers outside the HMO plan are hardly ever covered except for emergencies.
HRA (Health Reimbursement Account) – An account that lets an employer set aside funds for healthcare costs. These funds go to reimburse Covered Services paid for by employees who take part. An HRA has tax benefits for employer and employees.
HSA (Health Savings Account) – An account that lets you save for future medical costs. Money put in the account is not subject to federal income tax when deposited. Funds can build up and be used year to year. They are not required to be spent in a single year. HSAs must be paired with certain high-deductible health insurance plans (HDHP).
Health Assessment – A health survey that measures your current health, health risks and quality of life.
In-patient Services – Services received when admitted to a hospital and a room and board charge is made.
Legal Guardian – The person who takes care of a child and makes healthcare decision for the child. This person is the natural parent or was made caretaker by a court of law.
Long-term Insurance – A type of health insurance that covers certain services over a set amount of time (typically a 12-month period).
Medical Care – Medical services received from a healthcare provider or facility to treat a condition. Medically Necessary (or Medical Necessity) – Services, supplies or prescription drugs that are needed to diagnose or treat a medical condition.
Also, an insurer must decide if this care is:
- Accepted as standard practice. It can’t be experimental or investigational.
- Not just for your convenience or the convenience of a provider.
- The right amount or level of service that can be given to you.
Example: In-patient care is medically necessary if your condition can’t be treated properly as an outpatient service.
Medicare – A federal program for people age 65 or older that pays for certain healthcare expenses.
Network Provider/ln-network Provider – A healthcare provider who is part of a plan’s network. Non-covered Charges – Charges for services and supplies that are not covered under the health plan. Examples of non-covered charges may include things like acupuncture, weight loss surgery or marriage counseling. Consult your plan for more information.
Non-network Provider/Out-of-network Provider – A healthcare provider who is not part of a plan’s network. Costs associated with out-of-network providers may be higher or not covered by your plan. Consult your plan for more information.
Outpatient Services – Services that do not need an overnight stay in a hospital. These services are often provided in a doctor’s office, hospital or clinic.
Out-of-pocket Cost – Cost you must pay. Out-of-pocket costs vary by plan and each plan has a maximum out of pocket (MOOP) cost. Consult your plan for more information.
PPO (Preferred Provider Organization) – A type of insurance plan that offers more extensive coverage for the services of healthcare providers who are part of the plan’s network, but still offers some coverage for providers who are not part of the plan’s network. PPO plans generally offer more flexibility than HMO plans, but premiums tend to be higher.
Prescription Drug – Any medicine that may not be given without a prescription because of federal or state law.
Premium – Payments you make to your insurance provider to keep your coverage. The payments are due at certain times.
Provider (Healthcare Provider) – A hospital, facility, physician or other licensed healthcare professional.
Short-term Insurance – A type of health insurance that covers certain services for a set time period (6 months or less). Learn more about short-term insurance.
Urgent Care Provider – A provider of services for health problems that need medical help right away but are not emergency medical conditions.
Coinsurance – The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible.
Let’s say your health insurance plan’s allowed amount for an office visit is $100 and your coinsurance is 20%.
If you’ve paid your deductible: You pay 20% of $100, or $20. The insurance company pays the rest.
If you haven’t met your deductible: You pay the full allowed amount, $100.
Example of coinsurance with high medical costs:
Generally speaking, plans with low monthly premiums have higher coinsurance, and plans with higher monthly premiums have lower coinsurance.
Let’s say the following amounts apply to your plan and you need a lot of treatment for a serious condition. Allowable costs are $12,000.
Out-of-pocket maximum: $6,850
You’d pay all of the first $3,000 (your deductible).
You’ll pay 20% of the remaining $9,000, or $1,800 (your coinsurance).
So your total out-of-pocket costs would be $4,800 — your $3,000 deductible plus your $1,800 coinsurance.
If your total out-of-pocket costs reach $6,850, you’d pay only that amount, including your deductible and coinsurance. The insurance company would pay for all covered services for the rest of your plan year.
Understanding these terms – and a careful review of your insurance policy – can help you make smart decisions about your insurance and your healthcare.
About the Author:
A highly successful Doctor with a practice in West Bloomfield, Michigan, Jim is also an award-winning broadcast journalist who has served as the “on-air” medical expert for various Detroit radio stations, including: WWJ Radio in Detroit (CBS owned and operated), WJBK-TV (Detroit’s FOX network affiliate) and WKBD in Detroit. He has over 20 years of experience in the medical media industry, including nine years as a national radio medical expert for CNN.
Dr. Jim Bragman has 30 years of experience in private practice, and is also a clinical teacher of medicine at the Wayne State and Michigan State University College of Osteopathic Medical Schools.