Insurance: Beginning with the Basics by Michelle Jaco

In years past, fairly healthy individuals may have opted out of enrolling in an insurance plan because they had no history of chronic illnesses.  The price of health insurance may have also deterred, and possibly negated, many away from enrolling in a policy, as well.

Medical insurance can be viewed as a gamble; the insurer bets that they will make more money in monthly premiums than they will in paying out consumer benefits, whereas the insured (you) must decide what type of plan coverage — if any — is adequate to purchase.

Running the risk of being non-insured, in the event that a major medical emergency arises, can leave non-covered participants on the threshold of bankruptcy, because a single night’s stay in a hospital can most certainly leave an individual fiscally paralyzed, and yet, nearly 48 million Americans still do not have health insurance.

If you have health insurance — and by March of next year, many of you will — it is absolutely vital to understanding the details of plan coverage.

Coverage is the amount of the medical expenses your insurance will pay for.  Coverage varies from policy to policy.

The policy, also referred to as a contract, addresses what the insurance company will cover, as well specify which portion of the bill the patient will be responsible for; that portion of the bill will sometimes comes in the form of a copayment.  Accumulative copayments are typically applied towards the annual deductible.

During the start of a new calendar year, your insurance will establish a deductible, which is a fixed monetary amount that must be met, before health benefits can be fully utilized.  This means that a patient may be responsible for the entire cost of a visit, if the deductible has not yet been met.  Emergency room visits, along with regular trips to a primary care physician are sometimes covered in full by an insurance company, but only after the copayment per visit has been procured by the healthcare provider.

A common mistake among insured patients is the assumption that after the deductible has been met their insurance provider will begin full billing coverage 100 percent.  In some cases, this may be true, but typically a whole new billing cycle is established and a new financial quota is to be met.

Sure, once the deductible has been met more beneficial plan coverage may be accessed, however there is now a coinsurance and out-of-pocket-maximum, or out-of-pocket-cap, that must be accounted for.

Coinsurance is a percentage — not a contracted dollar amount — of the visit the patient will now be responsible for.  In most cases, coinsurance will range from approximately 10 percent to 20 percent, meaning the insurer will cover the remaining 90 to 80 percent of the visit.

Coinsurance is applied towards the out-of-pocket-maximum, which is relative to the deductible, but is still its own entity.  Once the out-of-pocket-maximum has been met, then will full insurance coverage be activated.  Premiums (the amount paid to an employer monthly for insurance coverage) and copays do not apply towards the out-of-pocket-maximum.

Once a basic understanding of how health insurance works is determined, you can delve deeper into the finer details of various plan coverage by using a Combined Evidence of Coverage and Disclosure Form (the booklet that is given to the insured party by the employer once they have established a health insurance account).  This information may also be found on the insurance provider’s website.

Sources:

consumerreports.org/cro/2012/09/understanding-health-insurance/index.htm

money.cnn.com/2013/09/17/news/economy/health-insurance-census/

CONTINUATION NOTES

When an insurance company denies payment for services, it is because the consumer did not follow the required procedures or failed to understand the limits of coverage.  Here are some examples:

• A patient with a PPO provider seeks services from a specialist who does not fall within their network.  Since the patient typically pays a $20 copay with their primary care physician, they assume they will be responsible for just the $20 for this new doctor.

• An HMO patient goes to a hand specialist without procuring a referral from their primary care physician.

• A patient goes into surgery without per-authorization from their health insurer.

First, it is important to understand what it is you are paying for and how that money is being applied towards your contracted rate.

Health insurance is a contract between you and the insurance company that states how the insurance company will pay for a portion of your medical expenses, in the event of an illness or injury, and your condition requires a doctor’s attention.  Some contracts will also include preventative care coverage, such as annual physicals or immunization vaccines.

There are various health insurance plans available, some of which include: Medicare, Medicaid, State Children’s Health Insurance, and now, ObamaCare.  The two most common types of insurance plans are Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO).

A PPO plan contracts with physicals and hospitals to provider services at a reduced rate.  Using an in-network provider allows for the plan to pay most of the treatment.  Participants may use out-of network providers, as well, however they will be responsible for a larger portion of the cost.

An HMO is a group plan in which the members prepay a flat fee and are given access to the services of specific doctors, hospitals, and clinics.  Members typically pay copayments, but do not need to pay for deductibles.

Once the basics are understood, you can delve into the details of what is covered, what types of procedures must be followed, and how the payment works.

Locate your Summary Plan Description; this is the best source in determining coverage and dissecting the fine print.

Take note of what is covered, and more importantly, what is not covered.  Excluded services may include infertility treatment, acupuncture, cosmetic treatment, mental health care, or substance abuse programs.