Navigating medical insurance can be frustrating. It’s not easy understanding the terminology and requirements. Most people often have no idea how much a procedure will cost them — until the bill arrives in the mail. Reading the explanation is like trying to read another language! This article will explain some of the basic concepts and terminology.
Let’s start with “deductibles”
Most medical insurance plans have a deductible — which is the amount you pay toward healthcare before insurance starts to pay. This process typically starts anew in January. You will be expected to pay for all medical services or products until you have spent that deductible amount.
Once you have spent, or met, your deductible, the insurance will pay a percentage of healthcare services until end-of-year — but you may still be responsible for a percentage or copay.
Next important terms: “covered” vs “non-covered”
Your insurance company (or healthcare provider) will describe a service as “covered” or “not covered.” The insurance company sets stipulations for covering that service. This doesn’t mean the insurance will pay for it, because if you have not met your deductible, you will still be responsible.
Only a “covered benefit” will count toward your deductible. If you decide to get a new wheelchair, but your insurance doesn’t consider it necessary, they won’t cover it. In that case, the money you spend on the wheelchair won’t count toward your deductible.
First, you pay toward your deductible during the year, until you reach the deductible amount. At that point, when you receive a covered service or product, your insurance will pay for the service — and you will only have a flat copay. In other cases, you may pay a percentage of the fee, known as coinsurance.
When you’ve met your deductible, maximize your insurance. Schedule any procedures or tests you have been putting off. You’ll pay very little for that service — or at least, just a percentage.
In-Network vs. Out-of-Network
This is another important distinction. An in-network provider is contracted with your insurance. They agree to a reasonable fee for their services, and your insurance will probably pay a higher percentage of the fee (you pay the rest).
With most insurance plans, there are different in-network and out-of-network deductibles. Out-of- network is often much higher. Be careful going to an out-of-network provider. You may be responsible for the entire cost of the service — even if your in-network deductible is met.
Let’s look at some examples
Scenario 1: You go to urgent care for an ear infection. It’s January, you have a $1000 deductible, and haven’t had any other healthcare services yet. The urgent care center bills your insurance, and they have a set fee with your insurance for $95 for an office visit.
$95 Service fee < $1000 Unmet Deductible
Patient Responsibility = $95 Service fee
Scenario 2: You need an MRI on your knee. The imaging center has a set fee with your insurance for $950. You have a $2000 deductible and have met $1550 of your deductible. Your coinsurance for in-network MRI provider is 15%.
$950 Service fee – $450 Unmet deductible = $500 Remaining Service fee
Patient Responsibility = $450 Unmet deductible + (15% X $500 Remaining Service fee) = $525
Scenario 3: You schedule a home sleep test. You’ve met your deductible. The sleep testing company has a set fee with your insurance for $450. Your Coinsurance for in-network providers in 10%.
Insurance pays 90% X $450 Service fee
Patient Responsibility = 10% X $450 Service fee = $45
Check with your provider
Medical insurance can be confusing. But with a few simple questions, you can estimate your expenses.
- Ask your provider to confirm they are in-network with your insurance plan.
- Ask the fee they have set with your insurance.
- Check with your insurance — about your remaining deductible — and about your coinsurance for the service.
- With these figures, you can calculate your cost.
Your health insurance is designed to provide you with necessary healthcare. Don’t let the confusing processes and terminology discourage you. You should get the healthcare care you need to live your best life!