Understanding Health Insurance
For the past 7 years, I have worked in the health insurance industry. One of the first things I learned is most companies do not provide the necessary education for people to understand what they are signing up for. Basic terms are not explained and most people do not know what benefits their insurance actually provides.
Many of the questions I received are as follows: What is a copay? What is a deductible? Why do I have a deductible? What is a coinsurance?
To start with, I will cover these terms.
This is typically a flat amount a person will pay to their doctor. If you have a copay on any part of your benefit, this is typically reflected on your Health Insurance card. It may look like the following:
- OV $30/$45 or OV $30/SPC $45
- V $30
- ER $100
- IPH $150
- The first example states an office visit for a primary care physician (EG: family doctor, gynecologist) has a $30 copay, while a specialist (EG: dermatologist, urologist, etc.) has a $45 copay.
- The second example states a Vision copay is $30 copay.
- The third example states an emergency room visit is $100 copay. (In some cases, this can be deceptive. I'll explain more on this later.)
- The fourth example states an inpatient hospitalization is $150 copay. (This may also be deceptive. Again, more on this later.)
This is an amount the patient has to pay before the insurance company will pay anything. For example, some services like an outpatient surgery, MRI, CAT Scan can require the patient pays $500 before the insurance company will pay anything. The way this works is when the bill for the service requiring the deductible comes in, the insurance company will give the patient the credit towards the deductible and then pay their portion to the hospital or doctor. The patient then may pay the deductible and any other responsibility to the hospital or doctor or they may set up a payment arrangement. Either way, this does not impact the credit the insurance company gives the patient toward the deductible.
This is the amount the insurance splits with the patient typically after the deductible. For example, a patient has an MRI. Their policy states they have a $500 deductible and the insurance will pay 80% after the deductible, while the patient pays the other 20%. To break this down, lets say the MRI cost $1000.
- $1000 MRI - $500 Deductible. This leaves the patient $500.
- Insurance will pay 80% of the remaining $500, which equals $400.
- The patient has the 20% coinsurance of $100.
- The patient owes a total of $600 ($500 deductible + $100 coinsurance).
These are the most basic terms. Understanding these will help you break your insurance down a little easier. Unfortunately, insurance isn't always this simple.
Lets go back to that ER and IPH copay. We all understand the concept "every policy is different." While Bobbi Jo has a policy where she only pays a $100 copay for her ER, her sister Bobbi Sue has a policy where she pays a $100 copay for her ER plus a $500 deductible plus a 20% coinsurance. The problem: both of their health insurance cards say only a $100 copay for ER. This is why it can be deceptive. Inpatient Hospitalizations can work the same way.
What can I do?
This doesn't mean you have to be in the dark about your policy. In fact, you have options.
- Before you sign up, call your insurance company. They WILL answer questions as best they can on your benefit options.
- If you've already signed up, call before anything happens. Ask how your office visits work. Question your ER benefits.
- You've had your insurance for months or years, but haven't had to use it. Call your insurance company and ask what you can anticipate being responsible for. Give them as much information as possible so they can provide you an accurate account of your benefits.
- It happened. You had to use your insurance, but didn't have time to call beforehand. Call as soon as you can.
The bottom line: ask questions. It's the reason people are there.