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How to Understand Your Health Insurance Coverage

Updated on September 5, 2011

Health insurance is a necessity for many people. You want to see a doctor, but you do not want to pay the outrageous costs. So you pay a certain amount monthly so that larger bills do not come your way later. But often times, people will pick a policy and have no idea what it entails. So when they get a bill later, they do not know why their plan is not picking up the costs.

The easiest way to avoid this dilemma? Know your plan. Here is a quick primer on health insurance plans: how to pick one and which costs will be your responsibility once you have one.

Terms You Should Know

PREMIUM

When looking for a health insurance policy, the premium is probably the first cost considered. The premium is the amount you will pay per month for a specific policy. It is the cost of the insurance policy and does not contribute to covering costs of medical services rendered.

COPAYMENT

A fixed payment required each time a medical service is requested. The copayment amount is often printed on the insurance card itself. Your plan may differentiate between general practitioners and specialty offices, with specialists requiring a higher copay. In some rare cases, patients choose a specialty doctor as their primary care physician. Despite the fact that the patient is gong to see the doctor for a physical exam, the visit will still be to a specialty office and may be charged accordingly. Also, some insurances now require copayments for laboratory work, even if the labs were ordered as part of physical examination.

DEDUCTIBLE

Some insurances will not begin paying money toward your medical bills until you have spent a certain amount of money out-of-pocket. You have to reach this threshold, called the deductible, before you will see in any reduction in your responsibility. All non-covered medical services will not count towards your deductible and will be an additional cost out of your pocket.

CO-INSURANCE

After you have met your deductible, you may still be responsible for a portion of any covered service. For example, you may have an 80% to 20% co-insurance where your insurance company will cover 80% of the claim while the remaining 20% will be your responsibility. If your plan as an out-of-pocket maximum, then your insurance company will assume 100% responsibility once it is reached (although you may still be responsible for a copayment for each visit).

Figuring Out Your Responsibility Before You See A Bill

It is important to remember that only certain services are covered under your insurance policy (depth of coverage differs per policy). When the insurance company receives a claim from your doctor’s office, they first determine whether or not the service is covered under your policy. If it is not, the service will be your responsibility. If it is covered, then the insurance will apply the cost to your deductible if your policy has one and you have not yet met it.

Even if something is covered under your plan, there may be a cap on how often you avail yourself of the service per year. For example, if physical examinations are covered under your plan, but you are only allowed one exam per year, any subsequent examination would be your responsibility. Similarly, there may be a cap on how much money the insurance will pay toward a certain service. Once you reach that limit, the remaining balance will be your responsibility.

When determining coverage, you must understand how the covered item is defined. A physical examination covers the taking of vitals and a detailed examination of head, ears, nose, throat, neck, chest, abdomen, reflexes, etc. When the doctor asks how you have been, and whether there is anything you would wish to discuss about your health, the following discussion would NOT be covered under the label of a physical exam. Even if you feel it is a casual conversation, you are soliciting the medical advice of a professional and may be charged for that service. That is not to say you should not discuss with your doctor if something else is bothering you. You should seek medical advice when necessary, just be aware that there may be an additional charge for doing so.

GETTING AN ESTIMATE ON COSTS

For more complicated and expensive procedures, you might want to get an estimate of the costs prior to the procedure if you know you will be responsible for some portion of the bill. Unfortunately, this process is not as simple as going to your insurance and asking if the procedure is covered under your plan. Depending on the complexity of the procedure, you will need to get a few pieces of information from the doctor’s office before calling your insurance company:

  1. Procedure code (provided by doctor)
  2. Price of the procedure (provided by doctor’s office or billing office)

If the procedure will be done while under anesthesia:

  1. Length of procedure (provided by doctor)
  2. Facility and anesthesia fees (provided by the facility where the procedure will be performed)

Why is all of this information necessary? Billing is done using procedure codes. This is what the insurance company will be able to recognize. The price billed for a particular procedure is decided by the doctor’s office, but it may be adjusted based on the type of contract they have with your insurance company. The facility fee is also based on the procedure being performed, but the anesthesia fee is dependent upon the time you spend under anesthesia.

Once you have obtained this information, you can call your insurance company and ask if that particular procedure code is covered under your plan and what costs may be associated.

NOTE: This information can only give you an estimate of costs. The procedure code used to bill may not be the one given to you, as the procedure may change slightly given what is found. For example, any tissue biopsy taken during the procedure that was not anticipated would change the procedure code. Procedures may also run longer than anticipated, which could affect the quoted anesthesia fee.

How to Seek Medical Advice Without Incurring Unwanted Charges

Your doctor will not know your particular coverage, and it is not in his or her job description to offer medical advice based on what would be covered. The best thing to do is to get to know your policy as well as possible. If your doctor suggests something that is not covered by your insurance, feel free to communicate this and ask if there are other available options. Again, this is not to say that you should ignore your doctor’s medical advice. Just be aware of what costs may be associated with any services rendered.

With complicated medical and insurance policies, a patient can often feel caught in the middle. Please do not let this keep you from seeking medical treatment when necessary. In these cases, the best tools in your arsenal are knowledge of your insurance policy and the ability to communicate freely with those providing you medical care. Despite the struggles that may come with having insurance, it is certainly better to have it than to find oneself in an emergency without it.

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    • tangoshoes profile image

      tangoshoes 6 years ago

      Great information. This is one of those things that should be taught in schools but just isn't. Thank you for making the information so easily accessible.

    • Megan Kathleen profile image
      Author

      Megan Kathleen 6 years ago from Los Gatos, CA

      Thank you for reading tangoshoes! I have actually had Kaiser insurance my entire life and did not learn any of this information until I started working at a medical clinic. I have seen so many patients come in with billing issues because they do not understand their coverage. I think classes on insurance and personal accounting would be a huge improvement to schools.

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