By Mark A. Kelley, MD |06/15/16
Understanding Private Health Insurance – Part II
It is important to understand the coverage of your health insurance plan.
Previously, we covered deductibles, and premiums. There are other details that are important:
“Co-Pays”: These are fees that you pay whenever you receive certain services or purchase drugs or devices. The dollar value of co-pays varies by insurance plan and by the type of service provided.
The fee must be paid to the provider at the time of the service. In most plans, the co-pays are counted toward the deductible.
Some insurance plans require you to pay a certain percentage of the cost of a medical service. For example, a 20% coinsurance for a procedure or hospitalization means that the insurance company pays 80% of the cost. You pay the rest. Plans with “co-insurance” usually have a lower monthly premium.
Some plans may include both co-insurance and deductibles. It is wise to contact your insurance company to learn these details.
Insurance companies may offer a lower premium if you only use doctors and hospitals within a defined network. Typically, the insurance company has negotiated a discount with the network and passes some savings on to you.
To get this discount, you must stay in the network. If you go to providers outside the network, you may have to pay more for the service.
This arrangement should be very clear in your policy. If you are unsure, check with your insurer. If you already have a favorite doctor or hospital, check beforehand to see if they are in the network you are considering.
How to Manage “the Deductible”:
If you have a $1000 deductible, you are responsible for paying for medical services out-of pocket until the sum total of all such payments for the year reaches $1000. After that, the insurance company covers all costs.
Deductibles usually apply to visits to physicians or other health professionals; hospitalizations, procedures, diagnostic tests and prescription medications. It pays to know the exact details of your policy.
The insurance company will ask you to pay their usual cost, and no more. For example, if the company usually pays $50 for the doctor visit, you would pay that cost.
But there may be surprises. Some prescribed drugs and technologies have become very expensive, even for insurance companies. You may get sticker shock when you are handed some of these bills. If so, ask your doctor if there are less expensive alternatives.
The deductible “resets” to zero at the end of every year. If you are planning an elective procedure, like joint surgery, check the calendar. If you have paid many medical bills in the calendar year already, you may have reached your deductible. In that case, the insurance company would pay for all the cost of the surgery…provided it happens before the end of the year.
Good News/Bad News – there are limits to your out-of-pocket costs –but not your premiums.
The Affordable Care Act limits out-of-pocket health costs. For an individual, the annual cost cannot exceed $6850 for an individual; or $13,700 for a family. These costs include, co-insurance, copays, and deductibles. For some plans the limits may be lower.
The limits are helpful but for those with modest incomes, these are still impressive sums. The other flaw is that these limits do not include the costs of premiums to purchase health insurance.
The federal government provides an excellent overview of these issues.
The Health Insurance Checklist:
In evaluating a plan, here are some things to consider:
1. Does the plan include your favorite doctors and hospitals? This is very important for those who are already receiving medical care. Some hospitals and doctors are more expensive and that cost may be passed on to you.
2. How much insurance can you afford? You must decide how much premium you are willing to pay to offset the risk of the deductible. Remember, by law, there are absolute limits on your out of pocket costs.
3. What is included in the coverage? Most common medical and surgical conditions and procedures are covered by insurance plans. However, check into the detials since the coverage can vary for:
Nursing home care, rehabilitation, medical equipment and devices,
Mental health services
Travel in other states or countries
Special drugs like chemotherapy, transplant.
4. Customer Service – health insurance is complex and you may need help to understand your coverage and your bills. Do not hesitate to contact your insurer for advice or questions. These companies must have good customer service to compete for your business. You can check consumer ratings of the companies in your region.