Let’s face it: insurance is confusing.
The companies we pay premiums to month after month in exchange for them to pay for our healthcare when and if we need it is becoming increasingly unreliable. They tote confusing terms such as coinsurance, copay, deductible, and max out-of-pocket. Add that to the fact that different services can have different benefit details under a single plan and it’s not surprising when people are astonished when I tell them how much financial responsibility they will have while receiving treatment.
This post is meant to be a starting point for those who use health insurance and want to learn how to take control over their own healthcare with actionable steps.
1. Learn the Lingo
Being able to distinguish between a coinsurance plan and a copay plan is important. This determines how you will be billed. On the other hand, knowing what your deductible and max out-of-pocket are will give you a better idea of how much you will pay over time.
Try googling the following terms to get a basic idea on what they mean: copay; coinsurance; deductible; max out-of-pocket.
Here is a quick description of each term and how they affect your financial responsibility:
In-Network vs Out-of-Network
Most of your benefits have two versions: In-Network and Out-of-Network. Depending on where you choose to receive care, one version or the other will apply.
Out-of-Network benefits are worse, and usually include a higher copay, less coinsurance coverage, a higher deductible and a higher max out-of-pocket. Click here to understand why some institutions opt Out-of-Network with certain plans.
On the contrary, In-Network benefits cover more of the bill.
Copay vs Coinsurance
I cheated a little and put these two terms together – but for good reason! Typically, you will have one or the other, not both.
If your plan requires a copay, this means you will pay X-dollar amount on every visit up-front, then you will be 100% covered. This usually means your deductible will not apply (see “Deductible” below). Often, each co-payment you make will count towards your max out-of-pocket (but not always. Confusing, I know). The main instance I’ve seen where the copay does not count towards your max out-of-pocket is when you are receiving a service from an institution that is out-of-network with your plan.
Coinsurance plans are becoming increasingly popular. This is probably because it allows a second financial defense for insurance companies: deductibles. When you have a coinsurance plan, you owe nothing up-front. However, please be aware, you will receive a bill in the mail a few months later, which will require you to pay for an entire month’s worth of services at once. This can be financially challenging.
There is almost always a deductible associated with a coinsurance plan, which dollar amount can vary widely. Your insurance company will not pay a dime (and forward all charges to you) until you have met your deductible amount. This is true whether your deductible is $250 or $2,500. Once your deductible has been met however, your insurance company will begin to pick up part of the bill. This, once again, can vary widely. Some plans cover over 90%, others only 50%. Sometimes coverage is so little that it makes more financial sense to pay out-of-pocket with competitive self-pay rates.
This mostly applies to coinsurance plans (see above). A deductible is a dollar amount set by your insurance company that you must pay before they cover anything. This can vary widely depending on your plan, and if in-network or out-of-network benefits apply. Once your deductible is met, coverage will kick in.
This is the maximum dollar amount you will have to pay for health services during your plan year. This is equal to or greater than your deductible amount and can be very high (over $10,000 is not uncommon). Once you hit your max out-of-pocket, you will be 100% covered and will not owe any more coinsurance or copays until your benefits reset.
2. Dig for Details
Plans vary widely, even different plans within the same insurance company. Ask the institution you are going to receive care at if they are in-network with your plan or not. Then, ask about the appropriate details (make sure you mention if you want an in-network or an out-of-network quote) when calling your insurance – especially the ones mentioned above.
Here are a few other details you could inquire about:
Depending on your plan, you could have a visit limitation per benefit year. If you do have a visit limit, ask if it is “hard” or “soft”.
A “soft” limit will allow you to call your insurance company when you run out of visits to request more out of medical necessity. A “hard” limit means you cannot, and all visits after the limit has been reached will not be covered. This is especially important because this is something only the patient is authorized to do, and your healthcare provider cannot call on your behalf.
Most benefit periods run on a calendar year. That is, they start on January 1st and expire December 31st. Then, on January 1st of the following year, your benefits reset (or could even change) including your accumulations on your deductible, max out-of-pocket, and visit limits.
However, not all benefit periods run on a calendar year. Therefore, it’s useful to ask if your plan runs on a calendar year or not so that you know when your benefits reset and can time your care accordingly.
Referrals and Authorizations:
Does your insurance plan require that you have a referral from your primary care physician to receive… let’s say… physical therapy services?! Usually, your healthcare provider can simply fax your plan of care to your physician, have them sign, then fax back to suffice a formal referral.
Need authorization? Care coordinators typically take care of this step, but it’s good to at least be aware of what authorization is. Essentially, it is asking your insurance company “permission” to bill them for your care and for them to cover you. If authorization is denied for whatever reason, such as if they deem the service not medically necessary, they could choose to not cover your visits.
3. How do My Benefits Affect My Physical Therapy Care?
This depends on a few variables. First, find out if the clinic is in-network with your insurance plan. Then, call your insurance company using the number on the back of your card and request the appropriate benefit information for outpatient physical therapy.
If you are inquiring about a service other than physical therapy, be sure to specifically ask for that service! Each service can have different benefit details.
Write down what the representative tells you and ask for a call-reference number before you hang up. Then, take that information with you to your appointment, and compare your details to the ones quoted by your healthcare provider.
At Active Physical Therapy, we always call our patients’ insurance companies to verify their benefits for them as a courtesy. Unfortunately, misinformation is a real issue that can lead to an inaccurate quote. I’m writing this because we care about our patients and want to be honest, transparent, and informative. That said, no healthcare provider can guarantee the accuracy of quoted benefits, and we strongly recommend our patients to take an active approach and call their insurance company. It is important to maintain control and responsibility over one’s own healthcare and being an informed consumer of health insurance is certainly part of that. Please call our office or talk to a patient care coordinator if you have any questions or concerns about your health insurance benefits.