Regardless of where you get your health insurance, either from the Marketplace or your employer, the process and the language are the same.
Some common terms are:
- Preferred Provider
- Medical Necessity
- Out-of-pocket maximum
Your health insurance is an agreement between you and your insurer. Think of your insurance company as an exclusive club which you are required to pay a fee to join. The membership fee in this case is known as a PREMIUM. This PREMIUM allows you to see in-network healthcare providers at a discounted rate. In-network providers are known as Preferred Providers.
Providers then file a CLAIM with your insurer. A claim is a request for payment that is submitted to your health insurance company when you receive care or services.
Claims determined by your health insurance to be medically necessary are then processed for payment. Medically necessary health care services are those needed to prevent, diagnose, or treat any given condition, disease, or symptom.
Claims processed by your health insurance fall into three categories for payment.
- What you pay.
- What you and your insurance pays.
- What your insurance pays.
The DEDUCTIBLE is what you pay before your insurance begins to pay. After you have met your deductible your insurer begins to pay in part until you have reached your OUT-OF-POCKET MAXIMUM.
OUT-OF-POCKET MAXIMUM is the amount you will pay before your health insurance begins to pay 100% of the costs. Patients reach their OUT-OF-POCKET MAXIMUM by paying COPAYMENTS and COINSURANCE, also known as cost sharing.
COPAYMENTS are the flat amount that you are required to pay for certain medical services or medications in addition to what your insurer will pay. This is collected at the time of the visit or treatment.
COINSURANCE is the percentage you as the patient will have to pay for your medical care after your deductible has been met.
Let’s take a look at an example.
Mary has a health plan with a $1,000.00 deductible, 20% coinsurance, and a $6,000.00 Out-of-pocket maximum. Mary just incurred $50,000 worth of medical bills. Who pays what?
- Mary will pay the first $1,000.00 of her medical care. Her deductible.
- Once Mary has paid her deductible her insurance begins to pay its portion, 80%.
- Mary will pay 20% until her out-of-pocket of $6,000.00 is met.
- She will pay $1,000.00 for every $4,000.00 paid by her insurance company.
- For the next $25,000.00 in medical necessary health care service Mary will pay $5,000.00.
- Since Mary has now paid her $1,000.00 deductible and 20% cost-sharing of $5,000.00 she has met her OOP maximum of $6,000. In total, Mary will have paid $6,000.00 and her health insurance will have paid the remaining $44,000.00.
To understand your specific benefits, refer to your benefit booklets, talk to your human resource manager, or call your insurance company directly. Utilizing all these tools can make your healthcare experience more enjoyable, and affordable!