I’ve had some interesting conversations this past week and wanted to take a step back to discuss health insurance in general. I’m slowly learning that the vocabulary regarding health insurance is very foreign to some folks and they are having difficulty understanding the terms that are used. I want to take this opportunity to educate folks on some of the basics and how it pertains to you, the consumer.
So lets start off with the basics of insurance terminology in its most simple form- in regards to how it plays out in the medical world.
Premium- this is the amount of money you pay to have health insurance (your safety net), can be paid monthly, quarterly, or all at once.
Deductible- this is the amount of money that you must pay before your insurance even begins to cover costs. There are fine details associated with this but in my mind, this is how I think about it. These can vary from a few hundred dollars to $10,000, depending on what kind of insurance that you have.
Co-insurance- after you have paid the entire amount toward your deductible (the amount of money you pay prior to your insurance actually kicking money in), your co- insurance represents the amount of dollars you are still responsible for. Let’s use an example to demonstrate this. If you see a doctor and the bill is $100, the first hurdle is whether you have paid your deductible yet or not. If you have paid the deductible amount, the insurance carrier will pick up a portion of the bill and the rest you will owe. If your Co-Insurance is 20%, then you are responsible for 20% of the bill. In this case its $20. If your Co-Insurance is 35%, then you are responsible for $35. The higher the co-insurance, the more money you will have to kick in for medical services.
Out of Pocket Maximum- this is the amount of money in a given YEAR, that you will likely need to pay on top of health insurance. Some plans include your deductible towards this amount. Some do not. The other fine detail here is that your insurance carrier can deem certain services not included in this out of pocket maximum. For example, if you really hurt your knee and need an MRI, your insurance carrier can say that the MRI is not a covered service meaning that they will not pay for it. The MRI bill will come to you on top of all the other bills that you have accrued.
IN- Network/ OUT of Network- This seems to be the area of most confusion for most patients. The simplest analogy I use is to think of discount membership stores like Costco or Sam’s Club. When you have a membership to either place, the products they sell have been approved by Costco or Sam’s, at an agreed price, and then the you the consumer can purchase it from the store, typically at a discounted rate. If a product that you want is not at Costco or Sam’s, then you are going to pay full price at another store. IN- network means that the doctors office has agreed to terms set by the insurance carrier, and you the patient only pay a pre-determined amount of money based on these negotiations. Most times- your charge is a nominal fee. OUT of network means that your doctors office is NOT a part of the insurance plan. The fees associated with this visit are ultimately your responsibility and sometimes your insurance carrier pays you back for services rendered. NEVER assume that your doctors office is IN NETWORK. I always assume OUT of network coverage until I see it in writing.