Most people are confused by their health insurance, they are unsure of what it covers and how much they will have to pay in any given situation. That’s easy to understand, health insurance policies are written in such a way that the average person just doesn’t carry those terms around in their heads every day. However, understanding your health insurance policy is key to receiving the care your premiums pay for you to receive. There are many different aspects to health insurance policies, and I wouldn’t presume to be able to address them all here, but I will attempt to address the most common and quite often, the most important. Premiums, co-pays, coinsurance, exclusions, deductibles, In network and out of network, stop loss, out of pocket, and preauthorization’s, are all terms we have each heard at one time or another, but what do they mean?
Premiums are quite simply the contribution you must make each month, or quarter, or year to keep your insurance coverage active. If you fail to make your premium payment, your health insurance policy may be canceled and you may be left with no coverage at all. It is very important that your premiums are always paid when they are due. Quite often, if you receive your health insurance benefits from a group policy offered by your employer, your premiums are deducted from your paycheck and always paid without any effort on your part.
Co-pays are not health insurance premiums, they are your portion or share of cost for the current visit, procedure, event, or appointment you are participating. Co-pays are always the responsibility of the patient or patients responsible party and cannot be waived, reduced, or discounted. Sometimes a patient will ask whether or not a co-pay can be reduced, waived or forgiven, and the answer is always no. Many people don’t realize this, but there are actually federal laws that prevent providers from doing this, so quite simply… It’s against the law, please don’t ask…
My experience has shown me that premiums and co-pays are the easiest terms for most people to understand when discussing their health insurance, but coinsurance is where it starts to get murky. Coinsurance is the amount that is left over after the claim has been submitted, approved and paid. The coinsurance is always the responsibility of the patient or the patients responsible party. To give you an example: say you visit an “in network provider” for ACME Insurance. You pay your co-pay when you sign in for the appointment, you see the provider, and you leave. The medical billing staff takes that charge and submits it to ACME insurance for payment. ACME insurance confirms the claim is valid and pays the claim according to the contract signed by the provider and ACME insurance, minus the coinsurance amount. To further define this let me add some numbers: the provider submits a charge for 100.00, but the contract between the provider and ACME says they will only pay 95.00, the provider agrees to write off the other 5.00, and accepts 95.00 as payment in full. However, your insurance policy with ACME says that the will pay 90% of the agreed upon charge and you must pay the rest. so in this example ACME will issue a check for 85.50 (90% of 95.00) and your coinsurance amount is 9.50 (10% of 95.00)
I hope that helps de-mystify, a few of the commonly used terms when dealing with health insurance. My next article will continue to define more terms to aid you in understanding more about your health insurance policy or at least give you some knowledge when speaking with your health insurance company. “Knowledge is Power.”