We field numerous calls regarding insurance benefits. Parents want to know why they have a balance with us and if insurance paid for the services.
Our office accepts a variety of plans. Each is underwritten by a person’s employer and the insurance company. What this means is that each plan is completely different from the other. Even two BCBS health insurance plans may be different when it comes to benefits. As a result, it is difficult for our office to know every patient’s specific plan.
However, there a few basic concepts that we suggest parents become familiar with so that they have a better understanding of terms and why you have a balance with the doctor.
Deductible refers to the total amount of covered medical expenses that must be paid by the patient before the insurance company begins paying benefits. After this requirement is reached, the insurer will begin paying according to terms of the contract (often 75%-85%) of covered medical costs.
The coinsurance is the cost-sharing portion of the medical expense the patient is responsible for. For example, the terms of the contract state a coinsurance of 30%. In practical terms, this means that your insurance plan covers 70% of your medical benefits, and you are responsible for 30% of the cost.
The coinsurance is generally in addition to the copayment. In other words, even if you have paid a copayment, you may be responsible for a portion of the medical bill if your plan has a coinsurance amount.
The flat-rate copayment is when a patient pays a share of the covered medical costs, and the insurance carrier pays an amount based on the policy. For example, when the patient pays $15 of any office visit charge or $3 for any prescription, the insurance carrier is responsible for the balance.
Copayments are non-negotiable at our practice. We are contractually obligated to collect the copayment at the time of service. Furthermore, copayments are required to be collected for virtually every single office visits, including follow-up visits.
This cost sharing option is when the patient pays a percentage share of covered medical costs, and the insurance company pays an amount based on the patient's policy. Examples: 20% of the office visit charge - $10 of a $50 charge, $12 of a $60 charge, etc. Typically this copayment arrangement includes a deductible and may have other variations.
CONSUMER-DRIVEN HEALTH PLANS (CDHPs)
CDHPs are the fastest growing plan type currently across the country. Employers are shifting financial responsibility to their employees by offering health plans with high deductibles and coinsurance to reduce the cost to the business.
Most plans cover wellness services such as immunizations, well-child visits and periodic check-ups more than sick services. They usually have a high deductible, but when the deductible is met, the plan pays for services at a percentage (such as 80%) of a defined reasonable and customary fee schedule.
CDHP are attractive because premiums are lower than non-CDHP plans. Keep in mind that the reason premiums are lower because the health insurance company shifts more of the risk to you, the patient. You are on the hook for paying for medical services before the health insurance begins to pay for their portion.
For example, if your plan has a $5000 deductible, the subscriber is on the hook for $5000 before the insurance company begins to cover for medical benefits.
HEALTH SAVINGS ACCOUNT (HSAs)
HSAs are tax-favored savings accounts funded with pre-tax dollars by the individual or the employer. Money can be withdrawn from the account at any time with no penalty or taxes to pay for qualified medical expenses.
An HSA can be established only along with high-deductible health insurance plans that meet Internal Revenue Service rules that set the amount of the individual and family deductible.
The amount an employee can put in an HSA is capped at the amount of his or her annual deductible of his or her health insurance policy. Any unused funds each year remain in the account, accumulate tax-free and can be used for future medical expenses.
HEALTH REIMBURSEMENT ACCOUNTS (HRAs)
HRAs are funded by the employer and can be used by an employee as pretax dollars. These accounts can be set up independent of any specific health plan. Money can be used to pay for medical expenses. HRA funds can also be carried over from year to year.
The amount of the contributions to the HRA varies based on the employer. The employer owns the fund and any unused amounts may or may not be transferred on termination of employment depending on the terms of the fund. Medical spending accounts (MSAs) and flexible spending accounts (FSAs) are versions of HRAs with particular features.
It is important, regardless of what type of plan you choose, to become as familiar as possible with the plan. Read the fine print.
If you are receiving health benefits through your employer, a good resource is your Human Resource Department. They have many of the answers about the plan the employer offers.
It is always a good idea to go directly to the source, the insurance company themselves. Most of them have designed a user-friendly website that explains many of the intricacies of the health plans. Although it may be overwhelming, take the time to peruse the site. You’ll be better informed.