Welcome to Hell. I mean, welcome to USA health insurance benefits. In this tutorial you will find
- definitions of common insurance terms,
- how the system works,
- how it doesn't work, and
- lots of sarcasm.
I don't care if you are still in high school or have been paying a premium for that last 30 years. Everyone can get something out of this article, even if it's the urge to write your senator for better policies. Let's begin.
Definitions of Common Insurance Terms
Premium: This is what you, the member, are contracted to pay your health insurer to be able to get certain, not all, health benefits at a lower cost. Does it make sense? No, but you have to pay it or pay a fee to not have health insurance.
In-Network: Health care providers will contract with health insurers to get "In-Network" status. In the contract, providers agree to a limiting charge for approved services. This esentially equates to a discount on medical expenses for the member/patient if their provider is apart of their insurer's network.
Out-of-Network: Some insurers offer really terrible contracts that providers don't want to sign. This leads to provider who are "Out-of-Network" and will not work directly with that insurer at all.
Allowed Amount: This is basically the limiting charge mentioned above that insurers set for the cost of approved services. Providers will have their own Billed Amounts, but the allowed amount is the contracted rate that is used when a provider is in that insurer's network.
Deductible: Remember the premium you pay? This is like the "second breakfast" to premiums. When you select your primium, don't just look at the monthly cost. Take your deductible into consideration as well, because you'll have to pay some or all of it each year, depending on how much you use your health insurance.
"Wait, wait, wait," you might be saying. "I have to pay more than just my monthly premium?" Yeah. You do.
The higher your premium, usually the lower the deductible. The lower your premium, the higher your deductible. But what is it, besides evil? Your deductible is your responsibility, a portion of the cost of healthcare set by your insurer in a dollar amount that must be "met" or spent before the next level of benefits kicks in.
"How is this a benefit?" Well, the only benefit is that you are paying the in-network allowed amount and get a bit of a discount instead of paying the billed amount which would happen if you are out-of-network.
"But I have an out-of-network deductible too, right?" Yes. And if your provider is not in your network, you have to pay the billed amount to your provider. If you submit your own claims (see Superbills), then your insurer only applies the approved services and their allowed amount toward that dedutible. So you pay $10, they apply $7.50 (their allowed amount) toward your out of network deductible.
Usually, out of network deductibles are double the in-network deductible.
"Why are deductible's important?" I don't see how they are important so I cannot tell you. Supposedly it represents your stock in the game. If an insurer has a bad year, they won't fall on their payments to their stakeholders, sorry, not you, but the other ones that run the show. Even from a provider's prespective, I see no medical, no economical, no health or financial benefit for a dedutible. Considering the profit insurers make off your body, they certainly don't NEED to make you pay a deductible. But for whatever reason, they want you to.
Are you upset yet? Tell your senator you are tired of paying for a fat hobbits's second breakfast. Until then, you signed up to pay it so please don't yell at me when you have to pay it!
Coinsurance: You've met your deductible. Now you get to really use your health insurance, right? It depends! Coinsurance is a division of the approved allowed amount for care, split between you and your insurer. Consider this, "eleventies," if we continue with the hobbit meal-time theme, because in most cases, the coinsurance patient responsibility is 20% of the allowed amount for care. Insurance covers 80% but you signed up to bring the croissants, in other words. Some contracts split it 10/90, and others 0/100 (bless their premium/employer's rate).
"Do out-of-network plans include coinsurance too?" Yes, and the most common split is 40/60.
Out of Pocket Maximum: This is big one you'll want to learn about, and maybe instead of shopping by deductible, you might find it helpful to shop by Out of Pocket Maximum, which is the maximum dollar amount you'd have to spend on approved healthcare services each year. However, how much do you really win if your premium is also high?
Limitations: You didn't think you'd need to be limited on the number of visits you can have per year, did you? Oh. You didnt. Sorry to burst your bubble, but it's true. The approval of some healthcare services is based on medical necessity while others are based on both medical necessity and a limited amount or number of visits. For example, a person could have "unlimited" physical therapy, insurance-talk for "based on medical necessity", but only 25 chiropractic visits per year.
Here's an example:
Under Custom Foot Orthotics, you might see a "2 visit" limitation, which is essentially a "2 foot" limitation -- don't ask how I found this out. If you want 2 pairs, you'd better hope your plan says "Quantity 2" instead.
