Health Insurance Know Hows

by Heidi Evenson, Director of Operations

Health insurance is a catch 22 expense. We have yet to hear someone thrilled to pay for it but it is also rare to hear someone complain about having it when the need for care is covered by insurance.

Health insurance can be confusing with its various technical terms and scenarios that can occur.  This post is intended to clear up some confusion. Take a look at the most FAQ’s about health insurance…and call us, because we love to be a resource as your clinic of choice!

What do I PAY for EVERY MONTH?  You (and/or your employer) pay a premium each month.  A premium is what it costs to have health coverage for a specific period, called your “benefit year.”  Typically, this is a calendar year but not always. A calendar year is considered Jan 1 – Dec 31.

What is copayment or COPAY?  This is a specifically set price for medical services at the time of service.  Not all plans have a copay requirement.

What is a DEDUCTIBLE?  This is the amount you are responsible for paying out-of-pocket for covered medical services before your health insurance begins to pay in portions or in full for your medical expenses each benefit year.  

What is COINSURANCE?  This is the shared costs between you and your health plan coverage.  after your deductible is met, you are required to pay a percentage of covered medical expenses, while your insurance pays for the remaining percentage (see example). 

What is OUT-OF-POCKET MAXIMUM?  This is the highest amount of money you pay for coverage during a benefit plan year.  This total includes: deductible, copayments, and coinsurance.  It does not include your premiums because this is required to be paid monthly.  Once you meet your out-of-pocket maximum, your insurance company pays for all covered expenses for the remainder of the coverage year.  For clarification, you cannot meet your out-of-pocket maximum without first meeting your deductible. 

There is an ongoing debate on whether you should try to reach out-of-pocket expenses early in the coverage year.  Let’s assume you have a calendar year benefit year – meaning, your coverage starts Jan 1 and ends December 31st of the same year. 

Hypothetically, you realize your knee problem has caused you significant alterations to your daily activities and interferes with your quality of life.  A few things to think about:

  • What have you done in the past for this knee?  Imaging, evaluations, physical therapy, etc.
  • What will you need to have done for this knee?  Imaging, surgery, physical therapy, etc. 
  • If surgery is likely, when is the best time for your family/work/recoupment?
  • What other medical bills have you incurred this benefit year?

If you need advanced care such as imaging (MRI, xrays, CT, etc), injections, surgery, and pre and post op physical therapy, you may wish to schedule this as early in your benefit year as possible.  As described above, you will likely meet your deductible, and out-of-pocket expenses quickly when advanced care is needed.   On the other hand, if it is late in your plan year and you have not received much care other than preventative care, you may wish to schedule imaging for the start of your next benefit year.  It tends to be frustrating when you just meet your deductible and then your benefit year starts all over again in a week.   

What is the difference between the amount my clinic bills the insurance company and the amount my insurance company approves?  You will see a difference in the amount that your clinic/physician originally bills for services and the amount your insurance company says is approved.  That is because your insurance plan re-prices services according to usual and customary charges.  

Who pays for the difference?  The clinic that performed the service and submitted the claim is required to write off the amount that was not approved by your insurance company as reasonable and customary.   Your portion due will be based on the repriced charges.  

For example: your clinic bills your insurance company $140.00 for a service.     

  • Your insurance approves $100.00 as reasonable and customary (meaning, this is the maximum amount that clinic can collect for that particular service.)
  • Your clinic will write off $40.00 (because of the reasonable and customary), leaving a $100.00 balance to be paid according to your plan. 

If you have not met your deductible and out-of-pocket, you will get a bill and are responsible for $100.00.  

If you have met your deductible but NOT your out-of-pocket, your insurance company will pay their portion and you will be charged your co-insurance portion which is likely to be an 80% 20% split: $80 paid by your insurance company and $20.00 paid by you.  If you have met your out-of-pocket then your insurance will pay the entire $100.00. Remember, you cannot meet your out-of-pocket without first meeting your deductible.

This is only the tip of the iceberg but these are basics beneficial to your knowledge about your health care coverage. We are always happy to assist and make your plan of care one of joy! Improving you is possible at Sport & Spine, and if you’ve met your out-of-pocket, you’re looking at FREE physical therapy care! Call us today 507-474-6900 for an appointment offer within 24 hours of your call.

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