Health Insurance 101: Understanding Your Benefits

It’s a new year and, for many people, this means a new insurance policy. While insurance can be confusing, it is important to understand your health insurance benefits as you consider your options for treatment. We’ve put together a handy primer to explain the basic components of an insurance plan, in hopes that it will make life simpler for you!

In-Network vs. Out-of-Network: Providers who are in-network with your insurance company have agreed to accept a lower rate for their services, as determined by the insurance company, in exchange for being affiliated with and promoted as a “preferred provider”. Out-of-network providers determine the value of their services and are not under contract with the insurance company. Most plans have some level of out-of-network reimbursement. Many people think that if a practice is not in-network with their insurance, they can’t seek services at that clinic. In fact, insurance companies may even tell you you have to work with an in-network provider, even if you have out-of-network coverage. This is wrong and misleading. We elaborate more on the difference between in- and out-of-network coverage in this past blog.

Explanation of Benefits (EOB): This is sent by mail or available online after each medical service you receive. Your EOB will include lots of information, but look for the billed amount, allowed amount, any payments made by your insurance company, and the amount you owe, or patient responsibility.

Billed Amount: The amount that your healthcare provider bills to your insurance company.

Allowed Amount: The amount your insurance company deems a service provided to you is worth. This may be equal to the billed amount, though is more often less than the billed amount.

Deductible: This is the amount of money you are required to pay before your insurance benefits kick in. This amount resets annually, typically at the beginning of the year. Occasionally, there are some services where the deductible is waived, but in general you are required to pay the amount of your deductible before insurance pays for anything. Generally, there are separate deductibles for in- and out-of-network providers, though occasionally they are combined.

Coinsurance: Generally, this is the percentage of what you are required to pay per service. This is most often calculated using the allowed amount. For example, 30% coinsurance means that you are required to pay 30% of what your insurance allows for a particular service, while they pay 70%. This shared payment responsibility starts only after you meet your deductible.

Copay: This is a flat-rate amount that you pay each time you visit a provider, regardless of the billed or allowed amounts. This won’t start until you have met your deductible.

Out-of-pocket max: This is the maximum amount of money you will have to pay per year for covered healthcare. Once you reach your out-of-pocket max, insurance should cover 100% of your medical expenses.

Visit limit: This is the maximum number of visits your insurance company will pay. However, this is not a guarantee. Often, an insurance company will state a high number, or even unlimited visits, but will deny payment after review of medical notes if they don’t consider treatment to be justified.

At TherapydiaSF, we are happy to call your insurance on your behalf to determine your specific in- or out-of-network benefits. We also offer discounted cash rates as an alternative, if you are faced with a high-deductible plan, high co-insurance or limited visits. Please let us know how we can help you get started on your path to a healthy 2017!