Insurance

Do you know what your insurance coverage is?  Have you ever read the details of your policy?  It’s almost as clear as reading the IRS instruction book.

Insurance, like any other field, has its own vocabulary.

Premium The amount of money paid to buy an insurance policy.  This can be paid either by the individual, or by the employer (or, I suppose by anyone feeling both wealthy and altruistic).

People who purchase private insurance pay their own premium.  Some people who have insurance through an employer also pay their own premium – or their employer might pick up part of the cost.  Things can get complicated when tax laws come into play; in some instances, the employer is prohibited from paying a particular employee’s premium (and it really sucks to know that the company is paying for most people’s insurance and is willing to pay for yours, but the IRS says you have to pay for your own).

BenefitWhat the insurance policy will pay toward a person’s medical bills.

When insurance pays 100% of the cost of preventive care, that is a benefit.  When labs and x-rays are covered at 80%, that is a benefit.  PPO plans pay a higher benefit to “in network” doctors and hospitals than to “out-of-network”  providers.  For instance, I can go online and look at the list of hospitals that have agreed to accept whatever amount the insurer decides to pay.  If I obtain care there, insurance will pay a 70% benefit and I will owe 30% of the bill.  If I go to someone who isn’t on the list, insurance will only pay a 50% benefit and I will owe the remaining 50%.

The catch is that the benefit doesn’t usually cover everything.  Patients must usually pay a certain amount out-of-pocket before any benefit will be paid.  This brings us to the…

DeductibleAmount that the insured person must pay annually before receiving a benefit

When my son hurt his arm, he needed an x-ray, which cost $352.03.  At the time, our deductible was $200, which we had to pay before any insurance benefits were available.  Deduct $200 from $352.03, to see that the insurance benefit was paid on $152.03 of the x-ray bill.

Whatever your deductible is, you must pay that much for medical care before insurance benefits are available.*  This resets at the beginning of every year.  It’s an annual deductible.

Money-saving tip:  Check your policy.  Many policies have a nifty little clause stating that if someone didn’t meet their annual deductible, any amount paid toward the deductible in the final quarter of a year would be credited to the following year’s deductible.  When you know about it ahead of time, you can make plans accordingly.  It’s a great way to save a little money if your medical expenses aren’t extreme.

Co-InsuranceAfter the deductible is met, the remaining amount owed after the insurance benefit is paid.

Taking the previous example, first we paid a $200 deductible.  Insurance paid an 80% benefit on the remaining $152.03, leaving the remaining 20% ($30.41) as the co-insurance amount for us to either pay or submit to secondary insurance.

For another example, if I have a $1,500 annual deductible (which I now do), and my $3,000 MRI is covered at 80%, the insurer will apply the first $1,500 to my deductible.  Then the insurer will pay 80% of the remaining $1,500 (which is $1200), leaving a co-insurance amount of $300 for me to pay (or submit to secondary insurance if I had a second policy).**

Primary InsuranceThe insurance policy that gets billed (spell-check thinks this should be “build”) first.
Secondary InsuranceFor a person who is covered under two different insurance policies, the insurance that gets billed second (after the primary policy has paid).

Some employer-based policies cover both the employee and a spouse.  If my husband’s employer-provided insurance covers me, and my employer-provided insurance covers him, then for me: my policy is primary and his is secondary.  My medical bills would all be submitted to the insurance carrier provided by my employer (my primary coverage); after that insurance has processed a claim, the remaining amount owed would be sent to the insurance provided by my husband’s employer (my secondary coverage).  On the other hand, my husband’s primary coverage is through his employer and my primary insurance would be his secondary.  This isn’t as common as it used to be.  Since insurance has gotten so expensive, employers are dropping family coverage unless the employee specifically requests it.

With children covered by two policies, there is usually a clause in the contracts defining which policy is primary and which is secondary.

Negotiated DiscountAmount that the insurer refuses to allow the provider to charge.  This saves the patient and the insurer money, and presumes to assure that the provider that it won’t get stiffed by a patient who doesn’t have the money to pay for care.

In reality, the preceding MRI example isn’t quite so straightforward.  The insurer looks at the $3,000 fee and says, “That’s too much to charge for an MRI.  The price is now $1500.  The diagnostic imaging center has to write-off the other $1500.  People who don’t have insurance are stuck paying the full $3000 if they don’t know to arrange a discount in advance.  The insurer will apply $1500 to the deductible, then pay 80% of the remaining $500.

Likewise, my son’s x-ray charge was $352.03, but the insurance company negotiated an $80.17 discount.  $200 went toward the deductible, insurance paid 80% of the remaining $71, I paid 20% of the $71 (plus my deductible), and the hospital had to eat the other $80.

  • My doctor charges $100, but insurance “negotiated” a $13.26 discount, so the doctor really only gets $86.74
  • The lab charges $190 every six weeks, but insurance only pays them $32; I pay $8 and the lab has to write-off the remaining $150
  • My rheumatologist charges $385, but insurance knocks $95.66 off that amount
  • An $85 tetanus boost is reduced to $65.71
  • A $219 charge for having the radiologist read my MRI was reduced to $128.02
  • A $134 visit to the physical therapist is reduced by $58 (at twice a week, that adds up in a hurry)

Co-Payment (aka co-pay)Flat fee that the insured patient must pay for some services before receiving any insurance benefit.

If your insurance plan says you need to pay $30 (or $20, or $40, or any specific dollar amount) when you visit the doctor, that is a co-payment.  The idea is that insurance keeps the cost of care down for patients, but we need to have a little skin in the game so that we don’t view medical care as “free” and will contemplate whether an appointment is truly needed.

After patients pay their co-pay, the insurance benefit will be available to pay toward the remainder of the bill.  This is completely separate from the deductible.  For instance, if I go to the emergency room, I pay a $75 co-pay just for walking in the door.  After that, I owe my annual deductible (if I haven’t met it yet), and after that, insurance will pay an 80% benefit.

Money-saving tip:  Some policies have a little-known clause saying that patients only owe one co-payment per day.  If I see my PCP on Monday, my podiatrist on Wednesday, and my rheumatologist on Friday, I will owe three separate co-pays.  However, if I can schedule things carefully so that I see all three doctors on Monday, I’ll only owe one co-pay.  Insurance will cover the rest.  Check the details of your policy to see if you can take advantage of a similar benefit.

Balance BillingWhen a medical provider charges you the difference between what insurance covers and what he charges.

Some insurance policies prohibit balance billing.  The insurance company “negotiates” a fee they’re willing to pay, and doctors must write-off the balance.  Other policies, however, allow the doctor to bill patients for the balance.

I’m accustomed to this at my kids’ dentist, where insurance will pay $165 of the $180 fee, and the dentist balance-bills us for the remaining $15.

  • On my new insurance policy, prefered providers will be covered at 100%, balance billing prohibited.  If the doctor bills $100 and insurance negotiates down to $80, the insurer will pay the doctor $80 and that’s all he gets.
  • Participating providers will be covered at 50%, balance billing prohibited.  If the doctor bills $100 and insurance negotiates down to $80, the insurer will pay the doctor $40 and I will pay the doctor $40, and he writes off the other $20.
  • Non-participating providers will be covered at 50%, balance billing permitted.  The doctor can charge me $100 and I’d get $40 back from the insurance company.

Ineligible Charges:  Things not covered by insurance.

Occasionally, insurance companies will say that something isn’t covered at all – either because the policy excludes it (like my orthotics), or because it was coded incorrectly.  The patient is stuck paying this amount, unless it’s possible to talk someone at the doctor’s office into resubmitting the claim with different coding.  If it was me being asked to do extra work for no pay so that you can save money, I suspect I wouldn’t be too happy about it.  When someone goes out of their way to resubmit a claim, it pays to let them know you’re thankful for their help.

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*Some benefits might specifically waive the deductible.  For instance, many policies waive the deductible on office visits, so the patient pays only a co-pay while the insurance benefit covers the remainder of the doctor’s fee.

**In this example, I’d owe the $1,500 deductible plus the $300 co-insurance, so I’d write a check for $1,800.

Comparison Shopping

Lower insurance premia would be great!  The theory is that by purchasing a policy with a high deductible, people can pay a lower premium.  This, in turn, lowers the cost of healthcare because having a higher deductible makes people be more careful about seeing the doctor; patients tend to make sure that tests & treatments are truly needed when the money is coming out of their own pocket.  The protection against catastrophic illness is still there, so things work out well.  High-deductible health plans are supposed to be good for everyone.  Too bad it doesn’t really work that way.

I knew that our new insurance plan would have a much higher deductible, and that the purpose of the switch was to save money.  What could be simpler?  Higher deductible, offset by paying a lower premium.  Silly me.  It turns out that in our company’s case, the premium will drop from approximately $800 to less than $300 for many people.  The difference, unfortunately, is that this only applies to people who will have single coverage.  Up to now, everyone has had family coverage.  The savings will come from converting all those family policies to singles.  Those who still need family coverage will actually see an increase in premium.  The bid predicted that the rate would be $1000.  It turns out that was an average/estimate; the real cost is a little over $1200.

This means that I’ll be paying extra money for less coverage.  Yes, for that extra $400 per month that we’ll be paying, my annual deductible will skyrocket.  Higher deductible = lower premium ???  Not here!  Our premium already costs more than my groceries, and the price is going up.

It’s been quite an experience talking to other people who are trying to figure out what to do.  Some of the methods people have been using to choose a new insurance plan:

  • Pin the plans to the wall, tie a blindfold over the eyes, and throw darts at the paper.  Whichever plan is hit by the most darts wins.
  • Tell the plan administrator to sign them up for which ever plan is least expensive.
  • Flip a coin.  Heads means they select the plan with the best prescription coverage for migraine meds, tails means to select the plan offering free colonoscopies.

I’ve been taking a less haphazard approach.  What kind of coverage is offered?  How much is paid for office visits?  How much will be covered if my doctor stops accepting insurance?  What’s the prescription formulary look like?  Can I keep my pharmacist?

There are bright spots.  One good feature of the new plan is that I’ll be able to continue getting my Enbrel locally.  I’ve been extremely stressed about the switch to mail-order, and am relieved to know that I’ll get to stick with my pharmacy.

Also, there will be much better PT/OT coverage than our current plan.  My current plan only pays for 15 sessions per year; the new policy will cover up to $5,000 annually.  I hope to never need that much PT, but I know I’d have been in for two more issues this year if it had been covered by insurance.  I’m almost desperate enough to pay cash, but our car’s engine just had issues of its own and that was a huge chunk of money we weren’t planning to spend.

Here are some of the things I’ve compared in deciding which of the two plans we’ll select.  Not that you care about my plan, but maybe the thought-process will be helpful to someone else who’s evaluating other plans:

What are the details of the prescription benefits?  Coverage for generics is going to be similar for most policies.  When we look at tier 2 or tier 3 drugs, though, there can be a huge difference.  The biologics don’t come in generic, so the benefit for these drugs is important to me.  I’m okay paying a $70 copay if the other option is to pay 50% of the cost of a $2200 drug!  I appreciate being able to go online and see the insurer’s formulary so I know where I stand on the drugs I’m currently being prescribed.

What is the deductible?  How much money will I owe out-of-pocket before insurance starts paying for things?  My choices are (cough, gasp!) $1000 or $1500. 

How much will insurance reimburse me if I go out-of-network?  While coverage of professional fees for in-network providers is 80%, out-of network providers cost more.  One plan reimburses at 50%, the other at 70%.  Seventy percent coverage means it wouldn’t be cost-prohibitive to go out-of-network.

Does it matter where you go for tests?  It’s often convenient to use the lab & x-ray facilities that the doctor prefers, but I might stop doing that.  Labs & x-rays done at a hospital, both inpatient and outpatient, will only be covered at 70%.  Free-standing facilities usually charge less than hospitals, and they’ll be covered at 80%.

How much will be covered if I’m admitted to the hospital?  I’ve always thought that 80% is standard, but one of the plans being offered only covers hospital stays at 70%.

For what reasons is the deductible waived?  Both policies I’m looking at waive the deductible for visits to the doctor’s office.  The policy with a $1000 deductible will waive that deductible on the first $300 of labs & x-rays.  If you have more labs & x-rays than that, however, those fees are applied to the deductible before insurance will pay.  The other policy has a higher deductible, but it’s waived for lab & x-rays.

I did the math.  This past year, my lab & x-ray fees through September were $1800 (no EOB yet on the October lab draw, and I’m to have more blood work done again next week).  The plan with a $1K deductible would have paid for the first $300 worth of labs, then I’d have owed the next $1000.  After that, insurance would pay 80% and I’d owe the remaining 20%.  In real numbers, that means this insurance policy would have paid $700 and I’d have paid $1100.  The policy with a $1500 deductible would have waived the deductible for these expenses and paid 80% of all lab costs; I’d only have owed $360.  $1100 or $360?  The decision seems pretty clear.

It’s not.  Factor in an MRI and the picture changes.  With the first plan, my deductible would have already been met with lab fees, so the MRI would be covered at 80% (I’d owe $316).  The second plan would have paid for all the labs and not applied anything toward the deductible, so I’d owe the first $1500 of the MRI plus 20% of the remaining amount.  Suddenly the comparison is $1416 versus $1876.  That $360 that looked so good before doesn’t look so great now.

If you just have lots of labs & x-rays the second plan might be nice, but if you have enough other expenses that cause you to meet your deductible (PT, MRI, EMG, orthotics, infusions), then paying for your own labs and getting to the deductible sooner might be the way to go.

With a $200 deductible, I was willing to have most tests my doctors suggested, wherever they sent me.  It didn’t take long until my deductible was met, and then I only had to pay 20% of the remaining cost.  Now things are different.  $1500 is a lot of money.  I will no longer be getting tests done at the hospital’s outpatient imaging clinic – a mile up the road their fees are lower and my insurance will pay a greater percentage of the cost.  It’s worth driving.  I’ll be less willing to have pricey tests done, or at least postpone them to stack as many expenses as possible in a single year.

There’s a great discussion of high deductible health plans here.  People tend to delay seeking care when they know it’s going to be costly.  I didn’t really understand that until I read the details of our new insurance.  As I bid farewell to the best coverage I’ve ever had, I see more clearly how higher deductibles could be an incentive for people to forgo or delay care.

Check the details.  Read the fine print.  Compare insurance plans to see who really offers the best deal.

Insurance Changes

As I mentioned previously, my insurance plan will change on December 1.  I have serious doubts about the new company’s ability to have things up and running so that my December 2 doctor visit will be paid in a timely manner.  Cynical?  Me?  I prefer the term “realistic.”

Consequently, when I learned about the coming changes, I phoned my doctor’s office and asked if they could possibly move my appointment up into November.

It’s a good thing I anticipated the insurer’s lack of efficiency. They’re even admitting it!  Yesterday’s mail brought another letter about our insurance.

If you have a pending doctor’s appointment scheduled during your first month’s coverage, consider moving this appointment towards the end of the month. This will ensure that you have your new health insurance ID card in your possession when you see the doctor and result in your doctor being able to verify that you have coverage.

It looks like I have some more rescheduling to do.  A quick check of my calendar shows that I’m due for an eye exam and the entire family has dental appointments scheduled that first week of December.  My rheumatology appointment isn’t until the middle of the month, so I’ll take my chances on that one.  Those are significantly more difficult to schedule.

The letter continued:

If you are taking any prescription medication, check to make sure that you have enough pills to get you through the first few weeks of your first month’s coverage.  If you are running low on medication, get your refill completed prior to the end of this month.

Seriously?  They’re not going to approve my med refills early.  Somebody ought to consider drug testing those insurance executives; whoever dreamed up that suggestion must have been smoking something.

Fortunately, I have a plan.