Health Insurance

Understanding Your Health Insurance

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Understanding Your Health Insurance

Undoubtedly, you have entered a physician’s office and read a sign stating: “Knowing your health insurance policy is your responsibility. Any unpaid balance or non-covered charges will be billed to you!”

But, who’s to know what is covered and what is not? How much does insurance pay, and how much will you be expected to pay? What is the bottom line bill going to be?

Here are some keys terms you should know related to health insurance:

– Deductible. The deductible is the amount you are required to pay before your benefits kick in. If your deductible is $1,000, that means you have to pay $1,000 out of pocket before your benefits apply. This amount need to be paid regardless of whether you are using an in-network or out-of-network medical professional. Co-pays are not included in the deductible.

– Allowable rate. This is the amount your physician is allowed to charge for services, based on his or her contract with the insurance company. For instance, a health care professional might typically bill $300 per hour for a particular service. However, when he or she contracted to be “in network” with a particular insurance company, he or she might have agreed to accept only $150 for the same service. This is called the “allowable rate;” it is the amount the health care provider is allowed to charge you because you are using an in-network health professional.

This is also the amount the health care professional should be charging you if you have a deductible to meet before your benefits kick in. You might want to ask your health care professional the “allowable rate” for services you receive. This rate is going to differ substantially depending on the physician’s contract with insurance companies. With one insurance company, the service may cost $100, and with another $120. This is a private contract between the physician and the insurance company, which is why allowable rates vary.

– Co-pay. This is the amount you will pay per visit to your primary care physician, gynocologist, mental health professional, specialist, etc. There is typically a different co-pay for primary care physicians and for specialists. If you go to a specialist, the co-pay may be higher. Co-pays can vary from $10 to $50 or more per visit.

– Co-insurance. This is the amount you are responsible for when you finally get a bill and once your deductible is satisfied, in addition to your co-pay. Sometimes the co-insurance is 10% of the ALLOWABLE rate, sometimes 30%, sometimes 40%. The Affordable Care Act has termed plans “Platinum, Gold, Silver, and Bronze” as a way to determine the co-insurance amounts easily. Platinum plans pay 90%; your contribution is 10%. Gold plans pay 80%, Silver plans 70% and Bronze plans 60%.

Next: Tips on what to ask your health care professional regarding insurance.