According to the National Conference of State Legislatures, the average family now pays more than $16,000 in Health Insurance premiums each year. To put it simply, health insurance is expensive. However, it is also necessary: medical care without insurance may cost you much more than the monthly premiums would, particularly if you become seriously ill or end up in an accident.
Because of its necessity, it’s also imperative to understand your insurance plan the best you can. This can help you budget for your medical care and avoid a lot of frustrations down the line. It’s important to remember that all insurance plans are different; what one plan allows, another other may not. Thus, your best source of information is your insurance plan itself. Read the following for some information that is generally applicable to most plans.
The deductible is a set amount you are required to spend before a plan will fully cover a service. Some plans have deductibles of one or two thousand dollars; others have no deductible at all or one that is much higher. Not all services are subject to a deductible: preventative care and office visits, typically, don’t require any deductible to be met. Diagnostic procedures, however, often carry a deductible.
If you have deductible of $1000, for instance, and you get an MRI that costs $3000, you will be responsible for paying $1000 before your insurance pays the remaining balance. Some plans pay 100 percent after you meet the deductible; others only pay 80 or 90 percent.
A co-pay is the amount of money you pay each time you go in for an office visit (or each time you visit the ER or an urgent care facility). Typically, these co-payments are around $20 dollars for primary care doctors and a bit higher for specialists. Some services, such as annual physicals, may not have a co-pay at all.
Your co-insurance is typically labeled as a percentage in your plan, often either 10 or 20 percent. This is the percent you are responsible for regarding any procedures performed. If you have a $2000 CT scan performed, and your co-insurance is 10 percent, you will be responsible for around $200 of the bill. Typically, insurance plans with lower premiums have higher co-insurance percentages. Some plans will have no co-insurance at all.
HMO versus PPO Plans
Insurance plans are typically either HMO or PPO. The differences in these may be small, but they are important. One of the most important differences is in regards to seeing specialists: you must get a referral before doing this. If you have an HMO plan and see a cardiologist without a referral, you will be responsible for the full payment. HMOs also mandate that you see doctors (both primary and specialists) who are part of the HMO network.
PPO plans provide a bit more flexibility. First of all, they generally don’t require a referral when seeing a specialist. They also allow you to see providers that are both in and out of your network. Still, going to an in-network doctor will be much cheaper: PPO plans typically pay around 100 percent for in-network doctors but only 80 or so percent for those out-of-network. They may also only pay an out-of-network doctor for certain services.
Both HMO and PPO plans may require preauthorization prior to certain procedures and hospitalizations. They also both generally allow you to see out-of-network doctors if it’s an emergency (as long as certain procedures are followed).
The out-of-pocket maximum is part of the insurance plan that is in your favor: it puts a cap on how much money you must pay out of your pocket in any given year. Most plans have maximums set for both individuals and families. If your out-of-pocket maximum is $2,000, this means that you will only have to pay $2,000 in any given year for medical expenses.
However, it’s important to remember that out-of-pocket-maximums don’t apply to co-pays (you will always have to pay those regardless of how much you’ve spent that year) and don’t apply to services your insurance doesn’t cover (such as plastic surgery or weight-loss surgery).