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Wednesday, January 7, 2015

New Year. New Insurance.

Have you ever wondered why you may have to pay more to see your doctor at the beginning of the year than at the end of the year? Understanding some "funny" insurance terms like "co-pay" and "deductible" may help you better understand why this occurs.  

If you have a policy that has a "copay":  With this plan, a patient usually pays a flat fee for each visit to a provider's office and the insurance plan generally pays the rest.   Once the patient paid that small copay, the insurance company would foot the rest of the bill as long as the doctor adhered to the insurers guidelines.  

If you have a policy that has "coinsurance" (pronounced co-insurance): With this plan, the patient pays a percentage of the bill instead of paying a flat-rate copay. The patient might pay 20% of the bill and the insurance company might pay the other 80%.  When a policy has a coinsurance instead of a copay it is possible that the amount the patient pays will go up or down from one visit to the next depending on what the doctor does during the visit.

If you have a policy that has a "deductible":   This is basically what the patient pays out of pocket each year before the insurance company starts paying for any of the covered healthcare costs.  For example, if a patient has a $3,000 deductible that means that the patient must pay $3,000 out of pocket before the insurance plan pays for anything.  Often the plan will have two different deductibles: one for the individual and a larger deductible amount for the entire family.  Usually, once either one of these deductibles is met the patient only has to pay the coinsurance (or sometimes a copay) and the insurer pays the rest.  It then keeps working that way for the rest of the year unless the patient meets the "out-of-pocket maximum".

What is the "out-of-pocket maximum"?  This is the largest amount that a person or a family will pay for healthcare during that year.  Once the patient crosses this line in the sand the insurance carrier should pay for 100% of the covered healthcare expenses.  Much like the deductible, there may be an individual "out-of-pocket maximum" and a larger "out-of-pocket maximum" for the entire family.  Just like we said about the deductible, the patient normally only has to meet one of those out-of-pocket maximums for the insurance to start covering at 100%.

Here is an example of how some of this works:

A patient sees a doctor 40 times in a year and accumulates $33,000 in covered charges.  In this instance, let's say that the patient has a $3,000 deductible, a 20% coinsurance and a $5,000 maximum out of pocket. 

At first the patient is in what I call the "deductible phase".  There are some exceptions, but in this first phase the patient basically pays for 100% of the cost of his healthcare.  The insurance does not pay for anything until the patient has forked out $3,000 of his own money to the doctors.  Thus, early on the patient is basically responsible for most of the medical expenses in addition to paying the insurance premiums.

Once the $3,000 deductible is met, the patient enters the "coinsurance phase". In this phase the patient pays the 20% coinsurance and the insurance company pays the other 80% of the healthcare costs.  These rules only apply from the time that the deductible is met ($3,000) until the "out-of-pocket maximum" is met ($5,000).  In most instances, that probably means that $10,000 of the bills will be split 20/80 between the patient and the insurer, with the patient owing $2,000 and the insurer paying $8,000.

The last phase is the "out-of-pocket maximum phase".  Once the out-of-pocket maximum is met, the insurance company will cover 100% of the cost for any covered healthcare expenses.

A helpful note: A smart consumer with a high "deductible" plan will start asking providers to explain why a service is necessary and may even shop around to find providers who get better long-term results for a more reasonable cost.

Insurance is a "tricky" business, and it's often hard to understand. Hopefully this will help give you some insight. If you have questions about your insurance and what to expect to pay when you visit our office for chiropractic, call us at (606) 549-4811.

Christopher Chiropractic. Feel better. Enjoy life.  

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