I love a new year! The slate is wiped clean and we are free to start all over again, to shape our dreams and set our goals to be anything we want them to be. The new year and wiping the slate clean isn’t always quite so fun, however, when it comes to health insurance.
Health insurance, my own and my clients’, is really the only part of the new year that I do not love. Coincidentally, billing also happens to be the only part of my job that I do not love either. January 1st marks the start of a new health care plan for most people, and a lot of people do not realize that their health insurance plan hits them with a lot of the costs of their medical care up front. So I have learned the hard way that a lot of awkward grumpiness can be avoided when people have a good understanding of how their plans work prior to receiving medical care.
And on top of it all, January 1st, 2014 marks the beginning of the Affordable Care Act for a lot of people, particularly here in Vermont where many are either self-employed or employed by small businesses. Those who are affected by the ACA have brand-new, untested health insurance plans, many of which begin today. I am here to tell you the truth that it is all going to be fine, but that health insurance as an industry tends to be slow-moving and not too bright, and as with any reform, there may be a few bumps in the road, confusion, and misunderstanding. For you, your medical providers, and your health insurance company. Just take a deep breath for the next couple of months.
The best way to avoid misunderstanding and unexpected medical costs is to have a complete understanding of your plan, and you can do this by calling your health insurance company and asking a representative to explain your plan to you line by line. Get his or her name, document the date and time of the conversation, and have him or her fax or email you a summary of your plan if you do not have a printed summary on hand yet. Also print out temporary health insurance cards from the company Web site if you have not received your cards in the mail yet. But be apprised that health insurance reps will talk to you like you’ve been in the biz for 15 years, so there are a few terms you need to know if you aren’t familiar with them already, and you also need to find out if these terms are a part of your plan. Here we go:
In network/out of network: Just about all health insurance companies have a credentialing process by which they approve a medical provider to be part of their network. The in network providers have agreed to accept a discounted rate from the health insurance company in exchange, basically, for fewer reimbursement hassles and a nominal amount of free advertising. An in network provider is not necessarily better than an out of network provider, but in most cases the out of network provider will cost you a little to a lot more, depending on your plan. It is important to know what the difference is between your in network and out of network coverage. If you can’t find the in network care that you need, you may be able to negotiate with your health insurance company for better out of network coverage for a particular provider or type of medical care.
Deductible: Most people are familiar with this term because you probably have a deductible with your home and auto insurance as well. It’s the portion of your medical costs you are required to pay before your full insurance coverage becomes effective. At the beginning of the year it is especially important for you to understand how your health insurance handles the deductible. Let’s say your deductible is $500. Some companies will not pay a cent until you have paid $500 out of pocket. Others will apply a small portion of the deductible to your medical costs throughout the year, so you may have coverage effective immediately but will be charged $18 here, $36 there, $72 elsewhere, and so on.
Coinsurance: If you have coinsurance, then you are responsible for a certain percentage of some or all medical costs all year long. For example, you may have a flat 20 percent coinsurance, which means you will be billed for 20 percent of all medical costs you incur. Or you may have 100 percent coverage of medical provider visits, but you may have to pay 20 percent coinsurance on lab work and radiology. Find out if you have coinsurance, what the percentage is, and specifically which services are affected.
Co-pay: A co-pay is defined by a specific dollar amount, not a percentage, and if you have a co-pay then you pay a certain dollar amount for your medical provider visits, and co-pays may vary depending on what type of provider you are seeing. You may have no co-pay for a checkup, a $25 co-pay for an in-network physician specialist, a $10 co-pay for an in-network P.T., and a $40 co-pay for an out of network medical provider. This information is usually listed on your card but not always. On the ball providers will call the health insurance company before your visit and verify your benefits ahead of time, but it’s a good idea to have some sort of idea what you’ll have to pay going in, in the event that the rep we spoke with hadn’t had her coffee yet. Or in case we hadn’t either.
Out of pocket maximum: Thank goodness for out of pocket maximums. This is the provision in your health insurance that goes into effect when you’ve had one of “those” years–You had five emergency room visits for random kid klutziness , 3 of which included stitches and one included a broken arm, your husband had a hernia repair and you needed an MRI of your knee. If you have a $3000 out of pocket maximum, for example, once you have paid $3000 in co-pays, coinsurance, deductibles, etc., your health insurance kicks into high gear and picks up the entire tab, co-pays, coinsurances, and all, for the rest of the year.
Referral: Sometimes you must be referred from your primary care provider to a specialist, or from a doctor to a physical therapist, and almost always from a doctor for radiology or lab work. This gets a little confusing. For example, when it comes to P.T., Vermont is a direct access state, which means by law no referral is needed. Anyone can show up at my door without seeing a doctor first. Most health insurances are on board with state law and do not require a referral for P.T. either, but some do. Or the state and the health insurance may not require a referral, but the P.T. clinic insists upon one. Would I ever do that? Heck no! In general, the trend of referrals to specialists seems to be phasing out. I am taking a leap here and surmising that health insurance companies are realizing that referrals involve more medical costs, paperwork and red tape. But sometimes referrals still are needed for specialists or certain services, so it’s best to call and ask.
So the phone monologue you receive from your health insurance representative might sound something like this: “For medical coverage you have a $500 individual deductible, $ 1500 family deductible, then 100 percent coverage with a $10 co-pay for primary care provider visits in- network, $25 co-pay for specialists in network, 80 percent coverage and 20 percent coinsurance for provider visits out of network, radiology and lab work covered at 80/20 in network or 70/30 out of network, physical, occupational and speech therapy covered in network 100 percent, no referral necessary, with a $20 co-pay or 70 percent coverage 30 percent coinsurance, with a maximum out of pocket costs of $2000.” Eek! No wonder everyone gets confused. Ask them to please slow down and repeat it so you can write it all down and read it back to them, or ask them to fax or e-mail you a summary so you can call back and review it with them. Don’t pretend that you understand. I like to set the bar low and let the companies I deal with think that I’m the dumbest in network provider alive, so I feel no stress in keeping them on the phone until I know exactly what they are talking about.
We haven’t discussed high deductible plans yet. These are plans that tend to be less costly but come with an extremely high deductible ranging from $1500-$3000 per individual and $5000-$15,000 per family (yikes!). They can be great in that many come with a health savings account that allows you to put pre-tax income into a savings account specifically for medical costs, which can accrue over several years. It can be a great way to manage your family’s medical costs, but look very carefully into these plans before signing up. It is unlikely, and trust me, you want it to be unlikely, that you will meet the highest deductibles of these plans in one year, so you can end up paying for a health insurance plan AND all your medical costs.
No matter how you feel about the Affordable Care Act, it is taking some good steps to standardize health insurance plans. Everyone will have an out of pocket maximum. No one can be denied for health care due to a pre-existing coverage. There is better coverage for children and for certain medical conditions. Don’t panic, try to have a little patience, and try to realize that real, beneficial change takes time. Everything will settle down soon.
–Kathleen Doehla, M.S. P.T.