You may have heard many different terms in the news lately. From Deductibles, to Premiums, to coverage. There are many words that are used when talking about insurance, and we will try to explain a basic understanding on how insurance works.
Insurance is what you buy as a way to better afford health care costs. When you buy insurance, there is a few factors that go into the price of that insurance. If you job offers insurance, you will be part of a group. Generally, when you are in a group, your insurance will cost less due to many people having the same plan which can negotiate a discount. People who own their own business, or their job does not offer insurance, generally have higher healthcare cost. The following terms will decide the cost and how the insurance is run.
Premium – Your premium is your monthly cost of the insurance. If you never use your insurance, you still have to pay a premium. The amount that you pay is greatly affected by other factors. The higher the premium, the lower the other costs tend to be. If you have multiple people on the same insurance in your family, your premium will go up. The money paid to a premium doesn’t go to your deductible, or max out of pocket.
Deductible – A deductible is a set amount of money that you have to pay before insurance will start to help you with payments. When you have a bill from a doctor, there will be service charges. If you have not paid enough to reach your deductible, your insurance will not help you with these charges. Once you have met your deductible, you could still be on the hook for payment if you haven’t reached your max out of pocket. The higher the deductible, the lower the monthly premium.
Max Out of Pocket – This is a number, generally larger than your deductible. This is the amount that you would have to pay even after a deductible is met. If you have a 90% to 10% plan, that means that once your deductible is met, you still have to pay 10% of the charges until you meet your max out of pocket. The higher the Max Out of Pocket, the lower the monthly premium.
Co-Pay – This is a set amount that you owe for every visit. This does not go towards your deductible. This can vary if you’re visiting your primary care doctor or a specialist. You are usually requred to pay your co-pay when you are in the office at the time of service.
Co-Insurance – You may have more than one insurance to cover the cost of your deductible. Many people on Medicare have a second insurance to help with coverage, this is often called a Secondary. Medicare will cover up to 80% of medical charges, and you are on the hook for the 20% if you do not have a supplement. Medicare has deductables just like any other commerical insurance which can vary from person to person.
Coverage – When an insurance company says something is covered, that doesn’t mean it will pay for it. What coverage means, is that the insurance company recognizes the charge, and the amount will go to your deducible. If you haven’t met your deductible, you have to pay the charge. Coverage does not mean your insurance will pay the charge. Drug coverage does not mean that it will cover any medication prescribed to you. Often there is a tier system that determines which medications your insurance will help pay for.
Prior Authorization – Sometimes your insurance will require you to ask for permission before getting certain tests or drugs covered. This can be a tedious task by your doctor’s office, and may take weeks to months to complete. If a prior authorization is denied by your insurance company, you can appeal it. Appeals are not always accepted, and often delay care further. These rules are made up by your insurance company, and the doctor’s office has no control over how slow the process is.
Insurance can be confusing. The biggest take away is that insurance is not a guarantee for payment. If your insurance company does not pay a bill that you thought should be paid, you have to contact your insurance company, not the doctor’s office to find out why it hasn’t been paid. Your insurance card will have a phone number that you can call to talk to a representative.
Difference between Vision and Medical Plan:
Vision plans will cover general exams that cover visual complaints. Usually there is a benefit for glasses, contacts, or both. Vision plans will not cover medical visits like red eyes, things stuck in the eye, and special testing for medical diagnosis like glaucoma and diabetes.
Medicare only pays a portion for glasses one time after cataract surgery. It will not pay for glasses or routine eye exams. Medicare does allow for a yearly diabetic exam, but deductibles and co-pays apply.