Understanding your Insurance Coverage
Insurance – just the mention of the word makes most people cringe!
Insurance can seem very daunting and complicated. Understanding your insurance coverage and plan can seem so overwhelming and stressful that some choose to just ignore it and hope for the best.
Unfortunately, that usually only intensifies any problems. What often happens when we don’t understand our own individual insurance plan and its coverage is that we incur unexpected medical costs.
Insurance plans vary greatly, so that means coverage and cost vary greatly. I can’t express enough the importance of understanding your coverage. It is well worth the time and effort you take to understand your plan. It is time well spent. You should receive documentation of your plan, its coverage and exemptions, but that can be difficult to read. Most of the time you can call your insurance and ask for help in understanding your coverage. There should be a member services phone number on the back of your card.
Here are a few key things to learn about your plan, along with a brief explanation of what they mean:
Out of Pocket Expenses:
This is the total you will pay out of your pocket for the year; after you have paid this you will be covered at 100%.
Example: If you have an Out of Pocket Max of $3,000.00, then after you have paid $3,000.00 you are fully covered for your Medical expenses for the year.
This is the amount you must satisfy (pay) before your insurance pays for any services.
Example: If your deductible is $500.00, you must pay the first $500.00 before insurance starts paying anything.
After your deductible is met, then you will be responsible for your co-pay or co-insurance (if one is applicable to your plan).
Here is the difference between a co-pay and co-insurance:
Co-Pay is a set amount you pay. If you have a $25.00 co-pay that is what you pay per visit.
Co-Insurance is a percent you pay. Percents vary per plan.
Example: If you have a 10% co-insurance you will pay 10% of the amount your plan allows for the service. If the plan allows $100.00 then you would pay $10.00. The amount you pay varies depending on the service you have received.
Some people may also have one of the following plans:
HSA (Health Savings Account)
HRA (Health Reimbursement account, Employer Funded)
Flex Spending Account
All of these plans are to help you pay for your portion of medical expenses.
The way they pay varies:
Some give you a credit card to pay for your medical expenses.
Some automatically pay after your insurance has processed.
Some require you to submit a receipt for reimbursement.
In closing, I can’t stress enough the importance of taking the time and initiative to understand your coverage. It is in your best interest to be in control of this area of your life. It is your responsibility and you shouldn’t rely on others (including your Health Care providers) to educate you on this. Your finances are affected by this, so make sure you don’t have any unpleasant surprises!!
Article written by Debbie Murphy, Insurance Biller