Healthcare Business DEMYSTIFIED

de mys ti fy - to make less mysterious, clarify

What are my out of pocket costs?

It is important to know all of the out of pocket costs you may incur during the plan year.  These costs can include the co-pay, the deductible, and co-insurance.  It also helps to be familiar with your insurance plan's out of pocket maximum.

The first expense that you may encounter is the co-pay.  The co-pay is defined as a set dollar amount that you pay when you use certain services.  Every time you visit your doctor's office you will be asked to pay a co-pay.  They vary by plan but can range from $10 to $40.  The co-pay is paid directly to the doctor's office and should be paid at the time you are seen.  Many offices take the payment when you check in at the front desk.  This payment is a necessary part of the physician's reimbursement.  Your insurance company expects you to pay it so they automatically deduct it from any payment they make to the physician's office for the services that you received.  Please remember to budget for this amount and be ready to pay it when you arrive at your doctor's office.  On occasion, there will be services that do not require a co-pay.  Thanks for the Affordable Care Act, you are not required to pay a co-pay for well woman care and well child preventative care.  Check your plan summary to verify your benefits for these various types of visits.  Your co-pay may vary by the type of service you receive.  There is often a difference in co-pays between a primary care office visit, a specialist visit, an urgent care center or an emergency room visit.  Again, check your summary of plan benefits to know the specifics of your plan.

The next expense is the deductible.  The deductible is a dollar amount you pay before a plan begins paying benefits.  Not all services are subject to the deductible so it is wise to check with your plan's summary of benefits.  If you have an individual plan, the deductible will be lower than a family plan.  Depending on the plan you choose, you could have an annual deductible of anywhere between $100 for an individual, up to $2500 for a family.  This is an average range so it is best to consult your plan for specifics that apply to you.  When shopping for insurance plans, it is usually the case that the lower the annual deductible, the higher the monthly premium will be.  When your physician's office submits a bill on your behalf to your insurance company, the insurance company will review the services rendered.  If they are services that your plan will normally cover, they apply their fee schedule to the charge and arrive at a dollar amount that they will apply to your deductible.  Once your deductible amount is met, they will begin to pay benefits.  It is important for you to be prepared to pay for services that have been applied to the deductible.  The payment for those services will be paid directly to the physician's office.  They are often identified on the Explanation of Benefits (EOB) as the Patient Responsibility.  Most likely, you will receive a bill from your doctor's office with the amount that has been applied to the deductible.  You should be able to compare it to the Patient Responsibility on the EOB.  They should be the same amount.

Co-insurance is often the most difficult out of pocket expense to understand and the most often overlooked.  It is defined as the percentage of the allowed amount that you pay when you use certain benefits.  It can be as low as 20% and as high as 50% depending on your plan.  Again, it is best to consult your plan benefits for specifics that apply to you.  Co-insurance becomes especially important to you after your deductible has been met as it can be an on-going cost every time you get medical care.  It is often one of those expenses that people are surprised to find out that they need to pay even after they have met their deductible amount.  Often patients will think that after the deductible is met, the insurance company will then pay for everything.  You will need to review your plan summary to ascertain if any of your covered benefits are subject to a co-insurance amount.  The co-insurance amount will be figured on your EOB and your doctor's office will send you a bill for the amount.  The co-insurance amount is paid directly to your physician's office.

This is a good time to discuss the annual out of pocket maximum.  With all of the additional expenses that you may not have thought about over and above your monthly premium, the annual out of pocket maximum amount is an important number to know.  Most plans have limits on what you are required to pay in out of pocket expenses for medical services and prescription drugs each year.  The specific dollar amount for your plan should be found in your plan summary.  In the worst case scenario, you would have to pay up to the stated amount in out of pocket expenses before your plan would begin to pay 100%.  Ask for specifics about this feature of your plan as they vary widely from plan to plan.